Full Report_Silver

The University of Hong Kong

Faculty of Business and Economics ACCT 3114 2016-2017

Valuation using Financial Statements

Instructed by: Dr. Li Jing

A Valuation of Luk Fook Holdings (International) Limited

Silver

Name UID Yaxuan CHEN 3035084902 Xue SUN 3035140811 Huixin WANG 3035085267 Zhixin WANG 3035085944 Ziyong WANG 3035028166

TableofContentsExecutiveSummary1.Introduction 1

1.1CompanyOverview–LukFook(“LF”) 1.2IndustryOverview&CompetitiveLandscape

2.BasicValuation 22.1Assumptions 2.2Non-accountingBasedValuation

2.2.1ComparableMethod 2.2.2DiscountedDividendModel

2.3AccountingBasedMethods 2.3.1ResidualIncomeModelandAbnormalEarningsGrowthModel 2.3.2.BuildingBlockAnalysis

3.BusinessDriversAnalysis 4

4.GrowthandProfitabilityAnalysis 5

5.ReOIModel 5

6.Conclusion&Recommendation 6

Appendices 7

2016-2017Semester1ACCT3114Report-Silver

1

ExecutiveSummaryInthisreport,weapplyvariousaccountingbasedandnon-accountingbasedmodelstovalueourresearchtarget–LukFook(“LF”),aHongKong(“HK”)-Chinajewleryretailer.We first conduct research on LF’s business nature and recent trends in HK-ChinajewelryindustrytogenerateourassumptionsforthebasicvaluationusingComparablesMethod, DiscountedDividendModel, Residual IncomeModel and Abnormal EarningsGrowthModel. During the valuation process,wemake our own justifications on LF’slong-term growth rate due to the limited base of consensus forecasts. We furtherreformulate LF’s financial statements and utilize common size analysis, profitabilityanalysis and growth analysis to identify LF’s primary business drivers. Based on ourunderstanding of LF’s future prospects, we derive full information forecasting. AfteradoptingResidualOperatingIncomemodelandmakingcorrespondingadjustmentsonnon-GAAP items,we considerour valuation results fromdifferentmodels collectivelyandarriveatourtargetpriceofHK$16.93.1.Introduction1.1CompanyOverview–LukFookEstablished in 1991, Luk Fook is one of the major Hong Kong (“HK”)-China jewelryretailers. Primarily operated in HK, Macau, and mainland China, LF engages in thesourcing, designing, wholesaling, trademark licensing and retailing of all its jewelryproducts.Retailing isLF’smajor lineofbusiness,accountingfor78%ofsalesrevenueand55.5%ofprofits.LFwas listed inHKSE in1997,andnowis tradedat$22.15pershareand14.08xP/E(Fig1).LF’s product line ranges from gold, platinum to gem-set jewelry. While gold andplatinum account for 60.9% of the sales, gem-set contributed to 61.9% of the grossprofit. In June 2014, LF acquired 50% of CGSwith HK$245million. CGS is awholly-ownedsubsidiaryofHKResourcesHoldingsLimited,andengagedintheretailingandfranchisingoperationsofgoldandjewelleryproductsinHK,MacauandMainlandChinaunderthebrandname“3D-GOLD”.1.2IndustryOverview&CompetitiveLandscapeHK jewelry industry saw a progressive decline in 2014 & 15. Despite the large baseformulated by the surging growth in 2013, the massive political protests andadjustmentsinpolicyofvisitorvisapolicy,togetherwiththeunfavorableexchangeratehave damaged visitors’ desire to travel. Thus, despite the slowing economic growth,ChinastillseesaGDPgrowthamongstthoseatthetopglobally,andhasbeenregardedasthenextstrategicfocusofHK-Chinajewelryretailers.ChowTaiFook(“CTF”)andChowSangSang(“CSS”),another2majorHK-Chinajewelryretailerswithmarketshareover10%,aredirectcompetitorsofLF(Fig2). CTF,withthelargestshareofHK-Chinajewelrymarketandsimilarbusinessmodelsandproducts,ischosenforcomparativeanalysiswithLF.


