Chelsea Logistics Holdings Corp.

CLC.PS CLC PM
EQUITY: TRANSPORT/LOGISTICS

TP lowered; maintain Neutral Global Markets Research

7 June 2018
Earnings forecast cut despite regulatory approval for
Rating
logistics investment Remains Neutral
Action/Valuation: Maintain Neutral, TP lowered to PHP7.50 Target Price
PHP 7.50
Reduced from 8.50
We cut our FY18F/19F EPS for CLC by an average of 46%. Our new SOTP-
derived TP is PHP7.50 (PHP8.50 previously). Changes to our forecasts stem Closing price
PHP 7.44
5 June 2018
from: 1) faster assumed depreciation rate (largely valuation-neutral); 2) higher
assumed fuel expenses (oil prices up 44% ytd); 3) reduced equity earnings Potential upside +0.8%
from associates (particularly logistics company 2GO PM [Not rated]); 4)
incorporation of looming cash raising in the form of preferred shares; and 5)
an increase in estimated capex. FY17 was a year fuelled by M&A and Anchor themes
management intends to continue with this in FY18F –the company’s estimated CLC is a comprehensive
acquisition budget is incorporated in our numbers but not the possible Philippine shipping and logistics
earnings contributions/drags of targets. At FY18F EV/EBITDA of 12.6x, we provider, a crucial service in an
believe CLC provides limited upside at this point, with regional peers trading at archipelagic country. Its recent
an average of 12.9x. acquisitions should be taken into
consideration given the
Poor visibility on logistics earnings but regulatory overhang eased
interlinkages and exposure to
2GO reported 1Q18 profits of PHP42mn – down 84% y-y vs. pre-restated
new revenue segments they
1Q17. We believe it is unlikely for 2GO profits to recover to pre-restatement
provide.
levels in the near term. It is worth reiterating that 2GO underwent a change in
management in late FY17 and we believe its 1Q18 earnings provide a better
Nomura vs consensus
base indicator of profits going forward and, hence, our lowered earnings
We are the only broker covering
estimates for both 2GO as well as CLC. On a positive note, the Philippine
CLC.
Competition Commission’s recent decision to approve the acquisition of the
indirect stake in 2GO should ease regulatory concerns on CLC.
Research analysts
CLC bolstering balance sheet for even more investments
Management is guiding for PHP4bn in capex for FY18F, notably with ~50% of ASEAN Transport/Logistics
the budget allocated for M&A. To support the capex plan, CLC has filed to
Thomas Earll Huang - BDO-NS
convert PHP2bn of its unissued authorised capital stock into preferred shares. +632 878 4968
We believe cash raising via preferred shares (terms have not yet been Dante Tinga Jr - BDO-NS
finalised) should give the company more flexibility to pursue investment +632 878 4969
opportunities. We estimate that cash raising via prefs will push down FY18F
BDO Unibank, Inc. and BDO Nomura
D:E from 1.3x to around 1.0x. Securities, Inc are the distributors of this
report in the Philippines. No part of this
Year-end 31 Dec FY17 FY18F FY19F FY20F material may be (i) copied, photocopied, or
Currency (PHP) Actual Old New Old New Old New duplicated in any form, by any means; or (ii)
redistributed without the prior written
Revenue (mn) 3,909 5,373 5,172 6,300 6,103 6,865 consent of BDO Unibank, Inc. and BDO
Nomura Securities. Inc. Nomura has
Reported net profit (mn) 161 844 447 987 545 626
authorized BDO Unibank, Inc. and BDO
Normalised net profit (mn) 161 844 447 987 545 626 Nomura Securities. Inc to re-distribute this
report in the Philippines.
FD normalised EPS 8.85c 46.33c 24.51c 54.15c 29.89c 34.36c
The "BDO-NS" (which stands for "BDO
FD norm. EPS growth (%) 22.4 22.6 177.0 16.9 21.9 14.9
Nomura Securities, Inc.") placed next to an
FD normalised P/E (x) 84.1 N/A 30.3 N/A 24.9 N/A 21.7 analyst’s name on the front page of a
research report indicates that the analyst is
EV/EBITDA (x) 17.8 N/A 12.6 N/A 10.8 N/A 10.0
employed by BDO Unibank Inc. ("BDO
Price/book (x) 1.0 N/A 0.9 N/A 0.8 N/A 0.8 Unibank") who has been seconded to
BDO-NS, to provide research assistance
Dividend yield (%) na N/A na N/A na N/A na
services to NSL under an agreement
ROE (%) 2.2 6.0 3.3 6.6 3.9 4.3 between BDO Unibank, NSL and BDO-NS.
BDO-NS is a Philippines securities dealer,
Net debt/equity (%) 67.6 69.4 71.1 72.3 69.2 73.7
which is a joint venture between BDO
Source: Company data, Nomura estimates Unibank and the Nomura Group.
Key company data: See next page for company data and detailed price/index chart.

