下载完整pdf文档
Asia Pacific Equity Research 19 August 2021 Malaysia REITs Reopening within reach We remain optimistic about “reopening” as the Malaysian government has moved to the benchmark of daily number of “symptomatic hospital admission cases”, away from the absolute level of COVID-19 cases, in its National Recovery Plan (NRP). With 78% of the Klang Valley (Selangor/KL) population where the majority of the M-REIT properties are located having already received its first dose and the prospect of the COVID-19 curve peaking at end-August (link), we anticipate reopening of the malls from October onwards, initially for fully vaccinated individuals with a further easing thereafter. Despite 2021 being effectively a “writeoff” after we cut our FY21E DPU by 19-48% post pricing in six months of rental waivers, we anticipate the market to be more forward-looking as we are only four months away from a potential strong recovery in 2022. Our preferred pick remains Sunway REIT as it provides the greatest leverage to an upturn, with an attractive combination of a 5.3% FY22E net yield and a three-year DPU CAGR of 33%. New protocols for reopening have been implemented with easing restrictions for fully vaccinated individuals such as dining in (states under Phase 2) and selective resumption of select industries. In addition, rather than basing the phased easing of restrictions on the level of COVID-19 cases, a shift has been made to the daily number of “symptomatic hospital admission cases” given the backdrop of 53% and 35% of the Malaysian population having received its first dose and being fully vaccinated. In comparison, under the original NRP, malls in Klang Valley may have only opened towards the end of the year, given a still high level of daily cases (>8,000) versus our base case of October. Near-term pain. While we see light at the end of the tunnel, we expect near-term pressure for the M-REITs, given they need to support their retail tenants. To that end, we now assume six months of rental waivers in FY21 (up from 2-3 months in 1H21) and one month in FY22. In addition, we also assume minimal contribution from hotels this year. Furthermore, we expect retail rents to be cut by 5-6% p.a. over FY21/22. Overall we cut FY21/22E DPU by 19-48%/6-10% and lower our Sunway REIT/KLCC/IGB REIT June-22 PTs to RM1.60/RM7.40/RM1.65. Only four months away from 2022 recovery. 2021 has been a disappointment with ineffective lockdowns earlier this year triggering an escalation in COVID-19 cases and tightening of measures. Nevertheless, we believe investors already see 2021 as a write-off and will progressively focus on 2022 recovery over the coming months. In addition, with 70-80% of the population likely to be fully vaccinated by October, Malaysia switching to Pfizer and the shift in protocol for a phased reopening, we remain confident of share price recovery for the M-REITs on the back of an upturn in profitability next year. Malaysia Conglomerates and Property Mervin Song, CFA AC (65) 6882-7829 mervin.song@jpmorgan.com Bloomberg JPMA MSONG J.P. Morgan Securities Singapore Private Limited Terence M Khi (65) 6882-1518 terence.ml.khi@jpmchase.com J.P. Morgan Securities Singapore Private Limited Cusson Leung, CFA (852) 2800-8526 cusson.leung@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited/ J.P. Morgan Broking (Hong Kong) Limited Jeffrey Ng (60-3) 2718 0713 Jeff.Ng@jpmorgan.com JPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X) See page 17 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Equity Ratings and Price Targets Company Ticker Mkt Cap Price ($ mn) CCY Price IGB REIT IGBREIT MK 1,410 MYR 1.69 KLCCP Stapled Group KLCCSS MK 2,855 MYR 6.70 Sunway REIT SREIT MK 1,140 MYR 1.41 Source: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 19 Aug 21. Rating Cur Prev N n/c OW n/c OW n/c Price Target Cur End Prev End Date Date 1.65 Jun-22 1.70 Dec-21 7.40 Jun-22 7.50 Dec-21 1.60 Jun-22 1.65 Dec-21 Table 1: JP Morgan coverage - M-REITs peer comparison M-REITs IGB REIT KLCC Stapled Group Sunway REIT JPM Rating N OW OW Mkt Cap (US$ m) 1,441 2,833 1,156 5,430 Sh Price 18-Aug-21 (LC) 1.71 6.65 1.43 Source: Bloomberg Finance L.P., J.P. Morgan estimates. Price Target (LC) 1.65 7.40 1.60 Net Yield DPU Growth 20 Day YTD Upside FYE P/B FY21E FY22E FY21E FY22E ADTV (%) (%) (US$m) -3.5% Dec 1.56 2.5% 4.2% -29.6% 65.9% 0.1 -0.6% 11.3% Dec 0.92 3.5% 4.7% -12.8% 33.0% 0.1 -6.1% 11.9% Dec 0.96 2.5% 5.3% -2.1% 112.9% 0.2 -4.7% 1.10 3.0% 4.7% -14.9% 58.7% -4.3% Shifting gears under National recovery plan (NRP) Under Malaysia’s original National Recovery Plan (NRP), the country would progressively open its economy under various phases subject to the level of daily cases nationally and within each state, status of the health system and percentage of the population that has been fully vaccinated. Despite good progress in vaccination rates, due to still elevated cases (>20,000), the Malaysian government has shifted towards a phased reopening, subject to the daily number of ‘symptomatic hospital admission cases’ in Category 3 (with pneumonia), 4 (with pneumonia, requiring oxygen therapy) and 5 (critical and requiring assisted ventilation) as a new threshold indicator. Furthermore, in view of the difficult economic situation, for states which are under Phase 1 of the NRP, such as Klang Valley, restrictions on 11 types of economic activities were lifted for fully vaccinated individuals on 15 August. The 11 types of businesses include barbers and hair salons, car wash shops, electrical shops, outlets selling household appliances and kitchen supplies, furniture, and sport equipment shops. Furthermore, car accessories workshops, car sales showrooms, morning and farmer’s markets, clothing and personal accessories stores as well jewelry stores also qualify. Once states enter Phase 2 of the NRP, an additional 11 business activities will also be allowed to open such as photography and photo services shops, second-hand item stores, flower shops and plant nurseries, handicraft and souvenir shops and antique shops, toy stores, carpet shops, as well as cosmetics, skin care and perfume stores. 2 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Table 2: Type of threshold categories Category Category 1 Category 2 Category 3 Category 4 Category 5 Source: COVID-19 Immunization Task Force, The Edge. Symptoms No symptoms Mild symptoms With pneumonia With pneumonia, requiring oxygen therapy Critical and requiring assisted ventilation Table 3: Original Phases of National Recovery Plan Phase Number of daily Health system % population vaccinated Commentary cases (nationwide) / ICU capacity with 2nd dose Phase 1 Only essential services allowed Phase 2 Less than 4,000 Moderate 10% Earliest expected August 2021 - More economic sectors like manufacturing and electrical and electronics allowed to operate with 80% max capacity - Social sectors remain closed Phase 3 Less than 2,000 Comfortable 40% Earliest expected date : September-October 2021 - All manufacturing, majority of economic sectors allowed to operate, except high risk activities, e.g., conventions, night clubs, pubs, spas and beauty salons - industries with fully vaccinated staff can request to operate at full capacity - Education, sporting and some social activities allowed to resume - Parliament can resume under strict SOPs Phase 4 Less than 500 Safe / secure 60% Earliest expected : November-December 2021 - All economic sectors and majority of social sectors allowed to resume - Interstate travel and domestic tourism allowed, subject to strict SOPs Source: The Edge Markets, New Straits Times, Malay Mail, Ministry of International Trade and Industry. Figure 1: New COVID-19 cases by state/total new cases New cases by state (LHS)/ total new cases (RHS) 25,000 20,000 15,000 10,000 5,000 0 13-Sep 13-Oct 13-Nov 13-Dec 13-Jan 13-Feb 13-Mar 13-Apr 13-May 13-Jun 13-Jul 13-Aug Total KL Selangor Source: Ministry of Health, Department of Statistics. 3 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Figure 2: Total COVID-19 cases in Malaysia and by state Total no. of cases by state (LHS)/total cases (RHS) 600,000 500,000 400,000 300,000 200,000 100,000 0 Total KL Selangor Source: Ministry of Health, Department of Statistics. 