2013 Stock Strategy Bible JP Morgan Emerging Equity Markets Year Ahead PDF

Emerging Markets Equity
Research
21 November 2012
Emerging Equity Markets Year Ahead

Stock Ideas for 2013
Source: US Census, China National Bureau of Statistics and J.P. Morgan calculations.
Chief Asian and Emerging Market

Equity Strategist
Adrian Mowat
AC
CEEMEA Equity Strategist

David Aserkoff, CFA
AC
Chief LatAm Equity Strategist

Pedro Martins Junior AC
(852) 2800-8599
adrian.mowat@jpmorgan.com
(44-20) 7134-5887
david.aserkoff@jpmorgan.com
(55-11) 4950-4121
pedro.x.martins@jpmorgan.com
Bloomberg JPMA MOWAT <GO>
Bloomberg JPMA ASERKOFF <GO>
Bloomberg JPMA MARTINS <GO>
J.P. Morgan Securities (Asia Pacific) Limited
J.P. Morgan Securities plc
Banco J.P. Morgan S.A.
For a full list of authors please refer to the list on the back page
* Registered/qualified as a research analyst under NYSE/FINRA rules.

See page 589 for analyst certification and important disclosures, including non-US analyst disclosures.
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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
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www.morganmarkets.com
Adrian Mowat
(852) 2800-8599
Emerging Markets Equity Research

21 November 2012
Emerging Markets Year AheadStocks for 2013

What to own
What to avoid
Banks: China, India, CEEMEA

Consumer: Russia, SA and Turkey, product mix
improvement stories & expanding modern retail in Asia
Tech: New product cycles, smartphones and tablet PC
Autos: Asian SUVs and luxury segment
Infrastructure: China govt FAI, North Asia E&C
Insurance: Asian life insurers with strong agency
business, Poland
Real Estate: Asian integrated property ex China, MENA
Utilities: Thailand, China and Korea
Telecom: Turkey, South Africa, parts of Middle East
Smaller sectors in countries: Gaming, Chinese internet
and healthcare
Focus on sectors within countries rather than country

recommendations
(* There is a conflict between strategy team and sector view. Please see
strategy and sector pages for details)
133 top picks
The resultant country allocation

OW: India, the Philippines, Thailand, Turkey and Mexico
UW: China, Korea (downgrade), Taiwan (downgrade),
South Africa and Brazil
For more on our country and sector head views please see
country and sector pages (93 to 171)
66 stocks to avoid
(See pages 191 to 427)
(See pages 429 to 557)
Examples of top picks

Top picks examples
Televisa
Ayala Land
Siam Commercial Bank
Yapi Kredi
Axis Bank
Emlak
Banks: Indonesia*, Thailand*

Autos: Low-to-mid-range car segment
Infrastructure: SA construction
Insurance: South Africa
Real Estate: China
Materials: Brazil steel-makers
Energy: Oil, refining and petrochemicals
Utilities: Asian power equipment makers, Brazil
Telecom: LatAm, Central Europe
Examples of stocks to avoid

Country
Mexico
Philippines
Thailand
Turkey
India
Turkey
Return to our PT
(%)
37
31
28
27
16
12
Stocks to avoid examples

HTC Corp
DongFeng Motor Co., Ltd.
Catcher Technology
Yanzhou Coal Mining - H
Marfig
Ecopetrol ADR
Country
Taiwan
China
Taiwan
China
Brazil
Colombia
Return to our PT
(%)
(59)
(23)
(23)
(20)
(11)
(11)
Source: J.P. Morgan estimates. Note: To PT = Returns to analyst price target as at 16 Nov
2012. Stocks with 3m average trading value greater than US$20 million.
Source: J.P. Morgan estimates. Note: To PT = Returns to analyst price target as at 16 Nov 2012.
Stocks with 3m average trading value greater than US$20 million.
The year-ahead process
Table of contents
The goal of this document is to present our key strategy

themes for 2013 using our most and least favored stocks
from the 1097 stocks in emerging markets covered by J.P.
Morgan.
Investment strategy ............................................................ 4
Both J.P. Morgan equity research analysts and our

macroeconomic team have been involved in the production
of this document. The process started with the Strategy
Team briefing analysts on our key themes and
macroeconomic forecasts for 2013. Analysts then reviewed
their earnings models and presented their top picks and
stocks to avoid to both their sector and country strategists.
The sector and country teams then produced their list of top
long and short ideas. These ideas form the core of this
document.
Economic forecasts .......................................................... 87
Potential Surprises for 2013............................................. 48

Economic outlook ............................................................ 59
Country strategy .............................................................. 93
Sector strategy ............................................................... 133
Summary tables of stock ideas ...................................... 173
Top picks ....................................................................... 191
Stocks to avoid .............................................................. 429
Strategy dashboards ....................................................... 559

21 November 2012
Adrian Mowat
(852) 2800-8599
Growth-scare snakes and QE ladders

The potential drivers
Potential returns
1. Demographic dividends and headwinds
MSCI EM end-2013 target 1150 (+15%)

Forward P/E of 11x, a 10% re-rating from 10x.
Consensus 2014E MSCI EM EPS is 110. We fear
downgrades for metal and energy companies. To be
conservative we assume no EPS growth in material and
energy companies. The resultant 2013 and 2014 EPS
forecasts are 96 and 105 respectively.
2. QE3/infinity = P/E multiple inflation

3. Relative EPS revisions drive relative returns
4. Growth-scare and policy snakes provide buying
opportunities
(See page 10 for range of potential returns)
Investment themes/baskets
Risks
1. Dividend aristocrats (JPGIEMDA <Index>):

Analysts top picks with consistent DPS track record
and yield >2%.
2. Dividend pretenders (JPGIEMDP <Index>): Highyield (> 2%) stocks to avoid with a poor dividend track
record
3. Rotation riders (JPGIEMRL <Index>, JPGIEMRS
<Index>): Around year-end low-P/BV and rotation
quant factors outperform. Underperforming top picks
with low P/BV, and the opposite for stocks to avoid.
2. Nifty Fifty (JPGINIF2 <Index>): Outperforming
growth stocks with a bias for domestic growth + some
global leaders.
3. ASEAN growth story (JPHASGRW <Index>)
4. China growth debate (JPGICHGL <Index>,
JPGICHGS <Index>): Now that the market is cheap,
and confidence in growth model more realistic, be
prepared to adjust exposure as confidence in growth
changes.
5. Policy risk (JPGIEMPL <Index>, JPGIEMPS
<Index>): Top picks and stocks to avoid in highpolicy-risk sectors.
US fiscal cliff
3Q capex slowdown becomes 2013 recession
Higher headline inflation
Large Chinese stimulus
India slips on policy implementation, including fiscal
consolidation, credit rating downgraded to junk
China economic debate (between easier money and
lower profits)
New Korean president policy is pro-consumer, Won
appreciates
Malaysian election outcome disrupts policy continuity
Fast solution of labor and politics in South Africa
Carry trade continues, REAL appreciates
Governance and political tension in LatAm
Geopolitical risk (maritime sovereignty disputes)
(See page 46 for details)
(See page 26 for thematic baskets)
Key issues for Snake briefing notes
Market performance
1.
2.
3.
4.
5.
6.
Figure 1: MSCI EM and MSCI World performance
China leadership change

Korea 18th Presidential elections
Malaysia 13th general elections
EM Nifty Fifty
US fiscal cliff
Saudi Arabia the next emerging market?
1400
MSCI EM
MSCI World
1200
1000
800
600
Technical strategy
400
Technical analysis forecasts:

1. Asian outperformance of EM
2. EM outperformance of global equities (MSCI World)
3. BRIC underperformance of EM
4. India preferred BRIC
5. Risk of China and Russia underperformance
6. End of Brazilian underperformance
(See page 51 for details)
200
0
88
90
92
94
96
98
00
02
04
06
08
10
12
Source: Bloomberg, 14 November 2012.
Adrian Mowat
(852) 2800-8599

21 November 2012
Equity Strategy: Growth-scare snakes and QE ladders

Savers are cornered. Financial repression is forcing
them to consider equities. PE multiples are likely to
continue to rise. But with 12 month returns low relative
to annual draw down, savers are reluctant buyers of
equities. Investor confidence in EPS forecasts is low
with the 2013 EPS of MSCI EM 13% lower today than
12 months ago!
It is a good environment for active managers. The low
one year return and index EPS downgrades hide a large
dispersion in country/sector/stock returns and the
importance of relative EPS revisions driving relative
returns. We continue to believe that relative EPS
revisions will drive relative returns (see dissection of
EPS growth on page 12).
The core of this report is our analysts top ideas for
2013. Two pages per stock provide the high-level
investment case. The due diligence is testing the
conviction and risk around the 2013 forecasts.
Our asset class frequently suffers from significant draw
downs. The 2012 peak (1080, 2 March) to trough (882, 4
June) range is 20%. The one year return is just 2%. As
strategists, we are better at identifying long term trends
rather than market timing. What can we say? We are
buyers on dips. The headline DM GDP forecast for both
2012/13 is 1.2% growth. Analysts should not build in
EPS recovery based on stronger DM economies. But the
traders should conclude that volatility will remain high.
With economies flying so close to zero any indications
of a loss of altitude would result in a rapid rise in
economic risk premium. These growth-scare-snakes are
often combined with heightened policy risk. Growthscare-snakes will remain an issue in China, in our view.
Fortunately market confidence in the countrys economic
model is more realistic today than a year ago.
Quant styles change with the seasons. Around year end,
low P/B and rotation factors outperform, while full year
EPS and price momentum are more powerful. For fear of
trying to be too cute we would recommend rotation
baskets now and look to add to Nifty Fifty and other
quality growth names mid Q1.
The long term

Demographic dividends and headwinds
QE3/infinity PE multiple inflation
Near term drivers of volatility (EM 2012 range 8821080 (20%) return 2% (12months))
DM economic data (including impact of fiscal cliff)
China debate
Policy risk (Korean presidential election, Brazilian
industrial policy, India and Malaysia political
development)
Geopolitical risk (maritime sovereignty disputes)
For more on risks please see page 46.
Themes and stock baskets
Dividend aristocrats: Analysts top picks with the
best DPS track record.
Dividend pretenders: High yield stocks to avoid
with a poor dividend track record.
Nifty fifty or running the winners: Outperforming
growth stocks with a bias for domestic growth +
some global leaders.
Rotation riders: Underperforming top picks with
low P/B and the opposite for stocks to avoid.
China growth debate: Now that the market is cheap,
and confidence in growth model more realistic, be
prepared to adjust exposure as confidence in growth
changes. Two baskets of top picks and stocks to
avoid.
ASEAN growth story: Indonesia and the Philippines
enjoy a significant demographic dividend. Thailands
economic momentum is strong and policy very progrowth. Beyond the political risk Malaysian
investment cycle is picking up. For more on ASEAN,
please see the country pages.
Policy risk: Top picks and stocks to avoid in high
policy risk sectors. The aim is to provide baskets of
stocks to manage your exposure to policy risk. See
valuation basket section on page 14.
Adrian Mowat
(852) 2800-8599

21 November 2012
Country asset allocation

Overweight:
India, the Philippines, Thailand, Turkey and Mexico
Underweight:
China, Korea (downgrade), Taiwan (downgrade), South
Africa and Brazil
Neutral:
Indonesia, Malaysia, Russia, CE3 and Chile
India is our top BRIC. It combines improving policy,
easier monetary conditions, and pent-up investment
demand with a market that generated EPS growth despite
significant macro headwinds in 2012. Add to this a huge
demographic dividend and an equity market with low
exposure to government sponsored companies.
Mexico is another demographic winner. The
regionalization of trade is very important. Mexican
production costs are close to China. Add transportation
costs plus the dangers of a transoceanic supply chain and
the case for investment is compelling. Mexican senate
approval of labor reform adds to competiveness.
According to the ministry of labor, the aftermath of the
reform would provide 400,000 jobs and could boost
GDP growth by 1% pts. Apart from the reform itself,
the most positive sign is the fact that political
negotiations are reaching common ground. We remain
OW Mexico.
The Philippines and Indonesia enjoy the best
demographics in ASEAN. This combined with policy
that does not hinder growth plus generally stable inflation
and interest rates supports a long term structural OW. For
now, the cyclical headwind of lower thermal coal prices
keeps us N on Indonesia. We would look to add to this
market as the consensus prices in weaker near term
consumption as income in the mining regions fall. We
remain OW the Philippines.
Thailands demographics are poor. After growing below
potential from 2004 it is now enjoying a period of
economic strength. The investment case is robust
domestic demand, sustained low interest rates,
undemanding valuations and scope for positive EPS
revisions. We remain OW Thailand.
Assessing political risk in Malaysia is a challenge. There
is a tangible risk that the ruling BN lose the mid-2013
general election. This would increase stock specific risk.
Beyond politics, economic fundamentals are strong. We
remain N Malaysia.
switching into domestic sectors, including low growth

cheap banks (see page 84 for more on Korean politics).
The financial teams Korean top pick is KB Financial.
With exporters two-thirds of the benchmark, the market
is likely to underperform. The technical risk is that the
Vanguard EM ETF is switching from MSCI EM to the
FTSE Emerging benchmark. The result is a potential
US$10billion of outflows from Korea in 1H13. We
downgrade Korea to UW.
Taiwan lacks domestic drivers and concern on China
import substitution makes us suspicious that the high
EPS growth forecast for this market is optimistic. Similar
to Korea this is an la carte market in that relative
performance is driven by a few stocks. We downgrade
Taiwan to UW.
Our China UW was successful until early September. In
3Q12 monetary conditions improved. More recently
activity data stopped deteriorating. We remain modestly
UW China. For more on our China views please see
China: Monetary policy vs. profits on page 8. Our key
concern is profits as capacity continues to grow faster
than demand. We are also worried that more than 45% of
MSCI China EPS is from one sector, banks. Another
concern is the 10% underperformance of A-shares versus
MSCI China in the last three months. What do the locals
know that H-share investors do not? Finally stock
performance is polarized with key stocks including
Tencent (700 HK, OW) considerably outperforming.
Selling winners is typical in 4Q.
Brazil GDP growth is accelerating from 1.4% in 2012 to
4.1% in 2013. But industrial policy favors the smaller
sectors in the market, manufacturing and retail, which
outperformed in 2012. The key sectors of energy and
mining remain vulnerable to the China growth debate.
Finally an overvalued Real adds currency risk. We
remain UW Brazil.
In CEEMEA, only in Turkey is growth forecast to
accelerate into 2013. Improving current account deficit
and reasonable valuations result in a Turkey OW.
Improving dividends in Russia are offset by corporate
governance issues and monetary policy tightening cycle.
We remain N Russia. Weak commodity prices, labor
strife and ZAR weakness keep us UW South Africa. We
however like retailers in South Africa. In Central Europe,
lower growth is compensated by high dividend yields.
We remain N CE3.
Please see the country section for more details (page
93 to 131)
Near term Korean investors face political and

technical risk. The presidential election is on 19
December. Economic policy may swing from pro-export
weak won to pro-consumer, resulting in investors
5

21 November 2012
Demographics are the most powerful long term force.

The dispersion of demographic trends in EM is stark.
A combination of the one child policy and a rapid
increase in tertiary enrollment in China results in a fast,
by demographic standard, decline in the available
workforce for manufacturing and construction. It is
combining education attainment with demographics
that differentiates our analysis. The challenge for
policy makers is finding jobs for graduates.
Note that Chinas demographics are similar to Japans
20 years ago. Potential GDP growth in Japan decelerated
significantly once the working age population stopped
expanding. The same may happen in China. In November
2010, China invested considerable time and resources in
its census. This clearly demonstrated its economic
success in the past 30 years. Post the great leap forward
and the Cultural Revolution the economy was in ruins.
Reforms provided the conditions for an industrious
growing population to drive high growth. By November
2010, 72% of the working age population was
employed. This is the highest workforce participation
rate in any major economy. Full employment in a
declining workforce is not consistent with high
growth and price stability. As we noted in China
Challenged, lessons from other Asian bubbles, Mowat et
al, 13 June 2012, the slowdown that Japan and Taiwan
suffered in the 1990s may occur in China.
Between 2005-25 the global working age population will
increase by 21%. India accounts for a third of the
increase. Other countries with large increases that are
difficult to invest in include; Pakistan, Nigeria,
Bangladesh, Congo and Ethiopia. More accessible
markets include Indonesia, the Philippines, Brazil, Egypt
and Mexico. A strong Real and surprisingly tight labor
market counter act Brazil demographic dividend. Our
preferred structural plays are India, Indonesia, the
Philippines and Mexico.
Demographics and high energy prices are influencing
global trade. As labor costs become competitive with
China transoceanic supply chains decline. Trade
regionalizes. Be careful with both container and air
cargo businesses.
Figure 2: 15-39 year olds without a university degree in China

3%
%oya
2%
Number
1%
0%
500
300
-2%
-3%
200
-4%
100
-5%
-6%
600
400
-1%
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
Do not ignore demographics
Source: PRC, NBS, Ministry of education, US census, J.P. Morgan calculation
Figure 3: Growth in working age population (forecast for China)

Japan
China
Taiwan
2.5
2
1.5
1
0.5
0
-0.5
-1
-10y
-9y
-8y
-7y
-6y
-5y
-4y
-3y
-2y
-1y
0y
1y
2y
3y
4y
5y
6y
7y
8y
9y
10y
Adrian Mowat
(852) 2800-8599
Source: J PRC NBS, Ministry of Education PRC, US Census, J.P. Morgan calculation.
Note: Growth Centered on peak of each equity market; Japan December 1989, Taiwan
February 1990 and China October 2007.
Table 1: Change in working age population 2005-2025

Country
India
Pakistan
Nigeria
Bangladesh
Indonesia
Congo
Ethiopia
Philippines
Brazil
Egypt
Mexico
Sudan
Others
Total
Source: J.P. Morgan economics
Absolute change
(millions)
250
57
43
38
35
28
25
23
19
19
17
16
212
782
Contribution to
growth in working age
population (%)
32.0
7.3
5.6
4.8
4.5
3.5
3.2
2.9
2.5
2.4
2.1
2.1
27.1
100.0
Adrian Mowat
(852) 2800-8599

21 November 2012
QE and PE inflation
The powerful medium term force on equity markets is
US and EU QE. The scale of monetization and
commitment to maintain low rates until unemployment
falls is unprecedented. Savers are cornered. If the Fed is
successful bond investors may face a capital loss within
three years. There is no momentum or fundamental bid in
commodities, unlike during QE2. Equities, particularly
developed, are already performing well. This is primarily
a function of PE expansion. With common ownership
across EM and DM valuation are likely to be
correlated.
Decisions based on valuation relative to history may
prove expensive. QE distorts asset valuation. Based on
the history of the risk reward trade off line it is possible
to argue that both DM and EM PEs exceed 50 with
current bond yields. MSCI World PE is 12. There is
plenty of head room. It is possible that companies
perceived to offer 'sustainable growth' may rerate
considerably. Our EM Nifty Fifty theme is based on
this concept.
We believe that PE inflation will continue but expect
volatility. Although ECB purchase of peripheral bonds
decreases financial event risk it does not make markets
immune to political events in Europe. J.P. Morgans
economists forecast 1.2% developed economies GDP
growth in 2012 and 13. With no change in full year
growth, it is tempting to underplay the significance of
economic data. We have two concerns. The first is
consensus forecast of a sharp recovery in profits for
cyclical sectors (see dissection of EPS on page 12).
Economic data will remain a major driver of the
volatility. With economies flying so close to zero any
evidence that there is a small loss in altitude will
continue to unnerve investors driving up risk
premiums. Most years in Asian and EM equities suffer a
15%+ fall within a four weeks period. We are buyers on
these dips.
Currently the US fiscal cliff is an excuse for a buyers
strike. As Michael Feroli notes in Six more weeks of
fiscal cliff if you dont jump off one first (see page 80)
the fiscal cliff is the predominant issue for the economy.
Compromise is likely, but may not occur soon. In Europe
policy makers struggle with rules that are inconsistent
with reality in that Greeces fiscal debt is unsustainable.
Figure 4: QE: Relative value in equities

15
13
US Investment grade
US High Yield
10 Year treasury yield
World Equities
Operation
"Twist" and
"LTRO's"
QE1
11
QE2
QE3
7
5
3
1
Aug 08
Jul 10
Aug 09
Jul 11
Jun 12
Source Datastream, MSCI, Bloomberg, 13 November 2012. Note: The chart represents
yields of the asset classes.
Figure 5: Risk return trade-off line

25
IRR %
Mar 09
20
Jun-09
Nov-12
15
10
MSCI EM
Jun-11
60 year average
HG
S&P500
EM Theoritical PE: 69
H SPX Theoritical PE: 62
USTs
EMBI
CEMBI
5
0
Cash
10
15
20
25
Historic vol %
Source: J.P. Morgan. Global Asset Allocation, 13 November 2012. IRRs are calculated as
current yield, minus expected default or downgrade losses in the case of credit. The IRR
for equities is earnings yield, based on trend earnings for either operating earnings, plus
the expected long-term rate of inflation. The x-axis is historical vol. The slope is calculated
by applying a linear regression of the IRR of various assets against their historical vol.
Figure 6: Slope of risk return trade-off line

0.6
0.5
0.4
0.3
0.2
0.1
2E-16
-0.1
53
59
65
71
77
83
89
95
01
07
Adrian Mowat
(852) 2800-8599

21 November 2012
China: Monetary policy vs. profits

The materials sector underperformed significantly in the
past year. China's investment activity data is weak. The
equity strategy team believes that China's demand for
commodities maybe in secular decline. Stay
structurally underweight resources. For fast money, there
could be a tradable rally as demonstrated by both
Rodolfo Angeles and Daniel Kang's buy calls after the
August decline in commodity prices.
The economic outlook for China remains uncertain.
Monetarists highlight the 20% ytd increase in social
financing as evidence that growth will build into 2013.
The question is can consumers meaningfully increase
their leverage while property restrictions remain. Note
that consumption is already robust (retail sales 14%oya
and car sales 7%oya). Companies could increase
investment spending. Finally local government could add
to debt accumulated since the 2008 stimulus. The counter
argument is that the decline in profits is evidence of
over investment thus free cash and motivation to invest
falls. Fixed capital formation is 47% of GDP with
corporate capex a third of this. If companies rationally
cut capex then the current tight employment market will
soften. Wage inflation would fall from mid teens
resulting in weaker consumption. Note that fiscal revenue
growth is slowing with the decline in corporate profits
restricting fiscal flexibility. In 2H13, the economy may
be suffering from weak investment, slowing
consumption and rising food inflation. As overall
growth slows the pace of absorption of excessive
capacity decelerates. Both outcomes are scenarios
without historical precedent. Track the data.
It is likely that investors perception on growth will
continue to swing with each data release. Our focus is
profits and activity data rather than smoothed GDP.
Leadership change is disappointing in that it brings no
change in policy. There are fewer bulls on economic
growth. This was evident with the powerful rally in
MSCI China in September. Our bias is to remain
structurally Underweight China but willing to manage
our relative position. Currently we are modestly UW.
China import substitution is a threat to profitability
of regional heavy industries. Korean, Japanese and
Taiwanese refiners, petrochemical and metal producers
exports to China will fall as domestic capacity increases.
We fear this may leave these sectors without alternative
sources of demand and thus structurally lower capacity
utilization and RoA. Brynjar Bustnes and Sam Lee
describe this situation in more detail on page 154.
Figure 7: MSCI China and MSCI EM materials relative to MSCI EM

MSCI China relative to MSCI EM
1.1
MSCI EM Materials relative to MSCI EM
1.05
1
0.95
0.9
0.85
0.8
Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
10 11 11 11 11 11 11 12 12 12 12 12 12
Source: MSCI, Datastream, 13 November 2012. Note: Indices rebased to 100 as of 13

November 2010.
Figure 8: Strong consumption, weak investment activity

Steel Production (3mmva, %oya)
Commercial vehicles (3mmva, %oya)
Clinker Production (3mmva, %oya)
Retail Sales (3mmva, %oya)
60
50
40
30
20
10
0
-10
-20
-30
-40
Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12
Source: MSCI, Datastream, 13 November 2012
Figure 9: Falling profits will this lead investment?

Industrial profits (%oya)
EPS Growth (%oya)
45.0
35.0
25.0
15.0
5.0
-5.0
-15.0
-25.0
Jan-99
Apr-01
Aug-03
Nov-05
Mar-08
Jun-10
Oct-12
Source: CEIC, IBES, MSCI, October 2012. Industrial profits as of September 2012. Note:
The axis range is from -25 to +50. The maximum and minimum growth for industrial profits
is 598% and -37% in January 99 and January 2009 respectively. The maximum and
minimum growth for MSCI China EPS is 71% and -61% in June 2001 and June 2000
respectively.

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 2: EM Heat Map.Avoid the Red.Focus on the Green

China Others
China
Telecom
China
Energy
Brazil Financials
Taiwan IT
Twn. Financials
Twn. Mater.
Twn. Others
Korea
China Mater. India Energy
Financials
India
China Banks
India Others
Financials
Korea
China CS
China Fin. ex China CD
China Ind.
banks
India IT
Industrials
Brazil CS
Brazil Others
Korea
Materials
Chile
Korea IT
Korea CD
Korea Others
Mexico tel.
Brazil Energy
Brazil Materials
SA
Financials
SA Telecom
SA CD
SA Materials
Turkey Fin.
Turk. Others
SA Others
CE3
Mexico
Others
Thailand
Mexico CS
Indonesia
Philippines
Russia
Energy
Malaysia
Russia
Others
Source: J.P. Morgan. Red indicates UW positions and green indicates OW positions.
Table 3: Key country and sector recommendations, performance and fundamentals

Country/Sector
EM
China
China Financials**
China Energy
China Telecom
China Industrials
China CS
China Materials
China CD
Brazil
Brazil Financials
Brazil Materials
Brazil Energy
Brazil CS
Korea
Korea IT
Korea Financials
Korea Industrials
Korea Materials
Korea CD
Taiwan
Taiwan IT
Taiwan Financials
Taiwan Materials
India
India Financials
India IT
India Energy
South Africa
SA Materials
SA Financials
South Africa CD
SA Telecom
Russia
Russia Energy
Mexico
Mexico Telecom
Mexico CS
Malaysia
Indonesia
Turkey
Turkey Financials
Thailand
Chile
Poland
Philippines
Hungary
Czech Republic
Wt
100.0
18.6
7.0
3.3
2.3
1.2
1.0
0.9
1.0
12.3
3.1
2.4
2.3
1.7
15.4
5.6
2.0
1.9
1.6
2.6
10.7
6.0
1.6
1.3
6.8
2.0
1.0
0.8
7.6
1.4
2.0
1.4
1.0
5.6
3.3
5.0
1.3
1.5
3.7
2.8
1.8
1.0
2.2
1.8
1.5
0.9
0.3
0.3
Rec
-UW
N
N
N
n/a
N
UW
N
UW
OW
UW
UW
N
UW
N
N
N
UW
N
UW
N
UW
UW
OW
OW
N
N
UW
UW
UW
N
N
N
N
OW
N
N
N
N
OW
OW
OW
N
N
OW
N
N
Demand
Classification
DD
GPT
DD
50% DD
DD
GPT
DD
DD
GPT
GPT
DD
GC/C
DD
60% DD
GPT
GCO
GC/C
DD
GPT
DD
GC
GPT
GPT
DD
DD
DD
GPT
DD
DD
DD
Performance
P/E (x)
EPS Growth (%)
(US$ Returns)
Jan 06 to EM low 12M YTD 12E 13E
12E
13E
date
to date
39
116
0
7
11.4 10.0
1.1
13.3
100
115
4
11 10.1 9.3
-1.9
9.5
131
100
7
13
7.3 7.0
5.3
8.0
120
204
-5
6
9.9 9.2
-8.9
-1.5
118
58
3
5
12.2 11.6
0.9
3.7
16
67
0
7
12.2 10.2 -14.2
22.0
228
164
1
6
25.5 21.6
6.0
22.6
43
169
-11
4
13.4 9.9
-36.0
39.4
52
142
-8
1
14.0 11.6
-9.4
10.1
62
91
-15 -10 12.2 10.2 -15.3
20.2
63
127
-14 -11 10.3 9.2
0.6
11.9
65
74
-25 -13 9.4 7.5
-40.1
25.3
24
22
-27 -21 11.2 8.3
-21.5
34.5
232
281
14
10 27.3 21.0
4.3
30.1
31
168
4
11
9.4 8.0
21.5
17.6
64
275
32
31
9.9 8.0
80.2
29.9
-35
50
-5
2
7.1 7.3
-3.0
-10.4
25
138
-10
-2 10.8 9.3
-2.0
6.5
111
168
-18
-8 11.9 9.1
-30.7
20.7
65
306
-8
1
6.5 5.9
20.3
11.3
5
79
0
5
17.4 13.8
2.0
27.0
-8
75
4
10 17.6 13.1 11.3
36.9
-8
87
-2
2
12.3 12.2
4.5
-2.2
49
71
-17 -10 26.6 18.4 -51.8
49.6
56
100
0
18 15.3 13.5 11.3
14.4
79
119
11
34 16.3 13.7 15.1
21.0
34
96
-12
-7 16.0 14.5 17.3
8.8
82
44
-15
8
11.4 10.8
1.7
0.3
39
156
2
4
13.4 11.4 11.7
17.1
-16
95
-28 -21 11.5 8.7
7.7
32.3
33
150
13
12 12.3 10.7 11.7
14.6
150
409
32
38 19.7 16.8 17.4
17.1
62
150
10
7
13.9 12.5 13.4
11.3
-11
115
-12
-2
4.9 4.8
-12.9
1.5
-25
100
-13
-4
3.9 3.9
-15.6
0.1
65
147
12
16 18.6 16.0 36.6
15.8
48
72
-10
3
11.6 10.9 24.9
5.8
167
226
29
22 27.2 22.9 10.3
18.5
118
118
10
8
15.1 13.9
4.9
7.4
240
274
1
4
15.5 13.6
1.0
16.9
18
148
27
46 11.5 10.3 10.3
12.0
24
190
33
60 10.6 9.4
5.1
12.7
115
247
20
19 12.6 10.8
8.3
13.9
96
119
-5
2
17.9 15.2
-5.9
17.7
-13
42
0
15 10.2 10.9 -11.2
-7.1
168
212
32
34 18.0 16.1 12.7
14.9
-30
62
23
23 10.0 8.2
-17.9
21.4
0
22
-7
-6 10.1 10.2
0.5
-1.2
EPS
CAGR
(07-13E)
EPS
CAGR
by SD
8.9
11.3
19.0
10.9
8.0
-5.9
8.9
0.7
8.5
3.5
6.3
0.1
3.5
21.5
12.7
27.1
-3.0
2.7
4.7
34.8
-4.0
-3.9
1.4
-13.3
10.1
18.4
14.5
7.6
9.1
12.1
3.1
15.6
10.5
6.0
6.8
4.5
8.9
13.1
3.2
13.3
6.4
9.4
28.0
9.8
-1.8
9.3
-2.5
1.4
0.7
0.7
1.7
0.5
1.0
-0.1
0.5
0.0
0.4
0.2
0.4
0.0
0.1
0.4
0.3
0.1
-0.1
0.1
0.3
0.6
-0.1
-0.1
0.0
-0.2
0.8
2.7
1.7
0.7
0.5
0.2
0.2
1.9
1.0
0.2
0.3
0.2
0.7
0.4
0.2
1.6
0.7
0.7
2.2
0.7
-0.1
0.6
-0.1
0.1
PEG
Ratio
DY
(%)
13E
ROE
(%)
13E
1.4
0.9
0.4
0.9
1.5
-2.5
3.2
18.7
1.6
3.7
1.6
74.8
NM
1.6
0.9
0.5
-2.5
4.8
3.0
0.2
-5.3
-5.2
10.2
-2.6
1.6
0.8
1.1
1.9
1.7
1.1
4.6
1.6
1.4
0.9
0.6
5.2
1.8
2.2
5.0
1.3
1.9
1.2
0.6
2.0
-4.4
2.0
NM
7.4
3.1
3.4
4.4
3.2
3.7
2.9
2.1
2.3
2.2
4.0
3.9
4.0
3.6
3.0
1.0
0.7
2.5
1.3
0.9
1.0
3.6
3.5
3.0
3.7
1.7
1.7
1.7
2.1
4.0
3.1
4.7
2.3
6.2
4.1
4.5
2.0
2.5
1.9
3.3
2.7
3.1
2.2
3.9
3.1
4.8
2.7
4.4
7.2
13.4
0.5
0.2
13.4
15.6
9.6
15.0
11.9
15.1
12.7
15.0
13.1
9.7
18.8
13.6
18.3
8.5
10.3
9.1
16.8
11.6
13.6
8.1
8.0
15.0
16.0
22.9
13.7
17.8
17.0
14.2
19.7
26.6
11.4
10.8
15.8
28.0
14.8
14.0
21.8
15.1
13.9
17.0
12.0
10.6
15.7
10.6
15.2
Source: MSCI, IBES, Bloomberg, 14 November 2012. Note: Outperformance of more than 2% vs. MSCI EM. Underperformance of more than 2% vs. MSCI EM. DD=Domestic Demand,
GPT=Global Price Takers, GC/C=Global Capex/Consumer, GC=Global Capex, GCO=Global Consumer..
Adrian Mowat
(852) 2800-8599

21 November 2012
Potential Returns and Earnings Estimates

End 2013 strategy team index forecasts
MSCI EM 1150 (+15%)
This assumes 10% re-rating and 5% EPS downgrade
Base case
Current MSCI EM forward PE 10x
Consensus 2014 MSCI EM EPS is 110 (before
currency appreciation).
The equity strategy teams key call is that Chinas
economy will continue to slow. Anecdotal evidence is
that industries are beginning to reduce production and
capex plans. This is likely to result in lower growth.
We believe the risk of downgrades in EPS forecasts
for materials and exporters is high. Domestic
cyclicals and interest rate sensitives may benefit from
upgrades. To be conservative, the strategy 2013
and 2014 EPS forecasts are 96 and 105
respectively. This assumes no EPS growth in
material and energy companies.
Forward P/E is 11x on 2014 EPS of 105 QE3
driven re-rating of global equities.
Statistical Warning
EM equity markets valuations trend rather than meanrevert. Indices also evolve with sector composition
changing. The growth characteristics of stocks also
change and thus their valuations. Prior to the mid-90s
current account crisis fixed exchange rates and high
nominal growth supported high valuations. Investors
should be suspicious of statistical justification for index
targets.
Analysts 2012 and 2013 EPS forecasts were 10% too
high at the start of the year. Our assumption is a 5% EPS
downgrade in 2013.
Pick your methodology
To illustrate the impact of different methodologies on
potential returns we calculate index targets using six
assumptions:
1. Current earnings to bond yield ratio using
provisional 2013 yield forecast and end 2014 EPS.
2. Five year average earnings to bond yield ratio using
provisional 2013 yield forecast and end 2014 EPS.
3. Current forward PE multiplied by 2014 EPS based on
the lower of 2014 EPS growth or potential nominal
GDP
10
4. Current forward PE multiplied by 2014 EPS forecast

5. Three year average PE multiplied by 2014 EPS
forecast
6. Gordon Growth model theoretical PE multiplied by
2014 EPS. This generates PE in excess of 30 for six
markets as local bond yields in these countries are
very low relative to nominal GDP growth and RoE.
Table 4: Current forward P/E with standard deviation ranges
Index
EM
EM Asia
Latam
EMEA
Brazil
Chile
China
Czech
Hungary
India
Indonesia
Korea
Malaysia
Mexico
Philippines
Poland
Russia
S Africa
Taiwan
Thailand
Turkey
Current
Fwd PE
10.0
10.4
11.3
7.9
9.8
15.5
9.3
10.3
8.2
13.5
13.8
8.2
14.1
16.2
16.2
10.6
4.7
11.7
14.0
10.7
10.5
Avg
10Y
10.7
11.4
10.2
9.6
8.5
15.8
12.1
12.6
9.4
14.6
11.1
9.4
13.9
13.0
13.6
12.0
7.9
10.3
13.8
10.2
9.3
+1 SD
-1 SD
12.2
13.2
11.9
11.3
10.9
17.8
14.9
15.3
11.0
17.5
13.9
11.0
15.1
14.8
15.3
14.0
10.3
11.7
17.1
11.4
11.1
9.2
9.6
8.6
7.9
6.2
13.9
9.2
9.9
7.8
11.7
8.3
7.7
12.7
11.1
11.9
10.0
5.5
9.0
10.5
9.1
7.5
Top
Decile
12.6
14.0
12.5
11.8
12.0
18.3
15.4
16.4
11.1
18.0
14.2
11.8
15.3
15.0
16.1
14.4
11.5
11.7
16.2
11.5
11.2
Bottom
Decile
8.8
9.3
8.1
7.6
5.4
13.3
8.9
9.8
7.3
10.9
7.3
7.1
12.3
10.3
11.6
9.2
4.8
8.3
11.6
8.7
6.8
Source: MSCI, IBES, Datastream, 12 November 2012
Table 5: Consensus earnings growth forecasts (%)

Index
EM
EM Asia
Latam
EMEA
Brazil
Chile
China
Czech
Hungary
India
Indonesia
Korea
Malaysia
Mexico
Peru
Philippines
Poland
Russia
South Africa
Taiwan
Thailand
Turkey
Consensus Earnings Growth (%)

12E
13E
14E
3.9
12.9
10.0
12.6
14.3
11.5
(9.3)
18.4
10.5
(4.3)
5.3
5.7
(17.5)
19.7
10.7
(3.4)
16.3
10.9
2.0
9.2
10.7
1.2
(1.3)
1.3
(16.4)
20.9
20.2
9.9
14.0
13.7
6.1
13.6
15.9
33.3
17.1
10.7
13.1
7.9
9.3
35.0
16.8
13.0
(4.1)
12.2
6.0
12.4
12.0
10.1
(11.7)
(5.7)
5.7
(12.8)
(0.6)
1.2
13.8
16.9
10.6
6.3
24.2
13.7
13.3
18.9
10.3
10.0
12.0
12.8
Source: MSCI, Datastream, IBES, J. P. Morgan, 12 November 2012
EPS growth
CAGR 13/ 08
11.6
18.0
6.0
5.9
6.3
6.2
13.9
(3.1)
(5.1)
13.9
12.5
24.8
6.2
8.9
15.6
13.4
0.4
6.9
7.6
22.2
18.4
7.0

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 6: Pick your methodology and thus your return: Percentage return to end 2013 targets based on multiple methodologies
EM
Brazil
Chile
China
India
Indonesia
Korea
Malaysia
Mexico
Philippines
Poland
Russia
South Africa
Taiwan
Thailand
Turkey
Index
Level
(1)
Current
EY/BY
(2)
5yr avg
EY/BY
44274
204680
4879
59
730
5242
544
585
38422
899
1607
727
968
262
479
1029288
17
69
11
3
24
19
26
1
24
26
65
(1)
8
(16)
(2)
29
42
37
26
27
27
61
129
12
26
49
48
26
23
15
5
42
(3)
FWD PE
2014 EPS
= GDP
12
11
10
14
14
13
10
10
8
11
5
10
10
10
8
14
(4)
Current
FWD PE
12
13
13
10
21
19
14
12
15
18
5
1
13
22
11
15
(5)
3year
average
FWD PE
17
15
12
22
26
11
25
13
2
9
9
28
3
16
7
3
Median
Max
Min
Range of
returns
17
15
12
14
24
19
25
12
15
18
9
10
10
15
7
15
42
69
26
27
27
61
129
13
26
49
65
28
23
22
11
42
12
11
10
3
14
11
10
1
2
9
5
(1)
3
(16)
(2)
3
30
58
16
24
13
50
120
12
25
40
60
29
20
38
13
39
(6)
Gordon
Growth
PE
168
(28)
3
244
135
152
310
137
1
122
30
543
31
162
195
175
Source: MSCI, IBES, Datastream, Bloomberg, J.P. Morgan. 12 November 2012

Note: All returns and index levels are in local currency; please email EM_Equity_Strategy@jpmorgan.com for the assumptions
Table 7: Consensus EPS estimates and revisions since the beginning of 2012
Index
EM (US$)
EM
EM Asia
Latam
EMEA
Brazil
Chile
China
Czech
Hungary
India
Indonesia
Korea
Malaysia
Mexico
Peru
Philippines
Poland
Russia
S Africa
Taiwan
Thailand
Turkey
10
83
3622
48
582243
43
20990
313
5.11
34
114
41
270
51
32
1536
91
43
146
131
51
20.3
29
86348
Actual
11
85
3800
48
585630
54
21446
275
5.69
30
130
45
319
43
35
1513
120
44
181
178
62
15
34
80178
Current Consensus EPS

12E
13E
14E
89
100
110
3952
4462
4913
54
61
68
533559
631533
697561
52
54
58
17700
21195
23466
274
318
353
5.80
6.34
7.01
30
30
30
108
131
157
49
56
64
338
384
445
58
68
76
39
42
45
2055
2401
2702
115
129
134
50
56
62
160
151
160
155
154
156
70
82
91
15
19
22
38
45
50
88173
98750
111362
Consensus EPS beginning of this Year

12E
13E
14E
99
111
129
4447
4983
5571
59
68
78
687705
755884
840726
55
58
59
23621
25519
25885
354
375
406
6.34
7.21
7.72
31
32
34
127
155
187
52
60
58
373
431
503
61
70
81
39
43
45
2236
2611
4734
137
137
109
52
57
56
167
169
171
162
163
165
81
90
94
19
24
24
40
46
49
90640
102086
109240
Revision in Consensus EPS (%)

12E
13E
14E
(10.7)
(10.0)
(14.5)
(11.1)
(10.5)
(11.8)
(9.2)
(9.7)
(12.4)
(22.4)
(16.5)
(17.0)
(6.7)
(5.9)
(2.3)
(25.1)
(16.9)
(9.3)
(22.7)
(15.1)
(12.9)
(8.5)
(12.1)
(9.1)
(3.5)
(8.2)
(10.9)
(14.4)
(15.4)
(15.7)
(5.2)
(6.5)
9.9
(9.3)
(10.8)
(11.5)
(5.8)
(3.3)
(6.5)
(0.3)
(2.9)
0.9
(8.1)
(8.0)
(42.9)
(15.5)
(5.6)
23.4
(3.0)
(1.6)
9.2
(4.0)
(10.8)
(6.4)
(4.2)
(5.5)
(5.5)
(13.4)
(8.5)
(3.7)
(21.2)
(19.0)
(11.1)
(5.7)
(0.7)
2.8
(2.7)
(3.3)
1.9
Source: MSCI, Datastream, IBES, J P. Morgan, 12 November 2012
11
Adrian Mowat
(852) 2800-8599

21 November 2012
Dissection of Emerging Markets EPS growth

The Objective
Disaggregate EM EPS growth into countries, sectors and
key sectors in countries.
Main observations on 2013 EPS growth
EPS growth for 2012E is 4%. Ironically the only
sectors with double-digit median EPS growth are
consumer discretionary, consumer staples and
healthcare. EM is meant to be high growth!
MSCI EM 2013 weighted and median EPS growth is

13% and 15% respectively. This is marginally higher
compared to our economists 2013 nominal GDP
growth forecast of 11%.
Korea, Brazil, China and Taiwan contribute

c70% of MSCI EM 2013E EPS growth. Note that
Korea 2012 EPS estimate is distorted by the shift to
Korean IFRS.
Note that the weighted 2013 EPS growth for EM

Materials is high at 24% (primarily due to expected
losses or low profits at ArcelorMittal SA, Sider,
Mfrisco, Northam platinum, China Steel and
Hyosung, among others, in 2012). The median EPS
growth is 20%.
Dataset
IBES EPS forecasts for MSCI EM constituents.
Calculation
The index's calendar year EPS is calculated using the
profit-weight of the constituents.
Index EPS = I x ( (C-EPS x FFS) / (FFS x P))
Information technology, financials and materials are

the highest contributors to 2013 earnings growth.
The contribution from healthcare and utilities is the

lowest (see Table 9)this is primarily a function of
low index weight.
Three sectors contribute c20% of MSCI EM 2013

EPS growth: Korea Semiconductors, Brazil
integrated oil &gas and Brazil steel.
Where C-EPS = Index constituents EPS, FFS = free

float shares for the constituents, I = index level and P =
current market price
The check
Median EPS growth of the index constituents: Reviewing
the median helps identify sectors in which a single
stocks impact on weighted EPS growth is large. This
could be due to its large weight in the index or moving
from loss to profit.
Table 8: Emerging markets earnings growth and contribution

Country
Korea
Brazil
China
Taiwan
South Africa
India
Mexico
Chile
Thailand
Indonesia
Malaysia
Turkey
Russia
Colombia
Hungary
Peru
Philippines
Egypt
Morocco
Czech Republic
Poland
EM
Mkt Cap
Weight
15.2
12.4
18.4
10.8
7.8
6.8
5.0
1.9
2.2
2.8
3.7
1.9
5.7
1.3
0.3
0.7
0.9
0.4
0.1
0.3
1.4
100
Earnings weights (%)

2012
2013
2014
17.7
18.4
18.8
11.7
12.3
12.4
20.8
20.1
20.1
7.1
7.9
8.3
6.7
6.9
6.9
5.1
5.1
5.3
3.1
3.2
3.2
1.0
1.3
1.2
2.0
2.1
2.1
2.1
2.1
2.2
2.8
2.7
2.7
1.8
1.8
1.8
13.0
11.6
10.6
0.8
0.9
0.8
0.4
0.4
0.4
0.6
0.6
0.5
0.6
0.6
0.6
0.5
0.5
0.5
0.1
0.1
0.1
0.3
0.3
0.3
1.7
1.4
1.3
100.0
100.0
100.0
Index EPS Growth

2012
2013
2014
33.3
17.1
10.7
(17.5)
19.7
10.7
2.0
9.2
10.7
6.3
24.2
13.7
13.8
16.9
10.6
9.9
14.0
13.7
35.0
16.8
13.0
(3.4)
16.3
10.9
13.3
18.9
10.3
6.1
13.6
15.9
13.1
7.9
9.3
10.0
12.0
12.8
(12.8)
(0.6)
1.2
12.0
14.8
1.8
(16.4)
20.9
20.2
(4.1)
12.2
6.0
12.4
12.0
10.1
30.5
9.1
5.6
9.3
10.2
9.4
1.2
(1.3)
1.3
(11.7)
(5.7)
5.7
3.9
12.9
10.0
Source: IBES, Datastream, J.P. Morgan calculation. Note: Sorted by 2013 earnings growth contribution.
12
Median EPS Growth

2012
2013
2014
(0.0)
18.8
15.1
4.5
18.3
15.9
3.4
16.7
15.1
1.1
13.0
13.0
14.4
15.6
14.4
13.3
16.7
15.1
17.6
16.5
14.2
(2.1)
15.6
3.4
19.9
17.2
12.3
9.1
13.3
13.8
7.9
10.7
9.2
12.4
15.8
13.6
(0.6)
5.8
10.6
18.6
18.8
9.7
(18.0)
18.8
10.7
(5.3)
12.7
5.5
13.6
12.5
9.4
53.5
12.5
0.0
2.9
9.6
8.9
(0.5)
(1.0)
0.8
(1.3)
(1.0)
11.4
6.4
15.4
13.7
Contribution to Earnings growth (%)

2012
2013
2014
330
23
22
(297)
16
13
34
15
20
27
14
12
102
8
7
67
5
7
118
4
4
(26)
3
1
34
3
2
17
2
3
27
2
2
25
2
2
(313)
1
1
8
1
(0)
(11)
1
1
(4)
1
0
10
0
1
14
0
0
1
0
(0)
0
(0)
0
(31)
(1)
1
100
100
100

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 9: EM Sector earnings growth and contribution

EM Sectors
Information Technology
Financials
Materials
Energy
Consumer Discretionary
Industrials
Consumer Staples
Telecommunication Services
Utilities
Health Care
EM
Mkt Cap
Weight
14.0
25.5
11.8
12.9
7.9
6.5
8.6
7.9
3.5
1.3
100

2012
2013
2014
11.3
12.6
13.1
30.1
28.7
29.0
10.4
11.3
11.4
20.0
19.0
17.5
7.8
7.9
7.9
5.6
5.8
6.1
4.1
4.3
4.5
7.1
6.7
6.6
3.1
3.0
3.0
0.6
0.6
0.8
100.0 100.0 100.0
Index EPS Growth

2012
2013
2014
37.0
26.8
15.7
5.0
8.5
11.9
(24.8)
24.2
11.9
(12.7)
8.0
2.1
16.1
14.9
11.5
3.5
17.1
16.1
9.5
20.1
14.7
8.0
8.2
8.4
14.4
10.2
13.4
8.0
17.3
31.2
3.9
12.9
10.0
Median EPS Growth

2012
2013
2014
5.9
16.7
13.0
8.9
12.0
13.5
(7.7)
20.0
14.3
(4.1)
8.3
7.4
11.1
16.7
14.3
5.3
17.3
16.7
13.0
18.9
16.9
5.3
6.0
10.0
7.7
8.6
7.1
20.2
22.1
17.8
6.4
15.4
13.7
Contribution to Earnings growth (%)

2012
2013
2014
434
22
18
203
19
31
(486)
18
12
(417)
12
4
155
9
8
27
7
9
51
6
6
74
4
5
55
2
4
7
1
2
100
100
100
Table 10: Country sub-industry contributing 65% of EM Earning growth

Country Sub-Industry
Mkt Cap
Korea Semiconductors
Brazil Integrated Oil & Gas
Brazil Steel
S Africa Gold
Taiwan Semiconductors
Brazil Diversified Banks
China Life & Health Insurance
China Integrated Oil & Gas
Korea Steel
Chile Diversified Banks
Korea Commodity Chemicals
Taiwan Commodity Chemicals
Korea Autom Manufacturers
Korea Oil & Gas R&M
India Diversified Banks
Taiwan Computer Hardware
Taiwan Electronic Manufacturing
China Diversified Banks
Thailand Diversified Banks
Brazil Packaged Foods & Meats
Mexico Wireless Telecom Svs
China Real Estate Development
Indonesia Diversified Banks
Korea Const. & Engineering
Korea Industrial Conglomerates
Turkey Diversified Banks
S Africa Diversified Banks
Brazil Homebuilding
China Internet Software & Svs
Korea Auto Parts & Equipment
S Africa Wireless Telecom Svs
Russia Oil & Gas E&P
China Integrated Telecom Svs
China Construction Materials
Korea Consumer Electronics
Russia Fertilizers & Agri Chem.
China Automobile Manufacturers
India It Consulting & Other SVS
Malaysia Diversified Banks
Mexico Diversified Banks
S Africa Cable & Satellite
Weight
4.6
2.1
2.2
0.7
3.2
2.4
1.1
1.3
0.7
0.3
0.6
0.8
1.3
0.5
1.1
0.8
0.9
4.4
0.9
0.4
1.3
1.0
0.9
0.4
0.4
0.9
0.7
0.2
1.0
0.6
1.0
0.5
0.5
0.3
0.2
0.3
0.4
1.0
1.0
0.5
0.7

2012
5.3
2.3
3.0
0.8
2.3
3.1
0.5
1.4
0.8
0.1
0.5
0.3
2.7
0.5
0.8
0.7
0.8
8.3
0.9
0.1
1.3
1.3
0.8
0.5
0.5
1.0
0.7
0.1
0.4
0.8
0.9
0.7
0.3
0.4
0.1
0.2
0.4
0.7
0.9
0.4
0.3
2013
5.9
2.7
3.2
1.1
2.3
3.0
0.7
1.4
0.9
0.3
0.7
0.5
2.5
0.6
0.9
0.8
0.8
7.5
0.9
0.2
1.2
1.2
0.8
0.5
0.6
1.0
0.7
0.2
0.4
0.8
0.8
0.7
0.3
0.4
0.2
0.2
0.4
0.7
0.8
0.4
0.3
2014
5.9
2.7
3.2
1.0
2.4
3.0
0.8
1.4
0.9
0.3
0.7
0.5
2.5
0.6
1.0
0.8
0.9
7.4
0.9
0.3
1.2
1.2
0.8
0.5
0.6
1.0
0.7
0.2
0.5
0.8
0.8
0.6
0.4
0.4
0.2
0.2
0.4
0.7
0.8
0.4
0.4
Index EPS Growth

2012
66.1
(20.1)
(41.5)
9.5
15.3
(1.7)
9.4
(4.8)
(27.7)
(56.7)
(26.1)
(56.5)
25.2
(44.6)
18.5
22.5
6.8
6.9
28.2
(37.8)
23.5
10.6
9.9
(7.1)
(12.8)
6.4
9.9
(40.4)
30.8
15.7
13.6
13.5
10.9
(34.0)
NM
15.2
(5.2)
17.2
7.2
34.4
15.1
2013
25.7
34.9
20.4
51.0
15.0
10.5
49.1
16.3
27.5
193.5
37.2
60.1
7.5
38.0
19.1
23.2
20.0
1.9
16.6
103.9
10.0
9.3
15.1
23.5
20.5
11.0
15.2
71.9
26.1
11.6
11.0
13.2
35.2
23.9
60.8
38.3
19.1
10.4
8.3
19.6
23.1
2014
10.7
7.8
11.2
3.0
14.3
11.9
16.5
7.4
15.5
1.8
16.6
17.2
9.2
8.5
19.1
15.0
16.7
10.1
14.5
27.5
9.1
12.0
19.3
16.3
9.7
13.3
14.7
15.5
23.4
10.6
7.5
(4.4)
28.3
13.4
11.6
(10.8)
15.7
10.7
11.2
18.4
27.3
Median EPS Growth

2012
66.9
(20.0)
(26.0)
16.6
12.2
(3.7)
17.5
(5.4)
(3.1)
1.9
(51.0)
(59.1)
25.0
(23.4)
16.1
3.5
6.8
8.2
48.5
39.0
23.5
16.0
8.7
(0.0)
(28.0)
5.0
10.7
11.8
30.8
13.6
13.9
15.2
5.3
(30.8)
NM
15.2
7.7
19.5
8.3
23.8
15.1
2013
18.6
35.2
30.9
49.4
15.2
10.7
44.4
17.8
18.7
7.7
63.4
45.5
7.7
37.4
16.6
25.0
20.0
0.0
18.4
83.5
10.0
10.0
16.7
28.1
33.1
10.7
16.0
20.2
26.1
16.8
9.6
16.6
33.3
25.0
60.8
38.3
20.5
10.0
8.5
22.2
23.1
2014
22.4
8.1
25.0
7.3
11.7
11.8
16.7
7.4
18.3
0.0
20.2
12.5
9.2
5.0
16.6
11.5
16.7
9.1
13.8
25.3
9.1
14.3
20.0
17.1
15.0
13.8
15.2
14.9
23.4
13.5
6.8
0.2
25.0
15.5
11.6
(10.8)
21.1
10.3
11.5
19.0
27.3
Contribution to Earnings growth

(%)
2012
2013
2014
300
10
6
(82)
6
2
(302)
4
3
10
3
0
44
3
3
(7)
2
3
7
2
1
(10)
2
1
(43)
2
1
(21)
2
0
(28)
2
1
(63)
2
1
76
1
2
(55)
1
0
19
1
2
18
1
1
7
1
1
76
1
7
27
1
1
(11)
1
1
34
1
1
17
1
1
10
1
1
(5)
1
1
(11)
1
0
8
1
1
9
1
1
(14)
1
0
13
1
1
16
1
1
15
1
1
12
1
(0)
4
1
1
(27)
1
0
33
1
0
4
1
(0)
(3)
1
1
15
1
1
9
1
1
13
1
1
6
1
1
13
Adrian Mowat
(852) 2800-8599

21 November 2012
Valuations analysis
The objective of this section is to highlight cheap and
expensive sectors in countries. Sectors are split into five
groups based on what drives their long term growth (see
page 17 to 25 for details):
Valuations conclusions
The domestic growth basket PE at 14 is 40%
premium to MSCI EM. In China the domestic
growth premium is 94%. The premium has been
stable since 2010.
Where banks are included in domestic growth the
valuations are flattered. This is particularly true in
Russia where consumer stocks PEs exceed 20.
Over the last 12 months the global demand basket had
the largest derating (-6%, see Figure 10). But this is
due to earnings upgrades in tech.
The P/B of all baskets except domestic growth
declined over a year ago. The largest de-rating (14%)
was the China growth concerns basket (see Figure 11)
ex -China.
The China growth concerns basket is more expensive
today than 12 months ago. Its underperformance
was insufficient to offset EPS downgrades.
The policy risk baskets in all countries except Russia
are at a discount. The PB discount is larger than the
forward PE discount (see Table 13 to Table 16 ).
Chinese banks PE and PB are more than one
standard deviation cheap relative to history. This
sector is likely to enjoy tradable rallies when policy
fears ebb.
The China growth concerns baskets forward PE
appears cheap. We have little confidence in the
forecast of high EPS growth in 2013 for these stocks
(see Table 23).
Policy risks, China growth concerns and global
demand baskets are trading close to their GFC P/B
lows.
Exposure groups or baskets
Policy risk: Sectors which de-rated owing to actual
or fear of government policy; i.e. China financials,
Brazil banks, India materials, India energy, utilities in
numerous countries.
Domestic growth: Sectors perceived as beneficiaries
of domestic growth stories; i.e. consumer
discretionary, select financials including India,
Turkey and ASEAN financials.
14
Global demand: Sectors sensitive to global demand;

i.e. Korea and Taiwan IT and industrials, Korea CD.
China growth concerns: Sectors dependent on
Chinese investment demand; i.e., materials in Brazil,
China, Korea and Taiwan.
Others: Sectors that do not fall into any of the above
categories such as telecoms, utilities without
perceived policy risk.
Index composition observations:
Policy risk exposure is the largest in China at 40%
market cap and 53% earnings.
Domestic growth is more than half the index value
and earnings in India, Mexico, Turkey, South Africa
and ASEAN.
Korea, Taiwan and Russia have more than half their
index value and earnings from global demand.
Table 11: Free float market cap weight of each country sector
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
SA
Turkey
Poland
Policy
Risks
40
23
NA
10
14
NA
NA
NA
6
NA
4
NA
NA
NA
China
growth
concerns
34
NA
7
11
NA
NA
13
NA
18
12
6
17
NA
15
Others
6
NA
17
5
25
28
23
7
3
27
13
16
24
56
Domestic
Growth
20
57
76
9
53
72
6
68
31
53
19
57
76
29
Global
Demand
NA
20
NA
64
9
NA
59
NA
20
8
59
9
NA
NA
Source: MSCI, IBES, Datastream, 6 November 2012. Note: For Korea, there has been a
change from Korea GAAP to IFRS; the growth number of global demand basket is
enhanced as a result of that. The year ending for Australia is June.
Table 12: 2012 EPS contribution of each country sector
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
SA
Turkey
Poland
Policy
Risks
53
31
NA
13
14
NA
NA
NA
9
NA
2
NA
NA
NA
China
growth
concerns
33
NA
9
9
NA
NA
9
NA
26
16
3
18
NA
22
Others
4
NA
17
4
20
32
27
8
3
41
6
16
26
52
Domestic
Growth
9
51
74
6
58
68
5
60
16
46
15
51
74
25
Global
Demand
NA
18
NA
68
8
NA
59
NA
20
(3)
74
14
NA
NA
Source: MSCI, IBES, Datastream, 6 November 2012. Note: For Korea, there has been a
change from Korea GAAP to IFRS; the growth number of global demand basket is
enhanced as a result of that. The year ending for Australia is June.

21 November 2012
Adrian Mowat
(852) 2800-8599
12 month forward PE of EM baskets

Figure 10: Forward PE of each basket (weighted average) - note premium for domestic growth
Policy Risks
17
China grow th concerns
Others
Domestic Grow th
Global Demand
15
13
11
9
7
5
3
Nov 02
Nov 04
Nov 06
Nov 08
Nov 10
Nov 12
Source: MSCI, Datastream, J.P. Morgan calculations, 9 November 2012. Note: Weighted average forward PE is calculated as total FF market cap of respective basket divided by total free float 12
month forward earnings. Note CEMEX and Korea utilities are omitted from calculations due to their volatile EPS.
Table 13: 12 month forward PE (weighted average) of each country sector
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
South Africa
Turkey
Poland
MSCI EM
Policy
Risks
7
10
NA
7
14
NA
NA
NA
9
NA
11
NA
NA
NA
8
12 month forward PE
China
growth
Domestic
Global
concerns
Growth
Demand
9
18
NA
NA
14
16
11
14
NA
9
13
8
NA
13
15
NA
17
NA
18
17
13
NA
12
9
7
17
9
13
19
NM
8
7
4
9
13
8
NA
11
NA
8
11
NA
9
14
8
Others
11
NA
14
11
17
14
13
10
13
12
10
12
10
11
12
Market
Multiple
9
13
14
8
14
16
14
11
10
17
5
11
11
11
10
Policy
Risks
(21)
(22)
MA
(12)
(4)
NA
NA
NA
(10)
NA
129
NA
NA
NA
(22)
Premium to 12 month forward PE

China
growth
Domestic
Global
concerns
Growth
Demand
(0)
95
NA
NA
7
19
(20)
2
NA
8
65
(4)
NA
(8)
5
NA
5
NA
29
26
(6)
NA
12
(20)
(31)
77
(13)
(22)
15
NM
68
39
(18)
(21)
15
(27)
NA
1
NA
(24)
1
NA
(9)
41
(20)
Others
21
NA
2
40
19
(15)
(4)
(11)
28
(29)
106
3
(6)
9
22
Source: MSCI, IBES, Datastream, 9 November 2012. Note: Weighted average is calculated as total market cap of respective country basket divided by total free float forward earning
Table 14: 12 month forward PE (simple average) of each country sector
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
South Africa
Turkey
Poland
MSCI EM
Policy
Risks
12
13
NA
13
14
NA
NA
NA
9
NA
11
NA
NA
NA
12
12 month forward PE
China
growth
Domestic
Global
concerns
Growth
Demand
9
19
NA
NA
16
17
11
17
NA
9
14
8
NA
15
16
NA
20
NA
19
17
13
NA
16
9
7
16
14
13
17
17
8
13
4
9
14
8
NA
13
NA
8
11
NA
11
16
12
Others
10
NA
14
11
18
14
16
11
13
12
10
11
10
11
12
Market
Multiple
12
15
15
11
16
18
16
14
14
16
10
12
12
11
14
Policy
Risks
(1)
(16)
MA
16
(13)
NA
NA
NA
(35)
NA
13
NA
NA
NA
(11)
Premium to 12 month forward PE

China
growth
Domestic
Global
concerns
Growth
Demand
(21)
58
NA
NA
7
16
(26)
10
NA
(20)
31
(28)
NA
(2)
1
NA
9
NA
16
7
(19)
NA
16
(38)
(50)
19
1
(18)
7
NM
(17)
34
(60)
(26)
11
(32)
NA
9
NA
(26)
3
NA
(20)
15
(11)
Others
(13)
NA
(6)
5
12
(26)
(4)
(21)
(7)
(26)
(1)
(10)
(17)
3
(9)
Source: MSCI, IBES, Datastream, 9 November 2012. Note: The market multiple is calculated as simple average of all the sector valuations.
15

21 November 2012
Adrian Mowat
(852) 2800-8599
Trailing PB of EM baskets
Figure 11: Trailing PB of each basket (weighted average) note de-rating of sectors dependent on Chinese growth
4.0
Policy Risks
China grow th concerns
Oct 04
Oct 06
Others
Domestic Grow th
Global Demand
3.5
3.0
2.5
2.0
1.5
1.0
Oct 02
Oct 08
Oct 10
Oct 12
Source: MSCI, Datastream, J.P. Morgan calculations, 9 November 2012. Note: Weighted average trailing PB is calculated as total FF market cap of respective basket divided by total free float
trailing book value. CEMEX and Korea utilities ar e omitted from calculations due to their volatile EPS
Table 15: Trailing PB (weighted average) of each country sector)

Trailing PB
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
South Africa
Turkey
Poland
MSCI EM
Policy
Risks
1.4
1.3
NA
0.6
1.6
NA
NA
NA
0.9
NA
0.4
NA
NA
NA
1.1
China growth
concerns
1.4
NA
2.7
1.0
NA
NA
1.6
NA
1.2
3.8
1.6
1.9
NA
1.6
1.4
Domestic
Growth
3.3
3.2
4.0
1.8
2.1
2.8
2.1
2.7
3.0
3.3
1.5
2.8
1.8
1.2
2.7
Global
Demand
NA
4.6
NA
1.4
2.8
NA
2.0
1.7
0.9
NM
0.6
1.9
NA
NA
1.3
Others
1.9
NA
4.3
0.8
2.4
3.8
1.4
1.7
1.0
4.3
2.4
3.0
2.3
1.3
1.9
Market
Multiple
1.6
2.6
3.9
1.1
2.1
2.9
1.8
2.3
1.4
3.1
0.8
2.5
1.9
1.3
1.6
Policy
Risks
(14)
(47)
NA
(52)
(25)
NA
NA
NA
(37)
NA
(51)
NA
NA
NA
(30)
Premium to Trailing PB
China
growth
Domestic
Global
concerns
Growth
Demand
(11)
104
NA
NA
26
82
(30)
2
NA
(14)
57
19
NA
0
32
NA
(6)
NA
(7)
20
11
NA
19
(25)
(16)
118
(35)
24
8
NM
103
98
(22)
(24)
11
(24)
NA
(4)
NA
20
(6)
NA
(13)
66
(21)
Others
21
NA
9
(27)
12
30
(20)
(25)
(29)
40
213
20
22
(1)
19
Source: MSCI, IBES, Datastream, 9 November 2012. Note: weighted average is calculated as total market cap of respective country basket divided by total free float trailing book value
Table 16: Trailing PB (simple average) of each country sector
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Brazil
Mexico
Russia
South Africa
Turkey
Poland
MSCI EM
Policy
Risks
1.8
1.3
NA
0.6
1.6
NA
NA
NA
0.9
NA
0.4
NA
NA
NA
1.2
China
growth
concerns
1.4
NA
2.3
1.1
NA
NA
1.6
NA
1.2
3.8
1.6
1.9
NA
1.6
1.6
Trailing PB
Domestic
Growth
3.6
4.5
4.9
2.2
2.1
3.3
2.7
7.7
4.1
3.3
3.8
5.9
2.3
1.9
4.0
Global
Demand
NA
4.6
NA
1.3
2.8
NA
1.7
1.7
1.1
2.8
0.6
1.9
NA
NA
2.1
Others
1.5
NA
5.2
0.8
3.2
3.8
2.1
2.3
1.0
4.3
2.2
2.2
2.2
1.5
2.3
Market
Multiple
1.9
3.4
4.5
1.3
2.4
3.4
2.0
5.6
2.7
3.3
2.1
4.4
2.3
1.7
2.8
Policy
Risks
(7)
(62)
MA
(52)
(33)
NA
NA
NA
(68)
NA
(82)
NA
NA
NA
(57)
Premium to Trailing PB
China
growth
Domestic
Global
concerns
Growth
Demand
(27)
86
NA
NA
34
37
(49)
11
NA
(14)
73
4
NA
(11)
18
NA
(4)
NA
(23)
35
(18)
NA
38
(69)
(57)
50
(59)
13
(2)
NM
(24)
82
(71)
(57)
33
(57)
NA
1
NA
(7)
16
NA
(43)
40
(25)
Source: MSCI, IBES, Datastream, 9 November 2012. Note: The market multiple is calculated as simple average of all the sector valuations.
16
Others
(24)
NA
17
(33)
32
11
6
(60)
(63)
28
5
(50)
(3)
(7)
(18)

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 17: EM expensive sectors (valuations more than one standard deviation above their 10 year average)
Domestic growth
China
Consumer Staples
India
Consumer Staples
Construction Materials
Chemicals
Indonesia
Health Care
Consumer Staples
Korea
Health Care
Malaysia
Thailand
Consumer Staples
Philippines
Real Estate
Banks
Diversified Financials
Brazil
Consumer Staples
Mexico
Consumer Staples
South Africa
Consumer Staples
Health Care
Insurance
Turkey
Real Estate
Consumer Staples
Global demand
Malaysia
Energy
Valuations
Trailing PB
# of st.devs.
from long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
from long
term average
18
22
1.8
3.5
10
3
1
5
2
1
23
15
22
19
17
19
29
18
17
2.2
1.6
1.4
2
16
12
8
1
15
9
7
12
7
9
20
17
16
17
18
24
15
18
16
12
42
18
7
12
2
7
6
5
1
5
3
16
13
6
Relative Valuations to respective market

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
0.7
15
2.1
134
36
120
26
11.8
4.1
5.0
1.7
0.5
(0.0)
35
19
23
1.9
1.4
1.6
121
33
31
46
(7)
(12)
361
62
97
170
1
62
2.1
1.2
1.1
1.0
7.5
4.9
5.5
5.5
2.8
1.5
1.2
1.6
27
29
25
27
2.1
3.0
2.6
2.3
72
7
32
15
14
(7)
29
24
91
26
41
41
17
(11)
18
(4)
17
0.7
3.0
1.0
16
0.5
104
45
161
53
15
20
1.2
2.7
2.5
13
4.2
39
13
26
(38)
61
(8)
34
(7)
9
39
17
30
15
20
21
14
0.7
2.1
1.7
1.8
12.6
5.6
14.9
3.6
2.4
1.3
2.4
0.7
90
26
67
20
7.0
3.2
4.7
3.7
43
89
100
27
36
22
61
3
449
144
547
58
127
58
205
46
2
10
13
5
11
16
14
41
15
15
12
20
27
26
15
18
1.8
1.3
1.0
0.2
5.4
4.0
2.2
2.5
1.4
1.7
1.4
1.3
18
14
12
13
1.2
1.6
1.6
0.9
69
63
(4)
14
31
48
3
31
83
36
(24)
(15)
44
11
(23)
(8)
14
29
21
1.6
4.3
1.7
20
3.1
117
58
212
83
30
21
11
19
23
2.1
4.0
1.5
15
2.0
38
31
30
16
18
7
4
5
13
4
2
6
21
11
18
16
18
18
19
8
17
19
18
12
2.8
2.3
2.1
1.8
4.3
7.2
5.1
2.2
1.6
1.3
0.1
1.8
21
30
24
16
2.3
2.9
2.4
4.4
47
67
54
2
5
18
12
(16)
70
187
104
(13)
20
113
89
(33)
1
13
1
6
99
42
24
20
12
25
(0.4)
1.0
1.8
5.4
2.3
1.2
13
28
2.8
2.2
12
137
46
114
(1)
193
(52)
135
11
23
19
1.9
3.0
1.1
15
1.8
31
(17)
41
17

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 18: EM expensive sectors (valuations more than one standard deviation above their 10 year average) (contd)
Valuations
Trailing PB
# of st.devs.
from long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
from long
term average
Mexico
Chemicals
109
19
17
1.5
4.8
Mexico
Metals & Mining
12
16
(2)
12
13
0.9
6
1
5
0
(1)
(50)
8
160
17
30
13
14
64
11
14
5
3
5
3
Global demand
China growth concerns
Others
Taiwan
Energy
Malaysia
Thailand
Utilities
Philippines
Utilities
Turkey
Energy
Metals & Mining

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
1.9
23
0.6
58
(53)
3.8
1.1
26
3.3
(22)
(24)
24
(12)
1.7
2.1
2.8
4.0
2.0
1.0
16
13
5.6
2.7
23
115
(6)
30
58
130
6
92
21
3.2
4.9
2.6
24
4.9
51
14
129
33
45
13
2.0
3.0
3.2
21
3.8
21
(9)
31
(17)
21
13
0.9
4.0
1.4
24
3.0
(19)
(29)
35
(19)
(12)
(19)
6
24
10
8
0.7
(0.2)
2.8
1.5
1.6
1.1
25
15
8.3
3.0
(9)
(20)
(12)
8
53
(20)
13
(36)
Source: MSCI, Datastream, 9 November 2012. Note: Trailing PB is used for capital intensive sectors such as energy, metals and mining, telecom, financials and utilities. For other sectors fwd PE is used.
Table 19: EM value sectors (valuations more than one standard deviation below their 10 year average)
Domestic Growth
India
Korea
Insurance
Taiwan
Insurance
Poland
Global demand
India
Korea
Thailand
Energy
Brazil
Energy
18
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
11
(3)
15
10
(1.2)
3.4
10
12
10
(0.8)
37
(8)
16
76
15
14
15
16
24
25
20

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(0.5)
27
1.8
(25)
(9)
33
17
1.2
(1.3)
11
2.8
27
31
38
(0.8)
1.4
(1.8)
1.7
15
42
(21)
32
12
(1.0)
2.4
(0.4)
16
1.7
15
73
85
73
15
(1.2)
4.7
(1.0)
25
2.0
10
31
85
101
87
12
(1.3)
1.3
(0.7)
19
1.0
(20)
(9)
12
32
16
(0.4)
1.7
(1.0)
18
4.4
(20)
(10)
(25)
20
20
(22)
36
0.3
0.9
(1.5)
10
3.6
(14)
(11)
(35)
(1)

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 20: EM value sectors (valuations more than one standard deviation below their 10 year average) (contd)
Global demand
Russia
Energy
South Africa
Energy
China growth concerns

China
Metals & Mining
Korea
Metals & Mining
Taiwan
Metals & Mining
Brazil
Metals & Mining
South Africa
Metals & Mining
Policy Risks
China
Banks
India
Metals & Mining
Energy
Korea
Banks
Brazil
Banks
Russia
Utilities
Others
Malaysia
Utilities
Taiwan
Banks
Brazil
Poland
IT
Utilities
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
59
74
(15)
(2)
(1.2)
0.6
14
21
(0.4)
(37)
41
12
(9)
16
(56)
18
26
17

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(1.3)
13
4.6
(18)
(12)
(22)
(13)
1.9
(1.0)
20
4.6
(27)
(15)
(24)
0.2
1.2
(1.0)
2.1
31
(6)
(28)
(12)
0.4
0.7
(1.5)
2.3
(18)
(37)
(21)
55
25
2.8
1.4
(1.0)
2.6
86
(15)
(20)
(6)
(41)
19
(0.4)
1.2
(1.5)
16
4.4
(31)
(6)
(16)
35
18
(0)
33
(1.3)
1.9
(1.0)
18
2.8
(21)
27
(24)
24
41
10
(1.3)
1.2
(1.5)
18
5.5
(37)
(6)
(26)
(4)
5
12
10
15
10
3
15
6
7
11
(0.8)
(0.3)
0.9
1.7
(1.4)
(1.0)
12
13
1.8
1.9
(49)
(16)
(45)
(18)
(64)
(35)
(39)
(22)
8
1
13
0
(7)
(19)
(5)
44
6
9
(1.0)
(0.2)
0.6
0.8
(1.6)
(1.2)
9
10
2.9
4.9
(24)
6
(17)
(4)
(49)
(27)
(20)
1
20
25
(2)
11
(0.7)
1.5
(1.2)
17
4.2
(16)
18
23
(33)
11
(0.3)
0.4
(1.2)
1.0
129
135
(51)
(23)
10
10
39
(11)
14
(0.3)
1.5
(1.0)
10
2.6
(5)
(31)
(13)
3
9
3
12
(29)
17
9
4
13
11
(0.6)
(0.8)
1.1
1.0
(1.2)
(1.1)
8
9
3.1
3.0
(8)
(18)
4
(4)
(39)
(45)
(25)
(32)
(1)
13
1.3
1.0
(1.2)
10.7
28
30
(29)
(29)
5
2
11
3
2
15
(47)
(12)
2
(14)
1
(21)
18
9
10
1.5
(1.1)
(0.4)
1.2
0.6
0.7
(1.7)
(1.3)
(1.1)
7
6
7
9.4
5.3
4.6
71
(15)
(10)
23
27
(6)
(3)
(50)
(47)
(8)
16
(32)
Source: MSCI, Datastream, 9 November 2012. Note: Trailing PB is used for capital intensive sectors such as energy, telecom, metals and mining, financials and utilities. For other sectors fwd PE is used.
19

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 21: EM Domestic growth basket
China
Insurance
Consumer Staples
India
Industrials
Banks
Chemicals
Consumer Staples
Korea
Insurance
Consumer Staples
Health Care
Taiwan
Insurance
Consumer Staples
Indonesia
Banks
Industrials
Consumer Staples
Health Care
Malaysia
Real Estate
Banks
Consumer Staples
Thailand
Banks
Consumer Staples
20
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
7
7
6
4
3
2
15
(3)
6
35
30
18
14
21
22
(1.0)
0.6
1.8
2.4
4.8
3.5
4
8
6
24
1
3
10
5
11
5
22
1
2
5
14
(3)
7
13
22
15
23
15
15
14
20
19
17
19
11
10
14
13
17
18
29
(0.9)
(1.2)
(0.4)
(0.4)
1.4
1.6
2.2
3
6
1
3
3
0
10
17
12
12
14
42
10
16
17
3
3
3
2
37
18
(8)
11
32
5
16
8
12
2
36
5
15
7
9
1
10
(2)
7
20
9
12
3
1
10
28
11
1
3
1
12
32
10
1
40
7
7
12
2
43
5
6
5
1

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(0.9)
0.6
0.7
15
20
15
1.7
0.9
2.1
56
125
134
69
55
36
50
200
120
53
73
26
1.9
3.4
2.5
2.8
5.0
4.1
11.8
(0.7)
(0.5)
(0.9)
(0.1)
(0.0)
0.5
1.7
15
27
15
19
23
19
35
1.9
1.8
1.3
1.8
1.6
1.4
1.9
(18)
(25)
8
2
31
33
121
4
(9)
11
3
(12)
(7)
46
(26)
33
(4)
9
97
62
361
(17)
17
26
(17)
62
1
170
(0.8)
0.9
0.7
1.2
2.3
3.0
(1.3)
(0.0)
1.0
11
12
16
2.8
1.5
0.5
27
92
104
31
39
45
6
101
161
38
58
53
16
19
(0.8)
0.5
1.4
4.1
(1.8)
1.9
8
34
1.7
2.8
15
39
42
35
(21)
132
32
37
14
8
16
18
17
17
12
14
15
16
18
24
0.5
0.3
1.2
1.0
1.1
2.1
3.2
3.0
4.9
5.5
5.5
7.5
0.5
(0.0)
1.5
1.6
1.2
2.8
22
19
29
27
25
27
2.0
2.9
3.0
2.3
2.6
2.1
(13)
2
7
15
32
72
(4)
16
(7)
24
29
14
(19)
(23)
26
41
41
91
(23)
(22)
(11)
(4)
18
17
8
22
1
6
(16)
18
11
16
8
10
17
15
11
20
12
12
16
20
(1.1)
1.0
(0.6)
(0.8)
0.6
1.2
1.7
1.8
1.9
2.1
2.6
2.7
0.4
0.7
(0.2)
(0.1)
(0.4)
2.5
14
9
14
16
15
13
4.1
1.9
2.4
4.4
3.4
4.2
(23)
39
(15)
(14)
16
39
(4)
11
(3)
(5)
10
13
(22)
(14)
(9)
(0)
20
26
(29)
(28)
(2)
6
37
(38)
30
(7)
61
(8)
34
18
30
9
39
17
10
14
15
20
21
(0.4)
1.8
0.7
2.1
1.7
2.0
3.6
12.6
5.6
14.9
0.9
0.7
2.4
1.3
2.4
18
20
90
26
67
3.4
3.7
7.0
3.2
4.7
(8)
27
43
89
100
1
3
36
22
61
(14)
58
449
144
547
(20)
46
127
58
205