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2.BasicValuation2.1AssumptionsKeyassumptionsused invaluationsare shown inFig3,mainlybasedon:1)adjustedanalyst forecasts;2)academicresearch;3)ourown forecasts. Importantassumptionsadjustedincludelong-termgrowthrateanddividendpayoutratio.Consensusforecastfor5Ylong-termgrowthratecurrentlyhasjumpedfrom6.06%to 15.10%1from 1 year ago till now. Although it can be justified by LF’s obviouscompetitive advantage over its HK peers in mainland China as shown in Fig 4, weremain conservative in the estimation given an unfavourable perspective in the localmarket,andusethelowestofanalystforecasts,10.2%forfurthervaluation.Withthejustifiedincreasein5Ylong-termgrowthrate,astabledividendpayoutratiohas been maintained in 2012-2015, but jumped to 67.5% in 2016. Considering thesignificantcutinearningsin2016,itisreasonabletobelievethespecialdividendpaidisfor the purpose of matching with previous DPS. By excluding this transitorymanipulationofpayoutratio,weusetheaverageof2012-2015,40.1%asourforecastedfuturedividendpayoutratio.2.2Non-accountingBasedValuation2.2.1ComparableMethodComparablemethod is a relative valuation approach and it estimates firm’s value byexamining the value of comparable companies. We select two local peers as ourtargetedcomparables,namelyCSSandCTF,mainlyoutoftheconsiderationthatthesethree companies share common ground in market shares, firm size and operationalactivities(GlobalandChinaJewelryIndustryReport,2014).Threemultiples-P/S,P/EandP/Bratios-areselectedtodeterminetherelativevalueof LF. Fig 5 presents P/S, P/E and P/B ratios for CTF and CSS,which are derived bydividing each firm’smarket capitalization by its sales revenue, net income and bookvaluerespectively.The averages of their P/S, P/E and P/B ratios should serve as proxies for LF’scorrespondingmultiplessincetheirmarketsharesarequitealike.ThroughapplyingtheaveragestoLF’srelevantmeasures,wecanestimateLF’smarketcapitalization.Furtherdividing the estimatedmarket capitalization by outstanding shares,we arrive at LF’sestimatedvalue,whichis$18.1byP/S,$25.49byP/Eand$19.17byP/B.Particularly,the estimated value byP/B is very close to LF’s current price.We realize that this isdrivenbyjewelrycompanies’identicalnormalP/Bratiosinrecentyears(Fig6)2.2.2DiscountedDividendModelThe average DPS growth rate is 12.99% over past 5 years, which far exceed thepresumeddiscountrateof10.99%.Therefore, it ismorejustifiabletoadopttwo-stage1ExtractedfromconsensusopiniononReuters.comatOctober7,2016.


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growthmodeltoestimateLF’sintrinsicvalue.Duringthefirstfiveyears,namely2016to 2021, LF’s dividend growth rate will follow its historical trajectory of 12.99%.Startingfrom2022,LF’sdividendgrowthratewilldropdown,suggestingthatthefirmwillenterintoamatureandstablegrowthphase.HerewetakeHKGDPgrowthrate-3%,astheproxyforLF’ssecondstagedividendgrowthrate.Thefinalvaluewederivefromthis two-stagegrowthmodel is$21.32,which is slightlyhigher than its currentstockprice.2.3AccountingBasedMethods2.3.1ResidualIncomeModelandAbnormalEarningsGrowthModelResidualincomemodelandabnormalearningsgrowthmodelhaveintrinsicsimilaritiesdespite of different arrangement of inputs.While residual income emphasizes on theextra return onbook value, abnormal earnings growth intends to associate the valuewithcapitalizedearnings.Considering the brand-name effect but weak financial performance of LF, it is morereasonabletoassumeconstantresidualincomeafteryears2020,orrather,noabnormalearningsgrowth.Undersuchcircumstance,theintrinsicvaluewillbepricedat$17.14(Table1).Inthissensitivitytesting,thedifferenceinresidualincomemodelbetweenthehighestandthelowestvalueinsignificantpartlyresultsfromthelowabsolutevalueofresidualincome inourprojectedyears.Moreover, theP/BratioofLF isclose toone, implyingthe critical influence of book value in deciding its intrinsic value. Nevertheless, AEGmodel is more sensitive to discount rate. The possible rationalization is the crucialimpactofdiscountrateoncapitalizationofearnings.2.3.2.BuildingBlockAnalysisTochallengeonthemarketprice,weanchoronbookvaluefromknownandshort-termforecast ofwhichwe are reasonably confident. To begin,we establish the no-growthvaluation by reverse engineering. Three-level blocks breakdown of the market priceincludebookvalue,valuefromshort-termaccountingandvaluefromlong-termgrowth.Book value has been ascertained as $14.94. To derive the value from short-termaccounting,wecalculatethepresentvalueofresidualearningsofboth2016and2017.Theresultshowedthatintheshortterm,marketexpectsthesharepricewillgodown$0.09.Meanwhile,inthelong-term,marketisplacing$4.23onthespeculativegrowth.Tofurtherdeterminethereasonablenessofmarketprice,wealsocansolveforgrowthinresidualearningsvaluationmodel.Basedoncurrentmarketprice$19.08,weconverttheresidualearninggrowthratetoEPSgrowthrateandfindtheexpectedEPSgrowthrateofmarketis10.2%.Iftheanalystforecastsgrowthratesarebelow10.2%,itimpliesthatLFwasoverpricedatcurrentmarketprice.Aswe havementioned in the first part, this 10.2% long-term forecastwas based onanalysts’goodknowledgeofbusiness,andtheybelievethereboundongoldpriceandcompany’scompetitiveadvantagewill support thisgrowth.Whileremainingskepticalof prices, as investor we may also reflect on ourselves to avoid over-pessimism.