1,609,000 1,409,000 1,209,000 1,009,000 809,000 609,000 409,000 209,000 9,000 Greater easing for Klang Valley malls from October Despite the current political uncertainties and still high daily COVID-19 cases, given the increasing vaccination rates and the government’s increasing focus on livelihoods as demonstrated by a shift in its approach to the NRP and selective resumption of various activities, we now assume that malls within the Klang Valley, where the majority of M-REIT assets are located, will be allowed to open from October onwards. In such a scenario, we now assume around 6 months of rental waivers, comprising 2-3 months of tenant support in 1H21 and 3-4 months in 2H21, to account for the closure of malls except for essential services over 3Q21 and 1 month of support as more stores reopen. This compares to our original projection of 1.5-2 months of tenant support. Furthermore, we have conservatively assumed 1 month of rental waivers in 2022, to account for any flare up in COVID-19 cases that may require a temporary tightening of measures. To account for expected pressure on rents, we have also assumed a 5-6% p.a. decline in rents over FY21-22E versus 2-5% previously, with recovery in occupancy only from FY23. For KLCC and Sunway REIT’s hotel segments, we now assume minimal contributions in FY21 despite homestays and hotel stays, in states under Phase 2 of the NRP, being allowed from 10 August onwards for those fully vaccinated, with a recovery only in FY22 when domestic interstate travel is expected to resume when most of the population is fully vaccinated. 4 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Table 4: Number of vaccination registrations State Johor Kedah Kelantan KL Labuan Melaka Negri Sembilan Pahang Pulau Pinang Perak Perlis Putrajaya Sabah Sarawak Selangor Terengganu Total Number of registrations 2,611,821 1,241,982 818,529 1,893,468 61,513 626,257 820,427 920,533 1,284,978 1,504,449 161,679 87,238 1,357,496 1,692,100 4,950,770 654,542 20,687,782 Source: Ministry of Health Malaysia. As at 18 August 2021. % of population 96.3% 80.6% 66.2% 100.0% 89.8% 92.5% 100.0% 78.3% 94.0% 80.8% 89.2% 100.0% 49.2% 82.8% 100.0% 81.0% 85.5% Table 5: Number of first-dose vaccinations State Johor Kedah Kelantan KL Labuan Melaka Negri Sembilan Pahang Pulau Pinang Perak Perlis Putrajaya Sabah Sarawak Selangor Terengganu Total Number of first doses 1,691,172 857,955 636,467 2,598,763 68,101 456,820 695,626 666,573 992,157 1,029,112 134,236 122,146 1,335,646 1,824,160 3,809,661 518,691 17,437,286 Source: Ministry of Health Malaysia. As at 18 August 2021. % of population 44.7% 39.3% 33.4% 146.5% 68.4% 49.0% 61.6% 39.7% 55.9% 41.0% 52.7% 111.0% 34.2% 64.8% 58.3% 41.2% 53.4% Table 6: Number of first-dose vaccinations in Klang Valley State Kuala Lumpur Putrajaya Selangor Total Number of first doses 2,598,763 122,146 3,809,661 6,530,570 Source: Ministry of Health Malaysia. As at 18 August 2021. % of population 146.5% 111.0% 58.3% 77.6% Overall, after the weaker-than-expected results from IGBREIT (link) and KLCC (link), we reduce our Sunway REIT/KLCC/IGB REIT FY21/22E gross DPU by 1948%/6-10% and lower our Sunway REIT/KLCC/ IGB REIT June-22 PT to RM1.60/RM7.40/RM1.65. Nevertheless, we remain convinced of a recovery in earnings and share prices ahead with only 4 months to go before the potential 2022 recovery, once 70-80% of the population is fully vaccinated by October, from 32% currently (53% of the population has already received the first dose and 85% have registered for vaccination) and the economy is progressively reopened. Furthermore, in our view, 5 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 the majority of investors have already discounted the lower level of profitability and DPU owing to the ongoing closure of many retail outlets since May. Our top pick remains Sunway REIT owing to its leveraged exposure to a recovery (three-year DPU CAGR of 33%) and as it offers the highest FY22E net yield of 5.3%. We also like KLCC given the majority of its earnings are anchored by its long office lease with Petronas. Finally, we are N on IGB REIT, as we believe the risk-reward is balanced, with an expected bounce in DPU next year offset by forward yields that are already comparable to KLCC’s and the lack of defensive earnings stream from long office leases. Table 7: Change in gross DPU estimates REIT IGB REIT KLCC Sunway REIT Previous gross DPU (Mcts) 1FY 2FY 3FY 7.1 8.7 8.8 32.4 36.9 38.3 7.7 9.4 9.8 Source: J.P. Morgan estimates. New gross DPU (Mcts) 1FY 2FY 3FY 4.8 7.9 8.7 26.2 34.8 37.6 4.0 8.4 9.6 Change 1FY 2FY 3FY -33% -9% -1% -19% -6% -2% -48% -10% -2% Table 8: Change in PTs REIT IGBREIT KLCCSS Sunway REIT Previous rating N OW OW Source: J.P. Morgan estimates. New rating N OW OW Previous PT (M$) 1.70 7.50 1.65 Revised PT (M$) 1.65 7.40 1.60 6 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Table 9: Malaysia national lockdown measures Measure Movement Control Order (MCO) Enhanced Movement Control Date 18-31 Mar 2020 1-14 Apr 2020 Description All places of worship and business premises to be closed, except supermarkets, public markets, grocery stores, and stores selling basic necessities Limit on operating hours for supermarkets, grocery shops, convenience stores and petrol stations of 8am and 8pm Order MCO Extension 15 Apr to 3 May Limited reopening, including hardware stores 2020 Conditional Movement Control 4 May to 9 Jun Order (CMCO) 2020 Almost all economic sectors allowed to be open with conditions Dining-in at restaurants allowed Recovery Movement Control Order (RMCO) 10 Jun to 13 Oct Business operations to return to normal, with adherence to the necessary standard operating procedures (SOPs). Open/morning/night markets, bazaars, food courts, hawker centers, food trucks and food stalls to be allowed. 2020 Haircuts and beauty treatments at salons. Conditional Movement Control Order (CMCO) - Klang Valley, Selangor, Kuala Lumpur and 14 Oct 2020 to 12 Jan 2021 Dining-in restricted to 4-5 pax/table Inter-district travel will be banned, while employees need to show work pass or employers' consent All schools, kindergartens, nurseries, public parks and recreational centers will be closed Places of worship, entertainment centers and night clubs will be closed Putrajaya Sports, recreational, social, cultural activities, including weddings not allowed All economic, industry and manufacturing activities in Selangor, Kuala Lumpur and Putrajaya are still allowed to operate as usual Movement Control Order (MCO) 2.0 – Selangor, KL, Johor and Penang 13 Jan to 4 March 2021 All places of social gatherings including weddings, seminars and sports and only allowing 2 people to travel in a car and buy groceries within a 10km radius from home. In addition, eateries and hawker stalls to only provide takeaway services and deliveries. However, from 21 January restaurants, food stalls and food deliveries can operate from 6am until 10pm vs. the previous limit of 8pm but dine-in at restaurants is still not allowed Only five essential economic sectors are allowed to operate: manufacturing, construction, services, trade and distribution, and plantations and commodities. Shopping malls are still allowed to operate Non-essential services staff to work from home Conditional Movement Control Order (CMCO) - Klang Valley, Selangor, Johor, Kuala Lumpur 5 Mar to 28 Apr 2021 All permitted businesses can operate daily from 6am- 12am (eateries and food delivery services may now operate until 6am during the Ramadan period). Dine-in at restaurants and F&B outlets is now allowed with 1 meter of social distancing and adherence to SOP. There are no more restrictions on the number of patrons per table and Penang Interstate travel still banned in CMCO states (ex. essential business, emergency, medical & education purposes) The previous ruling of only allowing 30% of employees to work from the office has been abolished. All employees in the private sector can return to work in offices from 1 April onwards Movement Control Order (MCO) 3.0 – KL, Nationwide effective 12 May 7-31 May 2021 Interstate and inter district travel not allowed All social gatherings prohibited including weddings, dinner and birthday parties Only three people allowed in private vehicles, taxis and e-hailing vehicles Ban on dine-in; only takeaways and deliveries allowed. F&B outlets such as restaurants, food trucks, food traders, and kiosks to operate from 6am to midnight Convenience stores, sundry shops, shops selling daily necessities, and pharmacies to operate from 6am to 10pm All economic sectors are allowed to operate but maximum of only 30% of employees allowed to work in the office All sports and recreational activities prohibited except individual activities Full Movement Control Order (FMCO) 1-28 June 2021 Only essential economic sectors and services will be allowed to operate Food outlets to close by 8pm Only 2 people per household allowed in one vehicle (including the driver) within 10km radius from home Shopping malls are closed except for supermarkets, hypermarkets, the F&B and essential items section of departmental stores, pharmacies, personal care stores, convenience stores, mini markets, and F&B outlets Worker capacity not more than 60 per cent of the workforce FMCO rolled into Phase 1 of From 28 June Eateries can now open for takeaway and delivery from 6am to 10pm NRP – all states 2021 Phase 2 of National Recovery From 5 July 2021 Plan (NRP) – Perlis, Perak, Kelantan, Terengganu, Pahang Phase 1 of National Recovery From 5 August Plan (NRP) – Selangor, KL 2021 Office capacity must not exceed 40% Worker capacity in the private sector for essential services can be increased to 80% Select sectors such as manufacturing (automotive, rubber, iron and steel) and trade & distributions (book and stationary stores, computers and telecommunications) can reopen and allowed to operate from 8am to 8pm Farmers and morning markets allowed to operate from 7am to 11am more food items, but weekly markets, night markets are still banned. 