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 22: EM Domestic growth basket (contd)
Philippines
Banks
Industrials
Consumer Staples
Real Estate
Brazil
Insurance
Real Estate
Industrials
Consumer Staples
Mexico
Banks
Industrials
Consumer Staples
Russia
Banks
Consumer Staples
South Africa
Banks
Insurance
Industrials
Health Care
Consumer Staples
Turkey
Industrials
Real Estate
Consumer Staples
Poland
Energy
Insurance
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
13
6
35
5
3
16
13
5
39
4
2
10
14
41
12
44
11
16
12
20
13
18
15
15
15
18
14
19
27
26
1.0
0.2
0.1
(0.1)
1.8
1.3
2.2
2.5
2.5
3.3
5.4
4.0
3
0
2
4
2
5
14
2
0
1
2
2
3
6
13
(7)
99
(29)
1
44
5
13
14
51
63
12
23
29
14
10
23
13
15
17
21
(0.0)
(0.1)
1.3
0.1
0.1
0.7
1.6
11
5
8
1
30
12
6
7
1
21
34
45
16
(1)
11
19
4
23
16
19
15
16
17
13
23
14
5
14
1
2
10
1
18
9
9
5
4
1
18
4
7
10
10
6
5
1
13
2
4
10
15
16
8
15
21
18
11
6
10
1
3
13
7
11
1
3
6
14
2
13
12
2
11

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
1.4
1.3
1.4
2.9
1.4
1.7
12
13
16
18
18
14
1.6
0.9
2.0
2.3
1.2
1.6
(4)
14
(12)
19
69
63
3
31
(4)
50
31
48
(24)
(15)
(15)
11
83
36
(23)
(8)
(17)
(14)
44
11
1.5
1.5
1.6
2.5
13.3
3.6
4.3
(0.4)
(0.6)
(0.7)
(0.1)
(0.1)
0.1
1.7
11
13
8
15
71
26
20
4.2
3.5
1.3
2.4
4.8
3.3
3.1
43
4
127
31
50
76
117
42
6
88
41
48
60
58
8
8
15
79
854
159
212
21
(2)
30
29
596
81
83
1.4
0.8
0.5
0.4
2.1
2.5
2.6
3.2
4.1
4.0
0.2
2.9
0.2
0.4
1.5
15
14
15
25
15
1.3
1.6
1.2
2.1
2.0
(10)
(5)
5
(22)
38
(10)
2
24
(8)
31
(19)
(15)
6
34
30
(16)
(50)
14
9
16
6
21
(1.1)
0.3
1.3
6.4
(0.9)
0.8
21
20
2.9
2.1
15
326
50
244
61
713
63
215
15
15
8
28
15
18
19
18
10
10
12
11
13
17
18
19
0.6
0.7
1.8
0.8
(0.0)
2.8
2.1
2.3
1.7
1.8
2.2
2.2
22.5
4.3
5.1
7.2
(0.7)
(0.5)
1.8
(0.4)
0.4
1.6
0.1
1.3
15
16
16
17
78
21
24
30
4.9
3.8
4.4
3.8
5.9
2.3
2.4
2.9
(14)
(10)
2
(6)
12
47
54
67
(14)
(15)
(16)
(9)
19
5
12
18
(32)
(28)
(13)
(14)
799
70
104
187
(14)
(12)
(33)
(4)
533
20
89
113
(7)
22
99
13
42
17
13
24
11
20
9
9
12
11
25
(0.1)
0.3
(0.4)
0.6
1.0
1.3
1.4
1.8
2.5
5.4
(0.3)
(0.3)
2.3
2.0
1.2
12
13
13
21
28
1.5
2.2
2.8
5.9
2.2
(13)
(12)
12
0
137
5
(7)
46
(4)
114
(29)
(25)
(1)
34
193
(9)
(7)
(52)
(17)
135
46
76
22
11
9
(0)
10
12
11
(0.4)
(1.0)
0.4
0.8
2.4
2.6
(0.8)
(0.4)
0.8
7
16
21
2.4
1.7
7.3
(6)
15
7
(10)
73
6
(41)
85
104
(41)
73
68
21

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 23: EM China growth concerns baskets
China
Industrials
Metals & Mining
Real Estate
Chemicals
Energy
Korea
Metals & Mining
Energy
Chemicals
Taiwan
Metals & Mining
Chemicals
Indonesia
Metals & Mining
Energy
Brazil
Metals & Mining
Mexico
Metals & Mining
Russia
Metals & Mining
South Africa
Metals & Mining
Poland
Metals & Mining
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
7
2
6
1
18
2
5
1
7
0
18
2
(10)
(37)
9
(31)
(5)
(36)
20
41
12
60
7
24
10
12
7
9
9
9
(0.8)
0.2
(1.0)
(0.9)
(0.3)
(0.9)
1.1
1.2
1.3
1.5
1.6
1.7
5
3
5
5
3
4
(9)
(43)
(23)
16
33
28
9
8
10
0.4
(0.2)
0.6
3
2
8
1
2
5
(56)
(13)
(47)
55
12
59
25
15
16
1
6
1
8
(48)
(24)
43
5
18
26
(41)
12
16

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(0.8)
(1.0)
(0.4)
(0.4)
(0.9)
(0.8)
10
9
15
15
15
17
2.8
2.1
3.3
3.8
3.6
1.8
11
31
(19)
(3)
1
(5)
11
(6)
(10)
2
(15)
14
(29)
(28)
(19)
(9)
2
8
(25)
(12)
(29)
(25)
1
39
0.7
1.2
1.3
(1.5)
(0.7)
(0.3)
9
13
13
2.3
2.5
1.3
5
(2)
17
(18)
(6)
(14)
(37)
5
14
(21)
7
2
2.8
0.3
1.4
1.4
1.5
1.8
(1.0)
0.5
(0.5)
5
10
10
2.6
5.0
4.1
86
7
20
(15)
(0)
(11)
(20)
(16)
0
(6)
(31)
3
11
11
0.3
0.2
1.6
3.0
(0.7)
(0.5)
13
20
4.2
4.4
(20)
(20)
(14)
(18)
(60)
(24)
(19)
34
19
(0.4)
1.2
(1.5)
16
4.4
(31)
(6)
(16)
35
(2)
12
13
0.9
3.8
1.1
26
3.3
(22)
(24)
24
(12)
(30)
(0.2)
1.6
(0.6)
20
1.7
68
15
103
47
17
18
(0)
33
(1.3)
1.9
(1.0)
18
2.8
(21)
27
(24)
15
22
(43)
(19)
0.1
1.6
(0.5)
16
5.9
(24)
(36)
20
22
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 24: EM Global demand basket
India
Health Care
Korea
Industrials
Taiwan
Industrials
Malaysia
Chemicals
Energy
Thailand
Energy
Brazil
Energy
Chemicals
Mexico
Chemicals
Russia
Energy
South Africa
Energy
Valuations
Trailing PB
# of st.devs.
From long
term
average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
15
5
14
4
15
18
9
8
15
20
(1.2)
0.2
4.7
4.4
16
36
12
24
33
11
87
77
24
12
23
16
6
8
9
(1.3)
(0.7)
(0.3)
56
4
56
3
15
31
13
13
4
4
5
3
20
11
7
23
25
32
20
0
20
(0)
5
3

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(1.0)
(1.0)
25
15
2.0
0.9
10
53
31
37
85
74
101
67
1.3
1.6
1.0
(0.7)
(0.9)
(0.6)
19
19
12
1.0
0.6
1.4
(20)
1
7
(9)
19
1
12
38
(9)
2
37
(6)
(0.2)
(0.2)
2.0
1.3
(0.4)
0.1
14
9
3.6
3.4
(6)
(3)
8
2
14
(26)
14
(33)
13
19
(0.6)
1.9
2.7
3.0
(0.7)
1.1
18
15
4.0
1.8
(11)
31
2
(17)
25
41
45
3
16
(0.4)
1.7
(1.0)
18
4.4
(20)
(10)
(25)
20
(22)
9
36
(217)
9
19
0.3
(0.1)
0.9
1.3
(1.5)
(0.3)
10
8
3.6
0.8
(14)
92
(11)
233
(35)
(6)
(1)
(20)
(6)
3
NM
109
NM
19
NM
17
NM
1.5
0.8
4.8
(0.6)
1.9
NM
23
0.0
0.6
NM
5
75
5
(74)
58
(55)
(53)
59
74
(15)
(2)
(1.2)
0.6
(1.3)
13
4.6
(18)
(12)
(22)
(13)
14
21
(0.4)
1.9
(1.0)
20
4.6
(27)
(15)
(24)
23

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 25: EM Policy risk basket
China
Banks
Utilities
Health Care
India
Real Estate
Metals & Mining
Energy
Utilities
Korea
Banks
Industrials
Utilities
Brazil
Utilities
Banks
Russia
Utilities
FF
market
cap
weight
EPS
Weight
24
3
13
1
41
2
10
0
1
5
12
4
2
Valuations
Trailing PB
# of st.devs.
From long
term
average
1.9
0.2
1.2
(1.5)
1.7
(0.5)
1.8
(0.8)
2.6
0.0
1.9
0.2
1.0
(0.7)
0.9
(1.4)
1.7
(1.0)
1.5
(0.8)
1.3
(0.3)
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
2013
ROE
2013
DY
1
10
15
5
1
10
10
47
2
21
10
36
10
3
13
9
12
1
19
5
21
12
27
15
6
8
44
10
6
11
12
19
10
17
7
11
12
17
0.6
(1.3)
(0.8)
(0.4)
0.3
0.6
0.0
(0.8)
(0.3)
(0.3)
0.6
16
18
13
14
12
16
6
12
13
12
8
3.1
5.5
2.9
3.7
1.3
3.1
1.0
1.8
1.9
2.0
0.5
8
14
1
2
13
14
0
(1)
(7)
20
(19)
NM
(5)
8
44
NM
6
14
9
23
(1.0)
(0.3)
(0.2)
(0.0)
0.6
1.6
0.8
0.4
(1.6)
(1.2)
(1.2)
(0.7)
9
12
10
2
6
20
9
25
16
(2)
(10)
11
9
8
0.2
(0.7)
0.9
1.5
0.7
(1.2)
(33)
11
(0.3)
0.4
(1.2)
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
0
0
5
0
0
4
(19)
(10)
(7)
23
27
21
10
10
11
(0.6)
(0.6)
(0.5)
1.0
1.1
2.2
22
(0)
11
0.1
9
3
4
1
1
6
12
3
5
1
0
5
17
(29)
31
(10)
(50)
(1)
4
9
6
(21)
160
8
11
13
14
9
30
17
(0.8)
(0.6)
(0.1)
(0.2)
2.1
1.7

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
(37)
22
26
102
(6)
11
8
44
(26)
5
9
60
(4)
(14)
16
19
27
(49)
(16)
(9)
26
6
(45)
(18)
(10)
(9)
(62)
(64)
(35)
(40)
(50)
44
(39)
(22)
(38)
(55)
2.9
3.1
4.9
0.6
(24)
(4)
6
181
(17)
2
(4)
168
(49)
(25)
(27)
(67)
(20)
(6)
1
(69)
9
17
5.8
4.2
(10)
(16)
2
18
(37)
9
(62)
23
1.0
129
135
(51)
(23)
Table 26 : EM others basket
China
Paper & Forest Products
Korea
Taiwan
Banks
Real Estate
Energy
24
Valuations
Trailing PB
# of st.devs.
From long
term average

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(0.6)
(0.4)
(0.2)
9
10
17
2.8
2.7
2.1
9
6
23
58
6
10
(37)
(30)
40
(34)
(17)
7
0.8
(0.9)
2.5
40
20
(27)
(15)
1.0
1.1
2.1
1.8
4.0
2.8
(1.1)
(1.2)
1.0
0.4
1.0
2.0
9
8
15
12
13
16
3.0
3.1
3.6
6.1
2.7
5.6
(18)
(8)
3
(35)
115
23
(4)
4
7
(21)
30
(6)
(45)
(39)
21
4
130
58
(32)
(25)
(4)
(15)
92
6

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 27 : EM others basket (contd))
Indonesia
Utilities
Malaysia
Utilities
Thailand
Chemicals
Utilities
Philippines
Utilities
Brazil
Mexico
Russia
Real Estate
Chemicals
South Africa
Paper & Forest Products
Real Estate
Turkey
Metals & Mining
Energy
Poland
Chemicals
Consumer Staples
Utilities
Banks
Valuations
Trailing PB
# of st.devs.
From long
term average
FF
market
cap
weight
EPS
Weight
2012
Growth
2013
Growth
12M
fwd PE
# of st.devs.
From long
term average
5
12
5
12
18
19
14
9
14
14
0.3
1.2
6.7
3.7
11
13
10
9
39
1
(11)
14
14
21
(0.3)
3.2
6
1
7
1
(13)
64
21
45
9
13
11
11
14
13
21
(10)
9
5
26
41
(1)
36
24
0
7
5
0
4
2
1
3
13

Premium
10Y
Premium
10Y
to 12M
Average
to trailing
Average
fwd PE
premium to
PB
premium
fwd PE
to PB
2013
ROE
2013
DY
(0.1)
(0.1)
36
22
3.9
4.6
2
2
14
3
72
(6)
92
12
1.5
4.9
(1.0)
2.6
10
24
2.6
4.9
(5)
51
0
14
(31)
129
(13)
33
0.1
2.0
1.5
3.0
(0.1)
3.2
15
21
4.6
3.8
(17)
21
(16)
(9)
(33)
31
(26)
(17)
13
14
0.9
2.0
4.0
3.7
1.4
(0.0)
24
27
3.0
6.8
(19)
(10)
(29)
(21)
35
25
(19)
64
6
17
7
13
17
12
1.3
2.0
(0.2)
1.0
3.1
4.3
(1.2)
0.6
(0.3)
8
17
30
10.7
2.0
2.5
28
30
(29)
(29)
(29)
(5)
40
70
53
20
15
52
4
39
8
9
12
(0.6)
(0.7)
(0.1)
1.3
2.3
2.9
(0.5)
(0.5)
(0.8)
8
25
23
0.2
5.1
5.2
66
91
143
122
49
108
71
197
273
60
109
492
1
2
13
(232)
25
14
84
(5)
11
7
14
12
(0.1)
1.1
0.8
1.0
1.6
4.1
(0.8)
1.0
0.9
13
9
27
2.0
6.7
6.3
(41)
25
3
132
16
(0)
(61)
(37)
63
(41)
(52)
26
3
5
10
3
5
11
(19)
(12)
58
24
6
3
8
10
11
(0.2)
0.7
0.1
1.5
2.8
2.4
1.1
1.6
(0.6)
15
25
22
3.0
8.3
7.3
(20)
(9)
2
8
(12)
13
(20)
53
30
(36)
13
91
2
2
4
11
32
5
2
2
4
15
26
3
(16)
(12)
2
2
1
(47)
(1)
1
16
(21)
1
(14)
9
9
9
10
12
18
0.5
(1.1)
1.0
(0.4)
(0.6)
1.5
2.7
0.6
2.2
0.7
1.8
1.2
0.1
(1.3)
1.6
(1.1)
(0.9)
(1.7)
23
6
21
7
13
7
4.5
5.3
1.3
4.6
4.4
9.4
(16)
(15)
(14)
(10)
17
71
(16)
27
(25)
(6)
19
23
109
(50)
71
(47)
40
(3)
20
16
(20)
(32)
46
(8)
25
Adrian Mowat
(852) 2800-8599

21 November 2012
Thematic stock baskets for the year ahead

Chief Asian and Emerging Market
Equity Strategist
Asia Pacific ex-Japan Equity Derivatives &

Delta One Strategy
Adrian Mowat AC
Tony SK Lee AC
(852) 2800-8599, adrian.mowat@jpmorgan.com

(852) 2800-8857, tony.sk.lee@jpmorgan.com

We have divided a shortlist of stocks in the Year Ahead into 10 thematic baskets
1. Dividend aristocrats (JPGIEMDA <Index>): Analysts top picks with the best DPS track record and yield greater than
2%. The criteria for a good track record are no cut in dividend over the last decade except 2008 and 2009. Even if
dividend was cut in the recession, last dividend should be greater than or equal to the 2007 peak. Stocks with a dividend
history of less than two years are omitted.
2. Dividend pretenders (JPGIEMDP <Index>): High-yield stocks (yield greater than 2%) to avoid with a poor dividend
track record.
3. Nifty fifty or running the winners (JPGINIF2 <Index>): Outperforming growth stocks with a bias for domestic growth
and few global leaders. The criteria for winners are outperformance in the last 12 months and price Q-score above 50%.
4. Rotation riders (JPGIEMRL <Index>, JPGIEMRS <Index>): Underperforming top picks with low P/BV and the
opposite for stocks to avoid.
5. China growth debate (JPGICHGL <Index>, JPGICHGS <Index>): Now that the market is cheap, and confidence in the
growth model more realistic, be prepared to adjust exposure as confidence in growth changes. Two baskets of top picks
and stocks to avoid.
6. ASEAN growth story (JPHASGRW <Index>): Indonesia and the Philippines enjoy a significant demographic dividend.
Thailands economic momentum is strong and policy very pro-growth. Beyond the political risk Malaysian investment
cycle is picking up. For more on ASEAN please see the country pages.
7. Policy risk (JPGIEMPL <Index>, JPGIEMPS <Index>): Top picks and stocks to avoid in high-policy-risk sectors. The
aim is to provide baskets of stocks to manage your exposure to policy risk. See valuation basket section on page 14.
The tables on the following pages summarize the basket constituents. Basket short-selling capacity will depend on borrow
availability at the time of execution. Investors can track the performance of these J.P. Morgan Thematic Baskets on
Bloomberg using the tickers in brackets above. For more information, please contact your J.P. Morgan salesperson or
Equity Derivatives & Delta One Strategy team.
26

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 28: J.P. Morgan 2013 Dividend Aristocrats Basket (JPGIEMDA <Index>)
Name
Share
Price
Price
Target % Change Bloomberg
(LC) 2013 (LC) to target
Code
Top Picks
Vodacom Group
11681
Advanced Petrochemical
23.6
Saudi Arabian Fertilizer Co.
198
First Gulf Bank
10.2
Mobily
74.8
Quanta Computer Inc.
69.0
Coronation Fund Managers 3617
Saudi Industrial Investment
22.3
Grupo Aeroportuario
29.7
Sasol
37289
ICBC - H
5.1
Tractebel Energia
33.1
Electricity Generating Co
128
Charoen Pokphand Foods
33.0
PTT Exp & Production
160
TSMC
90.0
China Shenhua Energy - H
30.8
Sberbank
86.7
Samsung Engg
144500
Semen Gresik
15000
KPJ Healthcare
6.0
Almacenes Exito
35300
Sesa Goa
166
Ju Teng International
3.6
IJM Land
2.1
Credicorp
138
Totvs
41.0
11500
34.0
221
13.5
88.0
85.0
5050
29.0
35.0
45700
6.3
37.0
155
43.0
180
110.0
35.0
147.3
260000
18000
7.1
34100
220
5.0
2.9
139
48.0
(1.5)
44.4
11.9
32.3
17.7
23.2
39.6
30.3
18.0
22.6
23.5
11.8
21.1
30.3
12.5
22.2
13.6
69.9
79.9
20.0
17.9
(3.4)
32.5
40.8
38.8
0.9
17.1
VOD SJ
APPC AB
SAFCO AB
FGB UH
EEC AB
2382 TT
CML SJ
SIIG AB
OMAB MM
SOL SJ
1398 HK
TBLE3 BZ
EGCO TB
CPF TB
PTTEP TB
2330 TT
1088 HK
SBER RX
028050 KS
SMGR IJ
KPJ MK
EXITO CB
SESA IN
3336 HK
IJMLD MK
BAP US
TOTS3 BZ
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
N
OW
OW
OW
OW
OW
19629
1030
13166
8331
13953
9103
1286
2670
903
27204
218889
10358
2193
8315
17286
80020
71050
59295
5320
9239
1260
8666
2622
518
958
10990
3176
14.6
12.3
12.6
7.6
9.1
10.8
18.5
13.3
17.3
8.8
8.0
12.8
6.5
11.6
10.2
14.2
13.4
5.3
9.2
19.2
23.1
33.6
8.0
7.5
15.0
14.8
24.4
13.7
8.4
12.7
6.7
8.9
8.5
12.0
8.3
16.3
8.6
7.6
13.1
9.9
12.7
10.0
13.5
12.7
5.0
8.4
15.9
18.9
29.5
6.2
5.7
12.8
12.6
20.8
Payout
Dividend
Yield (%) Ratio
CAGR
ROE (%)
2013E FY0 (%) 2007-11 (%) 2013E
8.0
7.4
7.1
6.7
6.0
5.9
5.8
5.4
5.0
4.7
4.2
4.2
4.1
3.9
3.4
3.3
3.0
3.0
2.8
2.6
2.6
2.6
2.4
2.3
2.2
2.0
2.0
104
55.1
79.1
40.5
44.8
66.5
94.8
85.2
65.0
49.3
34.0
98.7
55.4
50.4
120
57.9
39.2
6.3
23.3
50.0
48.8
50.0
12.9
34.9
28.7
21.9
58.9
57.8
41.4
34.3
55.1
69.4
4.4
45.5
18.9
3.6
14.2
11.7
9.5
2.5
93.8
13.3
0.0
49.5
42.1
25.7
21.9
42.7
21.4
26.2
17.0
100
10.7
29.5
62.6
20.0
41.5
15.8
27.7
22.3
70.1
17.4
12.0
19.5
19.6
30.3
10.0
17.9
20.8
22.4
17.9
21.9
32.8
30.3
18.1
7.2
15.6
10.7
9.2
19.9
27.3
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in descending order of 2013E dividend yield
Table 29: J.P. Morgan 2013 Dividend Pretenders Basket (JPGIEMDP <Index>)
Name
Stocks to Avoid
CSN
Globe Telecom
ELETROBRAS (ON)
HTC Corp
Bank Pekao SA
Mobile Telesystems
Group 5
Thai Oil Public Company
Liberty Holdings Ltd
S-Oil Corp
China Minsheng Bank - H
IOI Corp.
PetroChina
Petkim
Hong Leong Bank
Bank of Baroda
Share
Price
Price
Code
4.7
1150
9.3
244
157
17.2
2500
63.3
10163
97100
7.2
4.9
10.2
2.1
14.4
729
5.0
1000
10.0
100
179
20.5
2941
53.0
8400
78000
6.8
4.6
8.3
1.7
11.7
600
5.9
(13.0)
8.1
(58.9)
14.0
19.3
17.6
(16.2)
(17.3)
(19.7)
(5.6)
(6.7)
(19.3)
(18.2)
(18.8)
(17.7)
SID US
GLO PM
ELET3 BZ
2498 TT
PEO PW
MBT US
GRF SJ
TOP TB
LBH SJ
010950 KS
1988 HK
IOI MK
857 HK
PETKM TI
HLBK MK
BOB IN
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
UW
UW
UW
UW
N
UW
UW
UW
UW
UW
UW
UW
UW
UW
UW
UW
6882
3697
6298
7118
12663
17750
313
4199
3285
10062
27409
10352
250297
1160
8841
5188
NM
17.1
2.2
12.4
13.6
10.9
NM
9.8
9.2
13.0
7.0
17.7
14.5
NM
14.5
6.0
11.0
15.9
35.3
33.8
11.3
10.3
11.2
13.7
10.7
11.9
7.4
16.3
14.1
15.8
15.7
6.7
Payout
Dividend
Yield (%) Ratio
CAGR
ROE (%)
2013E FY0 (%) 2007-11 (%) 2013E
11.3
7.3
7.2
6.4
6.3
5.8
5.6
5.4
5.0
4.2
3.9
3.6
3.2
2.9
2.1
2.1
32.4
83.8
47.5
54.1
0.0
73.9
22.8
45.3
44.8
46.0
28.7
49.0
45.0
NA
23.0
17.0
(16.1)
(1.6)
20.6
15.4
(13.5)
(4.4)
(12.9)
(7.5)
5.0
(22.7)
74.8
(9.0)
(2.6)
NA
21.7
23.2
8.5
20.0
0.5
6.8
16.6
46.7
13.0
10.8
16.1
15.6
16.3
14.9
12.0
7.7
14.4
15.7
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in descending order of 2013E dividend yield
27
Adrian Mowat
(852) 2800-8599

21 November 2012
Table 30: J.P. Morgan 2013 Nifty Fifty / Running the Winners Basket (JPGINIF2 <Index>)
Name
Share
Price
Price
Code
Top Picks
Ju Teng International
3.6
5.0
Geely Automobile Holdings
3.7
6.0
Pruksa Real Estate Pcl
19.6
22.0
Orion
1076000 1300000
Magnit
35.4
40.5
Tencent
246
306
Ayala Corporation
455
550
Arca Continental
94.4
100.0
Sino Biopharmaceutical
3.6
3.8
Summarecon Agung
1890
2500
Semen Gresik
15000
18000
China Shipping Container
2.1
2.9
Vakifbank
4.3
5.5
157
200
Electricity Generating Co.
128
155
Erste Bank
20.4
25.0
Grupo Aeroportuario
29.7
35.0
Duratex
14.2
16.0
Lojas Americanas)
17.0
19.5
LG Display
34650
40000
Novatek Microelectronics
109
135
Ayala Land
22.9
30.0
Mobily
74.8
88.0
KPJ Healthcare Berhad
6.0
7.1
Beijing Capital International
5.2
9.3
Samsung Electronics
1332000 1800000
CSR Corp Ltd.
6.8
8.8
Coronation Fund Managers 3617
5050
Kunlun Energy Company
15.4
17.5
HCL-Technologies
614
650
Koc Holding
8.1
7.4
CCR
18.7
20.0
Emaar Properties
3.6
4.5
NATURA
56.5
62.0
First Gulf Bank
10.2
13.5
Anhanguera
31.9
45.0
Lenovo Group Limited
7.0
8.1
Thai Union Frozen Products 70.5
90.0
China Foods Ltd
8.2
10.0
ITC Limited
280
325
Far EasTone Telecom
69.8
80.0
Iguatemi
25.3
30.0
TSMC
90.0
110.0
TPK Holding Co., Ltd.
407
550
LG Electronics
79300 100000
ICICI Bank
1019
1200
TMK
13.8
19.0
KEPCO
27400
33000
LW Bogdanka
129
169
Localiza
36.0
39.0
Oberoi Realty
283
330
Vodacom Group
11681
11500
Pacific Basin Shipping
4.0
4.5
Fibria
19.2
19.0
Samsung Life Insurance
93300 145000
28
40.8
62.6
12.2
20.8
14.4
24.4
20.9
5.9
5.3
32.3
20.0
37.7
28.2
27.8
21.1
22.3
18.0
12.4
14.8
15.4
24.4
31.3
17.7
17.9
78.8
35.1
29.6
39.6
13.8
5.8
(8.0)
7.0
25.7
9.8
32.3
41.1
16.2
27.7
22.0
16.0
14.6
18.4
22.2
35.3
26.1
17.8
38.1
20.4
30.9
8.4
16.6
(1.5)
13.9
(1.2)
55.4
3336 HK
175 HK
PS TB
001800 KS
MGNT LI
700 HK
AC PM
AC* MM
1177 HK
SMRA IJ
SMGR IJ
2866 HK
VAKBN TI
SCB TB
EGCO TB
EBS AV
OMAB MM
DTEX3 BZ
LAME3 BZ
034220 KS
3034 TT
ALI PM
EEC AB
KPJ MK
694 HK
005930 KS
1766 HK
CML SJ
135 HK
HCLT IN
KCHOL TI
CCRO3 BZ
EMAAR DB
NATU3 BZ
FGB UH
AEDU3 BZ
992 HK
TUF TB
506 HK
ITC IN
4904 TT
IGTA3 BZ
2330 TT
3673 TT
066570 KS
ICICIBC IN
TMKS LI
015760 KS
LWB PW
RENT3 BZ
OBER IN
VOD SJ
2343 HK
FIBR3 BZ
032830 KS
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
N
OW
OW
OW
N
OW
518
3564
1410
5909
16733
58731
6558
11611
2301
1416
9239
3790
5951
17283
2193
10299
903
3752
8455
11412
2244
7630
13953
1260
2905
180599
10640
1286
15968
7751
11370
15828
5937
11670
8331
2228
9281
2633
2958
40030
7803
1926
80020
4311
11945
21274
3225
16191
1350
3478
1689
19629
987
5109
17176
7.5
14.1
12.4
33.2
24.6
36.1
22.5
24.8
24.2
25.2
19.2
NM
8.3
13.1
6.5
24.0
17.3
19.9
48.4
44.2
15.0
33.3
9.1
23.1
16.2
9.6
21.4
18.5
15.9
17.5
10.3
27.6
10.8
26.6
7.6
28.7
19.3
13.5
24.5
35.7
19.8
23.6
14.2
10.0
16.2
18.8
9.4
NM
12.6
30.1
42.7
14.6
NM
NM
17.5
5.7
10.5
9.7
28.5
21.2
26.7
17.4
19.2
20.4
19.1
15.9
33.7
7.2
11.0
9.9
10.6
16.3
17.8
31.4
7.4
11.8
27.5
8.9
18.9
13.3
7.6
16.5
12.0
14.3
13.2
9.6
22.2
11.0
23.3
6.7
16.8
15.7
11.8
18.2
30.3
16.0
20.9
13.5
8.0
7.0
15.2
8.2
49.7
9.0
18.0
18.8
13.7
30.4
264.2
14.7
Yield (%) ROE (%)

2013E
2013E
2.3
0.7
3.6
0.4
na
0.4
0.9
2.5
3.8
0.0
2.6
0.0
0.0
3.0
4.1
0.8
5.0
1.8
1.1
1.4
5.0
1.5
6.0
2.6
1.1
0.3
1.2
5.8
2.0
0.8
na
4.1
1.3
3.6
6.7
0.1
0.3
4.2
2.0
2.0
6.9
1.2
3.3
4.2
0.0
1.9
na
0.0
4.9
0.0
0.0
8.0
0.2
0.1
2.4
10.7
20.4
21.5
17.6
23.3
35.6
13.0
18.8
21.9
16.7
30.3
2.7
12.9
21.1
10.0
5.9
12.0
10.0
39.6
15.0
22.2
13.4
27.7
18.1
10.3
21.9
15.3
70.1
17.6
27.4
13.1
41.4
5.9
73.1
15.8
11.1
26.0
18.0
16.4
36.5
18.9
9.9
22.4
38.5
12.7
12.2
17.2
0.7
19.5
24.5
12.5
62.6
2.4
0.3
5.9
Price
Q-Score
12M
Relative
Perf (%)
99%
92%
75%
100%
84%
93%
73%
87%
76%
84%
91%
65%
55%
58%
58%
51%
63%
92%
82%
94%
93%
69%
97%
91%
94%
97%
51%
83%
80%
81%
89%
90%
72%
85%
64%
86%
70%
58%
84%
82%
91%
95%
85%
61%
86%
70%
78%
79%
70%
74%
62%
77%
59%
98%
74%
168
90.9
75.6
69.6
62.5
60.3
56.9
56.9
55.5
54.4
49.9
49.8
45.8
44.8
43.8
43.8
43.1
42.9
42.9
42.2
42.0
41.8
41.6
41.6
40.9
40.8
38.5
38.0
37.8
37.3
36.6
35.6
34.4
33.8
32.2
32.1
30.9
30.8
30.4
25.1
24.2
23.1
21.8
19.6
19.5
19.1
18.6
17.7
16.8
16.5
16.1
15.8
14.2
13.9
13.3

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 31: J.P. Morgan 2013 Nifty Fifty / Running the Winners Basket (JPGINIF2 <Index>) (contd)
Name
Top Picks
Turkcell
Totvs
Antofagasta
Mega Holdings
Industries Qatar
Pacific Rubiales
Tata Consultancy Services
Share
Price
Price
Code
10.8
69.0
41.0
22.3
1210
21.0
149
22.1
1263
14.0
85.0
48.0
29.0
1370
28.6
199
36.0
1400
29.6
23.2
17.1
30.3
13.2
36.2
33.2
62.7
10.9
TCELL TI
2382 TT
TOTS3 BZ
SIIG AB
ANTO LN
2886 TT
IQCD QD
PRE CN
TCS IN
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
OW
OW
OW
OW
OW
OW
OW
OW
N
13184
9103
3176
2670
18966
8249
22567
6538
44921
21.4
10.8
24.4
13.3
7.6
11.8
9.3
7.8
23.2
19.8
8.5
20.8
8.3
6.5
10.9
8.0
6.2
18.2
Yield (%) ROE (%)

2013E
2013E
0.0
5.9
2.0
5.4
3.2
5.9
5.3
2.5
1.1
16.7
22.3
27.3
17.4
22.7
10.1
28.5
29.1
36.4
Price
Q-Score
12M
Relative
Perf (%)
67%
84%
78%
68%
69%
54%
66%
71%
67%
12.9
12.5
11.1
11.0
10.6
8.2
6.8
6.1
4.8
Trailing
P/B (X)
12M
Relative
Perf (%)
0.3
0.6
1.0
1.0
1.2
1.2
1.2
1.3
1.3
1.3
1.4
1.5
1.6
1.8
1.9
2.0
2.1
(43.1)
(14.7)
(20.0)
(20.7)
(3.7)
(18.4)
(9.6)
(57.4)
(7.5)
(24.9)
(33.7)
(22.8)
(6.4)
(14.3)
(8.5)
(12.7)
(15.6)
Trailing
P/B (X)
12M
Relative
Perf (%)
1.9
2.1
2.1
2.1
2.4
2.9
3.3
3.8
4.0
4.4
4.7
8.2
53.5
16.5
15.1
36.8
68.0
23.3
20.6
36.5
16.3
8.3
18.8
8.0
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in descending order of relative performance.
Table 32: J.P. Morgan 2013 Rotation Riders (Top Picks) Basket (JPGIEMRL <Index>)
Name
Top Picks
FSK
HOMEX
Sesa Goa
Unimicron Technology
Sinopec Corp - H
Air China
IJM Land
ZTE Corp
Samba Financial Group
TIM Participacoes
Banco Macro
AirAsia BHD
ASE
Cebu Air, Inc.
Banco Bradesco
Sasol
China Shenhua - H
Price
Share
Price (LC) 2013 (LC) to target
Code
0.0065
25.7
166
28.4
8.0
5.2
2.1
11.2
45.2
7.6
13.8
2.9
22.8
61.0
32.8
37289
30.8
0.0080
38.0
220
40.0
9.5
7.0
2.9
15.0
63.0
11.0
21.0
4.0
28.0
90.0
37.0
45700
35.0
22.9
47.7
32.5
40.8
19.0
35.9
38.8
33.9
39.4
44.5
52.4
38.9
23.1
47.5
12.9
22.6
13.6
FEES RX
HOMEX* MM
SESA IN
3037 TT
386 HK
753 HK
IJMLD MK
763 HK
SAMBA AB
TIMP3 BZ
BMA US
AIRA MK
2311 TT
CEB PM
BBDC4 BZ
SOL SJ
1088 HK
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
7811
659
2622
1499
85288
9141
958
4532
10848
8820
791
2615
5925
898
56337
27204
71050
11.0
2.7
8.0
11.4
11.0
15.2
15.0
237.4
9.3
12.4
2.7
5.2
13.2
14.9
10.9
8.8
13.4
10.2
4.1
6.2
8.8
9.2
13.7
12.8
15.6
7.9
10.3
2.6
13.3
10.3
12.4
9.7
8.6
12.7
Yield (%) ROE (%)

2013E
2013E
0.0
0.0
2.4
5.2
3.3
2.8
2.2
1.6
4.0
1.8
0.0
0.0
2.9
0.0
3.6
4.7
3.0
2.6
12.0
15.6
9.4
14.4
9.5
9.2
10.0
15.6
11.9
24.7
10.1
14.4
13.3
17.9
19.5
17.9
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of trailing PB.
Table 33: J.P. Morgan 2013 Rotation Riders (Stocks to Avoid) Basket (JPGIEMRS <Index>)
Name
Stocks to Avoid
ASUSTek Computer
China Shineway Pharma.
Hong Leong Bank
Longfor Properties Co. Ltd.
Discovery Holdings Limited
Globe Telecom
Ecopetrol ADR
Weg
Manila Electric Company
Mobile Telesystems
OdontoPrev
Share
Price
Price
Code
308
11.9
10163
14.4
14.3
5743
1150
58.1
25.3
254
17.2
11.0
300
12.0
8400
11.7
11.7
5100
1000
52.0
18.0
225
20.5
12.0
(2.4)
0.7
(17.3)
(18.8)
(18.2)
(11.2)
(13.0)
(10.5)
(28.7)
(11.5)
19.3
9.6
2357 TT
2877 HK
LBH SJ
HLBK MK
960 HK
DSY SJ
GLO PM
EC US
WEGE3 BZ
MER PM
MBT US
ODPV3 BZ
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
N
UW
UW
UW
N
UW
UW
UW
UW
UW
UW
UW
7941
1272
3285
8841
10013
3596
3697
119444
7516
6957
17750
2789
10.3
13.6
9.2
14.5
13.5
13.6
17.1
13.7
24.1
16.4
10.9
33.9
10.3
12.3
10.7
15.7
12.6
12.0
15.9
10.8
19.8
15.4
10.3
29.8
Yield (%) ROE (%)

2013E
2013E
5.2
2.4
5.0
2.1
1.6
2.1
7.3
4.9
1.4
3.0
5.8
3.4
16.7
17.6
16.1
14.4
19.5
58.2
20.0
54.7
16.8
24.6
46.7
26.3
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of trailing PB.
29

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 34: J.P. Morgan 2013 China Growth Debate (Top Picks) Basket (JPGICHGL <Index>)
Name
Top Picks
Antofagasta
Skyworth Digital Holdings
Yanbu National Petrochem.
Metalurgica Gerdau
Sinopec Corp - H
Gerdau S.A.
Beijing Capital Intl Airport
Air China
CSR Corp Ltd.
Brilliance China Automotive
Share
Price
Price
Code
1210
4.4
22.3
23.6
43.9
22.0
8.0
3.7
17.3
30.8
198
5.2
5.2
6.8
8.8
2.1
1370
6.0
29.0
34.0
53.0
32.0
9.5
6.0
21.0
35.0
221
9.3
7.0
8.8
11.0
2.9
13.2
35.7
30.3
44.4
20.7
45.3
19.0
62.6
21.2
13.6
11.9
78.8
35.9
29.6
25.3
37.7
ANTO LN
751 HK
SIIG AB
APPC AB
YANSAB AB
GOAU4 BZ
386 HK
175 HK
GGBR4 BZ
1088 HK
SAFCO AB
694 HK
753 HK
1766 HK
1114 HK
2866 HK
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
OW
OW
OW
OW
OW
OW
OW
OW
N
OW
OW
OW
OW
OW
OW
OW
18966
1576
2670
1030
6585
4096
85288
3564
13470
71050
13166
2905
9141
10640
5692
3790
7.6
9.5
13.3
12.3
9.9
12.1
11.0
14.1
13.3
13.4
12.6
16.2
15.2
21.4
20.0
NM
EPS
EPS
P/E (X) Growth Growth Yield (%)
2013E 2012E (%) 2013E (%)
2013E
6.5
7.1
8.3
8.4
8.8
9.2
9.2
10.5
12.5
12.7
12.7
13.3
13.7
16.5
17.1
33.7
(0.2)
4.8
42.6
(47.1)
(21.7)
(2.5)
(14.2)
26.0
11.1
0.4
(4.5)
25.1
(41.8)
(2.8)
21.3
NM
19.6
34.9
59.3
47.1
13.3
31.7
19.5
34.0
6.5
5.3
(0.9)
21.3
10.5
30.0
16.9
NM
3.2
4.3
5.4
7.4
1.1
0.0
3.3
0.7
2.2
3.0
7.1
1.1
2.8
1.2
0.0
0.0
ROE (%)
2013E
22.7
19.0
17.4
20.0
18.0
12.0
14.4
20.4
8.0
17.9
41.5
10.3
9.5
15.3
24.6
2.7
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013 PE.
Table 35: J.P. Morgan 2013 China Growth Debate (Stocks to Avoid) Basket (JPGICHGS <Index>)
Name
Share
Price
Price
Code
Stocks to Avoid
ArcelorMittal South Africa
2824
JSW
83.2
Honam Petrochemical Corp 196000
CSN
4.7
Saudi Kayan Petrochemical
12.3
S-Oil Corp
97100
14.3
Anglo American
23858
Vale Indonesia
2375
PetroChina
10.2
Petkim
2.1
New World Resources
239
11.3
Mechel (Preference)
2.0
4800
90.0
180000
5.0
13.0
78000
11.7
24832
2600
8.3
1.7
210
9.0
1.9
70.0
8.2
(8.2)
5.9
5.7
(19.7)
(18.2)
4.1
9.5
(19.3)
(18.2)
(12.1)
(20.4)
(5.5)
ACL SJ
JSW PW
011170 KS
SID US
KAYAN AB
010950 KS
960 HK
AGL SJ
INCO IJ
857 HK
PETKM TI
NWR LN
1171 HK
MTL/P US
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
P/E (X)
2013E
UW
UW
UW
UW
N
UW
N
UW
N
UW
UW
UW
UW
UW
1422
3001
5748
6882
4920
10062
10013
37475
2451
250297
1160
1006
10713
558
467
8.7
10.9
NM
NM
13.0
13.5
14.9
43.8
14.5
NM
49.2
10.3
NM
7.9
10.2
10.7
11.0
11.5
11.9
12.6
13.6
14.0
14.1
15.8
22.1
24.2
NM
Payout
Dividend
Yield (%) Ratio
CAGR
ROE (%)
2013E FY0 (%) 2007-11 (%) 2013E
NM
(45.6)
(41.5)
NM
NM
(28.2)
(13.1)
(56.9)
(83.3)
(3.0)
NM
NM
(39.7)
NM
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013 PE.
30
NM
(14.1)
2.4
NM
NM
9.1
6.9
9.3
NM
3.0
NM
122.6
(57.4)
NM
0.0
5.4
0.9
11.3
0.0
4.2
1.6
1.7
0.0
3.2
2.9
na
1.2
11.2
2.7
10.8
9.3
8.5
10.4
15.6
19.5
5.1
9.6
12.0
7.7
3.8
5.0
4.7

21 November 2012
Adrian Mowat
(852) 2800-8599
Table 36: J.P. Morgan 2013 ASEAN Growth Story Basket (JPHASGRW <Index>)
Name
Top Picks
CIMB Group Holdings
Erajaya Swasembada Tbk
Cebu Air, Inc.
IJM Land
AirAsia BHD
Bank Central Asia (BCA)
Metro Pacific Investments
Semen Gresik (Persero)
Ayala Corporation
Summarecon Agung
Jollibee Foods Corp.
Ayala Land
Dialog Group Bhd
Share
Price
Price
Code
19.6
128.0
7.6
157
2500
61.0
33.0
2.1
2.9
8600
4.3
15000
455
6.0
1890
104
22.9
2.4
22.0
155.0
8.5
200
3000
90.0
43.0
2.9
4.0
10000
5.0
18000
550
7.1
2500
125
30.0
3.0
12.2
21.1
11.4
27.8
20.0
47.5
30.3
38.8
38.9
16.3
16.3
20.0
20.9
17.9
32.3
20.5
31.3
25.5
PS TB
EGCO TB
CIMB MK
SCB TB
ERAA IJ
CEB PM
CPF TB
IJMLD MK
AIRA MK
BBCA IJ
MPI PM
SMGR IJ
AC PM
KPJ MK
SMRA IJ
JFC PM
ALI PM
DLG MK
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
1410
2193
18521
17283
753
898
8315
958
2615
22018
2569
9239
6558
1260
1416
2628
7630
1885
12.4
6.5
12.8
13.1
15.8
14.9
11.6
15.0
5.2
17.8
17.8
19.2
22.5
23.1
25.2
29.3
33.3
31.5
EPS
EPS
2013E 2012E (%) 2013E (%)
2013E
9.7
9.9
10.8
11.0
11.5
12.4
12.7
12.8
13.3
14.5
15.3
15.9
17.4
18.9
19.1
24.2
27.5
28.3
22.7
NM
10.0
12.0
80.2
(30.9)
19.4
(29.3)
NM
8.6
11.3
17.9
25.5
7.9
31.4
14.2
24.7
(2.0)
28.2
(34.4)
18.9
18.7
37.0
19.9
(8.9)
17.4
(60.7)
22.6
16.8
21.0
29.0
22.6
32.3
21.1
20.9
11.3
3.6
4.1
3.1
3.0
0.0
0.0
3.9
2.2
0.0
1.5
1.0
2.6
0.9
2.6
0.0
1.5
1.5
1.4
ROE (%)
2013E
21.5
10.0
17.3
21.1
21.6
13.3
17.9
9.2
10.1
24.8
10.3
30.3
13.0
18.1
16.7
20.1
13.4
17.4
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013E PE. We removed PTTEP which is global price
taker rather than play on domestic demand.
Table 37: J.P. Morgan 2013 Policy Risk (Top Picks) Basket (JPGIEMPL <Index>)
Name
Top Picks
Sesa Goa
E.ON Russia JSC
ICBC - H
Banco Bradesco
FSK
Tractebel Energia
AirAsia BHD
Kunlun Energy Company
Mindray Medical
Oberoi Realty
Dialog Group Bhd
KEPCO
Share
Price
Price
Code
166
0.081
5.1
32.8
0.0065
33.1
2.9
15.4
32.4
283
3.6
2.4
27400
220
0.138
6.3
37.0
0.0080
37.0
4.0
17.5
39.0
330
3.8
3.0
33000
32.5
70.0
23.5
12.9
22.9
11.8
38.9
13.8
20.3
16.6
5.3
25.5
20.4
SESA IN
EONR RU
1398 HK
BBDC4 BZ
FEES RX
TBLE3 BZ
AIRA MK
135 HK
MR US
OBER IN
1177 HK
DLG MK
015760 KS
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
2622
5107
218889
56337
7811
10358
2615
15968
3750
1689
2301
1885
16191
8.0
7.4
8.0
10.9
11.0
12.8
5.2
15.9
18.8
42.7
24.2
31.5
NM
EPS
EPS
2013E 2012E (%) 2013E (%)
2013E
6.2
6.8
7.6
9.7
10.2
13.1
13.3
14.3
16.3
18.8
20.4
28.3
49.7
NM
NA
6.0
3.4
(37.2)
17.8
NM
23.0
16.6
(57.9)
59.3
(2.0)
NM
28.5
9.1
5.4
12.8
8.5
(2.1)
(60.7)
11.8
15.9
NM
18.6
11.3
NM
2.4
na
4.2
3.6
0.0
4.2
0.0
2.0
1.4
0.0
3.8
1.4
0.0
ROE (%)
2013E
15.6
16.0
19.6
17.9
2.6
30.3
10.1
17.6
16.1
12.5
21.9
17.4
0.7
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013E PE.
Table 38: J.P. Morgan 2013 Policy Risk (Stocks to Avoid) Basket (JPGIEMPS <Index>)
Name
Stocks to Avoid
China Minsheng Bank - H
China Shineway Pharma
Reliance Industries Ltd
JSW Energy Ltd.
ELETROBRAS (ON)
Share
Price
Price
Code
7.2
11.9
767
60.7
9.3
6.8
12.0
675
54.0
10.0
(5.6)
0.7
(12.0)
(11.0)
8.1
1988 HK
2877 HK
RIL IN
JSW IN
ELET3 BZ
JPM
Rating
Mkt Cap,
US$ MM
P/E (X)
2012E
UW
UW
UW
UW
UW
27409
1272
45634
1809
6298
7.0
13.6
12.7
58.5
2.2
EPS
EPS
2013E 2012E (%) 2013E (%)
2013E
7.4
12.3
12.7
17.7
35.3
(1.6)
(4.1)
(6.8)
(79.8)
29.6
(6.1)
10.7
0.5
NM
(93.9)
3.9
2.4
1.3
0.8
7.2
ROE (%)
2013E
16.3
17.6
13.8
9.5
0.5
Source: Datastream, MSCI, IBES, J.P. Morgan estimates. Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013E PE.
31
Adrian Mowat
(852) 2800-8599

21 November 2012
Pedro Martins JuniorAC
LatAm Equity Strategy

2013 Investment Case
We estimate LatAm equities will return 17% in the next
12 months based on the following factors: (1) LatAm
growing in a growth-starved world. LatAm to surpass
global GDP by 1.4ppt in 2013 and reach 3.9% vs. 2.9%
in 2012; (2) favorable macro outlook: global growth
bottoming and lasting super-easy monetary policy; and (3)
favorable asset reflation outlook.
Global macro is supportive to equities, in our view:
(1) economic data releases reaffirm the JPM view that
global growth has bottomed and will move higher
over the coming months, with quarterly growth rates
moving slowly back to trend by the end of 2013; (2)
lasting super-easy monetary policy, pointing to lowvolatility economic growth without a recession; and
(3) a gradual fading of event risk perceptions,
especially after the resolution of the US fiscal cliff.
(55-11) 4950-4121, pedro.x martins@jpmorgan.com

Bloomberg JPMA MARTINS <GO>
Banco J.P. Morgan S.A
Figure 12: LatAm 2013 GDP growth accelerating to 3.9%

8.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
32
Brazil
Chile Colombia Mexico
Peru
LatAm
Global
Source: J.P. Morgan.
Figure 13: Investments chiefly driving 2013 GDP growth

20.0%
Real GDP
Domestic Demand
Investment
15.0%
10.0%
5.0%
0.0%
Brazil
Chile
Colombia
Mexico
Peru
Figure 14: Global GDP tentative bottoming during 2H12

7.0
6.0
5.0
4.0
Median country return forecast of 17%, derived

from our analysis of six valuation methodologies
from EY/BY gap to long-term average P/E. This
median return is in line with EMs 17%.
Value or growth? We recommend OW positions on
Mexico and Colombia, despite the poor re-rating
outlook on those countries, as we see limited
downside risk to earnings estimates supported by (1)
strong macro, with room for an upside surprise from
reforms in Mexico; (2) historically resilient earnings
in both countries; and (3) lack of meaningful
government activism or civil protests adding risk to
the earnings outlook.
2013
6.0%
LatAm growing in a growth-starved world. We

expect LatAm to surpass global GDP by 1.4ppt in
2013. JPM economic research estimates LatAm to
grow 3.9% in 2013, driven by the effects of countercyclical policies (notably in Brazil via lower rates and
taxes), resilient domestic growth (demographic trends,
low level of debt and infrastructure investments), and
reform outlooks (notably in Mexico).
Favorable asset reflation outlook. The powerful
combination of large-scale global policy easing,
prevailing low level of real interest rates in LatAm,
and tight spreads in fixed income favors the
performance of equities in the region, in our view.
The dividend yield is expected to surpass real rates in
all LatAm countries, except Chile.
2012
7.0%
3.0
2.0
1.0
0.0
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

Global
DM
2011 2012 2013

EM
Source: J.P. Morgan Economics. Real GDP over previous period, saar.
.
Adrian Mowat
(852) 2800-8599

21 November 2012
Implications of anemic global growth

Despite a positive structural view on LatAm equities, the
following factors prevent us from recommending a more
cyclical portfolio at the moment: (1) we have yet to see
confirmation of stronger economic growth data in 2013;
and (2) further cuts to consensus earnings estimates have
preempted discussions about valuation multiple re-rating.
Lack of a catalyst and known risks. In our view, a
stronger growth environment supporting earnings
growth expectations is the missing element to justify
rotation into equities. While confirmation of a strong
growth outlook (global and regional) is pending,
known risks loom: (1) increased fiscal risks from the
US (protracted fiscal cliff negotiations) and Europe
(Greece, ability to fulfill fiscal program / Spain, cost
of financing) could bring the next recession within
sight; and/or (2) a significant rise in inflation, or
inflation expectations, could force an end to easy
monetary policy.
Earnings risk remains in LatAm. Despite possible
earnings downgrades, 2013 double-digit earnings
growth is feasible, in our view, in light of LatAm
economic growth acceleration, a stable FX outlook
for the region in 2013, and earnings contraction in
2012. But a 2013 consensus earnings estimate of 18%
(vs. -9%) offers offer downside risk, in our view, as a
significant portion of the growth has yet to be geared
toward global cyclical sectors.
Limited room for re-rating. Not much room for rerating. MSCI LatAm on 12.2x 12m fwd earnings
compares unfavorably to 10.2x EM (CEEMEA 7.9x)
and 11.8x Global (Europe 10.8x). Superior earnings
growth and lower risk perception will likely be
necessary to sustain such a valuation premium.
What about rotation opportunities? We see a better
2013 for LatAm. Rotation toward more cyclical
countries could materialize in 2013 driven by the
following factors: (1) resolution of the US fiscal cliff; (2)
macro data supporting stronger China economic growth;
(3) completion of downward revision to earnings
estimates; and (4) global growth data indicating global
growth rates moving toward trend by the end of 2013
(JPM base case view).
Table 39: J.P. Morgan GDP and Inflation forecasts

LATAM
Argentina
Brazil
Chile
Colombia
Mexico
Peru
China
DM
EM
Euro area
Japan
Real GDP (% oya)

2012E
2013E
2.9
3.9
2.7
3.6
1.4
4.1
5.4
4.5
4.3
4.5
3.9
3.6
6.0
7.0
7.6
8.0
1.2
1.0
4.7
5.1
(0.4)
0.1
1.7
0.1
CPI (%oya)
2012E
2013E
6.1
6.6
9.5
10.0
5.4
5.5
3.1
3.1
3.3
3.2
4.2
3.8
3.8
2.7
2.7
3.4
2.0
1.5
4.6
4.9
2.5
1.8
0.0
(0.1)
Source: J.P. Morgan Economics.
Table 40: EM Valuations

Brazil
Mexico
Chile
Argentina
Colombia
Peru
EMF LATAM
Global
USA
Europe
Japan
EMF Asia
EMF EMEA
GEMs
China
Russia
India
Avg.
06-11
13.0
18.0
19.7
9.2
21.1
16.2
14.2
16.1
17.4
13.2
NM
16.2
12.1
14.6
17.0
9.9
19.8
12m fwd
10.6
16.5
15.7
2.9
14.9
11.8
12.2
11.8
12.6
11.0
14.4
10.7
7.9
10.2
9.4
4.9
14.0
P/E (x)
2012E
12.4
18.8
18.0
3.1
16.8
13.0
14.2
13.0
13.6
11.9
20.2
12.0
8.4
11.4
10.0
5.0
15.7
2013E
10.3
16.2
15.3
2.9
14.7
11.6
12.0
11.7
12.4
10.8
13.8
10.5
7.9
10.0
9.4
4.9
13.8
Current Trailing
DY
P/B (x)
3.6
1.4
2.1
2.8
3.2
2.0
12.6
0.8
2.9
1.4
2.7
2.7
3.1
1.7
3.1
1.5
2.3
2.0
3.9
1.4
2.7
0.9
2.5
1.6
3.8
1.1
2.9
1.5
3.2
1.5
3.9
0.6
1.6
2.4
Source: MSCI, IBES, Datastream, J.P. Morgan.
Table 41: IBES Consensus EPS Growth

Taiwan
Brazil
Korea
S.Africa
EM Latam
Chile
EM Asia
Colombia
India
EM
Mexico
Global
DW
Peru
China
Argentina
EMEA
Russia
2011E
(29.0)
(3.6)
(16.0)
20.6
0.1
(7.2)
(4.3)
25.1
7.9
2.9
12.5
6.5
7.1
31.0
10.3
50.1
29.8
38.7
EPS Growth Expectations %

2012E
7.2
(15.3)
31.7
13.0
(8.8)
(8.7)
12.3
15.7
10.2
3.9
18.8
5.0
5.2
(3.2)
2.2
(18.2)
(10.2)
(12.2)
2013E
22.2
20.2
18.0
17.9
17.9
17.7
14.4
14.2
13.8
12.9
11.7
11.6
11.4
10.8
9.2
6.3
0.3
(1.4)
33
Adrian Mowat
(852) 2800-8599

21 November 2012
What are we tracking?

The key risks to our investment recommendations are a
sharp improvement in global demand, supportive
commodity prices, and/or a risk on rally due to lower
perceived policy risk. We present below positive and
negative risks to LatAm equities.
Positive risks: policy stimulus and reforms
Large-scale government stimulus. Counter-cyclical
government policies might support risk on for highbeta equities, driven by (1) continuous quantitative
easing in the US (asset purchases) and Europe or (2)
stronger than anticipated policy stimulus (e.g., China)
to foster domestic consumption. The JPM economic
research team forecasts another RRR cut for the rest
year. This would pose risk to our OWs in Mexico and
Colombia given their defensive nature and high
valuations, in our viewhistorically there is not a
strong correlation between Chinese RRR and LatAm
countries relative performance.
Reforms to boost economic growth. Government
pragmatism in LatAm could foster investments and
boost sustainable GDP growth in the region: (1) the
newly elected president in Mexico, Enrique Pea
Nieto, could advance the long-awaited economic
reforms (labor, energy and fiscal, as indicated by
Gabriel Lozano, JPM chief Mexico economist); and
(2) Dilma Roussef in Brazil appears more focused on
boosting infrastructure investment via partnerships
with the private sector to eliminate growth
bottlenecks, as discussed in Brazil 101 report. Lower
energy prices, lower taxes, and a more balanced
social security system could add to the wish list.
Domestic asset allocation. Large-scale rotation of
domestic savings in LatAm toward real assets could
lead to valuation multiple expansion for equities.
Negative risks: global growth and local governance
Euro stress. Persistent skepticism on the EuroZones
ability to deliver fiscal consolidation and economic
growth remains a fertile ground for (1) moments of
acute risk aversion, driven by flight to quality: gold,
cash, bonds over equities; and (2) downward
revisions for economic / earnings growth and
commodity price estimates barring valuation multiple
expansion.
US fiscal cliff risk. J.P. Morgan estimates that the US
fiscal cliff would subtract about 3.0%-pt from GDP
growth next year upon inability to reach consensus,
leading the economy to very likely sink back into
recession. Our base case calls for a deal to be reached
34
before year-end that would avert most, but not all, of

the fiscal cliff. Please refer to Living on the Edge for
implications to LatAm equities.
Inflation in LatAm. Inflation report close to the top
of target inflation bands should (1) restrain LatAm
countries latitude to use counter-cyclical monetary
policy given the weak G3 growth outlook; and (2)
revive the risk of macro prudential measures in 2013.
Governance. Government interference and/or
political tension across LatAm countries could reduce
predictability of cash flow and add risk premia to
stock selection in the region. Governance risk can
manifest via regulatory agency intervention, changes
in import tariffs, and civil protests delaying capital
intensive projects, for example.
Figure 15: Brazil: Real interest rates collapsed
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
1Year Rate
Real Rate
After Tax
Net of Fees
Source: J.P. Morgan, Brazil Central Bank and Bloomberg.
Figure 16: Bond-like equity in vogue

4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Brazil
Chile
Real rate
Source: J.P. Morgan and Bloomberg.
Colombia
Mexico
Dividend Yield
Peru
Adrian Mowat
(852) 2800-8599

21 November 2012
Country view: earnings visibility

We recommend OW positions on Mexico and Colombia,
despite the poor re-rating outlook on those countries, as
we see limited downside risk to earnings estimates
supported by (1) strong macro, with room for upside
surprise with reform in Mexico; (2) historically resilient
earnings in both countries; and (3) lack of meaningful
government activism or civil protests adding risk to the
earnings outlook. We are N on Brazil and UW on Chile
and Peru.
Rotation opportunities? Rotation toward more cyclical
countries could materialize in 2013 driven by the
following factors: (1) resolution of the US fiscal cliff; (2)
macro data supporting stronger China economic growth;
(3) completion of downward revision to earnings
estimates; and (4) global growth moving toward trend by
the end of 2013 (JPM base case view).
Mexico OW. Further outperformance of the Mexican
equity market is expected from economic growth upside
from the structural reform agenda, despite current
valuation. We are confident of the approval of reforms,
starting with labor, followed by fiscal, and finally energy
reform. Consumer demand should remain strong, mostly
fueled by credit growth. Finally, JPM estimates the
Mexican peso to appreciate c. 8% in 2013.
Colombia OW. We remain positive on the long-term
outlook driven by a strong macro reform agenda and high
growth potential. Attractive upside potential in Colombia
comes mainly from earnings growth as valuation
multiples show little space for re-rating. We expect stillstrong domestic demand figures, supported by
investment (mainly infrastructure) and consumption
(driven by increasing credit penetration, low
unemployment, higher penetration of formal retail, etc.).
Brazil N. The Brazilian economic balance today is
sounder than a year ago, with interest rates at 7.25%
(-525bp) and the exchange rate 25% weaker. Together
with a series of government stimuli (e.g., tax cuts), the
cyclical recovery should consolidate going into 2013.
The key factors preventing a more positive view on
Brazil are (1) weak global demand and government
activism that could lead to a weaker capex cycle in 2013;
and (2) downside risk to 2013 earnings estimates.
and (2) we do not see significant space for re-rating of

the market as a whole. Peru is trading at 11.4 times
2013E P/E, in line with historical averages. We remain
positive on the internal demand outlook in Peru and
consequently recommend exposure to domestic cyclical
stocks while avoiding commodities (growth risk on civil
protests).
Chile UW. The following factors prevent us from
holding a more positive view on Chile: (1) downside risk
to earnings expectations on higher energy costs in the
medium term (there is a lack of approved power
generation projects) and regulation, particularly for banks
and retailers; (2) issuance pipeline; and (3) valuation, to a
lesser extent, not compelling versus LatAm but in line
with historical trends.
Figure 17: LatAm Model Portfolio - Countries
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
MEX
COL
BRA
PER
CHI
Note. BRA = Brazil, CHI = Chile, COL = Colombia, MEX = Mexico, and PER = Peru.
Figure 18: LatAm EPS Revisions

125
2013
115
105
95
2012
85
75
65
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Source: MSCI, IBES, Datastream.
Peru UW. Two factors prevent a more positive view on

Peru: (1) both the equity market and the economy in Peru
show a high dependence on commodities, particularly
metals prices65% of MSCI Peru is related to copper,
gold and zinc, while 80% of exports are commodities;
35
Adrian Mowat
(852) 2800-8599

21 November 2012
Sectors: conviction, option, side effect

Our industry recommendations have been governed by
the following principles: (1) Conviction: we overweight
sectors associated with secular domestic growth in
LatAm; (2) Option: we hold a neutral position on
Materialslack of evidence of a bottoming in global
growth clashes with active counter-cyclical policy
making; (3) Side effects: large-scale global policy easing
and a low level of real interest rates is a powerful
combination for LatAm asset reflation.
OW Cons. Discretionary. LatAm is forecasted to
experience the largest regional GDP acceleration from
2.9% in 2012 to 3.9% in 2013, led by Brazil and Peru.
LatAm retailers are passing through a strong expansion
cycle and in some cases growing faster than demand. We
anticipate a solid 2013 economic backdrop given recordlow rates in Latin America. Key catalysts to watch will
be consumer confidence, household debt, inflation, and
employment.
OW Industrials. Private sector participation in capex is
expected to increase as LatAm governments focus on
infrastructure spending. We should witness another
round of concessions, higher returns compared to 2012
concessions, and a focus on players execution / delivery
capacity.
UW Telecom. Regulation is going to remain a main

driver for the sector: (1) Mexico: increasing competition
in mobile segment, including a drastic interconnection
cut; (2) Brazil: cuts to interconnection and network
unbundling are being introduced to increase competition.
UW Energy. We consider pure E&P companies with a
solid production growth track record and a disciplined
approach to capital usage to be the best options. Our
preference within the sector remains on Colombia (strong
growth and asset base de-risking). In Brazil we see
limited free cash flow visibility and back-end loaded
growth.
UW Utilities. We recommend no exposure to Utilities,
particularly in Brazil where government intervention has
been intense. We believe utility stocks will continue to
reflect (1) the dilutive effect of the regulated tariff resets
affecting the downstream distribution segment, which
will extend through to the end of 2013, and (2) the
concession renewal (or not) for upstream generation and
transmission assets, and its negative effect on long-term
price expectations.
Figure 19: LatAm Model Portfolio - Sectors
6.0%
4.0%
2.0%
0.0%
OW Cons. Staples. Cash flow visibility, driven by

strong domestic demand, should support steady growth
and dividend yield. Domestic demand conditions remain
sound, but multiples here already reflect a positive year
ahead as stock are trading at par to above historical
averages.
-2.0%
-4.0%
UTE
ENE
TEL
HCA
MAT
INT
CST
FIN
-8.0%
IND
-6.0%
CDS
OW Financials. Improving credit quality in Brazil could

help bottom-line momentum, and less policy pressure to
ease pricing on loans could also trigger positive share
performance. In Mexico, strong financial performance
has resulted from accelerating credit growth and lower
credit losses. We think sustainability of healthy credit
dynamics (Peru) or improved credit dynamics (Colombia,
Chile) are important drivers of stocks in these countries.
Note. CDS = Consumer Discretionary, CST = Consumer Staples, ENE = Energy, FIN =
Financials, IND = Industrials, INT = Technology, HCA = Health Care, MAT = Materials,
TEL = Telecom, UTE = Utilities. Source: J.P. Morgan.
Figure 20: Latam industries: golden domestic demand (P/E)

30.0
Global
LatAm
25.0
20.0
15.0
10.0
N Materials. Modest price gains are forecasted while

inflation remains a risk factor to LatAm producers, which
clashes with JPM economists view of bottoming in
global growth during 2H12 and excess global liquidity.
China continues to be the main driver: any hint toward a
more broad-based stimulus, especially including the
property market, post the leadership change in China
should boost confidence on Materials.
36
5.0
0.0
CDS CST ENE
FIN
HCA
Source: MSCI, Datastream, IBES, J.P. Morgan.
IND
IT
MAT
TEL
UTE
Adrian Mowat
(852) 2800-8599

21 November 2012
CEEMEA Equity Strategy
David Aserkoff, CFA AC
Minimum macro/maximum micro; many

stocks in 2013
(44-20) 7134-5887, david.aserkoff@jpmorgan.com

Bloomberg JPMA ASERKOFF<GO>
Figure 21: CEEMEA GDP Growth Forecast
We expect 2013 to look a lot like 2012 in some crucial

ways: non-recessionary, but sub-trend global growth; G3
rates hovering around zero; EM rates staying at or setting
new record lows; commodity prices hovering around
current levels. Next year looks like more of this year.
4.0
But we are not fooling ourselves a stable macro

backdrop can generate some highly differentiated
CEEMEA equity returns. Whats interesting is the
different impact that stable macro has on different
countries; on risk appetite; on individual countries and
their own domestic cycles. Dont think globally just act
locally.
0.0
Three of CEEMEAs four big markets Poland, South

Africa and Russia fall into the basket of still sub-par
growth and little-changing interest rates for the next 12
months. Only Turkey should see a significant pick-up in
growth in 13 v 12. Among these four countries we see
no changes in official rates in Russia or South Africa
and one rate cut in Poland to end-13. We do not expect
much if any change from the CBRT to the bottom end of
the rate corridor, even if the (daily set) Effective Lending
Rate could edge up to 6 1/4 from the c 5.3/4 current level.
If changes in growth and monetary policy are the meatand-drink of equity strategy, then 2013 is likely to be a
lean year.
3.0
2.0
1.0
-1.0
Poland
Russia South Africa Turkey

2013
Source: J.P. Morgan Economics
Figure 22: EM yields keep falling

16
14
12
10
8
6
4
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GBI - EM Yield
CEMBI Yield
Source: J.P. Morgan, Bloomberg, 2012
Figure 23: EMEA Market Performance YTD

155
145
The premium for growth can widen and investors will

continue to pay for earnings revisions. Accurate
earnings forecasts will generate alpha.
115
The impact of low rates on stocks is not fully priced

in
Euro Area
2012
A famine for macro strategy, but a feast of theme-driven

bottom-up stock stories. We do not think that CEEMEA
stock markets will adjust to the new normal in three ways:
Investors will pay for high and rising dividends
US
EMEA
Poland
Russia
South Africa
Turkey
135
125
105
95
85
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Source: J.P. Morgan, MSCI, Bloomberg, 13 November 2012
On a country basis, we OW Turkey v UW South

Africa and leave Russia, Central Europe and Egypt as
N. Within CEEMEAs frontier markets, our favorite
is Saudi Arabia, especially its banks.
37
Adrian Mowat
(852) 2800-8599

21 November 2012
3 key themes: Earnings, dividends and

the impact of low rates
Earnings
Earnings have been a key driver this year and we think
this will continue in 2013. In a growth-starved world, we
expect the premium that investors pay for high and/or
dependable earnings growth will expand. This is the key
driver behind our OW of big consumer names (best longterm growth EPS story in our view), as well as Turkish
banks (fastest growing bank sector in EMEA in our
view). Within the South African market, our strategist
continues to push the retailers as the key OW sector
mostly for its earnings growth and consistency.
Moreover, the earnings theme works in disparate sectors;
we find a high correlation of performance to EPS
revisions within almost every EMEA sector or
country/sector for financials (see Table 43 ). For all of
this years macro hoo-hah (risk-on/risk-off trades,
elections central bank activity, etc), investors time
would have been best spent on forecasting earnings. Our
quant teams work shows the top decile of revisions
outperforming the bottom decile of revision by 12%
YTD - we expect a similar performance in 2013.
Dividends
EM fixed income market outperformed EM equities
despite booming issuance - 2012 will be the biggest year
of EM corporate issuance ever. A few brave investors
(very few so far) are venturing from the low yielding EM
bond universe into EM equity. They find in many
markets higher dividend yields than sovereign yields
(Russia 22 Eurobonds yielding 2.9% v Russian equities
yield 3.8; Polish local 10 year bonds yield 4.2% v
equities yielding 5.1%). But we think dividends and
payout ratios will play a great role in 2013.
This pushes us into stocks in Poland, like PZU, KGH and
PGE where we could see 8+% dividend yields and high
payout ratios. In South Africa, our local strategy
continues to chase retailers as because of their high
payout ratios.
We have not been OW telecoms as a sector and are
happy to remain so we need more growth than a lot of
the mature telecoms provide. We believe dividends that
dont rise, will fall like the example of TPSA in
Poland.
38
Table 42: MSCI EMEA Earnings revisions in the last 3 months

By Country
Turkey
Morocco
Hungary
Egypt
Czech Rep.
Russia
Poland
South Africa
Up
Down
Net
127
1
12
10
7
72
37
128
88
4
16
14
19
103
86
209
39
-3
-4
-4
-12
-31
-49
-81
By Sector
Consumer Staples
Health Care
Industrials
Utilities
Energy
Financials
Materials
Total MSCI EMEA
50
43
13
28
10
32
54
117
48
394
30
39
11
34
26
54
77
150
123
539
20
4
2
-6
-16
-22
-23
-33
-75
-145
Source: J.P. Morgan, Bloomberg. Revisions are to consensus 2013 EPS
Table 43: Correlation of change in EPS forecast to stock market

performance
SA Materials
SA Consumer
EMEA consumers
EMEA Energy
EMEA Materials
CE3 Financials
TR Financials
Telecom
EMEA Financials
SA Financials
Correlation : YTD return v

consensus 2013 EPS
47%
68%
73%
41%
78%
68%
47%
61%
38%
54%
1% of EPS v x%
change in return
0.48
1.42
1.74
0.97
0.83
1.95
1.12
0.85
1.10
1.72
Source: J.P. Morgan, Bloomberg
Figure 24: Payout ratios across EM

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Payout Ratio (MSCI index) - latest
Median - last 10 years
Source: J.P. Morgan research, MSCI, end data 31 Oct 2012 as of 13 November 2012
Adrian Mowat
(852) 2800-8599

21 November 2012
Low rates and cheap funding

The impact of low rates across CEEMEA is a complex
issue. First, we think rates stay low more or less all year
in most countries and especially in hard currency
corporate bonds this theme will stick around for a
while.
Figure 25: EM bond issuance bigger than ever

350
300
250
200
150
100
We find four key beneficiaries. First, we look to Turkey

and its current account. We forecast 7.4%/6.6% of GDP
for 2012/13. But 10 year USD sovereign bonds yield
around 3.5%. And Garantis 5-year bond now yields
3.9% and its 2022 maturity yields 5.1%. We expect EM
yields to remain low and for growth stocks (or countries)
to be financed. Turkeys investment grade rating from
Fitch hints at, but does unleash the waves of financing
that may come when a 2nd rating agency upgrade Turkey
to IG. On a stock basis, we think Emlak should benefit
from lower mortgage rates for its housing market
customers.
50
0
2006
2007
2008
2009
2010
EM Bond issuance (US$ bn)
2011
2012
Rolling 4Q avg
Figure 26: Turkey bond yields since 2009

12
11
10
9
8
Second, low rates and big EM issuance is pushing down

funding costs across the bank sector we saw this in Q3
results in Turkey. Less aggressive competition from DM
banks (more pressing problems at home) might boost
asset yields too.
Third, we see big cap Russian stocks all of which can
issue Eurobonds in big size with 10 year issues yielding
below 5% and 5-year bonds around 3%. We infer the
debate between capex and dividends is moot bond
markets will fund both. We think the funding for
Rosnefts TNK-BP acquisition could be around 3%.
Finally, Dubai and Emaar: the Dubai debt crisis is both
small and diminishing in the rear-view mirror. For
Emaar, financing its Indian subsidiary is a big deal its
loan to Emaar MGF is about 10% of its market cap.
However, the Indian business is in decent shape with
overall launch to sales ratio currently at 83%.
7
6
Apr-10
Oct-10
Apr-11
Oct-11
GTTRY2Y Govt
Apr-12
Oct-12
GTTRY10Y Govt
Source: Bloomberg, 13 November 2012
Figure 27: UAE banks back to book value, but Emaar lags
1.4
1.2
1.0
0.8
0.6
0.4
Apr-10
Oct-10
Apr-11
Dubai Fin. P/BV
Oct-11
Emaar P/BV
May-12
Nov-12
Abu Dhabi Fin P/BV
Source: Bloomberg, 13 November 2012
39
Adrian Mowat
(852) 2800-8599

21 November 2012
CEEMEA OW Turkey; N on Russia and

Central Europe; UW South Africa. Saudi
is our top pick in MENA
Our CEEMEA asset allocation remains: OW Turkey; N
on Russia and Central Europe; UW South Africa
Why are we OW Turkey?
We wrote at length about why we are OW Turkey earlier
in November (see Still OW Turkey: Investment grade
upgrade provides an excuse, not a reason to reiterate
OW dated 6 November) we have four key reasons, : 1)
accelerating GDP growth and accelerating EPS growth;
2) reasonable valuations especially where low rates are
not priced in; 3) improving current account deficit
(CAD); and 4) it looks better than the rest of CEEMEA.
Why are we N on Russia?
Russia offers juicy potential if it could only re-rate
toward the EM average if we had a rouble for every
time we heard that lament, we would be an oligarch.
Only Magnit (new entrant to the CEEMEA Strategy Top
10 list) offers significant organic earnings growth next
year among the big caps; consensus EPS growth at
Sberbank is only 3%for 2013. Governance issues have
changed little either at the government or the corporate
level. Dividends are up at Gazprom, but the stock can not
shake the deeper problems brought on by shale gas and
falling European pricing. Oil at $110 means Russia is
likely to run a budget deficit in 2013 - it would be
Russias first deficit in a non-crisis year since the 1998
crisis .
Why are we N on Central Europe?
The best case for Poland revolves around dividend payout from government-owned companies. PZU is the only
Polish name in the CEEMEA Strategy Top 10 list. We
continue to struggle to find compelling big cap names,
especially as we have pulled down our GDP and bank
sector growth forecasts recently. Erste Bank is in the
CEEMEA Strategy Top 10 list for its broad-based
exposure and low valuation a better environment (or
effective self-help) in Romania would unlock a lot of
upside. The upside for the Polish market remains the
interplay of all-time lowest bond yields and all-time
biggest equity underweights. Given the dividend yield on
the WIG 20 is above the 10 year bond yield, pension
funds seem to believe that dividends will shrink in
nominal terms over the next decade
40
Figure 28: Foreign ownership in Turkey still low

74
Market_Value_Ratio
Trough
72
70
68
66
64
62
60
Jul-06
Oct-07
Jan-09
Apr-10
Aug-11
Nov-12
Source: Central Depository of Securities, 8 November 2012
Figure 29: Earnings yield v bond yield lower rates not priced
into
Turkish equity
2.1
Earn Yld / Bond yld
Avg. Turkey
-1sd
+1sd
1.9
Equity cheap
1.7
1.5
1.3
1.1
0.9
Bonds Cheap
0.7
0.5
Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Source: ISE, Bloomberg, 13 November 2012
Figure 30: Russia: relative performance and Brent in RUB

4000
110
105
3750
100
3500
95
3250
3000
Nov-11
90
Feb-12
May-12
Brent Crude(RUB) LHS

Source: MSCI, Bloomberg, 13 November 2012
Aug-12
85
Nov-12
MSCI Russia v MSCI EM (RHS)
Adrian Mowat
(852) 2800-8599

21 November 2012
Why are we UW on South Africa? But still enthused

about retailers?
South Africa, EMEAs biggest market, always has
something that we want to own. For now, it remains the
retailers which offer solid dividends (JSE retail yields 3%
v EM consumer staples 1.9%) and dependable growth.
But, we find cheaper banks (lower P/BV) with better EPS
growth elsewhere in EMEA (Turkey, Saudi, some
Russian names). SA telecoms (MTN and Vodacom)
offer good yield and dividend growth. Naspers (still in
the CEEMEA Strategy Top 10 list) and Aspen (a former
resident on the list until performance took it too close to
our analyst TP) have demonstrably strong track records
and big off-shore earnings. Sasol is in the CEEMEA
Strategy Top 10 list for its ZAR-hedge and 5% yield. If it
green-lights it its multi-year/multi-billion Louisiana GTL
plant, we think that would be a positive catalyst. But we
remain wary of ZAR weakness until mining output and
exports pick-up (mid-Q1 seems likely). And we remain
wary of the mining sector given weak commodity prices
and the labour strife.
Figure 31: Poland: weight of equity in Polish pension funds v

equity ownership of the free float
43%
As % of total assets (LHS)
as % of WIG mkt cap (RHS)
0.13
38%
0.11
33%
0.09
28%
0.07
23%
18%
Jan 01
0.15
0.05
Jan 03
Jan 05
Jan 07
Jan 09
Jan 11
0.03
Source: J.P. Morgan research, Polish Financial Supervision Authority, End-Oct data as of
7 November 2012
Figure 32: South Africa PE

13
12M Fwd PE
Avg South Africa
-1sd
+1sd
12
11
10
9
8
Saudi Arabia top pick in MENA

MENA remains mostly off-benchmark for EM investors.
The strong growth stories in the region are in the GCC
where big fiscal packages continue to keep non-oil GDP
growth at or above 5%. Saudi is our favorite market and
not just because it has 90% of the trading volume. Saudi
banks are just beginning to growth bank lending again
about two years behind the rest of the world. SAMBA
would be our top pick in the banks. Mobily offers
excellent dividend growth as the relatively young 2nd
entrant to the Saudi mobile market is seeing its debt load
fall and payout ratio rise. We would avoid the big cap
Saudi petchem names we do not think the pricing
environment will be helpful, preferring Industries Qatar.
For Egypt, a MSCI EM bench mark country, we prefer to
stick to our N rating; we see value in names like COMI,
but we have fears over devaluation and the still-steep
budget deficit. Its big gains this year have eroded
potential upside.
7
6
Nov-02
Nov-04
Nov-06
Nov-08
Nov-10
Nov-12
Figure 33: Tadawul forward PE

25
20
15
10
5
May-06
May-07
May-08
May-09
May-10
May-11
May-12
SASEIDX Index 12 M Fwd. P/E

Source: Bloomberg, updated as of 9 November 2012
41
Adrian Mowat
(852) 2800-8599

21 November 2012
CEEMEA Strategy Top 10 list Magnit

and Emlak in; Sberbank and Ko
Holding out
CEEMEA Strategy Top 10 list. Its performance since we
started it February of last year has been strong - we are
up 21.0% to 9 November from 12 February inception,
well ahead of the -1.1% MSCI EMEA index
performance.
Our asset allocation OW South Africa from April to
June; OW Turkey since June; UW Russia since March
has done well. Most of our stock picks have done well
(Emaar, Koc Holding, Erste), but not all (Gazprom,
Sberbank). Our goal remains the same: find 10 big cap,
liquid stocks that we think will outperform MSCI
EMEA; asset allocation should broadly reflect our
country weights; our stock selection should mostly marry
to our analysts views as well.
Whos in?
The new additions are: Magnit is the best big cap
earnings growth story in Russia, and one of the best in
CEEMEA. We have long admired it and wanted a pullback to jump in. We have given up waiting. We expect
more margin expansion in Q4 and further consensus
upgrades.
42
We also add Emlak. We think its new projects being

released in Q4 could be a positive catalyst. Also, falling
rates should trigger a re-acceleration in the mortgage
market, a key to Emlak selling more mass-market
housing.
Who's out?
We remove Sberbank. Its 2103 growth profile does not
justify its inclusion. We have been surprised and
disappointed by its lackluster performance after the SPO.
It merits inclusion in a CEEMEA Strategy Top 25 list for
its long-term upside (strong market share, high ROE, low
P/BV.)
Also, we remove Koc Holding. It is above our analyst's
target price. It has outperformed the market by more than
10% in the last month a lot for a diversified holding
company with strong index-tracking properties. We have
found nothing wrong other than the stock price went
up.