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

Key data on Chelsea Logistics Holdings Corp.

Relative performance chart Cashflow statement (PHPmn)
Year-end 31 Dec FY16 FY17 FY18F FY19F FY20F
EBITDA 679 1,262 2,049 2,394 2,677
Change in working capital -1,215 -2,284 -1,603 547 -737
Other operating cashflow -37 -1,055 759 -104 608
Cashflow from operations -572 -2,077 1,204 2,837 2,548
Capital expenditure -2,819 -3,788 -4,165 -2,481 -2,487
Free cashflow -3,392 -5,865 -2,961 356 61
Reduction in investments -17 7 0 0 0
Net acquisitions
Dec in other LT assets 9 -360 -107 -57 -53
Inc in other LT liabilities 5 -18 0 0 0
Adjustments 2 318 -13 -117 -141
CF after investing acts -3,392 -5,919 -3,081 183 -133
Source: Thomson Reuters, Nomura research Cash dividends
Equity issue 150 5,622 2,000 0 0
Notes: Debt issue 4,006 117 1,694 35 39
Convertible debt issue
Others -286 1,112 -499 361 -297
CF from financial acts 3,870 6,852 3,195 396 -258
Performance Net cashflow 478 933 113 579 -391
(%) 1M 3M 12M Beginning cash 31 509 1,442 1,555 2,134
Absolute (PHP) 8.3 -0.1 M cap (USDmn) 258.3 Ending cash 509 1,442 1,555 2,134 1,743
Absolute (USD) 6.5 -1.2 Free float (%) 29.9 Ending net debt 6,864 8,890 11,099 11,177 12,369
Rel to MSCI Philippines 5.6 8.7 3-mth ADT (USDmn) 0.2
Balance sheet (PHPmn)
Income statement (PHPmn) As at 31 Dec FY16 FY17 FY18F FY19F FY20F
Year-end 31 Dec FY16 FY17 FY18F FY19F FY20F Cash & equivalents 509 1,442 1,555 2,134 1,743
Revenue 1,638 3,909 5,172 6,103 6,865 Marketable securities 14 4 4 4 4
Cost of goods sold -1,261 -2,862 -3,287 -3,871 -4,356 Accounts receivable 1,489 3,365 4,394 4,082 4,843
Gross profit 377 1,047 1,885 2,232 2,509 Inventories 79 185 363 282 444
SG&A -155 -530 -712 -817 -884 Other current assets 543 1,926 1,522 2,546 2,030
Employee share expense Total current assets 2,634 6,922 7,838 9,049 9,065
Operating profit 222 517 1,173 1,415 1,625 LT investments 5 8 8 8 8
EBITDA 679 1,262 2,049 2,394 2,677 Fixed assets 7,864 13,269 16,213 17,327 18,355
Depreciation -458 -745 -876 -979 -1,052 Goodwill 74 5,638 5,638 5,638 5,638
Amortisation Other intangible assets
EBIT 222 517 1,173 1,415 1,625 Other LT assets 183 543 650 707 760
Net interest expense -261 -517 -628 -623 -762 Total assets 10,760 26,380 30,347 32,729 33,826
Associates & JCEs 0 -2 69 76 107 Short-term debt 5,029 3,434 4,026 3,597 3,286
Other income 174 49 132 0 0 Accounts payable 1,459 2,436 1,636 2,815 2,485