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Exclusiveinformation,whichisbeyondourknowledge,mayexist,thussupportingthehigherexpectationwithinmarket.3.BusinessDriversAnalysisThroughexaminingreformulatedbalancesheet,werealizethatLFisaNOAfirmandatthesametime,aNFAfirm.Amongoperatingassets,inventoryisthelargestcomponentand accounts for around 80%. This high percentage not only is contributed by LF’sinventory’sinherentfairvalue,butalsoisinflatedbygoldpricedeclineinrecentyears.Aspresented inFig7, goldpricehasdropped substantiallyover20%during2013 to2014.ThemassivedepreciationofferedLFanincentivetoincreaseinventorylevelandspeculate for a future bounce in gold price. The targeted gold price provided byGoldman Sachs is US$1300 for the next year. However, given the great intensity anduncertaintyshockforcurrenteconomicenvironment,togetherwithLF’sdecliningsalesunder HK bleak economic conditions, we expect LF’s future inventory level to berelativelystablewithmoderateincrease.We further examine the effect of gold price on LF’s sales performance and find amoderatenegative correlation (-0.54)betweenchange ingoldpriceandsalesgrowthwhere sales growth is measured by same stone sales growth (“SSSG”) (Fig 8).Consideringthegreatvolatilityingoldprice,thisfactorisnottakenintoconsiderationforsalespredictionpurpose.Breakingdownrevenuebymarket,businesslineandproductrespectively,wediscover1)ProportionofsalesfrommainlandChinahasbeengrowing,whichbringsnewgrowthopportunity andmore exposure to exchange rate risk (Fig 9); 2) HKwill still be themain source of sales in short term. Since the growth of visitor arrivals have beenstabilizing after over 12months of consecutive decline, it is likely there would be arebound in SSSG (Fig 10); 3) Business and product revenue structure remain stable,withover75%revenuecomingfromretailand60%fromgold&platinum.Intermsofexpensestructure(Fig11),staffcosttakesthelargestproportionagainstLF’s sales revenue, so does CTF. As increasing staff cost is an inevitable trend in thisindustry,LF’slowerstaffcostproportioncomparedtoCTFcanbeexplainedbyalargerpartofrevenuefromfranchiseandlicensingbusiness.The second largest item in the expense structure is lease expense. The soaring HKpropertyrental inthepastfewyearsconsumedLFmoreproportionofrentalexpensethan CTF with its larger HK based business. Downward course is expected as HKpropertyrentalpricehasstartedtodeclinesincethisyear,andLFisswitchingitsfocustomainlandChina.4.GrowthandProfitabilityAnalysisToanalysetheprofitabilityandgrowthofLF,returnoncommonshareequities(“ROCE”)isthemostdirectreflection.ROCEofthecompanyreachedapeakinyear2013andhasbeen decreasing ever since, especially dropped by 11.31% in 2015. This inevitable