21 November 2012
Adrian Mowat
(852) 2800-8599
CEEMEA Strategy Top 10 List

Table 44: CEEMEA Strategy Top 10 Stock Picks
Name
Magnit
Rosneft
Naspers Ltd
Sasol
Turkcell
Yapi Kredi
Emlak Konut
PZU
Samba
Erste Bank
Ticker
MGNT LI
ROSN LI
NPN SJ
SOL SJ
TCELL TI
YKBNK TI
EKGYO TI
PZU PW
SAMBA AB
EBS AV
Country
Russia
Russia
South Africa
South Africa
Turkey
Turkey
Turkey
Poland
Saudi Arabia
Austria
Sector
Cons. Stpls.
Energy
Cons. Discr
Energy
Telecoms
Financials
Financials
Financials
Financials
Financials
Analyst
Jouronova
Gromadin
Joosub
Comer
Lemardeley
Formanko
Hasan
Huttner
Bilandani
Formanko
Price Mkt Cap % YTD

13-Nov USD m
USD
34.5
16,312
63.0
7.69
81,500
16.5
55,183
26,015
43.8
36,600
27,002
-12.6
10.9
13,289
28.1
4.67
11,250
81.1
2.81
3,893
50.4
386
10,135
30.6
46.7
11,207
0.2
20.4
10,247
47.6
JPM
Rating
OW
OW
OW
OW
OW
OW
OW
OW
OW
OW
JPM
PT
147.3
8.4
62511
45700
14
5.7
7.43
414
63
25
EPS
12 E
1.44
0.97
1850
4228
0.50
0.44
0.17
32.2
4.90
0.85
13E
1.67
1.00
2230
4344
0.50
0.55
0.13
34.7
5.70
1.92
P/E Ratio
12E 13E
24.0 20.7
7.9
7.7
29.8 24.7
8.7
8.4
11.9 11.0
10.6
8.5
16.5 21.6
12.0 11.1
9.5
8.2
24.0 10.6
Source: J.P. Morgan, Bloomberg, Updated as of cob 13 November 2012
Table 45: CEEMEA Strategy top 10 - Performance and composition history

Start date
End date
Entrants
Exits
Portfolio Performance:
Period
Cumulative
Benchmark Performance:
Period
Cumulative
Portfolio v Benchmark
Period
Cumulative
Portfolio as on 12th Feb 2012 (Top 10 CEEMEA Picks) - Sberbank, Gazprom, Lukoil, AFK Sistema, Halkbank, Yapi Kredi, Woolworths, PZU, SABIC, Emaar
12 Feb 12
23 Mar 12
23 Mar 12
20 Apr 12
20 Apr 12
11 May 12
11 May 12
18 Jun 12
18 Jun 12
3 Aug 12
3 Aug 12
31 Aug 12
31 Aug 12
7 Sep 12
5 Oct 12
7 Sep 12
5 Oct 12
26 Oct 12
26 Oct 12
13 Nov 12
13 Nov 12
Garanti
ABSA, Aspen,
Naspers, Mr. Price
Erste Bank
Halkbank,
Koc Holding
MTN Group,
Yapi Kredi
PZU
Rosneft, Turkcell,
Samba
Sasol
Emlak, Magnit
Halkbank,
Yapi Kredi
Lukoil, AFK
Sistema, Emaar
PZU
ABSA
SABIC
Mr Price,
Halkbank
Woolworths
Gazprom,
Garanti, Aspen
MTN
Sberbank,Koc
Holdings
4.5%
-0.5%
4.5%
3.9%
1.9%
-1.9%
1.9%
0.0%
2.6%
1.4%
2.6%
4.0%
-4.3%
-0.5%
-5.3%
-5.3%
1.1%
5.1%
-4.9%
12.3%
-5.4%
6.3%
-2.1%
5.9%
-7.3%
-1.9%
-2.9%
6.1%
2.1%
8.3%
3.0%
9.5%
-1.4%
-3.3%
4.5%
13.2%
3.4%
0.9%
1.4%
13.2%
14.2%
15.9%
4.6%
-0.8%
-1.0%
1.2%
0.4%
-0.6%
-1.2%
1.7%
2.5%
11.9%
13.7%
16.6%
3.0%
19.4%
-1.3%
-1.9%
4.4%
21.7%
Source: J. P. Morgan, Bloomberg, updated as of cob 2 November 2012
43
Adrian Mowat
(852) 2800-8599

21 November 2012
Saudi Arabia the next emerging market?

It trades more than Turkey, Mexico or Thailand. Its GDP
is bigger than Taiwan or South Africa. Its per capita
income is 50% more than Russia. It ranks 17th in the
World Economic Forum (WEF) Global Competitiveness
Index and 12th in the Ease of Doing Business rankings
by the IFC. Its net foreign assets of USD555bn are the
3rd biggest in the world. But Saudi Arabia is not in the
MSCI DM/EM/frontier market universe.
The stock market is closed to direct foreign ownership
(GCC nationals are allowed), but foreign investors are
allowed to own shares via structures and p-notes. The
CMA (Capital Markets Authority) has said several times
that it wants to open the market to foreign participants.
We believe the CMA would take a first step by opening
the market to Qualified Foreign Investors (QFIs), similar
to what India China or Taiwan have done.
US$275bn, with a Free Float market cap of US$106bn.

The 25% cap implies an investable market cap of $61bn,
Larger than Poland, but smaller than Turkey or Chile.
Figure 34: Saudi Trading Volumes are big
Figure 35: Sector breakdown of MSCI Saudi Arabia Domestic

Telecoms, Utilities, 2.8%
14.1%
On 26 June, MSCI re-launched Saudi indices, with Saudi

as a stand-alone market (not part of any global EM or
Frontier market index); MSCI and Tadawul, the stock
exchange, restarted their data sharing agreement which
had lapsed in 2010 which had prevented MSCI from
calculating any Saudi index.
In terms of Saudi becoming an MSCI Emerging Market,
the next key step is opening the market to foreign
participation. MSCIs list of requirements is lengthy
including: change the T+0 settlement system to T+3;
upgrade reporting requirements, etc. The process of
joining indices is also lengthy. Typically, MSCI
announces every June which markets are up for review in
the next June announcement for inclusion in the index
the following June. So, in a bull case scenario, if the
market were opened today, then June 2013 could see
MSCI review Saudis market status in June 2014 and
then include it in the MSCI Emerging Markets index
effecitive in June 2015.
If Saudi were to be part of the EM index, given the
current constituents of the Saudi domestic index, it would
be 1.7% of MSCI EM, and about 9% of MSCI EMEA,
assuming a 25% foreign ownership limit. The total
market cap of stocks in MSCI Saudi (domestic) is around
44
Consumer
Staples,
5.9%
Energy, 2.1%
Financials,
27.8%
Industrials,
3.7%
Materials, incl
Petchem,
43.7%
Figure 36: Tadawul index sine 1994

25050
Tadawul All Share Index
20050
15050
10050
5050
50
Jan-94
Jan-97
Jan-00
Jan-03
Jan-06
Jan-09
Jan-12
Adrian Mowat
(852) 2800-8599

21 November 2012
The Saudi market is our favorite MENA market. The

governments stimulus package of last year continues to
filter into the local economy, keeping non-oil GDP
around 5%. The key beneficiary of the growth story,
among the big caps should be the banks where our top
pick is SAMBA (also in the CEEMEA Strategy Top 10
list). We should see private sector loan demand pick up
with the non-oil economy; Saudi bank lending growth
has been slowed by the local name-lending crisis in
2009-10 which meant the Saudi financial sector came out
of the GFC later than the rest of the world. The petchem
sector offers good value and good dividend yield; its
low-cost feedstocks are an enduring cost advantage. But
we don't see much upside given the flaccid product
pricing environment. Our top picks within the sector are
Advanced Petrochemicals. SIIG, Yansab and SAFCO.
Mobily is also a top pick the #2 entrant to the mobile
telecom market offers of strong growth in combination
with good FCF yields and healthy dividend yields.
The reform process in Saudi has been slower than

many investors have hoped. For instance, the law had
been ready for signature by the king for several years.
When it was signed earlier this year, the banks
complained that SAMA had not yet prepared the
regulatory detail. Some investors are reading across from
the mortgage law and concluding that a more full market
opening may not be as fast as we expect.
The oil and gas sector is of global importance. It also
accounts for roughly 45% of budget revenues, 55% of
GDP and 90% of export earnings. It is the worlds largest
net oil exporter. Saudi Arabia contains approximately
260 billion barrels of proven oil reserves, amounting to
around one-fifth of proven, conventional world oil
reserves. Its gas reserves are the 4th largest in the world.
It has kept the gas price low for many parts of its
economy, including some supplies to SABIC and the
petrochemical industry which give it a competitive
advantage.
Table 46: JPM Saudi Coverage

Company Name
Al Rajhi Bank
Banque Saudi Fransi
Dar Al Arkan Real Estate
Mobily
NIC (Tasnee)
Riyad Bank
SABB
SABIC
Sahara Petrochemical
Saudi Industrial Investment Group
Saudi International Petrochemical Company
Saudi Kayan Petrochemical Company
Saudi National Petrochemical Company
Saudi Real Estate Company
STC
Yanbu National Petrochemical Company
Zain KSA
BBG Ticker
APPC AB
RJHI AB
BSFR AB
ALARKAN AB
EEC AB
NIC AB
RIBL AB
SABB AB
SABIC AB
SPC AB
SAMBA AB
SAFCO AB
SIIG AB
SIPCHEM AB
KAYAN AB
PETROCH AB
SRECO AB
STC AB
YANSAB AB
ZAINKSA AB
Price
24.0
69.8
30.8
8.6
74.3
26.5
22.9
31.0
90.3
12.5
46.9
199.5
22.9
18.8
12.3
19.7
25.0
41.4
43.9
8.6
JPM
Rating
OW
N
OW
N
OW
N
N
OW
OW
N
OW
OW
OW
N
N
N
OW
OW
OW
N
Mkt. Cap.
ADTV
(USD mn) (3M) USD
1049
2.5
27897
21.3
7425
1.8
2477
59.4
13859
14.6
4727
6.9
9139
2.6
8266
1.2
72193
122.4
1457
5.2
11255
2.0
13299
5.4
2742
2.6
1833
2.0
4900
9.0
2515
4.3
800
1.5
22078
12.1
6584
5.8
2477
34.5
EPS (LC)
2012E
2013E
1.92
2.82
5.20
6.08
3.37
4.02
1.18
1.15
8.18
8.43
3.01
3.27
2.27
2.60
3.21
3.81
8.54
10.52
0.64
1.36
4.88
5.71
15.69
15.55
1.68
2.67
1.87
2.10
-0.47
1.07
0.21
1.86
1.25
1.32
4.88
4.93
4.42
5.00
-1.35
-1.07
Div. Yield
PE
2012E
2013E 2012E %
12.5
8.5
7.2%
13.4
11.5
5.5%
9.1
7.7
3.5%
7.3
7.5
0.0%
9.1
8.8
6.1%
8.8
8.1
5.6%
10.1
8.8
6.4%
9.7
8.1
2.8%
10.6
8.6
4.6%
19.5
9.2
0.0%
9.6
8.2
4.0%
12.7
12.8
7.1%
13.6
8.6
5.3%
10.0
8.9
5.7%
-25.9
11.4
0.0%
95.1
10.6
0.0%
20.0
18.9
4.0%
8.5
8.4
4.7%
9.9
8.8
1.1%
-6.4
-8.0
0.0%
Source: J.P. Morgan, Bloomberg, updated as of 13 November 2012
45
Adrian Mowat
(852) 2800-8599

21 November 2012
Risks to our strategy

US fiscal cliff
It is odd to call it a risk if it is becoming a consensus
view. If the US were to fall off the fiscal cliff the full
impact could be 4% of GDP. This is higher than our core
US GDP growth assumption of 3.7%. A recession is a
real risk. With limited policy flexibility this is a
significant risk.
But this report is the Year Ahead rather than just the
Quarter Ahead and the near-term risks into and around
the year-end are significant. Note that both sides wiggle
room is greater post-1 Jan when all the Bush tax cuts
expire. A deal to extend some of them would allow
higher revenue but still let the GOP to not vote for a tax
hike. We look for increased volatility around the fiscal
cliff, but for markets to rebound after any budget deal.
Q3 slowdown in capex becomes 2013 recession
US capital goods data is consistent with US recessions.
For now consumption is driving growth. Our base case is
that consumption slows from 2.5% to 0.5% in 1H13 as
higher taxes hit household income. The hope is that a
recovery in CAPEX offsets the slowdown in
consumption.
Numerous Middle Eastern trouble spots
Where to start? Syrian civil war may drag in neighbors.
US and Israeli military respond to Irans nuclear
ambitions. New governments in Libya and Egypt
struggle to achieve post dictatorship stability.
Higher headline inflation
Our base case is that inflation increases modestly from
2012 lows. Higher food prices and generally low output
gap generates the risk that inflation forces central banks
to tighten. This is a sell signal for EMs.
Local investors buy equities in our UW markets
Equities are inexpensive relative to bonds and cash.
Momentum may develop that encourages a rotation of
domestic savings. This could happen in all EMs.
Large Chinese stimulus
A large RRR cut is a significant risk to our structurally
bearish view on China. Another risk is opaque local
government finances and cash-rich SoEs which may
continue to invest in infrastructure. The final risk is that
households decide (possible with policy support) to
return to the property market. None of these risks appear
46
likely but the market is very sensitive to easing

speculation. Leadership change adds to uncertainty.
India slips on implementation of proposed reforms
In the past two months, the Indian government positively
surprised investors with a series of policy measures such
as a hike in the retail diesel price, allowing 51% FDI in
multi-brand retail, increased FDI limit in aviation from
26% to 49%, reduction in withholding tax from 20% to
5% on ECBs & FCCB, SEB (State Electricity Boards)
debt restructuring etc. The Union Cabinet approved the
increase in the FDI limit in the insurance sector from
26% to 49%, opening up the pension sector to FDI inline with the insurance sector and the Companies Bill
2011. These measures boosted investor sentiment and
resulted in a sharp rally in the INR and Indian equities.
The test now is can reform pass parliamentary scrutiny.
India fiscal consolidation; potential rating downgrade
The threat of a credit rating downgrade remains. Policy
reform is back on the table. The next step is a reduction
in the fiscal deficit. A busy political calendar in the next
two years makes achieving the targets challenging. The
implementation of the goods and services tax (GST) is
key to achieving fiscal consolidation.
Korean politics and won policy
The Korean presidential election is on 19 December. The
key issue is will the new governments economic policy
remain pro-exporters (weak Won) or move proconsumers (strong Won). This could drive investors to
switch into domestic sectors such as low growth cheap
banks.
Malaysia election disrupts policy continuity
The last day for the dissolution of parliament in Malaysia
for this electoral term is 27 April 2013, which marks the
deadline for the government to call for elections. The key
market concern is policy continuity and whether PM
Najib will be challenged from within. A less than 55%
majority for BN would be negative for the market and
could potentially hamper the continuity of ETP projects.
Fast solution of labor and politics in South Africa
While we doubt the December ANC elections will
change the thrust of South African policy, our UW on
South Africa is based on an expectation that labor strife
and ZAR weakness continue. An effective labor policy
and a shift to infrastructure spending would boost
structural growth and the ZAR.

21 November 2012
Adrian Mowat
(852) 2800-8599
region: (1) The newly elected president in Mexico,

Enrique Pea Nieto could advance on the long-awaited
economic reforms (labor, energy and fiscal, as indicated
by Gabriel Lozano, JPM chief Mexico economist in
Mexico: setting the pipelines for economic reforms 31August, 2012); and (2) Dilma Roussef in Brazil appears
more focused on boosting infrastructure investment via
partnerships with the private sector to eliminate growth
bottlenecks, as discussed in Brazil 101, 15 August
2012, Shayo et al. Lower energy prices, lower taxes and
a more balanced social security system could add to the
wish list.
Carry trade continues, REAL appreciates

Carry combined with a bull market in commodities drove
the appreciation in the Brazil currency. Flows into EM
fixed income are strong. There is a risk that these flows
push the REAL higher
Governance and political tension in LatAm
Government interference and/or political tension across
LatAm countries reduce predictability of cash flow and
add risk premia to stock selection in the region.
Governance risk can manifest via intervention via
regulatory agencies, changes in import tariffs, civil
protests delaying capital intensive projects, for example.
LatAm reforms to boost economic growth
Government pragmatism in LatAm could foster
investments and boost sustainable GDP growth in the
Figure 37: Corrections in MSCI Emerging Markets US dollar index
16 Feb 94, 563
24 Aug 94, 454
Decline 19%
Duration 59 day s
Fed tightening
10 Jul 97, 571

5 Oct 98, 241
Decline 58%
Duration 323 day s
Asian Crisis
1 Aug 90, 257

16 Jan 91, 175
Decline 32%
Duration 121 day s
Iraq inv ades
Kuw ait
19 Feb 90, 239

9 Apr 90, 198
Decline 17%
Duration 36 day s
22 Apr 92, 353

24 Aug 92, 286
Decline 19%
Duration 89 day s
Brazilian Fall
22 Sep 94, 586

9 Mar 95, 396
Decline 33%
Duration 121 day s
Mex ican Tequila Crisis
10 May 06, 879

10 Feb 00, 531.0
13 Jun 06, 665
3 Oct 01, 247
Decline 24%
Decline 54%
Duration 25 day s
Duration 430 day s
Fear of Fed ov ertightening
2000 Global Correction 12-April-04, 497
17-May -04, 396
Decline 20%
Duration 26 day s
Start of Fed tightening
26 Feb 07, 940

5 Mar 07, 844
Decline 10%
Duration 8 day s
A-shares fall, US
profit fears
25% rally
18-Apr-02, 364
10-Oct-02, 254
Decline 30%
23 July 07, 1163

16 August 07, 957
Decline 18%
Duration 19 day s
US sub-prime and
global credit market
concerns
4July 2011, 1169

4 October 2011, 824
Decline 29%
Duration 91 day s
S&P dow ngrade of US
credit outlook, heightened
Euro sov ereign stress
and China hardlanding
fears
31 October 2007, 1338
27 October 2008, 454
Decline 66%
Duration 268 day s
Credit Crisis and EM
Inflation
4.4
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: Datastream, MSCI, J.P. Morgan
47
Adrian Mowat
(852) 2800-8599
None of these events reflect

an official J. P. Morgan view;
they are intended to stimulate
discussion
Strong developed world growth

21 November 2012
Potential Surprises for 2013

Strong developed world growth. Cash rich DM companies put US fiscal-cliff and
-crisis fears behind them and invest again. Low rates push housing starts and
consumer lending up. Europe sees growth as the financial systems in the periphery
return to life. Global equities rally 30% and EM outperforms.
Bursting of the EM bond

bubble
Bond investors go on a buyers strike against sub-5% CEMBI yields and turn to
EM equities. EM equity income funds see massive inflows. Markets with good
dividend yields (Brazil, Taiwan, South Africa and Poland) massively outperform.
Different European policy mix
Different European policy mix. Europe breaks the vicious cycle of weaker-thanforecast GDP driving deeper budget cuts, which further depresses GDP via
coordinated spending plans from Germany and rest of the solvent core (Holland,
Finland, Switzerland and Sweden). SX7E doubles but still trades below book value.
M&Apple
Poland joins the Euro
US politicians dare each other

off the fiscal cliff; US enters
recession
Monetary ladder before the
over-investment snake
China's trend growth falls

significantly as demographic
change bites. Add a profit
recession..
South China Seas territorial
disputes intra-Asian trade falls
Evolution or revolution in
Indian and Malaysian politics
48
Apple decides to use its balance sheet cash plus short-term investments
(US$29bn at end-Sept 12) and borrows two turns of leverage (US$118bn or 2x
LTM EBITDA). With that $150bn, it buys the free float of Turkey ($90bn) plus half
the free float of Thailand ($60bn). Apples cost of debt, of 1.5% is twice covered by
its Thai and Turkish dividends.
Poland joins the Euro. The -crisis makes Western Europe realize how much they
need the growth and low debt burden of Poland. Poland accepts Euro-zone entry
effective 2016. Polish ten-year yields trade through France. But equities sell-off as
investors price in slower long-term growth.
Like Thelma and Louise US politicians dare each other off the fiscal cliff. US
enters recession with zero interest rates and no fiscal flexibility.
A monetary ladder before the over-investment snake. In the first three quarters of
2012, total social financing in China expanded. Individuals, companies and local
government seize the cash, consume and invest. Growth accelerates and finally Ashares rally.
Demographic destiny + cyclical certainty. China's trend growth falls significantly
as demographic change bites. Add a profit recession. The 2H13 conclusion is
weakening consumption and weak fixed capital. This feeds back into weaker
household income growth and thus consumption.
Revenge of a 14 century map. South China Seas territorial disputes dominate the
news. The complexity plus the conviction of each country on their claim is a
dangerous combination. There are no official sanctions but intra-Asian trade falls as
consumers boycott their neighbors products.
Bye bye BN and powerful political family. Evolution or revolution in Indian and
Malaysian politics. BN lose elections. Market falls initially but little changes. India
politics emerges from powerful political families. Congress reinvents itself as the
leader of a secular pro-reform capitalist nation.
Adrian Mowat
(852) 2800-8599
Real depreciates to 3 Real/US$

21 November 2012
3 Real/ 1 US dollar. Micro managing industrial policy is not enough. Brazil central
bank buys dollars. Government encourages capital flight. IFO tax raised to punitive
levels. Real depreciates to 3 Real/US$. Industry recovers. Investors rotate into
exporters. Big Mac cheaper but still expensive vs. US!
Delayed reforms in Mexico lead

to de-rating
Reforms in Mexico. Advances on structural reforms in Mexico prove protracted

given lack of convergence between PRI, PAN and PRD. An improving sustainable
GDP growth outlook fails to materialize lending to valuation multiple de-rating.
Rotation of funds in Andean

region
Andean Rotation. Popularity increases for President Ollanta Humala and civil
protests abate paving the way for major natural resources expansion projects in Peru.
This and further development of the integrated stock market in the Andean (MILA)
leads to major rotation of funds from Colombia and Peru.
Growth surprise in Brazil
Saudi opens..locals and

foreigners rush in
Burma is back
Growth surprises in Brazil. Government activism in Brazil reduces, real interest

rates reach new record lows and more competitive currency leads to massive capex
cycle. Brazil sustainable GDP improves fostering domestic institutional and retail
investors to relocate their assets towards equities.
Riding to Riyadh. Its open to all. Overnight Saudi regulators open capital markets to
all intentional investors. Locals and foreigners rush in.
Myanmar adds to ASEAN appeal. ASEAN nations agree on a free trade zone with
a population 20% larger than the European Union. Sensibly they do not experiment
with a currency union. Foreign direct investment into ASEAN expands rapidly
49
Adrian Mowat
(852) 2800-8599

21 November 2012
EM Nifty Fifty
Winners, value and hedge bets
The US Nifty-Fifty was a group of stocks that
outperformed through to the 1973 stock market crash.
Strangely there is no official list of the Nifty-Fifty but
investors recall a small group of stocks that one had to
own despite their price. These stocks outperformed the
market through the 1960s. The stocks included Avon,
Disney, McDonalds, Polaroid, and Xerox, among others.
The P/E ranged from 49x to 91x. We screened for an EM
Nifty-Fifty. To be consistent with history we do not have
50 stocks. Track JPGIENIF Index on Bloomberg for
the J.P. Morgan EM Nifty-Fifty. The other baskets to
monitor are The J.P. Morgan Underappreciated
Growth (JPGIEDNM Index) and The J.P. Morgan
Deep Value (JPGIEVAL Index).
The case for a narrow group of expensive stocks leading
the market:
Very low risk-free rates. Equities are cheap relative to
bonds. Investors confidence in economic growth is
low and thus their confidence in the ability of the
whole market to grow is low. The companies/
countries that investors believe can generate
consistent growth will be limited. These growth
companies develop a growth premium.
Apart from the winners, we also have a list of stocks

that were not a part of the top quartile.
Figure 38: Risk-return trade-off line
25
Methodology
Filter for top-quartile risk-adjusted six-month-return
stocks. Risk-adjusted is return divided by one weeks
standard deviation of returns.
Filter for stocks with negative EPS growth in
2011/2012/2013. The exceptions are Telekomunikasi
Indonesia, Axiata group, Maxis, Arca, Samsung
Electronics and Uni President Enterprises.
Remove stocks in sectors with policy risk or
structural issues, i.e. materials, energy, Chinese
property and banks.
Delete stocks with single-digit ROEs.
50
Mar 09
20
Jun-09
Nov-12
15
10
MSCI EM
Jun-11
60 year average
HG
S&P500
EM Theoritical PE: 69
H SPX Theoritical PE: 62
USTs
EMBI
CEMBI
5
0
Cash
10
15
20
25
Historic vol %
Figure 39: Slope of risk-return trade-off line

0.6
0.5
0.4
0.3
0.2
Key large sectors in EM have growth and policy risk

i.e. materials, energy, banks in Brazil and China,
government linked companies etc. This further limits
the attractive long-term investments adding to the
scarcity premium.
The case against the Nifty-Fifty is simply that high
growth stocks eventually slow and their P/Es fall. The
other factor is that cyclical rallies result in rotation from
growth.
IRR %
0.1
2E-16
-0.1
53
59
65
71
77
83
89
95
01
07
Figure 40: EM Nifty-Fifty has outperformed MSCI EM by 37% in

three years
EM Nifty 50 USD total return vs. MSCI EM USD total return
145
EM Nifty Fifty
Under Appreciated growth
Deep Value
135
125
115
105
95
Jul-10
Dec-10
Apr-11
Aug-11
Dec-11
May-12
Source: MSCI, Datastream, J.P. Morgan calculations, 8 September 2012
Sep-12
Adrian Mowat
(852) 2800-8599

21 November 2012
Asia Technical Analysis Research

Sunil GargAC
EM technicals: 2013 outlook
(852) 2800-8518, sunil.garg@jpmorgan.com

Bloomberg JPMA GARG <GO>
EM Outperformance/ India Preferred BRIC

Priced on 14 Nov 2012
Global Technical Analysis Research

Michael Krauss
(1-212) 834-5103, michael.krauss@jpmorgan.com
J.P. Morgan Securities LLC
MSCI EM (MXEF) is decidedly more bearishly

positioned vs. Asia, distinctly below the down-trendline
from Apr/May11. A bearish stochastics x-over and a
potential bearish MACD x-over will increase downside
break risks. While we expect EM to outperform MSCI
World (MXWO), we expect Asia to outperform EM.
Figure 41: MSCI EM Weekly Chart
BRIC View MSCI BRIC, while range bound in sync

with MSCI EM, has a bearish bias on moving averages,
stochastics and potentially on MACD. Within BRIC, a
small possibility of upside exists in India. We are bearish
SHCOMP. Brazil risks a downside break from trading
range. Russia remains sideways.
BRIC Relative View BRIC under-performance (vs.
EM) should continue. India is expected to outperform.
Brazil under-performance appears to be bottoming out.
China/ Russia continue to run under-performance risks.
MXEF View
Similar to MXAPJ, MSCI EM is stuck in a trading range but
is somewhat more bearishly positioned with down-trendline
from Apr11 acting as a solid resistance. Stochastics
recently delivered a bearish x-over and MACD runs a
similar risk. Daily charts have a channel breakdown led risk.
MXEF still needs to establish clear direction 1018/1085
are resistance levels and 877 is support.
On a relative basis (vs. MXWO), MXEF long-term
outperformance is supported on monthly charts following
a 2-year under-performance. A rise above the 12mth mov.
avg. looks likely and would be accompanied by a positive
MACD x-over.
Source: Bloomberg.
Figure 42: MSCI EM vs. MSCI World - Monthly Chart
Asia vs. EM
Asias outperformance (MXAPJ vs. MXEF) since May10,
accelerated from Feb12 and remains solidly in place.
Clearly the drag from BRICs as well as the likes of Kospi
and TWSE weighs more on MXEF. Our relative preference
for HK tilts the balance in favor of Asia vs. EM.
Source: Bloomberg.
51
Adrian Mowat
(852) 2800-8599
DAILY CHARTS
MXEF broke down from early

Jun12 up-channel.
KST and MACD are

positioned in a bearish mode.

21 November 2012
Figure 43: MXEF - DAILY
Similar to S&P, MXEF has

broken down from an upchannel, increasing risks of
deeper pullbacks
MXEF vs. MXWO
Source: Bloomberg.
MXEF under-performance
contained in a down-channel
since late 2010. Recent rally
from lower channel bound
facing short-term resistance
on 40wma
Figure 44: MXEF vs. MXWO Weekly Chart
MACD in a buy mode
MXEFs 2-year underperformance found support on

the long-term uptrend line
(monthly charts) and is
supported by moving averages
and MACD on weekly charts.
While the 40wma does provide a
headwind, we remain biased in
favor of EM outperformance
Source: Bloomberg.
Figure 45: MXAPJ vs. MXEF

ASIA vs. EM
MSCI Asias long standing
underperformance vs. MXEF
ended in 2008 and accelerated
(after a correction) from early
2012. The outperformance for
Asia is channeling up and is well
supported on oscillators and
moving averages, although a
touch stretched in the shortterm. We recommend Asian
outperformance (vs. MXEF),
using pullbacks/ pauses to add
to positions
Source: Bloomberg.
52
Adrian Mowat
(852) 2800-8599

21 November 2012
BRIC Under-Performance/ India Best Positioned

BRIC Remains Challenged
Figure 46: MSCI BRIC vs. MXEF Weekly Chart
BRIC under-performance, downchanneling, is now 3 years old

and remains firmly in place until
wee see clear channel breakout
and 40wma x-overs
Source: Bloomberg.
Figure 47: MSCI India vs. MSCI BRIC Weekly Chart

India vs. BRIC
Indias under-performance vs.
BRIC (in force since late 2010),
ended at the end of 2011 and is
continuing to evolve in an upchannel. MACD needs to hold
moving averages are supportive.
We would remain OW India
within BRIC
Source: Bloomberg.
China vs. BRIC
Figure 48: MSCI China vs. MSCI BRIC Weekly Chart
MSCI Chinas year-long

outperformance vs. BRIC is
facing a bearish RSI divergence
and an end of outperformance
for now
While a clear sell signal is yet to
be given, we see MSCI China
outperformance difficult in an
Asian context and hence would
look at India as the preferred
BRIC market
Source: Bloomberg.
53
Adrian Mowat
(852) 2800-8599

21 November 2012
GEM Quant Strategy

Making the case for risk rotation into 2013
In a year when beta volatility had been extreme, 2012 has
in the end been dominated by the defensive, lower beta
names. Quality styles (we proxy using ROE and Earnings
Certainty) have seen much stronger performance in
recent years than their usual long term strength. This has
been at the expense of Value styles which have been
under-owned and unloved. See the chart to the right
where the recent 1-3 year trends are clearly in favor of
Quality over Value.
Robert SmithAC
(852) 2800 8569, robert.z.smith@jpmorgan.com
Bloomberg JPMA RSMITH<GO>
Trends in alpha in more recent years Quality is up and Value

flat compared to their long term performance history (the chart is
showing average monthly LS returns)
Q-Score, 2,368
Earnings, 1,431
Valuation, 981
1,000
Price, 425
Index, 305
Quality, 173
100
Value Spreads on High vs. Low Beta are closing

As a result: Defensives are now expensive; cyclical
names are cheap; and the spreads between them are the
widest weve seen. These spreads are mean reverting
BUT they can stay painfully wide for quite some time!
Case in point they have been wide now for over 12
months and very painful for anyone long risk. But the
tide has changed as the spread has closed for 2 months in
a row, so we can finally get some comfort going with this
trade.
10
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: J.P. Morgan, MSCI, IBES, Reuters, Factset, Barra; Universe MSCI GEM
Beta Value spreads are wide and closing still with upside. A
high beta basket has been getting more expensive for the last 2
months now (note the very last data point is for mid-November)
High vs Low spread
Low Beta, Cap wght P/Efwd
High Beta, Cap wght P/Efwd
20.0
10.0
5.0
0.0
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
-10.0
Jan-07
-5.0
Jan-06
January seasonality favors Price/Book

Our seasonality explorer clearly identifies Price/Book as
the best factor going into any January. After the
Christmas cheer, as risk budgets are refreshed, and
appetites renewed, it is usually the value names that are
sought out and in particular P/B is a classic way to add
risk.
15.0
Jan-05
Beta volatility is falling

With beta volatility on the decline we have yet another
indicator that it might be safe let beta loose again. The
risk-on/risk-off thrashing has abated a little after peaking
during the year and we are finally starting to see
sustained addition of risk and persistent performance of
beta.
Source: J.P. Morgan, MSCI Barra, Thomson Reuters; Universe MSCI GEM
Safer to come out and play? Beta volatility peaked earlier this
year. This is the 12-mth trailing volatility of L/S returns to Barra
Beta. It was its highest in August and has been falling since.
12.0%
10.0%
54
8.0%
6.0%
4.0%
2.0%
Source: J.P. Morgan, MSCI Barra; Universe MSCI GEM
Aug-12
Jan-12
Jun-11
Nov-10
Apr-10
Sep-09
Feb-09
Jul-08
Dec-07
Oct-06
May-07
Mar-06
Jan-05
Aug-05
Jun-04
Apr-03
Nov-03
Sep-02
Jul-01
Feb-02
0.0%
Dec-00
and loathes Price momentum 12-mth

A new year brings in new ideas, and so the winners each
year tend to fall out of favor in January, not to mention
are targets for profit taking. On average each year, Price
momentum has its worst month in January. And now
more than is usual it is also behaving as low-beta
defensive play. So Price momentum is not only
seasonally challenged, but will suffer more than normal
during a risk rally right now.

21 November 2012
Adrian Mowat
(852) 2800-8599
Seasonality favors P/B in January average L/S return of over 5% and ICs around 10% (over the last 17 years)
3.0%
2.5%
6%
2.5%
5%
2.2%
4%
2.0%
3%
1.3%
1.5%
1.0%
0.6%
0.5%
0.7%
0.2%
1.0%
2%
0.6%
0.4%
0.5%
0.2%
1%
0%
0.0%
-1%
-0.5%
-2%
-1.0%
-1.5%
-3%
-0.9%
Jan
Feb
Mar
Apr
May
Jun
Average Long/Short (% LHS)
Aug
Jul
Sep
Oct
Nov
-4%
Dec
Average Information Co-Efficient (% RHS)
but not Price Momentum (12mths) January has been its biggest underperforming month on the averages by far (17 years of history)
1.5%
1.3%
1.4%
0.9%
1.0%
0.7%
4%
0.3%
0.1%
0.0%
6%
5%
0.5%
0.5%
7%
1.2%
3%
2%
0.0%
1%
-0.5%
-0.6%
-1.0%
-1.5%
0%
-0.6%
-1%
-2%
-1.2%
Jan
Feb
Mar
Apr
May
Jun
Average Long/Short (% LHS)
Jul
Aug
Sep
Oct
Nov
-3%
Dec
Average Information Co-Efficient (% RHS)
Source: J.P. Morgan, MSCI Barra, Thomson Reuters; Universe: MSCI GEM
A solid strategy for all year long is P/B + ROE

We do take the point that playing deep value on
seasonality basis is a very front loaded approach to next
year. For a longer term view, a strategy that has been
consistently a good solid performer of alpha is PB ROE
(ROE Is it useful for stock picking, Sep 2010).
The L/S cumulative performance of a PB + ROE composite factor

blend over the last decade (rebalanced every month end starting
Dec '93) the strategy is remarkably consistent with turnover
averaging only 14% per month.
1,200
0%
-10%
1,000
-20%
-30%
800
-50%
-60%
400
-70%
-80%
200
-90%
Nov-11
Nov-10
Nov-09
Nov-08
Nov-07
Nov-06
Nov-05
Nov-04
Nov-03
Nov-02
Nov-01
Nov-00
Nov-99
Nov-98
Nov-97
Nov-96
-100%
Nov-95
Base
It wont do as well in a risk rally as pure P/B, but if

things take a turn for the worse then a PB ROE blend will
be more robust.
-40%
600
Nov-94
This is a bit like sitting on the risk-fence, as its a broad

blend of deep value AND quality. But traded at the start
of each year and held for 12 months it is a very solid
performer in GEM. With a slow turnover and long alpha
horizon it is more than suitable for a year long view.
Source: J.P. Morgan, MSCI Barra, Thomson Reuters; Universe MSCI GEM
55
Adrian Mowat
(852) 2800-8599

21 November 2012
Alpha in Asia sliced by country & sector

If its more a long-term view you are after, we have recently published our new
Factor Reference book for Asia ex Japan. In this we take an 18 year view to look
at what strategies worked where. See the links to the left for the full report.
Asia ex-Japan Factor Reference
Asia ex-Japan Factor Reference
Companion Backtest Results:
Regional Chartbook
Country Chartbook
Sector Chartbook
GEM Chartbook
Other Factor Reference Books
Europe
US
Other key reports
The JPM Q-Score for EM Stock
Selection
Macro Factor Rotation
Model 2.0 for AxJ
Style timing using
Macro Indicators
Market Timing Model
Country versus Sector
Sector Selection in AsiaPac
Country Matrix
When comparing factor performance by country, we notice a few interesting points:
Malaysia has the highest risk-adjusted returns for quant and Korea has the
highest absolute long-short returns for quant (although shorting is a problem)
Quant models with a Value Bias generally performed better outperforming in 6
out of 10 countries
Earnings factors that worked well were those related to Net Earnings Revisions to
FY1 and FY2 and Change in Consensus Recommendations, although they have
quite high turnover
For a simple composite, P/B ROE performed consistently across geographies, and
was even the best performing factor in Korea
1-mth Price Momentum and RSI 10-day taken as contra-indicators (e.g. 1-mth
Price Reversion) worked fairly consistently across geographies
Historical Dividend Yield worked best in the more developed markets of Hong
Kong, Singapore, Korea, and China (with the exception of Malaysia where many
systematic strategies worked)
1.80
1.13
1.84
0.35
0.11
2.40
1.37
1.17
0.61
0.86
1.20
1.59
0.80
-0.17
-0.12
-0.55
-0.85
0.04
0.12
-0.19
-0.07
-0.29
0.45
0.48
0.18
0.13
-0.19
0.76
0.67
0.44
0.45
0.45
0.48
0.12
0.10
0.03
-0.16
-0.40
-0.41
-0.31
-0.44
-0.38
-0.10
-0.07
0.46
0.01
0.47
0.19
0.23
0.35
0.18
-0.03
-0.10
0.41
0.41
0.32
0.25
-0.28
-0.11
-0.32
-0.84
0.26
0.53
-0.24
-0.32
-0.09
0.80
0.23
0.83
0.29
0.16
0.78
0.34
0.08
-0.25
-0.02
0.56
0.61
0.61
-0.18
0.05
-0.05
-0.58
0.07
-0.11
-0.54
-0.37
-0.07
0.21
0.40
1.00
-0.34
-0.44
0.47
0.49
0.24
0.28
0.00
0.44
0.50
0.35
-0.06
-0.54
-0.60
-0.59
0.00
0.05
0.19
0.54
-0.51
0.98
0.69
0.60
0.18
-0.12
1.00
1.10
0.73
0.58
0.54
0.63
0.24
0.48
-0.24
-0.15
-0.78
-0.76
-0.13
0.00
-0.16
-0.05
-0.30
Source: J.P. Morgan, MSCI, IBES, Reuters, Factset, Barra. For Sharpe Ratio calculation, the risk-free rate is assumed to be 0%.
56
ala
ys
ia
Ph
il ip
pi
ne
Si
s
ng
ap
or
e
Ta
iw
an
Th
ai
lan
d
Name
Q-Score Composite
Composite Value (w ith Grow th)
Composite Earnings / Sentiment
Composite Price / Technical
Composite Quality
Q-Score Composite (Value Biased)
Composite Price to Book ROE
P/E (1-y ear forw ard)
P/B (1-y ear trailing)
Div idend Yield (1-y ear trailing)
Net Earnings Rev isions FY1 FY2 (rel. to total changes)
Change in Consensus Recommendations (1-mth chg.)
Forw ard Earnings Momentum (1-month change)
Forecast Earnings Grow th FY1 to FY2
Price Momentum 12-month
RSI 10-day
Return On Equity (1-y ear trailing)
Sales Grow th (1-y ear trailing)
Beta (Barra)
Volatility (Barra)
Size (Barra)
Family
C
C
C
C
C
C
C
V
V
V
ES
ES
ES
ES
PT
PT
PT
Q
Q
R
R
R
As
ia
Factor Factor
In
do
ne
s
K o ia
re
a
ex
C h Japa
in
n
a
Ho
ng
Ko
ng
In
di
a
Table 47: Risk-adjusted Return Matrix by Country
1.05
0.33
0.95
-0.22
-0.22
1.25
0.79
0.54
0.33
0.63
0.91
1.33
0.37
-0.30
0.00
-0.28
-0.62
-0.09
-0.07
-0.15
-0.16
-0.13
0.80
0.47
0.50
-0.13
0.00
0.74
0.43
0.40
0.23
-0.19
-0.49
0.58
-0.10
-0.29
0.00
0.00
-0.70
0.00
-0.22
0.22
-0.07
-0.48
0.43
0.16
0.48
-0.29
-0.01
0.43
0.59
0.40
0.17
0.40
0.34
0.56
0.31
-0.14
-0.34
-0.14
-0.64
-0.25
-0.28
-0.14
-0.13
-0.33
0.87
0.66
0.61
0.18
0.51
1.19
0.41
0.73
-0.08
0.26
0.51
0.50
0.32
-0.25
0.18
-0.06
-0.13
0.23
-0.14
-0.16
-0.22
-0.04
0.30
0.58
0.83
0.00
-0.14
0.79
0.17
-0.08
0.17
-0.06
0.69
0.49
0.37
-0.44
-0.27
-0.07
0.10
0.00
-0.24
-0.21
-0.06
0.00
Adrian Mowat
(852) 2800-8599

21 November 2012
Sector Matrix
When comparing factor performance by sector, we notice a few interesting points
and key takeaways:
Consumer Discretionary, Industrials, Information Technology, and Industrials
had the best risk-adjusted long-short returns for our Q-Score, indicating that these
sectors are relatively more quant friendly
Sectors that are more homogeneous such as Utilities and Energy or sectors with
fewer companies such as Health Care may do less well on a standalone basis due
to a lack of diversification
Our Q-Score with a Value Bias (and underweight Price/Technical and Quality)
outperformed our regular Q-Score in 7 sectors
Earnings/Sentiment was the best performing factor family for 6 sectors
(particularly for Financials and Information Technology), and the Value factor
family was the best performing for 4 sectors
1-mth Price Momentum was a strong contra-indicator for Materials (or as a strong
positive indicator as 1-mth Price Reversion)
The best overall sector specific Sharpe ratio was for the Q-Score in Consumer
Discretionary and Composite Earnings/Sentiment for Financials
ex
-J
ap
En
an
er
gy
M
at
er
ia
ls
In
du
st
r ia
ls
Co
ns
um
er
Co
Di
ns
sc
um
re
tio
e
rS
He
na
ta
ry
alt
pl
h
e
Ca
s
re
Fi
na
nc
ia
ls
In
fo
rm
at
io
Te
n
T
lec
o m echn
ol
Ut
og
il it
y
ie
s
Table 48: Risk-adjusted Return Matrix by Sector
Family
C
C
C
C
C
C
C
V
V
V
ES
ES
ES
ES
PT
PT
PT
Q
Q
R
R
R
Name
Q-Score Composite
Composite Value (w ith Grow th)
Composite Earnings / Sentiment
Composite Price / Technical
Composite Quality
Q-Score Composite (Value Biased)
Composite Price to Book ROE
P/E (1-y ear forw ard)
P/B (1-y ear trailing)
Div idend Yield (1-y ear trailing)
Net Earnings Rev isions FY1 FY2 (rel. to total changes)
Change in Consensus Recommendations (1-mth chg.)
Forw ard Earnings Momentum (1-month change)
Forecast Earnings Grow th FY1 to FY2
RSI 10-day
Return On Equity (1-y ear trailing)
Sales Grow th (1-y ear trailing)
Beta (Barra)
Volatility (Barra)
Size (Barra)
As
ia
Factor Factor
1.80
1.13
1.84
0.35
0.11
2.40
1.37
1.17
0.61
0.86
1.20
1.59
0.80
-0.17
-0.12
-0.55
-0.85
0.04
0.12
-0.19
-0.07
-0.29
0.09
0.21
0.13
-0.19
-0.26
0.29
0.40
0.02
0.15
-0.03
-0.33
0.43
-0.26
-0.22
-0.27
0.15
-0.12
0.06
0.32
-0.59
-0.63
0.00
0.73
0.64
0.44
0.14
0.03
0.75
0.46
0.63
0.70
-0.08
0.30
0.07
0.63
-0.07
-0.36
-0.96
-1.01
0.02
0.06
-0.28
-0.11
-0.44
0.92
0.87
0.79
0.10
-0.16
0.92
0.60
0.72
0.85
0.39
1.15
0.37
0.44
0.30
-0.31
-0.45
-0.74
-0.36
-0.24
-0.22
-0.01
-0.14
1.18
0.74
0.87
0.58
0.19
1.16
0.60
0.86
0.09
0.61
0.87
0.70
0.50
-0.13
0.19
-0.53
-0.85
0.01
-0.23
0.01
0.05
0.03
0.35
0.00
0.57
0.03
-0.09
0.28
0.01
-0.24
-0.04
0.29
0.14
0.48
-0.15
0.22
-0.36
-0.50
-0.60
-0.15
0.44
0.09
-0.04
-0.35
0.14
0.34
0.70
0.12
-0.42
0.35
-0.31
0.09
-0.02
-0.26
-0.16
0.16
0.24
0.30
0.13
-0.39
0.00
-0.45
-0.26
-0.03
0.11
-0.45
0.77
0.61
1.18
-0.21
-0.25
0.96
0.62
0.36
0.51
0.38
0.36
1.03
0.11
0.00
-0.48
-0.65
-0.71
0.01
0.01
0.19
0.20
-0.41
0.87
-0.13
0.85
0.11
-0.12
0.91
-0.05
0.02
-0.12
-0.02
0.76
0.90
0.27
-0.22
0.35
0.25
0.15
-0.31
0.20
-0.11
-0.17
0.36
0.55
-0.02
0.35
-0.20
0.14
0.55
0.27
0.22
-0.10
0.27
0.05
0.32
0.09
-0.56
-0.15
-0.46
-0.16
0.10
-0.37
-0.09
-0.12
0.00
-0.03
0.38
-0.08
-0.36
-0.43
0.35
0.14
0.62
0.23
-0.05
0.46
0.15
-0.18
-0.23
-0.35
-0.31
-0.30
-0.31
0.08
0.14
0.17
-0.31
Source: .P. Morgan, MSCI, IBES, Reuters, Factset, Barra. For Sharpe Ratio calculation, the risk-free rate is assumed to be 0%.
57
Adrian Mowat
(852) 2800-8599

21 November 2012
This page has been left blank intentionally
58

21 November 2012
Table of Contents
Emerging Markets Fixed Income Outlook .............. 60
Emerging Markets Corporate Outlook 2013 ........ 62
Asia Credit Outlook ................................................ 64
Asia FX in 2013: Recovering and rebalancing ....... 66
Asian Economic Outlook ........................................ 68
LatAm Economic Outlook ...................................... 69
CEEMEA Economic Outlook ................................. 71
CEEMEA FX Strategy ............................................ 72
China Economic Outlook ........................................ 73
India Economic Outlook ......................................... 74
Korea Economic Outlook ....................................... 75
Taiwan Economic Outlook ..................................... 76
ASEAN Economic Outlook .................................... 77
Brazil Economic Outlook ....................................... 78
Mexico Economic Outlook ..................................... 79
Economic Forecasts ................................................ 87
Interest Rate Forecasts ............................................ 90
Economics, Rates, FX and Commodities
Adrian Mowat
(852) 2800-8599
59

21 November 2012
%YTD return
25.0%
21.2%
16.4%
20.0%
holly.s.huffman@jpmorgan.com
15.0%
10.0%
15.4%
13.1% 12.6%
10.6% 10.1% 9.5%

8.6%
5.0%
60
-15.0%
-13.9%
-20.0%
Source: JPMorgan
Figure 50: Local markets carry and duration were steady; FX

volatile
14
GBI-EM local YTD returns
12
GBI-EM FX spot return
10
8
6
4
2
0
-2
-4
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Figure 51: EM local yield valuations remain attractive versus US

yields
GBI-EM weighted real yield - US Real Yield
6.0
Nominal EM - US yields
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
Sep 03 Sep 04 Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12
Figure 52: GBI-EM performance varied in 2012, a trend that

should continue in 2013
%YTD return
35
28.8 28.3
30
24.8
25
23.6
21.5
20
15
19.8 19.1 18.7
15.8
12.6
12.4
10.8
10
7.4
6.1
6.1
Russia
Poland
Mexico
Colombia
Peru
Chile
Turkey
Hungary
Philippines
Total returns for EM credit products in 2013 are

likely to be more moderate relative to 2012 given
lower carry and less attractive valuations. However,
the supply-demand imbalance from QE3 provides
continued support for the EMBIG and CEMBI, which
have more room to tighten than other USD credit
products such as US high grade and CMBS. We forecast
EM sovereign and corporate spreads will tighten
approximately 25bp-50bp each in 2013 relative to current
levels of 306bp and 363bp, respectively. Assuming
-5.0%
-10.0%
Nigeria
EM local currency bonds (GBI-EM) have also posted

double-digits this year despite a 6% EM F/X
correction during 2Q12. Though EM F/X remained
volatile and only added 1% in spot terms for the GBI in
2012, carry and duration provided steady returns through
the year (11.5% total; Figure 50). GBI-EM GD yields
have declined by 100bp to 5.60%, the lowest level since
2003, the period for which we data. Relative to US rates,
however, EM local yields offer over a 4% pick-up to US
yields on a nominal basis and 2% on a real basis (Figure
51).
1.1% 0.4%
0.0%
GBI-EM GD
EM fixed income could deliver 6% to 10% total

returns in 2013
EM fixed income substantially outperformed our base
case scenario for 2012, with EM credit emerging as a
flight-to-quality trade. USD-denominated sovereign
(+16.4%) and corporate (13.9%) debt emerged as the
top-performing asset classes across both DM and EM
fixed income (Figure 49). EMBIG and CEMBI spreads
are 120bp and 105bp tighter, respectively, than a year
ago. Although EMBIG yields have fallen to an all-time
low of 4.66%, US Treasuries have declined by 30bps in
2012 and also are near record lows. The high yield and
"NEXGEM" components of the EMBIG were the star
performers, up over 20% on the year, matching European
high yield returns, even accounting for major corrections
in Argentina (-15%) and Belize (-28%). The strong
performance in EM corporates in 2012 has occurred
despite estimated record supply of US$310 billion for the
year, which has matched US high yield issuance
(US$305 billion YTD).
5.9% 5.5%
4.4
3.7
Indonesia
Holly HuffmanAC
South Africa
Figure 49: EM hard currency debt outperforms other asset

classes in 2012
Brazil
joyce.chang@jpmorgan.com
Thailand
Joyce ChangAC
Treasury yields end 2013 20-40bp higher than current

levels, our spread forecasts would imply 7-8% returns for
the EMBIG and CEMBI. For NEXGEM markets, we
expect a stronger return of 8.5-9.5%.
Malaysia
Emerging Markets Fixed

Income Outlook
Czech Republic
Adrian Mowat
(852) 2800-8599
Adrian Mowat
(852) 2800-8599

21 November 2012
If de-risking remains a broader theme across markets

as the US fiscal cliff weighs on markets, EM fixed
income remains a defensive asset class to hold due to
relatively stronger growth, continued ratings
upgrades and low financing needs. EMBIG technicals
remain positive with cash flows of US$68 billion next
year versus projected sovereign issuance of only US$77
billion. We expect EM corporate issuance to moderate
somewhat to US$281 billion versus US$123 billion of
CEMBI cash flows.
Whereas local currency sovereign debt lagged in 2012,
we expect local debt to outperform in 2013; bottomsup estimate for the GBI-EM suggests gains of 11%.
With FX volatility having declined, liquidity high, and
the global backdrop more stable heading into 2013 given
the G-3 policy stance, carry and F/X spot should be the
dominant factors, with each contributing 5.5-6% to total
returns. This would be a shift from 2012, when duration
was a key contributor to performance and EM F/X spot
was close to flat on the year. For 2013, we look for
duration overall to drag 2013 performance by
approximately 1%. We anticipate comparable returns
across regions in 2013, with Latin America
outperforming marginally with 12.4% return relative to
10% for EMEA EM and 9.4% for Asia. At the country
level, we expect the continued variance as was the case
in 2012 (Figure 52). Top performers in 2013 should
include South Africa, Brazil, Mexico and Indonesia,
though we are bearish on South Africa from a near-term
perspective.
projected rebound in Brazil, which should grow by 4.1%

in 2013. Global fiscal policy tightening in the US and
Europe will remain a meaningful drag on DM growth,
and J.P. Morgans forecast incorporates a drag of 1.5% in
2013, even if the worst of the US fiscal cliff is avoided.
J.P. Morgan looks for developed market growth to
remain weak at 1.0% in 2013 from 1.2% in 2012 (Figure
54).
Policy rates overall in EM should be relatively steady
in 2013. On a weighted-average basis, we forecast rates
to increase to 5.60% from 5.55% currently (Figure 55).
We expect moderate easing in EMEA EM and in EM
Asia and moderate tightening towards the end of next
year in Latin America.
Figure 53: EM inflows likely to surpass US$80 billion record
US$ billions
90
80.0
80
74.23
70
60
50
46.8
43.3
40
30
20
10
0
-3.4
-10
Jan
Feb
Mar
Apr
May
2008
2009
We expect EM inflows to reach a record US$85

billion in 2012, or nearly double the US$46.8 billion
that EM fixed income attracted in 2011. Next year, we
forecast a more moderate US$70 billion of inflows, but
this would be still well above the historic average inflows
of US$40-50 billion that the asset class has attracted
annually over the past decade. Hard currency flows have
dominated this year, but local flows have picked up in
the past two months.
Jul
Aug
Sep
2010
Oct
Nov
2011
Dec
2012
Source: EPFR, Bloomberg, J.P. Morgan.
Figure 54: EM growth likely to improve relative to DM in 2013

Real GDP (%oya)
Developed Markets
10
7.7
7.5
8.5
Emerging Markets
9.0
7.7
6.1
6.1
EM inflows reach record pace in 2012
Jun
4.7
2.8
2.8
2.4
2.5
2.3
1.3
2
0
5.1
2.6
1.2
1.0
-0.2
-2
-4
-3.7
-6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Figure 55: More than 5% policy rate differential between EM and

DM
Policy rate %
14
Developed Markets
Emerging Markets
12
EM growth to increase to 5.1% in 2013, maintaining

significant margin versus DM growth
We expect EM growth to increase to 5.1% in 2013
from 4.7% (over-year-ago). EM Asia should remain the
key driver (6.4%), and we expect China to grow by 8.0%.
EMEA EM is likely to be remain the laggard (2.7%), and
we expect Latin America to post the most notable
improvement from (3.9% from 2.9%), led by the
10
8
6
4
2
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
61
Adrian Mowat
(852) 2800-8599

21 November 2012
Emerging Markets Corporate

Outlook 2013
Yang-Myung HongAC
(852) 2800-8028, ym.hong@jpmorgan.com
Alisa Meyers
(1-212) 834-9151, alisa.meyers@jpmorgan.com
We expect EM corporates to maintain the tightening

trend in line with other credit asset classes, and
introduce a 2013 year-end spread target of 275-300bp
for the CEMBI Broad. Our spread targets for CEMBI
IG and HY are 210-235bp and 500-525bp, respectively.
The main drivers that have been supporting credit from
the middle of 2012 should remain in place, with inflows
leading to robust demand while low rates and QE3 foster
a favorable environment.
We expect CEMBI total return of 7-8% for 2013
based on our spread target and 7-year UST forecast
of about 1.4%. This is lower than the 2012 year-to-date
return of 13.7% as we assume less spread compression of
55-80bp (versus 88bp so far in 2012) and a rise in UST
yields (versus a 37bp decline). Should growth surprise on
the upside, CEMBI spreads could move closer to the
post-crisis tight of 246bp, but returns likely offset by
higher UST yield. In an adverse scenario with downside
growth surprise and lower UST yield, spreads could
move back to 375bp, reducing total return to about 4%.
may keep spreads from tightening in the near term, but

we think a downward adjustment of investors yield
expectations should eventually enable spreads to tighten
further. Additionally, we feel crossover investors may
continue to find value in CEMBI HY versus US BBs,
offering over 200bp pickup.
CEMBI 2013 returns at different UST and spreads
% return to year-end
A variable for spread performance is likely to come

from HY, which may be seeing some resistance
currently given the yield of 7.4% is close to the all-time
low (7.3%). Thus, such stickiness in yield expectation
62
1.05
15.0
13.4
11.8
10.3
8.8
7.3
5.9
4.5
1.18
14.3
12.7
11.1
9.6
8.1
6.6
5.2
3.8
1.30
13.6
12.0
10.4
8.9
7.4
5.9
4.5
3.1
1.43
12.9
11.3
9.7
8.2
6.7
5.2
3.8
2.4
1.55
12.2
10.6
9.0
7.5
6.0
4.5
3.1
1.7
1.68
11.5
9.9
8.3
6.8
5.3
3.8
2.4
1.0
1.80
10.8
9.2
7.6
6.1
4.6
3.1
1.7
0.3
CEMBI IG is at the wider end of the range over US HG

CEMBI IG vs. JULI ex-EM spread
(bp)
400
CEMBI IG - JULI ex-EM

CEMBI IG
350
JULI ex-EM
300
250
200
150
100
50
-
Our base case CEMBI target implies about 50bp spread

pickup to EMBIG, which is in line with the average
during 2012. While CEMBI should normally outperform
when spreads tighten, we maintain some reservations on
further compression over EMBIG due to the large
difference in the supply dynamic. Although there should
be enough support to digest the supply as long as inflows
continue, vulnerability against an overall market selloff
would still be higher. That said, we do see more
valuation cushion compared to the JULI and EMBIG
given that current CEMBI spread is a fair bit higher than
the post-crisis tight of 246bp. In addition, the 116bp
spread of CEMBI IG over JULI (ex-EM) is towards the
wider end of the recent range.
7-year UST yield (%) at year-end 2013
CEMBI Broad
(bp)
200
225
250
275
300
325
350
375
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Yields are near record lows for HY, providing some resistance to
spread tightening
CEMBI HY YTM
(%)
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
Jan-10 Apr-10
All-time low = 7.33%
Jul-10
Oct-10
Jan-11 Apr-11
Jul-11
Oct-11
Jan-12 Apr-12
Jul-12
Oct-12

21 November 2012
EM corporates have further cemented their position

as a mainstream investment, with the debt stock
exceeding US$1 trillion. This is an important milestone
as it is now similar to the US HY bond market size. We
think the EM corporate asset class will mature further in
2013, with fundamentals overall remaining comfortable
and default rates expected at a low level of 1.7% versus
3.0% in 2012 and long term average of 3.7%. The steady
growth in funds benchmarked to the CEMBI indices also
provides a more stable investor base. At US$44 billion,
benchmarked funds are up 45% year-to-date, and more
than doubled over the past two years.
CEMBI spread by region (bp)

SOT (bp)
800
Asia
Emerging Europe
Latin America
Jul-10
Oct-10 Jan-11 Apr-11
Middle East & Africa
700
600
500
400
300
200
Jan-10 Apr-10
Jul-11
Jul-12
Oct-12
External issuance expected to remain strong in 2013

EM corporate external bond issuance (US$ billion)
Middle East & Africa
350
Latin America
Emerging Europe
Asia
300
250
200
150
100
2013F
YTD
2012F
2011
2010
2009
2008
2007
2006
2005
2004
2003
50
2002
We expect new issuance activity to remain strong

going into 2013, although volumes are likely to be
below the record set in 2012. Our 2013 forecast of
US$281 billion would be roughly 10% lower than our
full year 2012 forecast of US$310 billion. This is
partially a reflection of the moderate amount of
maturities that need to be refinanced next year and strong
opportunistic issuances that have already taken place in
2012. Another factor for the lower issuance expectation
is the decline in the spillover effect from reduced
syndicated loan availability, which was driven by the
pullout of European banks from the second half of 2011.
Based on our estimated 2013 reinvestment cash flows of
US$128 billion, we forecast net issuance (gross supply
net of maturities) at US$227 billion and net financing
(net issuance minus coupons) at US$153 billion.
Spreads are lower, but de-risking may continue in CEEMEA
2001
Compressed valuations keep us more selective in Asia

and Latin America, and we see better relative value in
EM Europe and the Middle East. The strong credits
within the IG and HY (mainly BB) segments in Asia and
Latin America have continued to receive strong support,
with spread and yields at or close to the post-crisis tights.
In addition, we see the good quality HY credits more as
carry plays with stable income rather than large capital
appreciation. A potential upside surprise for HY credits
would be if the market perception around the yield floor
shifts downward, enabling more spread compression. The
Middle Easts average rating of A2/A- with maturity of
6.7 years makes the 259bp spread still look attractive
against the 218bp spread for CEMBI single A. We think
further lifting of the geo-political risk should enable
spreads to continue rerating. Although EM Europe is the
lowest rated region at Baa3/BB+, we think major
corporates and banks in the BBB rating range offer value
given the solid fundamentals and spread pick-up over the
quasi-sovereigns. We would note, however, that the
region is also more vulnerable to renewed risk aversion
out of Europe, which would be a variable.
2000
Adrian Mowat
(852) 2800-8599
Source: Bond Radar; J.P. Morgan.
Expect higher cashflows and lower net financing in 2013

US$ billion
Gross supply
2012F
310.0
2012 YTD
288.6
2012
Remaining
21.4
2013F
280.6
Estimated cash flows
107.3
103.5
3.8
127.9
Amortizations
56.1
49.4
6.7
53.3
Coupons
51.2
54.0
-2.9
74.6
Net supply
253.9
239.1
14.7
227.3
Net financing
202.7
185.1
17.6
152.7
Source: Bond Radar; J.P. Morgan.
EM corporate default rates should remain at low levels

2011
0.0%
2012 YTD
2.2%
2012F
2.2%
2013F
1.2%
EM Europe
0.6%
4.5%
5.5%
1.0%
Latin America
0.8%
1.9%
2.5%
2.9%
MENA
0.0%
0.0%
0.0%
0.5%
Total EM
0.5%
2.5%
3.0%
1.7%
% of EM HY debt stock
Asia

63
Adrian Mowat
(852) 2800-8599

21 November 2012
Asia Credit Outlook

Soo Chong, LimAC
(852) 2800 7931, soo.ch.lim@jpmorgan.com
A good rally in 2012

The Asian credit market had a good run in 2012. As
measured by J.P. Morgan Asia Credit Index (JACI),
the market has chalked up a 13.5% total return till
November 9, 2012 as credit spreads tightened by 106bp
and US treasury yields also moved marginally lower by
7bp. We expect that the full year return should come in
around the 14% level, which would make 2012 the
second best performing year for Asian credit since 2006.
An essentially liquidity-driven rally
The Feds QE3 and other major central bank easing
programs are flushing the economy and financial system
with ample liquidity. As the tail-end risk of the
European sovereign crisis subsided after the ECB took
several decisive actions such as OMT, this liquidity has
found its way into the credit market to search for yield.
This is exemplified by the large inflow into EM hard
currency fixed income funds, totaling US$56 billion year
to date, setting up 2012 as a record year for inflow.
Importantly, we believe that inflow from strategic
accounts is structural in nature as EM corporate is
gaining recognition as a separate asset class.
Record new supply in 2012
Record new supply has been well absorbed by the
market, showing that such liquidity inflow is not being
captured only by EM fixed income funds. Asia has
already seen around US$105 billion of new issuances
year-to-date and would likely end the year with US$110115 billion of new supply, which is more than double the
2011 amount and 70% higher than the previous record in
2010.
Low default rate
One key attraction of the Asia credit market is that the
default rate of Asia HY remains low at 1.4%, as we only
had two defaults totaling US$1.4 billion in 2012, due to
only marginal weakening in credit fundamentals. We
expect HY default rates to stay low in 2013 given low
refinancing requirements and a more conducive
economic backdrop.
Similar forces should continue to play out in 2013
We believe that credit markets should continue to be a
sweet spot for investors going into 2013. While we see
some gradual pickup in growth in Asia, global economic
growth rates are likely to remain subpar, which should
64
keep the central bank's liquidity tap flowing. With

default rates expected to stay low, the market should
continue to attract investors that are looking for yield
pick-up over near zero deposit rates.
J.P. Morgan Asia Credit Index Total return
28.3%
13.5%
10.6%
7.3%
5.4%
2006
2007
4.1%
2008
2009
2010
2011
2012 YTD
-9.8%
Source: J.P. Morgan
EM fixed income hard currency flows (strategic & retail)

56.0 (2012)
32.2 (2010)
31.0 (2009)
19.6 (2011)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
-18.0 (2008)
Source: EPFR Global, Bloomberg, J.P. Morgan
Asia new supply (US$ B)

115
85
68
57
52
33
13
2007
2008
2009
2010
2011
2012E
2013E
Asia high yield default rate (as % of prior year total HY stock)
16.8%
Defaulted
Forecast
1.6%
1.3%
0.0% 0.0% 0.0% 0.4% 0.0% 0.6%
9.1%
1.5%
0.0%
1.4% 1.2%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E2013E
Adrian Mowat
(852) 2800-8599

21 November 2012
Total return should ease back to single-digits

That said, we expect total return to moderate to around
the 6-7% range as valuations have tightened noticeably
after the rally in 2012. Yield for JACI is now at a record
low of 3.95%. However, we still see some room for
further tightening in the credit spread, which at 269bp is
just marginally lower than the historical average of
286bp and is far wider than the low of 110bp recorded in
mid-2007. We see potential for the spread to tighten by
around 40-50bp in 2013, which together with the carry
should put total return at the high single-digit level.
Key risks
One key risk to our sanguine view of the market is the
movement in US treasury yields. If the US economy
grows at a faster pace than our expectation, leading to a
change in the interest rate outlook (notwithstanding the
anchoring by the Fed at the short-end), rising treasury
yields could pare down total return on credit. We would
also be vigilant in watching tail risks of the European
sovereign crisis and the US fiscal cliff. While we believe
that policy makers will eventually make some hard
decisions to tackle those issues, any prolonged dithering
could create volatility.
Top picks
Our overall theme of investment in Asia is to stay with
some good quality names for carry, and selectively go
down the capital structure or credit curve to pick up some
yield. For banks, we remain broadly comfortable with
fundamentals in the region, and like owning names that
are well positioned to benefit from stable economic
outlooks in countries such as Malaysia (CIMB) and
Thailand (SCB). Down the capital structure, old style
lower Tier 2 bonds offer good value, as they trade at
attractive discounts and will likely benefit from scarcity
value going forward. In the high grade space, we prefer
land lords in Hong Kong (Sun Hung Kai and Hang Lung)
and consumption story plays (Tingyi and Tencent) in
China, and would also reach down the capital structure
for yield in those well structured hybrids (Hutch 6%perps
and CKI 7% perps) that incentivize issuers to call on the
first call date.
In the Chinese property sector, we are recommending a
barbell strategy, i.e. sticking to some high-quality BB
names (Country Garden 18s and Agile 17s new) for
carry and dipping selectively into single-B credits (KWG
17s new and Kaisa 15s) to improve overall yield. We
are staying light in Indonesian corporates given that the
sector is rather bifurcated, with good quality names
trading at tight levels and high yielding bonds come with
some idiosyncratic risks that may not appeal to some
investors.
Key credit metrics for Asia high yield

9.9x
6.0x
5.4x
4.3x
2.4x
2008
2009
2010
2011
LTM
Source: J.P. Morgan
Yield-to-maturity for JACI (in percentage)

12
JACI YTM (%)
High: 11.13
10
Average
8
Average: 5.94
6
4
Low &
Current: 3.95
2
0
3-Oct-05
3-Oct-06
3-Oct-07
3-Oct-08
3-Oct-09
3-Oct-10
3-Oct-11
3-Oct-12
Spread-over-Treasury for JACI (in basis points)

1,000
JACI SOT (bps)

Average
High: 813
800
600
400
Average: 286
200
0
3-Oct-05
Current: 269
Low: 110
3-Oct-06
3-Oct-07
3-Oct-08
3-Oct-09
3-Oct-10
3-Oct-11
3-Oct-1
Top Picks
Issuer
Ratings
PX
Yield
SOT Z-spread
CIMB 2.375% 17 22/17c% 17 A3/A-/BBB+ 100.44 2.27%ytm 163

Siam Commercial 3.375% '17 A3/BBB+/BBB+100.66 3.23%ytm 199
195
190
DBSSP 3.625% 22/17c
195
Aa2/A+/A+ 104.25 2.68%ytc 204
Sun Hun Kai 3.5% 16s
A1/A+
105.21 2.11%ytm 164
154
Hang Lung 4.75% 22s
NR
107.32 3.83%ytm 229
231
Tingyi 3.875% 17s
Baa1/BBB+ 106.74 2.32%ytm 174
163
Tencent 4.675% 16s
Baa1/BBB+ 107.10 2.77%ytm 227
218
Hutchison 6% perp old

CKI 7% perps
Baa2/BBB/BBB105.25 4.09%ytc 376
363
NR/NR/BBB 104.00 3.74%ytc 355
342
Cogard 11.125% 18s
Ba3/BB-
112.75 7.21%ytc 693
683
Agile 9.875% 17s
Ba2/BB
108.50 7.54%ytc 700
692
904
KWG 13.25% 17s
B1/B+
112.50 9.65%ytc 911
Kaisa 13.5% 15s
B1/B+
104.0011.56%ytc1127 1118
Weschi 7.5% 16s
B1/B+/BB-
90.50 11.12%ytc1075 1066
Shanshui 10.5% 17s
NR/BB-/BB- 110.25 7.73%ytc 717
710
Source: J.P. Morgan, Moody, and S&P.
65
Adrian Mowat
(852) 2800-8599

21 November 2012
Asia FX in 2013: Recovering

and rebalancing
Daniel HuiAC
(65) 6882-2216, daniel.hui@jpmorgan.com
J.P. Morgan Securities Singapore Private Limited
The backdrop in 2013 for Asian currencies is a

constructive one
In contrast to the sharp fall in growth momentum of 2012,
Asia in 2013 should see a modest cyclical lift, supported
by tailwinds from leaner inventories, while inflation
should gradually track higher. Meanwhile, global policy
continues to be exceptionally easy, notably with the
Feds open-ended quantitative easing likely to be an
enduring part of the global backdrop for the duration of
the year. This will keep the USD under broad pressure,
and reinforce ongoing diversification flows into stronger
macro balance sheets in Asia. Moreover, along with the
ECBs OMT, such global central bank policy should
provide a better backstop against cascading global
systemic contagion.
More permissive FX policy encouraging better
rebalancing
Importantly, the recent FX policy permissiveness in the
absence of particularly robust external demand or
inflationary pressure is a new FX policy paradigm to
track in 2013. If this shift in FX policy approach proves
enduring, it will allow Asian currencies to perform better
in the earlier part of the cycle, and if combined with,
inter-alia, easier domestic policy, will encourage ongoing
growth rebalancing.
Continued evolution of the RMB exchange rate
regime
The mature stage of China external rebalancing (C/A
surplus only e2.3% of GDP in 2012) has allowed China
to shift its focus away from managing RMB revaluation
and more towards exchange rate regime liberalization,
with the regime delivering relevant trading band
widening, true two-way flexibility, and significantly less
FX market intervention in 2012. Going forward 2013 this
gradual liberalization should continue, with increased
two-way flexibility of both the fixings and spot trading,
ongoing capital account opening (both through US$ and
cross-border RMB channels), and some possibility of
further band widening. Meanwhile, besides showing
more two-way flexible, these changes mean the RMB
will also become more cyclical to both global and
domestic market developments. Still, with broad USD
weakness and better foreign portfolio inflows due to an
opening capital account, the RMB should end the year
around 2% stronger.
66
Improving cyclicals to re-attract Asian FX overweights

60
55
50
45
-1
40
-2
35
Jan 08
Oct 08
Jul 09
Apr 10
Jan 11
Oct 11
Jul 12
-3
Global Mfg PMI (LHS)

Ave JPM Investor survey AFX position
Source: Bloomberg, J.P. Morgan
Asian central banks have turned unusually permissive
RMB exchange rate regime evolution accelerating

1.5
1.0
0.5
% USD-CNY spot deviation from SAEC central

parity rate
Trading band
0.0
-0.5
-1.0
Trading band
-1.5
Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
More classical revaluation trades elsewhere in N. Asia,

tracking state of rebalancing in S/SE. Asia
The classical high-surplus revaluation theme still persists
in TWD and KRW, where FX policy will determine the
amount of USD weakness realized in 2013 we are more
constructive on FX policy permissiveness in KRW than
TWD. Meanwhile in S/SE Asia we have already seen
examples of currency overshoots and depreciation
adjustment cycles occur in INR and IDR. INR is a
Adrian Mowat
(852) 2800-8599

21 November 2012
constructive, if challenging currency, but we are more

constructive on IDR, where relative devaluation vs the
region, an ongoing current account adjustment, should
make the currency much more attractive on a valuation
and carry basis in early 2013. Elsewhere in SE Asia
currencies have richened considerably and current
account surpluses narrowed, but this should not impede
further cyclical strength, especially in the PHP, SGD,
and THB.
INR should see better stability, but a recovery?
INR in 2013 looks considerably less vulnerable than in
2012. The adjustment in the earlier overshoot looks
complete, and a calmer global backdrop should limit the
extent of any further weakness. In the longer term the
impact of recent reform measures, if fully implemented,
will be important for more stable current account deficit
financing. In the nearer term, however, two risks linger.
The first risk is an S&P downgrade, which may come
back in focus after the budget in March 2013, with
implementation a key hurdle. Second, there are risks of a
mid-term general election in 2013, with politics
potentially undermining the recent reform initiative. We
like the better value and remain constructive on the INR
in the medium term, but the near term through mid-2013
will likely present a more volatile and tactical
environment for the INR.
Increasingly diverse drivers of relative performance

Themes and drivers of Asian relative currency
performance will become increasingly diverse in 2013, in
our view. Our top longs are the KRW due to FX policy
permissiveness and IDR on a recovery from the 2012
reversal. SGD, THB, and PHP should form core solid SE
Asian performers on resilient currency fundamentals
(flows, surpluses, and policy). MYR has the greatest risk
of underperformance, in our view, with an idiosyncratic
political event risk pitted against particularly large
foreign portfolio investor allocations. We remain
constructive on the INR in the medium term, but it will
likely remain a volatile trading currency until more
stabile long-term capital flows from recent reform
initiatives reassert themselves later in 2013.
67
Adrian Mowat
(852) 2800-8599

21 November 2012
Asian Economic Outlook

David G. Fernandez
AC
(65) 6882-2461, david.g.fernandez@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch
Rotating into better growth in 2013

Economic activity in EM Asia has taken a turn for the
better as we end 2012 and will lead to better headline
GDP growth in 2013. We expect regional GDP growth to
pick up to 6.5% in 2013 from 6.1% in 2012. Importantly,
China and India are both forecast to see growth improve
next year to 8.0% and 6.0%, respectively, after a very
disappointing 2012. For Asian policymakers, improved
growth data will clearly be good news, but it is not clear
they will be satisfied with the pace of recovery,
especially coming after this year's disappointments.
Emerging Asia: real GDP

% yoy
10
9
8
7
6
5
4
3
2
1
0
Inflows and current accounts to be FX supportive

After phases of depreciation in 2012, we expect EM
Asian balance of payments to be stronger in 2013.
Current accounts are forecast to hold steady at around
$380 billion, while capital inflows should remain robust.
With inflation no longer falling, policymakers should be
more tolerant of Asian FX appreciation.
A few risks to note
Our baseline forecast assumes no major DM events and
only moderate growth. In a scenario where DM surprises
on the upside, Asian growth and inflation would both be
higher. Policymakers have only dripped out support in
2012, partly because they never fully dismissed inflation
risks. If growth and inflation see upside surprises, this
could produce tightening in 2013. India poses a countryspecific risk, where market expectations on how quickly
reforms can be implemented may be too aggressive.
68
EM Asia
2012 2013F
ex China and India
India
China
Source: J.P. Morgan estimates
Emerging Asia: inflation

%oya
7
12
China
Inflation no longer falling, but yet a threat

After falling continuously in 2012, inflation in EM Asia
is expected to turn higher. We forecast regional inflation
to rise 3.7% in 2013 from 3.5% in 2012. China inflation
should rise to 3.4% from 2.7%, but below the official
target of 4%. In India, we expect inflation will finally
soften in 2013. Indeed, for most countries in the region
the turn to higher monthly inflation, in our base case of
moderate GDP growth, will not be seen as a threat.
Drip, drip, drip of policy support
In base case for growth and inflation, bits of rate cuts
may still occur in 2013, with the Reserve Bank of India
expected to cut in January. For most of Asia, fiscal policy
also has the policy space to do more, and we expect
budgets to be growth supportive, but not massively so.
2011
11
India
10
8
EM Asia ex-China
& India
2
1
2010
2011
7
2012
2013
Emerging Asia: current account balance

% of GDP
6
2011
2012 2013F
2
0
-2
-4
-6
EM Asia
ex China and India
China
India
Adrian Mowat
(852) 2800-8599

21 November 2012
LatAm Economic Outlook

Luis OganesAC
(1-212) 834-4326, luis.oganes@jpmorgan.com
Latin Americas growth fell below potential in 2012,

as expected, but Brazil explained much of the
slowdown in the regional average. Our current forecast
for Latin Americas 2012 growth of 2.9% is similar to
the 3.0% projection made at the end of 2011 for this year.
However, the performance across countries this year has
been quite uneven. Brazil accounts for 47% of the
regions nominal GDP and the full-year growth rate of
1.4%oya expected for this yearwhich stands well
below Brazils estimated potential pace of 4.0%has
dragged down the regional average. Brazils
underperformance is partly explained by the tightening
measures adopted in 1H11, the currency appreciation and
the slowdown in China. However, most other countries in
the region are expected to grow largely in line or even
above potential this yearincluding several that are
quite exposed to China like Chile (5.4%) and Peru (6%),
where growth will far exceed the projections made late
last year. Another notable case is that of Mexico (3.9%),
where the economy is expected to grow above potential
once again this year despite the lackluster performance of
the US. One common explanation for the growth
resilience of many Latin American economies this year is
the strength of domestic demand, which has compensated
for the weakness of the external drag coming from
slower global growth and lower commodity prices.
Latin Americas local market returns were dominated
by duration and carry during 2012. The GBI-EM Latin
America subindex has returned 13.7% in local terms and
13.4% in USD terms so far in 2012. F/X in the region
had a stellar start to the year returning 8.7% over the first
two months, before declining trough the end of 1H12 as
central bank increased activism. The growth bias in
Brazil was behind the large swing in the regions
currency performance, while the reversal of tightening
done by the BCB was favorable to our long duration call
as GBI-EM Brazil yields have declined 223bp YTD,
equivalent to a return of 15.2%. However, Peru
Soberanos outperformed in the region, returning 17.5%
YTD in local terms and over 21% in USD terms. Foreign
inflows into Peruvian bonds have reached US$1.6 billion
so far this year, bringing the share of foreign ownership
from 48% in December 2011 to 58% in September 2012.
Returns in Mexico and Colombia were more balanced
between duration and F/X. Mexicos duration

performance was in line with US treasuries returning
nearly 12%, while F/X added another 5.5%. In Colombia,
duration returned 12% and F/X added 6.6%. While
Soberano bonds were the best performers in the region,
Peru has a weight of only 5% in the regional subindex,
while Brazilian local bonds represent a third.
Table 49: Latin America: Growth near potential
Latin America
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Uruguay
Venezuela
Real GDP (%oya)

2011
2012
2013
4.2
2.9
3.8
8.9
2.7
3.6
2.7
1.4
4.1
6
5.4
4.5
5.9
4.3
4.5
8
5
4
3.9
3.9
3.6
6.9
6
6
5.7
3.5
4
4.2
5
0
Potential GDP
3.9
3.5
4
4.5
5
3
3.3
6
4
3
Latin America is expected to reaccelerate back to

potential in 2013. The recovery under way in Brazil,
which is projected to grow 4.1%oya in 2013, will help to
bring the regions average close to its estimated potential
pace of 3.9% despite some moderation expected in Chile
(4.5%) and Mexico (3.6%), and a significant drop in
Venezuela (0%) as the economy absorbs the impact of
the needed post-election fiscal tightening and F/X
devaluation. Colombia (4.5%) and Peru (6.0%) should
maintain their current cruising speeds amid strong FDI,
while Argentina (3.6%) should recover with the help of
Brazil and a better agricultural crop that was affected by
a draught earlier this year. This baseline scenario
assumes that the US avoids a sharp deceleration or
recession due to the fiscal cliff (which would affect
Mexico, in particular) and that Chinas gradual recovery
consolidates (preventing a further drop in prices and
volumes of commodity exports). Faster growth will help
to improve fiscal accounts (Latin Americas average
fiscal deficit is expected to shrink to 2.1% of regional
GDP from a 2.4% gap this year), but current accounts
will likely deteriorate a bit (the current account deficit is
projected to reach 1.3% of GDP in 2013 versus 1.2% this
year). The good news is that countries with external gaps
should be able to finance them easily with FDI inflows
and/or long-term external borrowing.
With growth near potential and inflation within
target ranges, Latin American central banks will have
little reason to adjust policy rates in 2013. Among the
six inflation targeters in Latin America, this years
69
Adrian Mowat
(852) 2800-8599

21 November 2012
inflation is expected to fall within target ranges in Brazil,

Chile, Colombia and Peru, and to exceed them in Mexico
and Uruguay. For 2013, only Uruguay is expected to
miss its inflation target once again, although the trend
will point south. Given these growth and inflation
dynamics, our monetary policy forecasts pencil in no
interest rate moves in Chile, Colombia, Mexico and Peru
in the remainder of 2012 and the whole of 2013. The
only changes are expected in Brazil (where the forecast
assumes that the Copom hikes the Selic by 75bp in 4Q13)
and Uruguay (where we expect a 50bp rate cut in 2Q13).
The risks around these forecasts are for Brazil to stay on
hold throughout 2013 if growth disappoints again and if
inflation expectations remain well-anchored; for
Colombia to cut its repo rate once again if the 2Q12
recovery proves short-lived; for Chile to hike if inflation
finally accelerates amid strong domestic demand and
tight labor markets; and for Mexico to follow its recent
hawkish rhetoric with a hike if its currently high inflation
fails to converge back to target. F/X dynamics will also
play a role in driving monetary policy decisions. We
think Brazil will likely remain the most interventionist in
F/X markets and may adopt macro-prudential measures
to help maintain a low Selic rate amid potential inflation
pressures, while trying to prevent BRL appreciation.
Mexico will likely remain on the other extreme and
display the most tolerance to F/X volatility. The other
central banks will be somewhere in between we think .
70
Adrian Mowat
(852) 2800-8599

21 November 2012
CEEMEA Economic Outlook

EM, Economic and Policy Research
Michael MarreseAC
(44-20) 7777-4627
michael.marrese@jpmorgan.com
J.P. Morgan Securities plc.
EMEA EM growth to slow in 2013

J.P. Morgan forecasts that 2013 EMEA EM growth will
be 2.9%, slightly less than in 2012 and 30% lower than
the regions potential growth. Assumptions driving this
view are: stagnation of Euro area growth; tepid German
economic expansion; stable oil prices; declining/stable
oil production among most of the regions oil producers
(except for Angola and Ghana); and continued fiscal
consolidation (or a decreased fiscal stimulus in the
GCC). Five of the 15 countries in Table 50 are projected
to grow within 20% of potentialNigeria, Saudi Arabia,
Qatar, Russia and South Africa. Countries just below that
growth metric are: Israel, Kazakhstan, Turkey, and UAE.
Poland and Egypt are forecast to expand at 40-50% of
potential. The biggest laggards are projected to be: Czech
Republic, Hungary, Romania, and Ukraine.
Risks to 2013 EMEA EM growth forecasts
For 2013, upside risks to our growth forecasts revolve
around the worlds two largest economies. Suppose in
the USA the executive and legislative branches reach
some sort of grand bargain (this is not our base case)
about both the 2013 budget/fiscal cliff and medium-term
entitlement programs. Such a grand bargain would, in our
view, include a path to comprehensive tax reform, which
in turn would likely stimulate US growth and positively
affect investor sentiment globally. In China, it is possible
that the new leadership (again not our base case) will
engage in much more fiscal stimulus than we have
projected. That would be positive for Euro area growth.
On the downside, we see three risks. Risk 1 is a military
confrontation involving Iran, which would be negative
for global growth and risk appetite. Given that the EMEA
EM has many energy producers, risk 2 to our regional
growth forecast is substantially lower oil prices than we
have assumed, which would be more likely if the first
risk does not materialize because oil production in so
many of this regions oil-exporting countries is currently
close to all time highs. Risk 3 is that one or more of the
populations in peripheral Euro area force a change in
government, with the new one unwilling to support the
regions commitment to fiscal consolidation. Such
unanticipated political upheaval could cause a Euro area
member to exit EMU.
Other 2013 macro forecasts

We project fiscal surpluses (or growing reserve funds) in
all major energy exporters, and moderate deficits in most
other countries (except Egypt, South Africa and
Ukraine). With regard to the current account, we see
surpluses for energy exporters plus Hungary, and
narrowing deficits in all other EMEA EM countries
(especially important for Turkey and South Africa)
Table 50: GDP Forecasts
EMEA EM1
Czech Republic
Egypt
Hungary
Israel
Kazakhstan
Nigeria
Poland
Qatar
Romania
Russia
Saudi Arabia
South Africa
Turkey
UAE
Ukraine
2011
5.3
1.7
1.8
1.7
4.8
7.5
7.8
4.3
18.6
2.5
4.3
7.1
3.1
8.5
4.2
5.2
Real GDP (%oya)

2012
2013
3.1
2.9
-1.1
0.9
2.2
2.6
-1.2
0.5
3.0
3.1
4.7
4.5
6.5
6.7
2.3
1.6
5.4
4.6
0.0
0.8
3.6
3.0
5.6
3.5
2.2
2.7
2.8
3.7
3.8
2.8
0.3
1.0
Potential
Growth
4.1
3.5
5.0
3.0
4.0
6.0
7.5
3.5
4.8
4.0
3.5
3.3
3.3
5.0
3.9
4.5
Source: National statistics offices and J.P. Morgan estimates.

