Mobile Device Management settings are not applied to cloud-managed users in System Center 2012 R2 Configuration Manager

SET NOCOUNT ON
SET NOEXEC OFF
IF dbo.fnIsCas() = 1
BEGIN
    RAISERROR(N'This script needs to be run in primary site', 15, 1)
    SET NOEXEC ON
END
GO
DECLARE @PolicyCollMap TABLE (PADBID INT, CollectionID INT)
DECLARE @CollectionID INT
DECLARE @PADBID INT
DECLARE @TotalAddedRows INT = 0
DECLARE @AddedRows INT = 0
INSERT INTO @PolicyCollMap (PADBID, CollectionID)
SELECT PC.PADBID, PC.CollectionID FROM PolicyCollMapFlat PC 
INNER JOIN Collections C ON PC.CollectionID = C.CollectionID
INNER JOIN PolicyAssignment PA ON PA.PADBID = PC.PADBID 
INNER JOIN MDMPolicy MP ON MP.PolicyID = PA.PolicyID  
WHERE PC.AutoTarget = 1 AND C.CollectionType = 1 AND MP.PolicyType = 1
WHILE EXISTS (SELECT * FROM @PolicyCollMap)
BEGIN
    SELECT TOP (1) @PADBID = PADBID, @CollectionID = CollectionID, @TotalAddedRows = 0 FROM @PolicyCollMap
    WHILE (1 = 1)
    BEGIN
        MERGE TOP (1000) MDMUserPolicyAssignment MDMUPA    
        USING
        (
            SELECT DISTINCT PA.PolicyID, U.CloudUserID, MDMP.PolicyBodyHash, MDMP.PolicyType, GETUTCDATE()   
            FROM Collections C  
            INNER JOIN PolicyCollMapFlat PCMF ON PCMF.AutoTarget = 1 AND PCMF.PADBID = @PADBID AND PCMF.CollectionID = C.CollectionID AND C.CollectionID = @CollectionID AND C.CollectionType = 1  -- User Collection
            INNER JOIN PolicyAssignment PA ON PA.PADBID = PCMF.PADBID   
            INNER JOIN ResPolicyCollMap RPCM ON PCMF.PADBID = RPCM.PADBID AND RPCM.CollectionID = PCMF.CollectionID   
            INNER JOIN User_DISC U ON U.ItemKey = RPCM.MachineID  
            INNER JOIN MDMPolicy MDMP ON MDMP.PolicyID = PA.PolicyID AND MDMP.PolicyType = 1
            WHERE ISNULL(U.CloudUserID, N'00000000-0000-0000-0000-000000000000') != N'00000000-0000-0000-0000-000000000000'
        ) Source ( PolicyID, CloudUserID, PolicyBodyHash, PolicyType, LastUpdateTime )     
        ON (MDMUPA.PolicyID  = Source.PolicyID AND
            MDMUPA.UserID = Source.CloudUserID AND
            MDMUPA.PolicyType = Source.PolicyType)
        WHEN NOT MATCHED THEN
            INSERT ( PolicyID, UserID, PolicyBodyHash, PolicyType, LastUpdateTime)     
            VALUES ( Source.PolicyID, Source.CloudUserID, Source.PolicyBodyHash, Source.PolicyType, Source.LastUpdateTime);
        SET @AddedRows = @@ROWCOUNT
        SET @TotalAddedRows = @TotalAddedRows + @AddedRows
        IF @AddedRows < 1000
        BEGIN
            BREAK
        END
    END
    PRINT N'Added ' + CAST(@TotalAddedRows AS NVARCHAR(100)) + N' users into MDMUserPolicyAssignment for PADBID = ' + CAST(@PADBID AS NVARCHAR(100)) + N' and CollectionID = ' + CAST(@CollectionID AS NVARCHAR(100))
    DELETE @PolicyCollMap WHERE PADBID = @PADBID AND CollectionID = @CollectionID
END