11 sectors allowed to resume including barbers and hair salons, car wash shops, electrical shops, outlet selling household appliances and kitchen supplies, furniture, and sport equipment shops. Furthermore, car accessories workshops, car sales showrooms, morning and farmers’ markets, clothing and personal accessories stores as well jewelry stores also qualify. Source: The Edge Markets, New Straits Times, Malay Mail, Ministry of International Trade and Industry. 7 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Neutral IGB REIT IGRE.KL,IGBREIT MK Price (19 Aug 21): RM1.69 Investment Thesis, Valuation and Risks ▼ Price Target (Jun-22): RM1.65 Prior (Dec-21): RM1.70 Malaysia Conglomerates and Property Mervin Song, CFA AC (65) 6882-7829 mervin.song@jpmorgan.com Bloomberg JPMA MSONG J.P. Morgan Securities Singapore Private Limited IGB Real Estate Investment Trust (Neutral; Price Target: RM1.65) Investment Thesis Due to the impact of recent lockdowns, we believe IGBREIT’s near-term earnings/DPU will be under pressure owing to about six months of rental support that it may need to provide its tenants in FY21. With prospects of malls reopening in October 2021, and combined with the strong track record and dominant position of IGB REIT’s two properties, Mid Valley and the Garden’s Mall, we believe IGB REIT will be on the cusp of a recovery soon. However, we believe a large proportion of these positives and expected recovery in DPU are priced in already, given Key Changes (FYE Dec) IGBREIT trades on a low 4% FY22E yield which is 1.8 s.d. below mean. In our Gross DPS - 21E (RM) Gross DPS - 22E (RM) Prev Cur FY21-22 estimates, we have assumed a 5% decline in rents and a further 2-3% drop 0.071 0.048 in occupancy. In addition, we see better value in other M-REITs such as KLCC, 0.087 0.079 which we believe offers a comparable yield but greater resiliency in income, or Style Exposure Sunway REIT, which we believe offers a higher yield and DPU growth over the next 2-3 years. Hence, we maintain our Neutral recommendation. Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates. Valuation Our Jun-22 PT of RM1.65 is based on our DDM valuation with a discount rate of 6.8%, a risk free rate of 3.6% and a terminal growth rate of 2%. Our PT implies a forward FY22 net yield spread (assuming a 10-year Malaysia bond yield of 3.6%) of 0.7% (2.4 s.d. below mean). We have pegged valuations to the FY22E yield, which we believe is a fairer benchmark, given we expect a normalized operation environment in 2022 versus 2021. In addition, we believe a below-average yield spread is justified, given the expected DPU recovery. Risks to Rating and Price Target Key upside risks include: Faster-than-expected economic recovery and re-opening, leading to greater-thanexpected tenant sales. This in turn would translate into higher rents and occupancy than projected. Acquisition of Mid Valley Southkey would provide upside to our earnings estimates. Key downside risks include: Higher-than-expected cash payments of manager fees or lower payout ratio to conserve cash would result in a lower-than-expected DPU. Subsequent waves of COVID-19 cases in Malaysia necessitating another MCO or additional social measures such as extension of the current MCO which would affect traffic and spend in malls leading to lower-than-expected vacancies and rents. Steepening of the yield curve and increase in the 10-year Malaysian government bond yield may result in investors shifting out of M-REITs, including IGB REIT. 8 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Price Performance YTD Abs -0.6% Rel 5.7% Company Data Shares O/S (mn) 52-week range (RM) Market cap ($ mn) Exchange rate Free float(%) 3M - Avg daily vol (mn) 3M - Avg daily val ($ mn) Volatility (90 Day) Index BBG BUY|HOLD|SELL Key Metrics (FYE Dec) RM in millions Financial Estimates NOI Adj. EBITDA FFO per share BBG FFOPS AFFO per share Gross DPS Margins and Growth NOI margin NOI growth EBITDA margin EBITDA growth Ratios Adj. tax rate FFO payout AFFO payout Net debt/EBITDA ROA ROE Valuation Net debt/EV Dividend yield EV/EBITDA EV/Revenue Adj. P/E P/FFO P/AFFO P/ BV 1m 3m 12m 1.8% 1.8% -3.9% 1.6% 5.9% -0.6% 3,535 1.90-1.59 1,410 4.24 22.7% 0.56 0.2 16 FBMKLCI - FTSE BURSA MALAYSIA KLCI 6|6|1 FY20A 317 284 0.07 0.06 0.07 0.068 68.1% (20.6%) 61.0% (21.6%) 0.0% 0.9 0.9 3.5 5.0% 6.9% 0.1 4.0% 24.3 14.8 23.2 23.2 23.2 1.6 FY21E 238 210 0.05 0.08 0.05 0.048 73.9% (24.7%) 65.1% (26.0%) 0.0% 1.0 1.0 4.9 3.4% 4.7% 0.1 2.8% 33.0 21.5 33.8 33.8 33.8 1.6 FY22E 353 319 0.08 0.09 0.08 0.079 71.2% 48.3% 64.2% 51.9% 0.0% 1.0 1.0 3.0 5.7% 7.8% 0.1 4.7% 21.5 13.8 20.4 20.4 20.4 1.6 FY23E 385 349 0.09 0.09 0.09 0.087 72.3% 8.9% 65.5% 9.3% 0.0% 1.0 1.0 2.7 6.2% 8.6% 0.1 5.2% 19.6 12.8 18.4 18.4 18.4 1.6 Summary Investment Thesis and Valuation Due to the impact of recent lockdowns, we believe IGBREIT’s near-term earnings/DPU will be under pressure owing to about six months of rental support that it may need to provide its tenants in FY21. With prospects of malls reopening in October 2021, and combined with the strong track record and dominant position of IGB REIT’s two properties, Mid Valley and the Garden’s Mall, we believe IGB REIT will be on the cusp of a recovery soon. However, we believe a large proportion of these positives and expected recovery in DPU are priced in already, given IGBREIT trades on a low 4% FY22E yield which is 1.8 s.d. below mean. In our FY21-22 estimates, we have assumed a 5% decline in rents and a further 2-3% drop in occupancy. In addition, we see better value in other M-REITs such as KLCC, which we believe offers a comparable yield but greater resiliency in income, or Sunway REIT, which we believe offers a higher yield and DPU growth over the next 2-3 years. Hence, we maintain our Neutral recommendation. Our Jun-22 PT of RM1.65 is based on our DDM valuation with a discount rate of 6.8%, a risk free rate of 3.6% and a terminal growth rate of 2%. Our PT implies a forward FY22 net yield spread (assuming a 10-year Malaysia bond yield of 3.6%) of 0.7% (2.4 s.d. below mean). We have pegged valuations to the FY22E yield, which we believe is a fairer benchmark, given we expect a normalized operation environment in 2022 versus 2021. In addition, we believe a below-average yield spread is justified, given the expected DPU recovery. Performance Drivers Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Pricing history may not be complete or exact. 9 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 IGB REIT: Summary of Financials Income Statement Revenue COGS Net property income Adj. EBITDA D&A Adj. EBIT Revaluation gains/(losses) Net Interest Adj. PBT Tax Minority Interest Adj. Net Income Distributable profit Funds from operations (FFO) Adjusted funds from operations (AFFO) Reported EPS Adj. EPS FFO per share Payout ratio (x) AFFO per share Payout ratio (x) DPS Shares outstanding Balance Sheet Cash and cash equivalents Accounts receivable Other current assets Current assets PP&E Investment properties LT investments Other non current assets Total assets FY19A FY20A FY21E FY22E FY23E 552 465 323 497 532 (146) (146) (151) (149) (153) 399 317 238 353 385 362 284 210 319 349 - - - - - 362 284 210 319 349 - - - - - (46) (47) (48) (41) (40) 316 237 162 278 309 0 0 0 0 0 - - - - - 342 260 178 297 329 325 241 170 282 312 342 260 178 297 329 342 260 178 297 329 0.09 0.07 0.05 0.08 0.09 0.10 0.07 0.05 0.08 0.09 0.10 0.07 0.05 0.08 0.09 0.9 0.9 1.0 1.0 1.0 0.10 0.07 0.05 0.08 0.09 0.9 0.9 1.0 1.0 1.0 0.092 0.068 0.048 0.079 0.087 3,545 3,563 3,565 3,574 3,584 FY19A FY20A FY21E FY22E FY23E 226 222 179 258 287 30 35 24 36 39 0 0 0 0 0 255 257 203 294 326 6 4 4 4 4 4,960 4,960 4,960 4,961 4,961 - - - - - 4,960 4,960 4,960 4,961 4,961 5,221 5,221 5,167 5,259 5,291 Cash Flow Statement Cash flow from operating activities o/w Depreciation & amortization o/w Changes in working capital Cash flow from investing activities o/w Capital expenditure as % of sales Cash flow from financing activities o/w Dividends paid o/w Shares issued/(repurchased) o/w Net debt issued/(repaid) Net change in cash Adj. Free cash flow to firm y/y Growth Valuation P/FFO (x) P/AFFO (x) P/E (x) P/BV (x) EV/EBITDA (x) Dividend Yield Ratio Analysis NOI margin EBITDA margin EBIT margin Net profit margin FFO margin ROE ROA ROCE Short term borrowings Payables Other short term liabilities Current liabilities Long-term debt Other long term liabilities Total liabilities 15 - 223 238 1,199 0 1,437 15 - 206 221 1,200 0 1,420 15 - 143 158 1,200 0 1,357 15 - 220 235 1,200 0 1,434 Shareholders' equity Minority