1. GDP-weighted average for entire EMEA EM region. Fiscal year for Egypt data.
Table 51: EMEA EM 2013 Macro forecasts
EMEA EM1
Czech Republic
Egypt
Hungary
Israel
Kazakhstan
Nigeria
Poland
Qatar
Romania
Russia
Saudi Arabia
South Africa
Turkey
UAE
Ukraine
CA
balance
% of GDP
2.4
-0.9
-3.1
2.8
-2.6
7.9
4.6
-3.0
22.5
-3.8
2.9
19.1
-5.3
-6.6
9.4
-6.3
Fiscal
balance
% of GDP
-0.5
-2.9
-9.3
-3.0
-3.5
2.5
-2.5
-3.8
6.1
-2.9
-0.3
8.2
-4.5
-2.4
8.1
-4.5
Government
debt
% of GDP
29.3
45.0
81.1
74.2
72.9
13.0
15.4
55.3
32.5
34.5
10.8
5.3
42.2
36.7
16.4
35.1
CPI
(% eop)
5.2
2.1
8.6
5.0
2.3
6.7
10.2
2.6
3.6
5.1
5.8
3.8
5.5
6.2
2.2
8.1
Source: National statistics offices, IMF and J.P. Morgan estimates.

1. GDP-weighted average of 15 countries in table. Fiscal year for Egypt data.
71
Adrian Mowat
(852) 2800-8599

21 November 2012
CEEMEA FX Strategy
Emerging Markets Strategy
George Christou
AC
(44-20) 7134-7548, george.g.christou@jpmorgan.com

Jonny Goulden
(44-20) 7134-4470, jonathan.m.goulden@jpmorgan.com
2013 likely to see greater divergence between FX of

CEEMEA countries, with Central & Eastern Europe
(CEE) underperforming in H1. 2012 has seen FX for
CEEMEA markets perform well, excluding South Africa,
with RUB, PLN, TRY and HUF all making over 7% in
total returns. For 2013 we expect CEE FX (PLN and
HUF) to underperform RUB and ZAR, particularly in
1H. ZAR has been the clear underperformer so far this
year, with a total return of -3.0%, driven by mining strike
disruptions and the subsequent drag on economic
performance and sentiment. The top performer has been
the HUF, yielding a total return of 15.4%, though this is
to some extent biased by the significant
underperformance of the currency towards the end of the
last year. Other currencies in the region also performed
well, TRY (11.1%), PLN (11.5%) and RUB (6.9%).
2013s outlook for the regions currencies is driven by
the macro themes of liquidity versus growth. The
prospect of abundant liquidity should benefit the regions
FX (vs USD) more so than other EM regions due to the
higher global beta of CEEMEA FX (vs USD). In addition,
there are weaker incentives for central banks (v other
regions) to stem appreciation pressures through FX
intervention given concerns over already close to or above
target CPI. However the low regional growth trend coupled
with continued fiscal cliff concerns have, so far, not allowed
much of this liquidity effect to feed through ; CEEMEA
total returns since OMT/QE3only amount to 3%. The hopes
for a resolution to the fiscal cliff by 1Q13, as well as
stronger evidence of a lift in global growth will be critical
for CEEMEA FX performance for the remainder of the year.
Until then, idiosyncratic factors are likely to drive relative
value performance. We discuss these factors below.
Monetary policy easing and lower growth will weigh on
CEE currencies versus RUB and TRY in 1H13. Monetary
policy and growth differentials will be an important driver in
H1 particularly for CEE currencies. Monetary policy easing in
Poland (-100bp of cuts forecast), Hungary (-75bp cuts
forecast) and the Czech Republic (possible extraordinary
measures) will likely weigh on these currencies relative to
72
EMEA EM peers. . These rate cuts are likely as central banks

respond to the weaker growth in CEE where we forecast Polish
real GDP growing in 2013 just 1.6%, Hungary 0.5% and the
Czech Republic 0.9%. These compared to forecast growth
rates of 3.7% in Turkey and 3.0% in Russia. This will likely
lead to CEE underperformance against RUB and to a lesser
extent TRY, where we see policy rates on hold.
Balance of payment dynamics will marginally deteriorate
for major CEEMEA currencies in 2013 but this will be a
lower concern given reduced tails risks. The regions
current account dynamics will marginally deteriorate in
2013, with the regional current account deficit for major
CEEMEA currencies widening from -0.2% to -0.6% of GDP
on JPM forecasts. Among the surplus countries, we see a
deterioration in Russia (from 4.4% in 2012 to 2.6% in 2013)
and Nigeria (6.6% to 5.7%) and an improvement in Hungary
(1.5% to 2.8%). In the deficit countries, we expect a
narrowing from this year to next year in Turkey, Poland,
Czech Republic and South Africa but not Romania. Overall,
we do not expect current account /external financing to be a
major concern given the reduction of negative regional tail
risks. However investors are likely to pay closer attention to
South Africa (given the recent strikes), Poland (given the
increasing negative net errors and emissions data) and
Turkey (given the risks of a slower pace of external
rebalancing for what is still a large current account deficit).
In 2013, the ZAR has room to outperform over the
course of the year, but is likely to start out as an
underperformer. We think the ZAR could outperform
in 2013, though negative country specific factors are
likely to lead to underperformance to start the year. More
specifically, the weaker trade balance from the recent
strikes will peak in January/February. After that, we
think the market would have fully priced in the mining
strikes. Post Q1, there is also a greater chance for a
resolution on the fiscal cliff and stronger evidence of a
global macro lift, which should benefit the ZAR given its
high beta to global risk and commodity prices. In
addition, the currency is already among the cheaper
currencies in EMEA EM on a short term (financial fair
value model) and medium term (JPM equilibrium
exchange rate model) horizon, giving further reasons for
outperformance. There will likely be a time to favour
ZAR in 2013, but we expect depreciation first.
Adrian Mowat
(852) 2800-8599

21 November 2012
China Economic Outlook

Haibin Zhu AC
(852) 2800-7039, haibin.zhu@jpmorgan.com
JPMorgan Chase Bank, N.A., Hong Kong
Moderate recovery in 2013

Chinas economy started to turn higher in mid-2012 as
the impact of moderate easing measures gradually gained
traction. We expect quarterly real GDP to 2012 at a stillsubdued 7.4%oya, but to rise moderately to an average of
7.9% during 1H13 and 8.1% in 2H13. Our full-year GDP
forecast stands at 8.0% for 2013 compared to 7.6% in
2012.
Net exports still a drag, but FAI slightly stronger
In our view, external headwinds will remain the major
drag on Chinas growth in the coming quarters. We
expect net exports to subtract 0.8%-pt from Chinas
headline GDP growth next year, similar to its impact in
2012. On the domestic side, consumption will remain
supportive, with employment holding up and wage gains
solid. Fixed asset investment (FAI) growth is likely to
turn up to 22.4% in 2013 from 21.0%oya this year. Our
view on FAI is that China's moderate policy easing since
mid-2012 has supported a pick-up in public investment
such as infrastructure, railways, and environment
protection and clean energy sectors, and that this trend is
likely to carry on into 2013. Meanwhile, private
investment should also do better next year, with the
stabilization in real estate investments and easing
pressure on manufacturing sector's de-stocking.
Inflation will pick up, but still not a threat
Headline inflation in China is likely to turn up
moderately towards end of 2012, as favorable base
effects disappear, and this uptrend is likely to continue
into 2013. However, we expect inflation to remain well
below the government's 4% target. On the J.P. Morgan
forecast, headline CPI inflation should end 2013 at
3.6%oya, with the full-year average at 3.3%.
New leadership, but no big policy changes
The 18th CPC National Congress will announce the new
leadership for the next decade. Despite the change in
leadership, we do not expect substantial changes in
economic policy. The new leaders are expected to
continue the economic agenda as outlined in the 12th
five-year plan. As such, the primary economic policy
objective for China will remain to transition toward a
more sustainable, consumption-driven growth model.
In our view, this implies there will not be a significant
ramping up of policy easing in 2013. The new
government is likely to continue to adopt the mix of

proactive fiscal policy and prudent monetary policy.
Fiscal policy will continue to support infrastructure
investment, improve the social safety network and
facilitate income redistribution. On the monetary policy,
we expect PBOC will keep interest rates unchanged
throughout 2013 and will continue to focus on liquidity
management via open market operations (especially
reverse repos) and RRR cuts.
China: real GDP growth
% change, both scales
JP Morgan
forecasts
16
20
% q/q, saar
14
15
12
10
10
% oya
8
6
04
05
06
07
08
09
10
11
12
13
Source: CEIC and J.P. Morgan estimates
Contribution to headline GDP growth
%-pt contribution to headline %oya growth

10
8
Gross fixed capital

formation
Total consumption
expenditure
Net export
4
2
0
-2
-4
2006
2007
2008
2009
2010
2011
2012F
2013F
China: headline CPI

%oya
JPMorgan
forecast
10
-5
04
05
06
07
08
09
10
11
12
13
73

21 November 2012
74
%oya
12
10
8
6
4
2
0
12Q1
The RBI has indicated a reasonable probability of rate

cuts in 1Q13 but, with inflation expected to accelerate in
the coming months, it faces a difficult balancing act at
the January review. We expect the RBI to cut rates by
25-50 bps in 1Q13 but further easing will be contingent
on inflation pressures moderating later in the year.
India: Growth has moderated sharply but could be bottoming
11Q1
Inflation continues to remain stubbornly high with WPI

inflation close to 8% and CPI inflation perilously close to
double digits. Furthermore, WPI inflation is expected to
accelerate above 8% in 4Q12 as food prices rise and the
recent fuel price hike makes its way through the system.
The evolution of inflation in 2013 will be largely
contingent on the behavior of the exchange rate and
commodity prices. If policy actions at home lead to
sustained rupee appreciation and /or global commodity
prices remain muted, upside risks to inflation will wane.
Conversely, if the Rupees recent gains were to
evaporate, inflation pressures could further aggravate.
In recent weeks, however, some of this positive

sentiment has worn off, as markets worry about whether
the government will succeed on the game-changing
reforms that could arrest the structural deterioration in
investment and the deficit: creation of a National
Investment Board, passage of a land acquisition bill, and
political agreement on the GST. If the government can
succeed on these initiatives capital and currency markets
will likely get a significant boost, and the recent pick-up
in leading indicators is likely to sustain and accelerate.
Absent another reformist thrust, however, sentiment and
the INR are likely to drift downwards.
10Q1
Inflation and monetary policy
After procrastinating for 2 years, the government has

embarked on a strong policy offensive over the last two
months (fuel price hikes, FDI in multi-brand retail and
other sectors, reduction in capital market frictions,
cabinet approval of FDI in pension and insurance reform)
boosting investor sentiment and causing the Rupee to
appreciate and equities to strengthen.
09Q1
That said, leading indicators suggest that the industrial

and export slowdown seems to have bottomed with some
pick-up in activity likely in early 2013. We expect GDP
growth to print at 5.6% in FY13 (year ending March
2013) though the risks are skewed to the downside with
3Q growth expected to decelerate further. Growth could
modestly accelerate to 6% oya in FY14, if the
government can push ahead with reform and help revive
the investment climate.
Reforms and FX
08Q1
Slowing income growth and stubbornly high retail

inflation that has squeezed purchasing power have also
contributed to a slowdown in consumption. Meanwhile,
exports which had surged in 2011 saw a sharp drop in
the middle of 2012 as global demand softened.
Key to credible and sustainable fiscal consolidation and

achievement of the fiscal road-map is implementing the
goods and services tax (GST). Hopes of a political
agreement have risen on this front, but the next few
months will be important in revealing whether this is
possible to achieve in 2013.
07Q1
GDP growth continued to decelerate in the first half of

2012 as the investment slowdown was compounded by
slowing consumption growth and a sharp fall-off in
exports as global demand slowed. Implementation
bottlenecks remain the key on the investment front with
stalled projects at record highs, as project clearances,
environmental approvals, land acquisition and coal
linkages remain binding constraints.
06Q1
Growth and activity
05Q1
(1-202) 585-1254, jahangir.x.aziz@jpmorgan.com

04Q1
Jahangir Aziz
03Q1
(91-22) 6157-3386, sajjid.z.chinoy@jpmorgan.com

J.P. Morgan India Private Limited
While the governments recent fiscal actions (hiking

domestic fuel prices, announcing a fiscal road-map) may
have averted a ratings downgrade for now, much will
depend on the fiscal outturn for FY13 and the budget for
next year. Authorities indicate they will keep the deficit
down to 5.3% of GDP (Budget 5.1%) but the risks of
more slippage remain high. If the consolidation is
achieved primarily through postponing expenditures,
achieving the deficit target of 4.8% in FY14 will get
increasingly more challenging, especially given the
packed election calendar in 2013 and 2014.
02Q1
Sajjid Z ChinoyAC
Fiscal policy and ratings downgrade
01Q1
India Economic Outlook
00Q1
Adrian Mowat
(852) 2800-8599
Adrian Mowat
(852) 2800-8599

21 November 2012
Korea Economic Outlook

Jiwon Lim AC
(82-2) 758-5509, jiwon.c.lim@jpmorgan.com
JPMorgan Chase Bank, N.A., Seoul Branch
Mild growth recovery, but risks still lurk

We expect Korea real GDP to recover to 3% in 2013,
with exports to rise and fiscal policy to turn more
supportive. On a quarterly basis, real GDP growth has
slowed for three straight quarters since 1Q12, but
demand side conditions now look aligned to support an
improvement in manufacturing output which should lift
the overall GDP growth modestly starting this quarter.
The key risks to our growth view are external demand,
especially in DM countries, and any possible policy
interruptions after the Presidential election in December.
Export gains likely to broaden
After suffering through most of 2012, Koreas exports
have turned up since mid-3Q (by our estimate, which
controls for seasonal and irregular factors). Price effect
played an important role in improving nominal
performance, but even in volume-terms exports have
improved thanks to better demand from China and other
Asian countries. By product, export gains have been
narrowly based in electronics and oil products, but there
are signs of those improvements broadening. Vessel
exports are an exception, with deliveries having peaked
in 2011 (recall the orders-to-production lag is 2~3 years).
In 2013, we expect non-vessel exports to see a more
meaningful recovery.
Domestic demand mixed, calling for more policy help
On Korean domestic demand, private consumption has
been volatile, but through the noise has been modestly
trending higher. However, the gain in consumers real
purchasing power appears to have slowed recently,
despite a rise in employment. One impediment may be
the debt servicing burden of Korean households, but we
note that the Bank of Korea and the government have the
policy room to move to ease the debt servicing burden
(Korea: micro policy to ease household debt servicing
burden, GDW, Aug 31). In 2013, the key wild card will
be if financial and real estate asset values would rise to
generate positive wealth effect. The former requires the
improvement of Euro areas debt problem and the latter
calls for further deregulation of housing markets where
potential buyers have delayed housing purchase (pulling
down housing prices, but driving up rents).
Meanwhile, corporate sector has been reducing inventory
and business equipment investment. Importantly,
monthly data show that manufacturers destocking
appears be almost over, with high-tech sectors inventory

ratio to shipment down and the ratio for the non-tech
sector stabilizing. However, business sentiment remains
depressed, so it seems premature to expect an upturn.
Indeed, while the demand for replacement investment has
been rising, campaign calls for stricter regulations on
large conglomerates may be holding back investment.
Macro policy to be more supportive in early 2013
On this backdrop, the Bank of Korea will maintain an
easing bias for some more quarters. We do not exclude
the possibility that the BoK would take rate cut action in
1H13, but this will require further deterioration of growth
environment, enough to threaten the forecast of 3%-level
GDP growth for the full 2013.
Instead, fiscal policy will be more of the focus. Going by
the governments proposed 2013 budget, fiscal policy is
not expected to turn supportive, with the consolidated
surplus targeted to rise from W18.1 trillion (or 1.4% of
GDP) in 2012 to W30.6 trillion (or 2.2% of GDP) in
2013. However, we expect the fiscal plan to change in
the process of getting the National Assemblys approval.
In addition, there is a strong possibility of a
supplementary budget. In the medium-term, though, the
government will eventually neutralize the positive impact
of spending increase by hiking tax burden in latter part of
2013, with the rise in taxes mostly concentrated in
relatively high-income group households and larger sized
firms.
Consumption good sales and exports
%3m/3m sa (not annualized)
16
12
Consumption good sales

(latest data are Sep)
8
4
0
-4
-8
2010
Customs exports
(latest data are Oct)
2011
2012
Business sentiment and equipment investment

100=neutral, sa
%3m/3m sa
15
120
115
10
110
105
100
95
-5
90
BSI by FKI survey

(composite of 14 components)
85
80
05
06
07
08
Business equipment investment

09
10
11
12
13
-10
-15
75
Adrian Mowat
(852) 2800-8599

21 November 2012
Taiwan Economic Outlook
growth-inflation dynamics, the Taiwan central bank will

likely keep major policy rates on hold in coming quarters.
Grace Ng AC
Global manufacturing PMI and Taiwan real export growth
(852) 2800-7002, grace.h.ng@jpmorgan.com

JPMorgan Chase Bank, N.A., Hong Kong
Better growth in 2013

Taiwan had a very challenging year for growth in 2012,
but we expect a better outlook next year. Our forecast
anticipates a steady growth pace in the range of 3.5-4.0%
at the turn of the year, which would be a substantial
improvement over early 2012. Overall, our GDP growth
forecast is 3.4% for 2013 compared to 1.2% in 2012.
Trade with mainland China more supportive
Taiwans exports to China/Hong Kong, which had been
on a consistently weakening trend from mid-2011
through May this year, seemed to have stabilized and
recover at a decent pace in recent months. Our forecast
calls for China growth to show some moderate recovery
in the coming quarters on the back of macro policy
support. This will likely feed through to some further,
gradual uplift in Chinas trade activity with Taiwan.
But G3 demand outlook still lacks clarity
On the other hand, demand conditions from the advanced
economies remains challenging for Taiwan, as fiscal
policy will remain quite restrictive going into 2013. In
addition, the lack of signs on near-term pickup in global
business capex spending is also worrying (which has
been reflected in the weakness in Taiwans metal and
machinery manufacturing activity in recent months).
... and that uncertainty is affecting domestic demand
Taiwans domestic economy appears to have been
dragged down by the lingering uncertainty on global
demand, as private consumer expenditure and gross
capital formation lost some momentum recently. For
2013, some gradual recovery in industrial and export
sectors, as well as steady growth in tourism activity (led
by mainland tourists), will likely lead to a moderate
recovery in domestic demand.
Policy rates on hold barring worsening global risks
The Taiwan central bank continues to worry about global
economic uncertainty and the risk that higher commodity
prices could pose for inflation. In this regard, the easing
in Taiwans WPI and import prices recently suggests that
import inflation pressure will be contained in the near
term. Notably, the central bank has also openly worried
that QE3 could lead to renewed capital inflows and raise
inflation expectations. Overall, we expect Taiwans CPI
inflation to average at 2.0% for 2012, potentially easing
to an average 1.5%oya in 2013. Given the overall
76
Index, sa
60
55
50
45
40
35
30
25
%3m/3m, saar
Global manufacturing
PMI - output
Taiwan export volume

(adjusted by export prices)
2007
2008
2009
2010
2011
2012
50
25
0
-25
-50
-75
-100
-125
China IP and Taiwan exports to China/Hong Kong

%3m/3m, saar, both scales
China IP
20
Taiwan exports
to China/HK
80
60
40
20
0
-20
-40
-60
15
10
5
2010
2011
2012
G3 core capital goods orders and Taiwan export orders from Gs

%3m/3m, saar, both scales
50 G3 core capital
goods orders
25
Taiwan export
orders from G3
0
-25
-50
2008
2009
2010
2011
2012
80
60
40
20
0
-20
-40
-60
-80
Taiwan: GDP by industry

Index sa, 1Q2008 = 100
Manufacturing
120
Accomodation and
food services
Real estate
110
100
90
Wholesale and
retail trade
80
Finance and
insurance
70
2008
2009
2010
2011
2012
Adrian Mowat
(852) 2800-8599

21 November 2012
ASEAN Economic Outlook

Sin Beng Ong AC
(65) 6882-1623, sinbeng.ong@jpmorgan.com
Matt L Hildebrandt
(65) 6882-2253, matt.l.hildebrandt@jpmorgan.com
JPMorgan Chase Bank, N.A., Singapore Branch
A pause that refreshes

ASEAN domestic demand has been surprisingly resilient,
despite poor external demand. This reflects the impact of
still-low rates on strong financial and household balance
sheets, sprinkled to varying degrees with supportive
fiscal policy. This resilience should continue in 2013 and
help buffer any further slowing in external demand.
Nevertheless, softening external demand over the course
of this year combined with slower growth in 2H12 leaves
the region set to post lower average annual growth
figures in 2013.
The main driver of lower growth in 2013 reflects some
payback in domestic demand following a year of firm
investment in the face of weak export growth and lower
commodity prices during 2H12. Of the three key
commodities most relevant to the region - coal, crude
palm oil and natural gas - only natural gas has
experienced any form of recovery. In manufacturing,
ASEANs electronics sector tends to be more leveraged
to corporate PC rather than Smartphone/tablet demand
and has thus been slower to experience the modest lift
seen in the larger North Asian producers in late 2012.
However, as the global CAPEX cycle recovers in 2013,
this should exert a positive demand impulse for the
ASEAN producers as well. This improvement in exports,
combined with softer investment growth, should lead to
improvement in external balances around the region. The
clearest flip will occur in Indonesia, with the current
account expected to return into the black in 1H13.
Inflation still soft into early 2013
With commodity prices expected to remain flat through
1H13 before rising in 2H13, the inflation trajectory is
expected to remain benign, with headline inflation
expected to ease in over-year-ago terms. This will
provide some space for further policy easing should the
external environment deteriorate further. For the time
being, we expect most central banks in the region to be
on wait-and-see mode with the exception of the
Philippines where we expect 50bp of rate cuts penciled in
through 1H13. Singapore stands out on the opposite side
of the spectrum with the least flexibility, where domestic
rather than external price pressures are driving central
bank action.
Malaysia and Singapore: semiconductor exports

US$bn, 3mma, sa, both scales
3.5
3.0
0.30
Malaysia
0.25
2.5
0.20
2.0
1.5
2006
0.15
Singapore
2007
2008
2009
2010
2011
2012
0.10
2013
Commodity prices
Index, Jan 2 2010=100, nsa, US$ terms

175
Brent crude oil
150
125
Crude palm oil
100
75
2010
Coal
2011
2012
2013
ASEAN: composition of growth
%-pt. contribution to yoy GDP growth

2009 2010 2011
Indonesia
4.6
6.1
6.5
Consumption
4.1
2.7
3.0
Gross
-0.7
2.7
2.0
investment
Net trade
1.2
0.8
1.5
Malaysia
-1.5
7.2
5.1
Consumption
0.8
3.6
5.4
Gross
-2.2
5.0
0.8
investment
Net trade
-0.2
-1.4
-1.1
Philippines
1.1
7.6
3.8
Consumption
2.7
2.8
4.1
Gross
-1.6
5.4
2.5
investment
Net trade
0.1
-0.6
-2.9
Singapore
-1.0
14.8
4.9
Consumption
0.4
3.7
1.6
Gross
-6.8
0.0
2.1
investment
Net trade
5.4
11.1
1.2
Thailand
-2.3
7.8
0.1
Consumption
0.1
3.2
0.8
Gross
-5.8
5.1
-0.1
investment
Net trade
3.4
-0.5
-0.7
2012F
5.7
3.1
2013F
3.7
2.5
Change1
-2.0
-0.5
3.4
0.6
-2.8
-0.8
4.7
3.8
0.6
3.7
1.9
1.4
-1.1
-1.9
3.5
2.0
-1.5
-2.5
5.3
4.8
-0.2
3.5
4.4
2.4
-1.8
-0.4
-2.4
1.2
3.6
2.9
1.5
0.7
-2.2
2.5
0.8
-5.1
1.1
0.1
3.9
1.5
-2.4
-3.2
4.6
2.2
0.2
4.5
1.7
3.4
-0.1
-0.5
5.2
2.5
-2.7
-2.8
0.4
3.2

1. 2013 less 2012c
77
Adrian Mowat
(852) 2800-8599

21 November 2012
Brazil Economic Outlook

Fabio AkiraAC
(55-11) 3048-3634, fabio.akira@jpmorgan.com
Less policy activism, more reforms

Growth is accelerating in 2H12, but sustainability
through 2013 is the main challenge.
Inflation well behaved on regulatory factors, keeping
rates and F/X unchanged.
With the worst behind us, government is becoming
more focused on supply-side reforms.
Fundamentals and politics in 2013
Growth back to potential in 2013, following two years
of underperformance. After posting a 7.5% GDP
growth rate in 2010, Brazils performance has been
disappointing, slowing to 2.7% in 2011, and to an
expected 1.4% this year. Last years deceleration was
self-inflicted, but it was aggravated by negative global
factors and a downward credit cycle. These factors also
delayed the effects of the broad policy easing
implemented since August 2011, but we are starting to
see the economy gaining traction, and Brazils growth
pace finally rebounded to around 4.5% in 2H12. An
improvement in consumption is leading the initial
recovery, but we are looking for the resumption of capex
and infrastructure to provide more sustainability to the
growth outlook in 2013. The recovery in investments
amid a murky global scenario is the main challenge
ahead. We forecast real GDP growth at 4.1% next year,
with investment expansion improving from -2.6% this
year to 6.0% in 2013. Another important assumption is a
normalization in credit markets. It seems credit is now
growing at a more sustainable pace of 16% (from 25%p.a.
between 2005 and 2011), and NPL rates are stabilizing
after spiking over recent quarters.
2013 IPCA will juggle upward cyclical pressures and
downward regulatory factors. Labor markets remained
tight during the soft patch, keeping wage pressures and
inflation risks high, as well as depressing corporate
profits. Inflation declined from the September 2011 peak
of 7.3% to 4.9% last June, but has already accelerated to
5.5%. Slow global growth helps to anchor inflation, but
domestic pressures are a source of concern. While fresh
food and agricultural commodities prices will play an
important role in inflation dynamics ahead, gasoline,
energy prices and transportation fees will also be key
78
sources of uncertainty that could significantly impact

inflation in 2013. We are forecasting this years IPCA at
5.5%, and next years at 5.3%, assuming that local
gasoline prices will increase further this year, and only
part of the electricity price decline expected by the
government will be implemented.
Rates low for long, and F/X locked in a range; at least
reforms are moving. Following a period of hyperactive
economic policy actions, we expect less activism in 2013.
As such, monetary authorities should keep the Selic rate
at 7.25% for a prolonged period, starting a tightening
cycle only in 4Q13. Eventual inflationary pressures
should initially be contained using macroprudential
instruments, and even some F/X appreciation could be
allowed, provided the manufacturing industry and
exports are in good shape. In the near term, the BRL
range of 2.0-2.1 versus USD should preserve, without
relying on changes to capital controls as flows are
relatively neutral. Now that the worst has passed in terms
of cyclical trends, BRL is less overvalued in our view,
and the real interest rate is at a historically low level. The
government is finally focusing more on improving the
supply side of the economy, after spending much of its
efforts on demand-boosting initiatives. The supply side
agenda is dedicated to accelerating infrastructure
investment, promoting a broad-based tax relief,
implementing a pension reform, and overhauling private
capital markets. However, at the same time, the
government threatens the market and entrepreneurs with
protectionist measures, as well as unilateral shifts in the
regulatory environment that reduce the visibility of
investment and overshadow most of the structural
improvements of late.
Brazil macro forecasts

2012
2013
2014
Growth (%oya)
1.4
4.1
4.0
Inflation (%eop)
USD/BRL (eop)
Current account (% GDP)
Primary fiscal balance (% GDP)
Public debt/GDP
5.5
2.02
-2.4
2.3
58.3
5.3
1.95
-2.6
2.3
57.0
5.0
2.00
-2.4
2.6
62.7
Ratings outlook: Upgrade by Moodys.

Adrian Mowat
(852) 2800-8599

21 November 2012
Mexico Economic Outlook

Gabriel LozanoAC
(52-55) 5540-9558, gabriel.lozano@jpmorgan.com
Banco J.P. Morgan, S.A., Institucin de Banca Mltiple, J.P.Morgan Grupo
Financiero
A brave new year

We expect the economy to expand 3.6% in 2013
However, downside growth risks from the US fiscal
cliff remain
Reforms are expected to continue next year, as the
new government gains traction
Fundamentals and politics in 2013
Domestic demand should offset moderation in
external demand. The Mexican economy expanded
solidly during most of 2012, supported by broad-based
growth in services and industrial activities. While the
external sector has been the main engine of economic
growth on the back of a vigorous manufacturing boom,
consumer credit, employment and investment continue to
show positive rates of expansion. Such conditions have
supported Mexicos resilience to the moderation in the
US, despite their important economic and financial ties.
Looking toward 2013, several risks are starting to take
shape, particularly challenges affecting the global
economy and the prospects for structural reforms in
Mexico. First, the uncertainty behind the US fiscal cliff
could dent consumption and investment confidence
worldwide, which would impact the Mexican economy in
spite of its recent over-performance. Hence, while we are
maintaining our 3.6% annual growth forecast for next
year, we acknowledge that risks remain to the downside.
It is time for reforms. Indeed, the second challenge
facing Mexico stems from the potential scope for reforms.
As was the case recently with the approval of labor
reform, we anticipate domestic politics to take center
stage in 2013 as the incoming administration looks set to
push further on structural reforms. In this context, we
believe the recent approval of labor reform, proposed by
President Caldern under the new fast-track status,
reflects the political willingness amongst lawmakers.
Such collaboration suggests the PRI can count on the
opposition (mainly the PAN) to support Pea Nietos
plans to open the energy sector and simplify the tax code,
particularly as both reforms are not likely to differ much
from what the outgoing administration proposed. Hence,
the prospects of such reforms remain better positioned
than they have looked for years.
Tackling fiscal and energy reforms. The fiscal reform

will intend to increase tax revenues by raising the value
added tax (possibly by including food and medicine), and
close loopholes and simplify collection in payroll and
income tax schemes. We are penciling in that an increase
in the VAT in food and medicines from 0% to 10%
would increase tax collection by 1.6% of GDP, which
could have a one-off effect on consumer prices of around
100bp in 2014E. The other important fiscal challenge
will be to reduce states dependence on federal
participations by enforcing local governments to collect
taxes. On the energy front, it is not clear yet if the reform
will be intended to further increase private participation
in the crude oil industry, or if natural gas and electricity
will be favored instead. Even though the road for reforms
is likely to be bumpy, we believe both bills will go
through Congress. We should also keep in mind that a
broader proposal to allow for further private sector
participation in key sectors such as transportation and
telecommunications cannot be discarded.
Banxico to hold rates but keep a hawkish bias. While
we expect monetary policy to remain on hold in 2013,
the sustained economic expansion, combined with
potential second-round effects (i.e., stemming from
higher public-price adjustments), could push the central
bank to hike its policy rate sooner rather than later.
Overall, we remain reasonably optimistic. Next year
should confirm that the external sector is witnessing a
structural change driven by further investment in
manufacturing. In addition, we think sound fundamentals,
healthy growth and the prospects for reforms, should
favor a stronger peso, potentially reaching 12.00 by yearend.
Mexico macro forecasts

2012
2013
2014
Growth (%oya)
3.9
3.6
3.6
Inflation (%eop)
USD/MXN (eop)
Current account (% GDP)
Primary fiscal balance (% GDP)
Public debt/GDP
4.2
12.5
-0.4
-0.2
33.1
3.6
12.0
-0.7
-0.2
32.8
3.4
11.8
-1.0
-0.2
32.4
Ratings outlook: Possible positive review.

79
Adrian Mowat
(852) 2800-8599

21 November 2012
Six more weeks of fiscal cliff if you dont jump off one first
Michael FeroliAC (1-212-834-5523)
With the election behind us, the fiscal cliff is now
the predominant issue for the US economy
The fate of the upper-income Bush tax cuts remains
the key stumbling block to reaching a broader deal
There are several paths to compromise, none of
which would matter much for the economy or the
deficit
The election has settled one source of uncertaintywho
will set policybut another source of uncertainty
remainshow will the fiscal cliff be resolved. Unless the
President and Congress reach an agreement, almost $600
billion of fiscal tightening is set to hit the economy on
January 1, 2013. Out of this $600 billion, about is
higher taxes, and about is reduced federal spending.
Should all of this tightening be realized, the economy
would almost certainly sink back into recession.
In principle, avoiding the fiscal cliff is simple; in
practice, there are sharp ideological differences that
complicate the issue. Among these differences, none is
greater than the fate of the upper-income Bush tax cuts.
These cuts amount to around $50 billion per year of
extra federal revenue. Compared to the $600 billion
fiscal cliff, or the more than $1 trillion annual deficit
recently recorded, $50 billion may appear to be a
relatively trivial reason for holding up the entire cliff
deliberations.
Even so, small disagreements can have large
consequences. Both Democrats and Republicans have
vowed to block the extension of the Bush tax cutsfor
both lower- and middle-income taxpayers as well as
upper-income taxpayersif they dont get their way on
the upper income portion of the tax code. Thus, the
resolution of the $50 billion in upper income revenue has
implication for the larger $300 billion sum associated
with the entirety of the Bush tax cut package. And since
the resolution of the Bush tax cuts is likely to be central
to any larger deal on the fiscal cliffand on the debt
ceiling for that matterthe fate of the upper-income tax
cuts is a small but critical keystone in any deal to
construct a bridge over the fiscal cliff as a whole.
There are essentially three ways this could be resolved.
First, either one side or the other completely concedes the
issue. This seems somewhat unlikely given that each side
has legislation-blocking power. Second, neither side
concedes anything on the issue, and we go over the cliff
80
entirely. This is possible but certainly not appealing.

Third, some middle ground is found.
Table 52: Income tax rates for 2012
Taxable income
Single
Married, filing jointly
Up to $8,700
Up to $17,400
$8,701 to $35,350
$17,401 to $70,700
$35,351 to $85,650
$70,701 to $142,700
$85,651 to $178,650
$142,701 to $217,450
$178,651 to $388,350
$217,451 to $388,350
Over $388,351
Over $388,351
Marginal
tax rate
10%
15%
25%
28%
33%
35%
Table 53: Income tax rates for 2013, current law

Taxable income
Single
Married, filing jointly
Up to $35,350
Up to $70,700
$35,351 to $85,650
$70,701 to $142,700
$85,651 to $178,650
$142,701 to $217,450
$178,651 to $388,350
$217,451 to $388,350
Over $388,351
Over $388,351
Marginal
tax rate
15%
28%
31%
36%
40%
Tax debate heats up

The origin of the current dispute lies with the 2001 and
2003 tax cuts, which reduced tax rates across the board
and also made the tax code less onerous through several
non-rate provisions, such as increased generosity of
certain deductions and credits. Those two tax acts, which
had the legislative acronyms EGTRRA and JGTRRA but
are more commonly known as the Bush tax cuts, were
both set to expire at the end of 2010, and the tax code
would revert to its pre-2001 status. In late 2010 President
Obama pushed to extend only the lower- and middleincome portion of the Bush tax code, but this policy
preference was blocked in the Senate. A deal was
reached in early December 2010 to extend the Bush tax
cuts for two years, and a 2%-pt reduction in the payroll
tax was added as a concession from the Republicans to
the President and the Democrats.
The two-year extension of the Bush tax cuts is now about
to expire, and getting to a compromise extension looks
more difficult now than in 2010: the Obama
Administration has insisted never again on extending
the upper-income provisions of the Bush tax cuts. The
Republican majority in the House, which had been
elected but not yet seated at the time of the lame-duck
deal in December 2010, has vowed that taxes should not
be increased at all, hence the current impasse.
Adrian Mowat
(852) 2800-8599

21 November 2012
House Speaker Boehner recently reiterated his position

that he is open to higher tax revenue, not higher tax rates.
This would seem to imply that there are a few potential
avenues of compromise, whereby each side could claim
victory and save face. One compromise would be to
allow the upper income, non-rate provisions of the Bush
tax code to lapse. Prior to 2001, the personal exemption
(which allows taxpayers to reduce their taxable income
by $3800 for each member of the taxpayers household)
was phased out for upper-income taxpayers. This phaseout was eliminated in the Bush tax cuts. In addition, prior
to 2001, the amount of itemized deductions available to
upper-income taxpayers was limited (the so-called Pease
limitations). This was suspended in the Bush tax cuts.
Both of these measures affect upper income tax revenue
but not upper income tax rates, and so allowing them to
lapse may be an acceptable route to an agreement.
A second avenue of compromise would be revenue not
directly tied to the expiration of the Bush tax cut. One
such source of revenue that became a campaign topic is
carried interest. Compensation of fund managers tied to
the profit of the fund is currently taxed as capital rather
than ordinary income. Taxing such compensation as
ordinary income would produce relatively small revenue,
about $2 billion per year, but could be on the table
nonetheless. Similarly, there are numerous elements of
the corporate tax code that could generate some revenue
while allowing Congressional Republicans to have kept
their promise on not allowing individual income tax rates
to have increased.
A third compromise approach would see the Republicans
yield some on upper income tax rates, but only provided
that the definition of upper income is revised higher. For
example, House Minority leader Pelosi and Senator
Schumer have proposed a millionaires tax. The
Administration hasnt thrown its support behind this
proposal, perhaps because it wouldnt do much to raise
revenue. While an official score is not available, the
revenue raised would obviously be significantly less than
the $32 billion that would be raised by increasing
marginal rates for those making over $200,000.
An important point to note about all three of the

potential compromises mentioned above is that they
each raise a fairly small amount of revenue. Indeed,
even if all of the upper income measures expired they
would only address about one twentieth of the deficit.
At this point, however, the fiscal cliff debate is more
about fulfilling campaign promises and parrying the
opposition than about making a serious dent in the
deficit.
It is also worth noting that the status of dividend and
capital gains tax rates is especially murky. It is unclear
whether the Republican opposition to higher tax rates
applies to these forms of income as well. However, the
prior warning applies here as well: a reversion to higher
dividend and capital gain rates will make only a minor
impact on the deficit. (See The impact of higher
dividend and cap gains taxes, GDW,
Oct 5, 2012.)
Table 54: Fiscal cliff and upper-income tax provisions
$ bn
572
309
50
32
9
3
9
-3
1089
Fiscal cliff
Bush tax cuts
Upper-income (>$200k) Bush provisions
Upper-income rates (36% and 39.6%)
Pease deduction limitation
Personal exemption phase-out
Treat dividends as ordinary income
Tax long-term capital gains at 20%
Memo: FY12 federal deficit
% of GDP
3.6
2
0.3
0.2
0.1
0
0.1
0
6.9
Source: J.P. Morgan economics.
Table 55: Fiscal cliff: J.P. Morgan modal forecast

Measure
Sunsetting of Bush
tax cuts
Expiration of payroll
tax holiday
Emergency
unemployment
benefits
Budget control act
spending cuts
Total
$ bn
309
Assumed
multiplier
0.75
125
0.75
0.6
40
0.9
0.33
0.1
98
0.5
0.3
572
Share
realized
Drag as
% of GDP
81
Adrian Mowat
(852) 2800-8599

21 November 2012
China leadership change: new people, old policies

The members of the new Standing Committee are: Xi
Jinping (succeeds Hu Jintao), Li Keqiang (succeeds
Wen Jiabao as premier), Zhang Dejiang, Yu Zhengsheng,
Liu Yunshan, Wang Qishan, and Zhang Gaoli
The 12th National Peoples Congress (NPC) in March
2013 will officially elect the top leaders of the new
government, including the president, premier and the
state council. The NPC is the highest state body and the
only legislative house in China, and consists of nearly
3,000 delegates.
What is the implication for economic policy?
The result of the 18th CPC confirms our expectation that
there will be no substantial changes in economic policies.
The 12th five-year plan continues. The priority tasks
mentioned were similar to the 17th CPC in 2007: (1)
deepen economic reform, balance the role between the
government and the market; (2) promote innovationdriven economic growth; (3) transition of economic
structure, with the focus on domestic demand,
urbanization, industry upgrade, and balanced growth
across regions; (4) harmonize the development in rural
and urban areas; (5) enhance the openness of the China
economy. What was stated at the 17th but not 18th CPC
were: environment protection plus energy saving, deepen
fiscal and financial reform, and improve macroeconomic
policy.
Myths of leadership change

The last leadership change was in March 2003. The
economy was suffering from deflation and the shock of
SARs. These events were more important for the market
and economy than leadership change. Events in 1989 led
to Deng Xiaopings go for growth policies. In the early
1990s growth and inflation was high. In 1993 the PBoC
eventually tightened policy and devalued the Renminbi
by a third. We find it shocking that, based on historical
records, commentators claim that leadership change will
result in specific economic or market events. The two
events are not statistically significant and past conditions
were very different.
Figure 56: China CPI and Nominal GDP
Source: CEIC. Note: Shaded area denotes deflation period
Figure 57: Political transition: 3-tier leadership structure
President Hu set a goal of doubling GDP and per capita

income for urban and rural China by end of year 2020
from 2010 levels (2010 GDP= US$6.2trillion) by
optimizing the economic structure and improving
economic returns. This requires 7% CAGR in nominal
GDP.
President Hu also stated the need to increase spending on
education, deliver a better job in creating employment,
increase individual income, promote coordinated
development of the social security system in urban and
rural areas, improve peoples health, and strengthen and
make innovations in social management. These are
significant challenges with weak profits leading to slower
fiscal revenue growth.
Source: J.P. Morgan
82
Adrian Mowat
(852) 2800-8599

21 November 2012
Figure 58: Members of Standing Committee of Political Bureau of the China Communist Party (CPC)
Name
September 2002
Jiang Zemin
Li Peng
Positions
General Secretary of the CPC, President of PRC, Chairman of the Central Military Commission
Chairman of the Standing Committee of the National People's Congress NPC
Zhu Rongji
Premier of the State Council
Li Ruihuan
Chairman of the National Committee of the Chinese People's Political Consulative Conference (CPPCC)
Hu Jintao
Wei Jianxing
Li Lanqing
Vice President of PRC, General Secretary of the CPC, Vice Chairman of the CPC Central Military Commission
Member of the Secretariat of the CPC Central Committee, Secretary of the Central Commission for Discipline Inspection
Vice Premier of the State Council
October 2007
Hu Jintao
Wu Bangguo
Chairman of the Standing Committee of the NPC
Wen Jiabao
Premier of the State Council
Jia Qinglin
Chairman of the National Committee of the Chinese People's Political Consulative Conference (CPPCC)
Zeng Qinghong
Huang Ju *
Wu Guanzheng
Vice President of PRC, General Secretary of the CPC, President of the Party School of the CPC Central Committee
Vice Premier of the State Council
Secretary of the Central Commission for Discipline Inspection
Li Changchun
Luo Gan
State Councilor, Secretary of the Political and Legislative Affaires committee of the CPC Central Committee
November 2012
Xi Jinping
Li Keqiang
Member of the standing committee, Premier of the State Council
Zhang Dejiang
Member of the standing committee (Chongqing Party Secretary)
Yu Zhengsheng
Member of the standing committee (Shanghai Party Secretary)
Liu Yunshan
Member of the standing committee (senior propaganda official)
Wang Qishan
Secretary of the Central Commission for Discipline Inspection (Vice Premier in charge of economic affairs)
Zhang Gaoli
Member of the standing committee (Party Secretary in Tianjin)
Source: Baidu website, * Huang Ju died in June 2007.
83
Adrian Mowat
(852) 2800-8599

21 November 2012
Korea: 18th Presidential Elections 19 December 2012

Scott SeoAC (+82-2-758 5759)
The three strongest candidates nominated to run for
president are Ms. Park Geun-hye (Saenuri Party, the
former Grand National Party and the current ruling
party), Mr. Moon Jae-in (the opposition Democratic
United Party) and Mr. Ahn Cheol-soo (independent
candidate). The new president will assume office in
February 2013. Korean presidential terms are limited to
five years. The current president, Lee Myung-bak,
economic policy is pro-exporters.
Economic democratization or restructuring of
Chaebols is an important policy agenda for all three
candidates but each candidates interpretation of the term
differs widely (see Table 57). Scott Seo notes: The
implementation of Chaebol reforms would likely be
dependent on economic conditions. Since untangling the
circular-shareholding structure is quite expensive and the
Korean economy is largely dependent upon Chaebols,
along with the recent economic slowdown, it is hard to
imagine the proposed changes to circular-shareholdings
to be an abrupt one. Also, there is a high possibility of
Chaebols exerting political pressure to prevent
unfavorable regulations. The implementation of
ownership structure reforms would be a long term
positive, yet could produce an overhang in the short term
as circular-shareholding affiliates would have to sell off
their stakes. Ultimately, the ownership structure reform
should improve corporate governance and minority
shareholder value.
Stock market implications:

Key issue is will the new governments economic policy
remain pro-exporters (weak Won) or move pro-consumer
(strong Won). This could drive significant sector
rotation.
In the three presidential elections between 1992 and
2007, consumers, IT and industrials outperformed post
the elections, while financials and telecom
underperformed. Sector performance was less consistent
prior to the elections. In two out of the three elections
observed, materials and telecom outperformed. Utilities
consistently underperformed perhaps due to regulatory
concerns before the elections (see Table 56). For more,
please see J.P. Morgans Heart and Seoul, Korea
Politics: The 18th Presidential Election (D-70)', Scott
Seo, 10 October 2012 and J.P. Morgans Heart and
Seoul, Korea Politics: The 18th Presidential Election (D50) and chaebol restructuring, Scott Seo, 30 October
2012.
Table 56: MSCI Korea sector performance pre and post elections
Pre- elections
15th election
16th election
17th election
Post-elections
15th election
16th election
17th election
Outperformers
Underperformers
Materials, telecom
IT
Materials, telecom
Utilities
CS, financials, utilities
Financials, IT, utilities
CD, CS, industrials, IT,

utilities
CD, CS, industrials, IT
CD, CS, industrials, IT
Financials
Financials, telecom
Financials, telecom, utilities
Source: J.P. Morgan
Table 57: Korea politicsPolicy directions regarding the chaebol reform of each presidential candidate
Chaebol
Cross-shareholding
Equity investment ceiling

Separation of banking and
commerce
Taxation
Source: Hankyung
84
Park Geun-hye (SNP)

Establishment of the fair trade, and
regulation on circular-shareholding
structure
Ban on new circular-shareholding. Seems
to be under a discussion about what
should be done to the existing circularshareholding structure, but leaning
towards no regulation on already existing
circular-shareholding structure
Under a discussion
Moon Jae-in (DUP)

Establishment of the fair trade, regulation
on the chaebol's corporate governance and
ownership structure
Ban on both new and existing circularshareholding structure altogether
Ahn Cheol-soo (Independent)

Establishment of the fair trade, internally
reform the chaebol's corporate governance
Reintroduction
Will prudently review. Against the

reinforcement on the nonmonetary
institutions
Will lower corporate tax rate. Reviewing
increasing tax for financial income
Will lower the ceiling of non-financial

companies investment on banks to 4%
from the current 9%
Will create new marginal tax rate bracket of
both income tax and corporate tax for high
income group. Tax increase for financial
income
It is important to be consistent. Hence,

against the reintroduction
Will lower the ceiling of non-financial
companies investment on banks to 4%
from the current 9%
Will increase effective corporate tax rate.
Gradual increase in financial related tax
Ban on the circular-shareholding structure

after some grace period
Adrian Mowat
(852) 2800-8599

21 November 2012
Malaysia 13th General Elections

Hoy Kit MakAC (60-3-2270-4728)
Background to upcoming 13th General Elections
The 13th General Elections are not due till April 2013,
the deadline for parliament dissolution (polling must take
place not more than two months thereafter). Main risk to
policy continuity is whether a political tsunami could
occur similar to 2008, where BN lost its two thirds
majority in parliament for the very first time since the
first elections in 1969. Opposition coalition (PR) is
helmed by former DPM Anwar Ibrahim, hopeful of
capturing parliament. In 2008, BN won a simple majority
of 140 out of 222 seats (63% of seats), and lost five plus
the Federal Territory, out of the 12 contested state
legislatures. There are 166 parliamentary seats in the
Peninsula and 56 seats in both Sabah and Sarawak. This
means that 75% of the seats are situated and fought in
West Malaysia with the remaining 25% in East Malaysia.
Of the 166 seats in West Malaysia, 62% of them have
more than 70% Malay majority and 46% of them have a
Malay composition of between 51-69%. This means that
65% of the seats have a somewhat Malay majority. There
are 32 mixed seats (14%) in which there is an almost
equal split among the various major races. The
population composition of 26 seats (12%) has a large
percentage of Chinese. Malays (Bumiputera) are the
dominant population (67%), followed by Chinese (25%),
Indians (7%) and others (1%).
Sectors impacted during 2008 elections
The KLCI was negatively impacted during the 2008
General Elections in March. During the period from
dissolution of parliament to polling (13 Feb to 8 Mar),
the KLCI fell by 9%. Sectors that were affected the most
were construction (-20.3%), gaming (-10.5%), property (13.9%), transportation (-13.5%) and Bursa Malaysia (21.7%). The more resilient sectors were infrastructure (5.0%), utilities (-5.5%), and consumer (-6.1%). Unlike
the previous two elections, the 2004 and 1999 elections,
the market rose 2.5% and 2.9% respectively.
J.P. Morgans joint-research with CENSE
In a joint-research with CENSE (provides independent
research and analysis on political issues), five probable
scenarios are highlighted. CENSEs key conclusion: BN
(ruling alliance) should win about 137 parliamentary
seats, +/- 5%, a majority of between 58-64%. Nonconsensus views include:- 1) PM Najib will not be
challenged from within so long as UMNO (key BN
component party) retains more than 78 seats, 2) Malay
middle ground voters have swung in favour of BN, more
so after Bersih 3.0 rally, 3) market is concerned with the
2.3MM new registered voters who may vote against BN,
Figure 59: KLCI performance during 12th GE (2008)

1550
-4%
1450
1350
-5%
-9%
-5%
1250
1150
1050
Jan-08
Feb-08
Mar-08
Apr-08
May-
Source: CEIC. Bloomberg.
Table 58: 2008 General Elections - results breakdown by party

Votes
Barisan Nasional
- UMNO
- MCA
- MIC
- PBB
- Others
4,081,115
2,381,725
840,489
179,422
131,243
548,236
% of
votes
51.4%
30.0%
10.6%
2.3%
1.7%
6.9%
Pakatan Rakyat
- PKR
- PAS
- DAP
3,767,606
1,529,256
1,140,598
1,097,752
47.4%
19.3%
14.4%
13.8%
82
31
23
28
36.9%
14.0%
10.4%
12.6%
62
30
16
16
94,082
1.2%
0.0%
-1
7,942,803
100%
222
100%
Non-partisans (others)
Total
Seats
140
79
15
3
14
29
% of
seats
63.1%
35.6%
6.8%
1.4%
6.3%
13.1%
+/(seats)
-58
-30
-16
-6
3
-9
Source: Election Commission, J.P. Morgan estimates. Note: BN seats reduced to 137
after the withdrawal of the Sabah Progressive Party (SAPP) from BN and the defeat in the
Kuala Terengganu byelection. However, PKR is now holding only 77 seats after the
withdrawal and dismissal of four members, as well as the defeat in the recent Hulu
Selangor by-election.
Figure 60: Timing of school holidays
1-Jan-12 1-Mar-12 1-May-12 1-Jul-12 1-Sep-12 1-Nov-12 1-Jan-13

School holidays
Source: J.P. Morgan estimates.
85
Adrian Mowat
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21 November 2012
but most of the new voters are registered in Johor,

Selangor and Perak, where seats are already lost to the
Opposition, where 4) More votes do not necessarily
mean more seats for BN/PR (opposition alliance). J.P.
Morgan analyses market impact. 1) Scenario A (BN wins
61% of seats, status quo), Scenario B (BN wins >61%
but short of a two thirds majority), Scenario C (BN wins
two thirds majority); all suggest policy continuity and an
expected short term relief rally (big rally for outcome C).
Sectors that benefit the most longer-term should include:
Construction and Oil & Gas directly, and Banks,
Property and Media indirectly. Top picks in these sectors
include: IJM, Dialog, CIMB, IJM Land and Media
Prima. Scenario D (BN wins 50-61%). Negative for
market if <55%. >55% to 61% (provided PM Najib is not
challenged from within) neutral for market given policy
continuity, hence similar picks as above. Scenario D (PR
wins): Sell and stay away, potential policy changes breed
uncertainty, potentially for 9-12 months. Most impacted
sectors: construction, property, transportation, gaming
and stocks with perceived government linkages. Key
stocks affected include: Tenaga, YTL Power, MMC,
Gamuda, IJM, WCT, MRCB, UEM Land, SP Setia,
IJM Land, Genting Malaysia and MAHB. Timing
wise, given the monsoon season, it is not likely for
elections to be held in Nov-Dec 2012. Given the extent
of delays, there is likelihood that BN will go full term, ie
dissolve parliament in Apr 2013.
86
Figure 61: 13th General Elections: Possible outcomes for BN (222

Parliament seats)
Source: CENSE.

21 November 2012
Adrian Mowat
(852) 2800-8599
Economic Forecasts
GDP and CPI growth forecasts
The Americas
United States
Canada
Latin America
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Uruguay
Venezuela
Asia/Pacific
Japan
Australia
New Zealand
Asia ex Japan
China
Hong Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Africa/Middle East
Israel
South Africa
Europe
Euro area
Germany
France
Italy
Spain
United Kingdom
Emerging Europe
Bulgaria
Czech Republic
Hungary
Poland
Romania
Russia
Turkey
Global
Developed markets
Emerging markets
Memo:
Global PPP weighted
Real GDP % over a year ago

2011
2012E
2013E
1Q12
Real GDP % over previous period, saar

2Q12
3Q12 4Q12E 1Q13E 2Q13E
3Q13E
Consumer Prices % over a year ago

4Q11
2Q12
4Q12E
2Q13E
1.8
2.6
4.2
8.9
2.7
6.0
5.9
8.0
3.9
6.9
5.7
4.2
2.2
2.2
2.9
2.7
1.4
5.4
4.3
5.0
3.9
6.0
3.5
5.0
1.7
2.1
3.9
3.6
4.1
4.5
4.5
4.0
3.6
7.0
4.0
0.0
2.0
1.8
2.8
2.4
0.5
5.1
0.9
4.2
4.9
8.3
11.8
10.1
1.3
1.9
2.4
-3.2
1.6
7.1
6.7
4.8
3.5
6.0
2.1
0.6
2.0
1.9
3.9
5.0
4.8
3.0
2.8
3.0
2.1
5.5
9.0
3.5
2.0
2.0
4.5
10.0
4.6
4.0
3.8
5.5
3.5
6.0
-9.0
0.0
1.0
2.1
3.4
2.0
3.8
4.0
4.2
5.0
4.0
8.0
12.0
-4.0
1.5
2.1
3.7
2.5
4.0
5.0
5.5
3.0
3.2
8.0
7.0
0.0
2.5
2.2
4.0
2.0
4.3
5.0
5.5
3.0
3.3
7.0
9.0
3.0
3.3
2.7
7.2
9.6
6.7
4.0
3.9
5.5
3.5
4.5
8.3
28.5
1.9
1.6
6.0
9.9
5.0
3.1
3.4
5.1
3.9
4.1
8.0
22.3
1.9
2.4
6.0
10.0
5.5
2.5
3.1
5.1
4.4
3.0
7.6
18.5
1.7
2.0
6.8
11.0
5.6
3.1
3.2
5.4
4.1
2.8
7.2
30.2
-0.7
2.1
1.3
7.4
9.3
5.0
6.5
6.5
3.6
5.1
3.8
4.9
4.0
0.1
1.7
3.5
2.6
6.1
7.6
1.2
5.6
5.7
2.3
5.0
5.3
1.5
1.2
5.8
0.1
2.5
2.9
6.4
8.0
3.2
6.0
3.5
3.2
3.7
3.5
2.5
3.4
2.7
5.3
5.6
4.1
7.2
6.6
2.4
6.1
4.7
3.5
5.8
12.6
9.5
1.6
50.8
0.7
2.6
2.3
5.8
7.1
-0.4
5.3
6.0
1.1
5.9
0.9
-0.7
2.2
13.9
-3.5
1.5
1.5
5.7
7.7
2.0
5.2
4.9
0.6
2.5
1.2
-3.9
3.5
2.0
-2.0
1.8
3.5
6.2
8.2
2.5
5.0
3.0
3.5
3.5
1.2
3.2
3.8
1.5
1.0
3.8
3.7
6.3
8.0
3.5
5.8
3.0
3.0
3.5
4.5
4.9
3.5
1.5
1.6
2.5
3.3
6.5
8.2
3.5
6.0
4.0
4.0
3.0
4.5
1.6
3.5
2.0
1.3
1.8
2.0
6.8
8.2
5.0
6.8
4.0
4.5
3.5
4.5
4.1
3.8
2.0
-0.3
3.1
1.8
4.9
4.6
5.7
8.4
4.1
4.0
3.2
4.7
5.5
1.4
4.0
0.2
1.2
1.0
3.9
2.9
4.2
10.1
4.5
2.4
1.7
2.9
5.3
1.7
2.5
0.0
1.7
1.4
3.4
2.2
3.4
9.8
3.9
1.9
1.1
2.3
4.5
2.1
3.3
-0.2
2.7
1.5
3.9
3.3
3.4
9.0
2.2
3.0
1.2
2.3
4.0
1.8
3.0
4.6
3.1
3.0
2.2
3.1
2.7
3.1
2.7
3.4
3.2
2.0
1.6
2.8
-1.3
4.9
5.4
6.1
3.3
6.1
3.6
2.5
6.1
1.6
5.7
1.3
5.6
1.5
5.8
1.5
3.1
1.7
0.6
0.4
0.9
4.8
1.7
1.7
1.6
4.3
2.5
4.3
8.5
3.0
1.3
6.1
-0.4
1.0
0.1
-2.3
-1.3
0.0
2.6
1.0
-1.1
-1.2
2.3
0.0
3.6
2.8
2.4
1.2
4.7
0.1
1.1
-0.1
-0.6
-1.6
1.8
2.6
1.5
0.9
0.5
1.6
0.8
3.0
3.7
2.5
1.0
5.1
0.0
2.0
0.1
-3.2
-1.3
-1.2
2.4
-3.1
-3.5
2.4
0.5
3.7
3.0
1.7
5.4
-0.7
1.1
-0.1
-3.3
-1.7
-1.5
1.3
-0.8
-0.9
1.6
1.9
1.5
1.8
0.4
4.3
0.0
1.0
0.0
-1.5
-1.2
4.1
0.4
-1.2
-1.0
0.5
-2.4
1.0
2.0
0.6
4.5
-1.5
-1.0
-1.5
-2.0
-2.5
0.5
1.8
-1.3
-1.0
0.5
-1.2
3.0
1.9
0.2
5.0
0.0
1.0
-0.5
-0.5
-2.5
1.5
2.7
2.1
1.0
1.3
1.2
3.5
2.4
0.9
5.1
0.8
2.0
0.5
0.5
0.0
2.0
2.4
1.0
1.5
2.3
-0.4
3.0
2.7
1.4
5.2
1.3
2.5
1.0
1.0
0.0
2.5
3.7
4.3
1.8
3.0
3.2
4.0
3.2
1.9
5.6
2.9
2.6
2.6
3.7
2.7
4.6
6.4
2.4
4.1
4.6
3.4
6.7
9.2
3.8
2.7
5.7
2.5
2.1
2.3
3.6
1.9
2.8
5.0
3.4
5.5
4.0
1.9
3.8
9.4
2.8
1.8
4.6
2.5
2.1
1.9
3.2
3.4
2.6
6.0
2.9
5.8
3.1
4.7
6.8
7.3
2.8
1.9
4.4
1.9
1.8
1.3
2.3
2.9
2.5
6.3
2.4
4.7
2.5
6.4
7.4
7.5
2.8
1.6
5.0
3.8
3.0
3.1
3.6
2.4
2.6
2.6
3.0
3.3
3.8
4.2
3.3
3.2
3.3
Source: J.P. Morgan economics, 9 November 2012.

Note: For some emerging economies, 2012-2013 quarterly forecasts are not available and/or seasonally adjusted GDP data are estimated by J.P. Morgan. On July 6 we shifted to using concurrent
nominal GDP weights in computing our global and regional aggregates from a static 5-year average GDP weight. We maintain the use of current FX rates but still report PPP-based aggregates. For
details, see research note "Global economic aggregates get new weights in July 6, 2012 GDW.
87

21 November 2012
Adrian Mowat
(852) 2800-8599
Sources of GDP Growth

Country
USA Real GDP
Consumption
Fixed investment
Net external demand
UK Real GDP
Consumption
Fixed investment
Net external demand
Euro Real GDP
Consumption
Fixed investment
Net external demand
Japan Real GDP
Consumption
Fixed investment
Net external demand
Australia Real GDP
Consumption
Fixed investment
Net external demand
Brazil Real GDP
Consumption
Fixed investment
Net external demand
China Real GDP
Consumption
Fixed investment
Net external demand
Czech Republic Real GDP
Consumption
Fixed investment
Net external demand
Hong Kong Real GDP
Consumption
Fixed investment
Net external demand
Hungary Real GDP
Consumption
Fixed investment
Net external demand
India Real GDP
Consumption
Fixed Investment
Net external demand
Indonesia Real GDP
Consumption
Fixed investment
Net external demand
Korea Real GDP
Consumption
Fixed investment
Net external demand
Malaysia Real GDP
Consumption
Fixed investment
Net external demand
Mexico Real GDP
Consumption
Fixed investment
Net external demand
88
2010
Share of Real GDP

2011
2012E
2013E
90.3
12.8
-3.1
89.9
13.1
-3.0
89.0
13.9
-3.0
88.4
14.6
-3.0
86.7
15.2
-2.0
85.5
15.1
-0.5
86.3
15.3
-1.6
85.4
16.2
-1.6
78.9
19.2
1.8
77.8
19.4
2.8
77.5
18.3
4.2
77.1
18.0
4.9
77.7
19.0
3.3
78.7
18.8
2.5
79.2
19.1
1.8
79.3
19.4
1.3
73.4
27.6
-1.0
74.1
29.4
-3.4
74.2
30.1
-4.3
73.8
30.5
-4.3
80.5
21.5
-2.1
81.2
21.6
-2.8
82.7
20.7
-3.3
82.6
21.2
-3.8
47.5
47.1
5.4
47.7
47.8
4.5
48.3
48.3
3.5
48.7
48.9
2.4
68.2
25.1
6.7
66.5
23.7
9.8
66.3
23.3
10.4
65.2
23.4
11.4
70.7
22.2
7.1
72.5
21.3
6.2
74.3
21.3
4.4
75.4
20.8
3.7
71.3
20.4
8.3
72.2
17.1
10.7
72.0
15.9
12.1
71.0
16.0
13.0
75.1
31.4
-6.5
74.4
33.6
-7.9
74.2
32.4
-6.5
74.2
32.2
-6.4
65.1
24.5
10.4
63.9
24.9
11.2
63.3
26.9
9.8
63.0
25.9
11.1
66.5
26.6
6.9
65.6
25.9
8.5
65.6
25.9
8.6
65.2
25.6
9.2
60.8
24.4
14.8
63.0
23.9
13.1
63.6
26.4
10.0
63.2
27.3
9.5
80.0
21.5
-1.5
80.0
21.5
-1.5
79.7
21.8
-1.6
79.5
22.2
-1.8
Contribution to Real GDP growth

2010
2011
2012E
2013E
2.4
1.8
2.2
1.7
1.8
1.2
1.1
0.9
1.5
0.7
1.1
0.9
-0.9
0.0
-0.1
0.0
1.8
0.9
0.0
1.8
1.0
-0.5
0.8
0.6
1.4
0.0
0.2
1.2
-0.5
1.4
-1.1
0.0
1.9
1.5
-0.4
0.1
0.7
0.0
-0.6
-0.4
0.5
0.4
-1.2
-0.2
0.7
1.0
1.4
0.6
4.6
-0.7
1.7
0.1
1.8
0.4
0.9
-1.4
0.0
-0.1
1.1
-1.4
2.7
-1.1
-0.3
2.9
2.5
2.1
3.5
2.5
2.2
2.3
2.6
1.4
1.7
2.4
1.8
1.1
-1.5
-2.5
-0.9
0.0
7.5
2.7
1.4
4.1
5.2
2.9
2.6
3.4
5.0
0.7
-0.7
1.4
-2.6
-0.8
-0.5
-0.7
10.4
9.3
7.6
8.0
3.9
4.7
4.2
4.3
5.6
5.1
4.2
4.5
0.9
-0.5
-0.8
-0.8
2.7
1.7
-1.1
0.9
0.4
-0.6
-0.9
-0.5
1.1
-1.0
-0.7
0.3
1.2
3.3
0.5
1.1
7.1
5.0
1.2
3.2
4.4
5.4
2.8
3.6
2.4
0.2
0.2
0.3
0.2
-0.6
-1.7
-0.6
1.3
1.6
-1.2
0.5
-0.9
2.1
-1.1
-0.6
0.0
-3.0
-1.4
0.1
2.1
2.6
1.2
1.0
8.4
6.5
5.6
6.0
6.1
4.1
3.9
4.4
1.9
4.4
0.6
1.8
0.4
-2.0
1.0
-0.2
6.1
6.5
5.7
3.5
2.7
3.0
3.1
1.9
2.7
2.0
3.4
-0.1
0.8
1.5
-0.8
1.7
6.3
3.6
2.3
3.2
2.8
1.5
1.5
1.7
3.5
0.2
0.6
0.5
0.1
1.9
0.3
0.9
7.2
5.1
5.0
3.7
3.6
5.4
3.8
1.9
5.0
0.8
3.7
2.0
-1.4
-1.1
-2.5
-0.2
5.5
3.9
3.9
3.6
3.7
3.2
2.8
2.7
1.8
0.9
1.2
1.2
0.0
-0.1
-0.1
-0.3
2010
1.5
GDP Deflator Y/Y

2011
2012E
1.4
1.8
2013E
1.5
2.8
2.7
2.6
2.5
0.8
1.2
1.2
1.1
-2.2
-2.1
-0.8
-0.3
5.3
4.2
0.1
2.5
8.2
7.0
5.2
6.0
6.8
8.2
4.0
4.5
17.9
17.8
11.9
12.9
0.2
3.7
2.5
3.0
3.1
3.3
3.5
3.0
9.6
8.4
7.5
7.5
8.2
8.3
6.5
6.5
3.6
1.7
2.0
2.5
4.1
5.5
2.0
4.0
3.9
5.4
4.2
3.6

21 November 2012
Adrian Mowat
(852) 2800-8599
Sources of GDP Growth (contd)

Country
Philippine Real GDP
Consumption
Fixed investment
Net external demand
Poland Real GDP
Consumption
Fixed investment
Net external demand
Russia Real GDP
Consumption
Fixed investment
Net external demand
Singapore Real GDP
Consumption
Fixed investment
Net external demand
South Africa Real GDP
Consumption
Fixed investment
Net external demand
Taiwan Real GDP
Consumption
Fixed Investment
Net external demand
Thailand Real GDP
Consumption
Fixed investment
Net external demand
Turkey Real GDP
Consumption
Fixed investment
Net external demand
2010
Share of Real GDP

2011
2012E
2013E
79.2
20.8
0.0
80.3
22.5
-2.7
79.9
24.1
-4.0
80.9
24.6
-5.5
79.1
23.7
-2.8
77.4
24.8
-2.2
77.6
23.5
-1.0
78.1
22.5
-0.6
68.9
18.1
13.1
69.5
21.7
8.8
70.2
22.7
7.1
70.4
23.8
5.8
46.3
19.6
34.1
45.7
20.7
33.6
45.8
25.1
29.1
46.3
25.3
28.4
85.1
20.1
-5.3
86.6
19.9
-6.4
87.7
20.8
-8.5
88.7
21.1
-9.8
65.0
19.7
15.3
64.2
17.4
18.4
64.2
16.8
19.0
63.4
16.8
19.8
61.3
22.3
16.4
62.1
22.2
15.7
60.7
25.9
13.4
60.7
27.7
11.6
79.8
24.1
-3.9
78.9
26.1
-5.0
77.9
26.6
-4.5
77.8
27.7
-5.6
Contribution to Real GDP growth

2010
2011
2012E
2013E
7.6
3.8
5.3
3.5
2.8
4.1
3.9
3.8
5.4
2.5
2.9
1.4
-0.6
-2.9
-1.4
-1.7
3.9
4.3
2.3
1.6
2.7
1.7
1.9
1.8
2.1
2.1
-0.8
-0.6
-0.9
0.5
1.1
0.4
4.3
4.3
3.6
3.0
2.3
3.6
3.3
2.3
4.1
4.6
1.7
1.9
-2.0
-3.9
-1.4
-1.2
14.8
4.9
1.5
2.5
3.7
1.6
0.8
1.6
0.0
2.1
4.8
0.8
11.1
1.2
-4.1
0.1
2.9
3.1
2.2
2.7
3.4
4.1
3.1
3.4
1.0
0.4
1.4
0.9
-1.5
-1.4
-2.2
-1.6
10.7
4.0
1.2
3.4
2.2
1.8
0.8
1.3
6.2
-1.5
-0.4
0.6
2.4
3.8
0.8
1.5
7.8
0.1
5.8
2.7
3.2
0.8
2.2
1.6
5.1
-0.1
5.2
2.5
-0.5
-0.7
-1.6
-1.4
9.2
8.5
2.8
3.7
4.9
5.8
1.2
2.8
8.6
4.2
1.3
2.1
-4.4
-1.5
0.3
-1.2
2010
4.2
GDP Deflator Y/Y

2011
2012E
4.2
4.0
2013E
4.0
1.4
3.2
3.0
2.5
11.6
15.8
6.3
5.7
0.1
0.5
3.0
3.0
7.9
8.0
5.5
5.5
-1.5
-2.9
1.0
1.5
3.3
3.0
1.0
3.0
5.7
8.9
8.7
6.5
89

21 November 2012
Adrian Mowat
(852) 2800-8599
Interest Rate Forecasts

Global
excluding US
Developed
Emerging
Latin America
EMEA EM
EM Asia
Official interest
rate
Change since (bp)

Current
(%pa) 05-07 avg Trough* Jul 11
2.26
-212
42
-46
2.95
-137
47
-54
0.51
-298
0
-31
5.54
-154
64
-74
6.12
-465
0
-291
4.93
-152
99
59
5.54
-32
103
-44
Last change
Next
meeting
Forecast
next change
On hold
3Q 13 (+25bp)
4Q 13 (+25bp)
On hold
On hold
On hold
On hold
2Q 13 (-50bp)
Dec- Mar- Jun- Sep- Dec12E 13E 13E 13E 13E

2.25 2.23 2.23 2.24 2.28
2.94 2.92 2.92 2.93 2.98
0.50 0.49 0.49 0.50 0.51
5.53 5.50 5.50 5.50 5.59
6.12 6.12 6.11 6.11 6.53
4.91 4.89 4.89 4.89 4.89
5.54 5.50 5.50 5.50 5.50
The Americas
United States
Canada
Brazil
Mexico
Chile
Colombia
Peru
Uruguay
Fed funds
O/N rate
SELIC O/N
Repo rate
Disc rate
Repo rate
Reference
Reference
1.45
0.125
1.00
7.25
4.50
5.00
4.75
4.25
9.00
-388
-438
-273
-800
-337
31
-256
19
175
28
0
75
0
0
450
175
300
275
-59
0
0
-525
0
-25
25
0
100
16 Dec 08 (-87.5bp)
8 Sep 10 (+25bp)
10 Oct 12 (-25bp)
17 Jul 09 (-25bp)
12 Jan 12 (-25bp)
24 Aug 12 (-25bp)
12 May 11 (+25bp)
28 Sep 12 (+25bp)
12 Dec 12
4 Dec 12
28 Nov 12
30 Nov 12
13 Nov 12
23 Nov 12
6 Dec 12
29 Dec 12
Europe/Africa
Euro area
United Kingdom
Czech Republic
Hungary
Israel
Poland
Romania
Russia
South Africa
Turkey
Refi rate
Bank rate
2-wk repo
2-wk dep
Base rate
7-day interv
Base rate
Repo rate
Repo rate
Effective rate
1.63
0.75
0.50
0.05
6.25
2.00
4.50
5.25
5.50
5.00
5.79
-223
-223
-444
-235
-88
-225
-2
-294
N/A
-329
-1014
9
0
0
0
100
150
100
0
N/A
0
4
-32
-75
0
-70
25
-125
0
-100
N/A
-50
-46
5 Jul 12 (-25bp)
5 Mar 09 (-50bp)
1 Nov 12 (-20bp)
30 Oct 12 (-25bp)
29 Oct 12 (-25bp)
7 Nov 12 (-25bp)
29 Mar 12 (-25bp)
13 Sep 12 (+25bp)
19 Jul 12 (-50bp)
N/A
6 Dec 12
On hold
6 Dec 12
On hold
19 Dec 12
On hold
27 Nov 12 4Q 12 (-25bp)
26 Nov 12
On hold
5 Dec 12 5 Dec 12 (-25bp)
7 Jan 13 Feb 13 (+25bp)
Dec 12
On hold
22 Nov 12
On hold
20 Nov 12
N/A
Asia/Pacific
Australia
New Zealand
Japan
Hong Kong
China
Korea
Indonesia
India
Malaysia
Philippines
Thailand
Taiwan
Cash rate
Cash rate
O/N call rate
Disc. wndw
1-yr working
Base rate
BI rate
Repo rate
O/N rate
Rev repo
1-day repo
Official disc.
3.74
3.25
2.50
0.05
0.50
6.00
2.75
5.75
8.00
3.00
3.50
2.75
1.875
4
-269
-488
-17
-548
-14
-140
-412
113
-24
-356
-108
-71
83
25
0
0
0
69
75
0
325
100
0
150
62.5
-40
-150
0
0
0
-56
-50
-100
0
0
-100
-50
0
2 Oct 12 (-25bp)
10 Mar 11 (-50bp)
5 Oct 10 (-5bp)
17 Dec 08 (-100bp)
7 Jul 12 (-31bp)
11 Oct 12 (-25bp)
9 Feb 12 (-25bp)
17 Apr 12 (-50bp)
5 May 11 (+25bp)
25 Oct 12 (-25bp)
17 Oct 12 (-25bp)
30 Jun 11 (+12.5bp)
3.71 3.67 3.67 3.67 3.67

4 Dec 12 4 Dec 12 (-25bp) 3.00 2.75 2.75 2.75 2.75
5 Dec 12 Sep 13 (+25bp)
2.50 2.50 2.50 2.75 2.75
30 Oct 12
On hold
0.05 0.05 0.05 0.05 0.05
13 Dec 12
On hold
0.50 0.50 0.50 0.50 0.50
On hold
6.00 6.00 6.00 6.00 6.00
13 Dec 12
On hold
2.75 2.75 2.75 2.75 2.75
12 Dec 12
On hold
5.75 5.75 5.75 5.75 5.75
18 Dec 12 Jan 13 (-25bp)
8.00 7.75 7.75 7.75 7.75
Jan 13
On hold
3.00 3.00 3.00 3.00 3.00
13 Dec 12 13 Dec 12 (-25bp) 3.25 3.00 3.00 3.00 3.00
28 Nov 12
On hold
2.75 2.75 2.75 2.75 2.75
4Q 12
On hold
1.875 1.875 1.875 1.875 1.875
Source: J.P. Morgan economics, 9 November 2012.