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change is a result of the slow-down economy inmainland China and the decrease oftouriststoHK.When we further decompose ROCE to investigate the impact of leverages, it is notsurprised toobserve that those effects are relatively insignificant sinceLFhas a verysmall proportion of liabilities [Fig 11]. Change of financial leverage(“FLEV”) remainsstable andmerely adds on small increase as 0.33%. Instead, return on net operatingassets(“RNOA”)andreturnonoperatingassets(“ROOA”)arethemajordriversofROCE.Consequently,breakingdownRNOAandROOAarecrucialtolookforvaluedrivers.When it comes to RNOA, profit margin and asset turnover are decisive components,particularlydrivenbycorebusiness.WithinLF’s13.37%decreaseofRNOAin2015，drop from core income from sales takes up11.66%. Decomposingprofitmargin,weobserve that the sales profitmargin of the company is relatively stable, even slightlyincreasedinrecenttwoyears,probablycausedbytherisingsalesofgem-set(Fig12).However, since the growing selling and administration costs, the badperformance oftheassociateandthelossinhedginginstruments,theprofitmarginofthemostrecentyeardropsinyear2015comparedtoarelativelystablerateataround9.7%inpreviousyears(Fig13).Furtherinvestigationintocoreincomefromsalesshowsthatdecreaseincore profitmargins and asset turnover contribute 6.54%and 5.11% respectively. Inotherwords, assets used to generate same amount of core operating sales are risingyearbyyear,mostlycausedbytheclimbinginventoryturnover,whichcloselyrelatedtothethenumberofvisitorstoHKandgoldprice(Fig14).Besides, ifbreakingdownRNOAto investigate the impactofROOA,operating liabilityleverage (“OLLEV”) and operating liability spread(“OLSPREAD”), ROOA is also thedominant factor in determining RNOA (Fig 15). For one thing, operating incomedecrease drives down the return. For the other thing, the rise in operating assetsenlargesthebase.Morespecifically, the financialdrag fromassociateaccounts for thegrowingamountin“interestsinassociates”,“loanstoassociates”and“amountduefromassociates” which recorded as assets on the balance sheet of LF. Consequently, thecombinationeffectofbothoperatingincomeandoperatingassetresultsinconsecutivedeclineofROOAinrecentyears.Residualearningsgrowthisalsodrivenbythechangeincommonshareequity(“CSE”),which can be explained by two components which are change in net operatingassets(“NOA”)andchangeinNFA.In2015,growthofNOAturnednegativeafteratwo-year increase.Previousanalysisbreakingdown intoprofitmarginandasset turnoverexplained the change in sales growth that affect NOA.Moreover, it is also caused bydecreaseoflong-terminvestmentandinventory.Ontheotherhand,thegrowthofNFAturnedpositiveattributedtothesharpreductiononbankborrowingin2015.In addition, we further compare some key indicatorswith otherwell-known jewelrybrands in theworld. In termsofgrossprofitmargin, jewelrybrands suchasPandoraandTiffanythatrelymoreongem-setsarehigherthanbrandslikeLFandCTFwhosemain focus isgoldproducts.Also, thehighsellingexpenseswhich includesmarketingexpenses are also high for these two brands, probably also contributes to a highermargin(Fig16).