Earnings before tax 135 47 746 868 970 Other current liabilities 126 231 231 231 231
Income tax -4 114 -149 -174 -194 Total current liabilities 6,614 6,101 5,892 6,643 6,001
Net profit after tax 132 161 597 695 776 Long-term debt 2,343 6,898 8,628 9,715 10,827
Minority interests Convertible debt
Other items Other LT liabilities 242 223 223 223 223
Preferred dividends -150 -150 -150 Total liabilities 9,199 13,222 14,743 16,581 17,052
Normalised NPAT 132 161 447 545 626 Minority interest
Extraordinary items Preferred stock 0 0 2,000 2,000 2,000
Reported NPAT 132 161 447 545 626 Common stock 500 11,820 11,820 11,820 11,820
Dividends Retained earnings 748 965 1,412 1,956 2,582
Transfer to reserves 132 161 447 545 626 Proposed dividends
Valuations and ratios Other equity and reserves 313 372 372 372 372
Reported P/E (x) 102.9 84.1 30.3 24.9 21.7 Total shareholders' equity 1,561 13,157 15,604 16,149 16,775
Normalised P/E (x) 102.9 84.1 30.3 24.9 21.7 Total equity & liabilities 10,760 26,380 30,347 32,729 33,826
FD normalised P/E (x) 102.9 84.1 30.3 24.9 21.7
Dividend yield (%) na na na na na Liquidity (x)
Price/cashflow (x) na na 11.3 4.8 5.3 Current ratio 0.40 1.13 1.33 1.36 1.51
Price/book (x) 8.7 1.0 0.9 0.8 0.8 Interest cover 0.9 1.0 1.9 2.3 2.1
EV/EBITDA (x) 30.1 17.8 12.6 10.8 10.0 Leverage
EV/EBIT (x) 92.1 43.6 21.5 17.9 16.1 Net debt/EBITDA (x) 10.10 7.05 5.42 4.67 4.62
Gross margin (%) 23.0 26.8 36.4 36.6 36.5 Net debt/equity (%) 439.8 67.6 71.1 69.2 73.7
EBITDA margin (%) 41.5 32.3 39.6 39.2 39.0
EBIT margin (%) 13.5 13.2 22.7 23.2 23.7 Per share
Net margin (%) 8.0 4.1 8.6 8.9 9.1 Reported EPS (PHP) 7.23c 8.85c 24.51c 29.89c 34.36c
Effective tax rate (%) 2.7 -240.5 20.0 20.0 20.0 Norm EPS (PHP) 7.23c 8.85c 24.51c 29.89c 34.36c
Dividend payout (%) 0.0 0.0 0.0 0.0 0.0 FD norm EPS (PHP) 7.23c 8.85c 24.51c 29.89c 34.36c
ROE (%) 6.4 2.2 3.3 3.9 4.3 BVPS (PHP) 0.86 7.22 8.56 8.86 9.21
ROA (pretax %) 2.6 2.9 4.6 5.0 5.5 DPS (PHP) 0.00 0.00 0.00 0.00 0.00
Growth (%) Activity (days)
Revenue 138.6 32.3 18.0 12.5 Days receivable 229.0 226.6 273.8 253.5 237.9
EBITDA 85.7 62.3 16.9 11.8 Days inventory 26.4 16.8 30.4 30.4 30.5
Normalised EPS 22.4 177.0 21.9 14.9 Days payable 416.1 248.4 226.1 209.8 222.6
Normalised FDEPS 22.4 177.0 21.9 14.9 Cash cycle -160.6 -4.9 78.1 74.0 45.8
Source: Company data, Nomura estimates Source: Company data, Nomura estimates