Note: *Refers to trough end-quarter rate from 2009-present Effective rate adjusted on daily basis. Aggregates are GDP-weighted averages
90
1.45 1.45 1.45 1.47 1.57

0.125 0.125 0.125 0.125 0.125
1.00 1.00 1.00 1.25 1.50
7.25 7.25 7.25 7.25 8.00
4.50 4.50 4.50 4.50 4.50
5.00 5.00 5.00 5.00 5.00
4.75 4.75 4.75 4.75 4.75
4.25 4.25 4.25 4.25 4.25
9.00 9.00 8.50 8.50 8.50
1.63
0.75
0.50
0.05
6.00
2.00
4.25
5.25
5.50
5.00
5.85
1.62
0.75
0.50
0.05
6.00
2.00
3.75
5.75
5.50
5.00
6.00
1.62
0.75
0.50
0.05
5.50
2.00
3.50
5.75
5.50
5.00
6.25
1.62
0.75
0.50
0.05
5.50
2.00
3.50
5.75
5.50
5.00
6.25
1.62
0.75
0.50
0.05
5.50
2.00
3.50
5.75
5.50
5.00
6.25

21 November 2012
Adrian Mowat
(852) 2800-8599
Exchange Rate Forecasts

Country
Euro
Sterling
Yen
2008
1.48
1.78
101
FX rate vs US dollar annual average

2009
2010
2011
2012E
1.40
1.32
1.37
1.11
1.57
1.54
1.58
1.14
94
87
79
80
2013E
1.33
1.62
79
1Q12
1.33
1.60
83
FX rate vs US dollar*** Quarter end forecasts

2Q12
3Q12
Current
1Q13E
2Q13E
1.27
1.29
1.27
1.30
1.32
1.57
1.62
1.58
1.60
1.62
80
78
80
79
79
3Q13E
1.34
1.63
79
Australia
China
Hong Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
South Africa
Czech Republic
Hungary
Poland
Russia
Turkey
0.83
6.88
7.77
44.6
9730
1127
3.34
45.26
1.40
31.44
33.39
3.19
1.90
538
2045
11.42
2.97
2.147
8.41
16.94
169
2.43
25.53
1.34
0.81
6.83
7.75
48.1
10207
1248
3.51
47.63
1.45
32.69
34.07
3.79
1.95
544
2168
13.48
2.99
2.147
8.05
18.72
200
3.10
31.36
1.55
1.05
6.28
7.80
55.6
9900
1109
2.99
40.41
1.19
29.43
30.15
5.41
2.00
475
1775
12.00
2.56
6.500
8.64
19.19
205
3.15
30.81
1.73
1.03
6.30
7.77
50.9
9144
1132
3.06
42.93
1.26
29.52
30.85
4.38
1.83
489
1787
12.81
2.67
4.295
7.67
18.59
221
3.11
29.32
1.78
1.02
6.35
7.76
55.5
9393
1141
3.17
41.93
1.27
29.79
31.76
4.53
2.01
501
1783
13.36
2.67
4.295
8.17
20.15
226
3.35
32.40
1.81
1.06
6.25
7.80
56.0
9900
1100
2.98
40.00
1.19
29.40
30.10
5.55
1.98
475
1775
11.90
2.55
6.500
8.55
18.96
201
3.10
30.79
1.70
0.93
6.72
7.77
45.1
9021
1154
3.17
44.77
1.35
31.11
31.31
3.93
1.73
506
1889
12.57
2.81
4.295
7.14
19.15
210
3.03
30.46
1.52
1.02
6.42
7.78
47.8
8785
1126
3.10
43.59
1.27
29.72
30.90
4.17
1.73
496
1877
12.87
2.76
4.295
7.43
18.08
208
3.08
30.19
1.73
1.01
6.31
7.77
53.3
9464
1128
3.08
41.9
1.24
29.56
30.97
4.65
1.97
485
1786
12.88
2.62
4.296
8.25
19.38
221
3.20
30.89
1.80
1.04
6.28
7.75
52.9
9570
1114
3.06
41.68
1.23
29.32
30.78
4.70
2.03
475
1800
12.86
2.60
4.295
8.31
19.55
222
3.20
31.19
1.80
1.04
6.23
7.75
55.0
9625
1087
3.06
41.16
1.22
29.00
30.71
4.78
2.07
485
1821
13.28
2.61
4.295
8.92
19.98
224
3.28
31.71
1.81
1.04
6.32
7.80
55.0
9900
1125
3.00
41.15
1.20
29.50
30.30
5.20
2.02
475
1775
12.20
2.56
6.500
8.80
19.38
215
3.23
30.84
1.75
1.05
6.30
7.80
55.5
9900
1110
2.98
40.50
1.19
29.40
30.10
5.35
2.00
475
1775
12.00
2.56
6.500
8.65
19.47
201
3.18
30.81
1.75
Source: J.P. Morgan FX team, 9 November 2012. Current as of 13 November 2012.
Commodity Forecasts
Energy
WTI crude (US$/bbl)
Brent Crude (US$/bbl)
Natural gas (US$/mmbtu)
Precious Metals
Gold (US$/oz)
Silver (US$/oz)
Platinum (US$/oz)
Palladium (US$/oz)
Base Metals
Aluminum (US$/metric ton)
Copper (US$/metric ton)
Nickel (US$/metric ton)
Zinc (US$/metric ton)
Lead (US$/metric ton)
Tin (US$/metric ton)
Agriculture
Corn (US$/bushel)
Wheat (US$/bushel)
Soybeans (US$/bushel)
Soybean Oil (US cents/lb)
Soybean Meal (US$/short ton)
Sugar (US cents/lb)
Current
4Q12E
1Q13E
2Q13E
3Q13E
4Q13E
2011
2012E
2013E
85.6
109.1
3.57
87.0
105.0
3.25
95.0
112.0
4.25
90.0
105.0
4.00
111.0
120.0
4.25
106.0
115.0
4.50
95.1
110.9
4.03
94.0
110.0
2.75
100.5
113.0
4.25
1728
32.4
1564
608
1725
30.0
1500
650
1750
30.0
1575
700
1775
30.0
1650
750
1800
30.0
1725
800
1775
30.0
1800
825
1572
35.3
1721
733
1670
30.5
1528
643
1775
30.0
1688
769
1951
7635
16036
1906
2177
20408
2075
8300
17750
2000
2050
20750
2100
8500
18500
2050
2100
21500
2200
8700
19000
2100
2250
22000
2250
9000
19500
2150
2300
22500
2300
9200
20000
2200
2375
23000
2400
8816
22866
2193
2398
26000
2040
8054
17720
1961
2024
20880
2213
8850
19250
2125
2256
22250
7.2
8.6
14.1
47.4
431.4
19.4
8.8
9.5
16.6
53.0
515.0
18.0
8.5
9.3
15.8
51.5
482.0
18.5
8.3
8.8
14.1
48.8
420.0
20.0
7.0
7.5
14.0
53.1
393.5
20.0
6.5
7.0
13.0
50.9
366.1
20.0
6.8
7.1
13.2
55.1
343.6
27.1
7.3
7.8
15.1
53.1
445.2
21.2
7.6
8.1
14.2
51.1
415.4
19.6
Source: Bloomberg, Exchanges, J.P. Morgan Commodities Research. Note: Forward prices are the average of the contracts in the quarter. Current as of 12 November 2012.
91
Adrian Mowat
(852) 2800-8599

21 November 2012
92

21 November 2012
Table of Contents
Argentina .................................................................94
Brazil........................................................................96
Chile .........................................................................98
China ......................................................................100
Colombia................................................................102
India .......................................................................104
Indonesia ................................................................106
Malaysia .................................................................108
MENA....................................................................110
Mexico ...................................................................112
Peru ........................................................................114
Philippines .............................................................116
Poland & Central Europe .......................................118
Russia .....................................................................120
South Africa ...........................................................122
South Korea ...........................................................124
Taiwan ...................................................................126
Thailand .................................................................128
Turkey ....................................................................130
Emerging Markets Overviews
Adrian Mowat
(852) 2800-8599
93
Adrian Mowat
(852) 2800-8599

21 November 2012
Argentina
Diego CeledonAC
(56-2) 425 5245
diego.celedon@jpmorgan.com
Argentina micro investment case

Trading at 3.1x 2013E P/E, Argentina in the most derated
EM YTD and also the cheapest. Unfortunately, policy
risk remains high, and heterodox macro policy is
expected to continue. Recent noise regarding a potential
pesofication of US debt has boosted country risk, placing
Argentine CDS below only Greece. However, our
economists believe that a pesofication of US debt held by
foreigners is unlikely, while economic activity should
benefit in 2013 from higher soy prices and crops,
stronger activity in Brazil (one of the main trade partners
of Argentina) and increased reserves after the strong
decline in capital outflows YTD. In our view, the release
of better economic figures and the potential payments in
US dollar of debt coupons could act as a driver for the
equity market in the short term. In addition, after weak
earnings this year, we expect Argentine companies to
post 6.3% earnings growth in 2013.
Bloomberg JPMA CELEDON <GO>

Argentina is the cheapest EM equity market, and its
trading at historical lows. In our view, the market is
highly sensitive to any signs of policy change. While a
structural long-term change is still highly unlikely, our
view is that at current levels the market is incorporating
an excessively negative scenario. In this sense, any
confirmation of less extreme measures (for example if
the US debt is finally not pesofied) could create space for
some multiple re-rating.
Source: J.P. Morgan Economics, 1. Contribution to growth of GDP 2. Debt with original
maturity of less than one year 3. Exports of goods, services, and net transfers.
Inversiones y Asesorias Chase Manhattan Ltda
Macro Outlook
Average
2005-09
2010
2011
2012f
2013f
6.7
4.8
2.3
-0.4
8.8
9.1
9.7
0.6
3.3
14.9
53.7
38.8
7.7
3
39.9
144.2
31.2
57
211
8.0
9.2
7
4.2
-2.1
10.5
10.9
14.6
-1
3.97
14.3
68.1
53.9
2.9
0.8
53.1
146.1
33
41
181
5.0
8.9
8.3
2.5
-1.9
9.8
9.5
12.9
-1.5
4.3
13.5
84.3
70.7
1.5
0.3
44.3
146.5
35.9
33
145
5.0
3.3
4.7
-1
-0.4
9.5
9.6
10
-2
4.8
10.2
80.7
70.6
-0.5
-0.1
41.3
146.9
37.8
33
148
4.0
2.2
2.3
0.8
-0.9
10
11
15
-0.5
5.7
4.1
88.1
84
-4.5
-1
39.3
147.8
39.7
34
135
2.0
Real GDP, % change

Consumption
Investment
Net trade
Consumer prices, % oya
% Dec/Dec
Producer prices, % oya
Government balance, % of GDP
Exchange rate, units/$, eop
Merchandise trade balance (US$ bn)
Exports
Imports
Current account balance
% of GDP
International reserves, (US$ bn)
Total external debt, (US$ bn)
Short term
Total external debt, % of GDP
Total external debt, % of exports
Interest payments, % of exports
Key Financial Data

EPS Growth
2010
20.3
2011E
50.1
2012E
-18.2
2013E
6.3
P/E
4.1
2.7
3.3
3.1
ROE
24.3
34.2
24.2
21.1
Yield
19.9
12.7
11.7
11.6
12Mth Fwd P/E

Unfortunately, here is where the main question mark
remains on Argentina. While in terms of reserves, capital
outflows, and economic activity Argentina is currently
standing in a better position, the most relevant factors
that could make this recovery different, which are policy
risk and heterodox macro policy, dont seem to have
changed significantly.
Stock recommendations
While macro risks remain high, key proxies for an
improved top-down environment would be financials,
such as the ADR of Banco Macro. The bank is still
posting strong results and has lower risk of political
intervention than other sectors, in our view.
94
30.00
25.00
+1SD
20.00
15.00
10.00
5.00
0.00
-1SD
95
97
98
99
00
01
02
04
05
06
07
08
09
11
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top pick
Top picks
Banco Macro
Price (US$)
Ticker
Rating
$13.81
BMA
OW
Mkt cap
(US$MM)
808.55
P/E (x)
12E
13E
2.7
2.6
EPS (US$)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
2.34
2.92
0.0
24.7
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 14 November 2012.
MSCI Chile Absolute and Relative to EMF Index

1000
Absolute
Relative to MSCI EMF Index
900
MSCI Fair Value Range

FWD PER
800
(4062923)
(65695092)
(16378703)
700
PER
600
(55297829)
(12508377)
500
PBR
400
(31669881)
300
DY
200
(375824002)
(22825325)
100
300000
0
Dec-02 Jan-04 Feb-05 Mar-06 Apr-07 May-08 Jun-09 Jul-10 Aug-11 Sep-12
15300000
30300000
45300000
Source: MSCI, Bloomberg, Datastream, J.P. Morgan.
Source: MSCI, Bloomberg, IBES, Datastream, J.P. Morgan.
Currency Outlook (CLP/USD)
EPS Integer over Time
J.P. Morgan forecast:

5.4
J.P Morgan
end Dec 12: 5.00
5.2
5.0
end Mar 13: 5.20
4.8
end Jun 13: 5.35
4.6
4.4
Consensus
4.2
4.0
3.8
3.6
3.4
3.2
3.0
2.8
Dec 04 May 06 Sep 07 Dec 08 May 10 Sep 11 Dec 12
130
60300000
2013
120
110
100
90
2012
80
70
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
95
Adrian Mowat
(852) 2800-8599

21 November 2012
Brazil
Brazil micro investment case
2013 will be all about the confirmation of a V-shape
recovery for Brazil. J.P. Morgan expects growth to pick
up from 1.4% in 2012 to 4.1% in 2013, the largest
change (+2.7 p.p.) in all EM (ex-Taiwan). Investors have
been frustrated with the wait for a recovery ever since the
start of 2012, and activity data will be center stage.
Specifically, industrial production and credit releases
tend to be key, as are the most laggard indicators. The
first will show if investment is picking up after the slew
of industrial stimulus measures implemented in 2013.
The latter will have to show an improvement in trends for
NPL and credit growth.
Emy Shayo ChermanAC

(55-11) 4950-6684
emy.shayo@jpmorgan.com
Bloomberg JPMA SHAYO <GO>
Brazil Economic Projections

Avg
2005-09

We expect the recovery will be atypical as it will have
many different push factors. In the past, recovery has
relied mostly on monetary policy. This will continue to
be key, especially now that real rates are ~2%, a record
low. Now, however, both fiscal policy and regulatory
issues should help. On the fiscal side, the government
enacted a R$45 billion tax cut. On the regulatory side,
government actions have led to lower banking spreads, a
reduction in energy cost starting in 2013, and overall
stimulus for the industrial side.
We are OW the industrial side, which gets the largest
government stimulus. We do that through CCR. To
engage in the cyclical recovery, we like consumer
discretionary names Lojas Americanas, AEDU, and
Totvs. Growth should also benefit financials, where
Bradesco and BVMF are our vehicles. We like earnings
visibility, and both Natura and Iguatemi offer that. We
get exposure to the global recovery through Gerdau,
which has exposure to the U.S. On the other hand, we
dont like the flat steel business in Brazil and would
avoid CSN. Recent regulatory changes have impaired
Eletrobas.
96
2011
2012f
2013f
Real GDP, % change
3.6
7.5
2.7
1.4
4.1
Consumption1
3.7
5.2
2.9
2.6
3.4
Investment1
0.6
0.7
-0.7
1.4
Net trade1
-0.7
-2.6
-0.8
-0.5
-0.7
Consumer prices, %oya

% Dec/Dec
6.6
5.4
5.5
4.7
5.9
6.5
5.5
5.2
5.7
9.4
7.8
5.3
-3
-2.5
-2.6
-2.7
-2.3
Producer prices, %oya

Government balance, % of
GDP

Brazils P/E at 10.7x is cheaper than the LatAm average,
cheaper than Global, and in line with EM. The multiple is
also in line with Brazils average. However, we believe
there is room for re-rating considering that interest rates
are at a historical low and that Brazil is far from the peak
multiple of 13.7x reached in 2Q09, exactly at the time
when a V-shape recovery was starting to materialize.
2010
Trade balance (US$ bn)
36.3
20.1
29.8
19.3
8.9
Exports
153.5
201.9
256
241.6
254.4
Imports
117.3
181.8
226.2
222.3
245.6
-4.3
-47.1
-52
-53.5
-64
% of GDP
International reserves, (US$
bn)
-0.3
-2.2
-2.1
-2.4
-2.6
149.6
287.1
352.1
386.1
406.1
272.1
460
499.4
530.4
551.4
38.8
71.5
69.5
74.5
79.5
19.5
19.2
19.4
23.1
22.1
138.1
173.6
162.5
181.2
181
7.4
5.9
7.4
6.6
Short term2
Total external debt, % of
exports3
Interest payments, % of
exports3
Source: J.P. Morgan. 1. Contribution to growth of GDP; 2. Debt with original maturity of
less than one year. 3. Exports of goods, services and net transfers.
Macro Outlook
2010
2011E
2012E
2013E
EPS Growth
28.8
2.1
-8.26
17.5
P/E
10.3
10.7
12.6
10.4

.
ROE
Yield
10.9
13.3
3.5
3.9

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks and stocks to avoid

Top picks
Anhanguera
Banco Bradesco
BM&F Bovespa
CCR
Gerdau
Iguatemi
Lojas Americanas
Natura
Totvs
Stocks to avoid
CSN
Eletrobras
Rating
Mkt cap
(US$MM)
12E
AEDU3.SA
BBDC4.SA
BVMF3.SA
CCRO3.SA
GGBR4.SA
IGTA3.SA
LAME3.SA
NATU3.SA
TOTS3.SA
OW
OW
OW
OW
N
OW
OW
OW
OW
2,294
55,126
12,271
15,888
13,775
2,012
8,253
11,605
3,199
SID
ELET3.SA
UW
UW
7,159
6,671
Price (LC)
Ticker
R$32.60
R$32.70
R$12.8
R$18.6
R$17.6
R$26.2
R$16.2
R$55.6
R$40.9
$4.9
R$9.5
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
1.1
3.0
0.9
0.7
1.3
1.1
0.4
2.1
1.7
1.9
3.4
1.0
0.8
1.4
1.2
0.5
2.4
2.0
0.1
3.6
0.0
4.1
2.2
1.2
1.1
3.6
2.0
11.1
17.9
NA
41.4
8.0
9.9
39.6
73.1
27.3
(0.6)
3.4
0.4
4.1
11.2
7.2
8.5
5.8
13E
12E
29.3
10.8
14.6
27.3
13.4
24.2
45.3
26.1
24.2
17.1
9.5
12.9
21.9
12.6
21.5
29.4
23.0
20.6
NM
2.8
23.3
2.3
Brazil GDP SAAR: On the Cusp of a Sharp Recovery
12-Month Forward P/E
9.0%
14
7.0%
12
5.0%
10
3.0%
1.0%
-1.0%
4
1Q10
3Q10
1Q11
3Q11
1Q12E 3Q12E 1Q13E 3Q13E
+1SD
98
00
02
04
-1SD
06
08
10
12
Source: IBES.
Source: IBE; J.P. Morgan.
Brazil Real Interest Rates Record Lows

16.0%
12.0%
2013 Inflation Expectations

5.8
5.5
5.2
8.0%
4.9
4.0%
4.6
0.0%
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
4.3
08/01/2011
11/10/2011
02/17/2012
05/31/2012
09/10/2012
2013
Center of the target
Source: Banco Central do Brasil.

Source: Bloomberg; J.P. Morgan.
97
Adrian Mowat
(852) 2800-8599

21 November 2012
Chile
Chile micro investment case
In our view, the recent underperformance of the Chilean
market has not been related to macroeconomic issues
(economic activity is still robust and has surprised on the
upside YTD) or valuations (which despite not being
compelling are practically in line with history) but to an
aggressive equity issuance pipeline and a more
complicated political and regulatory scenario, which has
translated into negative news flow in sectors such as
utilities, retail, and banks. Looking forward, and
considering that we expect a positive economic scenario
for 2013 (GDP growth of 4.5% and low inflation of
3.1%), we believe that a market recovery would probably
be driven more by micro than macro events, such as (1)
the approval of new power generation projects, likely to
happen during 1H13; (2) a normalization of the rainy
season, which starts in April/May; (3) the definition of
ongoing projects to change maximum interest rates and
credit regulation for retailers, and (4) the execution of
important market events that are pressuring certain stocks,
such as Enersis and Cencosuds capital increases.
We see little room for a multiple rerating. The market is
trading at 15.4x 2013E P/E, practically in line with
history, being the second most expensive market in
LatAm (after Mexico), while the valuation premium to
the region, at 40%, is also in line with history. EPS
growth estimates have corrected significantly (mainly in
the utilities sector), so we now see limited downside risk.
Diego CeledonAC
(56-2) 425 5245
Macro Outlook
98
2010
2011
2012f
2013f
3.4
3.6
0.8
-1.0
3.9
3.6
7.1
6.9
538
16.0
58.0
42.0
3.0
1.9
20.3
58.0
11.9
35
73
3.0
6.1
6.6
8.1
-8.6
1.4
3.0
-2.0
-1.0
468
15.3
70.9
55.6
3.4
1.6
27.7
85.7
21.6
37
85
3.0
6.0
6.0
4.0
-4.0
3.3
4.4
5.9
1.0
520
10.8
81.4
70.6
-5.4
-2.2
39.7
90.7
21.6
35
85
1.0
5.4
4.3
2.8
-2.1
3.1
2.6
2.8
1.0
490
4.3
80.4
76.1
-12.9
-4.6
39.7
94.7
21.6
33
87
1.0
4.5
3.2
5.5
-4.3
3.1
3.2
4.0
1.0
500
1.8
88.6
86.8
-19.6
-7.0
39.7
101.7
21.6
35
85
1.0
Real GDP, % change

Consumption
Investment
Net trade
% Dec/Dec
Exports
Imports
% of GDP
Short term
Source: J.P. Morgan Economics, 1. Contribution to growth of GDP. 2. Debt with original
maturity of less than one year. 3. Exports of goods, services, and net transfers.
Key Financial Data

EPS Growth
2010
28.3
2011E
-7.2
2012E
-7.1
2013E
16.2
P/E
16.0
16.7
17.9
15.4
ROE
14.2
12.7
11.2
11.9
Yield
2.4
4.4
2.9
3.1
12Mth Fwd P/E

The current account deficit has widened significantly,
which could lead monetary authorities to consider FX
intervention or introduce macroprudential measures,
creating significant currency risk. On the other hand, the
$160bn AUM pension fund system has also not been as
active in equities as historically.
We remain positive on domestic consumption, for which
we recommend CCU. Retail stocks that have
underperformed could also benefit after the capital
increase of Cencosud. On the other hand, we believe that
Antofagasta is a good way to get exposure to stillsupportive copper prices. We would avoid Banco
Santander as it trades at a premium to the rest of the
Andean banks in a context of increased regulation
(authorities are proposing to reduce the maximum
interest rate) and lower-than-expected profitability
(2012E ROE of 20% vs. prior levels above 25%).
Average
2005-09
23.0
+1SD
20.0
17.0
14.0
-1SD
11.0
8.0
95
97
00
02
04
06
08
10
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Top picks
Antofagasta
CCU
Price (US$)
Ticker
Rating
Mkt cap
(US$MM)
12E
P/E (x)
13E
12E
EPS (US$)
13E
GBp1,243
70.67
ANTO.L
CCU
OW
OW
12.3 bn
4,507.48
13.9
14.7
11.0
13.0
1.43
4.54
1.80
5.12
Div. yield
13E (%)
ROE
13E (%)
2.7
2.7
22.3
21.9

700
Absolute
600
FWD PER
500
(4035)
PER
(3816)
400
300
(5354)
(6267)
(3216)
PBR
(5305)
200
DY
100
0
750
700
600
5000
6000
7000
8000
9000
2013
115
J.P Morgan
105
95
85
500
Consensus
400
4000
125
550
450
3000

end Dec12: 475
end Mar 13: 475
end Jun 13: 475
650
2000
800
1000
(5978)
(3189)
2012
75
65
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
99
Adrian Mowat
(852) 2800-8599

21 November 2012
China
China micro investment case
The economic debate in China for 2013 is polarized
between: 1) the notable pick-up in social financing
statistics in 3Q12 signals that monetary stimulus will
support accelerating growth into 2013. Better PMIs is
consistent with this. 2) The decline in profits results in a
decline in capex. With fixed capital formation 47% of
GDP the cut back in capex leads to a weaker labor
market. As wage inflation falls from mid teens, todays
high retail sales growth moderates. This is likely to result
in lower growth. The polarization is also evident in the
divergence between macro data-points (PMI, GDP
growth, FAI) that suggest bottoming out vs. bottom up
demand metrics (loans, car sales, SSSG, gaming
revenues, advertising etc) which display momentum
weakness. Out investment view is biased in favor of EPS
revisions, making us overweight on China banks.
Trade weakness is a concern particularly on trade with
Europe, in turn impacting SME/ trade/ container shipping.
Cheaper imports of coal (also reflecting global slow
growth) hurt domestic players. In contrast, global
weakness benefits China through lower prices of coking
coal, iron ore and oil these not only help the steel sector
but also cap inflation. Chinas slowdown is largely
driven by its own imbalances and overcapacity, rather
than solely a trade issue
Weak domestic demand, partially a function of
overcapacity is impacting sales and margins. We
therefore track (1) capacity utilization, (2) margins, (3)
corporate cash flows, and (4) bank loans as key sector
specific metrics. On the macro front, we focus on FAI.
Our key sector call is Banks (underperformed on NIM
and asset quality fears). ICBC is our top pick. We like
Geely due to a structural SUV demand uplift, Skyworth
and Lenovo on volume expansion. Sinopec is a play on
lower oil prices (which in turn explains our top avoids
classification for Petrochina). BCIA is our pick on new
terminal led growth, and CSCL on a freight rate rebound.
An emerging dispersion between the haves and have nots
in banking makes smaller banks, such as Minsheng
challenged for capital and liquidity, least preferred.
Lower oil prices impact Petrochina and lower coal prices
weigh on Yanzhou Coal.
100
Sunil GargAC
(852) 2800 8518, sunil.garg@jpmorgan.com
Bloomberg JPMA GARG<GO>
J.P. Morgan Securtieis (Asia Pacific) Limited
Manufacturing sector: Sales growth and profit margins

45%
40%
35%
30%
25%
20%
15%
10%
5%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
Sales yoy growth (LHS)
Profit margin (RHS)
Source: CEIC.
China industrial profits and PMI

Industrial profits (%oya, LHS)
NBS PMI (RHS)
100
60
50
55
50
-50
45
-100
99 00 01 02 03 04 05 06 07 08 09 10 11 12
40
Source: Bloomberg, CEIC, October 2012. Note: Industrial profits as of September 2012.
Bank loan growth and money supply growth (M1)

45
40
35
30
25
20
15
10
5
0
M1 yoy growth
Source: CEIC.
Loan yoy growth

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
ICBC- H
Geely Automobile Holdings Ltd
Sinopec Corp - H
China Shipping Container Lines
Stocks to avoid
China Minsheng Banking - H
PetroChina
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
12E
5.25
3.43
6.43
4.35
5.17
8.48
2.20
1398.HK
0175.HK
0992.HK
0751.HK
0694.HK
0386.HK
2866.HK
OW
OW
OW
OW
OW
OW
OW
223,252
3,313
8,564
1,552
2,889
90,169
4,077
7.37
10.66
12.28
1988.HK
0857.HK
1171.HK
UW
UW
UW
27,570
256,794
11,715
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
0.63
0.26
0.05
0.46
0.32
0.72
(0.02)
0.62
0.35
0.06
0.62
0.39
0.87
0.06
4.7
0.9
2.9
4.4
1.4
3.8
0.0
18.4
20.4
25.8
19.0
10.3
14.4
2.7
1.03
0.70
1.15
0.97
0.73
0.73
4.7
3.8
2.2
16.3
12.0
7.7
13E
12E
6.7
10.6
17.8
9.4
12.9
9.4
nm
6.8
7.9
14.5
7.0
10.7
7.9
28.8
5.8
12.2
8.6
6.1
11.8
13.6
Chinas merchandise export growth vs. Newcastle coal prices

200
170
140
110
80
50
20
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
SHCOMP WEEKLY CHART + MSCI China Relative (lower Panel)
60
50
40
30
20
10
0
-10
-20
-30
Oct-12
Newcastle Coal price (6600Kc, USD/t, LHS)

Export growth (% oya, RHS)
Source: Bloomberg and CEIC.
Changes in 2012 and 2013 EPS forecasts for MSCI China

8.0
2011
2012
2013
7.5
7.0
Source: Bloomberg.
Absolute view (SHCOMP): SHCOMP remains one of the

most challenged indices in our coverage. While treading
bottom, we see substantial resistance on every rise
(2100/2132/2164). Recent bearish stochastics cross-over also
does not bode well.
6.5
6.0
5.5
5.0
Nov-10
May-11
Source: I/B/E/S, Datastream..
Nov-11
May-12
Nov-12
Relative view (MSCI China vs. MXAPJ): Similar to the

long-standing decline for SHCOMP, MSCI Chinas
underperformance post early 2009 peak is continuing apace.
An attempted breakout of this under-performance trend
channel has been invalidated for now.
We see little merit in being on the long side of SHCOMP either absolute or relative. We see considerable headwinds
for SHCOMP on every rise and we see MSCI China's
under-performance to remain in place for now. Up until
recently, HSCEI had been outperforming SHCOMP, but
this is over for now.
101
Adrian Mowat
(852) 2800-8599

21 November 2012
Colombia
Colombia micro investment case
Colombia has been the best-performing LatAm market
YTD given solid earnings growth and positive long-term
outlook driven by a strong macro reform agenda and high
growth potential. Nonetheless, economic activity has
been somewhat disappointing, showing a faster-thanexpected deceleration. In our view, this is transitory and
our economists expect a slight acceleration in growth
next year to 4.5%. In our view, the release of more
positive macro data, mainly IP and retail sales, could
drive further appreciation of the market. On the other
hand, we believe that the outcome of the ongoing peace
talks with the FARCs could be a structural change for
Colombia, and particularly positive for the oil companies,
which have suffered from increased attacks this year.
In our view, the attractive upside potential in Colombia
comes mainly from earnings growth, as valuation
multiples show little space for a re-rating. After the
recent downward revisions to estimates, the Colombian
market is trading slightly above the historical average, at
14.2x 2013E P/E.
The country should be more resilient to any economic
downturn given the macro reform progress made in
recent years, including the new fiscal rule and FTA with
the US. On the other hand, it shows a higher dependence
on oil prices.
We remain very positive on the medium-term Colombian
macro outlook and capital markets intermediation
potential but recognize that stock-picking is difficult due
to valuations and liquidity. We concentrate on two stocks,
Pacific Rubiales on one side, our top pick among
Colombian oils, which should benefit from strong
production growth in the medium term (other companies
in the sector such as Gran Tierra could benefit from a
positive outcome of the peace conversations with the
FARCs), and Almacenes Exito, as a way to gain
exposure to internal demand and low retail penetration.
We believe Exitos rich valuationis justified considering
its strong growth outlook. On the other hand, we would
avoid Ecopetrol, as it is trading at a significant premium
to its peers and we have a negative view on short-term
production.
102
Diego CeledonAC
(56-2) 425 5245
Macro Outlook
Average
2005-09
2010
2011
2012f
2013f
4.7
3.6
2.2
-1.1
5.2
4.9
3.5
-0.1
2154
1.0
30.0
29.0
-4.6
-2.3
19.8
44.6
3.5
22
108
8.0
4.0
4.2
1.9
-2.0
2.3
3.2
1.7
-3.2
1920
2.1
40.8
38.6
-8.9
-3.1
28.0
57.7
4.4
19
109
7.0
5.9
4.8
4.2
-3.1
3.4
3.7
5.5
-2.1
1939
0.8
54.9
54.1
-10.4
-3.1
31.8
61.9
4.9
18
89
5.0
4.3
3.8
2.8
-2.2
3.3
3.0
3.0
-0.8
1775
-1.1
57.1
58.1
-10.6
-2.9
36.8
62.6
4.9
17
88
4.0
4.5
3.7
1.5
-0.7
3.2
3.0
5.0
-1.0
1775
-2.5
64.7
67.2
-11.9
-3.0
40.8
64.3
4.9
16
80
4.0
Real GDP, % change

Consumption
Investment
Net trade
% Dec/Dec
Exports
Imports
% of GDP
Short term
Source: J.P. Morgan Economics, 1. Contribution to growth of GDP 2. Debt with original
Key Financial Data

EPS Growth
2010
2011E
25.1
2012E
15.7
2013E
14.2
P/E
33.6
18.8
16.3
14.3
ROE
6.4
7.8
8.3
6.6
Yield
2.2
2.8
2.9
3.8
12Mth Fwd P/E

24.00
21.00
18.00
+1SD
15.00
12.00
9.00
6.00
-1SD
3.00
0.00
95
97
99
01
03
05
07
10
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Top picks
Pacific Rubiales
Almacenes Exito
Stocks to avoid
Ecopetrol
Price (LC)
Ticker
Rating
Mkt cap
(US$MM)
12E
P/E (x)
13E
C$22.00
Col$33,700.00
PRE.TO
IMI.CN
OW
N
C$6,669.58
8,301.74
7.7
32.0
6.1
28.1
US$2.84
1,052.09
$56.46
EC
UW
116,070.50
13.3
10.5
US$4.24
12E
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
US$3.6
1,197.61
2.0
0.8
26.7
6.4
US$5.37
4.3
35.3

2500
Absolute
FWD PER
(954)
(3340)
2000
PER
(1252)
(2089)
1500
PBR
1000
DY
500
0
(3272)
(1161)
(1962)
0
500
1000
1500
2000
2500
3,000
2,800
2,600

end Dec 12: 1775
end Mar 13: 1775
end June 13: 1775
2,400
2,200
2,000
1,800
J.P. Morgan
Consensus
1,600
3000
3500
4000
4500
170
160
2013
150
140
130
120
2012
110
100
90
80
70
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
103

21 November 2012
India
India micro investment case
We remain constructive on Indian equities as we go into
2013. The policy environment is improving, as evidenced
in a series of announcements from the Government over
the last two months. Growth appears to be troughing and
inflation is expected to roll over into 1Q. The RBI has
guided towards further monetary easing early next year.
Additionally, likely increased commitment to public
investments ahead of elections should support growth
recovery. A substantial political calendar however
implies volatility, both in terms of policy making and the
markets likely reaction to these.
Bharat IyerAC
91-22 6157 3600, bharat.x.iyer@jpmorgan.com
Bloomberg JPMA IYER<GO>
Quarterly GDP growth trend & J.P. Morgan expectation (% yoy)

10.0
9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
13Q4
Adrian Mowat
(852) 2800-8599

A weak global growth outlook at this stage should be
good for domestic demand led, current account deficit
and capital deficit economies like India. Lower global
commodity prices not only help lower inflation and
anchor inflationary expectations, but also help address
the twin deficits problem. Global Central Banks likely
policy response of keeping liquidity easy should also be
supportive of a recovery in the capex cycle. Such an
environment should help Indian equities in relative terms.
Inflation trajectory (% yoy)

We believe the most important indicators to track for
next year from a domestic perspective are 1) Inflation
the trajectory herein will determine the extent of
monetary easing 2) Fiscal consolidation important not
only to free up resources for the investment cycle, but
also to stave off a sovereign rating downgrade and
support the currency 3) Momentum in the Investment
cycle - necessary to alleviate supply side pressures, cool
down inflation structurally and elevate growth. On the
international front, the fiscal cliff in the US and Chinas
growth momentum will play a key role in shaping
investors portfolio choices.
Interest rate trend and J.P. Morgan expectations
Our key stock recommendations are a combination of 1)
secular growth stories linked to the consumer, with a
defendable competitive position and expanding product
suites i.e. ITC and M&M and 2) likely policy
beneficiaries of monetary easing, fiscal consolidation and
steps taken to kick-start the investment cycle Axis in
Financials and Adani Ports in Infrastructure.
10 9.7
9.0
9
8
7.5
7.8
8.0
7.7
7.3
7.0
6.7
6
5
Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
10.0
9.0
8.0
Repo
7.0
6.0
5.0
CRR
4.0
3.0
Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13
Source: J.P. Morgan Economics.
MSCI India EPS expectation trend

54
53
52
51
50
49
48
Nov-11
Jan-12
Mar-12
May-12
CY 12 (L)
Source: MSCI, IBES.
104
7.4
Jul-12
CY13
Sep-12
Nov-12
64
63
62
61
60
59
58
57
56

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Axis Bank
ICICI Bank
ITC
Mahindra & Mahindra
Adani Ports and SEZ
Stocks to avoid
Reliance Industries
Hero Motocorp
Bank Of Baroda
Price
Rs
Code
Rating
Mkt cap
(US$MM)
13E
1,216
1,080
283
917
128
AXSB IN
ICICIBC IN
ITC IN
MM IN
ADSEZ IN
OW
OW
OW
OW
OW
9,650
23,159
41,426
10,479
4,769
808
1,946
743
RIL IN
HMCL IN
BOB IN
UW
UW
UW
48,622
7,228
5,684
P/E (x)
EPS (LC)
14E
Div. yield
13E (%)
ROE
13E (%)
124
67
9
51
6
150
84
11
59
9
1.6
1.8
2.0
1.4
1.0
20
11
35
22
23
61
114
109
58
123
121
1.1
2.5
2.6
15
55
21
14E
13E
10
16
31
18
21
8
13
26
16
14
13
17
7
14
16
6
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of November 02, 2012.
MSCI India 12 Month Fwd P/E
NIFTY WEEKLY CHART + MSCI India Relative (lower Panel)
24
20
16
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
12
Sensex EPS and P/E multiple matrix

EPS Integer
1,140
PE
10
11
12
13
14
EPS CAGR FY 12-14E (%)

(5)
0
5
1,029
1,140
1,257
10
1,379
15
1,508
10,289
11,317
12,346
13,375
14,404
13,794
15,173
16,553
17,932
19,312
15,077
16,584
18,092
19,599
21,107
11,400
12,540
13,680
14,820
15,960
12,569
13,825
15,082
16,339
17,596
Source: Bloomberg.
Absolute view (NIFTY): Niftys rally since Dec11,

contained in an up-channel, remains in place although does
face short-term pressures (negative x-over on stochastics in
overbought territory). On monthly charts, NIFTYs uptrend
from late 2008 remains in place.
Relative view (MSCI India vs. MXAPJ): A positive
monthly MACD x-over along with a possible golden
cross supports an outperformance view. On weekly charts,
underperformance ended in Sep12 and recent
outperformance continues to build after a recent pullback.
India is one of the two markets in Asia (along with Hong
Kong) where we are positive on a relative basis. Arguably
a bullish case for absolute upside can be made technically
for Nifty, but that will probably come post a consolidation/
correction. The relative view is clearly positive with a
bottoming out process underway and visible on both
weekly and monthly relative charts.
105
Adrian Mowat
(852) 2800-8599

21 November 2012
Indonesia
Indonesia micro investment case
Stable real growth and double-digit nominal GDP growth,
translating into strong and stable EPS growth (18%
CAGR over the last five years) are Indonesias core
attractions for us. Domestic demand, fuelled by healthy
demographics, is now being supplemented by a strong
investment cycle (FA Investment/GDP 32%). These
longer-term structural strengths are somewhat tempered
by nearer-term concerns about the transmission of lower
commodity prices into domestic demand and currency
weakness. Longer-term risks include weak infrastructure
and dithering over reforms as political posturing rises in
the run-up to 2014s election.
Aditya SrinathAC
Phone, aditya.s.srinath@jpmorgan.com
Bloomberg JPMA SRINATH<GO>
PT J.P. Morgan Securities Indonesia
Indonesia: Nominal & real GDP (% y/y)

32%
Nom GDP y/y - LHS
Real GDp y/y - RHS
24%
5%
12/2008
9/2009
6/2010
3/2011
12/2011
4%
9/2012
Source: CEIC.
Indonesia FX reserves (% y/y) and Rp/$ Rate

Indonesian growth is largely domestic focused and hence
resilient to global weakness. However, the implications
of weaker Coal and Palm Oil prices are negative for
domestic demand and the current account.
Car sales remain at record levels (over 100,000 units pm)
and are a barometer of middle class consumption. We are
also looking for signs of inflection in the trade balance
and current account (-2.4% of GDP in 3Q). We are also
watching the setting of minimum wage increases in
Jakarta for 2013 (up 18.5% in FY12). This will offer cues
on low-end purchasing power, FDI competitiveness, as
well as the investment climate and decision making of
the administration in the face of union pressures.
Source: CEIC.
Indonesia: 1M Interbank rates & policy rate

11.5
BI Rate
9.5
JIBOR 1M
7.5
5.5
3.5
D-08
J-09
F-10
S-10
A-11
N-11
Source: Bloomberg, Bank Indonesia.
Our top picks are BBCA, a beneficiary of rising domestic
interest rates (overnight rates up 25bp since June). We
also pick two stocks as plays on the emergence of the
affluent Indonesian consumer class SMRA, a property
developer and Mall Operator, and ERAA, a rapidly
growing handset distributor and Apple Reseller.
Our key avoids are UNTR, on a deteriorating mining
capex outlook, ISAT on weak data economics, and INCO,
on a subdued outlook for nickel.
106
7%
6%
16%
8%
3/2008
8%
Indonesia: Monthly 4W, 2W & Komatsu sales (2010 = 100)
Source: Company, J.P. Morgan.
J-12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Bank Central Asia
Semen Gresik
Erajaya Swasembada
Summarecon Agung
Code
Rating
Price
(LC)
Mkt cap
(US$MM)
12E
BBCA IJ
SMGR IJ
ERAA IJ
SMRA IJ
OW
OW
OW
OW
8,450
14,850
2,450
1,830
21,634
9,147
738
1,371
Stocks to avoid
United Tractors
Indosat
Vale Indonesia
UNTR IJ
ISAT IJ
INCO IJ
UW
UW
N
20,600
6,450
2,600
7,979
3,640
2,683
P/E (x)
13E
EPS (LC)
12E
13E
17.5
19.0
15.4
24.4
14.3
15.7
11.3
18.5
482
783
159
75
13.3
25.3
48.3
12.1
26.2
15.5
1,551
255
0.01
Div. yield
13E (%)
ROE
13E (%)
591
944
217
99
1.5
2.6
0
0
24.8
30.3
21.6
16.7
1,490
246
0.02
3.3
1.9
1.5
17.7
6.8
9.6
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 8 Nov 2012.
Indonesia: Domestic credit (% y/y)
JCI WEEKLY CHART + MSCI Indonesia Relative (lower Panel)
40%
30%
20%
10%
Loans y/y
0%
1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012
Source: CEIC.
Indonesia: Inflation & 10 Year Bond Yields

20
Inflation
Indo 10Y Bond Yield
15
Source: Bloomberg.
Absolute view (JCI): JCIs solid rally since 2008/09 lows is

now faltering with clear bearish RSI divergences on monthly
charts pointing to distribution at the top. Nov is looking to
potentially form a bearish harami candlestick pattern.
Weekly charts show a negative stochastics x-over and failure
to reach upper channel bound as signs of fading momentum.
10
5
0
J-05 O-05 J-06 A-07 J-08 O-08 J-09 A-10 J-11 O-11 J-12
Source: Bloomberg.
Relative view (MSCI Indonesia vs. MXAPJ): MSCI

Indonesias 44-year outperformance up-trend has recently
been broken on the downside although needs some
conviction given that the breakdown from a symmetrical
triangle is through the apex.
Indonesias stellar absolute performance is now under
threat, following a solid 7% pt underperformance. We see
continuing risks to relative performance and are
increasingly cautious on absolute performance. We
recommend selling.
107
Adrian Mowat
(852) 2800-8599

21 November 2012
Malaysia
Malaysia micro investment case
Positive structural changes are underway with economic
rebalancing through the M$1.4T Economic
Transformation Programme. The upcoming general
elections (28 April 2013 will be the last day for
parliament dissolution) is the biggest market risk, which
has so far paved the way for the opportunity to
accumulate quality growth stocks with visible domestic
drivers. We expect a profitable trade in rotation from safe
sectors (telcos; safe banks and consumers outperformed
YTD) to the underperforming construction, oil and gas,
property, gaming and selected banks (with ETP
exposure), if no regime change.
Domestic-led growth (private and public) is fueling the
economy, offsetting the weak external sector. Domestic
demand contributed 10.9%-pts to Y/Y growth in 2Q
while net exports subtracted 4.9%-pts. Government
infrastructure spending (estimated M$160B in railrelated projects, and various growth corridors e.g.
Iskandar Malaysia) and Petronas M$300B oil and gas
capex spending lends support to the capex cycle uplift.
Political certainty post elections (depending on outcome).
Key data points driving our view are continued growth in
private investments evident by 25% Y/Y private fixed
capital formation growth in 2Q12. We are also on the
lookout for job creation numbers, driving wages higher,
positive for consumption. We view government fiscal
consolidation positively, estimated at 4% of GDP in
2013. Subsidy cuts in petrol prices at the pump and
natural gas will signal further reforms. Gradual CPI rise
expected as subsidy cuts are likely to be in small bites.
Hence, earnings momentum likely to be positive as
divergence between CPI and PPI continues, driven by
lower input prices (mainly commodity).
Relatively safe sectors (mainly yielders) telcos, safer
banks and consumers are becoming a crowded trade.
Hence, we think staying in apolitical stocks with visible
growth drivers will generate outperformance. Key picks:
AirAsia, Dialog and KPJ Healthcare. We add YTD
underperformers CIMB and IJM Land, both indirect ETP
beneficiaries, to our top picks as a positive elections
hedge (assuming no regime change).
108
Hoy Kit MakAC

(60-3) 2270 4728, hoykit.mak@jpmorgan.com
Bloomberg JPMA MAK<GO>
JPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X)
Private investment levels vs. FBMKLCI

90.0
1,700
75.0
1,500
60.0
1,300
45.0
1,100
30.0
900
15.0
700
0.0
2000
2002
2004
2006
Private Investments (M$B)
2008
2010
2012E
500
FBMKLCI (Average) (RHS)
Source: Bank Negara. Note: Correlation of private investments vs FBMKLCI: 0.9x

(Total investments vs FBMKLCI: 0.95x)
Domestic demand leading growth
Source: CEIC, Bank Negara.
CPI vs. PPI

16.0%
4.0%
12.0%
3.0%
8.0%
2.0%
4.0%
1.0%
0.0%
-4.0%
Jan-11 Apr-11
Jul-11

PPI
CPI
Jul-12
0.0%
Source: Bank Negara
KLCI performance during 12th GE (2008)

1550
-4%
1450
1350
-9%
1250
-5%
-5%
1150
1050
Jan-08
Feb-08
Source: CEIC. Bloomberg.
Mar-08
Apr-08
May

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
AirAsia
CIMB Group
Dialog Group
IJM Land
KPJ Healthcare
Stocks to avoid
Genting Plantations
Hong Leong Bank
IOI Corporation
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
3.06
7.71
2.40
2.21
6.05
AIRA MK
CIMB MK
DLG MK
IJMLD MK
KPJ MK
OW
OW
OW
OW
OW
2,708
18,844
1,969
999
1,263
8.85
14.68
5.03
GENP MK
HLBK MK
IOI MK
UW
UW
UW
2,185
9,051
10,649
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
0.55
0.60
0.08
0.13
0.25
0.22
0.71
0.10
0.15
0.30
0.0%
3.1%
1.4%
2.1%
2.6%
10.1
17.3
17.4
9.2
18.1
0.50
1.00
0.27
0.52
0.93
0.30
1.2%
2.1%
3.5%
10.6
16.1
14.9
13E
12E
5.6
12.9
30.3
17.1
24.5
14.2
10.9
24.9
14.6
20.2
17.8
14.7
18.4
17.2
15.7
16.7
KLCI WEEKLY CHART + MSCI Malaysia Relative (lower Panel)
FMBKLCI P/E
20.0
18.0
16.0
+2SD = 18.1x
+1SD = 16.5x
Mean = 14.8x
14.0
-1SD = 13.1x
12.0
-2SD = 11.4x
12.8x
10.0
8.0
Jan-06
12.9x
9.3x
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Source: Bloomberg.
EM Fund Weightings vs. MSCI Malaysia Weight

4.0
3.5
3.0
2.5
2.0
1.5
1.0
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Fund Weightings
MSC Malay weight in EM
Source: MSCI, Datastream.
Source: Bloomberg.
Absolute view (KLCI): Bearish monthly RSI divergence is

followed by a bearish engulfing line candlestick, which bodes
poorly for KLCI. Index threatening to break below Sep11 up
channel while stochastics are already in sell mode.
Relative view (MSCI Malaysia vs. MXAPJ): Negative
moving average x-overs on weekly relative index along with
declining trendline are a negative set up and headwinds for
MSCI Malaysias relative performance.
The weakness in the KLCI monthly chart is alarming,
pointing to the potential for a large correction. We
recommend selling.
109
Adrian Mowat
(852) 2800-8599

21 November 2012
MENA
MENA micro investment case
MENA remains a variegated, mostly off-benchmark
investment case for EM investors. The big fiscal
packages from Saudi and Qatar will keep non-oil growth
strong in these countries a key positive when global
growth is poor. We think banks are the best big-cap way
to play the growth angle. Political uncertainty and policy
risk in Egypt keep us wary on that stock market. Also
dividends are quite high in the GCC, another key positive.
Sluggish global growth is an opportunity and a threat to
GCC markets. The opportunity is that domestic growth
(ex-oil) should remain around 5% in Saudi and Qatar and that looks better and better as the rest of the world
slows. But the risk is the oil price - if slower global
growth pushes the oil price down more, then the regions
upside is limited. Also, lower oil prices will hurt petchem
margins. We will not worry, though, until Brent trades
below US$100/bbl.
Keys to watch are dividends in Saudi and Qatar after
the promptly reported 4Q results. Better dividends could
drive yield-hungry locals into more equities. The
dividend story underpins FGB in UAE as a top pick. And
oil prices/petchem demand/petchem margins remain key
drivers for Saudi petchems. In Egypt, the stock market
has re-rated this year despite the policy vacuum we
want to see progress on issues like the tax system and
subsidy reform; concluding an $5bn IMF loan would
involve answering a lot of medium-term policy and
reform questions.
We want to tap the Saudi growth story via the banks:
SAMBA is our top pick. Mobily offers a rapidly rising
dividend. Industries Qatar offers dividend and volume
growth even if the global growth and petchem pricing
remain weak. Emaar is the best <1x book value asset in
Dubai, in our view; our price target of AED 4.5 (25%
upside) uses a 15% cap rate on the Dubai Mall (more
visitors than Manhattan) which is way too low. The stock
is below book and book value may be too low. Stocks to
avoid: Palm Hills, Riyad Bank (a good pair trade with
SAMBA), and Saudi Kayan (little growth and weak
pricing) and Zain KSA.
110
David Aserkoff, CFA
AC
(44-20) 7134-5887
Christian Kern
(971) 4428-1789
christian.a.kern@jpmorgan.com
Bloomberg JPMA KERN <GO>
JPMorgan Chase Bank, N.A., Dubai Branch
GDP Growth in MENA markets

4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Egypt
Saudi Arabia
2012
U.A.E.
Qatar
Global
2013
J.P. Morgan oil price forecasts

In($/bbl)
Brent
WTI
Spot
106
85
4Q12
105
87
1Q13
112
95
2Q13
105
90
3Q13
120
111
4Q13
115
106
2012
110
94
2013
113
101
Source: J.P. Morgan forecasts. Spot price as of 2 November
Egypt: forward P/E in the last 10 years

20
12M Fwd PE
Avg Egypt
-1sd
+1sd
18
16
14
12
10
8
6
4
Nov-02
Nov-04
Nov-06
Nov-08
Nov-10
Source: Bloomberg, Datastream, I/B/E/S, updated as of 9 November 2012
Nov-12

21 November 2012
Adrian Mowat
(852) 2800-8599

Price (LC)
Top picks
Emaar Properties
First Gulf Bank
Industries Qatar
Mobily
Samba
Stocks to avoid
Palm Hills
Riyad Bank
Saudi Kayan
Zain KSA
Code
Rating
3.7
10.5
154.6
72.5
44.0
EMAAR DB
FGB UH
IQCD QD
EEC AB
SAMBA AB
OW
OW
OW
OW
OW
2.7
23.1
12.4
8.7
PHDC EY
RIBL AB
KAYAN AB
ZAINKSA AB
N
N
N
N
P/E (x)
12E
13E
6,070
8,658
22,945
13,859
11,280
10.8
8.0
9.5
9.1
9.6
10.8
7.0
8.2
8.8
8.2
447
9,240
5,080
2,549
14.3
10.2
nm
nm
8.8
8.9
11.9
nm
Mkt cap
(US$MM)
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
0.33
1.34
16.04
8.18
4.88
0.33
1.53
18.57
8.43
5.71
0.0%
7.7%
6.0%
7.2%
4.5%
5.9%
15.8%
0.0%
0.0%
15.6%
0.18
2.27
-0.47
-1.35
0.30
2.60
1.07
-1.07
0.0%
6.6%
0.0%
0.0%
7.4%
12.2%
10.4%
0.0%
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 2 November 2012
Egypt NDF not pricing in devaluation
MENA & EMEA: Daily trading values 3m (US$ MM)
6.2
4000
3000
6.0
2000
5.8
1000
5.6
5.4
Nov-09
1800
Nov-10
May-11
EGP Spot (LHS)
Nov-11
May-12
1739
South
Africa
Russia
(local &
GDR)
900
600
300
0
-1000
Nov-12
EGP 1M fwd points (RHS)
52
75
Qatar
Egypt
229
Poland
Turkey
Saudi
Arabia
Av. Daily value Traded 3m (USD Mn)
Source: Bloomberg, updated as of 9 November 2012.
Tadawul forward P/E
MSCI Qatar market forward P/E
25
1736
1175
1200
0
May-10
1444
1500
20
20
15
15
10
10
5
May-06
May-07
May-08
May-09
May-10
May-11
SASEIDX Index 12 M Fwd. P/E

May-12
5
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
MSCI Qatar 12 M Fwd. P/E

111
Adrian Mowat
(852) 2800-8599

21 November 2012
Mexico
Mexico micro investment case
Despite current valuations, we expect further
outperformance of the Mexican equity market on the
back of economic growth upside from the structural
reform agenda. We are confident on the approval of
reforms, starting with labor, followed by fiscal, and
finally energy reform. Consumer demand should remain
strong, mostly fueled by credit growth, but beware of
signs of deteriorating asset quality. Finally, keep an eye
out for the manufacturing industry, particularly the auto
sector, as this is the spark that keeps the economic engine
running.
High valuations in Mexico have been the main pushback
from investors for at least two years now. Though the
companies have been delivering on earnings growth,
lofty P/Es imply there is little room for disappointment.
Delivery of the much-awaited structural reforms could
prove to be a catalyst for sustained high multiples as
companies earnings growth is expected to remain
healthy.
Key to economic recovery after the crisis has been the
strength of the domestic consumer. This has been fueled
both by the dynamism in the manufacturing industry, as
Mexico gains competitiveness vs. China, and rising
consumer credit availability, especially considering the
low penetration of formal financial services among the
Mexican population. These two should remain the key
drivers for growth. For the former it will be important to
focus on US industrial production performance and
consumer confidence. For the latter, it is fundamental to
remain vigilant on loan book quality. The main
difference in expected growth pickup for next year from
previous economic recoveries is the additional boost
from possible reforms. The question is how much
politicians can deliver.
We focus on Arca and Televisa to get exposure from the
Mexican consumer. Furthermore, the regulatory context
is favorable for TV, while there is upside to earnings
growth in Arca. We include OMA as a beneficiary of the
recovery in the Mexican business environment, plus it
has a very attractive valuation vs. peers. We would avoid
NIHD on slowing growth coupled with increasing
leverage.
112
Nur Cristiani, CFAAC

(52-55) 5540-9374
nur.cristiani@jpmorgan.com
Bloomberg JPMA CRISTIANI <GO>
J.P. Morgan Casa de Bolsa, S.A de C.V., J.P. Morgan Grupo Financiero
Macro Outlook
AVG
2005-09
2010
2011
2012f
2013f
Real GDP, % change
1.3
5.5
3.9
3.9
3.6
Consumption
1.4
3.7
3.2
2.8
2.7
Investment
-0.1
1.8
0.9
1.2
1.2
Net trade
-0.1
0.0
-0.1
-0.1
-0.3
Consumer prices, %oya
4.4
4.2
3.4
4.2
3.8
% Dec/Dec
4.2
4.4
3.8
4.2
3.6
Producer prices, %oya
5.0
3.8
4.9
5.2
4.4
-0.4
-2.8
-2.5
-2.4
-2.4
-9.1
-3.0
-1.5
-1.6
-4.1
Exports
251.4
298.5
349.4
382.6
412.2
Imports
260.6
301.5
350.8
384.2
416.3
-8.2
-5.6
-5.7
-5.2
-10.1
-0.9
-0.5
-0.5
-0.4
-0.7

% of GDP
78.1
113.6
142.6
164.6
184.6
186.5
211.6
218.4
219.3
221.7
38.6
58.9
65.7
66.6
69.1
19.1
19.6
18.6
18.6
15.7
61.5
59.8
54.4
51.1
48.0
4.5
3.7
3.8
2.6
2.8

Short term
Source: J.P. Morgan Economics. 1. Contribution to growth of GDP. 2. Debt with original
Valuation Metrics
EPS Growth
2010
P/E
ROE
Yield
25.6
14.6
0.6
3.3
2011E
12.5
26.1
11.7
2012E
18.6
19.2
14.8
1.8
2013E
12.5
16.5
15.9
1.9
12 Mth fwd P/E

19
+1SD
17
15
13
11
-1SD
9
7
95
97
99
01
03
05
07
10
12

21 November 2012
Adrian Mowat
(852) 2800-8599

Top picks
Arca Continental
OMA
Grupo Televisa SA
Stocks to avoid
NII Holdings Inc.
Price (LC)
Ticker
Ps94.95
Ps29.98
$22.24
AC.MX
OMAB MM
TV
$4.94
P/E (x)
12E
Rating
Mkt cap
(US$MM)
OW
OW
OW
11,532
902
12,704
25.0
17.5
21.3
19.3
16.4
14.8
3.8
2.0
1.0
848
NM
NM
(1.7)
NIHD
13E
12E
EPS (LC)
Div. yield
13E (%)
13E
4.9
2.0
1.2
2.5
4.9
1.2
(1.5)
ROE
13E (%)
18.8
12.0
17.1
0.0
(10.4)
MSCI Mexico Absolute and Relative to EMF Index

600
Absolute
500
PER
400
300
(19021)
PBR
200
DY
100
0
Dec-02 Jan-04 Feb-05 Mar-06 Apr-07 May-08 Jun-09
Jul-10
15000
Aug-11 Sep-12
(32888)
(24226)
FWD PER
(29773)
(22700)
(36679)
(22040)
20000
(36768)
25000
30000
Source: Bloomberg, IBES, Datastream, J.P. Morgan.
Currency Outlook (MXN/USD)
16.0
15.0
14.0

end Dec12: 12.50
end Mar 13: 12.20
end Jun 13: 12.0
40000
45000
170
J.P. Morgan
150
2013
130
13.0
110
12.0
11.0
35000
Consensus
10.0
9.0
90
70
Feb-11
2012
Jun-11
Oct-11
Feb-12
Jun-12
113
Adrian Mowat
(852) 2800-8599

21 November 2012
Peru
Peru micro investment case
Both the equity market and the economy in Peru show a
high dependence on commodities, particularly metals
prices. 65% of MSCI Peru is related to copper, gold, and
zinc, while 80% of exports are commodities. If
commodities prices were to post a positive surprise, it
could be a relevant driver for the equity market, although
that is not our base-case scenario (in particular these
three metals are trading well above our long-term
estimates). We are more positive on internal demand and
domestic stocks, where the confirmation of positive
consumption figures (we expect that 70% of the strong 7%
growth next year will be derived from consumption)
could act as a driver for these sectors.
As with the rest of the Andean region, we do not see
significant space for a re-rating of the market as a whole.
Peru is trading at 11.4x 2013E P/E, in line with its
historical average. Nonetheless, we believe that certain
sectors such as financials are currently showing attractive
valuations.
Peru has strengthened its macro position significantly in
recent years, leading economic growth in the region,
showing one of the lowest debt burdens in LatAm, and
posting a solid fiscal position (it is the only country in
LatAm with a fiscal surplus). This provides a strong
position from which to continue leading growth and
stronger protection in the case of an external downturn.
Diego CeledonAC
(56-2) 425 5245
Macro Outlook
Average
2010
2011
2012f
2013f
6.8
4.7
2.6
-0.5
2.8
2.7
3.0
0.9
3.1
6.3
25.5
19.2
0.1
0.1
23.9
32.1
4.6
30
98
6.0
8.8
4.9
8.2
-4.3
1.5
2.1
1.8
-0.6
2.8
6.7
35.6
28.8
-2.4
-1.5
43.0
38.9
6.8
24
84
8.0
6.9
4.7
2.8
-0.6
3.4
4.7
6.3
1.5
2.7
4.4
44.5
40.1
-7.6
-4.3
47.7
41.3
6.8
23
74
7.0
6.0
4.5
3.9
-2.4
3.7
3.1
3.5
0.5
2.6
3.5
48.4
45.0
-9.5
-4.7
64.2
43.3
6.8
21
72
6.0
7.0
4.9
3.1
-1.0
2.7
3.0
4.0
0.8
2.6
4.4
61.3
56.9
-9.4
-4.1
71.2
45.8
6.8
19
61
5.0
Real GDP, % change

Consumption
Investment
Net trade
% Dec/Dec
Exports
Imports
% of GDP
Short term
Source: J.P. Morgan Economics, 1. Contribution to growth of GDP. 2. Debt with original
Key Financial Data

EPS Growth
2010
2011E
31.0
2012E
-3.2
2013E
10.8
P/E
22.2
12.3
12.7
11.4
ROE
16.2
24.6
20.1
19.5
Yield
2.4
2.7
2.7
3.0
12Mth Fwd P/E

32.00
We remain positive on the internal demand outlook in
Peru and consequently recommend exposure to domestic
cyclical stocks while avoiding commodities. Our top pick
in Peru is Credicorp, which should benefit from a leading
competitive position in the country and one of the lowest
(close to 25%) banking penetration rates in the region. In
addition, it is trading below historical multiples and at a
discount to the rest of Andean banks.
24.00
+1SD
16.00
8.00
-1SD
0.00
95
97
99

.
114
2005-09
01
03
05
07
10
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top pick
Top pick
Credicorp
Price (US$)
Ticker
Rating
Mkt cap
(US$MM)
P/E (x)
12E
13E
EPS (US$)
12E
$136.56
BAP
OW
10,892.03
14.7
12.5
9.29
13E
Div. yield
13E (%)
ROE
13E (%)
10.94
2.2
20.0

1200
Absolute
FWD PER
(1644)
(3385)
1000
800
600
400
PER
(2272)
PBR
(1542)
DY
200
(1744)
0
(3947)
(5373)
500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000
0
110
3.5
105
3.3
100
3.1
2.9
2.7
J.P. Morgan

end Dec 12: 2.57
end Mar13: 2.56
end June 13: 2.56
2.5
Dec 04 May 06
Sep 07
Dec 08 May 10
Sep 11
90
2012
85
Consensus
2013
95
Dec 12
80
Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12
115

21 November 2012
Loan growth
30%
25%
20%
15%
14%
10%
5%
0%
Jan-12
Consumption and GDP
2010
2008
2006
2004
2002
2000
GDP
1998
1990
1988
1986
1984
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
PCE
Source: National Statistical Coordination Board
Growth by decade
7.0
4.5 4.7
5.0
4.0
3.0
2.0
1.0
-
1951-1960 1961-1970 1971-1980 1981-1990 1991-2000 2001-2011

Private consumption (%)
Source: CEIC
.
116
Jan-11
Source: Central Bank of the Phils.
6.0
Our top picks in the Philippines are composed of
companies with impressive earnings growth. Ayala Land
leads the pack, with 21% EPS growth in 2013E.
Noteworthy too is Cebu Air, as next year should reverse
the 2012E share underperformance by refuting
overblown competition concerns. Jollibee, on the other
hand, would be the best consumption proxy, in our view.
Finally, Metro Pacific and Ayala Corporation are our top
infrastructure-driven-growth picks.
Jan-10
Jan-09
Jan-06
Jan-08
Jan-05
Jan-07
Jan-04
1996
Jan-03
1994
-10%
Jan-02
-5%
1982

We will continue to track government progress on its
infrastructure program, after an uneven year (only a
single project worth US$238MM). We will also be
looking at increased expenditures in the fiscal
programme as a preferred way to exhibit fiscal gains
(underspending covering up for rather tepid 15% tax
revenue increases). Disappointments in these two data
points may not necessarily result in a markedly worse
macro, but could potentially reverse the positive
sentiment.
J.P. Morgan Securities Philippines, Inc.
1992

As a mostly domestic-demand-driven economy with
attractive demographics, The Philippines should perform
well even amid anemic global growth. Remittances,
which have proven their resiliency in previous adverse
global economic conditions, should remain a key driver
and account to close to 10% of GDP.
(632) 878 1188, gilbert.y.lopez@jpmorgan.com

Bloomberg JPMA LOPEZ <GO>
Jan-01
The Philippines micro investment case

The Philippines stands out as a country with improving
economic growth, with consumption picking up (retail
same store sales at c10%) along with a new-found
investment upcycle. The pervasiveness of record-low
interest rates is a key driver of these positive trends, with
policy rates of 3.5% forecast to come off further in 1Q13.
This should help drive a further re-rating in corporate
earnings, which we forecast to accelerate to 17% growth
in 2013E.
Gilbert LopezAC
Jan-00
Philippines
Jan-99
Adrian Mowat
(852) 2800-8599
GDP (%)

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Ayala Land
Cebu Air
Ayala Corp.
Stocks to avoid
Globe Telecom
Meralco
Union Bank of the Phils.
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
23.55
57.20
105.70
4.14
443.00
ALI PM
CEB PM
JFC PM
MPI PM
AC PM
OW
OW
OW
OW
OW
7,408
848
2,678
2,349
6,257
1,140.00
279.00
107.00
GLO PM
MER PM
UBP PM
UW
UW
UW
3,675
7,546
1,665
P/E (x)
EPS (LC)
13E
13E
12E
34.3
14.0
33.0
18.5
23.1
28.9
11.6
25.4
15.4
17.6
0.69
4.09
3.21
0.22
19.17
15.3
18.0
10.9
15.3
16.9
10.1
74.6
15.50
9.85
Div. yield
13E (%)
ROE
13E (%)
0.83
4.92
4.17
0.27
25.13
1.3
0.0
1.1
1.0
0.9
14.7
12.9
18.8
0.0
12.6
74.9
16.50
10.59
7.5
2.8
2.8
30.8
24.6
14.2
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 31 October 2012.
Fiscal position and long bonds
25.00
PCOMP WEEKLY CHART + MSCI Philippines Relative (lower Panel)
20.00
15.00
10.00
Fiscal position (Phpm)
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
Jan-02
Jan-01
5.00
Jan-00
80,000
60,000
40,000
20,000
(20,000)
(40,000)
(60,000)
(80,000)
(100,000)
(120,000)
10-yr bond yields (RHS)
Source: CEIC
Remittances
Remittances (RHS)
Source: CEIC
35%
30%
25%
20%
15%
10%
5%
0%
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
Y/Y % (LHS)
-5%
Source: Bloomberg.
Absolute view (PCOMP): Bearish monthly RSI divergence

+ bearish weekly RSI divergences suggest increasing risks
to Sep11 uptrend-line. We should note however that
stochastics are not in a sell mode, unlike Asean peers.
Relative view (MSCI Philippines vs. MXAPJ): Relative
performance is holding up better than Asean peers and
remains above the long-term uptrend. We find MSCI
Philippines index substantially better positioned than other
ASEAN markets.
While we are concerned about absolute performance for
PCOMP, we do see merit in holding long relative positions
in the Philippines given substantially better indicator/
trend positioning.
117
Adrian Mowat
(852) 2800-8599

21 November 2012
Poland & Central Europe

Poland & Central Europe micro investment case
The case for Poland and Central Europe earnings growth
in 2013 is poor the growth slowdown in core Europe
hurts. The buy case for Poland is mostly about dividends,
driven by the governments need to move cash into the
budget from cash-rich companies. The low weight of
equities in Polish pension funds, more acute given low
long-term bond yields, offers upside when (or if) the
pension funds switch back to stocks.
David Aserkoff, CFA
AC
(44-20) 7134-5887
Michal Kuzawinski
(48-22) 44 19534
michal.kuzawinski@jpmorgan.com
Bloomberg JPMA KUZAWINKSI<GO>
GDP growth in Central Europe

2.5
2012
2.0

Anemic global growth, worsened by the euro-zone
recession hurts. 2H12 economic growth in Poland has
surprised to the downside and slowed after the 1H buildup to the European football championships. We are
worried about the impact on the bank sector: upside risks
to NPLs and the lack of growth.
The key deltas for the Polish market are: 1) dividends
from the big state-owned companies (KGH, PGE) as well
as PZU; 2) a pick-up in domestic growth indicator; and 3)
the interplay of all-time lowest bond yields and all-time
biggest equity underweights. Given the dividend yield on
the WIG 20 is above the 10-year bond yield, pension
funds seem to believe that dividends will shrink in
nominal terms over the next decade.
Our top picks are: PZU steady underlying earnings
growth with upside surprise possible on the next dividend.
Erste Bank one of the last healthy banks trading sub1x
P/BV. Their stable businesses in Czech and Austria look
healthy enough, as does their growing CT1 ratio with
upside potential as and when Romania returns to
profitability. Bogdanka is our top pick in Polish SMIDs:
we are confident of volume growth and resilient soft coal
pricing. Our Avoids are two coking coal producers, JSW
and NWR, and Bank Pekao where we see downside to
consensus 2013 numbers and few (if any) positive
catalysts.
2013
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
Czech
Hungary
Poland
Poland: dividend yield v 10 year bond yield

10
8
6
4
2
0
Nov-02
Nov-04
Nov-06
Nov-08
Polish Div. Yield
Nov-10
Nov-12
Polish 10 yr. Yield
Source: DataStream, I/B/E/S, Bloomberg, updated as of 8 November 2012
Poland: weight of equity in Polish pension funds v equity

ownership of the free float
43%
As % of total assets (LHS)
as % of WIG mkt cap (RHS)
0.15
0.13
38%
0.11
33%
0.09
28%
0.07
23%
0.05
18%
Jan 01
0.03
Jan 03
Jan 05
Jan 07
Jan 09
Jan 11
Source: J.P. Morgan research, Polish Financial Supervision Authority, End-Oct data as of
7 November 2012
118

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Erste Bank
PZU
LW Bogdanka
Stocks to avoid
JSW
Bank Pekao SA
New World Resources
Price (LC)
Code
Rating
19.9
384.5
120.1
EBS AV
PZU PW
LWB PW
OW
OW
OW
86.2
154.7
267.4
JSW PW
PEO PW
NWR LN
UW
N
UW
P/E (x)
12E
13E
10,176
10,182
1,237
23.9
11.2
11.7
10.6
11.2
8.4
3,106
12,324
1,090
9.0
13.3
49.2
10.5
11.0
22.1
Mkt cap
(US$MM)
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
0.85
34.16
10.23
1.92
34.24
14.28
1.6%
0.0%
6.9%
5.9%
21.4%
19.5%
9.52
11.5
0.07
8.18
13.9
0.15
2.6%
8.1%
-
10.8%
16.6%
-
Source Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 2 November 2012..
Poland: Long-term forward P/E chart

18
12M Fwd PE
Poland: 2012 and 2013 consensus earnings forecast
Avg Poland
-1sd
+1sd
110
16
105
14
100
12
95
10
90
85
6
Nov-02
Nov-04
Nov-06
Nov-08
Nov-10
80
Feb-11
Nov-12
2012
Jul-11
Nov-11
Mar-12
2013
Jul-12
Source: Bloomberg, DataStream, I/B/E/S, updated as of 8 November 2012.
Source: DataStream, I/B/E/S, updated as of 8 November 2012.. Feb 2011 = 100
Hungary: Long-term forward P/E chart
Czech Rep: Long-term forward P/E chart
14
12M Fwd PE
Avg Hungary
-1sd
+1sd
20
Avg Czech
-1sd
+1sd
18
12
16
10
14
12
10
6
4
Nov-02
12M Fwd PE
Nov-12
8
Nov-04
Nov-06
Nov-08
Nov-10
Source: Bloomberg, DataStream, I/B/E/S, updated as of 8 November 2012.
Nov-12
6
Nov-02
Nov-04
Nov-06
Nov-08
Nov-10
Nov-12
Source: Bloomberg, DataStream, I/B/E/S, updated as of 8 November 2012..
119
Adrian Mowat
(852) 2800-8599