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5.ReOIModelResidual operating income (ReOI) model is a modified model for RIM. Using CAPM, we calculate cost of equity to be 10.99% and WACC to be 12 57%. Corresponding to three cases in RIM, the continuing value of residual operating income model also has three forms and when we apply scenario 2, the intrinsic value of LF is $17.16 (Table 2). Specially, in simple forecasting scenario 3, growth rate in residual operating income is -13.94%, which is not representative for the growth trend of residual operating income. So we use the average growth rate of ReOI in past three years, 26%, to generate enterprise value. Valuation grid is made to indicate what combination of return on net operating assets (RNOA) and growth in net operating assets (NOA) can justify current market price of LF. For instance, current market price $19.08 can be legitimized by forecasting a 16% RNOA and 2.5% growth rate in NOA, or alternatively, 15% RNOA and 5.5% growth rate in NOA. However, since we estimate the long term growth rate in NOA to be 1%, LF needs to maintain at least 16.55% RNOA to explain its market price, while its current RNOA is only 14.56%. FFull information forecasting of ReOI model is conducted based on analysts’ forecast and historical data. Analysts forecast there will be a sharp drop of sales, leading to -8.31% growth in sales in 2016. After 2016, the sales tend to grow relative steadily so we assume long term sales growth rate to be 1%. As far as asset turnover, ATO declines and analysts’ forecast for 2016 ATO is 1.815. We assume ATO continues to decline until 1.215 in 2018 and remains constant after then, and we have NOA grow at 1% after 2017.Asfornon-GAAPitemsadjustments,LFdoesnotissueanyshareoptionsanditsdesignfeescannotbecapitalizedasR&Dexpense.WethereforeadjustLF’sReOIbycapitalizingoperatingleasecommitments.Detailedcalculationpleaserefertoexcelappendix.SinceLF has relative small amount of lease contingent commitments, adjusting operatingleasedoesnotbringasignificantdifferenceonLF’svaluation.6.Conclusion&Recommendation:SellBased on our analysis of valuation results above, our initial investmentrecommendationwouldbesellattargetpriceof$17.14.Themostsuitablemodelwouldbe residual income model, as the industrial P/B ratio is close to one, therefore ouranalysisonbookvaluemaygiveusreasonablyexpectationonstockprice. Our valuation results from all models are listed in Fig 17. We take average of thevaluationresultsgivenbybothRIM(Case2)modelandReOI(Case2)modelafternon-GAAP adjustments, which gives a target price of $16.93. This price is within thecompany’s52wpricerangeand11.27%belowthecurrentmarketprice,andourfinalopinionistosell.


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AppendicesFig1:MarketInformationofLF

Source:GoogleFinanceFig2:LBNBrandSharesofJewelry:%ofValue2011-2014

Source:Euromonitor,February2016


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Fig3:ChinaGem-setSSSGLFvsCTF

Source:LFandCTF’sAnnualReportFig4:Assumptions FY16 FY15 FY14 FY13 FY12BasicEPS 1.63 2.74 3.17 2.11 2.43DPS 1.10 1.10 1.27 0.86 0.96Payoutratio 67.5% 40.1% 40.1% 40.8% 39.5%Notes:Weextracttheforecastsfor5Ylong-termgrowthrateandEPSinthenext2yearsfromReuters,aswellasthefirmbetaandindustrybeta.Weusethefirmbeta,whichisquiteclose to the industry beta, and US 10Y T-bill yield as our risk free rate to get thediscountrateofLF.ThemarketriskpremiumisfromNYUsource.Moreon5Ylong-termgrowthrate:Appreciation of gold at the beginning of 2016 might be a justification for the jump.EarningsliftislikelytocomefromGPmarginsasinventorypurchasedatalowercostissold at a higher spot value, but any impact from rebounce of gold price with highvolatilityislikelytemporarygiventhe3-monthinventorycycle.However,thevolatilityingoldpricecannotsupportasustainedpositiveimpact.Amorereasonableexplanationis the visibility of LF’s obvious competitive advantage over its HK peers inmainlandChina.LFhasoutperformedCTFinChinagem-setSSSGcontinuouslyfor15months,andremainedapositivegrowth.Fig5:Comparablemodel:

Sales NetIncome Marketcap(ttm) (ttm) (msq)

CSS 17,630 765.2 9,078 9,600 0.54 12.55 1.06LF 7,300 379.26 4,607.38 7,082 0.97 18.67 1.54LF 14,030 958.69 8,674

P/S P/E P/B

Calculatedasbelow

(inMillions)Bookvalue

(mrq)

Notes:LF’svaluebyP/S:0.76*14,030=10,625.36/587.11=$18.2

-30%

-20%

-10%

0%

10%

20%

Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16LukFook CTF


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LF’svaluebyP/E:15.61*958.69=14,964.65/587.11=$25.49LF’svaluebyP/B:1.3*8,674=11,252.78/587.11=$19.17Figure6:CTF,CSS&LF’sP/Bratio

Table1:RIMandAEGModelResults

Case1 Case2 Case3

RIM 15.48 17.14 17.83

AEGModel 17.14 21.26 22.97SensitivitytestofRIM


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SensitivitytestofAEGModel

Fig7:GoldPriceandInventoryLevel

Fig8:GoldpricechangeandSSSGcorrelation


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Fig9Profitsbreakdownbymarket