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

TP lowered; maintain Neutral

We cut our FY18F/19F EPS for CLC by an average of 46%. Our new SOTP-derived TP
is PHP7.50. Changes to our forecasts stem from: a) faster assumed depreciation rate
(largely valuation-neutral); b) higher assumed fuel expenses (oil prices up 44% ytd); c)
reduced equity earnings from associates (particularly logistics company 2GO PM [Not
Rated]); d) incorporation of looming cash raising in the form of preferred shares; and e)
an increase in estimated capex. FY17 was a year fuelled by M&A and management
intends to continue with this in FY18F – the company’s estimated acquisition budget is
incorporated in our numbers but not the possible earnings contributions/drags of targets.
At FY18F EV/EBITDA of 12.6x, we believe CLC provides limited upside at this point with
regional peers trading at 12.9x.

Fig. 1: CLC – fleet evolution

Fleet size has almost doubled since FY16, more growth for FY18F

Tanker/Barge RoPax/Cargo Tugboat

 70

 53

 35

 18

 ‐
FY16 FY17 FY18F FY19F FY20F

Source: Company data, Nomura estimates

Fig. 2: CLC – revenues

Passenger/cargo as well as logistics entered In FY17 - through M&A

Charter Passage/Freight Tugboat Fees Others

 8
PHP bn

 6

 4

 2

 ‐
FY16 FY17 FY18F FY19F FY20F

Source: Company data, Nomura estimates

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

Fig. 3: Cashflow and leverage outlook

Preferred shares In FY18F should keep D/E at 1x, 1.3x without the offering

Cash from Operations Capex Cash from Debt Cash from Equity Debt to Equity

 8  6
PHP bn

 4  3

 ‐  ‐

 (4)  (3)

 (8)  (6)
FY16 FY17 FY18F FY19F FY20F

Source: Company data, Nomura estimates

Valuation
We continue to use a sum-of-the-parts methodology to value CLC. Changes to our TP
include:
• Valuing Chelsea Shipping Corp. (CSC), Trans-Asia Shipping Lines, Inc. (TA), Starlite
Ferries (Starlite), and Worklink Services (WSI) under one methodology as the four are
fully-owned and integrated into CLC as of end FY17. We value the four using a 9x
EV/EBITDA multiple – in-line with regional marine shipping & logistics peers.
• Updated 2GO’s mark-to-market valuation.
• Incorporating higher FY18F net debt position as capex forecast was revised upwards.
• Reverting back the holding company discount to 10% (from 25%) since regulatory
issues have eased.

Fig. 4: SOTP

Value (PHP Net Value NAV per

Company Ownership mn) (PHP mn) share Valuation

CSC, TA, Starlite, WSI 100% 17,619 17,619 9.67 FY18F EV/EBITDA
2GO 28% 38,404 10,811 5.93 Mark to market
Gross Value 28,429 15.60
Net debt (13,099) (7.19) 2018F net debt
Net Asset Value 15,331 8.41
Holdings Co. Discount (10%) (1,594) (0.88)
Target Price 7.50

Source: Nomura estimates

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

Peer comparison
At a current FY18F EV/EBITDA of 12.6x, we believe there is limited upside to CLC vs.
regional peers, who are trading at a broad average of 12.9x. Maintain Neutral.