21 November 2012
AC
Russia
Alex Kantarovich, CFA
Russia micro investment case

We retain our constructive view on Russia translating
into a neutral position within the CEEMEA universe.
Russias economy is a leveraged play on the global
macro where grounds for optimism look thin. However,
the anemic earnings outlook now appears to be
adequately priced in while the concerted stimulus efforts
by G7 central banks should see a reduction of abnormally
high risk premium.
Bloomberg JPMA KANTAROVICH<GO>
(7-495) 967-3172
alex.kantarovich@jpmorgan.com
J.P. Morgan Bank International LLC
MSCI Russia Index 12M FWD P/E discount to EM

10%
0%
-10%
-20%
-30%
-40%
-50%

Weak global macro directly affects demand for pivotal
export commodities. Oil price could be supported by the
secular uptrend in Asia, with the US intake likely flat,
however the EU recession is a headwind. Gas remains
hostage to the rising threat from the shale and LNG front
while feeling the heat from structural changes in Europe.
Outlook for materials is a hostage to the pace of
slowdown in China. By implication, in 2013, Energy and
Materials sectors are unlikely to show meaningful growth.
-60%
-70%
Dec-06
Jun-11
Dec-09
MSCI Russia Index P/E by sector

RU
25
EM
P/E 2013
20.6
20
15
10.3
10
5

Fading risk aversion may be compensating for the lack of
growth, yet going for high beta segments outright could
still be too risky. We consider that growth may remain
the scarcest commodity, a bad omen for many Russian
stocks. With stimulus likely weakening the USD, we
would overweight domestic growth stories over exporters.
Rising share supply is another consideration with the
additional freefloat potentially reaching $20 bn level, or
8% of MSCI Russia free-float; correspondingly tactical
allocations need to slalom around the major liquidity
events (Megafon, Rosneft, VTB, to name a few). While
things are quiet on the political front, we are watching
the confusing reform in Electrical Utilities as well as the
ongoing tag-of-war between the government and RNG.
Jun-08
Source: Bloomberg.
7.0
8.9
5.3
4.1
10.1
FN
EN
MT
10.9
6.8
12.1
4.9
UT
TC
Aggt
CS
Source: Bloomberg.
Russia vs. EM: 2013 EPS growth by sector

28%
30%
25%
20%
RU
EPS growth 2013

19%
17%
15%
7%
10%
8%
6%
EM
20%
17%
12%
7%
14%
8%
5%
1%
0%
-5%
-3%
EN
FN
MT
UT
TC
CS
Source: Bloomberg.
Aggregate earnings (RUB bn)

3900
2011A
2012
2013
3700
3600
3500
3400
3300
3200
3100
3000
Nov-11
Jan-12
Source: Bloomberg.
120
10.0
8.8
3800
The above-mentioned general themes coupled with
name-specific attractions leads to our top-pick short-list:
Sberbank, Rosneft, TMK, Globaltrans, E.ON Russia,
Yandex and Magnit. We recommend avoiding MTS,
Alliance Oil, Mechel prefs and X5.
20.1
Mar-12
May-12
Jul-12
Sep-12
Aggt

21 November 2012
Adrian Mowat
(852) 2800-8599

Price (LC)
Top picks
Sberbank
Rosneft
TMK
Globaltrans
E.ON Russia
Yandex
Magnit
Stocks to avoid
MTS
Alliance Oil
Mechel prefs
X5
Code
Rating
$2.92
$8.10
$14.46
$18.38
$0.083
$22.46
$37.00
SBER RX
ROSN LI
TMKS LI
GLTR LI
EONR RX
YNDX US
MGNT LI
OW
OW
OW
OW
OW
OW
OW
$16.90
$51.75
$2.31
$19.12
MBT US
AOIL SS
MTL/P US
FIVE LI
UW
UW
UW
N
P/E (x)
12E
13E
65,222
75,055
3,384
3,285
5,243
7,254
17,494
5.8
8.0
9.8
9.9
6.9
26.0
28.5
5.5
8.1
7.2
7.8
6.4
17.9
25.3
16,844
1.325
642
5,192
10.4
5.1
n.a.
23.1
9.8
4.5
n.a.
15.4
Mkt cap
(US$MM)
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
$0.50
$0.97
$1.46
$1.85
$0.017
$0.85
$1.44
$0.53
$1.00
$1.68
$2.36
$0.012
$1.19
$1.67
4.2%
2.7%
n.a.
3.8%
4.3%
n.a.
1.0%
21.9%
12.5%
17.2%
22.2%
17.0%
27.3%
23.0%
$1.01
$1.76
$(0.63)
$0.83
$1.40
$1.77
$0.86
$1.22
8.2%
n.a.
11.3%
n.a.
45.6%
12.3%
7.4%
22.0%
Brent vs. aggregate oil product demand ($/bbl)

mn bbl/day
$/bbl
122
Brent vs. DXY index ($/bbl)
Brent l.s.
95
Demand r.s.
102
90
82
62
85
42
22
2004
2005
2006
2007
2008
2009
2010
2011
2012
80
90
88
86
84
82
80
78
76
74
72
70
May-06
DXY l.s.
Brent r.s.
135
95
75
55
May-07
May-08
May-09
May-10
Source: Bloomberg
Brent futures curves ($/bbl)
MSCI Russia Index mcap split by sector (%)

Dec-10
Consumers, 3%
Dec-11
105
155
115
Source: Bloomberg.
110
$/bbl
Apr-11
Apr-12
35
Utilities, 4%
Nov-12
Telecoms, 8%
100
95
Materials, 10%
90
85
1M
3M
6M
1YR
2YR
3YR
4YR
Financials, 15%
Source: Bloomberg.
Energy, 59%
Source: Bloomberg.
121

21 November 2012
South Africa
South Africa micro investment case
South Africa is a defensive emerging equity market, but
given that we are adding more beta to the portfolio, our
EM Strategy team is UW.
MSCI SA has outperformed MSCI EM by 6.5% in local
currency terms year-to-date in 2012. However, MSCI SA
has underperformed MSCI EM by 1.7% in dollar
currency terms over the same time period, given
significant rand weakness. The rand remains a wildcard,
but has already been sold-off quite significantly (-6.3%
against the dollar), and appears fairly valued at current
levels, in our view. While record portfolio bond inflows
of R85.4bn ($10.6bn) year-to-date in 2012 have been the
largest financing item for the current account deficit in
recent quarters, we believe that further rand weakness is
unlikely, unless we see bond investors switching out of
credit into equities in an environment of strong global
macro economic growth.
Meanwhile, the SA equity market is currently trading at a
premium to the MSCI EM with the MSCI SA forward
P/E for 2012 at 11.5x vs 10.3x for MSCI EM.
Given our concerns about the global macro backdrop, we
stay defensively positioned in proven SA growth sectors
with solid earnings growth records. As such, we remain
constructive on domestic demand sectors in SA given
extremely high real wage settlements in the mining
industry, which are likely to permeate through to other
sectors, as well as a very accommodative monetary
policy environment domestically. Earnings for Food
Retailers, Mobile Telecoms, Beverages, and Food
Producers have been the most resilient even in
recessionary scenarios, falling by 5.3%, 6.1%, 9.4% and
10.7% on average respectively during the previous
recessions in 2003 and 2009. We reiterate our
preference for quality companies, with strong balance
sheets, improving margins, and high dividend yields
in a soft economic patch over the next few years.
Deanne Gordon
AC
(27-21) 712-0875
deanne.gordon@jpmorgan.com
Bloomberg JPMA GORDON<GO>
J.P. Morgan Equities Ltd.
While value stocks have lagged in year-to-date in 2012,
we still continue to favour growth stocks in an
environment of relative growth paucity. Our top stock
picks include: Naspers, Aspen, and Vodacom.
Ranked Betas of emerging markets to MSCI EMF
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Israel
Czech
Chile
India
Malaysia
Philippines
SA
Hungary
Poland
Taiwan
Indonesia
Argentina
China
Thailand
Korea
Turkey
Mexico
Russia
Brazil
Adrian Mowat
(852) 2800-8599
Source: DataStream, J.P. Morgan calculations.
SA policy rate
25
15
5
-5
-15
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Nominal
SA CPI inflation
14
12
10
8
6
Inflation
target band

If the globe tips into recession then SA will move back
into favour. We continue to monitor global growth for a
strong rebound would drive us back into SA resources.
122
Real
Source: SARB.
2
0
Estimate
01
02
03
04
05
06
Source: Stats SA, J.P. Morgan estimates.
07
08
09
10
11
12
13

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Naspers
Vodacom
Aspen
Stocks to avoid
ArcelorMIttal SA
Price (LC)
Code
Rating
56600
11200
15534
NPN SJ
VOD SJ
APN SJ
OW
OW
OW
3589
ACL SJ
UW
P/E (x)
12E
13E
26620.0
19002.4
8068.7
27.9
13.9
21.8
22.7
13.1
18.6
1824.2
-527.8
12.9
Mkt cap
(US$MM)
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
2025
802
711
2496
855
835
0.71
6.7
1.3
14.9
63.6
18.8
-6.8
279
-0.6
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 2 Nov, 2012.
GEM fund managers' relative UW / OW positions in SA equities
12
9
6
3
0
-3
-6
-9
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: MSCI, EFPR
MSCI SA vs. MSCI EM 12m forward P/E ratio

1.4
Currency performance vs. US$: 2012 year-to-date
Average: 0.90x
1.2
Source: Bloomberg.
MSCI SA vs. MSCI EM Price-to-Book ratio

1.7
1.6
Average: 1.28x
1.5
1.0
1.4
0.8
1.2
1.3
1.1
0.6
0.4
HUF
CLP
PLN
MXN
PHP
NZD
SGD
KRW
TRY
NOK
TWD
GBP
CAD
THB
RUB
AUD
CZK
CHF
EUR
DKK
INR
ILS
JPY
IDR
ZAR
BRL
1
0
-1
-2
-3
-4
-5
-6
-7
-8
1.0
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Datastream
0.9
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Datastream
123
Adrian Mowat
(852) 2800-8599

21 November 2012
South Korea
Korea micro investment case
We are generally cautious about the Korea equity market
in 2013 due mainly to growing macro volatility across
the globe as well as local political uncertainties related to
the upcoming presidential election. However, we are
biased toward a scenario that the equity market is on a
gradually rising trajectory in 2013, as we expect Koreas
real GDP to recover to above the 3% level next year
(from 2.3% in 2012E), with exports to rise and fiscal
policy to turn more supportive. Despite vulnerable
movements over the progress of global risk aversion, a
gradual pace of KRW appreciation should remain intact
in 2013, resulting in continuing foreign money inflow
into the domestic credit and equity markets.
Scott SeoAC
(82 2) 758 5759, scott.seo@jpmorgan.com
Bloomberg JPMA SEO <GO>
J.P. Morgan Securities (Far East) Ltd., Seoul Branch
MSCI KoreaRelative to APxJ and EM

Index (2011-12-29 = 100)
110
105
100
95
90
85
Dec-11
Feb-12
Apr-12
rel. to MSCI AxJ
Jun-12
Aug-12
rel. to MSCI EM
Source: Bloomberg
KoreaRelationship between KOSPI and USD/KRW

Index

As a (relatively) small open economy focusing on
exports, KRW strength combined with weak spending
from DM counties could be negative for Korean
exporters, despite their continuing efforts for
geographical production diversification during the last
decade, resulting in share price corrections in the ST.
However, given our macro assumptionmodest lift in
global growth taking shape despite wide regional
divergences, large exporters such as Samsung
Electronics and Hyundai Motor are expected to convey
relatively solid earnings in 2013.
Oct-12
USD/KRW
2,200
800
1,800
1,400
1,300
1,000
600
200
2001
2003
2005
KOSPI Index
1,800
2007
2009
2011
USDKRW Curncy (RHS, Inverted)
Source: Bloomberg
KoreaKTB yield curve

%
6.0
Our top Korean picks for 2013 are Hyundai Mipo DY,
Hyundai Motor, KEPCO, LGE, and Orion. Our top
avoids are Honam Petro and S-Oil.
124
4.0
3.0
2.0
3M
6M
1Y
6-Nov-12
2Y
8-Nov-11
3Y
5Y
10Y
5-Nov-10
20Y
6-Nov-09
Source: Bloomberg
Telco.
Health
Care
IT
Materials
Consumer
stap.
Consumer
disc.
50
30
10
-10
-30
Industrials
Energy
KoreaEPS growth estimates by sector (FY13E)
Financials
5.0
Utilities

The BoKs policy rate direction should be the most
critical for fund movements between the credit and the
equity market. The valuation of the credit market seems
to imply 25-50bp of further rate cuts in 2013, while our
economic research team maintains their view of no rate
change in 2013. If shipbuilding orders pick up in 2H13,
together with the global economy returning to an abovetrend growth, the KRW could appreciate much faster
than our estimate. A downward earnings revision for
Korean companies should continue for the time being
amidst disappointing earnings announcements in 3Q12.
However, we expect an upward earnings cycle to kick off
from 2Q13 once we have better visibility on KRW
movement and policy rate direction.
Source: IBES, MSCI, J.P. Morgan estimates, Note: Average earnings growth calculated
based on earnings aggregate of MSCI constituents. Consensus numbers used for stocks
not covered by JP Morgan under J.P. Morgan forecasts calculations

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Hyundai Mipo Dockyard
Orion
LG Electronics
KEPCO
Hyundai Motors
Stocks to avoid
Honam Petrochem
S-oil
P/E (x)
EPS (LC)
12E
13E
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
115,000
1,052,000
76,700
28,200
208,000
010620 KS
001800 KS
066570 KS
015760 KS
005380 KS
OW
OW
OW
OW
OW
2,109
5,754
11,507
16,596
42,004
20
32
16
NM
6
13
28
7
51
6
5,879
32,430
4,903
-3,088
32,432
231,500
101,000
011170 KS
010950 KS
UW
UW
6,762
10,424
13
14
13
12
17,966
7,472
13E
Div. yield
13E (%)
ROE
13E (%)
8,918
37,780
11,266
551
34,979
1.3
0.4
0.0
0.0
1.1
5.0
17.6
12.7
0.7
19.8
18,394
8,156
0.8
4.0
9.3
15.6
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of November 6 2012.
KoreaMSCI Korea 12M-fwd P/BV
KOSPI WEEKLY CHART + MSCI Korea Relative (lower Panel)
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
2005
2006
2007
MSCI Korea
2008
2009
Average
2010
+1 stdev
2011
2012
-1 stdev
Source: Datastream.
KoreaMSCI Korea EPS forecasts trend

2012-01-03 = 100
102
Source: Bloomberg.
100
Absolute view (KOSPI): KOSPI appears to be breaking

down from its Oct08 uptrend after facing resistance from the
May11 downtrend. While the breakdown is not fully
confirmed, a weak MACD set up (bearish crossover) suggests
room for caution. 38.2% and 50% retracements of the
Oct08-May11 rally are at 1774/1633 (6%/14% below).
98
96
94
92
Jan-12
Mar-12
May-12
2012E
Jul-12
2013E
Sep-12
Nov-
Relative view (MSCI KR vs. MXAPJ): MSCI Koreas

outperformance uptrend, in force since late 2008, is facing a
break-down threat with under-performance implications.
Source: Datastream.
Both the absolute and relative views on Korea are bearish.

We see a potential breakdown from a long-standing uptrend
to result in deeper pullbacks and in the process driving
under-performance after a sustained four-year
outperformance.
125
Adrian Mowat
(852) 2800-8599

21 November 2012
Taiwan
Taiwan micro investment case
As Taiwans economy is highly geared to exports, the
equity market is vulnerable to the external environment.
The pace of economic recovery in China and the US will
be key factors for stock sentiment and performance, in
our view, especially in the technology sector, which
accounts for 55% of market cap.
Currently, consensus is expecting strong FY13 EPS
growth, implying an all-round cyclical rebound. This
optimistic bias also occurred at the beginning of 2012,
despite weak GDP growth. However, a 43% earnings
downward revision YTD indicates to us that the end-ofyear estimates are too optimistic. Now we see the market
holding a similarly optimistic view on EPS growth in
2013. This suggests potential downward earnings
revisions in the future as we expect anemic global
economic growth. Before we see a meaningful economic
recovery, the equity market is likely to be less liquid than
in 2011/12. As the result, we expect earnings profile to
be the sole driver of the stock performance. We
recommend focusing on 1) companies with a strong
technology edge or exposed to new disruptive products
(such as iPad Mini), and 2) companies that can constantly
deliver an increasing cash dividend over time.
We will watch the following macro data points to gauge
the overall economic outlook and earnings momentum.
(1) Global manufacturing PMI indicators as Taiwan is
an export-oriented country, the global PMI indicators are
a leading barometer for manufacturing sectors. (2)
Inventory level inventory is a leading indicator for the
technology sector. (3) Energy prices the government
raised electricity prices in 2Q12 and current energy
prices are closely linked to global prices. Any additional
pressure from the global energy market would likely lead
to inflation and subsequent monetary policy adjustment.
Nick LaiAC
(886-2) 2725-9864, nick.yc.lai@jpmorgan.com
Bloomberg JPMA LAI<GO>
J.P. Morgan Securities (Taiwan) Limited
3Q12 earnings surprise: big caps performed better

Earning
surprise
5.6%
-19.4%
-34.7%
-1.6%
YTD earnings revisions

Material -59%
Tech
-48%
Overall Taiwan
-43%
Financial
-15%
Consumer staples
11%
Consumer discretionary
21%
-70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30%
Source: Datastream, J.P. Morgan.
Manufacturing PMI: China vs. US vs. Global vs. Taiwan

Manufacturing PMI
Index, sa
China
Markit PMI
70
Global PMI
60
50
40
30
20
Taiwan PMI
US PMI
04
08
06
12
10
Source: CEIC, J.P. Morgan estimates
Producer inventory index vs. inventory-to-shipment ratio

Taiwan: producer inventory and shipment
Index, 2006 = 100, sa
140
Inventory to shipment
ratio
Producer inventory
index
130
Ratio
1.6
1.4
110
1.2
100
1.0
90
80
04
05
06
07
Source: CEIC, J.P. Morgan estimates
126
Index
weightings
16.7%
8.2%
5.0%
29.9%
Source: Bloomberg, J.P. Morgan.
120
Our top picks are: TSMC, ASE, Quanta, Far EasTone
and Mega Financials. Our top avoids are HTC, Catcher
and ASUS as a result of their weak earnings profile.
# of reported
companies
4
15
13
32
By market cap
Big cap (> US$8bn)
Mid cap (within US$2bn/8bn)
Small cap (< US$2bn)
Overall technology sector
08
09
10
11
12
13
0.8

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
TSMC
ASE
Quanta
Far EasTone
Mega Financials
Stocks to avoid
HTC
ASUS
Catcher
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
89.9
21.9
70.6
67.5
21.6
2330 TT
2311 TT
2382 TT
4904 TT
2886 TT
OW
OW
OW
OW
OW
79,682
5,764
9,430
7,522
8,321
197.0
307.5
125.5
2498 TT
2357 TT
2474 TT
UW
N
UW
5,843
8,059
3,299
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
6.3
1.7
6.4
3.5
1.8
6.7
2.2
8.1
4.3
1.9
3.3%
3.0%
5.7%
7.0%
5.8%
22%
14%
22%
19%
10%
19.6
29.7
12.1
7.2
30.0
11.9
7%
17%
13%
7.9%
5.2%
0.0%
13E
12E
14.2
12.7
11.0
19.3
12.2
13.5
10.0
8.7
15.7
11.2
10.0
10.3
10.3
27.3
10.3
10.6
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
TWSE WEEKLY CHART + MSCI Taiwan Relative (lower Panel)
Others
Auto
Food
Construction
Rubber
Other elect.
Semicon
Components
Biotech
Info service
Cement
Electronics
Elec&Machinery
Paper
Computer
Textiles
Chemical
Elec. Appliances
Financials
Machinery
Tourism
Transportation
Opto elec.
Plastic&Chemical
Depart.
Steel
Energy
Plastic
Glass&Porcelain
Elec. Distribution
Communication
YTD sector performance: upstream over downstream in tech space
Semiconductor: quarterly SCM sales trend (US$M)

18,000
120%
16,000
14,000
100%
SCM sales
Growth (Y/Y)
80% Source: Bloomberg.
12,000
60%
10,000
40%
20%
6,000
0%
4,000
-20%
2,000
-40%
-60%
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13E
3Q13E
8,000
Source: Company data, J.P. Morgan estimates
Absolute view (TWSE): TWSE is stuck in a triangle on

monthly charts, but more importantly id showing an H&S
Top on weekly charts (neckline 7000). Stochastics set-up is
negative but we need a specific neckline break from the
pattern to look for shorts.
Relative view (MSCI Taiwan vs. MXAPJ): MSCI Taiwans
unerperformance Since Feb'11 remains in place with the
downtrend line on the relative index a formidable resistance
line.
Somewhat similar to KOSPI, the threat of an H&S Top
for TWSE is a large concern, with the potential to pullback
closer to 5000. We would look for specific neckline break to
short meantime, we recommend being underweight.
127
Adrian Mowat
(852) 2800-8599

21 November 2012
Thailand
Thailand micro investment case
We remain positive on Thailand for 2013. Key drivers of
this view are a robust domestic macro backdrop, a
sustained low-interest-rate environment, undemanding
relative valuation, and potential to beat consensus
expectations. Risks are: 1) significant acceleration in
inflation; 2) rise in political noise; 3) cash calls. We stay
OW on Financials (Banks/Property), and are N on
Consumer as robust SSSG will be balanced against
wage-driven operating margin pressure. We are UW on
Energy and Telecom. We are N on Materials as a hedge
against a strong global recovery.
Despite being a relatively open economy with
exports/GDP of 70%, Thailand has several domestic
drivers that can drive growth in a climate of flat global
demand growth: 1) rising income from farm output,
government subsidies, and higher minimum wages; 2)
continued HH savings draw down to fund leveraged
spending; 3) accelerating public infrastructure spending
on flood protection and transportation; 4) SME capex
spending and FDI expansion underpinned by Japanese
investment. System liquidity should expand in 2013 as
softer imports push the CA back into 1.2% of GDP
surplus. This will foster domestic credit growth
momentum, against a benign rate backdrop. A second
successive corporate tax cut (from 23% to 20%), and
possibility of expanded fiscal stimulus provide a unique
buffer against weak global growth.
Farm income growth, consumer confidence and ramp-up
of public infrastructure spending are key domestic data
points, while acceleration of core inflation to 3% would
signal tighter monetary policy.
SCB and PS benefit from positive forecast momentum,
while CPF is set to o/p as operating pressures abate in
2013. 20% volume growth would propel PTTEP after the
completion of capital-raising. EGCO should see
consensus earnings upgrades in 2013/14 from
underappreciated solar capacity, and new rounds of IPP
biddings scheduled for late 2013 where we expect EGCO
to win at least two new IPPs. Among our avoids, TISCO
may de-rate on slower auto h-p growth after an
impressive 2012, while we are cautious on TOP given a
bearish outlook on refining margins supported by rising
supply relative to demand over the next three years.
128
Sriyan PieterszAC
(662) 684 2670,sriyan.pietersz@jpmorgan.com
Bloomberg JPMA PIETERSZ<GO>
JPMorgan Securities (Thailand) Limited
Robust domestic demand
Source: National Economic & Social Development Board, J.P. Morgan Economics.
Consumer lending accelerating

Thailand: bank credit
THB bn, change over 6 months
400
300
Consumer loans
Corporate loans
300
225
200
150
100
75
-100
-75
-200
-150
05
06
07
08
10
09
11
12
13
Source: CEIC, J.P. Morgan Economics.
Rising HH income driving credit card and personal loans

Thailand: consumer bank credit
THB bn, change over 12 months, both scales
300
150
Housing and auto loans
200
100
100
50
Other loans
-100
-50
05
06
07
08
09
10
11
12
13
Source: CEIC, J.P. Morgan economics.
Farm income recovery on the cards

% Y/Y
Change in farm income

Change in crop price
Change in production
80
60
40
20
0
-20
-40
06
07
08
Source: Office of Agricultural Economics
09
10
11
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
PTT Exploration & Prod
Electricity Generating
Pruksa Real Estate
Stocks to avoid
Thai Oil
Tisco Financial Group
Price (Bt)
Code
Rating
Mkt cap
(US$MM)
12E
159.00
164.50
130.50
19.30
36.50
SCB.BK
PTTE.BK
EGCO.BK
PS.BK
CPF.BK
OW
OW
OW
OW
OW
17,582
17,795
2,239
1,391
9,209
65.50
47.00
TOP.BK
TISCO.BK
UW
N
4,354
1,115
P/E (x)
EPS (Bt)
13E
Div. yield
13E (%)
ROE
13E (%)
11.9
15.7
11.7
1.5
1.6
14.2
15.9
12.9
1.9
2.7
3.0
3.3
4.0
3.7
3.7
21.1
19.4
10.0
20.8
18.2
6.3
5.2
4.6
5.8
5.2
5.3
10.8
21.5
13E
12E
13.3
10.5
11.1
12.8
23.0
11.2
10.3
10.1
9.9
13.5
10.4
9.1
14.1
8.2
Rising liquidity, improving LDR
SET WEEKLY CHART + MSCI Thailand Relative (lower Panel)
Bt billion
2,500
%
140
130
2,000
120
1,500
110
1,000
100
90
500
80
70
00 01 02 03 04 05 06 07 08 09 10 11 12
Excess liquidity (LHS)
Loans to deposit ratio (RHS)
Source: Bank of Thailand.
Absolute valuation is at historical average...

x
25
Current 12-month f orward PE = 10.8x

+2stdev = 19.1x
20
+1stdev = 15.3x
15
Source: Bloomberg.
Average = 11.4x
10
-1stdev = 7.5x
5
-2stdev = 3.6x
0
01 02 03 04 05 06 07 08 09 10 11 12
Source: J.P. Morgan estimate and calculations.
Absolute view (SET): In sync with ASEAN markets, SET is

displaying a bearish RSI divergence on monthly charts and in
addition also on weekly charts. Stochastics has turned
negative and the risk of a downside break from the Oct11 up
channel has increased.
Relative view (MSCI Thailand vs. MXAPJ): Relative
performance for MSCI Thailand is capped by declining
Jul12 trendline and potentially testing outperformance
uptrend in force since 2010. Negative MACD cross-over for
relative index on monthly charts.
The Thai story, much like ASEAN peers, is looking tired on
absolute and relative charts. We recommend selling.
129
Adrian Mowat
(852) 2800-8599

21 November 2012
Turkey
Turkey micro investment case
Turkey is our sole OW in CEEMEA with three big
positives: 1) accelerating GDP growth and accelerating
EPS growth; 2) reasonable valuations especially where
low rates are not priced in; 3) improving current account
deficit (CAD) while its fast-approaching investment
grade status will reduce the cost/expand the availability
of capital account financing. We are mindful that big
SPOs (Halkbank and Turk Telekom) before year-end
could slow the rally.
Slower growth hurts Turkey, which needs firm export
markets to stop its current account from worsening. But,
the strong underlying growth in MENA/GCC (fiscal
stimulus and rebuilding) is offsetting weakness in
European exports. And the big declines in interest rates
(local and USD borrowing) should see domestic growth
picking up into 2013.
Domestic growth (IP, consumer confidence and bank
lending) and the current account (and the trade balance)
are two key indicators. Bank investors have been worried
about NIMs we think they nudge up from here on
lower funding costs. Turkey has one investment grade
rating investors are likely to watch for a second
upgrade, which may not come until 2H13 (or later).
David Aserkoff, CFAAC

(44-20) 7134-5887
ISE 100 since Jan 2010

75000
70000
65000
60000
55000
50000
45000
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
XU100 Index
Market P/E marginally above average

12M Fwd PE
Avg Turkey
-1sd
+1sd
14
12
10
8
6
4
Nov-02
Nov-04
Nov-06
Nov-08
Nov-10
Nov-12
Source: DataStream, I/B/E/S, Bloomberg, updated as of 9 November 2012
Our top picks in Turkey include: two banks (banks are
>50% of the market cap and >80% of the trading
volume): Vakifbank (still cheap on P/BV) and Yapi
Kredi (lower P/BV multiple with upside catalyst form
insurance sale); Emlak should benefit from a strong
pipeline of new projects and lower mortgage rates;
Turkcell is in the middle of a multi-year margin
expansion story with upside potential of a dividend; and
Koza Gold is one of our favorite gold companies
globally given its strong growth profile. Stocks to Avoid:
Petkim offers little growth at a high PE multiple;
Garanti Bank looks expensive versus Turkish peers on
P/BV v ROE; Turk Telekom pays a good dividend yield
but lack of top-line growth is a big negative.
130
Turkey: Earnings Yield/Bond Yield

2.1
Earn Yld / Bond yld
Avg. Turkey
-1sd
+1sd
1.9
1.7
Equity cheap
1.5
1.3
1.1
0.9
0.7
Bonds Cheap
0.5
Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12
Source: DataStream, I/B/E/S, Bloomberg, updated as of 9 November 2012.

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Vakif Bank
Yapi Kredi
Koc Holding
Turkcell
Emlak Konut
Stocks to avoid
Petkim
Turk Telekom
Garanti Bank
Price (LC)
Code
Rating
4.17
4.5
8.1
10.9
2.7
VAKBN TI
YKBNK TI
KCHOL TI
TCELL TI
EKGYO TI
OW
OW
OW
OW
OW
2.1
6.9
8.4
PETKM TI
TTKOM TI
GARAN TI
UW
OW
N
P/E (x)
12E
13E
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
5,813
11,246
11,783
13,395
3,914
8.1
10.2
10.4
21.6
16.0
7.0
8.2
9.8
20.0
21.2
0.52
0.44
0.79
0.50
0.17
0.60
0.55
0.84
0.55
0.13
0.0
0.0%
3.5%
0.0%
0.0%
13
14.8%
13.1%
0.0%
7.7%
1,161
12,990
20,034
nm
8.4
10.5
15.7
8.2
9.5
-0.03
0.78
0.81
0.13
0.80
0.89
3.3%
10.1%
3.7%
7.7%
42.0%
17.6%
Mkt cap
(US$MM)
Monthly foreign flows to the stock market

1,000
800
600
400
200
0
(200)
(400)
(600)
(800)
Daily Trading volumes by sector

700
Av.Daily Value Traded 3m (USD MN)
600
75%
500
400
300
200
100
0
Jun-11
Oct-11
MSCI Turkey
Feb-12
Jun-12
Total ISE
Banks
ex-Banks
Monitoring the Trend in Turkeys EPS Forecasts (2012 and 2013)
110.0
11
105.0
10
100.0
95.0
90.0
2012
Mar-12
2013
Source: DataStream, I/B/E/S, updated as of 9 November 2012.
5%
5%
10%
GTTRY10YR Corp and GTTRY2YR Corp yield chart

12
Nov-11
3%
Source: DataStream, Bloomberg, updated as of 9 November 2012
115.0
Jul-11
2%
Oct-12
Source: J.P. Morgan, ISE, data as of Oct 2012, updated on 9 November 2012.
85.0
Feb-11
1%
Jul-12
Nov-12
6
Apr-10
Oct-10
Apr-11
GTTRY10Y Govt
Oct-11
Apr-12
Oct-12
GTTRY2Y Govt
131
Adrian Mowat
(852) 2800-8599

21 November 2012
132

21 November 2012
Table of Contents
Auto and auto parts ................................................134
Banks .....................................................................136
Chemicals ..............................................................138
Consumer ...............................................................140
Education services .................................................142
Healthcare ..............................................................144
Infrastructure, capital goods & construction ..........146
Insurance ................................................................148
Internet ...................................................................150
Metals and mining .................................................152
Oil and gas .............................................................154
Pulp & paper ..........................................................156
Real Estate .............................................................158
Semiconductors ......................................................160
Software IT services ..............................................162
Technology hardware.............................................164
Telecommunications ..............................................166
Transportation ........................................................168
Utilities & power equipment ..................................170
Sector Overviews
Adrian Mowat
(852) 2800-8599
133
Adrian Mowat
(852) 2800-8599

21 November 2012
Auto and auto parts

Auto and auto parts micro investment case
Investment in the automobile sector, in our view, is about
identifying a secular or structural trend and holding onto
it throughout both the industry cycle and earnings cycle.
We see SUVs and luxury cars as two areas that investors
should focus on in 2013 despite their year-to-date
outperformance. Their rally will continue, in our view, as
consensus earnings revisions in a cyclical sector rarely
occur just once but in sequence either up or down.
Conversely, we would avoid the mid-to-upper-end
segment (retail price point Rmb200-300,000/unit) due to
competition or substitution effect from entry-level luxury
cars that are priced at a similar level.
We believe major risk facing automobile sector is the
rising overcapacity risk on the slowdown in car demand,
especially in the low-end and mid-range car segments
from 2H12. Consequently, we take a relatively cautious
view on passenger vehicle producers that have a lot of
exposure to these segments because of the concern that
auto producers may face margin erosion pressure.
Nick LaiAC
(886-2) 2725 9864, nick.yc.lai@jpmorgan.com
Bloomberg JPMA LAI <GO>
Share price performance of top picks

250
200
150
100
50
0
Jan-12
Jul-12
Apr-12
Oct-12
Geely
Brilliance China
Baoxin
Hyundai
Mahindra & Mahindra
Source: Bloomberg.
Share price performance of stocks to avoid

140
130
120
110
100
90

Pricing environment and sales momentum are two key
factors in Chinese auto market in 2013. Similarly, for
other Asian players, competition landscape and market
share gain will determine relative share price
performance. We believe investors should focus on the
segment that has strongest growth and less competition
or overcapacity pressure.
Top picks: In China, our top pick is Geely Auto, which
we believe has multiple potential growth drivers. We also
like Brilliance China and Baoxin, two key plays on
Chinas multi-year luxury consumption theme. Hyundai
Motor is our preferred OEM pick in Korea as we believe
it has the biggest mis-match between valuation and
FY13E outlook. Meanwhile, we like the healthy sales
growth and multi-business model of Mahindra &
Mahindra in the Indian auto sector.
80
70
60
50
40
Jan-12
Apr-12
DongFeng
Jul-12
Zhongsheng
Oct-12
Hero Motorcorp
Source: Bloomberg.
Passenger vehicle penetration by country analysis (car

ownership per 1,000 people)
600
500
400
300
200
100
0
Stocks to avoid: (1) DongFeng Motor, which is seeing

declining ROE and rising margin pressure; (2)
Zhongsheng, with large exposure to Japanese brand cars,
which are losing sales momentum; and (3) Hero Motor,
which has been losing market share.
134
Source: CAAM, CEIC, WDI. For India, Indonesia, USA, UK and France, the penetration is
based on 2010 statistics and the rest are 2011..

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Geely
Brilliance China
Baoxin
Hyundai Motor
Mahindra & Mahindra
Stocks to avoid
DongFeng Motor
Zhongsheng
Hero Motorcorp
Price
(LC)
Code
Rating
3.43
9.60
5.80
215,000
917.45
0175 HK
1114 HK
1293 HK
005380 KS
MM IN
10.10
10.76
1,945.8
0489 HK
0881 HK
HMCL IN
Mkt cap
(US$MM)
12E
OW
OW
OW
OW
OW
3,049
5,360
1,742
UW
UW
UW
9,926
2,351
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
0.26
0.44
0.32
0.35
0.51
0.52
0.9%
N/A
N/A
20%
25%
25%
1.01
0.50
1.04
0.69
2.2%
1.0%
16%
13%
13E
12E
10.6
17.6
15.8
7.9
15.0
8.9
8.0
17.2
7.8
12.6
Total vehicle penetration YoY change analysis
Total vehicle penetration (PV+CV) analysis (car ownership per 1,000

people)
40%
700
30%
Indonesia
Korea
300
Taiwan
200
China
Japan
India
Taiwan
Korea
Indonesia
Thailand
Indonesia
China
India
100
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
Source: CAAM, CEIC, J.P. Morgan.
1988
1980
Thailand
1986
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
Japan
400
1984
-20%
1988
1986
1982
1984
1980
0%
India
Thailand
Korea
Taiwan
Japan
500
1982
10%
-10%
600
China
20%
Source: CAAM, CEIC, J.P. Morgan.
Penetration analysis of luxury car vs. per capita GDP (on Purchasing
Power Parity basis) in 2011
Passenger Vechicle Sales Penetration
(Units per 1 million people)
45,000
40,000
US
35,000
Germany
30,000
UK
25,000
France
20,000
Japan
15,000
10,000
Korea
5,000
Taiwan
China
20,000 40,000 60,000 80,000

PPP Adj. GDP per Capita (USD)
India
Chinas PV sales growth by segment

120%
Sedan
100%
MPV
80%
SUV
Minivan
60%
40%
20%
0%
2009
2010
2011
20%
Source: CAAM, J.P. Morgan estimates
2012E
2013E
2014E
2015E
Source: CAAM, CEIC, CIA FactBook.
135
Adrian Mowat
(852) 2800-8599

21 November 2012
Banks
Banks micro investment case
We expect a cyclical improvement for volumes &
liquidity in China & India. In contrast, we see a cyclical
slowdown in Indonesia and Thailand. Policy risk is rising
in Indonesia and Thailand and was the key reason for the
underperformance of Brazilian banks in 2012. Improving
credit quality could help bottom-line momentum for
Brazil banks. Less policy pressure to ease pricing on
loans could also trigger positive share performance. In
Mexico, strong financial performance has resulted from
accelerating credit growth and lower credit losses.
Bottom-line momentum could suffer if these factors
become less supportive. We see only modest positive
multiples re-rating in Brazil. Structural dynamics are
more favorable in Peru, Colombia, and Mexico, in our
view. With average EPS growth of 41% 13/12E and 26%
14/13E for our top picks in CEEMEA; we believe
CEEMEA banks are more attractive than their Asian and
LatAm counterparts.
Weak external growth is likely to have the biggest impact
on North Asia; Korea and Taiwan loan growth is just 4%
and 2% Y/Y, respectively. Weaker global growth could
lead to further rate cuts in Asia, which would push down
NIMs and exacerbate an already weak outlook for loan
growth & fee income. India would perhaps be a larger
beneficiary in this scenario, should oil prices in particular
help set the stage for further rate cuts, which have so far
been delayed by persistently high inflation. Anemic
global growth does not mean anemic EPS growth for
many stocks in CEEMEA. We prefer exposure to growth
in Turkey and Russia, NPL stabilization in CEE/SEE,
strong deposit franchises with high or improving ROE,
banks with improving capital position and diminishing
equity dilution risk, and improved market access.
We are tracking loan growth and liquidity measures
(M1/M2) in China, inflation and policy rate cuts in India,
credit quality and policy risk in Brazil, sustainability of
growth momentum in Mexico and Andean markets, NPL
stabilization in Romania and Hungary and Russian
growth.
We like state banks in China and retail growth stories in
India. We are selective in LatAm. Credicorp should
benefit from very beneficial structural growth dynamics
in Peru while generating high ROEs. We like Erste which
has material upside if Romania turns profits from a
substantial loss in 12E, market pricing in only value of its
Czech/ Slovak business. Insurance disposal and better
ROE is likely to drive further re-rating in Yapi Kredi.
136
Josh KlaczekAC
(852) 2800-8534, josh.klaczek@jpmorgan.com
Bloomberg JPMA KLACZEK <GO>
Saul Martinez
212 62-3602, saul.martinez@jpmorgan.com
Bloomberg JPMA MARTINEZ<GO>
Paul Formanko
AC
(44-20) 7134-4718
paul.formanko@jpmorgan.com
Bloomberg JPMA FORMANKO<GO>
Divergence in valuations & performance in Asia reflects GDP

PB (x)
3.00
ID (+21)
2.50
2.00
MY (+14)
AU (+26)
IN (+42)
PH (+49)
HK (+29)
1.50
TH (+37)
SG (+24)
0.50
Asia (+19)
TW (+5)
1.00
PE = 10x
CH (+10)
ROE (%)
KR (-4)
5.0
10.0
15.0
20.0
25.0
Source: Bloomberg (as of Nov 9, 2012 close), J.P. Morgan estimates.
System ROE by country in LatAm

25.0%
23.7%
18.7%
20.0%
16.4%
16.3%
15.0%
12.4%
10.0%
5.0%
0.0%
Peru
Chile
Colombia
Brazil
Mexico
Source: Banco Central do Brasil, Banco de Mexico, Superintendencia de Bancas, Seguros

y AFP (Peru), Superintendencia Financiera de Colombia, Superintendencia de Bancos e
Instituciones Financieras, and J.P. Morgan estimates.
RoNAV for CEEMEA banks

30.0%
11
12E
13E
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Sberbank
Erste
RBI
Yapi
Source: Company reports and J.P. Morgan estimates.
Vakif
Samba
Pekao
Akbank

21 November 2012
Adrian Mowat
(852) 2800-8599

Price (LC)
Top picks
ICBC - H
ICICI Bank
Erste Bank
Yapi Kredi
Credicorp
Stocks to avoid
Bank of Baroda
Bank Pekao SA
Banco Santander Chile
Code
Rating
Mkt cap
(US$MM)
12E
P/E (x)
13E
12E
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
5.02
1027
21
4.62
136
1398 HK
ICICIBC IN
EBS AV
YKBNK TI
BAP US
OW
OW
OW
OW
OW
217453
21404
10309
11127
10861
8.0
19.0
24.0
10.4
14.7
7.5
15.4
10.7
6.3
12.4
0.6
54
0.9
0.4
9.3
0.7
67
1.9
0.7
10.9
4.2
1.8
0.8
0.0
2.0
19.6
12.2
5.9
14.8
19.9
736
157
26
BOB IN
PEO PW
BSAC US
UW
N
UW
5220
12625
12475
6.0
13.6
29.0
6.7
11.3
25.0
122
11.5
0.9
109
13.9
1.1
2.1
6.3
4.3
15.7
16.6
20.9
Overall liquidity improves as PBOC boosts NDA growth
LDRs have increased since 08 but still well cushioned

20
19
15
Chg since 2008 (%)
15
14
11
10
7
4
-19
-19
-26
-5
-10
Jun-12
TH
HK
SG
PH
ID
MY
CH
IN
TW
AU
US
KR
95
69
92
63
85
78
68
74
84
126
81
101
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
Net Foreign Assets
Net Domestic Assets
RRR-Adj Reserve Money
Source: CEIC.
Source: CEIC.
CEEMEA loan penetration remains low
China State banks = Better funding mix supports margins

YTD
120%
Loans / GDP
100%
Q/Q
Time Dem and
Mix
Time Dem and
Corp
Mix
Retail
Time Dem and
ABC
18.9%
4.8%
4.6%
1.0%
36%
64%
44%
56%
80%
BOC
8.3%
0.9%
-1.5%
-1.5%
53%
47%
52%
48%
CCB
21.8%
1.6%
2.8%
-3.4%
54%
46%
50%
50%
60%
ICBC
26.3%
3.8%
11.8%
0.7%
48%
52%
51%
49%
40%
BoComm
25.3%
-4.2%
7.5%
-6.0%
67%
33%
58%
42%
-4.8%
1.5% -12.3%
CMB
15.0%
20%
CITIC
n.a.
0%
MSB
n.a.
Total
19.7%
2.1%
State Bks
19.4%
2.9%
n.a.
n.a.
China
SA
Hungary Ukraine Czech Poland Turkey Brazil Russia Romania Mexico
Source: Central bank websites.
JSBs
n.a. .
n.a. .
64%
36%
50%
50%
n.a.
84%
16%
57%
43%
n.a.
n.a.
80%
20%
62%
38%
5.0%
-1.7%
52%
48%
50%
50%
4.9%
-0.7%
48%
52%
50%
50%
n.a.
n.a.
83%
17%
60%
40%
n.a.
Source: Company Reports. 2Q data used for mix (ABC, BOC, CCB, ICBC, CITIC) and BOC
growth trends.
137

21 November 2012
Our key OWs are stocks with capacity additions kicking
in e.g. IQ, SIIG. We like Sasol for GTL/ Ethane cracker
project FEED. Within Fertilizers, we like SAFCO with
its 7.2% div yield. Our stocks to avoid include costdisadvantaged Petkim in Turkey and Kayan in Saudi
which still faces operational issues.
138
Neeraj KumarAC
(971) 4428-1740, neeraj.z.kumar@jpmorgan.com
Bloomberg JPMA NKUMAR<GO>
Muneeza HasanAC
(971) 4428-1766, muneeza.z.hasan@jpmorgan.com
Bloomberg JPMA HASAN<GO>
Key petrochemical prices development

165
155
145
135
125
115
105
95
85
75
Oct-10
Apr-11
Brent
Ethylene
Source: Bloomberg.
Oct-11
Propylene
Apr-12
HDPE
MEG
LLDPE
Naphtha
World indicative ethylene production cash cost

1200
900
600
Propane
Low Cost
Typical
Naphtha
High Cost
Naphtha
Weighted
300
Condensate

Demand is key, and there is a strong correlation between
PMIs and petchem prices. A pick-up in Chinese PMI
could lead to recovery in petrochemical demand. For
fertilizers, we look at stock-to-use ratios for key crops
and their prices to gauge fertilizer demand.
Ethane

Weak economic growth is clearly negative for Petchems
particularly given planned capacity additions of ~ 3-5%
in 2013-14. Adjusting for potential delays and
commissioning issues with Iranian and Chinese coal to
chemical capacity slated to come onstream, the sector
needs global GDP to ave ~ 2.7% in five years for the
cycle to tighten. If we continue to see anemic demand,
chemical spreads over oil will remain depressed.
However, those at the top of the curve are likely to be
under pressure most and we would suspect Chinese and
European naphtha closures/ capacity delays should the
current situation continue. With MENA players largely at
the bottom of the curve, a period of weak demand may
ultimately help by clearing out those at the top of the
curve and dissuading Chinese capacity additions.
(44-20) 7325-1964, alex.r.comer@jpmorgan.com

Bloomberg JPMA COMER <GO>
C2/C3
Chemicals micro investment case

MENA petchems have gone through a significant capex
increase in recent years and companies are benefiting to
varying degrees as the additional volumes kick in and
plant operating rates improve. In addition, MENA
petchems are largely placed near the bottom of the cost
curve, providing strong cash generation even in weak
pricing scenarios. The addition of volumes at the bottom
of the cost curve should hold the sector in good stead. US
shale gas is a long-term risk with first project still about
five years away. In fertilizers, we like nitrogen fertilizer
producers, as we expect solid agri-dynamics, higher
planted corn acreage, tight global grain stocks and strong
crop prices to support 2012-13 fertilizer demand.
Alex ComerAC
Ethane
Chemicals
Ethane
Adrian Mowat
(852) 2800-8599
KSA
Iran
KSA
US
KSA
US
KSA
WEur
WEur
Asia
WEur
US
Source: CMAI and J.P. Morgan.
Ethylene demand/supply (kt) balance and operating rate (%)

180000
160000
140000
120000
100000
80000
60000
40000
20000
0
0.98
0.96
0.94
0.92
0.9
0.88
0.86
0.84
0.82
2006
2007
2008
2009
Total Capacity
Source: CMAI and J.P. Morgan.
2010
2011
2012
Total Demand
2013
2014
2015
Oper. Rate
2016

21 November 2012
Adrian Mowat
(852) 2800-8599

Price (LC)
Top picks
Industries Qatar
Sasol
Advanced Petro.
SIIG
Yansab
SAFCO
Stocks to avoid
Petkim
Saudi Kayan
154.6
37,299
23.5
23.6
43.7
194.25
2.1
12.4
Code
Rating
IQCD QD
Sol. SJ
APPC AB
SIIG AB
YANSAB AB
SAFCO AB
OW
OW
OW
OW
OW
OW
PETKM TI
KAYAN AB
UW
N
P/E (x)
12E
13E
23,352
28,632
1025
2838
6554
12,950
9.6
8.7
12.2
14.1
9.9
12.4
8.3
8.5
8.3
8.9
8.7
12.5
1168
4959
Nm
nm
15.7
11.6
Mkt cap
(US$MM)
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
16.0
4228
1.92
1.68
4.42
15.69
18.6
4344
2.82
2.67
5.00
15.55
6.6
4.8
8.5
6.3
4.6
7.2
28.3
15.8
20.0
17.4
18.0
42.0
-0.03
-0.47
0.13
1.07
3.3
0.0
7.7
10.4
China PMI
J.P. Morgan Global Mfg PMI

70
65
60
55
50
45
40
35
30
65
60
55
50
45
40
35
30
JPM Global Manufacturing PMI S
China Manufacturing PMI SA
Source: Bloomberg.
Source: Bloomberg.
Grain price development
World grain consumption and ending stocks
300
2,500
250
2,000
200
600
500
400
300
1,000
100
200
500
50
02/11/2008
Corn ($/mt)
Source: Bloomberg.
700
1,500
150
0
02/11/2007
Mn tons
02/11/2009
02/11/2010
Soybean ($/mt)
02/11/2011
Wheat ($/mt)
100
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
Production
Consumption
Ending stocks
Source: Bloomberg.
139
Adrian Mowat
(852) 2800-8599

21 November 2012
Consumer
Consumer micro investment case
We are generally positive on the consumer sector in Asia,
particularly on names where we can clearly identify the
long-term opportunities along with bottom-up drivers.
We like Asian cosmetics plays given their resilient
business. We anticipate a solid 2013 economic backdrop
in LatAm given record low rates. The key catalysts to
watch will be consumer confidence, household debt,
inflation and employment. If those variables remain
encouraging, we believe same store sales in LatAm will
re-accelerate. The poultry, pork and bakery side of the
LatAm food sector was severely impacted by a +50%
grain cost surge in 2H12. A decline in these key input
costs could lead to a reversal of margin compression seen
in 2012. On the other hand, if cattle prices rise, beef
companies should face declining profitability. Margins
for beverage companies could improve from declining
commodity costs and expected currency appreciation. In
Russia household spending is resilient despite bottomingout inflation starting to eat into real incomes. South
African retail spend is holding up reasonably well, as the
real wage growth thematic continues. Turkish
consumption has slowed in 2012 with the weak TYR and
11-12 rate hikes, but we are still confident that this years
lower rates plus stable FX will translate into an
acceleration in 4Q12 and 2013.
Ebru Sener KurumluAC

(852) 2800 8521, ebru.sener@jpmorgan.com
Bloomberg JPMA KURUMLU<GO>
Andrea Teixeira, CFAAC

(1-212) 622-6735, andrea.f.teixeira@jpmorgan.com
Alan AlanisAC
(1-212) 622-3697, alan.alanis@jpmorgan.com
Bloomberg JPMA ALANIS <GO>
Elena Jouronova, CFA
(7-495) 967-3888, elena.jouronova@jpmorgan.com

Bloomberg JPMA JOURONOVA<GO>
Stephen Carrott
(27-11) 507-0373, stephen.j.carrott@jpmorgan.com
Bloomberg JPMA CARROTT<GO>
J.P. Morgan Equities Limited
Komal Dhillon
(44-20) 7134-5885, komal.dhillon@jpmorgan.com
Bloomberg JPMA DHILLON<GO>
HK/China earnings growth expectations

43%
31%

In the context of sluggish economic activity, quality
consumer companies able to deliver above-market
growth and sustainable returns should fare relatively well.
We are tracking SSSG by retailer where available,
consumer sentiment, wealth effect, pricing trends,
discounting trends and input costs. In CEEMEA, space
growth, LFL sales trends, progression of gross margins,
opex control, working capital management are key data
points we follow. LatAm retailers are passing through a
strong expansion cycle, and in some cases growing faster
than demand. Cannibalization of stores opening may be a
key risk for retailers to continue expanding.
We like China Foods, a strong product mix improvement
story, and TUF from Thailand given capacity expansion
and favorable shift in product mix. We like Magnit as the
fastest-growing and most efficient retailer in Russia and
see room for re-rating closer to historic highs. Our top
picks in LatAm are Natura (strong pipeline of new
products) and Ambev, the most profitable beer company
in the world.
140
AC
20%
36%
20%
19%
15%
7%
2010
2011
Staples
2012E
Discretionary (ex. Sportswear)
2013E
Ag commodity prices are expected to decline in 2013

30
25
20
15
10
5
0
1Q12
2Q12
3Q12
Wheat
4Q12E
Corn
1Q13E
Soybean
2Q13E
3Q13E
Sugar
Source: J.P. Morgan estimates. Wheat, Corn and Soybean in US$/bu. Sugar in US
cents/lb (ICE Raw Sugar).
4Q13E

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
China Foods Ltd
Thai Union Frozen
Magnit
AmBev
NATURA
Stocks to avoid
Parkson Retail Group
X5 Retail Group
Marfrig
Price (LC)
Code
Rating
P/E (x)
12E
Mkt cap
(US$MM)
13E
EPS (LC)
12E
Div. yield
13E (%)
13E
ROE
13E (%)
8
71
35
40
56
506 HK
TUF TB
MGNT LI
ABV US
NATU3 BZ
OW
OW
OW
OW
OW
2944
2630
16633
115885
11578
24.4
13.5
24.4
21.6
26.2
18.1
11.8
21.1
20.3
23.0
0.3
5.2
1.4
1.8
2.1
0.4
6.0
1.7
2.0
2.4
2.0
4.2
na
5.3
3.6
16.4
18.0
23.3
49.6
73.1
6
17
10
3368 HK
FIVE LI
MRFG3 BZ
UW
N
UW
2353
4619
1713
16.9
20.5
72.2
15.6
13.9
53.0
0.4
0.8
0.1
0.4
1.2
0.2
3.3
na
0.0
19.2
12.9
1.2
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of Nov 15, 2012.
CEEMEA retailers 2013E top-line growth (LC-based)

Magnit
Dixy
O'Key
X5
MVideo
Massmart
Woolwor
Shoprite
Foschini
Spar
Mr price
Pick'n'Pay
Clicks
truworths
0%
8%
6.5%
2%
5%
10%
11%
14%
13%
17%
17%
16%
130
125
120
115
110
105
100
95
90
27%
27%
20%
19%
truworths
Foschini
Mr price
Woolworths
Magnit
O'Key
Clicks
X5
Shoprite
Dixy
MVideo
Massmart
Spar
Pick'n'Pay
29%
avg 16%
15%
Source: JPMe for Russian retailers, Bberg for SA retailers.
Brazil consumer confidence
CEEMEA retailers 2013E EBITDA margins
20%
25%
30%
9.2%
8.0%
7.6%
7.2%
7.0%
6.5%
5.7%
4.9%
3.9%
3.6%
0.0%
35%
5.0%
11.6%
32.0%
27.2%
17.0%
avg 10.8%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Source: JPMe for Russian retailers, Bberg for SA retailers.
Earnings growth to remain in double digit for AmBev and FEMSA,

Marfrigs EPS is coming from a negative 2011 base
40%
35%
30%
25%
20%
15%
10%
5%
0%
38%
32%
19%
12%
11%
2010
10%
2011
AmBev
20%
18%
2012E
2013E
FEMSA
Source: FGV.
Source: Company. J.P. Morgan Estimates.
141

21 November 2012
Education services
Marcelo Santos, CFAAC
Education services micro investment case

In our view, the main driver of continued growth of the
sector is the continued expansion of FIES, a government
program that offers subsidized loans to low-income
students. Also, maintenance of employment levels is
important, as most students from covered companies are
working adults that pay for their own studies, although
FIES should reduce that exposure. Last, the distancelearning segment should benefit if the government
approves its expansion, which is expected for 2013.
Brazil lags other countries in higher education
Japan
US
UK
France
Chile
Germany
Greece
Peru
Bolivia
Mexico
Portugal
Italy
Venez.
Turkey
Brazil
Colombia
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Source: OECD and J.P. Morgan estimates.
Brazil tops salary premium for higher education
Salary ratio of employees with higher vs secondary education, 25-34 yr
3.0
2.5
2.0
Italy
Greece
Japan
Germany
OECD
UK
Portugal
1.0
Turkey
1.5
US

Education is a regulated sector, and a significant part of
its growth depends on FIES. Up to now, the government
has been very consistent in committing more resources to
the program, but that could change. For example,
scrutiny on quality could increase, reducing the number
of institutions that can participate in FIES, or the
program might be modified if default rates are high.
However, we do not see a significant risk on this front for
the coming years as Brazil lags significantly other peer
countries in education and the government has shown
firm commitment to the sector. Other regulatory risk
would be a delay in the process of granting authorization
for expansion of distance learning centers.
% of adult population (25-64yr) with higher education degree
Brazil

We see substantial upside for covered stocks on our
expectation for earnings growth in the coming years,
which we project to be around 30% y/y. Education
companies currently trade at 20x P/E 12m forward, and
we do not see significant re-rating potential.
(55-11) 4950-3756, marcelo.p.santos@jpmorgan.com

France
Adrian Mowat
(852) 2800-8599
Source: OECD and J.P. Morgan estimates.
FIES offers the lowest interest rate available

% interest per year
142%
Anhanguera is the best vehicle for exposure to the
Brazilian higher education segment, in our view as: (1) it
utilizes an efficient low-cost model with proven track
record; (2) it offers lower risk growth as much of it
should come from increasing capacity utilization in its
current campuses; and (3) margins should increase as
acquired campuses adopt their academic model. We also
like Kroton, which is the leading player in the distance
learning segment as well as having a strong on-campus
operation.
142
45%
3.4%
4.5%
FIES
Inflation
Target
5.5%
7.5%
Minha
SELIC
Casa
Minha Vida
Source: BACEN, MEC, and J.P. Morgan estimates.
20%
Vehicle
General
Bank
Consumer Revolving
Credit
Line

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Top picks
Anhanguera
Kroton
Price (R$)
Ticker
R$32.55
R$42.70
AEDU3.SA
KROT11.SA
Rating
Mkt cap
(US$MM)
12E
OW
OW
2,292
2,464
29.3
24.3
P/E (x)
13E
EPS (R$/shr)
12E
13E
17.2
19.1
1.1
1.8
Div. yield
13E (%)
ROE
13E (%)
0.0
0.0
7.3
7.0
1.9
2.2
Education stocks have outperformed the market
Anhangueras historical trading multiples
Share prices, 30-Dec-11 = 100
250
230
210
AEDU3
KROT11
ESTC3
IBOV
12-month forward P/E
50
45
Average
35
190
30
170
25
150
20
130
15
110
90
30-Dec
12m fwd P/E
40
10
29-Feb
30-Apr
30-Jun
31-Aug
31-Oc
5
4/Oct/07
4/Oct/08
4/Oct/09
4/Oct/10
Source: Bloomberg and J.P. Morgan estimates.
Source: Bloomberg historical estimates and J.P. Morgan calculations.
Krotons historical trading multiples
Estacios historical trading multiples
20
12m fwd P/E
17
Average
20
14
15
11
10
5
4/Oct/07
4/Oct/
30
25
4/Oct/11
4/Oct/08
4/Oct/09
4/Oct/10
4/Oct/11
4/Oct/
5
4/Oct/07
12m fwd P/E

Average
4/Oct/08
4/Oct/09
4/Oct/10
4/Oct/11
4/Oct/
143
Adrian Mowat
(852) 2800-8599

21 November 2012
Healthcare
Health care micro investment case
We believe the worst is likely over for the drug sector in
China. The fundamentals of the Chinese healthcare
industry are still strong: 1) aging population; 2)
increasing government spending on healthcare; 3)
expanding insurance coverage; and 4) rising disposal
income. We remain positive in the long term and see
2013 as a solid year for industry growth and
consolidation.
Sean WuAC
(852) 2800-8538, sean.wu@jpmorgan.com
Bloomberg JPMA SWU<GO>
LatAm
Andrea Teixeira, CFAAC
(1-212) 622-6735, andrea.f.teixeira@jpmorgan.com
China's ageing population puts extra demand on healthcare
The healthcare market in LatAm decelerated in 2012

driven by slower pace of formal job creation. The main
driver in 2013 will be the acceleration of membership
growth, and consolidation of the market. Another key
change was the sale of AmilPar to United Health Group.
Medical inflation, which has outpaced the broad CPI, is
leading to lower profitability of medical plans and
therefore a tougher landscape for medical labs (Fleury
OW, and Dasa, N) to pass on price increases to payers.
Anemic global growth should have a limited impact on
Chinas healthcare sector because it is not heavily exportoriented. However, the manufacturers of active
pharmaceutical ingredients (API) are expected to be hurt
by lackluster global drug demand.
In China, we are tracking monthly healthcare industry
output and profit data announced by the NDRC. We
monitor some key commodity product prices such as
corn, 6-APA, and amoxicillin. Importantly, we keep a
close eye on tenders carried out by various provinces
throughout the year to gauge pricing trends and the
weight on quality vs. prices. The healthcare sector in
LatAm is trading at an average 13E P/E of 24.6x, a
record high, which provides limited room for re-rating in
our view. We are tracking medical costs which are rising.
Source: UN.
Chinas healthcare payments (Rmb B)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
144
222.5 258.6 321.1

117.2 153.9 178.9
71.0
389.5
719.7 842.1
507.3 615.5
359.0 481.6 573.3 737.8

90.9 111.7 129.4 155.3 177.9 229.2
2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Government
Social
Individual
Source: MOH.
Health Services Inflation vs Brazilian CPI

9%
8%
We are OW on Mindray because its strong global
franchise minimizes risks associated with overexposure
to one particular market. China growth has been
impressive and is expected to continue. We like Sino
Biopharma which has the most balanced product
portfolio and pipeline. In LatAm our top pick is Fleury
(OW) which is trading at a 32% discount to the sector
average on 13E P/E. The stock we recommend avoiding
is UW-rated OdontoPrev on increased competition and
increased regulatory risk (limit on X-rays), as well as
pressure from dentists for raising prices.
657.1 705.1 847.0

510.3 587.2
452.1 485.4
270.5 334.2 367.9 407.1
8.1%
7.7%
7.4%
7%
6.0% 5.9%
6%
5%
4.5%
6.4%
5.9%
6.5%
4.3%
4%
3%
2%
1%
0%
2007
2008
2009
Health Services
Source: IBGE.
2010
Brazilian CPI
2011

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Mindray Medical
Sino Biopharma
Fleury
Stocks to avoid
China Shineway Pharm
OdontoPrev
Price (LC)
Code
P/E (x)
12E
Mkt cap
(US$MM)
Rating
EPS (LC)
12E
13E
13E
Div. yield
13E (%)
ROE
13E (%)
33
4
23
MR US
1177 HK
FLRY3 BZ
OW
OW
OW
3808
2237
1742
19.1
23.6
24.8
16.5
19.9
19.5
1.7
0.1
0.9
2.0
0.2
1.2
1.3
3.9
1.9
16.1
21.9
10.2
12
11
2877 HK
ODPV3 BZ
UW
UW
1272
2840
13.6
34.3
12.3
30.2
0.9
0.3
1.0
0.4
2.4
3.4
17.6
26.3
China: Medical devices market by product category in 2010
China: Three different insurance schemes to expand insurance

coverage dramatically full coverage planned for 2020
900
800
700
16.5%
19.1%
Consumables
600
Diagnostic Imaging
500
400
Dental Products
300
15.3%
200
Orthopedic Products
Patient Aids
100
0
2005
2006
2007
New Rural Cooperative Health Care System
2008
2009
5.2%
2010
Others
2.8%
Urban Residents' Basic Medical Insurance
Basic Medical Insurance System
41.1%
Source: The Medical Market: China, Espicome Business Intelligence, 2011.
Source: : Chinese government websites.
Medical plan market share
Brazil unemployment rate

14%
Unimed Rio
12%
Golden Cross
10%
Unimed
Paulistana
8%
Unimed BH
6%
Sul Amrica
4%
Intermdica
2%
Bradesco Sade
0%
Jan-02
Amil
0%
2%
4%
6%
2011
2010
8%
10%
Jan-05
Jan-08
Jan-11
12%
Source: IBGE
Source: ANS
145
Adrian Mowat
(852) 2800-8599

21 November 2012
Infrastructure, capital goods

& construction
Infrastructure, capital goods & construction
investment case
In China, we expect FAI spend to be led by government
FAI. We expect capex in transport infra, utilities and
water conservancy to lead the rebound in investment. In
India, if Government proposals get the legislative nod we
could see a sharp revival in a depressed capex cycle. We
stay positive for North Asia E&C, driven by LNG boom.
In LatAm, we believe truck production could recover if
GDP growth returns. For SA, the contractors are unlikely
to re-rate significantly as we do not expect a recovery in
commodities. Construction remains dominated by
sovereign-sponsored projects in MENA. Russias
construction companies backlogs are a function of
government spending and thus may grow in the
environment of lower commodities prices.
North Asia E&C names are expected to defy the anemic
global growth, with robust global LNG demand growth
ahead. Most of the companies in our LatAm universe
have been trading at a 10-20% EV/EBITDA premium to
historical levels. Given continued government support,
we do not expect these valuations to come down. Weak
commodity prices will cause reduced mining capex in SA,
and accelerated decline in oil prices could lead to lower
than planned sovereign spending in MENA and Russia.
India private sector investments will resume until
financial, regulatory and physical infrastructure related
bottlenecks ease. For LatAm, capital goods should re-rate,
given the close ties to GDP growth. Capex expectations
of SA mining companies are a leading indicator of
construction activity. Companies have cut capex so the
project tendering environment will be tough for SA
contractors. For Russia, we expect construction activity
to pick up on launch of large-scale government tenders,
and for MENA we track oil prices for sovereign spending.
In China, we believe freight-rail/ subway/ urban transit
will be the key investment area; we prefer CSR. We are
bullish on Indias port sector given lower regulatory
intervention. We like Adani Ports and avoid ABB. In
Korea, we like Samsung Eng due to its stronger-thanpeer growth potential. For LatAm, MYPK3 exhibits the
most upside in our universe on the back of truck
production recovery. We avoid WEGE3. In CEEMEA,
we avoid Group 5 as we expect its earnings to come
under pressure due to low private investment in SA.
146
Karen Li, CFA AC

(852) 2800-8589, karen.yy.li@jpmorgan.com
Bloomberg JPMA KLI<GO>
Cassio LucinAC
+55 11 4950 3893, cassio.lucin@jpmorgan.com
Bloomberg JPMA HUERTA <GO>
Necessity Ngorima
AC
(27-11) 507-0723, necessity.x.ngorima@jpmorgan.com

Bloomberg JPMA NGORIMA<GO>
Muneeza Hasan
AC
(971) 4428-1766, muneeza.z.hasan@jpmorgan.com

AC
(7-495) 967-3888, elena.jouronova@jpmorgan.com

Global LNG export capacity additions by year (MT)

120
800
700
100
Unprecedented decade long growth in LNG capacity driven by:

1. Environment - society's preference for lower carbon fuels e.g. gas
2. Economics - carbon costing is spreading from OECD to non-OECD
3. Energy security - desire to diversify supply sources i.e. avoid pipelines
4. Geopolitics - some countries will not pipe gas to their neighbours
5. Gas costs - creation of new low cost supply sources e.g. CBM, gas shale
6. Nuclear risks - heightened popular opposition post-Fukushima
80
600
500
------> 7 year 2012-18 +287 MT pa could require $1 trillion investment

60
400
300
40
200
20
100
0
64
66
68
70
72
74
76
78
80
82
84
Capacity additions (MT pa)
86
88
90
92
94
96
Cumulative capacity (MT pa)
98
00
02
04
06
08
10
12
14
16
18
20
Cumulative liquefaction trains
Source: J.P. Morgan estimates, BP
LNG effective supply / demand outlook (MT pa)

400
20%
15%
300
10%
5%
200
0%
-5%
100
0
-10%
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E
Demand
Effective supply
Spare capacity

.
-15%

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Adani Ports and SEZ
CSR Corp Ltd.
Samsung Engineering
Iochpe-Maxion
Stocks to avoid
ABB Ltd
Group 5
Weg
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
127
7
145000
26
ADSEZ IN
1766 HK
028050 KS
MYPK3 BZ
OW
OW
OW
OW
4624
10418
5315
1167
721
2465
25
ABB IN
GRF SJ
WEGE3 BZ
UW
UW
UW
2771
307
7617
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
5.5
0.3
15724
0.5
6.0
0.4
17202
1.6
1.2
1.2
2.8
2.3
22.9
15.3
32.8
15.2
10.1
-288
1.0
18.7
223
1.3
0.4
5.6
1.4
13.8
13.0
16.8
13E
12E
23.2
20.9
9.2
46.5
21.1
16.1
8.4
15.9
71.5
NM
24.3
38.6
11.0
20.0
We forecast ethanol demand of 44.2 bln liters by 2020, which should

encourage investment in the sector (CAGR 2012-2022 10%)
Bln liters.
19.7
23.7
27.4
30.1
32.9
35.6
41.1
38.4
44.2
47.2
50.3
Brazilian truck production is highly sensitive to GDP

YoY trucks production (y axis) vs Brazil GDP growth (x axis)
60%
2010
1993
1994
1984 2004 1986
2000 1997
1985
2007
2008
2001
1977
2005
1995
1980
1979
1991 2003 2011
1988
1999
1998
2006
2002
1978
1990
1989 1987
1981 1983 2009
1996
1992
1982
40%
20%
0%
-20%
-40%
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
-60%
-6.0%
-4.0%
-2.0%
0.0%
4.0%
2.0%
6.0%
8.0%
10.0%
Source: ANFAVEA, J.P. Morgan
Source: J.P. Morgan Estimates.
SA construction: Order book exposure to commodities

80%
70%
60%
50%
40%
30%
20%
10%
0%
64%
SA business confidence vs private sector GDFI growth (oya)

30%
67%
100
20%
80
10%
32%
28%
4%
0%
47 40
-10%
20
-20%
-30%
Aveng
M&R
WBHO
Commodities
Group 5
60
82
85
88
91
94
97
Pvt Sector GFCF (LHS)
00
03
06
09
12
Business confidence (RHS)
Source: SARB, BER and J.P. Morgan estimates
Source: Company reports and J.P. Morgan estimates
147
Adrian Mowat
(852) 2800-8599

21 November 2012
Insurance
Insurance micro investment case
We stay neutral on the insurance sector in Asia as a
prolonged low-interest-rate environment would hurt the
life insurers especially those with high guaranteed legacy
insurance policies while underwriting performance for
the non-life insurers would continue to deteriorate in
view of early signs of deterioration in 2012. We have
been overweight on the large South African life insurers
for the past year, but these have now strongly rerated to,
or above, our SoTP valuations. We expect record-high
valuations, low interest rates, Solvency II and other
regulatory concerns, tax changes and ongoing savings
sector market share losses to depress returns next year.
Bao Ling ChanAC

(852) 2800-8592, baoling.chan@jpmorgan.com
Bloomberg JPMA BCHAN <GO>
Francois du ToitAC
(27-11) 507 0378, francois.x.dutoit@jpmorgan.com
Bloomberg JPMA DUTOIT<GO>
Valuation band for the major Asian insurers

3.5
3.0
2.5
2.0
1.5
We like Ping An (for its profitable life insurance
franchise), Samsung Life (benefitting from demographic
change), and Fubon FHC (for its diversified operation).
We dislike DSY, LBH and Dongbu (for its aggressive
underwriting/investment approach.) We like CML's
strong growth and the lagged impact of the strong
markets through performance fees. PZU's quality and
growth also keeps it close to the top of our picks. We like
SLM's diversification and strong balance sheet in
uncertain times.
148
Taiwan life (P/BV)
Nov-12
Jul-12
Sep-12
May-12
Jan-12
Mar-12
Nov-11
Sep-11
Jul-11
May-11
Jan-11
Mar-11
Nov-10
Sep-10
Jul-10
May-10
Jan-10
Korea non-life (P/BV)
China life (P/EV)
Source: Company data, Bloomberg, J.P. Morgan.
10-year government bond yield movement in the major Asian

countries
Taiwan (%)
China (%) - rhs
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
2.0
Apr-11
0.0
Jan-11
3.0
Oct-10
0.5
Jul-10
4.0
Apr-10
1.0
Jan-10
5.0
Oct-09
1.5
Jul-09
6.0
Apr-09
2.0
Jan-09

The increase in the number of tied agents is crucial in
gauging whether insurers are making headway in selling
protection-type products. Rising interest rates or
steepening of yield curves across Asia coupled with
stronger equity market performance would cause us to
turn more positive on the sector, especially the life
insurance sector. We are well below consensus for DSY
and LBH earnings. We expect embedded value growth at
these two companies to be weak as aggressive EV
assumptions weigh and weak markets and low yields bite.
A strong equity market performance gives upside risk to
our LBH view whereas upside risk at DSY comes from
its China venture.
Mar-10
1.0

Investment return achieved by the insurers would reduce
should the low interest rate environment sustains on
anemic global growth, raising concern on downward
revision to reported EV/NBV. One positive development
coming out of the weaker global growth would be a
stronger focus by the life insurers on higher margin
products to mitigate weaker insurance sales. Weak
international growth and markets should affect LBH and
DSY in SA due to their affluent client focus, developed
market equities exposure and cost pressures.
S.Korea (%) - rhs
Source: Bloomberg.
SA life insurers have rerated to trade at/near five-year record

price-to-EV levels
110%
108.4%
101.1%
98.3%
100%
92.0%
90%
82.4%
80%
70%
60%
50%
Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
DSY
LBH
Source: J.P. Morgan. Company Reports
SLM
OML
MMI

21 November 2012
Adrian Mowat
(852) 2800-8599

Top picks
Ping An Insurance - H
Samsung Life Insur.
Fubon Financial
PZU
Coronation Fund Mgr
Stocks to avoid
Dongbu Insurance
Discovery Holdings
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
P/E (x)
12E
EPS (LC)
12E
60
92500
30.6
387
3580
2318 HK
032830 KS
2881 TT
PZU PW
CML SJ
OW
OW
OW
OW
OW
52532
16952
9914
10247
1269
21.9
17.4
11.3
11.3
18.3
15.5
14.5
10.7
11.3
11.9
2.7
5325
2.7
34.2
196
3.9
6365
2.9
34.2
302
0.8
2.4
3.7
7.0
5.8
18.7
5.9
10.7
21.4
70.1
47650
10180
5670
005830 KS
LBH SJ
DSY SJ
UW
UW
UW
3091
3280
3539
7.5
9.2
13.4
7.6
10.7
11.8
6391
1104
423
6299
950
480
2.9
5.0
2.1
16.0
16.1
58.2
13E
13E
Div. yield
13E (%)
ROE
13E (%)
Premium growth momentum for the Chinese life insurers
Solvency margin ratio/RBC ratio for the Asian insurers
50%
500%
40%
450%
30%
400%
2011
1H12
350%
20%
300%
10%
250%
0%
200%
-10%
150%
-20%
100%
50%
Shinkong
Fubon
Cathay
KRE
HMF
Dongbu
TYL
SFM
KLI
SLI
TPL
NCL
CPIC
C. Life
CPIC Life
Ping An
0%
AIA
Sep-12
Jul-12
Aug-12
Jun-12
Apr-12
Ping An Life
Taiping Life
China Life
New China Life
May-12
Mar-12
Jan-12
Feb-12
Dec-11
Oct-11
Nov-11
Sep-11
Jul-11
Aug-11
Jun-11
Apr-11
May-11
Mar-11
Jan-11
Feb-11
-30%
Source: CIRC.
Source: Company data. Note: 1QFY12 data for the Korean life insurers and group level data
unless stated otherwise.
Auto combined ratio trend for the Korean non-life insurers
NBV growth momentum
95.0
40%
90.0
35%
2011A
2012E
2013E
30%
85.0
25%
80.0
20%
75.0
15%
70.0
10%
5%
65.0
0%
Shinkong
Fubon
Cathay
HMF
SFM
TYL
KLI
SLI
CTIH
Dongbu
Source: Samsung F&M, Hyundai F&M, Dongbu Insurance.
NCL
-10%
CPIC
Dongbu Insurance
Ping An
Hyundai F&M
C. Life
Samsung F&M
-5%
AIA
Apr-04
Aug-04
Dec-04
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
Apr-12
Aug-12
60.0
Source: Company data, J.P. Morgan estimates.
Growth in assets under management
PZU life and non-life ratios (%)
Coronation
2.4
35.0%
Savings Industry (excl bank deposits)

Unit Trusts
100.0%
20.0%
GDP
110.0%
15.0%
1.4
10.0%
0.9
90.0%
25.0%
Life Assurance-Retail and Surplus funds
1.9
80.0%
30.0%
2007
2008
2009
Source: J.P. Morgan estimates, Company data. SARB
2010
2011
2012
2009
2010
2011
1H12
2012e 2013e 2014e
120.0%
Life Group and continued margin - LHS

Non-life combined Ratio - RHS*
Source: Company reports. Note: * Combined ratio on inverted axis
149
Adrian Mowat
(852) 2800-8599

21 November 2012
Internet
Internet micro investment case
We remain positive on internet market development.
Transition to mobile internet creates threats and new
opportunities for the listed companies. Product
development capabilities will be key differentiating
factors within the fast moving mobile internet market.
Dick WeiAC
(852) 2800-8535, dick.x.wei@jpmorgan.com
Bloomberg JPMA WEI <GO>
China smartphone shipment forecasts

Mn
300
200
150
In the eCommerce space, we expect more capital market

activity, and that could change the competitive landscape,
with a few clear winners to emerge.
We expect the structural ad budget shift from offline to
online to continue next year, and online media such as
search and online video to benefit from the transition
regardless of macro situations. However, with anemic
global growth, domestic consumer spending could slow,
dragging on total ad spending in China. Expect online
games market to be stable despite uncertainties in growth.
Mobile internet traffic share and monetization progress
will be key to watch next year, in our view. In addition,
we will be watching closely for changes in ad sentiment
through the year.
We are positive on mobile internet transition - bringing
additional search traffic and potential revenue for Baidu.
We see investors as overly-skeptical about mobile
internet monetization, and this presents a good
opportunity to invest in Baidu, which we think is a great
consumer stock with dominant market power.
Mobile internet also brings additional monetization
opportunity to online video company Youku. In addition
to ad budget shift from TV to online video, additional
content consumption on mobile platform should generate
more ad dollar potential to Youku.
We think Tencent will continue to stay ahead of its peers,
with strong R&D team and good operating capability.
Tencents large exposure on mobile internet (via WeChat)
and eCommerce (via its various prior investments)
should provide valuation support to the name. Tencent
game business will be a stable earnings driver, in our
view. Next years pipeline include B&S and COD Online.
150
Smartphone
250
100
50
0
250
192
25
36
2009
2010
88
2011
2012E
2013E
Source: IDC, J.P. Morgan estimates.
% of people that dont leave the house without a smartphone

%
90
80
70
60
50
40
30
20
10
0
78
80
78
Japan
USA
UK
74
43
China
Australia
Source: Google, Ipsos.
Mobile traffic exposure of major internet companies

Internet Portal
Baidu
Naver
Google
Facebook*
Sina Weibo
1Q11
>15%(1)
18%
14%(1)
42%
40%
3Q12
20%
~38%
20%
60%
50%+(2)
Source: Company Earnings Call, JP Morgan estimates. * Number of Mobile Monthly Active
Users (MAUs) as a % of total MAUs for Facebook; for others its Mobile Traffic as a % of
Total Traffic. (1) 4Q11 numbers. (2) 2Q12 number.
Mobile search advertising as a % of total online advertising

16%
14%
12%
10%
8%
6%
4%
2%
0%
13.2%
10.1%
7.4%
10.1%
9.1%
5.8%
2.2%
2011
4.1%
3.1%
2012E
US
Source: Zenith, IDC, J.P. Morgan estimates.