interests Total liabilities & equity 3,784 3,801 3,810 3,825 - - - - 5,221 5,221 5,167 5,259 BVPS 1.07 1.07 1.07 1.07 y/y Growth 0.1% 0.1% 0.0% 0.1% Net debt/(cash) 989 992 1,036 956 Source: Company reports and J.P. Morgan estimates. Note: RM in millions (except per-share data).Fiscal year ends Dec. o/w - out of which 15 - 235 250 1,200 0 1,450 3,841 - 5,291 1.07 0.1% 927 Net debt/Equity Net debt/EBITDA Sales/Assets (x) Assets/Equity (x) Interest cover (x) Operating leverage Debt/Investment properties Tax rate Revenue y/y Growth EBITDA y/y Growth EPS y/y Growth FY19A 392 0 5 FY20A 287 0 (20) FY21E 174 0 (52) FY22E 403 0 65 FY23E 381 0 12 7 6 5 6 7 (0) (0) (0) (0) (0) 0.1% 0.1% 0.1% 0.1% 0.1% (381) (297) (223) (329) (359) (328) (244) (170) (282) (312) 0 0 0 0 0 0 0 0 0 0 18 (4) (43) 80 28 438 334 222 444 420 2.0% (23.8%) (33.5%) 100.1% (5.4%) FY19A 17.5 17.5 17.5 1.6 19.0 5.4% FY20A 23.2 23.2 23.2 1.6 24.3 4.0% FY21E 33.8 33.8 33.8 1.6 33.0 2.8% FY22E 20.4 20.4 20.4 1.6 21.5 4.7% FY23E 18.4 18.4 18.4 1.6 19.6 5.2% FY19A 72.2% 65.5% 65.5% 61.9% 61.9% FY20A 68.1% 61.0% 61.0% 55.9% 55.9% FY21E 73.9% 65.1% 65.1% 55.3% 55.3% FY22E 71.2% 64.2% 64.2% 59.8% 59.8% FY23E 72.3% 65.5% 65.5% 61.8% 61.8% 9.1% 6.9% 4.7% 7.8% 8.6% 6.6% 5.0% 3.4% 5.7% 6.2% 7.3% 5.7% 4.2% 6.3% 6.9% 0.3 0.3 0.3 0.2 0.2 2.7 3.5 4.9 3.0 2.7 0.1 0.1 1.4 1.4 7.9 6.0 109.2% 137.0% 24.5% 24.5% 0.0% 0.0% 0.1 1.4 4.4 85.0% 24.5% 0.0% 0.1 0.1 1.4 1.4 7.7 8.8 96.3% 130.1% 24.5% 24.5% 0.0% 0.0% 3.1% (15.7%) (30.6%) 53.9% 7.2% 3.4% (21.6%) (26.0%) 51.9% 9.3% (0.1%) (24.4%) (31.4%) 65.9% 10.4% 10 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Overweight KLCCP Stapled Group KLCC.KL,KLCCSS MK Price (19 Aug 21): RM6.70 Investment Thesis, Valuation and Risks ▼ Price Target (Jun-22): RM7.40 Prior (Dec-21): RM7.50 Malaysia Conglomerates and Property Mervin Song, CFA AC (65) 6882-7829 mervin.song@jpmorgan.com Bloomberg JPMA MSONG KLCCP Stapled Group (Overweight; Price Target: RM7.40) Investment Thesis We have an OW rating and a Jun-22 PT of RM7.40 for KLCC. We are attracted to KLCC’s long office leases (8-15 years) anchored with Petronas. Combined with inbuilt escalations every three years (equivalent to 3% p.a.) for the majority of these leases, we believe KLCC offers investors a degree of resilience amidst the current uncertain environment. J.P. Morgan Securities Singapore Private Limited Suria KLCC and Mandarin Oriental Kuala Lumpur have been impacted by the recent Key Changes (FYE Dec) lockdowns, translating into about 6 months of rental waivers in FY21. However, we Gross DPS - 21E (RM) Gross DPS - 22E (RM) Prev Cur remain positive on an eventual recovery of both properties on the back of vaccine 0.324 0.262 rollout, which should result in greater reopening of Suria KLCC in October 2021 and 0.369 0.348 resumption of interstate travel in FY22. We estimate this should translate into an 8% Style Exposure three-year DPU CAGR (FY20-FY23E). Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates. Valuation Our Jun-22 PT of RM7.40 is based on our DDM valuation, which uses a 6.4% discount rate, a 3.6% risk free rate and a 1.5% terminal growth rate. The implied FY22 net yield spread based on our PT stands at 0.7% (0.5 s.d above its mean yield spread) assuming a 3.6% Malaysian 10-year bond yield. We believe a slightly higher than average yield spread is appropriate given tougher operating conditions for the hotel and retail segments. In addition, pegging KLCC’s valuation to FY22E is appropriate given FY22 better represents normalized earnings compared to FY21. Risks to Rating and Price Target Key downside risks to our rating and price target include: Lower-than-expected retail rents owing to a slower-than-expected recovery after the lockdown in Malaysia. Longer-than-expected travel restrictions resulting in a delayed recovery in RevPAR for Mandarin Oriental Kuala Lumpur. Extension of the current MCO and subsequent waves of COVID-19 cases resulting in imposition of additional social distancing measures or lockdowns causing a negative impact on economic activity and resulting in lower rents, occupancy and RevPAR. 11 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Price Performance YTD Abs -6.1% Rel 0.2% Company Data Shares O/S (mn) 52-week range (RM) Market cap ($ mn) Exchange rate Free float(%) 3M - Avg daily vol (mn) 3M - Avg daily val ($ mn) Volatility (90 Day) Index BBG BUY|HOLD|SELL Key Metrics (FYE Dec) RM in millions Financial Estimates NOI Adj. EBITDA FFO per share BBG FFOPS AFFO per share Gross DPS Margins and Growth NOI margin NOI growth EBITDA margin EBITDA growth Ratios Adj. tax rate FFO payout AFFO payout Net debt/EBITDA ROA ROE Valuation Net debt/EV Dividend yield EV/EBITDA EV/Revenue Adj. P/E P/FFO P/AFFO P/ BV 1m -0.9% -1.1% 3m -2.2% 1.9% 12m -16.1% -12.8% 1,805 8.10-6.58 2,855 4.24 12.8% 0.13 0.2 10 FBMKLCI - FTSE BURSA MALAYSIA KLCI 5|6|1 FY20A 859 815 0.33 0.36 0.33 0.300 69.4% (22.6%) 65.8% (23.4%) 10.9% 0.9 0.9 1.8 3.0% 4.2% 0.1 4.5% 16.2 10.7 22.1 20.1 20.6 0.9 FY21E 780 738 0.31 0.38 0.31 0.262 72.0% (9.2%) 68.2% (9.4%) 13.2% 0.8 0.8 2.0 2.8% 3.9% 0.1 3.9% 17.8 12.1 23.8 21.7 21.7 0.9 FY22E 1,048 1,000 0.40 0.42 0.40 0.348 76.9% 34.4% 73.4% 35.5% 13.2% 0.9 0.9 1.3 3.7% 5.1% 0.1 5.2% 13.0 9.6 17.9 16.7 16.7 0.9 FY23E 1,133 1,084 0.43 0.44 0.43 0.376 77.1% 8.1% 73.7% 8.4% 13.2% 0.9 0.9 1.1 4.0% 5.5% 0.1 5.6% 11.9 8.8 16.6 15.5 15.5 0.9 Summary Investment Thesis and Valuation We have an OW rating and a Jun-22 PT of RM7.40 for KLCC. We are attracted to KLCC’s long office leases (8-15 years) anchored with Petronas. Combined with in-built escalations every three years (equivalent to 3% p.a.) for the majority of these leases, we believe KLCC offers investors a degree of resilience amidst the current uncertain environment. Suria KLCC and Mandarin Oriental Kuala Lumpur have been impacted by the recent lockdowns, translating into about 6 months of rental waivers in FY21. However, we remain positive on an eventual recovery of both properties on the back of vaccine rollout, which should result in greater reopening of Suria KLCC in October 2021 and resumption of interstate travel in FY22. We estimate this should translate into an 8% three-year DPU CAGR (FY20-FY23E). Our Jun-22 PT of RM7.40 is based on our DDM valuation, which uses a 6.4% discount rate, a 3.6% risk free rate and a 1.5% terminal growth rate. The implied FY22 net yield spread based on our PT stands at 0.7% (0.5 s.d above its mean yield spread) assuming a 3.6% Malaysian 10-year bond yield. We believe a slightly higher than average yield spread is appropriate given tougher operating conditions for the hotel and retail segments. In addition, pegging KLCC’s valuation to FY22E is appropriate given FY22 better represents normalized earnings compared to FY21. Performance Drivers Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Pricing history may not be complete or exact. 12 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 KLCCP Stapled Group: Summary of Financials Income Statement Revenue Property operating expenses Net property income Adj. EBITDA D&A Revaluation gains/(losses) Net Interest Associate Adj. PBT Tax Minority Interest Adjustments to NP Adj. Net Income Distributable profit Funds from operations (FFO) Adjusted funds from operations (AFFO) Reported EPS Adj. EPS FFO per share Payout ratio (x) AFFO per share Payout ratio (x) Gross DPS Net DPS Shares outstanding Balance Sheet Cash and cash equivalents Accounts receivable Other current assets Current assets PP&E Investment properties LT investments Other non current assets Total assets Short term borrowings Payables Other short term liabilities Current liabilities Long-term debt Other long term liabilities Total liabilities Shareholders' equity Minority interests Total liabilities & equity FY19A FY20A FY21E FY22E FY23E 1,423 1,238 1,083 1,362 1,470 (360) (423) (345) (362) (386) 1,110 859 780 1,048 1,133 1,063 815 738 1,000 1,084 (43) (50) (49) (49) (48) - - - - - (80) (88) (88) (87) (85) 13 13 14 15 16 1,014 662 616 879 966 (126) (72) (81) (116) (127) (156) (43) (27) (88) (108) - - - - - 733 547 508 676 730 730 550 508 676 730 773 600 557 724 778 734 588 557 724 778 0.44 0.24 0.28 0.37 0.40 0.41 0.30 0.28 0.37 0.40 Cash Flow Statement Cash flow from operating activities o/w Depreciation & amortization o/w Changes in working capital Cash flow from investing activities o/w Capital expenditure as % of sales Cash flow from financing activities o/w Dividends paid o/w Shares issued/(repurchased) o/w Net debt issued/(repaid) Net change in cash Adj. Free cash flow to firm y/y Growth 0.43 0.9 0.41 0.9 0.380 0.355 1,805 0.33 0.9 0.33 0.9 0.300 0.276 1,805 0.31 0.8 0.31 0.8 0.262 0.240 1,805 0.40 0.9 0.40 0.9 0.348 0.319 1,805 0.43 0.9 0.43 0.9 0.376 0.345 1,805 Valuation P/FFO (x) P/AFFO (x) P/E (x) P/BV (x) EV/EBITDA (x) Dividend Yield FY19A FY20A FY21E FY22E FY23E 884 872 936 1,085 1,217 479 509 499 518 525 15555 1,367 1,388 1,441 1,609 1,748 