Fig. 5: Peer table

Name BBG Market Cap EBITDA CAGR EV/EBITDA P/E P/B

MARINE SHIPPING COMPS Ticker Rating USD mn FY17F-19F FY18F FY19F FY18F FY19F FY18F FY19F
COSCO SHIPPING HOLDINGS CO-H 1919 HK Not Rated 8,685 6% 15.7 14.2 24.5 16.9 1.6 1.3
MISC BHD MISC MK Not Rated 6,828 7% 9.1 8.7 16.1 14.7 0.8 0.7
COSCO SHIPPING ENERGY TRAN-H 1138 HK Not Rated 2,882 11% 10.9 8.9 13.5 9.3 0.5 0.5
MARINE SHIPPING AVERAGE 8% 11.9 10.6 18.0 13.6 0.9 0.9
LOGISTICS COMPS
SEINO HOLDINGS CO LTD 9076 JP Buy 3,898 6% 5.6 5.0 17.1 15.6 1.0 0.9
NIPPON EXPRESS CO LTD 9062 JP Buy 7,544 3% 8.1 8.1 14.8 13.9 1.3 1.2
SINOTRANS LIMITED-H 598 HK Neutral 3,415 9% 6.3 6.0 11.2 10.5 0.9 0.9
KERRY LOGISTICS NETWORK LTD 636 HK Buy 2,575 10% 9.0 8.4 17.2 16.3 1.2 1.1
SHENZHEN INTL HOLDINGS 152 HK Buy 4,540 6% 9.8 8.9 15.9 12.4 1.5 1.4
EM LOGISTICS AVERAGE 8% 8.4 7.7 14.8 13.1 1.2 1.1
DM LOGISTICS AVERAGE 5% 6.9 6.5 16.0 14.8 1.1 1.1
LOGISTICS AVERAGE 7% 7.8 7.3 15.3 13.8 1.2 1.1
COURIER COMPS
CJ LOGISTICS 000120 KS Not Rated 3,247 19% 14.5 12.0 32.6 24.4 1.1 1.1
GRUBHUB INC GRUB US Not Rated 9,878 57% 37.4 28.8 62.3 49.0 7.7 6.7
FUKUYAMA TRANSPORTING CO LTD 9075 JP Neutral 2,814 2% 10.1 9.7 21.4 20.5 1.1 1.0
YAMATO HOLDINGS CO LTD 9064 JP Buy 11,921 8% 9.6 8.9 25.2 22.1 2.0 1.9
BLUE DART EXPRESS LTD BDE IN Not Rated 1,228 13% 25.7 21.9 55.4 42.3 15.1 12.6
UNITED PARCEL SERVICE-CL B UPS US Not Rated 100,654 10% 11.6 10.6 16.1 14.9 29.9 15.7
FEDEX CORP FDX US Not Rated 67,338 16% 9.4 8.2 16.7 14.4 3.6 3.1
EM COURIER AVERAGE 16% 20.1 17.0 44.0 33.4 8.1 6.8
DM COURIER AVERAGE 18% 15.6 13.2 28.3 24.2 8.9 5.7
COURIER AVERAGE 18% 16.9 14.3 32.8 26.8 8.6 6.0
CHELSEA LOGISTICS CORP CLC PM BUY 256 38% 12.6 10.8 30.3 24.9 0.9 0.8
EM BROAD AVERAGE 10% 12.6 11.1 23.3 18.4 2.8 2.5
DM BROAD AVERAGE 14% 13.1 11.3 24.8 21.5 6.7 4.4
BROAD AVERAGE 12% 12.9 11.2 24.0 19.8 4.6 3.3
Source: Bloomberg consensus for not-rated stocks, Nomura estimates. Note: Priced as of 5 June 2018 close.

Key risks
Downside risks include: 1) rationalisation of tax incentives may be detrimental; 2)
refinancing of FY18F debt maturities crucial; 3) high exposure to fuel price & FX volatility;
4) unexpected ship down-time; and 5) regulatory risk from Maritime Industry Authority
(MARINA). Upside risks include: 1) lower than expected bunkering costs; 2) pick-up in
online retailing necessitating shipping & logistics services; and 3) consolidation of
fragmented domestic shipping industry.

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

Appendix A-1
Analyst Certification
I, Thomas Earll Huang, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views
about any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or
will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of
my compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc.,
Nomura International plc or any other Nomura Group company.

Issuer Specific Regulatory Disclosures

The terms "Nomura" and "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries, including Nomura
Securities International, Inc. ('NSI') and Instinet, LLC('ILLC'), U. S. registered broker dealers and members of SIPC.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures
Chelsea Logistics Holdings
Corp. CLC PM PHP 7.45 01-Jun-2018 Neutral N/A

Chelsea Logistics Holdings Corp. (CLC PM) PHP 7.45 (01-Jun-2018) Neutral (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
22-Feb-18 Neutral 7.61
22-Feb-18 8.50 7.61
11-Dec-17 Buy 8.57
11-Dec-17 10.10 8.57

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology We use a sum-of-the-parts methodology to value CLC, with a TP of PHP7.50. The benchmark index is
the MSCI Philippines.