Source:LF’sAnnualReportFig10:VisitorsArrivalofHongKongbyCountry

Source:CensusandStatisticsDepartment,HKSAR,September2016

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015

MainlandChina HK,Macau&Overseas

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

2012-1

2012-3

2012-5

2012-7

2012-9

2012-11

2013-1

2013-3

2013-5

2013-7

2013-9

2013-11

2014

-120

14-3

2014

-520

14-7

2014

-920

14-1

120

15-1

2015

-320

15-5

2015

-720

15-9

2015

-11

2016

-120

16-3

2016

-520

16-7

2016

-9

Africa TheAmericas AustraliamainlandChina OtherareasofAsia Europe&MiddleEast%ChangeofmainlandChina


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Fig11:CommonSizeAnalysisofOperatingAssets&Operatingexpenses

20152014201320122011Others 780,115815,128682,680547,286241,815

Long-termEquityInvestments 154,531245,9347,0467,3038,161

PPE 603,878618,012566,321516,172395,160

Inventories 6,344,7287,394,6966,225,2804,955,3744,330,499

TradeReceivables 214,534200,759225,938316,629162,516

WorkingCash 140,313159,227192,14937,21323,397

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Common Size Analysis of Operating Assets


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2015201420132012Otheroperatingexpenses 2.52%2.62%2.93%2.86%

LossondisposalofPP&E 0.01%0.00%0.01%0.01%

Shareofresultsofassociates 0.06%0.14%0.00%0.01%

Creditcardcommissionexpense 0.79%0.82%0.87%0.84%

D&A 0.96%0.98%0.64%0.75%

Currencytranslationdifference 1.09%0.11%0.04%0.00%

Leasepayment 4.59%3.66%2.46%2.11%

Staffcost 5.08%4.66%3.81%4.17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Common Size Analysis of Operating Expenses

Fig12:ChangeofROCETrend

23.22%

28.91%

20.80%

9.49%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

2012 2013 2014 2015


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Fig13.1:SalesProfitMarginTrend

Fig13.2:ProfitMarginTrend

Fig14:1/ATOTrend

21.42%

22.13%

24.62%

23.57%

21.00%21.50%22.00%22.50%23.00%23.50%24.00%24.50%25.00%

2012 2013 2014 2015

10.47% 10.24%

8.91%

3.60%

9.69% 9.67% 9.83%

5.62%

3.00%

5.00%

7.00%

9.00%

11.00%

2012 2013 2014 2015ChowTaiFook LokFook

0.597

0.404

0.708

0.825

0.302 0.275

0.410

0.584

0.020

0.120

0.220

0.320

0.420

0.520

0.620

0.720

0.820

0.920

2012 2013 2014 2015

ChowTaiFook LokFook


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Fig15:ComponentsofROOA

Fig16:ComparisonofJewelryIndustry

*Blue–Pandora,Yellow–Tiffany,Orange–CTF,Green–LFSource:AnnualReportsfromcompaniesTable2:Simpleforecasting–ReOI

Case1 Case2 Case3

Value $14.94 $17.16 $13.14

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2012 2013 2014 2015

ROOA OLLEVxOLSPREAD

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

GrossP

rofitM

argin

Selling,marketingandadministrationexpensesproportion


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Sensitivityanalysis

Fig17:ValuationResults

*(asof2016October7)

18.10

25.49

19.1721.32

15.4817.1417.8317.14

21.2622.97

14.9416.9716.71

13.26

16.93

23.85

12.80

19.08

-13.00

-8.00

-3.00

2.00

7.00

12.00

17.00

22.00

27.00

Valuation Results

Results GapwithCurrentMarketPrice

RNOA

$13.14 13.0% 14.0% 15.0% 16.0% 16.55%

0.0% 15.35 16.31 17.27 18.23 18.76

0.5% 15.37 16.37 17.37 18.37 18.92

GrowthinNOA 1.0% 15.39 16.43 17.48 18.52 19.09

1.5% 15.41 16.50 17.59 18.68 19.28

2.0% 15.43 16.57 17.72 18.86 19.49

2.5% 15.46 16.66 17.86 19.05 19.71

3.0% 15.48 16.75 18.01 19.27 19.96

3.5% 15.51 16.85 18.18 19.51 20.24

4.0% 15.55 16.96 18.37 19.78 20.55

4.5% 15.59 17.08 18.58 20.08 20.90

5.5% 15.68 17.39 19.09 20.80 21.74

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