672 638 634 631 627 15,894 15,693 15,693 15,693 15,693 - 279 276 290 305 321 Ratio Analysis NOI margin EBITDA margin Net profit margin FFO margin ROE ROA ROCE 18,211 17,995 18,059 18,239 18,390 Net debt/Equity 29 430 430 430 430 258 258 225 284 306 23 17 17 17 17 310 705 673 731 753 2,317 1,919 1,951 1,982 2,014 2,372 2,357 2,357 2,357 2,357 4,999 4,981 4,981 5,070 5,124 13,212 13,014 13,079 13,168 13,266 - - - - - Net debt/EBITDA Sales/Assets (x) Assets/Equity (x) Interest cover (x) Operating leverage Debt/Investment properties Tax rate Revenue y/y Growth EBITDA y/y Growth 18,211 17,995 18,059 18,239 18,390 EPS y/y Growth BVPS 7.30 7.19 7.22 7.27 y/y Growth 0.8% (1.6%) 0.4% 0.6% Net debt/(cash) 1,463 1,478 1,445 1,328 Source: Company reports and J.P. Morgan estimates. Note: RM in millions (except per-share data).Fiscal year ends Dec. o/w - out of which 7.32 0.7% 1,227 FY19A 1,041 43 59 FY20A 808 50 (22) FY21E 644 49 (22) FY22E 935 49 40 FY23E 986 48 15 (99) (28) (45) (45) (45) (40) (13) 0 0 0 2.8% 1.0% 0.0% 0.0% 0.0% (793) (793) (535) (741) (809) (673) (630) (433) (576) (623) 0 0 0 0 0 91 2 32 32 32 148 (12) 64 149 132 1,071 874 720 1,010 1,060 14.0% (18.4%) (17.6%) 40.3% 4.9% FY19A 15.6 16.5 16.5 0.9 12.4 5.7% FY20A 20.1 20.6 22.1 0.9 16.2 4.5% FY21E 21.7 21.7 23.8 0.9 17.8 3.9% FY22E 16.7 16.7 17.9 0.9 13.0 5.2% FY23E 15.5 15.5 16.6 0.9 11.9 5.6% FY19A 78.0% 74.7% 51.5% 54.3% FY20A 69.4% 65.8% 44.2% 48.5% FY21E 72.0% 68.2% 46.9% 51.4% FY22E 76.9% 73.4% 49.6% 53.2% FY23E 77.1% 73.7% 49.7% 52.9% 5.6% 4.2% 3.9% 5.1% 5.5% 4.1% 3.0% 2.8% 3.7% 4.0% 5.8% 4.4% 3.9% 5.3% 5.7% 0.1 0.1 0.1 0.1 0.1 1.4 1.8 2.0 1.3 1.1 0.1 0.1 0.1 0.1 0.1 1.4 1.4 1.4 1.4 1.4 13.3 9.3 8.4 11.5 12.7 74.3% 192.6% 78.7% 147.4% 111.6% 14.8% 15.0% 15.2% 15.4% 15.6% 12.4% 10.9% 13.2% 13.2% 13.2% 1.2% (13.0%) (12.5%) 25.8% 7.9% 1.4% (23.4%) (9.4%) 35.5% 8.4% 0.8% (25.3%) (7.1%) 33.0% 8.0% 13 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Overweight Sunway REIT SUNW.KL,SREIT MK Price (19 Aug 21): RM1.41 ▼ Price Target (Jun-22): RM1.60 Prior (Dec-21): RM1.65 Investment Thesis, Valuation and Risks Sunway Real Estate Investment Trust (Overweight; Price Target: RM1.60) Malaysia Conglomerates and Property Mervin Song, CFA AC (65) 6882-7829 mervin.song@jpmorgan.com Bloomberg JPMA MSONG J.P. Morgan Securities Singapore Private Limited Key Changes (FYE Dec) Gross DPS - 21E (RM) Gross DPS - 22E (RM) Prev 0.077 0.094 Cur 0.040 0.084 Style Exposure Investment Thesis We believe the strong positioning of Sunway Pyramid, Sunway REIT’s key asset, and exposure to healthcare and education properties with in-built escalations positions the REIT for a robust recovery as social distancing measures are relaxed. Near term, we expect Sunway REIT to still need to support tenants, and we assume about six months of rental waivers in CY21, given potential for its malls to only open in October. In addition, we assume a 3-6% p.a. drop in signing rents over the next couple of years and a 2- to 4-point fall in occupancy for Sunway REIT’s retail portfolio. The hotel portfolio will also be impacted by the downturn in the tourism industry and disruption from refurbishment of Sunway Resort over the next 12-18 months. Nevertheless, RevPAR should rebound in CY22 as the domestic travel market recovers once interstate travel is allowed. We project a three-year DPU CAGR of 33% after declines in FY20/21E DPU on the back of normalization of business activities, as rental waivers dissipate and ~350,000 sqft expansion of Sunway Carnival. Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates. Valuation Our Jun-22 PT of RM1.60 is based on our DDM, which uses a 7.5% discount rate, a 3.6% risk-free rate and a 2% terminal growth. Our PT implies a forward FY22 net yield of 4.7% and yield spread of 1.1% (-2.1 s.d. below mean). We believe pegging to FY22E, when earnings will be less disrupted by the refurbishment of its hotels, better reflects a normalized period; pegging to FY21E would unduly penalize Sunway REIT. Our implied yield spread is also ~30bps higher than the implied yield spread for IGB REIT, slightly lower than the historical differential between the two REITs of ~50bps. Risks to Rating and Price Target Key downside risks include: A slower-than-economic recovery due to another wave of COVID-19 cases, resulting in lower-than-projected occupancy, rents and average daily room rates. Delays in opening and/or higher-than-expected costs (RM436m) for the Carnival Mall extension. Competition from e-commerce, resulting in a greater-than-expected impact on retail rents. A larger-than-expected impact from new retail, office and hotel supply. 14 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Price Performance YTD Abs -4.7% Rel 1.6% Company Data Shares O/S (mn) 52-week range (RM) Market cap ($ mn) Exchange rate Free float(%) 3M - Avg daily vol (mn) 3M - Avg daily val ($ mn) Volatility (90 Day) Index BBG BUY|HOLD|SELL Key Metrics (FYE Dec) RM in millions Financial Estimates NOI Adj. EBITDA FFO per share BBG FFOPS AFFO per share Gross DPS Margins and Growth NOI margin NOI growth EBITDA margin EBITDA growth Ratios Adj. tax rate FFO payout AFFO payout Net debt/EBITDA ROA ROE Valuation Net debt/EV Dividend yield EV/EBITDA EV/Revenue Adj. P/E P/FFO P/AFFO P/ BV 1m 3m 12m 0.7% -1.4% -8.9% 0.5% 2.8% -5.6% 3,425 1.72-1.34 1,140 4.24 32.8% 1.20 0.4 19 FBMKLCI - FTSE BURSA MALAYSIA KLCI 3|9|3 FY20A 315 276 0.06 0.08 0.04 0.041 70.2% (31.6%) 61.6% (33.9%) 0.0% 0.7 0.9 10.8 2.0% 3.7% 0.4 2.9% 29.4 18.1 24.1 24.1 32.5 0.9 FY21E 289 252 0.05 0.08 (0.11) 0.040 69.7% (8.3%) 60.8% (8.8%) 0.0% 0.9 NM 13.8 1.7% 3.1% 0.4 2.8% 34.3 20.8 30.6 30.6 NM 0.9 FY22E 449 406 0.09 0.10 0.08 0.084 74.0% 55.3% 66.9% 61.2% 0.0% 0.9 1.1 8.6 3.3% 6.0% 0.4 6.0% 21.3 14.3 15.6 15.6 18.6 0.9 FY23E 503 458 0.10 0.10 0.09 0.096 74.8% 12.0% 68.1% 12.7% 0.0% 0.9 1.1 7.7 3.7% 6.8% 0.4 6.8% 19.0 13.0 13.9 13.9 16.2 0.9 Summary Investment Thesis and Valuation We believe the strong positioning of Sunway Pyramid, Sunway REIT’s key asset, and exposure to healthcare and education properties with in-built escalations positions the REIT for a robust recovery as social distancing measures are relaxed. Near term, we expect Sunway REIT to still need to support tenants, and we assume about six months of rental waivers in CY21, given potential for its malls to only open in October. In addition, we assume a 3-6% p.a. drop in signing rents over the next couple of years and a 2- to 4-point fall in occupancy for Sunway REIT’s retail portfolio. The hotel portfolio will also be impacted by the downturn in the tourism industry and disruption from refurbishment of Sunway Resort over the next 12-18 months. Nevertheless, RevPAR should rebound in CY22 as the domestic travel market recovers once interstate travel is allowed. We project a three-year DPU CAGR of 33% after declines in FY20/21E DPU on the back of normalization of business activities, as rental waivers dissipate and ~350,000 sqft expansion of Sunway Carnival. Our Jun-22 PT of RM1.60 is based on our DDM, which uses a 7.5% discount rate, a 3.6% risk-free rate and a 2% terminal growth. Our PT implies a forward FY22 net yield of 4.7% and yield spread of 1.1% (-2.1 s.d. below mean). We believe pegging to FY22E, when earnings will be less disrupted by the refurbishment of its hotels, better reflects a normalized period; pegging to FY21E would unduly penalize Sunway REIT. Our implied yield spread is also ~30bps higher than the implied yield spread for IGB REIT, slightly lower than the historical differential between the two REITs of ~50bps. Performance Drivers Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Pricing history may not be complete or exact. 