Risks that may impede the achievement of the target price Downside risks include: 1) rationalisation of tax incentives may
be detrimental; 2)refinancing of FY18F debt maturities crucial; 3) high exposure to fuel price & FX volatility; 4) unexpected ship
down-time; and 5) regulatory risk from Maritime Industry Authority (MARINA). Upside risks include: 1) lower than expected
bunkering costs; 2) pick-up in online retailing necessitating shipping & logistics services; and 3) consolidation of fragmented
domestic shipping industry.

Important Disclosures
Online availability of research and conflict-of-interest disclosures
Nomura Group research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, Reuters and ThomsonOne.
Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx or requested
from Nomura Securities International, Inc., or Instinet, LLC on 1-877-865-5752. If you have any difficulties with the website, please
email grpsupport@nomura.com for help.

The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a
portion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report are

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

not registered/qualified as research analysts under FINRA rules, may not be associated persons of NSI or ILLC, and may not be subject to
FINRA Rule 2241 restrictions on communications with covered companies, public appearances, and trading securities held by a research
analyst account.

Nomura Global Financial Products Inc. (“NGFP”) Nomura Derivative Products Inc. (“NDPI”) and Nomura International plc. (“NIplc”) are
registered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, and
NIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.

Distribution of ratings (Nomura Group)

The distribution of all ratings published by Nomura Group Global Equity Research is as follows:
51% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 42% of companies with this
rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the EEA)
with this rating were supplied material services** by the Nomura Group.
43% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 51% of companies with
this rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the
EEA) with this rating were supplied material services by the Nomura Group
6% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 6% of companies with this
rating are investment banking clients of the Nomura Group*. 0% of companies (which are admitted to trading on a regulated market in the EEA)
with this rating were supplied material services by the Nomura Group.
As at 31 March 2018.
*The Nomura Group as defined in the Disclaimer section at the end of this report.
** As defined by the EU Market Abuse Regulation

Distribution of ratings (Instinet, LLC)

The distribution of all ratings published by Instinet, LLC Equity Research is as follows:
61% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.
35% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.
4% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; Instinet LLC has provided
investment banking services to 0% of companies with this rating within the previous 12 months.

Definition of Nomura Group's equity research rating system and sectors

The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock,
subject to limited management discretion. An analyst’s target price is an assessment of the current intrinsic fair value of the stock based on an
appropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash flow
analysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the stated
target price, defined as (target price - current price)/current price.

STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral',
indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that
the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, target
price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies
that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage. Investors should not expect continuing or
additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex-
Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed
at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emerging Markets (ex-Asia): MSCI
Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

SECTORS
A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,
indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that
the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as
'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging
Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.

Target Price
A Target Price, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part the analyst's
estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and
by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

Disclaimers
This publication contains material that has been prepared by the Nomura Group entity identified on page 1 and, if applicable, with the
contributions of one or more Nomura Group entities whose employees and their respective affiliations are specified on page 1 or identified
elsewhere in the publication. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries including:
Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New
York, US; Instinet, LLC ('ILLC'); Nomura International (Hong Kong) Ltd. (‘NIHK’), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd.
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Monetary Authority of Singapore); Nomura Australia Ltd. (‘NAL’), Australia (ABN 48 003 032 513), regulated by the Australian Securities and
Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; PT Nomura Sekuritas Indonesia

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Nomura | Chelsea Logistics Holdings Corp. 7 June 2018

(‘PTNSI’); Nomura Securities Malaysia Sdn. Bhd. (‘NSM’), Malaysia; NIHK, Taipei Branch (‘NITB’), Taiwan; Nomura Financial Advisory and
Securities (India) Private Limited (‘NFASL’), Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie
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