.
14.9%
2013E
China
Japan
11.2%
5.1%
2014E

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Baidu
Youku
Tencent
Stocks to avoid
Shanda Games
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
105.1
19.6
278.2
BIDU US
YOKU US
700 HK
OW
OW
OW
36,739
3,171
66,430
3.43
GAME US
961
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
4.81
-0.51
9.49
6.20
0.08
12.64
0.0
0.0
10.0
40.3
1.0
36.1
0.68
0.68
0.0
17.8
13E
12E
21.8
NM
29.3
16.9
254.0
22.0
5.0
5.1
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of 2 Nov, 2012.
China online shopping (B2C+C2C) market size by GMV
Chinas B2C taking more share as % of Global B2C

%
Rmb B
3,000
2,551
2,500
2,012
2,000
1,569
1,500
1,000
500
0
16
26
56
128
263
461
767
1,184
2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
B2C+C2C, excl. B2B (Rmb B)
10%
100%
8%
80%
6%
60%
4%
40%
2%
20%
0%
0%
As a % of Total Retail Sales (%)
6.1%
9.9%
13.7%
18.6%
2010
2011
2012E
2013E
China
Australia
South Korea
21.3%
23.4%
2014E
2015E
2016E
India
Indonesia
Other
Source: eMarketer, Jul 12.
Source: iResearch.
China B2C eCommerce market share by GMV in 2Q12
Tmall
57%
Japan
3.7%
China online shopping categories share by GMV
Leading B2C retailer

20%
Suning.com
4%
Tencent
4%
Amazon.cn
3%
Vancl
2%
Dangdang
1%
Coo8.com
Newegg
Others
2%
1%
6%
Source: iResearch. GMV include both B2C marketplaces and B2C retailers.
Apparel,
Footwear,
Bags and
Suitcases ,
26.8%
Others, 42.8%
3C, Home
Appliance,
18.2%
Books, Music,
Video, 3.0%
Mother &
Babycare,
4.3%
Cosmetics,
4.9%
Source: iResearch, 2Q12
China online advertising market

Brand Advertising (RMB M)
Video Advertising (RMB M)
Search Advertising (RMB M)
Other Online Format (RMB M)
Total Online ad market (RMB M):
Total Online ad market (US$M)
Growth Rate (Rmb, %)
Total China ad market (Rmb M)
Growth Rate (Rmb, %)
Ad market as % of GDP
Online ad as % of Total ad market
2007
4,871
250
2,880
2,771
10,771
1,062
87.5%
180,086
8.3%
0.68%
4.4%
2008
8,411
570
5,331
3,770
18,082
2,632
147.7%
184,070
2.2%
0.61%
9.8%
2009
8,997
1,360
6,991
4,742
22,089
3,235
22.9%
199,242
8.2%
0.59%
11.1%
2010
13,348
2,150
11,038
6,430
32,967
4,903
51.5%
245,916
23.4%
0.63%
13.4%
2011
17,507
4,250
18,880
12,188
52,825
8,227
67.8%
277,951
13.0%
0.65%
19.0%
2012E
19,258
7,225
28,039
13,772
68,294
10,845
31.8%
311,305
12.0%
0.67%
21.9%
2013E
21,184
11,199
38,190
15,425
85,998
13,483
24.3%
342,436
10.0%
0.69%
25.1%
Source: iResearch, CNNIC, J.P. Morgan estimates. *Note: Growth rates are in Rmb terms.
151

21 November 2012
152
Bloomberg JPMA ANGELE <GO>
Steve Shepherd
AC
(27-11) 507-0386, steve.a.shepherd@jpmorgan.com

Bloomberg JPMA SHEPHERD<GO>
Historical iron ore, copper and Chinese HRC prices

120
110
100
90
80
70
60
50
Jan-12
Mar-12
May-12
Jul-12
China HRC
Copper
Sep-12
Iron ore
Nov-12
Jan'12=100
Source: Bloomberg.
Global steel overcapacity has averaged 437Mt or ~22.6% of

capacity over past 12 months
2,000
1,500
1,000
500
-
Jan-08
Jan-09
Jan-10
Production
Jan-11
Jan-12
Excess Capacity
Source: World Steel Association, J.P. Morgan estimates.
FAI - Govt
Source: CEIC
FAI - Private
Jun-12
Sep-12
Mar-12
Dec-11
Jun-11
Sep-11
Mar-11
Dec-10
Sep-10
60%
50%
40%
30%
20%
10%
0%
-10%
Jun-10
China FAI Government and private
Mar-10
In Asia, we recommend stocks with high-quality, lowcost assets operating in deficit markets (Shenhua Energy
and Sesa Goa), and avoid Yanzhou. For LatAm, we
prefer names with bottom-up stories and managements
that are delivering. We recommend Metalurgica Gerdau
and avoid CSN. For CEEMEA, our top picks are LW
Bogdanka and TMK, and avoid Anglo American.
(55-11) 4950-3888, rodolfo.r.angele@jpmorgan.com

Dec-09
Rodolfo R. De Angele, CFAAC
Jun-09

We continue to track supply discipline via inventory
trends for signals on underlying market strength. The
steel industrys overcapacity problems are exposed, and
raw material costs are higher. This makes the sector more
challenging to invest in just from an absolute return
perspective. While we monitor supply-side interventions,
generating a sustained bull trend in commodities, robust
and growing demand is the key. Were hopeful a
sustained global recovery may begin to look possible
from 2014. In SA, the formulation of a credible roadmap
to address the labor issues will be the key.
Sep-09

We expect commodity prices to trade around marginal
cost levels on low global growth. China continues to hold
the key on demand, but a more restrained approach to
fiscal and monetary stimulus should see most
commodities in modest oversupply. For LatAm, the
mining and steel sector at 6.7/7.0 13E EBITDA are
above the normalized level. Steel sector continues to
anticipate recovery, but earnings disappointments could
bring back the valuations to normalized levels. The
flaccid macroeconomic outlook in CEEMEA is likely to
constitute a challenge for commodity prices. We expect
the best performing stocks to be those with robust
margins, specific growth angles, attractive dividend yield,
captive markets, and strong management track records.
(852) 2800 8570, daniel.kang@jpmorgan.com

Bloomberg JPMA KANG <GO>
Mar-09
Metals and mining investment case

The sectors steady descent from its early 2011 peak,
which culminated in the bust of early 3Q12, has finally
been arrested by industry supply cuts, promises of
unlimited debt monetization (US/EU)) and seasonal
restocking. Underlying real demand has been absent from
the recovery so far. In our view, most commodities
should trade around marginal cost levels with supply
discipline holding the key to pricing strength. We
recommend stocks with low-cost, world-class assets and
would avoid high-cost plays in oversupplied markets.
The unstable labor environment in SA hosts a substantial
part of the CEEMEA mining segment. We are thus
focusing away from SA as we await the formulation of a
solution to the deep-seated and chronic issues.
Daniel KangAC
Dec-08
Metals and mining
Sep-08
Adrian Mowat
(852) 2800-8599

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Sesa Goa
LW Bogdanka
TMK
Metalurgica Gerdau
Stocks to avoid
Yanzhou Coal - H
Anglo American
CSN
P/E (x)
12E
EPS (LC)
12E
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
31
168
127
13.7
22.21
1088 HK
SESA IN
LWB PW
TMKS LI
GOAU4 BZ
OW
OW
OW
OW
OW
70923
2649
1322
3211
4172
13.3
8.1
12.4
9.4
12.2
12.7
6.3
8.9
8.1
9.2
2.3
20.7
10.2
1.5
1.8
2.4
26.6
14.3
1.7
2.4
3.0
2.4
4.9
na
0.0
17.9
15.6
19.5
17.2
12.0
11.26
23743
4.785
1171 HK
AGL SJ
SID US
UW
UW
UW
10668
37175
6984
10.3
14.8
NM
24.1
13.5
11.1
1.1
1604
-0.6
0.5
1753
0.4
1.2
1.7
11.3
5.0
5.1
8.5
13E
Div. yield
13E (%)
13E
ROE
13E (%)
MSCI Global Metals & Mining index bottoms out
MSCI EMEA Materials Index vs GSCI Industrial Metals Index
400
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-06
Jan-04
Jan-05
Jan-03
Jan-02
Jan-01
Jan-07
GSCI Ind. Metals Index (RHS)
MSCI EMEA Mat. Index (LHS)
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
FTSE 350 Mining Index (RHS)
Source: Bloomberg
Jan-02
350
300
250
200
150
100
50
0
Jan-01
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Gold Price/GSCI Industrial Metals Index
Jan-00
FTSE/JSE Mining Index (LHS)
Jan-07
Jan-06
Jan-05
Jan-04
Jan-03
50000
Jan-02
5000
Jan-01
100000
Jan-00
10000
Source: Bloomberg.
Scope for re-rating Asia sector PB valuations below 3-year average

5
1
Steel
Source: Bloomberg
FTSE JSE Mining Index vs FTSE London Mining Index
200
Jan-00
Jul-12
Nov-12
Mar-12
Jul-11
Nov-11
Mar-11
Jul-10
Nov-10
Mar-10
Jul-09
Nov-09
Mar-09
Jul-08
Nov-08
Mar-08
Jul-07
Nov-07
Mar-07
Jul-06
Nov-06
Mar-06
Source: Bloomberg.
600
1000
500
Nov-05
650
600
550
500
450
400
350
300
250
200
150
Aluminium
Min to Max PBV
Coal
Avg 3 yr PBV
Diversifieds
Spot PBV
Note: Diversifieds (BHP and RIO) use a P to NPV as a proxy for PBV.
Latin American peer comps Miners seem cheaper

20.0
17.4
Steel
15.0
10.0
Mining
12.5
10.9
10.0
9.3
6.4
7.0 6.7
5.0
0.0
2012
2013
EV/EBITDA
2012
2013
P/E
Source: J.P. Morgan Estimates.
153
Adrian Mowat
(852) 2800-8599

21 November 2012
Oil and gas

Oil and gas investment case
We are negative into 2013 as we see downside in oil and
refining, while we do not expect improved petchems.
Downside risk on oil is demand growth unlikely to
increase, while OPEC rebuilds capacity. In a weak
demand scenario, we see refining capacity ex China
being in excess, while excess Chinese capacity is a
further risk. Petchem capacity will add more than our
expected growth driven by Chinese capacity additions. In
LatAm, we believe investors will center their attention on
companies that convey production growth, solid
exploratory campaigns, and higher profitability than its
peers. For CEEMEA, the oil tax reform remains sluggish.
Our preference is for superior FCF generation.
Brynjar BustnesAC
(852) 2800 8578, brynjar.e.bustnes@jpmorgan.com
Bloomberg JPMA BUSTNES<GO>
Caio CarvalhalAC
(55 11) 4950 3946, caio.m.carvalhal@jpmorgan.com
Bloomberg JPMA CARVALHAL <GO>
Andrey Gromadin, CFA
AC
(7-495) 967-1037, andrey.gromadin@jpmorgan.com

Bloomberg JPMA GROMADIN<GO>
Artem Konchin
(7-495) 937-7323, artem.v.konchin@jpmorgan.com
Bloomberg JPMA KONCHIN <GO>

With oil price and refining margins sitting at elevated
levels, we see mostly downside here due to weak demand
growth. At the same time we see greater capacity
additions in refining while crude production even ex
OPEC should meet demand growth. For CEEMEA, we
expect further pressure on FCF generation, and we
forecast slightly higher average dividend payments.
Pressure from unfavorable changes on the fundamental
front is likely to continue in Gas. Macro outlook may be
further clouded by the domestic market share rebalancing
upon the arrival of the new independent producers.
Oil demand growth (mn BOPD) vs Brent price (US$/bbl)- RHS

Crude demand in China and the US, including inventory
rebuilding by strategic holders. Structural demand
decline in the US on relatively high gasoline prices and
more efficient car fleet. In petchems we look at China
PMI, IP and naphtha-crude spreads for any pickup in
activities. For LatAm, we consider pure E&P companies
with solid production growth track record and Service oil
companies with disciplined approach to capital usage.
For CEEMEA, our preferences are based on the visible
outliers in terms of production profiles, high-yielding
names and companies with above-average isolation from
commodity price fluctuations.
Source: Bloomberg, J.P. Morgan estimates,
Source: Bloomberg, J.P. Morgan estimates
Our preferences in CEEMEA are Rosneft due to the

improved production profile on back of Vankor's output
gains, and Novatek which starts building foundation for
its long-term growth strategy. In Asia, we prefer Sinopec
on refining reversal and low valuations. We avoid
PetroChina (nat gas import loss), Reliance (weak
refining/petchems), S-Oil (weak ref/PX/lube), Alliance
Oil (cautious view on costs and timing of the refinery
upgrade project/crude output growth), and Ecopetrol
(uncompelling valuation and mild output growth).
154
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E2013E2014E
Growth mn BOPD
Brent price (US$/bbl)
Refining capacity addition to outpace demand growth (kBOPD)

3,000
2,500
2,000
1,500
1,000
500
(500)
(1,000)
(1,500)
(2,000)
(2,500)
2009
2010
2011
Effective net capacity additions
2012 E
Net demand growth
2013 E
2014 E
120
110
100
90
80
70
60
50
40
30
20

21 November 2012
Adrian Mowat
(852) 2800-8599

Price (LC)
Top picks
Sinopec Corp - H
Rosneft
Novatek
PetroChina
S-Oil Corp
Alliance Oil Company
Ecopetrol
Code
Rating
Mkt cap
(US$MM)
P/E (x)
12E
EPS (LC)
12E
13E
Div. yield
13E (%)
13E
ROE
13E (%)
7.9
7.8
101
386 HK
ROSN LI
NVTK LI
OW
OW
OW
84721
83037
30667
10.8
6.1
13.1
9.1
5.0
9.7
0.7
1.3
7.7
0.9
1.6
10.4
3.3
1.4
1.9
14.4
18.2
27.4
10.14
775.15
96000
50
57
857 HK
RIL IN
010950 KS
AOIL SS
EC US
UW
UW
UW
UW
UW
250138
46004
9904
1266
117573
14.4
12.9
12.8
33.2
13.5
14.0
12.8
11.8
28.9
10.6
0.7
60.2
7472
1.5
4.2
0.7
60.5
8156
1.7
5.4
3.2
1.3
4.2
0.0
4.9
12.0
13.8
15.6
12.3
54.7
Excess crude over ref t'put
US Petroleum demand (kBOPD)
12 per. Mov. Avg. (Excess crude over ref t'put)
Source: Bloomberg
Singapore GRMs below five-year average now (US$/bbl)
We believe PX spreads will fall in 2013/14
15
million tons
10
5
0
700
3.0
600
500
2.0
400
1.0
300
0.0
200
-1.0
5Y average
Global PX demand growth
Global PX capacity growth
2014E
2011
2013E
2012
2010
2009
2012E
2011
2008
2007
2006
2005
2004
2003
100
2002
-2.0
2001
-5
4.0
Source: IHS Chemical, J.P. Morgan estimates.
Russia oil and gas sector EPS sensitivity to oil price/RUB
Russia oil and gas sector EBITDA sensitivity to oil price/RUB
20%
15%
16%
19.6%
15.6%
18.4%
18.0%
13.2%
13.6%
12%
5%
4%
0%
0%
-10%
-4.1%
-4.9%
-4.9%
2012E
2013E
2014E
Impact on EPS from 10% oil price increase

Impact on EPS from 3.8% RUB appreciation
Real impact on EPS from 10% increase in oil price
12.1%
12.4%
12.4%
9.9%
9.8%
8%
10%
-5%
14.3%
spread (RHS)
25%
$/ton
Jul-12
Oct-12
Apr-12
Jan-12
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Oct-10
Apr-10
Jan-10
Jul-09
Oct-09
Apr-09
Jan-09
Jul-08
Oct-08
Apr-08
Jan-08
Jul-07
Oct-07
Apr-07
6.0
5.0
4.0
3.0
2.0
1.0
(1.0)
(2.0)
(3.0)
(4.0)
Jan-07
23,000
22,000
21,000
20,000
19,000
18,000
17,000
16,000
15,000
China importing above refining tput needs 1H12 (mn tonnes)
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
US overall product demand slowing down (kBOPD)
-4%
-2.2%
2012E
-2.5%
2013E
-2.6%
2014E
Impact on EBITDA from 10% oil price increase

Impact on EBITDA from 3.8% RUB appreciation
Real impact on EBITDA from 10% increase in oil price
155

21 November 2012

We would welcome any news that could contribute to
balancing pulp supply/demand such as (1) recovery in
European demand and acceleration in Chinese demand,
(2) new capacity closures, and (3) M&A.
We prefer to play it safe and stick with companies that
generate cash and have been recently showing
disciplined capital allocation such as Duratex
(DTEX3/OW) and Fibria (FIBR3/N).

Bloomberg JPMA FERREIRA <GO>
Latam W. Average
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Sep-07
14
13
12
11
10
9
8
7
6
5
4
Mar-08
Global forestry 1Y forward EV/EBITDA
Global Peers W. Average
Source: Bloomberg and J.P. Morgan. Market cap weighted average of 32 companies.
Latam W. Average
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
26
24
22
20
18
16
14
12
10
8
6
4
2
0
Jul-07
Global forestry 1Y forward P/E
Jul-06

The sector has outperformed the index by 15-20% in the
past six months and is currently trading at a 6.5%
premium to the five-year historical average. We see
limited room for a re-rating due to the solid performance
in 2012 and pulp price risks in 2013. A re-rating could
come from (1) higher or prolonged government
incentives, (2) weaker-than-expected competition, and (3)
improvement in the disposable income of the domestic
consumer.
(55-11) 4950-3629
lucas.x.ferreira@jpmorgan.com
Jan-07
Pulp & paper micro investment case

We foresee different drivers impacting the performance
of the pulp & paper and wood panels markets in 2013.
Opportunities: (1) Government incentives have made the
sector more attractive than other regulated sectors. Tax
incentives to the consumer, lower labor taxes, tax rebates
on exports, and lower energy prices should have a
positive impact on profitability. (2) Weaker average FX
should make exports more profitable and competition
with imported goods softer. (3) Pulp capacity closures
should make the market a little more rational than
initially anticipated. (4) Prolonged low interest rates and
low unemployment are setting the outlook for healthy
demand locally. Risks: (1) 2013 should be marked by the
beginning of a pulp supply expansion cycle that in our
view should cause downward pressure on prices. (2)
House launches have declined and should result in lower
house deliveries in 2013.
Lucas FerreiraAC
Mar-07
Pulp & paper
Jan-06
Adrian Mowat
(852) 2800-8599
Global Peers W. Average
Source: Bloomberg and J.P. Morgan. Median of 32 companies.
2011-15E pulp supply and demand CAGR

4.0%
4.0%
5.1%
3.0%
2.6%
0.8%
Total
Hardwood
Demand Supply
Softwood
Operating rates of the Brazilian wood panel industry

100%
90%
80%
97%
98%
86%
82%
81%
85%
83%
84%
87%
70%
70%
60%
2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Source: ABIPA and J.P. Morgan estimates.
156

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Top picks
Duratex
Fibria
Price (R$)
Ticker
Rating
Mkt cap
(US$MM)
R$14.11
R$19.24
DTEX3
FIBR3
OW
N
3,744
4,958
EV/EBITDA (x)
12E
13E
9.5
8.3
8.3
8.4
12E
EPS (R$)
0.71
(0.42)
13E
Div. yield
13E (%)
ROE
13E (%)
0.80
0.07
1.8
0.0
10.0
0.0
157
Adrian Mowat
(852) 2800-8599

21 November 2012
Real Estate
Real estate investment case
QE3 and inflow of liquidity to Asia could provide strong
support to companies book values. Asian RE equities
are trading below LT average P/BV and hence we expect
mean reversion of NAV discounts / P/BV to continue. In
Mexico, we could be getting close to an inflection point
after significant underperformance. But we rather wait a
bit more to see better clarity on housing policy. For
Brazil, FCF of the sector starts to be positive in 4Q12.
For CEEMEA, UAE (mainly Dubai) is seeing pickup in
property prices for select projects. In Russia,
fundamental shortage of housing and improved access to
mortgages drives demand. In Poland, continued
economic slowdown may put pressure on rental rates.
Yield seeking would most likely continue within real
estate equities under low-rate environment, and we
expect further yield compression among the Asia REITs.
A re-rating in BZ and MX HBs would need a higher
earnings bottoming and upward revisions to current
expectations. In Dubai, new project launches have
resumed after 4yrs with improved consumer confidence.
In KSA, RE demand will pick up subject to the
implementation of mortgage law; less reliant on global
macro outlook. In Russia, consumer confidence and
spending has been resilient in 12, however a lower
commodity prices environment could cloud the picture.
Cap rate moves in the property investment markets
provide good indications on book value growth upside.
For residential segments, volume pickup will be key
share price drivers. We expect a positive cash generation
for BZ given the reduction on launches and a greater
focus on profitability. In Mexico, after significant
deterioration on WC we believe it should stabilize or
reduce going forward. MENA developers are trading at
~40% discount. We remain selective and like developers
with strong investment portfolios and low ND/E. Russian
developers are a source of beta and tend to outperform
during market rise and underperform in the downturns.
In Asia, we prefer residential developers in improving
markets and strong balance sheets (Summarecon Agung,
Oberoi). We avoid China for 2013 as supply growth
could limit pricing power towards 2H13. In Mexico, we
like Homex as it is trading at less than half of its BV (ex
penitentiary business). In Brazil, we like Cyrela and
avoid Rossi given the lack of visibility on its results.
Emaar in MENA is our preferred play, and avoid LSR in
Russia.
158
Lucia Kwong, CFAAC

(852) 2800-8526, lucia.yk.kwong@jpmorgan.com
Bloomberg JPMA KWONG <GO>
J.P.Morgan Securities (Asia Pacific) Limited
Adrian HuertaAC
(52-81) 8152-8720, adrian.huerta@jpmorgan.com
J.P. Morgan Casa de Bolsa S.A. de C.V., J.P. Morgan Grupo Financiero
Muneeza HasanAC
+971 4 428-1766, muneeza.z.hasan@jpmorgan.com
JPMorgan Chase Bank N.A. Dubai Branch
Elena JouronovaAC
+7 495 9673888, elena.jouronova@jpmorgan.com
JPMorgan Bank International LLC
Michal KuzawinskiAC
+48 22 44 19534, michal.kuzawinski@jpmorgan.com
JPMorgan Securities Limited
Asian real estate: Prem/ disc to NAV

20%
10%
+2 s.d.
+1 s.d.
0%
Mean = -14.3%
-10%
-20%
-30%
-40%
Jan-05
-1 s.d.
-19.2%
-2 s.d.
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Asian real estate: FY12E P/BV and deviations (s.d.) from longterm average
4.00
3.00
FY12E P/BV
1.51
2.00 1.29
1.19
1.13
1.00
0.75 0.82
vs. LT avg
2.04
1.17
0.00
-1.00
-2.00
Source: Bloomberg, J.P. Morgan estimates.
1.11 1.11
3.35
2.48
1.43
2.48
1.52
1.45

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Oberoi Realty
Summarecon Agung
Emaar Properties
Cyrela Brazil Realty
HOMEX
Stocks to avoid
Longfor Properties
LSR
Rossi Residencial
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
12E
283.7
1900
4
17
26
OBER IN
SMRA IJ
EMAAR DB
CYRE3 BZ
HOMEX* MM
OW
OW
OW
N
OW
1688
1424
6003
3322
651
13.88
4.115
3.98
960 HK
LSRG LI
RSID3 BZ
N
UW
UW
9719
2120
516
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
6.6
74.9
0.3
1.4
9.4
15.1
99.2
0.3
1.7
6.3
0.0
0.0
1.3
2.2
0.0
12.5
16.7
5.9
13.7
12.0
1.1
0.2
0.6
1.1
0.4
0.6
1.6
na
3.9
19.5
8.2
8.6
13E
12E
42.8
25.4
11.0
11.4
2.7
18.8
19.2
11.1
9.5
4.1
13.1
17.8
6.3
12.2
11.7
6.5
BZ HB we expect a turnaround during 2013

17%
Net income
17%
2.8
ROE
2.3
BZ HB Monetization Capacity: WC + Inventories divided by 2012

launches
3.0
2.6
3.0
2.3
1.9
1.4
1.3
2010
10%
11%
2013e
2014e
2015e
2011
2012e
PDGR3
Source: J.P. Morgan estimates, including Cyrela, Gafisa, Rossi, PDG and MRV
1.3
GFSA3
RSID3
MRVE3
CYRE3
RDNI3
250
249
250
188 198
151
118
25 31 36
50
1Q08
3Q08
168
146
100
0
1.3
Property prices in Moscow and St. Petersburg (000 RUB/sq m)
300
150
1.4
Source: J. P. Morgan estimates
New mortgage loans in Russia
200
1.6
6%
7%
2009
10%
1Q09
3Q09
61 49
1Q10
84
101
195
105
248
181
150
100
72%
y/y
48%
y/y
3Q10
1Q11
3Q11
1Q12
200
50
0
2002
2003
2004
2005
St. Petersburg mass market

Source: Central Bank of Russia
2006
2007
2008
2009
St. Petersburg high-end
2010
2011 Jun-12
Moscow
Source: SPB Realty, IRN, LSR.
159
Adrian Mowat
(852) 2800-8599

21 November 2012
Semiconductors
Semiconductor micro investment case
2012 was a year of mobile computing devices (MCD)
with new product launches along with new OS. While
stagnant economic growth is likely to continue, we
expect smartphone and tablet PC demand growth to
remain strong in 2013. Accordingly related key
component names (Display, AP) that were able to
reshape their business model should continue to
outperform in 2013 in our view. We remain positive on
winners in respective sectors and expect global brands to
outperform on the back of solid customer base and
ongoing market share gains.
Most upstream tech companies have expressed concern
about global macro conditions and expect this trend to
continue into 2013. Accordingly, echoing anemic global
consumer spending growth, we expect muted growth
from traditional IT products (PC, NB) next year.
However, as price erosion for key components stabilizes
given supply discipline across the industry, we expect the
overall supply-demand conditions to improve on a Y/Y
basis. We believe industry leaders with superior cost
structure and economies of scale should benefit more and
outperform the rest of the pack.
Near-term catalysts we see for the sector are year-end
holiday demand, smartphone, tablet and new Win OS
related products sell-through. We are also closely
watching for a sign of Chinese New Year demand, to see
if it can surprise on the upside, as we witnessed in the
Golden Week holiday. If results turn out better than
expected, we could turn more positive.
JJ ParkAC
(822) 758-5717, jj.park@jpmorgan.com
Bloomberg JPMA JPARK <GO>
J.P. Morgan Securities (Far East) Ltd, Seoul Branch
Global DRAM revenue trend

US$ mn, %
12,000
8,000
6,000
4,000
2,000
0
160
1Q10
DRAM revenue, US$ mn
Growth rate, Y/Y% (RHS)
Source: WSTS, Company data, J.P. Morgan estimates
Global NAND revenue trend

US$ mn, %
8,000
11%11%
4,000
3%
-5%
2,000
0
30%
25%
20%
15%
10%12%
10%
8% 9%
5%
4%
3%
0%
-1%-1%
-5%
-5%
-6%
-10%
-13%
-15%
-20%
3Q11
2Q12
1Q13E
4Q13E
25%
6,000
1Q10
4Q10
NAND revenue, US$ mn
Growth rate, Q/Q% (RHS)
Source: WSTS, Company data, J.P. Morgan estimates
Global AP (Application Processor) market forecast

US$ mn
27,000
24,000
21,000
18,000
15,000
12,000
9,000
6,000
3,000
0
We believe major brands such as Samsung and LG will
sustain strong growth in handset and TV, which should
benefit the relevant supply chains. In the SCM sector, in
addition to structural market share gains driven by the
mobile computing and IDM outsourcing, we believe
robust AP demand will clearly benefit TSMC. In touch
panel space, we believes TPK would benefit from tablet
PC growth as well as touch panel adoption in NBs/AIOs
given its dominant market share on both ends. On the
other hand, we recommend investors to stay away from
following names: CMI/E-ink in display and Wintek in
touch panel space due to poor customer base and weak
earnings visibility.
20%
15%
10%
6%
5%
3% 2%
0%
0%
0%
-2%
-3%-4%
-5%
-9%
-7%
-10%
-17%
-15%
-20%
-18%
-25%
3Q10 1Q11 3Q11 1Q12 3Q12 1Q13E 3Q13E
15%
15%
14%
10%
10,000
2009
2010
2011
2012E
2013E
2014E
2015E
LCD industry capex vs. OP trend

US$ mn
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000
-10,000
2003
2004
2005
2006
2007
Industry Capex
2008
2009
2010
2011
Industry OP
Source: Company data, J.P. Morgan estimates. *Note: Industry OP includes

SEC/LGD/AUO/CMI/Sharp while industry capex includes all players
2012E
2013E

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Samsung Electronics
LG Display
TSMC
Novatek
TPK
Stocks to avoid
CMI
E-ink
Wintek
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
1,349,000
35,100
90.4
115.0
399.0
005930 KS
034220 KS
2330 TT
2311 TT
3673 TT
OW
OW
OW
OW
OW
182.2
11.5
80.2
2.4
4.2
11.1
22.4
11.7
3481 TT
8069 TT
2384 TT
UW
UW
UW
3.0
0.8
0.7
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
138,427
783
6.33
6.84
40.7 4
176,013
4,683
6.66
8.90
50.61
0.4
1.4
3.3
4.7
4.3
21.9
15.0
22.4
21.7
38.5
-3.43
-1.58
-0.95
0.64
0.26
-0.94
n.m.
n.m.
n.m.
2.8
1.2
-4.9
13E
12E
9.7
44.8
14.3
16.8
9.8
7.7
7.5
13.6
12.9
7.9
NM
NM
NM
17.4
86.8
NM
APAC Tech P/BV valuation (FTM basis)
APAC Tech P/BV valuation (excl. SEC/TSMC FTM basis)
Source: Company data, Bloomberg, J.P. Morgan estimates
Source: Company data, Bloomberg, J.P. Morgan estimates
Global memory capex and Y/Y change
Global LCD capex and Y/Y change
X, %
X, %
US$ billion, Y/Y growth (%)

35
30
96
74
25
20
10
15
-27
10
5
0
1996
US$ billion, Y/Y growth (%)
67
23
-20
-35
1998
2000
Memory Capex (LHS)
26 17
-40
-44
2002
45
2004
2006
Memory Capex Chg, % (RHS)
2008
-56
2010
100
80
60
40
5
20
-12 0
-20
-40
-60
2012E
25
80%
20
67%
15
10
5
0
17
-31%
48%
13
2003
2005
2007
Capex (LHS)
15
60%
2011
-16%
2013E
20%
0%
-20%
-40%
Capex Growth (RHS)
Major LED peers revenue and Y/Y trend

US$ million, Y/Y (%)
1,600
1,400
1,200
1,000
800
600
400
200
0
50%
40%
30%
20%
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13E
3Q13E
10%
SPIL
-13%
2009
OSAT sector quarterly M/S trend
ASE
16
40%
-29%
80%
-3%
0%
13
-32%
Top 5 memory maker capex portion, % (RHS)
M/S (%)
65% 19
-9%
6
3%
2001
100%
22
19
19
18%
10
6
20
Amkor
STATS-ChipPac
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
Industry revenue (US$ mn)
1Q09
1Q10
1Q11
1Q12
160%
140%
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
Y/Y %
Source: Bloomberg, Company data, J.P. Morgan
161

21 November 2012
India IT services micro investment case

Barring hard-to-estimate effects of certain events like the
US fiscal cliff, we have good reasons to believe
CY13/FY14 will be a better year for Indian IT and the
offshore IT industry than the current period
(CY12/FY13). The three primary reason for this are (a)
We expect discretionary spending to pick up in CY13, (b)
CY13 is likely to be a better year for large, legacy
contracts/deals opening up for renewal, where Indian IT
players will likely win share, and (c) historically there
have never been two successive years of anemic growth
for Indian IT because not investing in IT might result in
competitive disadvantage. However, what we are not
clear about is how much better 2013 can be than 2012.
In case of flat or anemic global growth, IT spending
might be affected. In such a scenario, we expect
continued polarization in the performance of large Indian
IT players. If FY14 industry growth is light, it is likely
that the usual suspects, i.e. TCS, Accenture, Cognizant
and HCLT (particularly in Infra management), will gain
market share at the expense of other players.
We believe record consulting bookings registered by
Accenture in 4QFY12 (Aug-12 quarter) with book-to-bill
of 1.15x point to a pick up in discretionary demand.
Management commentary is mixed as TCS points to
strong pipeline including discretionary demand. Wipro
and HCLT also report increase in deals in pipeline, but
Infosys suggests the demand environment remains weak.
Our conversations with industry bodies such as TPI also
suggest that spending will likely increase (Y/Y) in CY13.
We remain OW on HCLT and Wipro. We believe
HCLTs revenue growth momentum will continue with
better margins; hence there is a case for re-rating along
with earnings roll-over. Wipro is our non-consensus OW
as we keep the faith that the new managements
structural changes will yield results in CY13 (initial
structural positives are already visible). We are Neutral
on TCS as valuations preclude us from taking a more
favorable view given limited absolute upside potential in
the near-term. We see TCS as the best near-term choice
for investors wishing to protect against downside. Our
long-held Neutral on Infosys stays due to our structural
concerns with its business, concerns we dont see
receding soon.
162
Viju K GeorgeAC
(91-22) 6157 3597, viju.k.george@jpmorgan.com
Bloomberg JPMA VGEORGE<GO>
When industry growth noticeably slows down as it is doing now, nearterm outsized growth can be achieved only by eating into each others
market share, resulting in polarization in performance
60%
FY04-08 was marked by the polarization

between the large-caps and mid-caps
50%
40%
FY10-FY14 will be marked by

polarization among the large-caps
30%
20%
10%
0%
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11 FY12P FY13E FY14E
India IT exports growth (Y/Y)
Source: Nasscom, J. P. Morgan
Accenture reported the highest ever quarterly consulting bookings in

4QFY12 (quarter ending Aug-12) with book-to-bill ratio of 1.15x,
suggesting improvement in discretionary demand
4,500
4,000
3,500
3,000
2,500
2,000
Aug-05
Nov-05
Feb-06
May-06
Aug-06
Nov-06
Feb-07
May-07
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
Feb-10
May-10
Aug-10
Nov-10
Feb-11
May-11
Aug-11
Nov-11
Feb-12
May-12
Aug-12
Software IT services
Consulting bookings (in $mn)
Source: Company reports, J P Morgan.
Outsourcing as a % of total Accenture revenues increased from

32% in FY03 to 44% in FY12 pointing to strong growth potential in
outsourcing services
75.0%
70.0%
65.0%
60.0%
55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
FY03
FY04
FY05
FY06
FY07
Consulting as a % of Accenture's revenues
FY08
FY09
FY10
FY11
Outsourcing as a % of Accenture's revenues
Source: J.P. Morgan
Three phases of growth in Indian IT Catering to needs of clients

beyond cost cutting provides the top-up
30%
Industry growth
Adrian Mowat
(852) 2800-8599
20%
10%
0%
Source: J.P. Morgan
Business ex pansion(Discretionary )
Cost Transformation
Cost Cutting
FY12

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Wipro
HCLT
TCS
Stocks to avoid
Infosys
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
12E
363
614
1,330
WPRO.BO
HCLT.BO
TCS.BO
OW
OW
Neutral
16,307
7,911
47,655
2,378
INFO.BO
Neutral
25,011
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
22.7
35.0
54.4
26.6
46.6
69.6
1.7%
1.0%
2.0%
20.8%
27.0%
37.0%
145.1
158.0
2.3%
23.9%
13E
12E
16.0
17.5
24.5
13.6
13.2
19.1
16.4
15.1
Source: Bloomberg, J.P. Morgan estimates. Note: Share prices and valuations are as of Nov. 5th, 2012.
Expected total contract value (TCV) of the deals coming for renewal in The largest chunk of churn deals is likely to come from infrastructure
CY13 is about $120 billion implying ~20% increase from CY12
management and full ITO (IT outsourcing), where certain Indian IT
players have good positioning
in USD billion
in USD billion
140
120
120
100
100
63
80
73
80
61
61
60
58
60
40
40
41
20
0
2012
57
52
2013
2014
H1
31
20
0
Infrastructure
Full ITO
BPO
ADM Outsourcing
management
TCV of churn market by service (between Oct 12 - Dec 14)
H2
Source: Company reports, TPI
Source: Company reports, TPI
We expect Indian IT exports to grow at a CAGR of ~10-13% over the

next 3-4 years hitting ~$115B mark in FY16 including $9B from
innovation-driven revenues
9
120.0
6
100.0
2
80.0
Supply of engineering and non-engineering talent should exceed

demand by convenient margin at least in the near-to-medium term
900
in
'000
800
800
700
FY15: 230
600
500
60.0
40.0
20.0
111
50
59
69
76
95
85
106
400
FY14: 205
750
300
FY13:185
200
100
0.0
FY10
FY11P
FY12E
Traditional IT exports
FY13E
FY14E
FY15E
Innovation led revenues
Source: Nasscom, Gartner, J.P. Morgan estimates
FY16E
FY12: 165
Engineer Demand (2012-15)
Engineer supply (2012-15)
Source: Nasscom, J.P. Morgan
163
Adrian Mowat
(852) 2800-8599

21 November 2012
Technology hardware
Technology hardware micro investment case
Since August, Asian tech has outperformed US tech by
11%, and we expect this to continue in 2013. Asian tech
underperformed US tech in 2011-1H12. We highlighted
the shift of value from hardware to OS/ apps in our 2010
Year-Ahead Content Meeting Hardware, and US tech
has done very well partly due to an impressive rise in OS
market share. Now, we think that the value is moving
back to Hardware space (even Apple is focusing on
hardware features now). For the first time, Asian
companies are grabbing share from the US in processor
market, e.g., Samsung outgrowing Apple, Mediatek/
SPRD gains shares from Qualcomm/ Marvell.
Implications of anemic global growth/What are we
tracking?
Despite anemic global growth, Asian tech supply chain
has seen a rebound in order rates in 2H12 thanks to a
flurry of new products. Admittedly, global growth is still
anemic and some new product announcements have been
disappointing (Win 8, iPad Mini price point). There are
risks of inventory overbuild, and we have to check back
the inventory level after the holiday seasons.
The valuation gap between winners and losers is
widening. We think money can be made by identifying
winners/ losers that are still not expensive/ cheap enough
yet. Meanwhile, the biggest alpha comes from picking
stocks whose status changes from winners to losers, or
vice versa.
For status change, MediaTek, Unimicron and ZTE have
big new product cycles coming up smartphone inroad,
top-2 smartphone substrate design win and China TDLTE equipment respectively, that could revive the
decline driven by saturating feature phone/ 3G
equipments respectively. While we believe ASUS is a
good company, it could face tougher competition from
Samsung/ Microsoft Surface.
Among winners, Quanta and Ju Teng are still trading at
a single-digit P/E, even though earnings growth is strong
and underestimated, in our view. Among losers, the
earnings cycle for HTC and Catcher could be very weak,
as seen from the lessons of LG/ Nokia and Catchers own
history in 2007-09 the stocks are still far from any
valuation support, in our view.
164
Alvin KwockAC
(852) 2800-8533, alvin.yl.kwock@jpmorgan.com
Bloomberg JPMA KWOCK<GO>
Tech Strategy: Timeline of the views

2013
Asia to outperform US
-5%
Aug12
Turned Positive Product

launch / Supply issue resolved
Apr12
Turned Cautious Demand

collapse/ supply problem
Nov11
Turned Positive Product

cycle / Low inventory
2011
Theme
Either change or become

irrelevant
2011
2010
Theme
Content meeting Hardware
2010
Aug'12 - Present
6%
-7%
-12%
Apr'11 - Jul'12
18%
Nov'11 - Mar'12
13%
-2%
-16%
14%
18%
-40% -20% 0% 20% 40%
US Tech
Asia Tech
Source: Bloomberg and J.P. Morgan.
Smartphone OS share US driving OS innovation

100%
80%
US rules on strong
OS share gains
Europe slowdown
60%
Asia continued
weakness in OS
40%
20%
0%
US (Android + iOS + MS +
Europe (Symbian)
RIMM)
2008
2009
2010
Source: Company data and J.P. Morgan estimates.
Asia
2011
2012
Smartphone AP share Asian gains ground for first ever time

80%
60%
Material market share

loss starts in 2012
40%
Asia strong share gain in

AP due to first Samsung
Exynos and then
Mediatek/ SPRD
20%
0%
US (Apple + QCOM)
2009
2010
Asia (Mediatek + Exynos + SPRD)

2011
2012E
Taiwan tech 3Q earnings big-cap beat, small-cap miss

By market cap
Big cap (> US$8bn)
Mid cap (within US$2bn/8bn)
Small cap (< US$2bn)
Overall technology sector
# of reported
companies
5
14
12
31
Index
weightings
17.8%
7.1%
5.2%
30.1%
Earning surprise
7.3%
-55.2%
-33.2%
-1.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
MediaTek
ZTE
Unimicron
Quanta
Ju Teng
Stocks to avoid
HTC
Catcher
ASUStek
13E
EPS Growth (LC)

12E
13E
22.5
194.5
11.3
11.5
6.9
14.1
12.8
9.1
10.3
5.4
14.8
-92.1
-24.0
6.6
150.0
11.5
10.7
10.7
15.6
9.9
10.1
-73.3
-14.0
36.0
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
320
11.42
28.20
69.90
3.29
2454 TT
763 HK
3037 TT
2382 TT
3336 HK
OW
OW
OW
OW
OW
14,733
4,733
1,510
9,007
493
225
129.50
315
2498 TT
2474 TT
2357 TT
UW
UW
N
6,823
3,439
8,154
P/E (x)
Div. yield
13E (%)
ROE
13E (%)
59.4
1,423.9
24.3
11.1
27.4
3.0
0.7
4.7
5.9
2.1
24.7
0.1
9.4
18.6
10.5
-26.4
8.6
6.0
9.8
3.4
5.2
15.6
15.5
17.8
Catchers P/BV
Ju Tengs P/BV
2.50
9.00
+2 Stdev
+2 Stdev
8.00
2.00
7.00
+1 Stdev
+1 Stdev
6.00
1.50
5.00
4.00
Mean
2.00
-1 Stdev
-2 Stdev
Jan-06
Jan-07
Jan-08
-1 Stdev
0.50
1.00
(1.00)Jan-05
Mean
1.00
3.00
Jan-09
Jan-10
Jan-11
-2 Stdev
Jan-12
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Source: Bloomberg, Company data and J.P. Morgan estimates
Unimicrons P/BV
HTCs P/BV
14.0
3.00
80
70
12.0
2.50
+2 Stdev
2.00
60
+2 Stdev
10.0
50
8.0
+1 Stdev
1.50
Mean
+1 Stdev
6.0
0.9x
40
30
Mean
20
4.0
1.00
-1 Stdev
Supporting
valuation
-2 Stdev
0.50
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
-2 Stdev
2.0
10
-1 Stdev
Still a lot more to go
Jan-05
Jan-06
Jan-07
Jan-12
Jan-08
Jan-09
P/B
Jan-10
Jan-11
ASUS P/BV
ZTEs P/BV
2.0
1.9x
1.8
1.6
1.4
Mean
1.2
1.0
0.8
3.5
All time highest

valuation at +2stdev.
Winner
to loser
-1 Stdev
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
3.0
2.5
2.0
1.5
1.0
-2 Stdev
0.6
Jan-12
Jan-13
At 2008
levels.
Turnaround
in sight
4.0
+1 Stdev
Jan-12
(10)
5.0
4.5
+2 Stdev
1.7x
ROE (%) (RHS)
0.4
Jan-05
Jan-12
0.5
Jan-05
1.3x
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
165
Adrian Mowat
(852) 2800-8599

21 November 2012
Telecommunications
Telecoms micro investment case
The key driver of telecom stocks, in our view, is earnings
revisions. We highlight that most telcos are transiting
from being voice-only operators to full-scale servicers
with increasing data consumption trend. Managing longrun incremental costs will be a key differentiator of
performance within the space in Asia. The picture varies
greatly in CEEMEA, depending on macro conditions and
levels of maturity, regulation, competition and secular
growth opportunities. Central Europe looks worse, while
Africa and parts of the Middle East look most attractive.
The current dynamics in Russia are reasonable, with
some downside risk on competition, while we believe
Turkey is likely to improve sharply and is structurally
attractive. Positively, leverage is generally low and cash
flow strong, with scope for growing cash returns in South
Africa, MENA and Turkey. For LatAm, regulation is
going to remain a main driver.
In Asia, operators are moving into new product segments
with different pricing and price elasticity dynamics. In
the context of limited top-line growth, a key driver would
be on how operators manage their cost structures in the
long term through spectrum and asset rationalization. For
LatAm, we believe a re-rating could take place only if
regulatory environment improves and prices stop
declining on competition. In CEEMEA, stronger growth
in Africa, the Middle East and Turkey supports the sector
and overlaps with stronger secular growth drivers.
Central Europe combines the weakest macro and the
most difficult secular outlook in telecoms.
James R. Sullivan, CFAAC

(65) 6882-2374, james.r.sullivan@jpmorgan.com
Bloomberg JPMA SULLIVAN <GO>
Andre Baggio, CFA AC

(55-11) 4950-3427, andre.baggio@jpmorgan.com
Bloomberg JPMA Baggio<GO>
Jean-Charles Lemardeley, CFA
(44-20) 7134-5051, jean-charles.lemardeley@jpmorgan.com

Most markets show ceiling to voice MOU at 500, will video usage
also be capped?
Asian capex share by subsegment

0.4
0.3
0.2
0.1
0

Understanding the economics of wireless data through
demand/supply forecasting and data pricing analysis
would be a key driver in understanding profitability
trends. In CEEMEA, secular growth prospects are best
measured by demographics/GDP growth, current levels
of spend and the level of development of alternative
infrastructure. On these, Africa, the Middle East and
Turkey look best. A key risk in LatAm is deterioration in
the regulatory environment.
Source: J.P. Morgan estimates, Bloomberg.
In Asia, we prefer integrated DM operators over EM

wireless operators based on their better cost structure
dynamics, better consumer affordability, low capex risks
and lack of strategic wireless asset sales. We like Far
EasTone and avoid Globe Tel. We like Tim as a pure
mobile play in Brazil. We avoid NIHD given the high
expenses and raising leverage. Our picks in CEEMEA
are Naspers, Turkcell, Yandex; we would avoid MTS.
166
AC
-0.1
-0.2
-0.3
2008
2009
2010
2011
2012
2013
Advertising
Internet Retail
Internet Software & Services
Movies & Entertainment
Publishing
Adrian Mowat
(852) 2800-8599

21 November 2012
Top picks
Far EasTone Telecom
Naspers Ltd
Yandex
Turkcell
TIM Participacoes
Stocks to avoid
Globe Telecom
Mobile Telesystems
NII Holdings
Price (LC)
Code
Rating
Mkt cap
(US$MM)
P/E (x)
12E
13E
EPS (LC)
12E
13E
Div. yield
13E (%)
ROE
13E (%)
69.5
54576
21.0
10.9
7.7
4904 TT
NPN SJ
YNDX US
TCELL TI
TIMP3 BZ
OW
OW
OW
OW
OW
7753
25365
6852
13315
9008
19.7
27.0
24.7
21.6
12.6
15.9
21.9
17.6
20.0
10.4
3.5
2025
0.9
0.5
0.6
4.4
2496
1.2
0.5
0.7
6.9
0.7
na
0.0
1.8
18.9
16.7
27.3
16.7
11.9
1150
16.8
4.9
GLO PM
MBT US
NIHD US
UW
UW
N
3685
17317
839
17.1
10.7
NM
15.9
10.1
NM
67.1
1.6
-1.7
72.4
1.7
-1.5
7.3
5.8
0.0
20.0
46.7
-10.4
Steeper glide path for MTRs to foster competition
Success determinants shift in a data-driven environment (Stage 3)
Mobile Termination Rates (MTR), R$/min
0.45
actual
old plan
new plan
0.40
0.35
Revenue
Growth
0.30
0.25
Earnings
Growth
0.20
0.15
Period
Pricing
Honeymoon period Network capacity End of Honeymoon

begins
close to full
period
Pricing moves to
Rising as
Low, based on
long term
companies begin
market expansion
incremental cost,
goals and very low to look through to
implying a differential
long term
incremental costs
between firms
incremental costs
Varies by pricing
Slowing as
High, based on
elasticity and
product user growth
strategies, which are
rising prices hit
and rising ARPU
driven by cost base
usage
High, based on
Slowing, based on Varies based on cost
revenue growth
revenue growth
base differentials
2011
2012
2013
2014
2015
Source: Anatel and J.P. Morgan estimates
A "Stages of Development" approach to Telco investing

Stage
Time Period
Key Characteristic
Drivers
Most important statistic
Pricing
Winners
One
2005-2007
Voice Period
Operators leverage scale-ability of
voice to push wireless penetration far
above expectations
Wireless penetration rates
Voice pricing constantly falls as scale
drives down cost, increases
addressable market
CMHK, Bharti
Two
2010-2012
Empty network period
Operators leverage empty networks
post large CAPEX programs to grow
revenue at low incremental cost
Open network capacity
Data priced off Short Run Incremental
Cost (SRIC) given empty networks
EXCL previously, Smartone, LGU+,
Unicom, FarEastone
Three
2012
Integrated operator period
Operators networks fill, move focus to
differential cost structure.
Spectrum and off-loading capabilities
Data priced off Long Run Incremental
Costs (LRIC), which will be very
different between operators
KT Corp, Chunghwa, major integrated
operators
Source: J.P. Morgan
167
Adrian Mowat
(852) 2800-8599

21 November 2012
Transportation
Transportation micro investment case
We expect nominal supply to continue to outpace
demand. 2013 does not bring much cheer as scheduled
aircraft and vessel deliveries suggest another year of
industry oversupply if all are fully deployed. However,
the airline and container shipping industries have proven
that they can manage the effective supply through
aircraft/vessel idling and ad-hoc service cancellations.
We expect 2014E to be a much better year with demand
likely outpacing supply growth. The transportation
companies in Latam however are more linked to
domestic infrastructure growth. In 2012, Brazilian
companies have suffered from regulatory issues and
government intervention in other sectors. 2013 should be
no different. However, we expect higher returns in Brazil
as government is more concerned with players execution
and delivery capacity.
The nature of transportation sector varies across regions.
The transportation companies in Latam are defensives
and a proxy to domestic growth. In Asia, however,
transportation is a cyclical sector and slower-thanexpected growth could lead to lower demand and prolong
the demand-supply imbalance. Historically, Asian
airlines traffic tends to grow 1.6x their economies real
GDP growth, container shipping volume 3.0x global real
GDP growth, dry bulk shipping 1.9x.
Airlines: Sector still faces oversupply in 2013E, which
needs to be effectively managed. The outlook should
improve markedly from 2014E as demand will likely
outpace supply growth. Bulk shipping: Vessel deliveries
should finally moderate in 2013E. The orderbook looks
overstated and vessel delivery shortfalls will be
significant given financing challenges for many ship
owners and builders. Fuel efficiency priorities will drive
accelerated scrapping. Container shipping: To
sustain/raise rates further, the liners would need to
exercise significant capacity rationalization. In Latam,
we track the infrastructure developments.
Our top airline picks are Air China and AirAsia. In
shipping, we like the bulk shippers with Pacific Basin as
our top pick. In Latam, we see CCR as the best vehicle to
get exposure to infrastructure in Brazil. Our top avoids
are Hanjin Shipping, and ALL.
168
Corrine PngAC
(65) 6882-1514, corrine.ht.png@jpmorgan.com
Bloomberg JPMA PNG<GO>
Fernando AbdallaAC
+55 (11) 4950-3463, fernando.abdalla@jpmorgan.com
Bloomberg JPMA BBG ABDALLA <GO>
Asian airlines passenger demand-supply growth

15.0
10.8
10.0
10.6
10.4
10.4
9.4
10.6
10.2
10.0
9.5
9.0
10.8
10.2
9.0
8.1
7.2
8.8
6.7
4.1
4.0
8.2
5.5
6.4
5.0
6.0
5.5
5.0
6.0
5.2
5.5
1.2
(1.5)
(5.0)
(5.6)
(10.0)
(10.0)
Pax Traffic RPK growth YoY
(15.0)
2007
2008
Pax Capacity ASK growth YoY
2009
2010
Fleet growth YoY
2011
Effective Fleet growth (net of retirement) YoY
2012F
2013F
2014F
Asian airlines cargo demand-supply growth

30.0
Cargo Traffic RPK growth YoY
Cargo Capacity growth YoY
25.0
Fleet growth YoY
Effective Fleet growth (net of retirement) YoY
24.0
20.0
14.0
15.0
10.0
5.9
5.0
5.0
1.3
4.1
3.0
2.0
1.0
2.4
3.0
3.0
2.0
(5.0)
(4.7)
(6.6)
4.4
3.4
2.0
-2.0
0.6
-2.5
(5.0)
5.8
3.8
3.9
(9.2)
(10.0)
-11.0
(15.0)
2007
2008
2009
2010
2011
2012F
2013F
2014F
Dry bulk shipping demand-supply growth

16.9%
20.0%
15.0%
10.0%
5.0%
9.9%
6.7%
6.5%
7%
0.0%
14%
6.5%
7%
-3.1%
2008
2009
17.4%
9.6%
16%
4.4%
12.0%
8%
3.2%
14.4%
11%
6.0%
4.0%
5.0%
2012E
2013E
3.3%
4.5%
3.3%
-5.0%
2007
Supply Growth
2010
2011
Supply Growth Net of Capacity Adjustments
2014E
Demand Growth
CCR: Investment opportunities (R$ B)

Railroads
91
Federal concessions
42
Urban mobility
27
Airports in Brazil
25
Contractual amendments
5
0
20
Source: Company reports and J.P. Morgan.
40
60
80
100

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
Air China
AirAsia BHD
Localiza
CCR
Stocks to avoid
Hanjin Shipping
ALL
Price
(LC)
Code
Rating
Mkt cap
(US$MM)
12E
5.1
2.9
4.0
35.3
18.5
753 HK
AIRA MK
2343 HK
RENT3 BZ
CCRO3 BZ
OW
OW
OW
N
OW
9149
2634
989
3438
15755
10800
8.3
117930 KS
ALLL3 BZ
N
N
1237
2758
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
0.3
0.6
-0.5
1.2
0.7
0.4
0.2
0.1
2.0
0.8
2.8
0.0
0.2
0.0
4.1
9.5
10.1
2.4
24.5
41.4
-3400
0.4
441
0.6
0.0
nm
3.5
8.9
13E
12E
14.9
5.3
NM
29.5
27.3
13.5
13.4
30.5
17.6
21.9
NM
19.8
24.5
14.0
Asian airlines cargo traffic growth versus US semiconductor book-to- Historical newbuild bulkcarrier delivery slippages
bill ratio
120
15,000
Localiza: Rental revenue growth and elasticity to GDP

31
30
12,000
29
9,000
28
27
6,000
26
3,000
Used cars sold
Source: Company reports and J.P. Morgan.
Avg. price, cars sold ('000 R$)
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
1Q10
4Q09
3Q09
2Q09
1Q09
4Q08
3Q08
25
2Q08
2011
Source: Clarksons.
Localiza: Used cars sold volumes vs. prices (car rental division)
1Q08
Delivery (Shortfall)/Surplus (RHS)
US semiconductor book-to-bill ratio (RHS)
Source: CEIC database and IATA.
Actual deliveries (LHS)
Sep-12
Jan-11
Nov-11
Mar-10
Jul-08
May-09
Sep-07
Jan-06
Nov-06
Mar-05
Jul-03
May-04
Sep-02
Jan-01
Nov-01
Mar-00
Jul-98
May-99
Sep-97
Jan-96
Nov-96
Mar-95
Jul-93
May-94
Sep-92
Jan-91
Nov-91
Asia Pacific airlines cargo traffic growth y/y (LHS)
0.30
2012E
1999
0.50
-20%
2010
-40%
2009
-10%
2008
-30%
2007
20
0.70
2006
0%
-20%
40
2005
0.90
2004
10%
-10%
60
2003
1.10
20%
0%
80
2002
1.30
30%
100
2001
40%
-30%
10%
1.50
2000
50%
24
50%
40%
30%
20%
5.1x
2.6x
7.7x
9.4x
9.7x
12.4x
4.7x
4.1x
4.1x
3.2x
10%
0%
2010
2011
2012e
Car rental
2013e
2014e
Fleet rental
169
Adrian Mowat
(852) 2800-8599

21 November 2012
Utilities & power equipment

Utilities & power equipment micro investment case
The performance of utilities varies across EM. EM Asia
utilities have outperformed (13%) EMEA and Latam
underperformed 23% and 8% respectively. Utilities in
EM are subject to policy risks as the tariff prices in most
countries are fixed by the governments. In EMEA, we
expect the electricity regulation environment to stabilize
in 2013 and to see some recovery in investor sentiment.
In Brazil, we expect utilities to lag the market as policy
risks persist. In Asia, we perceive the outperformance to
be challenging. We advise investors to be stock-selective
and focus on stocks that have (1) new positive catalysts,
(2) existing positive catalysts with more positive
surprises, and (3) attractive operating CF yield for better
risk reward.
Overall, most utilities will either be unaffected or even
benefit from anemic global growth. Specifically, (1) Thai
IPPs are protected by proven tariff regime mechanism, (2)
structural growth of China gas & wastewater operators is
relatively unaffected thanks to the low penetration rates,
(3) China IPPs, Korean utilities should even have
improved margins thanks to weakening fuel prices (coal
+ LNG), (4) in EMEA Czech is most exposed to foreign
(mostly German) power prices, and (5) although
Brazilian utilities have been affected by weak demand
via softer wholesale power prices, the local regulators
mandate to allocate a large portion of the electricity
production back to the regulated market will limit the
influence of deregulated prices in companies results. In
our view, the only players that will be negatively affected
are power equipment makers.
Key data points to keep track of are (1) spot coal prices,
(2) power demand growth, (3) gas demand numbers, (4)
CPI, (5) FX fluctuations against US$ (e.g. KRW, INR,
MYR, BRL and to a less extent CNY), (6) political and
regulatory developments, and (7) tariff prices.
Our top picks are Kunlun (defensive growth & strong
CF), KEPCO (falling LNG prices & lower fuel prices
with new nuclear units), Tractbel Energia (insulated
from effects of MP 579, fully contracted through 2015)
and FSK (RAB regulation is approved, low risk of
dilutive equity issuance). Stocks to avoid are JSW
Energy (high earnings volatility, market disappointment
on slow project rollout) and Electrobras (affected by
concessional renewal at low tariffs).
170
Boris Kan
AC
(852) 2800 8573, boris.cw.kan@jpmorgan.com

Bloomberg JPMA KAN<GO>
Sergey V Arinin
AC
(7-495) 967-7031, sergey.v.arinin@jpmorgan.com

Bloomberg JPMA ARININ <GO>
Gabriel Salas, CFAAC

(1-212) 622-0289, gabriel.salas@jpmorgan.com
Bloomberg JPMA SALAS <GO>
MSCI Utilities relative EM, sector wise

EM Asia utilities relative to EM
120
EM Latam utilities relative to EM

EM EMEA utilities relative to EM
110
100
90
80
70
Dec 11
Mar 12
May 12
Jul 12
Sep 12
Nov 12
Source: Bloomberg, 14 November 2012. Note: Index rebased to 100 as of 31

December 2011
Cross country comparison of unit city gas consumption (2011)

1,000
800
600
83%
0%
100%
0%
400
200
USA
S. Korea
China
Beijing
NG cons (indus+pow er) (in m3 per US$1000 GDP RHS)
Per cap NG consump (resi+comm) (in m3 / capita LHS)
Source: CEIC, BP, BJ Government Statistics. % figures represent % of natural gas
sourced domestically
.
35
30
25
20
15
10
5
-

21 November 2012
Adrian Mowat
(852) 2800-8599
Top picks
KEPCO
Kunlun Energy
Tractebel Energia
FSK
Stocks to avoid
JSW Energy Ltd.
ELETROBRAS (ON)
Price (LC)
Code
Rating
Mkt cap
(US$MM)
12E
27600
14.92
33.1
0.01
015760 KS
135 HK
TBLE3 BZ
FEES RU
OW
OW
OW
OW
16236
15490
10427
7633
61
9
JSW IN
ELET3 BZ
UW
UW
1812
6238
P/E (x)
EPS (LC)
13E
Div. yield
13E (%)
ROE
13E (%)
-3088
1.0
2.3
0.0
551
1.1
2.6
0.0
0.0
2.1
4.2
0.0
0.7
17.6
24.2
2.6
1.0
3.4
3.4
4.1
0.8
7.2
9.5
5.8
13E
12E
NM
15.5
14.4
8.0
50.1
13.8
13.0
8.3
58.8
2.7
17.7
2.2
China urban wastewater treatment capacity and treatment ratio
Central Europe year ahead power prices (/MWh)
100
250
80
200
60
150
40
100
20
50
54.0
52.0
50.0
48.0
46.0
44.0
42.0
40.0
Dec 11
Mar 12
Jun 12
Urban WWT capacity (mn tons/day)
Urban WWT ratio (%)
Sep 12
Polish (/MWh)
Czech (/MWh)
Source: J.P. Morgan estimates, Bloomberg. Price in
Source: NDRC, CEIC, J.P. Morgan estimates
Major European utility companies' asset disposals in 2010 12 YTD & Brazil wholesale power price outlook (R$/MWh)
future plans
70,000
30,000
140.0
125
60,000
115
117
120.0
111
25,000
105
108
108
108
103
101
50,000
20,000
99
100.0
90
85
15,000
10,000
85
40,000
80.0
30,000
60.0
20,000
40.0
10,000
20.0
5,000
-
2010
E.ON AG
2011
GDF Suez
Source: Company annual reports
Enel
2012 YTD
RWE
Veolia
EDF
2013 E
EDP
Iberdrola
0.0
2012
2013
2014
2015
Captive Market Sold
2016
Itaipu
2017
Bilaterial
2018
2019
Expiring
2020
2021
Expansion - not contracted
2022
2023
2024
2025
Average Price - Total
Source: CCEE and J.P. Morgan
171
Adrian Mowat
(852) 2800-8599

21 November 2012
172

21 November 2012
Stocks for 2013
Adrian Mowat
(852) 2800-8599
173
Adrian Mowat
(852) 2800-8599

21 November 2012
Top Picks by country strategists

Price
Share
Target % Change
Brazil
16.9
Banco Bradesco
32.8
37.0
12.9
Gerdau S.A.
17.3
21.0
21.2
BM&F Bovespa
12.7
14.0
10.2
Anhanguera
31.9
45.0
41.1
Totvs
41.0
48.0
17.1
Iguatemi
25.3
30.0
18.4
CCR
18.7
20.0
7.0
NATURA
56.5
62.0
9.8
Lojas Americanas (Voting)
17.0
19.5
14.8
China
39.1
4.4
6.0
35.7
ICBC - H
5.1
6.3
23.5
Sinopec Corp - H
8.0
9.5
19.0
3.7
6.0
62.6
5.2
9.3
78.8
7.0
8.1
16.2
2.1
2.9
37.7
India
15.9
Axis Bank Ltd
1210
1400
15.8
ICICI Bank
1019
1200
17.8
Mahindra & Mahindra
907
985
8.6
Adani Ports and SEZ
128
155
21.2
ITC Limited
280
325
16.0
Indonesia
22.1
Erajaya Swasembada Tbk PT
2500
3000
20.0
8600
10000
16.3
Semen Gresik (Persero) Tbk
15000
18000
20.0
Summarecon Agung
1890
2500
32.3
Korea
34.8
Hyundai Motor Company
214000 290000
35.5
LG Electronics
79300
100000
26.1
108000 185000
71.3
Orion
1076000 1300000
20.8
KEPCO
27400
33000
20.4
Malaysia
26.5
CIMB Group Holdings
7.6
8.5
11.4
IJM Land
2.1
2.9
38.8
AirAsia BHD
2.9
4.0
38.9
6.0
7.1
17.9
Dialog Group Bhd
2.4
3.0
25.5
Mexico
20.3
Televisa
22.7
31.0
36.9
Grupo Aeroportuario
29.7
35.0
18.0
Arca Continental
94.4
100.0
5.9
Philippines
27.3
Cebu Air, Inc.
61.0
90.0
47.5
Metro Pacific Investments Corp.
4.3
5.0
16.3
Ayala Corporation
455
550
20.9
104
125
20.5
Ayala Land
22.9
30.0
31.3
Russia
56.1
Sberbank
86.7
147.3
69.9
Rosneft
8.0
10.6
33.1
Globaltrans
15.8
27.2
71.9
E.ON Russia JSC
0.081
0.138
70.0
TMK
13.8
19.0
38.1
Yandex
21.5
42.0
95.1
Magnit
35.4
40.5
14.4
South Africa
8.9
Vodacom Group
11681
11500
(1.5)
Aspen
15516
17300
11.5
Naspers Ltd
53576
62511
16.7
Name
174
Bloomberg JPM Mkt Cap,

Code
Rating US$ MM
13905
BBDC4 BZ OW
56337
GGBR4 BZ
N
13470
BVMF3 BZ OW
12055
AEDU3 BZ OW
2228
TOTS3 BZ
OW
3176
IGTA3 BZ
OW
1926
CCRO3 BZ OW
15828
NATU3 BZ OW
11670
LAME3 BZ OW
8455
46470
751 HK
OW
1576
1398 HK
OW
218889
386 HK
OW
85288
175 HK
OW
3564
694 HK
OW
2905
992 HK
OW
9281
2866 HK
OW
3790
17093
AXSB IN
OW
9382
ICICIBC IN OW
21274
MM IN
OW
10123
ADSEZ IN
OW
4655
ITC IN
OW
40030
8356
ERAA IJ
OW
753
BBCA IJ
OW
22018
SMGR IJ
OW
9239
SMRA IJ
OW
1416
15885
005380 KS OW
43390
066570 KS OW
11945
010620 KS OW
1988
001800 KS OW
5909
015760 KS OW
16191
5047
CIMB MK
OW
18521
IJMLD MK
OW
958
AIRA MK
OW
2615
KPJ MK
OW
1260
DLG MK
OW
1885
8484
TV US
OW
12938
OMAB MM OW
903
AC* MM
OW
11611
4057
CEB PM
OW
898
MPI PM
OW
2569
AC PM
OW
6558
JFC PM
OW
2628
ALI PM
OW
7630
25518
SBER RX
OW
59295
ROSN LI
OW
84414
GLTR LI
OW
2824
EONR RU
OW
5107
TMKS LI
OW
3225
YNDX US
OW
7028
MGNT LI
OW
16733
17528
VOD SJ
OW
19629
APN SJ
OW
7982
NPN SJ
OW
24973
P/E (X)
2012E
2013E
24.2
18.9
10.9
9.7
13.3
12.5
14.5
12.8
28.7
16.8
24.4
20.8
23.6
20.9
27.6
22.2
26.6
23.3
48.4
31.4
13.0
13.9
9.5
7.1
8.0
7.6
11.0
9.2
14.1
10.5
16.2
13.3
19.3
15.7
NM
33.7
21.6
18.9
11.8
10.0
18.8
15.2
18.6
17.7
23.2
21.2
35.7
30.3
19.5
15.2
15.8
11.5
17.8
14.5
19.2
15.9
25.2
19.1
18.6
20.7
6.6
6.1
16.2
7.0
18.4
12.1
33.2
28.5
NM
49.7
17.5
16.8
12.8
10.8
15.0
12.8
5.2
13.3
23.1
18.9
31.5
28.3
21.3
16.9
21.8
15.3
17.3
16.3
24.8
19.2
23.6
19.4
14.9
12.4
17.8
15.3
22.5
17.4
29.3
24.2
33.3
27.5
12.4
10.1
5.3
5.0
6.2
5.1
8.6
6.7
7.4
6.8
9.4
8.2
25.3
18.1
24.6
21.2
20.9
17.9
14.6
13.7
21.8
18.6
26.5
21.5
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
12.4
25.1
2.0
28.5
3.4
12.8
3.6
17.9
11.1
6.5
2.2
8.0
10.3
13.6
0.0
na
(1.0)
70.7
0.1
11.1
21.0
17.3
2.0
27.3
12.0
12.8
1.2
9.9
33.0
24.6
4.1
41.4
16.2
13.9
3.6
73.1
5.9
54.0
1.1
39.6
18.8
22.9
2.0
16.1
4.8
34.9
4.3
19.0
6.0
5.4
4.2
19.6
(14.2)
19.5
3.3
14.4
26.0
34.0
0.7
20.4
25.1
21.3
1.1
10.3
65.1
22.4
0.3
26.0
NM
NM
0.0
2.7
19.1
14.8
1.6
22.4
24.4
18.2
1.6
19.5
21.1
23.3
1.9
12.2
7.8
4.7
1.4
21.1
20.0
9.7
1.2
22.9
22.3
18.1
2.0
36.5
34.5
28.2
1.0
23.3
80.2
37.0
0.0
21.6
8.6
22.6
1.5
24.8
17.9
21.0
2.6
30.3
31.4
32.3
0.0
16.7
16.2
25.4
0.6
11.1
15.0
7.9
1.1
19.8
NM
NM
0.0
12.7
(41.2)
51.7
1.4
5.0
74.9
16.5
0.4
17.6
NM
NM
0.0
0.7
(3.3)
1.9
1.9
14.4
10.0
18.9
3.1
17.3
(29.3)
17.4
2.2
9.2
NM
(60.7)
0.0
10.1
7.9
22.6
2.6
18.1
(2.0)
11.3
1.4
17.4
23.2
26.0
2.9
16.0
2.0
42.3
1.2
17.1
11.3
6.5
5.0
12.0
56.4
29.2
2.5
18.8
9.0
21.5
1.0
14.0
(30.9)
19.9
0.0
13.3
11.3
16.8
1.0
10.3
25.5
29.0
0.9
13.0
14.2
21.1
1.5
20.1
24.7
20.9
1.5
13.4
30.0
19.2
1.4
21.6
16.4
6.0
3.0
21.9
15.4
20.4
1.4
18.2
7.1
27.8
0.0
27.0
NA
9.1
na
16.0
(9.9)
15.2
na
17.2
88.9
40.0
na
27.3
61.8
16.0
na
23.3
19.3
15.8
4.4
32.7
11.4
6.6
8.0
62.6
37.0
17.4
na
18.8
9.5
23.3
0.7
16.7
Adrian Mowat
(852) 2800-8599

21 November 2012
Top Picks by country strategists (contd)

Price
Share
Target % Change
Taiwan
23.9
69.0
85.0
23.2
ASE
22.8
28.0
23.1
Mega Holdings
21.0
28.6
36.2
TSMC
90.0
110.0
22.2
Far EasTone Telecom
69.8
80.0
14.6
Thailand
20.8
19.6
22.0
12.2
Electricity Generating Company
128
155
21.1
PTT Exploration & Production
160
180
12.5
157
200
27.8
33.0
43.0
30.3
Turkey
17.8
Yapi Kredi
4.5
5.7
26.7
Vakifbank
4.3
5.5
28.2
Koc Holding
8.1
7.4
(8.0)
Turkcell
10.8
14.0
29.6
Emlak Konut
2.8
3.1
12.3
Chile
14.9
Antofagasta
1210
1370
13.2
CCU
70.3
82.0
16.6
MENA
29.7
First Gulf Bank
10.2
13.5
32.3
45.2
63.0
39.4
Industries Qatar
149
199
33.2
Mobily
74.8
88.0
17.7
Emaar Properties
3.6
4.5
25.7
Poland & CE3
20.5
LW Bogdanka
129
169
30.9
Erste Bank
20
25
22.3
PZU
388
421
8.4
Peru
0.9
Credicorp
138
139
0.9
Colombia
29.6
Pacific Rubiales
22.1
36.0
62.7
Almacenes Exito
35300
34100
(3.4)
Argentina
52.4
Banco Macro
13.8
21.0
52.4
Name

Code
Rating US$ MM
22220
2382 TT
OW
9103
2311 TT
OW
5925
2886 TT
OW
8249
2330 TT
OW
80020
4904 TT
OW
7803
9298
PS TB
OW
1410
EGCO TB
OW
2193
PTTEP TB
OW
17286
SCB TB
OW
17283
CPF TB
OW
8315
9038
YKBNK TI
OW
10855
VAKBN TI
OW
5951
KCHOL TI
OW
11370
TCELL TI
OW
13184
EKGYO TI
OW
3829
11723
ANTO LN
OW
18966
CCU US
OW
4481
12327
FGB UH
OW
8331
SAMBA AB OW
10848
IQCD QD
OW
22567
EEC AB
OW
13953
EMAAR DB OW
5937
7319
LWB PW
OW
1350
EBS AV
OW
10299
PZU PW
OW
10309
10990
BAP US
OW
10990
7602
PRE CN
OW
6538
EXITO CB
N
8666
791
BMA US
OW
791
P/E (X)
2012E
2013E
14.0
11.9
10.8
8.5
13.2
10.3
11.8
10.9
14.2
13.5
19.8
16.0
10.8
10.7
12.4
9.7
6.5
9.9
10.2
10.0
13.1
11.0
11.6
12.7
13.2
12.7
10.2
6.2
8.3
7.2
10.3
9.6
21.4
19.8
15.9
20.9
11.5
10.1
7.6
6.5
15.5
13.7
9.2
8.5
7.6
6.7
9.3
7.9
9.3
8.0
9.1
8.9
10.8
11.0
16.0
10.3
12.6
9.0
24.0
10.6
11.4
11.3
14.8
12.6
14.8
12.6
20.7
17.8
7.8
6.2
33.6
29.5
2.7
2.6
2.7
2.6
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
13.7
18.2
5.0
17.6
6.8
26.5
5.9
22.3
(3.1)
27.4
2.9
14.4
13.2
8.3
5.9
10.1
22.3
5.1
3.3
22.4
29.2
23.8
6.9
18.9
17.6
1.1
3.6
18.3
22.7
28.2
3.6
21.5
NM
(34.4)
4.1
10.0
16.3
1.7
3.4
20.8
12.0
18.7
3.0
21.1
19.4
(8.9)
3.9
17.9
23.5
14.2
0.7
13.0
(15.7)
64.8
0.0
14.8
5.3
15.6
0.0
12.9
(10.6)
6.8
na
13.1
47.8
8.1
0.0
16.7
90.9
(24.2)
2.7
7.7
11.5
16.3
3.2
22.6
(0.2)
19.6
3.2
22.7
23.1
12.9
3.1
22.5
(1.1)
9.6
4.7
18.7
(43.4)
13.9
6.7
15.8
2.0
17.0
4.0
15.6
11.3
15.8
5.3
28.5
12.6
3.0
6.0
27.7
12.2
(1.5)
1.3
5.9
129.8
55.1
4.2
15.6
57.6
39.5
4.9
19.5
305.9
125.5
0.8
5.9
25.8
0.2
7.0
21.4
4.5
17.7
2.0
19.9
4.5
17.7
2.0
19.9
35.9
20.3
2.5
18.1
50.8
26.8
2.5
29.1
20.9
13.8
2.6
7.2
5.0
5.7
0.0
24.7
5.0
5.7
0.0
24.7
Source: Datastream, MSCI, IBES, J.P. Morgan estimates

Note: Prices and valuations as of November 16, 2012. Sorted in ascending order of 2013E PE. Simple average is calculated in grey shaded row.
175
Adrian Mowat
(852) 2800-8599

21 November 2012
Stocks to avoid by country strategists

Price
Share
Target % Change
Brazil
7.0
CSN
4.7
5.0
5.9
ELETROBRAS (ON)
9.3
10.0
8.1
China
(15.1)
7.2
6.8
(5.6)
PetroChina
10.2
8.3
(19.3)
11.3
9.0
(20.4)
India
(14.1)
Bank of Baroda
729
600
(17.7)
767
675
(12.0)
Hero Motocorp Ltd.
1832
1600
(12.6)
Indonesia
(5.8)
United Tractors
19600
17000
(13.3)
Vale Indonesia
2375
2600
9.5
PT Indosat Tbk
6250
5400
(13.6)
Korea
(13.9)
Honam Petrochemical Corp 196000
180000
(8.2)
S-Oil Corp
97100
78000
(19.7)
Malaysia
(8.8)
Hong Leong Bank
14.4
11.7
(18.8)
Genting Plantations
8.4
8.3
(1.1)
IOI Corp.
4.9
4.6
(6.7)
Mexico
NA
NII Holdings
5.2
NA
NA
Philippines
(12.5)
Union Bank of the Philippines
112
97
(13.0)
Globe Telecom
1150
1000
(13.0)
254
225
(11.5)
Russia
15.2
Mobile Telesystems
17.2
20.5
19.3
50.8
59.0
16.3
Mechel (Preference)
2.0
1.9
(5.5)
X5 Retail Group
17.2
22.5
30.7
South Africa
70.0
2824
4800
70.0
Taiwan
(28.0)
ASUSTek Computer
308
300
(2.4)
Catcher Technology
142
110
(22.5)
HTC Corp
244
100
(58.9)
Thailand
(4.8)
Tisco Financial Group Pcl.
46.0
49.0
6.5
63.3
53.0
(16.2)
Turkey
12.7
Petkim
2.1
1.7
(18.2)
Turk Telekom
6.5
9.0
38.5
Garanti
8.1
9.6
17.9
MENA
5.3
Palm Hills Developments
2.5
2.1
(15.3)
Riyad Bank
22.9
26.0
13.8
12.3
13.0
5.7
Zain KSA
8.6
10.0
17.0
Poland & CE3
3.4
New World Resources
239
210
(12.1)
JSW
83
90
8.2
Bank Pekao SA
157
179
14.0
Colombia
(10.5)
Ecopetrol ADR
58
52
(10.5)
Name