15 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Sunway REIT: Summary of Financials Income Statement Revenue COGS Net property income Adj. EBITDA D&A Adj. EBIT Revaluation gains/(losses) Net Interest Adj. PBT Tax Minority Interest Adj. Net Income Distributable profit Funds from operations (FFO) Adjusted funds from operations (AFFO) Reported EPS Adj. EPS FFO per share Payout ratio (x) AFFO per share Payout ratio (x) DPS Shares outstanding Balance Sheet Cash and cash equivalents Accounts receivable Other current assets Current assets PP&E Investment properties LT investments Other non current assets Total assets FY19A FY20A FY21E FY22E FY23E 608 449 415 607 673 (148) (134) (126) (158) (170) 461 315 289 449 503 418 276 252 406 458 - - - - - 418 276 252 406 458 - - - - - (115) (99) (93) (95) (106) 303 177 159 312 351 00000 - - - - - 303 177 159 312 351 303 177 159 312 351 303 177 159 312 351 226 132 (375) 262 301 0.10 0.06 0.05 0.09 0.10 0.10 0.06 0.05 0.09 0.10 0.10 0.06 0.05 0.09 0.10 1.0 0.7 0.9 0.9 0.9 0.08 0.04 (0.11) 0.08 0.09 1.3 0.9 NM 1.1 1.1 0.099 0.041 0.040 0.084 0.096 2,925 3,036 3,456 3,456 3,456 FY19A FY20A FY21E FY22E FY23E 76 445 87 104 99 141 113 91 127 141 00000 217 558 178 231 240 - - - - - 8,084 8,544 9,079 9,129 9,179 - - - - - 8,097 8,574 9,108 9,158 9,208 8,313 9,132 9,286 9,389 9,449 Cash Flow Statement Cash flow from operating activities o/w Depreciation & amortization o/w Changes in working capital Cash flow from investing activities o/w Capital expenditure as % of sales Cash flow from financing activities o/w Dividends paid o/w Shares issued/(repurchased) o/w Net debt issued/(repaid) Net change in cash Adj. Free cash flow to firm y/y Growth Valuation P/FFO (x) P/AFFO (x) P/E (x) P/BV (x) EV/EBITDA (x) Dividend Yield Ratio Analysis NOI margin EBITDA margin EBIT margin Net profit margin FFO margin ROE ROA ROCE Net debt/Equity Short term borrowings 0 1,218 1,360 1,408 1,446 Net debt/EBITDA Payables - - - - - Other short term liabilities 95 187 145 200 222 Sales/Assets (x) Current liabilities 95 1,404 1,506 1,609 1,668 Assets/Equity (x) Long-term debt 3,226 2,200 2,200 2,200 2,200 Interest cover (x) Other long term liabilities 530 428 428 428 428 Operating leverage Total liabilities 3,852 4,033 4,134 4,237 4,296 Debt/Investment properties Tax rate Shareholders' equity 4,462 5,099 5,152 5,152 5,152 Minority interests 0 0 0 0 0 Revenue y/y Growth Total liabilities & equity 8,313 9,132 9,286 9,389 9,449 EBITDA y/y Growth EPS y/y Growth BVPS 1.51 1.49 1.49 1.49 1.49 y/y Growth 2.4% (1.7%) 0.1% 0.0% 0.0% Net debt/(cash) 3,150 2,973 3,474 3,505 3,547 Source: Company reports and J.P. Morgan estimates. Note: RM in millions (except per-share data).Fiscal year ends Dec. o/w - out of which FY19A 441 0 23 FY20A 267 0 (10) FY21E 232 0 (20) FY22E FY23E 425 466 0 0 19 8 (721) (407) (528) (77) (46) (534) 12.7% 10.2% 128.8% (48) (48) (50) (50) 8.2% 7.4% 293 508 (283) (169) 0 710 321 141 (62) (361) (423) (86) (292) (332) 0 0 0 143 48 38 13 368 (358) 17 (5) 479 320 (209) 470 522 (20.3%) (33.1%) (165.2%) (325.1%) 11.1% FY19A FY20A 13.6 24.1 18.3 32.5 13.6 24.1 0.9 0.9 19.9 29.4 7.0% 2.9% FY21E 30.6 NM 30.6 0.9 34.3 2.8% FY22E FY23E 15.6 13.9 18.6 16.2 15.6 13.9 0.9 0.9 21.3 19.0 6.0% 6.8% FY19A 75.7% 68.8% 68.8% 49.8% 49.8% FY20A 70.2% 61.6% 61.6% 39.5% 39.5% FY21E 69.7% 60.8% 60.8% 38.4% 38.4% FY22E FY23E 74.0% 74.8% 66.9% 68.1% 66.9% 68.1% 51.3% 52.2% 51.3% 52.2% 6.9% 3.7% 3.1% 6.0% 6.8% 3.8% 2.0% 1.7% 3.3% 3.7% 5.6% 3.4% 2.9% 4.7% 5.2% 0.7 0.6 0.7 7.5 10.8 13.8 0.7 0.7 8.6 7.7 0.1 0.1 1.8 1.8 3.6 2.8 98.2% 129.4% 40.4% 40.6% 0.0% 0.0% 0.0 1.8 2.7 116.0% 42.3% 0.0% 0.1 0.1 1.8 1.8 4.3 4.3 132.0% 117.3% 41.1% 41.6% 0.0% 0.0% (27.9%) (26.2%) (7.6%) (27.4%) (33.9%) (8.8%) (27.9%) (43.6%) (21.1%) 46.4% 10.8% 61.2% 12.7% 95.7% 12.8% 16 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research Analysts are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and (2) no part of any of the Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if applicable, they also certify, as per KOFIA requirements, that the Research Analyst’s analysis was made in good faith and that the views reflect the Research Analyst’s own opinion, without undue influence or intervention. All authors named within this report are Research Analysts unless otherwise specified. In Europe, Sector Specialists (Sales and Trading) may be shown on this report as contacts but are not authors of the report or part of the Research Department. Important Disclosures Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to IGB REIT, KLCCP Stapled Group, Sunway REIT. Manager or Co-manager: J.P. Morgan acted as manager or co-manager in a public offering of securities or financial instruments (as such term is defined in Directive 2014/65/EU) of/for KLCCP Stapled Group within the past 12 months. Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: KLCCP Stapled Group. Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as investment banking clients: KLCCP Stapled Group. Investment Banking Compensation Received: J.P. Morgan has received in the past 12 months compensation for investment banking services from KLCCP Stapled Group. Potential Investment Banking Compensation: J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from KLCCP Stapled Group. Debt Position: J.P. Morgan may hold a position in the debt securities of IGB REIT, KLCCP Stapled Group, Sunway REIT, if any. Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium reports and all J.P. Morgan–covered companies, and certain non-covered companies, by visiting https://www.jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. IGB REIT (IGRE.KL, IGBREIT MK) Price Chart 3 N RM1.665 2 N RM1.8 N RM1.75 N RM1.8 N RM1.7 Date Rating Price (RM) 23-Nov-18 N 1.69 31-Jul-19 N 1.93 18-Jul-20 N 1.78 13-Oct-20 N 1.71 22-Apr-21 N 1.74 Price Target (RM) 1.665 1.8 1.8 1.75 1.7 Price(RM) 1 0 Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug 18 18 19 19 19 19 20 20 20 20 21 21 21 Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Oct 16, 2012. All share prices are as of market close on the previous business day. Break in coverage Mar 12, 2020 - Jul 17, 2020. 17 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 KLCCP Stapled Group (KLCC.KL, KLCCSS MK) Price Chart 13 12 11 10 9 UW RM6.7 OW RM8.8 8 7 Price(RM) 6 5 4 3 2 1 0 Aug Nov Feb May Aug Nov Feb 18 18 19 19 19 19 20 OW RM8.55 OW RM8.95 May Aug Nov 20 20 20 OW RM7.5 Feb May 21 21 Date Rating Price (RM) 09-Nov-18 UW 7.80 31-Jul-19 OW 7.84 18-Jul-20 OW 7.94 13-Oct-20 OW 7.65 22-Apr-21 OW 7.00 Aug 21 Price Target (RM) 6.7 8.8 8.95 8.55 7.5 Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Nov 21, 2006. All share prices are as of market close on the previous business day. Sunway REIT (SUNW.KL, SREIT MK) Price Chart 3 N RM1.798 2 N RM2 OW RM1.7 OW RM1.8 OW RM1.65 Date Rating Price (RM) 13-Sep-18 N 1.73 31-Jul-19 N 1.89 18-Jul-20 OW 1.58 13-Oct-20 OW 1.52 22-Apr-21 OW 1.51 Price Target (RM) 1.798 2 1.8 1.7 1.65 Price(RM) 1 0 Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug 18 18 19 19 19 19 20 20 20 20 21 21 21 Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Aug 15, 2010. All share prices are as of market close on the previous business day. Break in coverage Mar 12, 2020 - Jul 17, 2020. The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. 18 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Coverage Universe: Song, Mervin C: Ascendas India Trust (AINT.SI), Ascendas REIT (AEMN.SI), Ascott Residence Trust (ASCO.SI), CDL Hospitality Trusts (CDLT.SI), CapitaLand (CATL.SI), CapitaLand Integrated Commercial Trust (CMLT.SI), City Developments (CTDM.SI), Far East Hospitality Trust (FAEH.SI), IGB REIT (IGRE.KL), KLCCP Stapled Group (KLCC.KL), Mapletree Industrial Trust (MAPI.SI), Mapletree Logistics Trust (MAPL.SI), Sunway REIT (SUNW.KL) J.P. Morgan Equity Research Ratings Distribution, as of July 03, 2021 J.P. Morgan Global Equity Research Coverage* IB clients** JPMS Equity Research Coverage* IB clients** Overweight (buy) 52% 54% 49% 77% Neutral (hold) 37% 48% 39% 69% Underweight (sell) 11% 39% 13% 55% *Please note that the percentages might not add to 100% because of rounding. **Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking services within the previous 12 months. For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above. This information is current as of the end of the most recent calendar quarter. Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com. For material information about the proprietary models used, please see the Summary of Financials in company-specific research reports and the Company Tearsheets, which are available to download on the company pages of our client website, http://www.jpmorganmarkets.com. This report also sets out within it the material underlying assumptions used. A history of J.P. Morgan investment recommendations disseminated during the preceding 12 months can be accessed on the Research & Commentary page of http://www.jpmorganmarkets.com where you can also search by analyst name, sector or financial instrument. Analysts' Compensation: The research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of J.P. Morgan Securities LLC, may not be registered as research analysts under FINRA rules, may not be associated persons of J.P. Morgan Securities LLC, and may not be subject to FINRA Rule 2241 or 2242 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. Other Disclosures J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries and affiliates worldwide. All research material made available to clients are simultaneously available on our client website, J.P. Morgan Markets, unless specifically permitted by relevant laws. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research material available on a particular stock, please contact your sales representative. Any long form nomenclature for references to China; Hong Kong; Taiwan; and Macau within this research material are Mainland China; Hong Kong SAR (China); Taiwan (China); and Macau SAR (China). JPMorgan research may, from time to time, write on issuers or securities targeted by economic or financial sanctions imposed or administered by the governmental authorities of the U.S., EU, UK or other relevant jurisdictions (Sanctioned Securities). Nothing in this report is intended to be read or construed as encouraging, facilitating, promoting or otherwise approving investment or dealing in such Sanctioned Securities. Clients should be aware of their own legal and compliance obligations when making investment decisions. Options and Futures related research: If the information contained herein regards options- or futures-related research, such information is available only to persons who have received the proper options or futures risk disclosure documents. Please contact your J.P. Morgan Representative or visit https://www.theocc.com/components/docs/riskstoc.pdf for a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options or http://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement_2018.pdf for a copy of the Security Futures Risk Disclosure Statement. 19 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 Changes to Interbank Offered Rates (IBORs) and other benchmark rates: Certain interest rate benchmarks are, or may in the future become, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please consult: https://www.jpmorgan.com/global/disclosures/interbank_offered_rates Private Bank Clients: Where you are receiving research as a client of the private banking businesses offered by JPMorgan Chase & Co. and its subsidiaries (“J.P. Morgan Private Bank”), research is provided to you by J.P. Morgan Private Bank and not by any other division of J.P. Morgan, including, but not limited to, the J.P. Morgan Corporate and Investment Bank and its Global Research division. Legal entity responsible for the production and distribution of research: The legal entity identified below the name of the Reg AC Research Analyst who authored this material is the legal entity responsible for the production of this research. Where multiple Reg AC Research Analysts authored this material with different legal entities identified below their names, these legal entities are jointly responsible for the production of this research. Research Analysts from various J.P. Morgan affiliates may have contributed to the production of this material but may not be licensed to carry out regulated activities in your jurisdiction (and do not hold themselves out as being able to do so). Unless otherwise stated below, this material has been distributed by the legal entity responsible for production. If you have any queries, please contact the relevant Research Analyst in your jurisdiction or the entity in your jurisdiction that has distributed this research material. Legal Entities Disclosures and Country-/Region-Specific Disclosures: Argentina: JPMorgan Chase Bank N.A Sucursal Buenos Aires is regulated by Banco Central de la República Argentina (“BCRA”Central Bank of Argentina) and Comisión Nacional de Valores (“CNV”- Argentinian Securities Commission” - ALYC y AN Integral N°51). Australia: J.P. Morgan Securities Australia Limited (“JPMSAL”) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by the Australian Securities and Investments Commission and is a Market, Clearing and Settlement Participant of ASX Limited and CHIX. This material is issued and distributed in Australia by or on behalf of JPMSAL only to "wholesale clients" (as defined in section 761G of the Corporations Act 2001). A list of all financial products covered can be found by visiting https://www.jpmm.com/research/disclosures. J.P. Morgan seeks to cover companies of relevance to the domestic and international investor base across all Global Industry Classification Standard (GICS) sectors, as well as across a range of market capitalisation sizes. If applicable, in the course of conducting public side due diligence on the subject company(ies), the Research Analyst team may at times perform such diligence through corporate engagements such as site visits, discussions with company representatives, management presentations, etc. Research issued by JPMSAL has been prepared in accordance with J.P. Morgan Australia’s Research Independence Policy which can be found at the following link: J.P. Morgan Australia - Research Independence Policy. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Ombudsman J.P. Morgan: 0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com. Canada: J.P. Morgan Securities Canada Inc. is a registered investment dealer, regulated by the Investment Industry Regulatory Organization of Canada and the Ontario Securities Commission and is the participating member on Canadian exchanges. This material is distributed in Canada by or on behalf of J.P.Morgan Securities Canada Inc. Chile: Inversiones J.P. Morgan Limitada is an unregulated entity incorporated in Chile. China: J.P. Morgan Securities (China) Company Limited has been approved by CSRC to conduct the securities investment consultancy business. Dubai International Financial Centre (DIFC): JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - The Gate, West Wing, Level 3 and 9 PO Box 506551, Dubai, UAE. This material has been distributed by JP Morgan Chase Bank, N.A., Dubai Branch to persons regarded as professional clients or market counterparties as defined under the DFSA rules. European Economic Area (EEA): Unless specified to the contrary, research is distributed in the EEA by J.P. Morgan AG (“JPM AG”), which is a member of the Frankfurt Stock Exchange, is authorised by the European Central Bank (“ECB”) and is regulated by the Federal Financial Supervisory Authority (BaFin). JPM AG is a company incorporated in the Federal Republic of Germany with a registered office at Taunustor 1, 60310 Frankfurt am Main, the Federal Republic of Germany. The material has been distributed in the EEA to persons regarded as professional investors (or equivalent) pursuant to Art. 4 para. 1 no. 10 and Annex II of MiFID II and its respective implementation in their home jurisdictions (“EEA professional investors”). This material must not be acted on or relied on by persons who are not EEA professional investors. Any investment or investment activity to which this material relates is only available to EEA relevant persons and will be engaged in only with EEA relevant persons. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong, and J.P. Morgan Broking (Hong Kong) Limited (CE number AAB027) is regulated by the Securities and Futures Commission in Hong Kong. JP Morgan Chase Bank, N.A., Hong Kong (CE Number AAL996) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission, is organized under the laws of the United States with limited liability. India: J.P. Morgan India Private Limited (Corporate Identity Number - U67120MH1992FTC068724), having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz - East, Mumbai – 400098, is registered with the Securities and Exchange Board of India (SEBI) as a ‘Research Analyst’ having registration number INH000001873. J.P. Morgan India Private Limited is also registered with SEBI as a member of the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited (SEBI Registration Number – INZ000239730) and as a Merchant Banker (SEBI Registration Number - MB/INM000002970). Telephone: 91-22-6157 3000, Facsimile: 91-22-6157 3990 and Website: www.jpmipl.com. JPMorgan Chase Bank, N.A. - Mumbai Branch is licensed by the Reserve Bank of India (RBI) (Licence No. 53/ Licence No. BY.4/94; SEBI - IN/CUS/014/ CDSL : IN-DP-CDSL-444-2008/ IN-DP-NSDL-2852008/ INBI00000984/ INE231311239) as a Scheduled Commercial Bank in India, which is its primary license allowing it to carry on Banking business in India and other activities, which a Bank branch in India are permitted to undertake. For non-local research material, 20 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 this material is not distributed in India by J.P. Morgan India Private Limited. Indonesia: PT J.P. Morgan Sekuritas Indonesia is a member of the Indonesia Stock Exchange and is regulated by the OJK a.k.a. BAPEPAM LK. Korea: J.P. Morgan Securities (Far East) Limited, Seoul Branch, is a member of the Korea Exchange (KRX). JPMorgan Chase Bank, N.A., Seoul Branch, is licensed as a branch office of foreign bank (JPMorgan Chase Bank, N.A.) in Korea. Both entities are regulated by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS). For non-macro research material, the material is distributed in Korea by or through J.P. Morgan Securities (Far East) Limited, Seoul Branch. Japan: JPMorgan Securities Japan Co., Ltd. and JPMorgan Chase Bank, N.A., Tokyo Branch are regulated by the Financial Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X), which is a Participating Organization of Bursa Malaysia Berhad and holds a Capital Markets Services License issued by the Securities Commission in Malaysia. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V.and J.P. Morgan Grupo Financiero are members of the Mexican Stock Exchange and are authorized to act as a broker dealer by the National Banking and Securities Exchange Commission. New Zealand: This material is issued and distributed by JPMSAL in New Zealand only to "wholesale clients" (as defined in the Financial Advisers Act 2008). JPMSAL is registered as a Financial Service Provider under the Financial Service providers (Registration and Dispute Resolution) Act of 2008. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Philippines: J.P. Morgan Securities Philippines Inc. is a Trading Participant of the Philippine Stock Exchange and a member of the Securities Clearing Corporation of the Philippines and the Securities Investor Protection Fund. It is regulated by the Securities and Exchange Commission. Russia: CB J.P. Morgan Bank International LLC is regulated by the Central Bank of Russia. Singapore: This material is issued and distributed in Singapore by or through J.P. Morgan Securities Singapore Private Limited (JPMSS) [MCI (P) 018/04/2020 and Co. Reg. No.: 199405335R], which is a member of the Singapore Exchange Securities Trading Limited, and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) [MCI (P) 052/09/2020], both of which are regulated by the Monetary Authority of Singapore. This material is issued and distributed in Singapore only to accredited investors, expert investors and institutional investors, as defined in Section 4A of the Securities and Futures Act, Cap. 289 (SFA). This material is not intended to be issued or distributed to any retail investors or any other investors that do not fall into the classes of “accredited investors,” “expert investors” or “institutional investors,” as defined under Section 4A of the SFA. Recipients of this material in Singapore are to contact JPMSS or JPMCB Singapore in respect of any matters arising from, or in connection with, the material. As at the date of this material, JPMSS is a designated market maker for certain structured warrants listed on the Singapore Exchange where the underlying securities may be the securities discussed in this material. Arising from its role as a designated market maker for such structured warrants, JPMSS may conduct hedging activities in respect of such underlying securities and hold or have an interest in such underlying securities as a result. The updated list of structured warrants for which JPMSS acts as designated market maker may be found on the website of the Singapore Exchange Limited: http://www.sgx.com. South Africa: J.P. Morgan Equities South Africa Proprietary Limited and JPMorgan Chase Bank, N.A., Johannesburg Branch are members of the Johannesburg Securities Exchange and are regulated by the Financial Services Board. Taiwan: J.P. Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. Material relating to equity securities is issued and distributed in Taiwan by J.P. Morgan Securities (Taiwan) Limited, subject to the license scope and the applicable laws and the regulations in Taiwan. According to Paragraph 2, Article 7-1 of Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers (as amended or supplemented) and/or other applicable laws or regulations, please note that the recipient of this material is not permitted to engage in any activities in connection with the material that may give rise to conflicts of interests, unless otherwise disclosed in the “Important Disclosures” in this material. Thailand: This material is issued and distributed in Thailand by JPMorgan Securities (Thailand) Ltd., which is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission, and its registered address is 3rd Floor, 20 North Sathorn Road, Silom, Bangrak, Bangkok 10500. UK: Unless specified to the contrary, research is distributed in the UK by J.P. Morgan Securities plc (“JPMS plc”) which is a member of the London Stock Exchange and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. JPMS plc is registered in England & Wales No. 2711006, Registered Office 25 Bank Street, London, E14 5JP. This material is directed in the UK only to: (a) persons having professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) (Order) 2005 (“the FPO”); (b) persons outlined in article 49 of the FPO (high net worth companies, unincorporated associations or partnerships, the trustees of high value trusts, etc.); or (c) any persons to whom this communication may otherwise lawfully be made; all such persons being referred to as "UK relevant persons". This material must not be acted on or relied on by persons who are not UK relevant persons. Any investment or investment activity to which this material relates is only available to UK relevant persons and will be engaged in only with UK relevant persons. Research issued by JPMS plc has been prepared in accordance with JPMS plc's policy for prevention and avoidance of conflicts of interest related to the production of Research which can be found at the following link: J.P. Morgan EMEA - Research Independence Policy. U.S.: J.P. Morgan Securities LLC (“JPMS”) is a member of the NYSE, FINRA, SIPC, and the NFA. JPMorgan Chase Bank, N.A. is a member of the FDIC. Material published by non-U.S. affiliates is distributed in the U.S. by JPMS who accepts responsibility for its content. General: Additional information is available upon request. The information in this material has been obtained from sources believed to be reliable. While all reasonable care has been taken to ensure that the facts stated in this material are accurate and that the forecasts, opinions and expectations contained herein are fair and reasonable, JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) make no representations or warranties whatsoever to the completeness or accuracy of the material provided, except with respect to any disclosures relative to J.P. Morgan and the Research Analyst's involvement with the issuer that is the subject of the material. Accordingly, no reliance should be placed on the accuracy, fairness or completeness of the information contained in this 21 Mervin Song, CFA (65) 6882-7829 mervin.song@jpmorgan.com Asia Pacific Equity Research 19 August 2021 material. Any data discrepancies in this material could be the result of different calculations and/or adjustments. J.P. Morgan accepts no liability whatsoever for any loss arising from any use of this material or its contents, and neither J.P. Morgan nor any of its respective directors, officers or employees, shall be in any way responsible for the contents hereof, apart from the liabilities and responsibilities that may be imposed on them by the relevant regulatory authority in the jurisdiction in question, or the regulatory regime thereunder. Opinions, forecasts or projections contained in this material represent J.P. Morgan's current opinions or judgment as of the date of the material only and are therefore subject to change without notice. Periodic updates may be provided on companies/industries based on company-specific developments or announcements, market conditions or any other publicly available information. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections, which represent only one possible outcome. Furthermore, such opinions, forecasts or projections are subject to certain risks, uncertainties and assumptions that have not been verified, and future actual results or events could differ materially. The value of, or income from, any investments referred to in this material may fluctuate and/or be affected by changes in exchange rates. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated. Past performance is not indicative of future results. Accordingly, investors may receive back less than originally invested. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipients of this material must make their own independent decisions regarding any securities or financial instruments mentioned herein and should seek advice from such independent financial, legal, tax or other adviser as they deem necessary. J.P. Morgan may trade as a principal on the basis of the Research Analysts’ views and research, and it may also engage in transactions for its own account or for its clients’ accounts in a manner inconsistent with the views taken in this material, and J.P. Morgan is under no obligation to ensure that such other communication is brought to the attention of any recipient of this material. Others within J.P. Morgan, including Strategists, Sales staff and other Research Analysts, may take views that are inconsistent with those taken in this material. Employees of J.P. Morgan not involved in the preparation of this material may have investments in the securities (or derivatives of such securities) mentioned in this material and may trade them in ways different from those discussed in this material. This material is not an advertisement for or marketing of any issuer, its products or services, or its securities in any jurisdiction. "Other Disclosures" last revised July 17, 2021. Copyright 2021 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. #$J&098$#*P 22 Completed 19 Aug 2021 05:53 PM HKT Disseminated 19 Aug 2021 05:57 PM HKT
下载完整pdf文档
关注微信