Code
Rating US$ MM
6590
SID US
UW
6882
ELET3 BZ
UW
6298
96140
1988 HK
UW
27409
857 HK
UW
250297
1171 HK
UW
10713
19156
BOB IN
UW
5188
RIL IN
UW
45634
HMCL IN
UW
6648
4523
UNTR IJ
UW
7592
INCO IJ
N
2451
ISAT IJ
UW
3527
7905
011170 KS
UW
5748
010950 KS
UW
10062
7091
HLBK MK
UW
8841
GENP MK
UW
2079
IOI MK
UW
10352
898
NIHD US
N
898
4130
UBP PM
UW
1737
GLO PM
UW
3697
MER PM
UW
6957
6067
MBT US
UW
17750
AOIL SS
UW
1285
MTL/P US
UW
558
FIVE LI
N
4674
1422
ACL SJ
UW
1422
6239
2357 TT
N
7941
2474 TT
UW
3657
2498 TT
UW
7118
2644
TISCO TB
N
1090
TOP TB
UW
4199
10918
PETKM TI
UW
1160
TTKOM TI
OW
12624
GARAN TI
N
18971
4237
PHDC EY
N
426
RIBL AB
N
9140
KAYAN AB
N
4920
ZAINKSA AB
N
2463
5557
NWR LN
UW
1006
JSW PW
UW
3001
PEO PW
N
12663
119444
EC US
UW
119444
P/E (X)
2012E
2013E
2.2
23.1
NM
11.0
2.2
35.3
10.6
15.2
7.0
7.4
14.5
14.1
10.3
24.2
11.4
11.8
6.0
6.7
12.7
12.7
15.4
16.0
27.0
17.5
12.6
13.2
43.8
14.0
24.5
25.4
12.0
11.3
10.9
10.7
13.0
11.9
16.4
16.1
14.5
15.7
16.9
16.3
17.7
16.3
NM
NM
NM
NM
14.4
13.7
9.7
9.9
17.1
15.9
16.4
15.4
21.8
17.9
10.9
10.3
33.6
29.3
NM
NM
20.7
14.1
466.8
7.9
466.8
7.9
11.5
18.7
10.3
10.3
11.7
12.0
12.4
33.8
9.3
10.8
8.9
8.0
9.8
13.7
9.2
11.0
NM
15.8
8.3
8.1
10.0
9.1
11.8
9.5
13.6
8.4
10.1
8.8
NM
11.5
NM
NM
23.8
14.5
49.2
22.1
8.7
10.2
13.6
11.3
13.7
10.8
13.7
10.8
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
29.6
(93.9)
9.2
4.5
NM
NM
11.3
8.5
29.6
(93.9)
7.2
0.5
(14.8)
(20.2)
2.8
11.1
(1.6)
(6.1)
3.9
16.3
(3.0)
3.0
3.2
12.0
(39.7)
(57.4)
1.2
5.0
9.7
(4.6)
1.9
23.4
12.5
(10.2)
2.1
15.7
(6.8)
0.5
1.3
13.8
23.4
(4.1)
2.3
40.7
(8.0)
(3.7)
1.7
11.3
(6.3)
(4.0)
3.0
17.7
(83.3)
NM
0.0
9.6
65.6
(3.5)
2.0
6.8
(34.9)
5.8
2.5
12.5
(41.5)
2.4
0.9
9.3
(28.2)
9.1
4.2
15.6
(2.6)
1.6
2.3
13.3
26.7
(7.5)
2.1
14.4
(14.8)
3.9
1.3
10.6
(19.6)
8.4
3.6
14.9
NM
NM
0.0
(10.4)
NM
NM
0.0
(10.4)
10.9
4.0
4.3
19.5
12.0
(2.4)
2.6
14.1
(9.3)
7.8
7.3
20.0
30.0
6.5
3.0
24.6
(10.6)
22.5
5.7
19.1
12.1
5.7
5.8
46.7
(18.8)
14.8
0.0
12.3
NM
NM
11.2
4.7
(25.2)
47.0
na
12.9
NM
NM
0.0
2.7
NM
NM
0.0
2.7
(19.8)
(21.5)
3.9
12.2
33.2
0.9
5.2
16.7
(19.7)
(2.1)
0.0
13.1
(72.7)
(63.3)
6.4
6.8
2.1
(8.6)
5.4
16.2
15.4
11.2
5.4
21.5
(11.3)
(28.3)
5.4
10.8
16.8
6.6
4.3
22.4
NM
NM
2.9
7.7
32.0
3.0
7.7
42.0
1.7
10.2
2.4
17.6
8.0
38.6
2.1
5.1
NM
62.2
na
7.4
8.0
14.9
6.3
12.2
NM
NM
0.0
10.4
NM
NM
0.0
(9.4)
(20.7)
43.1
5.9
10.4
NM
122.6
na
3.8
(45.6)
(14.1)
5.4
10.8
4.2
20.6
6.3
16.6
3.3
26.9
4.9
54.7
3.3
26.9
4.9
54.7

176

21 November 2012
Adrian Mowat
(852) 2800-8599
Top Picks by Sector Heads

Name
Auto
Baoxin Auto Group Limited
Mahindra & Mahindra
Banks
Yapi Kredi
ICBC - H
Erste Bank
Credicorp
ICICI Bank
Chemicals
Industries Qatar
Sasol
Yanbu National Petrochemical
Consumer
Thai Union Frozen Products
China Foods Ltd
AmBev ADR
Magnit
NATURA
Education Services
Anhanguera
Kroton
Healthcare
Mindray Medical
Fleury
Infrastructure, Capital Goods &
Construction
Samsung Engineering
Iochpe-Maxion
CSR Corp Ltd.
Adani Ports and SEZ
Insurance
Fubon Financial Holdings
PZU
Coronation Fund Managers Ltd
Ping An Insurance Group - H
Internet
Baidu.com
Tencent
Youku Tudou Inc.
Oil & Gas
Rosneft
Sinopec Corp - H
Novatek
Pulp & Paper
Duratex
Fibria
Metals & Mining
Sesa Goa
TMK
LW Bogdanka
Metalurgica Gerdau
Price
%
Share
Target Change
31.2
214000 290000
35.5
3.7
6.0
62.6
5.6
7.0
24.1
8.8
11.0
25.3
907
985
8.6
18.2
4.5
5.7
26.7
5.1
6.3
23.5
20.4
25.0
22.3
138
139
0.9
1019
1200
17.8
16.3
149
199
33.2
22.3
29.0
30.3
23.6
34.0
44.4
37289
45700
22.6
43.9
53.0
20.7
198
221
11.9
17.6
70.5
90.0
27.7
8.2
10.0
22.0
40.3
46.0
14.2
35.4
40.5
14.4
56.5
62.0
9.8
23.5
31.9
45.0
41.1
42.5
45.0
5.9
19.7
32.4
39.0
20.3
23.2
31.0
33.6
3.6
3.8
5.3
144500
25.2
6.8
128
260000
31.0
8.8
155
31.0
388
3617
93300
58.5
40.0
421
5050
145000
70.0
93
246
17.0
170
306
30.0
8.0
8.0
104
10.6
9.5
180
14.2
19.2
16.0
19.0
166
13.8
129
22.0
31
220
19.0
169
32.0
35
38.4
79.9
23.0
29.6
21.2
30.5
29.2
8.4
39.6
55.4
19.8
61.4
83.4
24.4
76.3
41.8
33.1
19.0
73.4
5.6
12.4
(1.2)
32.1
32.5
38.1
30.9
45.3
13.6

Code
Rating US$ MM
12922
005380 KS
OW
43390
175 HK
OW
3564
1293 HK
OW
1840
1114 HK
OW
5692
MM IN
OW
10123
54462
YKBNK TI
OW
10855
1398 HK
OW
218889
EBS AV
OW
10299
BAP US
OW
10990
ICICIBC IN
OW
21274
9876
IQCD QD
OW
22567
SIIG AB
OW
2670
APPC AB
OW
1030
SOL SJ
OW
27204
YANSAB AB OW
6585
SAFCO AB OW
13166
29997
TUF TB
OW
2633
506 HK
OW
2958
ABV US
OW
115993
MGNT LI
OW
16733
NATU3 BZ
OW
11670
2483
AEDU3 BZ
OW
2228
KROT11 BZ OW
2737
2597
MR US
OW
3750
FLRY3 BZ
OW
1739
1177 HK
OW
2301
028050 KS
MYPK3 BZ
1766 HK
ADSEZ IN
OW
OW
OW
OW
2881 TT
PZU PW
CML SJ
032830 KS
2318 HK
OW
OW
OW
OW
OW
BIDU US
700 HK
YOKU US
OW
OW
OW
ROSN LI
386 HK
NVTK LI
OW
OW
OW
DTEX3 BZ
FIBR3 BZ
OW
N
SESA IN
TMKS LI
LWB PW
GOAU4 BZ
1088 HK
OW
OW
OW
OW
OW
5440
5320
1146
10640
4655
18090
10049
10309
1286
17176
51633
31294
32400
58731
2752
67073
84414
85288
31517
4431
3752
5109
16469
2622
3225
1350
4096
71050
P/E (X)
EPS Growth
Yield (%) ROE (%)
2012E
2013E 2012E (%) 2013E (%) 2013E
2013E
15.7
12.4
15.8
28.1
0.6
22.2
6.6
6.1
15.0
7.9
1.1
19.8
14.1
10.5
26.0
34.0
0.7
20.4
19.0
10.8
9.0
77.0
0.0
25.0
20.0
17.1
21.3
16.9
0.0
24.6
18.6
17.7
7.8
4.7
1.4
21.1
15.2
10.4
64.4
47.4
1.8
14.5
10.2
6.2
(15.7)
64.8
0.0
14.8
8.0
7.6
6.0
5.4
4.2
19.6
24.0
10.6
305.9
125.5
0.8
5.9
14.8
12.6
4.5
17.7
2.0
19.9
18.8
15.2
21.1
23.3
1.9
12.2
11.3
10.7
(13.1)
6.2
4.1
29.8
9.3
8.0
11.3
15.8
5.3
28.5
13.3
8.3
42.6
59.3
5.4
17.4
12.3
8.4
(47.1)
47.1
7.4
20.0
8.8
8.6
24.9
2.8
4.7
19.5
9.9
8.8
(21.7)
13.3
1.1
18.0
12.6
12.7
(4.5)
(0.9)
7.1
41.5
22.2
19.0
28.2
17.0
3.8
36.1
13.5
11.8
4.5
14.6
4.2
18.0
24.5
18.2
44.6
34.4
2.0
16.4
21.8
20.5
13.9
6.4
5.3
49.6
24.6
21.2
61.8
16.0
na
23.3
26.6
23.3
16.2
13.9
3.6
73.1
30.4
19.2
(1.0)
59.9
0.6
10.4
28.7
16.8
(1.0)
70.7
0.1
11.1
32.0
21.5
NM
49.2
1.1
9.7
22.6
18.8
33.7
20.5
2.4
16.1
18.8
16.3
16.6
15.9
1.4
16.1
24.9
19.6
25.0
27.1
1.9
10.2
24.2
20.4
59.3
18.6
3.8
21.9
24.9
9.2
45.9
21.4
23.2
16.1
11.4
11.4
18.5
17.5
21.5
27.9
19.6
36.1
NM
10.2
6.2
11.0
13.4
19.9
19.9
NM
11.1
8.0
9.4
12.6
12.1
13.4
15.4
8.4
15.7
16.5
21.2
12.8
10.8
11.3
12.0
14.7
15.2
20.9
15.1
26.7
NM
8.1
5.1
9.2
9.9
141.0
17.8
264.2
9.1
6.2
8.2
9.0
9.2
12.7
(12.7)
22.9
(91.0)
(2.8)
20.0
8.3
(15.7)
25.8
11.4
11.4
8.7
41.9
59.6
24.2
NM
(13.7)
15.4
(14.2)
(42.3)
11.9
11.9
NM
11.4
NM
(9.9)
57.6
(2.5)
0.4
60.5
9.4
192.8
30.0
9.7
24.2
5.5
0.2
54.1
19.5
41.5
32.5
29.8
35.1
NM
24.9
20.4
19.5
34.9
11.7
11.7
NM
24.0
28.5
15.2
39.5
31.7
5.3
1.9
2.8
2.3
1.2
1.2
3.9
3.7
7.0
5.8
2.4
0.8
0.1
0.0
0.4
0.0
2.2
1.4
3.3
1.9
0.9
1.8
0.1
2.6
2.4
na
4.9
0.0
3.0
21.6
32.8
15.2
15.3
22.9
25.4
10.7
21.4
70.1
5.9
18.7
25.6
40.3
35.6
1.0
20.0
18.2
14.4
27.4
5.1
10.0
0.3
16.4
15.6
17.2
19.5
12.0
17.9
177

21 November 2012
Adrian Mowat
(852) 2800-8599
Top Picks by Sector Heads (contd)

Name
Real Estate
HOMEX
Emaar Properties
Oberoi Realty
Summarecon Agung
Technology - Hardware
Ju Teng International Holdings
Limited
Unimicron Technology Corp.
MediaTek Inc.
ZTE Corp
Technology - Semiconductors
LG Display
Samsung Electronics
Novatek Microelectronics Corp.
TSMC
Technology - IT Services
HCL-Technologies
Wipro Ltd.
Telecoms
TIM Participacoes
Far EasTone Telecom
Yandex
Turkcell
Naspers Ltd
Transportation
AirAsia BHD
Air China
Localiza
CCR
Utilities
FSK
Tractebel Energia
Kunlun Energy
KEPCO
Price
%
Share
Target Change Bloomberg JPM Mkt Cap,
Code
Rating US$ MM
26.5
2593
26
38
47.7 HOMEX* MM OW
659
16
18
10.1
CYRE3 BZ
N
3266
3.6
4.5
25.7
EMAAR DB OW
5937
283
330
16.6
OBER IN
OW
1689
1890
2500
32.3
SMRA IJ
OW
1416
36.6
6019
3.6
69.0
28.4
312
11.2
5.0
85.0
40.0
450
15.0
34650
40000
1332000 1800000
407
550
109
135
90.0
110.0
614
356
1263
650
405
1400
7.6
69.8
21.5
10.8
53576
11.0
80.0
42.0
14.0
62511
2.9
5.2
36.0
18.7
4.0
4.0
7.0
39.0
20.0
4.5
0.0065
33.1
15.4
27400
0.0080
37.0
17.5
33000
40.8
23.2
40.8
44.2
33.9
26.5
15.4
35.1
35.3
24.4
22.2
10.2
5.8
13.8
10.9
40.1
44.5
14.6
95.1
29.6
16.7
20.8
38.9
35.9
8.4
7.0
13.9
17.2
22.9
11.8
13.8
20.4
3336 HK
2382 TT
3037 TT
2454 TT
763 HK
OW
OW
OW
OW
OW
034220 KS
005930 KS
3673 TT
3034 TT
2330 TT
OW
OW
OW
OW
OW
HCLT IN
WPRO IN
TCS IN
OW
OW
N
TIMP3 BZ
4904 TT
YNDX US
TCELL TI
NPN SJ
OW
OW
OW
OW
OW
AIRA MK
753 HK
RENT3 BZ
CCRO3 BZ
2343 HK
OW
OW
N
OW
OW
FEES RX
TBLE3 BZ
135 HK
015760 KS
OW
OW
OW
OW
518
9103
1499
14443
4532
55717
11412
180599
4311
2244
80020
22867
7751
15929
44921
12362
8820
7803
7028
13184
24973
6410
2615
9141
3478
15828
987
12582
7811
10358
15968
16191
P/E (X)
EPS Growth
Yield (%) ROE (%)
2012E
2013E 2012E (%) 2013E (%) 2013E
2013E
18.6
12.5
30.0
4.8
0.7
12.2
2.7
4.1
141.6
(32.7)
0.0
12.0
11.3
9.4
22.6
21.0
2.2
13.7
10.8
11.0
12.2
(1.5)
1.3
5.9
42.7
18.8
(57.9)
NM
0.0
12.5
25.2
19.1
31.4
32.3
0.0
16.7
57.8
10.5
(23.4)
36.7
3.7
15.2
7.5
10.8
11.4
21.9
237.4
18.6
44.2
9.6
10.0
15.0
14.2
18.8
17.5
15.7
23.2
21.1
12.4
19.8
25.3
21.4
26.5
19.5
5.2
15.2
30.1
27.6
NM
13.3
11.0
12.8
15.9
NM
5.7
8.5
8.8
13.7
15.6
9.7
7.4
7.6
8.0
11.8
13.5
14.9
13.2
13.4
18.2
17.1
10.3
16.0
18.1
19.8
21.5
19.5
13.3
13.7
18.0
22.2
30.4
21.8
10.2
13.1
14.3
49.7

178
NM
6.8
(23.2)
14.8
(92.1)
30.4
NM
72.5
9.5
17.2
22.3
25.9
51.1
4.4
22.1
35.7
3.3
29.2
88.9
47.8
9.5
(8.7)
NM
(41.8)
(17.3)
33.0
NM
1.2
(37.2)
17.8
23.0
NM
31.4
26.5
29.7
59.4
NM
21.1
NM
27.2
24.2
27.8
5.1
26.1
33.0
17.4
28.0
23.2
21.0
23.8
40.0
8.1
23.3
10.4
(60.7)
10.5
67.4
24.6
NM
6.1
8.5
(2.1)
11.8
NM
2.3
5.9
5.2
3.8
1.6
2.8
1.4
0.3
4.2
5.0
3.3
1.3
0.8
2.0
1.1
2.4
1.8
6.9
na
0.0
0.7
1.4
0.0
2.8
0.0
4.1
0.2
1.5
0.0
4.2
2.0
0.0
10.7
22.3
9.4
23.6
10.0
24.0
15.0
21.9
38.5
22.2
22.4
28.2
27.4
20.8
36.4
18.3
11.9
18.9
27.3
16.7
16.7
17.6
10.1
9.5
24.5
41.4
2.4
12.8
2.6
30.3
17.6
0.7

21 November 2012
Adrian Mowat
(852) 2800-8599
Stocks to Avoid by Sector Heads

Name
Auto
Zhongsheng Group Holdings
Hero Motocorp Ltd.
Banks
Bank of Baroda
Bank Pekao SA
Chemicals
Petkim
Consumer
X5 Retail Group
Parkson Retail Group Ltd
Marfrig
Healthcare
China Shineway Pharmaceutical
OdontoPrev
Infrastructure, Capital Goods &
Construction
Group 5
Weg
ABB Ltd
Insurance
Dongbu Insurance
Internet
Shanda Games
Oil & Gas
Ecopetrol ADR
S-Oil Corp
PetroChina
Metals & Mining
CSN
Anglo American (AGLJ.J)
Real Estate
Rossi Residencial
LSR
ASUSTek Computer
Catcher Technology
HTC Corp
Chimei Innolux Corporation
E Ink Holdings Inc.
Wintek Corporation
Technology - IT Services
Infosys
Telecoms
Mobile Telesystems
Globe Telecom
NII Holdings
Transportation
ALL
Hanjin Shipping Co Ltd
Utilities
JSW Energy Ltd.
ELETROBRAS (ON)
Price
%
Share
Target Change
(19.0)
9.8
7.5
(23.5)
9.5
7.5
(21.0)
1832
1600
(12.6)
1.0
729
600
(17.7)
157
179
14.0
26.2
28.0
6.7
(6.2)
12.3
13.0
5.7
2.1
1.7
(18.2)
1.8
17.2
22.5
30.7
5.9
5.0
(15.5)
11.1
10.0
(9.9)
5.1
11.9
12.0
0.7
11.0
12.0
9.6
2500
25.3
720
2941
18.0
540
47000
10163
5743
41000
8400
5100
3.3
4.0
58.1
97100
767
10.2
50.8
52.0
78000
675
8.3
59.0
4.7
23858
11.3
5.0
24832
9.0
4.0
4.1
14.3
NA
5.3
11.7
308
142
244
300
110
100
11.2
20.0
12.1
9.0
20.0
10.0
2355
2400
17.2
1150
5.2
20.5
1000
NA
8.3
10700
11.5
13000
60.7
9.3
54.0
10.0
(12.0)
17.6
(28.7)
(25.0)
(13.8)
(12.8)
(17.3)
(11.2)
22.7
22.7
(15.4)
(10.5)
(19.7)
(12.0)
(19.3)
16.3
(3.4)
5.9
4.1
(20.4)
5.5
NA
29.3
(18.2)
(28.0)
(2.4)
(22.5)
(58.9)
(12.2)
(19.3)
0.0
(17.4)
1.9
1.9
3.1
19.3
(13.0)
NA
29.9
38.4
21.5
(1.5)
(11.0)
8.1

Code
Rating US$ MM
6625
489 HK
UW
10892
881 HK
UW
2336
HMCL IN
UW
6648
10071
BOB IN
UW
5188
PEO PW
N
12663
BSAC US
UW
12362
3040
KAYAN AB
N
4920
PETKM TI
UW
1160
2887
FIVE LI
N
4674
3368 HK
UW
2146
MRFG3 BZ UW
1840
2030
2877 HK
UW
1272
ODPV3 BZ UW
2789
GRF SJ
WEGE3 BZ
ABB IN
UW
UW
UW
005830 KS
LBH SJ
DSY SJ
UW
UW
UW
GAME US
EC US
010950 KS
RIL IN
857 HK
AOIL SS
UW
UW
UW
UW
UW
SID US
AGL SJ
1171 HK
UW
UW
UW
RSID3 BZ
LSRG LI
960 HK
UW
UW
N
2357 TT
2474 TT
2498 TT
N
UW
UW
3481 TT
8069 TT
2384 TT
UW
UW
UW
INFO IN
MBT US
GLO PM
NIHD US
UW
UW
N
ALLL3 BZ
117930 KS
N
N
JSW IN
ELET3 BZ
UW
UW
3534
313
7516
2773
3315
3063
3285
3596
913
913
106359
119444
10062
45634
250297
1285
18357
6882
37475
10713
4212
513
2112
10013
6239
7941
3657
7118
1512
3027
741
767
24578
24578
7449
17750
3697
898
1985
2740
1231
4054
1809
6298
P/E (X)
EPS Growth
Yield (%) ROE (%)
2012E
2013E 2012E (%) 2013E (%) 2013E
2013E
14.6
13.1
(8.5)
11.6
1.7
23.1
9.7
9.4
(16.6)
2.3
1.8
15.6
18.8
13.8
(32.1)
36.4
0.9
12.9
15.4
16.0
23.4
(4.1)
2.3
40.7
16.1
14.2
5.2
8.8
4.3
17.7
6.0
6.7
12.5
(10.2)
2.1
15.7
13.6
11.3
4.2
20.6
6.3
16.6
28.7
24.8
(1.1)
16.0
4.3
20.9
NM
13.6
NM
NM
1.5
9.1
NM
11.5
NM
NM
0.0
10.4
NM
15.8
NM
NM
2.9
7.7
38.8
28.9
(20.4)
32.6
1.6
10.7
20.7
14.1
(25.2)
47.0
na
12.9
17.6
15.3
(15.7)
14.8
3.3
18.1
78.0
57.3
NM
36.1
0.0
1.2
23.7
21.1
2.3
12.1
2.9
22.0
13.6
12.3
(4.1)
10.7
2.4
17.6
33.9
29.8
8.8
13.6
3.4
26.3
47.7
NM
24.1
71.3
10.0
7.4
9.2
13.6
5.0
5.0
13.5
13.7
13.0
12.7
14.5
33.6
12.6
NM
14.9
10.3
12.5
6.3
17.7
13.5
11.5
10.3
11.7
12.4
NM
NM
NM
NM
16.2
16.2
14.0
10.9
17.1
NM
19.8
19.8
NM
30.4
58.5
2.2
23.2
11.2
19.8
38.5
10.0
7.5
10.7
12.0
5.0
5.0
12.4
10.8
11.9
12.7
14.1
29.3
16.3
11.0
13.6
24.2
10.3
6.5
11.7
12.6
18.7
10.3
12.0
33.8
47.6
17.5
77.7
NM
14.9
14.9
13.1
10.3
15.9
NM
19.1
14.0
24.3
26.5
17.7
35.3
13.2
NM
10.6
15.9
11.3
12.2
18.7
3.0
(5.2)
(5.2)
(8.7)
3.3
(28.2)
(6.8)
(3.0)
(18.8)
(48.3)
NM
(56.9)
(39.7)
(7.2)
(50.5)
41.9
(13.1)
(19.8)
33.2
(19.7)
(72.7)
NM
NM
NM
NM
21.5
21.5
1.4
12.1
(9.3)
NM
17.8
17.8
NM
(25.1)
(79.8)
29.6
53.5
NM
21.7
85.4
(0.7)
(1.4)
(14.0)
13.4
(1.8)
(1.8)
9.9
26.9
9.1
0.5
3.0
14.8
(24.1)
NM
9.3
(57.4)
18.6
(2.7)
51.7
6.9
(21.5)
0.9
(2.1)
(63.3)
NM
NM
NM
NM
8.9
8.9
6.8
5.7
7.8
NM
41.7
41.7
NM
(93.9)
NM
(93.9)
2.5
5.6
1.4
0.4
3.4
3.0
5.0
2.1
0.0
0.0
3.4
4.9
4.2
1.3
3.2
0.0
4.7
11.3
1.7
1.2
2.7
3.9
na
1.6
3.9
5.2
0.0
6.4
0.0
0.0
0.0
0.0
2.4
2.4
4.4
5.8
7.3
0.0
0.0
nm
0.0
4.0
0.8
7.2
14.5
13.0
16.8
13.8
30.1
16.0
16.1
58.2
17.8
17.8
24.0
54.7
15.6
13.8
12.0
12.3
6.2
8.5
5.1
5.0
12.1
8.6
8.2
19.5
12.2
16.7
13.1
6.8
(0.3)
2.8
1.2
(4.9)
24.7
24.7
18.8
46.7
20.0
(10.4)
6.2
8.9
3.5
5.0
9.5
0.5

179
Adrian Mowat
(852) 2800-8599

21 November 2012
Large Cap Stocks

Price
Share
Target % Change
Top Picks
25.2
Sberbank
87
147
69.9
Rosneft
8.0
10.6
33.1
214000 290000
35.5
Pacific Rubiales
22
36
62.7
Yapi Kredi
4.5
5.7
26.7
Antofagasta
1210
1370
13.2
First Gulf Bank
10.2
13.5
32.3
E.ON Russia JSC
0.1
0.1
70.0
LG Electronics
79300
100000
26.1
Vakifbank
4.3
5.5
28.2
LG Display
34650
40000
15.4
Samsung Electronics
1332000 1800000
35.1
ICBC - H
5.1
6.3
23.5
45.2
63.0
39.4
407
550
35.3
Industries Qatar
149
199
33.2
TMK
13.8
19.0
38.1
Samsung Engineering
144500 260000
79.9
69.0
85.0
23.2
Sasol
37289
45700
22.6
43.9
53.0
20.7
Mobily
74.8
88.0
17.7
Metalurgica Gerdau
22.0
32.0
45.3
Sinopec Corp - H
8.0
9.5
19.0
16.4
18.0
10.1
Koc Holding
8.1
7.4
(8.0)
Banco Bradesco
32.8
37.0
12.9
Novatek
104
180
73.4
Axis Bank Ltd
1210
1400
15.8
160
180
12.5
FSK
0.0
0.0
22.9
TIM Participacoes
7.6
11.0
44.5
ASE
22.8
28.0
23.1
3.7
6.0
62.6
Erste Bank
20.4
25.0
22.3
CIMB Group Holdings
7.6
8.5
11.4
31.0
40.0
29.2
Mega Holdings
21.0
28.6
36.2
Emaar Properties
3.6
4.5
25.7
157
200
27.8
PZU
388
421
8.4
Gerdau S.A.
17.3
21.0
21.2
Credicorp
138
139
0.9
30.8
35.0
13.6
198
221
11.9
33.0
43.0
30.3
BM&F Bovespa
12.7
14.0
10.2
Tractebel Energia
33.1
37.0
11.8
HCL-Technologies
614
650
5.8
Wipro Ltd.
356
405
13.8
TSMC
90.0
110.0
22.2
Vodacom Group
11681
11500
(1.5)
CCU
70.3
82.0
16.6
Air China
5.2
7.0
35.9
MediaTek Inc.
312
450
44.2
Kunlun Energy
15.4
17.5
13.8
8600
10000
16.3
93300
145000
55.4
Baidu.com
92.7
170.0
83.4
58.5
70.0
19.8
Name
180

Code
Rating US$ MM
21782
SBER RX
OW
59295
ROSN LI
OW
84414
005380 KS OW
43390
PRE CN
OW
6538
YKBNK TI
OW
10855
ANTO LN
OW
18966
FGB UH
OW
8331
EONR RU
OW
5107
066570 KS OW
11945
VAKBN TI
OW
5951
034220 KS OW
11412
005930 KS OW
180599
1398 HK
OW
218889
SAMBA AB OW
10848
3673 TT
OW
4311
IQCD QD
OW
22567
TMKS LI
OW
3225
028050 KS OW
5320
2382 TT
OW
9103
SOL SJ
OW
27204
YANSAB AB OW
6585
EEC AB
OW
13953
GOAU4 BZ OW
4096
386 HK
OW
85288
CYRE3 BZ
N
3266
KCHOL TI
OW
11370
BBDC4 BZ
OW
56337
NVTK LI
OW
31517
AXSB IN
OW
9382
PTTEP TB
OW
17286
FEES RX
OW
7811
TIMP3 BZ
OW
8820
2311 TT
OW
5925
175 HK
OW
3564
EBS AV
OW
10299
CIMB MK
OW
18521
2881 TT
OW
10049
2886 TT
OW
8249
EMAAR DB OW
5937
SCB TB
OW
17283
PZU PW
OW
10309
GGBR4 BZ
N
13470
BAP US
OW
10990
1088 HK
OW
71050
SAFCO AB OW
13166
CPF TB
OW
8315
BVMF3 BZ
OW
12055
TBLE3 BZ
OW
10358
HCLT IN
OW
7751
WPRO IN
OW
15929
2330 TT
OW
80020
VOD SJ
OW
19629
CCU US
OW
4481
753 HK
OW
9141
2454 TT
OW
14443
135 HK
OW
15968
BBCA IJ
OW
22018
032830 KS OW
17176
BIDU US
OW
32400
2318 HK
OW
51633
P/E (X)
2012E
2013E
19.4
17.0
5.3
5.0
6.2
5.1
6.6
6.1
7.8
6.2
10.2
6.2
7.6
6.5
7.6
6.7
7.4
6.8
16.2
7.0
8.3
7.2
44.2
7.4
9.6
7.6
8.0
7.6
9.3
7.9
10.0
8.0
9.3
8.0
9.4
8.2
9.2
8.4
10.8
8.5
8.8
8.6
9.9
8.8
9.1
8.9
12.1
9.2
11.0
9.2
11.3
9.4
10.3
9.6
10.9
9.7
13.4
9.9
11.8
10.0
10.2
10.0
11.0
10.2
12.4
10.3
13.2
10.3
14.1
10.5
24.0
10.6
12.8
10.8
11.4
10.8
11.8
10.9
10.8
11.0
13.1
11.0
11.4
11.3
13.3
12.5
14.8
12.6
13.4
12.7
12.6
12.7
11.6
12.7
14.5
12.8
12.8
13.1
17.5
13.2
15.7
13.4
14.2
13.5
14.6
13.7
15.5
13.7
15.2
13.7
21.9
13.7
15.9
14.3
17.8
14.5
17.5
14.7
19.6
15.1
21.5
15.2
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
17.8
19.5
2.4
20.7
16.4
6.0
3.0
21.9
15.4
20.4
1.4
18.2
15.0
7.9
1.1
19.8
50.8
26.8
2.5
29.1
(15.7)
64.8
0.0
14.8
(0.2)
19.6
3.2
22.7
(43.4)
13.9
6.7
15.8
NA
9.1
na
16.0
NM
NM
0.0
12.7
5.3
15.6
0.0
12.9
NM
NM
1.4
15.0
72.5
27.2
0.3
21.9
6.0
5.4
4.2
19.6
2.0
17.0
4.0
15.6
9.5
24.2
4.2
38.5
11.3
15.8
5.3
28.5
(9.9)
15.2
na
17.2
22.9
9.4
2.8
32.8
6.8
26.5
5.9
22.3
24.9
2.8
4.7
19.5
(21.7)
13.3
1.1
18.0
12.6
3.0
6.0
27.7
(2.5)
31.7
0.0
12.0
(14.2)
19.5
3.3
14.4
22.6
21.0
2.2
13.7
(10.6)
6.8
na
13.1
3.4
12.8
3.6
17.9
(42.3)
34.9
1.9
27.4
24.4
18.2
1.6
19.5
16.3
1.7
3.4
20.8
(37.2)
8.5
0.0
2.6
3.3
21.0
1.8
11.9
(3.1)
27.4
2.9
14.4
26.0
34.0
0.7
20.4
305.9
125.5
0.8
5.9
10.0
18.9
3.1
17.3
(15.7)
5.5
3.7
10.7
13.2
8.3
5.9
10.1
12.2
(1.5)
1.3
5.9
12.0
18.7
3.0
21.1
25.8
0.2
7.0
21.4
11.1
6.5
2.2
8.0
4.5
17.7
2.0
19.9
0.4
5.3
3.0
17.9
(4.5)
(0.9)
7.1
41.5
19.4
(8.9)
3.9
17.9
10.3
13.6
0.0
na
17.8
(2.1)
4.2
30.3
51.1
33.0
0.8
27.4
4.4
17.4
2.0
20.8
22.3
5.1
3.3
22.4
11.4
6.6
8.0
62.6
23.1
12.9
3.1
22.5
(41.8)
10.5
2.8
9.5
14.8
59.4
3.8
23.6
23.0
11.8
2.0
17.6
8.6
22.6
1.5
24.8
11.4
19.5
2.4
5.9
59.6
29.8
0.0
40.3
8.7
41.5
0.8
18.7

21 November 2012
Adrian Mowat
(852) 2800-8599
Large Cap Stocks (contd)

Name
Top Picks
ICICI Bank
Televisa
ZTE Corp
Far EasTone Telecom
Mindray Medical
CSR Corp Ltd.
Ayala Corporation
Mahindra & Mahindra
Duratex
Localiza
Yandex
Aspen
Arca Continental
Turkcell
AmBev ADR
Totvs
Emlak Konut
Adani Ports and SEZ
Magnit
Naspers Ltd
CCR
NATURA
Tencent
Ayala Land
Orion
Almacenes Exito
ITC Limited
KEPCO
Fibria
Stocks to Avoid
Bank of Baroda
Dongbu Insurance
Turk Telekom
Riyad Bank
Garanti
JSW
ASUSTek Computer
Mobile Telesystems
Honam Petrochemical Corp
Ecopetrol ADR
CSN
Bank Pekao SA
S-Oil Corp
Catcher Technology
United Tractors
PetroChina
Price
Share
Target % Change
25.2
1019
1200
17.8
22.7
31.0
36.9
11.2
15.0
33.9
7.0
8.1
16.2
15000
18000
20.0
69.8
80.0
14.6
32.4
39.0
20.3
6.8
8.8
29.6
8.8
11.0
25.3
455
550
20.9
907
985
8.6
14.2
16.0
12.4
36.0
39.0
8.4
21.5
42.0
95.1
1263
1400
10.9
15516
17300
11.5
94.4
100.0
5.9
10.8
14.0
29.6
40.3
46.0
14.2
41.0
48.0
17.1
2.8
3.1
12.3
128
155
21.2
35.4
40.5
14.4
53576
62511
16.7
18.7
20.0
7.0
56.5
62.0
9.8
246.0
306.0
24.4
22.9
30.0
31.3
1076000 1300000
20.8
35300
34100
(3.4)
280
325
16.0
17.0
19.5
14.8
2.1
2.9
37.7
27400
33000
20.4
19.2
19.0
(1.2)
(6.6)
729
600
(17.7)
7.2
6.8
(5.6)
47000
41000
(12.8)
6.5
9.0
38.5
22.9
26.0
13.8
8.1
9.6
17.9
9.8
7.5
(23.5)
83.2
90.0
8.2
308
300
(2.4)
17.2
20.5
19.3
196000 180000
(8.2)
10163
8400
(17.3)
58.1
52.0
(10.5)
4.7
5.0
5.9
157
179
14.0
12.3
13.0
5.7
97100
78000
(19.7)
142
110
(22.5)
5743
5100
(11.2)
14.3
11.7
(18.2)
767
675
(12.0)
19600
17000
(13.3)
23858
24832
4.1
63.3
53.0
(16.2)
10.2
8.3
(19.3)

Code
Rating US$ MM
21782
ICICIBC IN OW
21274
TV US
OW
12938
763 HK
OW
4532
992 HK
OW
9281
SMGR IJ
OW
9239
4904 TT
OW
7803
MR US
OW
3750
1766 HK
OW
10640
1114 HK
OW
5692
AC PM
OW
6558
MM IN
OW
10123
DTEX3 BZ
OW
3752
RENT3 BZ
N
3478
YNDX US
OW
7028
TCS IN
N
44921
APN SJ
OW
7982
AC* MM
OW
11611
TCELL TI
OW
13184
ABV US
OW
115993
TOTS3 BZ
OW
3176
EKGYO TI
OW
3829
ADSEZ IN
OW
4655
MGNT LI
OW
16733
NPN SJ
OW
24973
CCRO3 BZ OW
15828
NATU3 BZ
OW
11670
700 HK
OW
58731
ALI PM
OW
7630
001800 KS OW
5909
EXITO CB
N
8666
ITC IN
OW
40030
LAME3 BZ
OW
8455
2866 HK
OW
3790
015760 KS OW
16191
FIBR3 BZ
N
5109
19430
BOB IN
UW
5188
1988 HK
UW
27409
005830 KS UW
3063
TTKOM TI
OW
12624
RIBL AB
N
9140
GARAN TI
N
18971
489 HK
UW
10892
JSW PW
UW
3001
2357 TT
N
7941
MBT US
UW
17750
011170 KS UW
5748
LBH SJ
UW
3285
EC US
UW
119444
SID US
UW
6882
PEO PW
N
12663
KAYAN AB
N
4920
010950 KS UW
10062
2474 TT
UW
3657
DSY SJ
UW
3596
960 HK
N
10013
RIL IN
UW
45634
UNTR IJ
UW
7592
AGL SJ
UW
37475
TOP TB
UW
4199
857 HK
UW
250297
P/E (X)
2012E
2013E
19.4
17.0
18.8
15.2
21.8
15.3
237.4
15.6
19.3
15.7
19.2
15.9
19.8
16.0
18.8
16.3
21.4
16.5
20.0
17.1
22.5
17.4
18.6
17.7
19.9
17.8
30.1
18.0
25.3
18.1
23.2
18.2
21.8
18.6
24.8
19.2
21.4
19.8
21.8
20.5
24.4
20.8
15.9
20.9
23.2
21.2
24.6
21.2
26.5
21.5
27.6
22.2
26.6
23.3
36.1
26.7
33.3
27.5
33.2
28.5
33.6
29.5
35.7
30.3
48.4
31.4
NM
33.7
NM
49.7
NM
264
13.1
14.3
6.0
6.7
7.0
7.4
7.4
7.5
8.3
8.1
10.1
8.8
10.0
9.1
9.7
9.4
8.7
10.2
10.3
10.3
10.9
10.3
10.9
10.7
9.2
10.7
13.7
10.8
NM
11.0
13.6
11.3
NM
11.5
13.0
11.9
11.7
12.0
13.6
12.0
13.5
12.6
12.7
12.7
12.6
13.2
14.9
13.6
9.8
13.7
14.5
14.1
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
17.8
19.5
2.4
20.7
21.1
23.3
1.9
12.2
2.0
42.3
1.2
17.1
(92.1)
NM
1.6
10.0
65.1
22.4
0.3
26.0
17.9
21.0
2.6
30.3
29.2
23.8
6.9
18.9
16.6
15.9
1.4
16.1
(2.8)
30.0
1.2
15.3
21.3
16.9
0.0
24.6
25.5
29.0
0.9
13.0
7.8
4.7
1.4
21.1
11.9
11.7
1.8
10.0
(17.3)
67.4
0.0
24.5
88.9
40.0
na
27.3
22.1
28.0
1.1
36.4
37.0
17.4
na
18.8
56.4
29.2
2.5
18.8
47.8
8.1
0.0
16.7
13.9
6.4
5.3
49.6
21.0
17.3
2.0
27.3
90.9
(24.2)
2.7
7.7
20.0
9.7
1.2
22.9
61.8
16.0
na
23.3
9.5
23.3
0.7
16.7
33.0
24.6
4.1
41.4
16.2
13.9
3.6
73.1
24.2
35.1
0.4
35.6
24.7
20.9
1.5
13.4
74.9
16.5
0.4
17.6
20.9
13.8
2.6
7.2
22.3
18.1
2.0
36.5
5.9
54.0
1.1
39.6
NM
NM
0.0
2.7
NM
NM
0.0
0.7
NM
NM
0.1
0.3
(2.0)
(1.8)
3.6
18.0
12.5
(10.2)
2.1
15.7
(1.6)
(6.1)
3.9
16.3
12.2
(1.4)
3.0
16.0
32.0
3.0
7.7
42.0
8.0
14.9
6.3
12.2
1.7
10.2
2.4
17.6
(16.6)
2.3
1.8
15.6
(45.6)
(14.1)
5.4
10.8
33.2
0.9
5.2
16.7
12.1
5.7
5.8
46.7
(41.5)
2.4
0.9
9.3
18.7
(14.0)
5.0
16.1
3.3
26.9
4.9
54.7
NM
NM
11.3
8.5
4.2
20.6
6.3
16.6
NM
NM
0.0
10.4
(28.2)
9.1
4.2
15.6
(19.7)
(2.1)
0.0
13.1
3.0
13.4
2.1
58.2
(13.1)
6.9
1.6
19.5
(6.8)
0.5
1.3
13.8
(6.3)
(4.0)
3.0
17.7
(56.9)
9.3
1.7
5.1
(11.3)
(28.3)
5.4
10.8
(3.0)
3.0
3.2
12.0
181

21 November 2012
Adrian Mowat
(852) 2800-8599
Large Cap Stocks (contd)

Name
Stocks to Avoid
X5 Retail Group
Infosys
Hong Leong Bank
Globe Telecom
Hero Motocorp Ltd.
IOI Corp.
Weg
PT Indosat Tbk
HTC Corp
ELETROBRAS (ON)
Price
Share
Target % Change
(6.6)
17.2
22.5
30.7
2355
2400
1.9
254
225
(11.5)
14.4
11.7
(18.8)
1150
1000
(13.0)
1832
1600
(12.6)
4.9
4.6
(6.7)
11.2
9.0
(19.3)
25.3
18.0
(28.7)
11.3
9.0
(20.4)
26.2
28.0
6.7
6250
5400
(13.6)
244
100
(58.9)
9.3
10.0
8.1

Code
Rating US$ MM
19430
FIVE LI
N
4674
INFO IN
N
24578
MER PM
UW
6957
HLBK MK
UW
8841
GLO PM
UW
3697
HMCL IN
UW
6648
IOI MK
UW
10352
3481 TT
UW
3027
WEGE3 BZ UW
7516
1171 HK
UW
10713
BSAC US
UW
12362
ISAT IJ
UW
3527
2498 TT
UW
7118
ELET3 BZ
UW
6298
P/E (X)
2012E
2013E
13.1
14.3
20.7
14.1
16.2
14.9
16.4
15.4
14.5
15.7
17.1
15.9
15.4
16.0
17.7
16.3
NM
17.5
24.1
19.8
10.3
24.2
28.7
24.8
24.5
25.4
12.4
33.8
2.2
35.3
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
(2.0)
(1.8)
3.6
18.0
(25.2)
47.0
na
12.9
21.5
8.9
2.4
24.7
30.0
6.5
3.0
24.6
26.7
(7.5)
2.1
14.4
(9.3)
7.8
7.3
20.0
23.4
(4.1)
2.3
40.7
(19.6)
8.4
3.6
14.9
NM
NM
0.0
2.8
10.6
21.7
1.4
16.8
(39.7)
(57.4)
1.2
5.0
(1.1)
16.0
4.3
20.9
65.6
(3.5)
2.0
6.8
(72.7)
(63.3)
6.4
6.8
29.6
(93.9)
7.2
0.5

Note: Prices and valuations as of November 16, 2012. Large cap are stocks with market cap over US$ 3 billion. Sorted in ascending order of 2013E PE. Simple average is calculated in grey
shaded row.
182
Adrian Mowat
(852) 2800-8599

21 November 2012
Mid Cap Stocks

Name
Top Picks
Sesa Goa
Globaltrans
LW Bogdanka
Electricity Generating Company
Coronation Fund Managers Ltd
AirAsia BHD
Iochpe-Maxion
Anhanguera
China Foods Ltd
Oberoi Realty
Summarecon Agung
Fleury
Iguatemi
Kroton
Dialog Group Bhd
Youku Tudou Inc.
Stocks to Avoid
LSR
ALL
Vale Indonesia
Petkim
Genting Plantations
JSW Energy Ltd.
New World Resources
OdontoPrev
ABB Ltd
Marfrig
Zain KSA
Price
Share
Target % Change
32.6
166
220
32.5
15.8
27.2
71.9
4.4
6.0
35.7
22.3
29.0
30.3
23.6
34.0
44.4
28.4
40.0
40.8
129
169
30.9
19.6
22.0
12.2
128
155
21.1
5.6
7.0
24.1
109
135
24.4
70.5
90.0
27.7
3617
5050
39.6
108000 185000
71.3
2.9
4.0
38.9
5.2
9.3
78.8
4.3
5.0
16.3
25.2
31.0
23.0
31.9
45.0
41.1
8.2
10.0
22.0
283
330
16.6
6.0
7.1
17.9
1890
2500
32.3
23.2
31.0
33.6
3.6
3.8
5.3
25.3
30.0
18.4
42.5
45.0
5.9
104
125
20.5
2.4
3.0
25.5
17.0
30.0
76.3
4.8
2824
4800
70.0
46.0
49.0
6.5
112
97
(13.0)
4.1
5.3
29.3
11.9
12.0
0.7
9.5
7.5
(21.0)
8.3
11.5
38.4
2375
2600
9.5
5.9
5.0
(15.5)
2.1
1.7
(18.2)
8.4
8.3
(1.1)
60.7
54.0
(11.0)
239
210
(12.1)
10700
13000
21.5
50.8
59.0
16.3
11.0
12.0
9.6
720
540
(25.0)
11.1
10.0
(9.9)
8.6
10.0
17.0
P/E (X)
JPM Mkt Cap,
Rating US$ MM 2012E
2013E
2064
19.8
14.4
SESA IN
OW
2622
8.0
6.2
GLTR LI
OW
2824
8.6
6.7
751 HK
OW
1576
9.5
7.1
SIIG AB
OW
2670
13.3
8.3
APPC AB
OW
1030
12.3
8.4
3037 TT
OW
1499
11.4
8.8
LWB PW
OW
1350
12.6
9.0
PS TB
OW
1410
12.4
9.7
EGCO TB
OW
2193
6.5
9.9
1293 HK
OW
1840
19.0
10.8
3034 TT
OW
2244
15.0
11.8
TUF TB
OW
2633
13.5
11.8
CML SJ
OW
1286
18.5
12.0
010620 KS
OW
1988
18.4
12.1
AIRA MK
OW
2615
5.2
13.3
694 HK
OW
2905
16.2
13.3
MPI PM
OW
2569
17.8
15.3
MYPK3 BZ
OW
1146
45.9
15.7
AEDU3 BZ
OW
2228
28.7
16.8
506 HK
OW
2958
24.5
18.2
OBER IN
OW
1689
42.7
18.8
KPJ MK
OW
1260
23.1
18.9
SMRA IJ
OW
1416
25.2
19.1
FLRY3 BZ
OW
1739
24.9
19.6
1177 HK
OW
2301
24.2
20.4
IGTA3 BZ
OW
1926
23.6
20.9
KROT11 BZ
OW
2737
32.0
21.5
JFC PM
OW
2628
29.3
24.2
DLG MK
OW
1885
31.5
28.3
YOKU US
OW
2752
NM
NM
1881
59.9
19.9
ACL SJ
UW
1422
466.8
7.9
TISCO TB
N
1090
8.9
8.0
UBP PM
UW
1737
9.7
9.9
LSRG LI
UW
2112
17.7
11.7
2877 HK
UW
1272
13.6
12.3
881 HK
UW
2336
18.8
13.8
ALLL3 BZ
N
2740
19.8
14.0
INCO IJ
N
2451
43.8
14.0
3368 HK
UW
2146
17.6
15.3
PETKM TI
UW
1160
NM
15.8
GENP MK
UW
2079
16.9
16.3
JSW IN
UW
1809
58.5
17.7
NWR LN
UW
1006
49.2
22.1
117930 KS
N
1231
NM
24.3
AOIL SS
UW
1285
33.6
29.3
ODPV3 BZ
UW
2789
33.9
29.8
ABB IN
UW
2773
71.3
38.5
MRFG3 BZ
UW
1840
78.0
57.3
ZAINKSA AB
N
2463
NM
NM
Bloomberg
Code
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
5.8
34.1
2.5
17.0
NM
28.5
2.4
15.6
7.1
27.8
0.0
27.0
4.8
34.9
4.3
19.0
42.6
59.3
5.4
17.4
(47.1)
47.1
7.4
20.0
(23.2)
29.7
5.2
9.4
57.6
39.5
4.9
19.5
22.7
28.2
3.6
21.5
NM
(34.4)
4.1
10.0
9.0
77.0
0.0
25.0
17.2
27.8
5.0
22.2
4.5
14.6
4.2
18.0
11.4
54.1
5.8
70.1
(41.2)
51.7
1.4
5.0
NM
(60.7)
0.0
10.1
25.1
21.3
1.1
10.3
11.3
16.8
1.0
10.3
(91.0)
192.8
2.3
15.2
(1.0)
70.7
0.1
11.1
44.6
34.4
2.0
16.4
(57.9)
NM
0.0
12.5
7.9
22.6
2.6
18.1
31.4
32.3
0.0
16.7
25.0
27.1
1.9
10.2
59.3
18.6
3.8
21.9
12.0
12.8
1.2
9.9
NM
49.2
1.1
9.7
14.2
21.1
1.5
20.1
(2.0)
11.3
1.4
17.4
NM
NM
0.0
1.0
(10.5)
33.9
1.5
10.1
NM
NM
0.0
2.7
15.4
11.2
5.4
21.5
12.0
(2.4)
2.6
14.1
41.9
51.7
na
8.2
(4.1)
10.7
2.4
17.6
(32.1)
36.4
0.9
12.9
17.8
41.7
nm
8.9
(83.3)
NM
0.0
9.6
(15.7)
14.8
3.3
18.1
NM
NM
2.9
7.7
(14.8)
3.9
1.3
10.6
(79.8)
NM
0.8
9.5
NM
122.6
na
3.8
NM
NM
0.0
3.5
(18.8)
14.8
0.0
12.3
8.8
13.6
3.4
26.3
15.9
85.4
0.4
13.8
NM
36.1
0.0
1.2
NM
NM
0.0
(9.4)

Note: Prices and valuations as of November 16, 2012. Mid cap are stocks with market cap between US$1billion & US$3billion. Sorted in ascending order of 2013E PE. Simple average is calculated
in grey shaded row.
183
Adrian Mowat
(852) 2800-8599

21 November 2012
Small Cap Stocks

Name
Top Picks
Banco Macro
HOMEX
Ju Teng Intl. Holdings Ltd.
Erajaya Swasembada Tbk
Cebu Air, Inc.
IJM Land
Grupo Aeroportuario
Stocks to Avoid
Shanda Games
Rossi Residencial
Group 5
E Ink Holdings Inc.
Wintek Corporation
NII Holdings
Mechel (Preference)
Price
Share
Target % Change
34.9
13.8
21.0
52.4
25.7
38.0
47.7
3.6
5.0
40.8
2500
3000
20.0
61.0
90.0
47.5
2.1
2.9
38.8
29.7
35.0
18.0
4.0
4.5
13.9
0.4
3.3
4.0
22.7
4.0
NA
NA
2.5
2.1
(15.3)
2500
2941
17.6
20.0
20.0
0.0
12.1
10.0
(17.4)
5.2
NA
NA
2.0
1.9
(5.5)

Code
Rating US$ MM
808
BMA US
OW
791
HOMEX* MM OW
659
3336 HK
OW
518
ERAA IJ
OW
753
CEB PM
OW
898
IJMLD MK
OW
958
OMAB MM
OW
903
2343 HK
OW
987
641
GAME US
N
913
RSID3 BZ
UW
513
PHDC EY
N
426
GRF SJ
UW
313
8069 TT
UW
741
2384 TT
UW
767
NIHD US
N
898
MTL/P US
UW
558
P/E (X)
2012E
2013E
10.8
12.0
2.7
2.6
2.7
4.1
7.5
5.7
15.8
11.5
14.9
12.4
15.0
12.8
17.3
16.3
NM
30.4
8.3
21.8
5.0
5.0
6.3
6.5
13.6
8.4
NM
11.2
NM
77.7
NM
NM
NM
NM
NM
NM
EPS Growth
Yield (%) ROE (%)
2012E (%) 2013E (%) 2013E
2013E
29.6
12.2
1.2
13.2
5.0
5.7
0.0
24.7
141.6
(32.7)
0.0
12.0
NM
31.4
2.3
10.7
80.2
37.0
0.0
21.6
(30.9)
19.9
0.0
13.3
(29.3)
17.4
2.2
9.2
11.3
6.5
5.0
12.0
NM
NM
0.2
2.4
(27.8)
19.2
3.0
4.7
(5.2)
(1.8)
0.0
17.8
(50.5)
(2.7)
3.9
8.6
NM
62.2
na
7.4
NM
NM
5.6
13.0
NM
NM
0.0
1.2
NM
NM
0.0
(4.9)
NM
NM
0.0
(10.4)
NM
NM
11.2
4.7

Note: Prices and valuations as of November 16, 2012. Small cap are stocks with market cap less than US$1billion. Sorted in ascending order of 2013E PE. Simple average is calculated in grey
shaded row.
184
Adrian Mowat
(852) 2800-8599

21 November 2012
2012 losers picked to be 2013 winners (Stocks with relative underperformance end
2011 to date and top pick)
Name
Top Picks
Banco Macro
HOMEX
Sesa Goa
Antofagasta
Samsung Engineering
Sasol
Sinopec Corp - H
Banco Bradesco
Novatek
FSK
TIM Participacoes
ASE
CIMB Group Holdings
Cebu Air, Inc.
IJM Land
Tractebel Energia
AirAsia BHD
Wipro Ltd.
Air China
Baidu.com
ZTE Corp
Iochpe-Maxion
Fleury
Adani Ports and SEZ
Dialog Group Bhd
Price
%
P/E (X)
Share
Target Change Bloomberg JPM Mkt Cap,
Code
Rating US$ MM 2012E 2013E
32.1
14421
20.1
11.9
13.8
21.0
52.4
BMA US
OW
791
2.7
2.6
25.7
38.0
47.7
HOMEX* MM OW
659
2.7
4.1
166
220
32.5
SESA IN
OW
2622
8.0
6.2
1210
1370
13.2
ANTO LN
OW
18966
7.6
6.5
45.2
63.0
39.4
SAMBA AB
OW
10848
9.3
7.9
23.6
34.0
44.4
APPC AB
OW
1030
12.3
8.4
144500 260000
79.9
028050 KS
OW
5320
9.2
8.4
37289
45700
22.6
SOL SJ
OW
27204
8.8
8.6
28.4
40.0
40.8
3037 TT
OW
1499
11.4
8.8
43.9
53.0
20.7
YANSAB AB OW
6585
9.9
8.8
8.0
9.5
19.0
386 HK
OW
85288
11.0
9.2
16.4
18.0
10.1
CYRE3 BZ
N
3266
11.3
9.4
32.8
37.0
12.9
BBDC4 BZ
OW
56337
10.9
9.7
104
180
73.4
NVTK LI
OW
31517
13.4
9.9
160
180
12.5
PTTEP TB
OW
17286
10.2
10.0
0.0
0.0
22.9
FEES RX
OW
7811
11.0
10.2
7.6
11.0
44.5
TIMP3 BZ
OW
8820
12.4
10.3
22.8
28.0
23.1
2311 TT
OW
5925
13.2
10.3
7.6
8.5
11.4
CIMB MK
OW
18521
12.8
10.8
5.6
7.0
24.1
1293 HK
OW
1840
19.0
10.8
31.0
40.0
29.2
2881 TT
OW
10049
11.4
10.8
108000 185000
71.3
010620 KS
OW
1988
18.4
12.1
61.0
90.0
47.5
CEB PM
OW
898
14.9
12.4
30.8
35.0
13.6
1088 HK
OW
71050
13.4
12.7
33.0
43.0
30.3
CPF TB
OW
8315
11.6
12.7
2.1
2.9
38.8
IJMLD MK
OW
958
15.0
12.8
33.1
37.0
11.8
TBLE3 BZ
OW
10358
12.8
13.1
2.9
4.0
38.9
AIRA MK
OW
2615
5.2
13.3
356
405
13.8
WPRO IN
OW
15929
15.7
13.4
5.2
7.0
35.9
753 HK
OW
9141
15.2
13.7
8600
10000
16.3
BBCA IJ
OW
22018
17.8
14.5
93
170
83.4
BIDU US
OW
32400
19.6
15.1
11.2
15.0
33.9
763 HK
OW
4532
237.4
15.6
25.2
31.0
23.0
MYPK3 BZ
OW
1146
45.9
15.7
8.8
11.0
25.3
1114 HK
OW
5692
20.0
17.1
1263
1400
10.9
TCS IN
N
44921
23.2
18.2
23.2
31.0
33.6
FLRY3 BZ
OW
1739
24.9
19.6
128
155
21.2
ADSEZ IN
OW
4655
23.2
21.2
2.4
3.0
25.5
DLG MK
OW
1885
31.5
28.3
Performance end 11 to
date (%)
Yield (%) ROE (%)
2013E
2013E Absolute Rel to Region
2.2
18.0
(8.4)
(14.7)
0.0
24.7
(29.3)
(35.6)
0.0
12.0
(30.1)
(36.4)
2.4
15.6
(1.9)
(8.2)
3.2
22.7
3.6
(2.7)
4.0
15.6
(2.8)
(9.1)
7.4
20.0
(3.1)
(9.4)
2.8
32.8
(23.7)
(29.9)
4.7
19.5
(11.8)
(18.1)
5.2
9.4
(17.1)
(23.4)
1.1
18.0
0.5
(5.8)
3.3
14.4
(2.1)
(8.4)
2.2
13.7
(1.0)
(7.3)
3.6
17.9
(4.1)
(10.4)
1.9
27.4
(17.1)
(23.4)
3.4
20.8
(2.4)
(8.7)
0.0
2.6
(29.3)
(35.6)
1.8
11.9
(25.4)
(31.7)
2.9
14.4
4.0
(2.2)
3.1
17.3
6.1
(0.2)
0.0
25.0
(25.1)
(31.3)
3.7
10.7
5.4
(0.9)
1.4
5.0
2.6
(3.6)
0.0
13.3
0.2
(6.0)
3.0
17.9
(8.4)
(14.7)
3.9
17.9
2.8
(3.5)
2.2
9.2
(6.0)
(12.3)
4.2
30.3
(0.7)
(7.0)
0.0
10.1
(21.0)
(27.3)
2.0
20.8
(13.8)
(20.1)
2.8
9.5
(10.1)
(16.4)
1.5
24.8
2.1
(4.2)
0.0
40.3
(20.4)
(26.7)
1.6
10.0
(53.9)
(60.2)
2.3
15.2
(10.2)
(16.5)
0.0
24.6
5.0
(1.3)
1.1
36.4
5.8
(0.5)
1.9
10.2
(2.6)
(8.8)
1.2
22.9
2.8
(3.4)
1.4
17.4
3.4
(2.8)

185
Adrian Mowat
(852) 2800-8599

21 November 2012
2012 winners picked to be 2013 losers (Stocks with relative outperformance end 2011
to date and stocks to avoid)
Price
%
Share
Target Change
Stocks to Avoid
(6.4)
7.2
6.8
(5.6)
46.0
49.0
6.5
2.5
2.1
(15.3)
Garanti
8.1
9.6
17.9
112
97
(13.0)
ASUSTek Computer
308
300
(2.4)
Mobile Telesystems
17.2
20.5
19.3
10163
8400
(17.3)
Ecopetrol ADR
58.1
52.0
(10.5)
Bank Pekao SA
157
179
14.0
LSR
4.1
5.3
29.3
5743
5100
(11.2)
China Shineway Pharmaceutical 11.9
12.0
0.7
14.3
11.7
(18.2)
767
675
(12.0)
63.3
53.0
(16.2)
254
225
(11.5)
Hong Leong Bank
14.4
11.7
(18.8)
Petkim
2.1
1.7
(18.2)
Globe Telecom
1150
1000
(13.0)
JSW Energy Ltd.
60.7
54.0
(11.0)
Weg
25.3
18.0
(28.7)
OdontoPrev
11.0
12.0
9.6
ABB Ltd
720
540
(25.0)
Marfrig
11.1
10.0
(9.9)
Name

Code
Rating US$ MM
12597
1988 HK
UW
27409
TISCO TB
N
1090
PHDC EY
N
426
GARAN TI
N
18971
UBP PM
UW
1737
2357 TT
N
7941
MBT US
UW
17750
LBH SJ
UW
3285
EC US
UW
119444
PEO PW
N
12663
LSRG LI
UW
2112
DSY SJ
UW
3596
2877 HK
UW
1272
960 HK
N
10013
RIL IN
UW
45634
TOP TB
UW
4199
MER PM
UW
6957
HLBK MK
UW
8841
PETKM TI
UW
1160
GLO PM
UW
3697
JSW IN
UW
1809
WEGE3 BZ UW
7516
ODPV3 BZ UW
2789
ABB IN
UW
2773
MRFG3 BZ UW
1840
P/E (X)
2012E
2013E
20.9
15.9
7.0
7.4
8.9
8.0
13.6
8.4
10.0
9.1
9.7
9.9
10.3
10.3
10.9
10.3
9.2
10.7
13.7
10.8
13.6
11.3
17.7
11.7
13.6
12.0
13.6
12.3
13.5
12.6
12.7
12.7
9.8
13.7
16.4
15.4
14.5
15.7
NM
15.8
17.1
15.9
58.5
17.7
24.1
19.8
33.9
29.8
71.3
38.5
78.0
57.3
date (%)
Yield (%) ROE (%)
2013E
3.3
19.6
29.3
23.0
3.9
16.3
6.4
0.2
5.4
21.5
24.4
18.2
na
7.4
125.1
118.9
2.4
17.6
44.3
38.0
2.6
14.1
79.9
73.6
5.2
16.7
48.3
42.0
5.8
46.7
17.0
10.8
5.0
16.1
16.6
10.3
4.9
54.7
31.4
25.1
6.3
16.6
17.7
11.4
na
8.2
21.6
15.3
2.1
58.2
20.4
14.1
2.4
17.6
10.0
3.7
1.6
19.5
63.2
56.9
1.3
13.8
6.8
0.5
5.4
10.8
11.1
4.9
3.0
24.6
9.5
3.2
2.1
14.4
36.6
30.3
2.9
7.7
11.0
4.7
7.3
20.0
8.1
1.8
0.8
9.5
55.2
48.9
1.4
16.8
20.8
14.5
3.4
26.3
11.0
4.7
0.4
13.8
19.0
12.7
0.0
1.2
16.8
10.5

186
Adrian Mowat
(852) 2800-8599

21 November 2012
Running with 2012 winners (Stocks with relative outperformance end 2011 to date and
top picks)
Price
Share
Target % Change
Top Picks
25.5
Sberbank
86.7
147.3
69.9
Rosneft
8.0
10.6
33.1
Ju Teng International Holdings
3.6
5.0
40.8
214000 290000
35.5
Pacific Rubiales
22.1
36.0
62.7
Yapi Kredi
4.5
5.7
26.7
First Gulf Bank
10.2
13.5
32.3
Globaltrans
15.8
27.2
71.9
E.ON Russia JSC
0.1
0.1
70.0
LG Electronics
79300
100000
26.1
4.4
6.0
35.7
Vakifbank
4.3
5.5
28.2
LG Display
34650
40000
15.4
Samsung Electronics
1332000 1800000
35.1
ICBC - H
5.1
6.3
23.5
407
550
35.3
Industries Qatar
149
199
33.2
TMK
13.8
19.0
38.1
22.3
29.0
30.3
69.0
85.0
23.2
Mobily
74.8
88.0
17.7
LW Bogdanka
129
169
30.9
Metalurgica Gerdau
22.0
32.0
45.3
Koc Holding
8.1
7.4
(8.0)
19.6
22.0
12.2
128
155
21.1
Axis Bank Ltd
1210
1400
15.8
3.7
6.0
62.6
Erste Bank
20.4
25.0
22.3
Mega Holdings
21.0
28.6
36.2
Emaar Properties
3.6
4.5
25.7
157
200
27.8
PZU
388
421
8.4
2500
3000
20.0
Novatek Microelectronics
109
135
24.4
70.5
90.0
27.7
Coronation Fund Managers
3617
5050
39.6
Gerdau S.A.
17.3
21.0
21.2
Credicorp
138
139
0.9
198
221
11.9
BM&F Bovespa
12.7
14.0
10.2
HCL-Technologies
614
650
5.8
5.2
9.3
78.8
TSMC
90.0
110.0
22.2
Vodacom Group
11681
11500
(1.5)
CCU
70.3
82.0
16.6
MediaTek Inc.
312
450
44.2
Kunlun Energy
15.4
17.5
13.8
93300
145000
55.4
58.5
70.0
19.8
ICICI Bank
1019
1200
17.8
4.3
5.0
16.3
Televisa
22.7
31.0
36.9
7.0
8.1
16.2
15000
18000
20.0
Far EasTone Telecom
69.8
80.0
14.6
Grupo Aeroportuario
29.7
35.0
18.0
Mindray Medical
32.4
39.0
20.3
CSR Corp Ltd.
6.8
8.8
29.6
Anhanguera
31.9
45.0
41.1
Ayala Corporation
455
550
20.9
Mahindra & Mahindra
907
985
8.6
Duratex
14.2
16.0
12.4
Name

Code
Rating US$ MM
16758
SBER RX
OW
59295
ROSN LI
OW
84414
3336 HK
OW
518
005380 KS OW
43390
PRE CN
OW
6538
YKBNK TI
OW
10855
FGB UH
OW
8331
GLTR LI
OW
2824
EONR RU
OW
5107
066570 KS OW
11945
751 HK
OW
1576
VAKBN TI
OW
5951
034220 KS OW
11412
005930 KS OW
180599
1398 HK
OW
218889
3673 TT
OW
4311
IQCD QD
OW
22567
TMKS LI
OW
3225
SIIG AB
OW
2670
2382 TT
OW
9103
EEC AB
OW
13953
LWB PW
OW
1350
GOAU4 BZ OW
4096
KCHOL TI
OW
11370
PS TB
OW
1410
EGCO TB
OW
2193
AXSB IN
OW
9382
175 HK
OW
3564
EBS AV
OW
10299
2886 TT
OW
8249
EMAAR DB OW
5937
SCB TB
OW
17283
PZU PW
OW
10309
ERAA IJ
OW
753
3034 TT
OW
2244
TUF TB
OW
2633
CML SJ
OW
1286
GGBR4 BZ
N
13470
BAP US
OW
10990
SAFCO AB OW
13166
BVMF3 BZ OW
12055
HCLT IN
OW
7751
694 HK
OW
2905
2330 TT
OW
80020
VOD SJ
OW
19629
CCU US
OW
4481
2454 TT
OW
14443
135 HK
OW
15968
032830 KS OW
17176
2318 HK
OW
51633
ICICIBC IN OW
21274
MPI PM
OW
2569
TV US
OW
12938
992 HK
OW
9281
SMGR IJ
OW
9239
4904 TT
OW
7803
OMAB MM OW
903
MR US
OW
3750
1766 HK
OW
10640
AEDU3 BZ OW
2228
AC PM
OW
6558
MM IN
OW
10123
DTEX3 BZ OW
3752
P/E (X)
2012E
2013E
18.5
17.9
5.3
5.0
6.2
5.1
7.5
5.7
6.6
6.1
7.8
6.2
10.2
6.2
7.6
6.7
8.6
6.7
7.4
6.8
16.2
7.0
9.5
7.1
8.3
7.2
44.2
7.4
9.6
7.6
8.0
7.6
10.0
8.0
9.3
8.0
9.4
8.2
13.3
8.3
10.8
8.5
9.1
8.9
12.6
9.0
12.1
9.2
10.3
9.6
12.4
9.7
6.5
9.9
11.8
10.0
14.1
10.5
24.0
10.6
11.8
10.9
10.8
11.0
13.1
11.0
11.4
11.3
15.8
11.5
15.0
11.8
13.5
11.8
18.5
12.0
13.3
12.5
14.8
12.6
12.6
12.7
14.5
12.8
17.5
13.2
16.2
13.3
14.2
13.5
14.6
13.7
15.5
13.7
21.9
13.7
15.9
14.3
17.5
14.7
21.5
15.2
18.8
15.2
17.8
15.3
21.8
15.3
19.3
15.7
19.2
15.9
19.8
16.0
17.3
16.3
18.8
16.3
21.4
16.5
28.7
16.8
22.5
17.4
18.6
17.7
19.9
17.8
date (%)
Yield (%) ROE (%)
2013E
2.3
20.0
39.4
33.1
3.0
21.9
11.2
4.9
1.4
18.2
20.7
14.4
2.3
10.7
299.6
293.4
1.1
19.8
6.9
0.7
2.5
29.1
19.9
13.7
0.0
14.8
75.0
68.7
6.7
15.8
32.0
25.8
0.0
27.0
14.9
8.6
na
16.0
22.7
16.5
0.0
12.7
13.5
7.2
4.3
19.0
62.8
56.5
0.0
12.9
82.7
76.4
1.4
15.0
50.5
44.3
0.3
21.9
34.0
27.7
4.2
19.6
10.0
3.7
4.2
38.5
38.7
32.5
5.3
28.5
12.3
6.1
na
17.2
52.9
46.6
5.4
17.4
17.4
11.1
5.9
22.3
12.6
6.3
6.0
27.7
43.1
36.8
4.9
19.5
31.5
25.2
0.0
12.0
10.5
4.2
na
13.1
56.6
50.3
3.6
21.5
73.7
67.4
4.1
10.0
36.7
30.4
1.6
19.5
44.5
38.2
0.7
20.4
117.5
111.2
0.8
5.9
48.5
42.2
5.9
10.1
9.6
3.4
1.3
5.9
39.7
33.4
3.0
21.1
38.1
31.8
7.0
21.4
33.0
26.8
0.0
21.6
137.4
131.1
5.0
22.2
48.5
42.3
4.2
18.0
31.6
25.4
5.8
70.1
45.3
39.0
2.2
8.0
7.4
1.1
2.0
19.9
25.9
19.6
7.1
41.5
13.5
7.2
0.0
na
16.4
10.2
0.8
27.4
52.8
46.6
1.1
10.3
33.6
27.3
3.3
22.4
23.4
17.1
8.0
62.6
19.7
13.4
3.1
22.5
12.3
6.0
3.8
23.6
16.8
10.6
2.0
17.6
39.3
33.0
2.4
5.9
22.8
16.5
0.8
18.7
13.7
7.4
1.9
12.2
43.8
37.5
1.0
10.3
25.1
18.8
1.2
17.1
7.5
1.3
0.3
26.0
34.8
28.5
2.6
30.3
24.4
18.1
6.9
18.9
28.4
22.2
5.0
12.0
51.0
44.7
1.4
16.1
26.4
20.1
1.2
15.3
53.2
46.9
0.1
11.1
42.6
36.3
0.9
13.0
55.8
49.5
1.4
21.1
28.4
22.1
1.8
10.0
43.3
37.1
187
Adrian Mowat
(852) 2800-8599

21 November 2012
Running with 2012 winners (Stocks with relative outperformance end 2011 to date and
top picks) (contd)
Name
Top Picks
Localiza
Yandex
China Foods Ltd
Aspen
Oberoi Realty
Summarecon Agung
Arca Continental
Turkcell
AmBev ADR
Totvs
Iguatemi
Emlak Konut
Magnit
Naspers Ltd
Kroton
CCR
NATURA
Tencent
Ayala Land
Orion
Almacenes Exito
ITC Limited
KEPCO
Fibria
Youku Tudou Inc.
Price
Share
Target % Change
25.5
36.0
39.0
8.4
21.5
42.0
95.1
8.2
10.0
22.0
15516
17300
11.5
283
330
16.6
6.0
7.1
17.9
1890
2500
32.3
94
100
5.9
10.8
14.0
29.6
3.6
3.8
5.3
40.3
46.0
14.2
41.0
48.0
17.1
25.3
30.0
18.4
2.8
3.1
12.3
35.4
40.5
14.4
53576
62511
16.7
42.5
45.0
5.9
18.7
20.0
7.0
56.5
62.0
9.8
103.7
125.0
20.5
246.0
306.0
24.4
22.9
30.0
31.3
1076000 1300000
20.8
35300
34100
(3.4)
280
325
16.0
4.0
4.5
13.9
17.0
19.5
14.8
2.1
2.9
37.7
27400
33000
20.4
19.2
19.0
(1.2)
17.0
30.0
76.3

Code
Rating US$ MM
16758
RENT3 BZ
N
3478
YNDX US
OW
7028
506 HK
OW
2958
APN SJ
OW
7982
OBER IN
OW
1689
KPJ MK
OW
1260
SMRA IJ
OW
1416
AC* MM
OW
11611
TCELL TI
OW
13184
1177 HK
OW
2301
ABV US
OW
115993
TOTS3 BZ OW
3176
IGTA3 BZ
OW
1926
EKGYO TI OW
3829
MGNT LI
OW
16733
NPN SJ
OW
24973
KROT11 BZ OW
2737
CCRO3 BZ OW
15828
NATU3 BZ OW
11670
JFC PM
OW
2628
700 HK
OW
58731
ALI PM
OW
7630
001800 KS OW
5909
EXITO CB
N
8666
ITC IN
OW
40030
2343 HK
OW
987
LAME3 BZ OW
8455
2866 HK
OW
3790
015760 KS OW
16191
FIBR3 BZ
N
5109
YOKU US
OW
2752
P/E (X)
2012E
2013E
18.5
17.9
30.1
18.0
25.3
18.1
24.5
18.2
21.8
18.6
42.7
18.8
23.1
18.9
25.2
19.1
24.8
19.2
21.4
19.8
24.2
20.4
21.8
20.5
24.4
20.8
23.6
20.9
15.9
20.9
24.6
21.2
26.5
21.5
32.0
21.5
27.6
22.2
26.6
23.3
29.3
24.2
36.1
26.7
33.3
27.5
33.2
28.5
33.6
29.5
35.7
30.3
NM
30.4
48.4
31.4
NM
33.7
NM
49.7
NM
264
NM
NM
date (%)
Yield (%) ROE (%)
2013E
2.3
20.0
39.4
33.1
0.0
24.5
26.2
20.0
na
27.3
9.3
3.0
2.0
16.4
36.2
30.0
na
18.8
47.9
41.7
0.0
12.5
30.2
23.9
2.6
18.1
32.5
26.2
0.0
16.7
44.7
38.4
2.5
18.8
68.4
62.2
0.0
16.7
26.6
20.3
3.8
21.9
56.6
50.3
5.3
49.6
11.7
5.4
2.0
27.3
10.7
4.5
1.2
9.9
31.4
25.1
2.7
7.7
48.0
41.8
na
23.3
67.2
61.0
0.7
16.7
38.3
32.0
1.1
9.7
107.6
101.4
4.1
41.4
37.5
31.2
3.6
73.1
39.9
33.6
1.5
20.1
22.1
15.8
0.4
35.6
57.9
51.6
1.5
13.4
60.5
54.2
0.4
17.6
68.9
62.7
2.6
7.2
47.4
41.1
2.0
36.5
34.4
28.1
0.2
2.4
27.2
21.0
1.1
39.6
51.7
45.5
0.0
2.7
17.2
10.9
0.0
0.7
14.2
7.9
0.1
0.3
24.6
18.4
0.0
1.0
8.6
2.3

188
Adrian Mowat
(852) 2800-8599

21 November 2012
Non-consensus top picks and stocks to avoid

Name
Top Picks
Fibria
Stocks to Avoid
Shanda Games
Bank of Baroda
Dongbu Insurance
Turk Telekom
Riyad Bank
Garanti
ASUSTek Computer
Mobile Telesystems
LSR
S-Oil Corp
Catcher Technology
United Tractors
ALL
Vale Indonesia
PetroChina
X5 Retail Group
Infosys
Genting Plantations
PT Indosat Tbk
NII Holdings
Price
Share
Target % Change
(1.2)
19.2
19.0
(1.2)
(0.5)
3.3
4.0
22.7
729
600
(17.7)
7.2
6.8
(5.6)
47000
41000
(12.8)
46.0
49.0
6.5
6.5
9.0
38.5
22.9
26.0
13.8
8.1
9.6
17.9
9.8
7.5
(23.5)
112
97
(13.0)
308
300
(2.4)
17.2
20.5
19.3
196000
180000
(8.2)
10163
8400
(17.3)
4.1
5.3
29.3
97100
78000
(19.7)
142
110
(22.5)
5743
5100
(11.2)
11.9
12.0
0.7
14.3
11.7
(18.2)
767
675
(12.0)
19600
17000
(13.3)
23858
24832
4.1
63.3
53.0
(16.2)
9.5
7.5
(21.0)
8.3
11.5
38.4
2375
2600
9.5
10.2
8.3
(19.3)
17.2
22.5
30.7
2355
2400
1.9
8.4
8.3
(1.1)
11.2
9.0
(19.3)
10700
13000
21.5
6250
5400
(13.6)
50.8
59.0
16.3
5.2
NA
NA
Bloomberg
Code
JPM
Rating
FIBR3 BZ
GAME US
BOB IN
1988 HK
005830 KS
TISCO TB
TTKOM TI
RIBL AB
GARAN TI
489 HK
UBP PM
2357 TT
MBT US
011170 KS
LBH SJ
LSRG LI
010950 KS
2474 TT
DSY SJ
2877 HK
960 HK
RIL IN
UNTR IJ
AGL SJ
TOP TB
881 HK
ALLL3 BZ
INCO IJ
857 HK
FIVE LI
INFO IN
GENP MK
3481 TT
117930 KS
ISAT IJ
AOIL SS
NIHD US
N
UW
UW
UW
N
OW
N
N
UW
UW
N
UW
UW
UW
UW
UW
UW
UW
UW
N
UW
UW
UW
UW
UW
N
N
UW
N
N
UW
UW
N
UW
UW
N
Bloomberg Mkt Cap,

Rating
US$ MM
5109
UW
5109
15291
OW
913
OW
5188
OW
27409
OW
3063
OW
1090
OW
12624
OW
9140
OW
18971
OW
10892
OW
1737
OW
7941
OW
17750
OW
5748
OW
3285
OW
2112
OW
10062
OW
3657
OW
3596
OW
1272
OW
10013
OW
45634
OW
7592
OW
37475
OW
4199
OW
2336
OW
2740
OW
2451
OW
250297
OW
4674
OW
24578
OW
2079
OW
3027
OW
1231
OW
3527
OW
1285
OW
898
P/E (X)
2012E
2013E
NM
264
NM
264
14.1
12.7
5.0
5.0
6.0
6.7
7.0
7.4
7.4
7.5
8.9
8.0
8.3
8.1
10.1
8.8
10.0
9.1
9.7
9.4
9.7
9.9
10.3
10.3
10.9
10.3
10.9
10.7
9.2
10.7
17.7
11.7
13.0
11.9
11.7
12.0
13.6
12.0
13.6
12.3
13.5
12.6
12.7
12.7
12.6
13.2
14.9
13.6
9.8
13.7
18.8
13.8
19.8
14.0
43.8
14.0
14.5
14.1
20.7
14.1
16.2
14.9
16.9
16.3
NM
17.5
NM
24.3
24.5
25.4
33.6
29.3
NM
NM
Yield (%)
2013E
0.1
0.1
2.5
0.0
2.1
3.9
3.0
5.4
7.7
6.3
2.4
1.8
2.6
5.2
5.8
0.9
5.0
na
4.2
0.0
2.1
2.4
1.6
1.3
3.0
1.7
5.4
0.9
nm
0.0
3.2
na
2.4
1.3
0.0
0.0
2.0
0.0
0.0
ROE (%)
2013E
0.3
0.3
15.7
17.8
15.7
16.3
16.0
21.5
42.0
12.2
17.6
15.6
14.1
16.7
46.7
9.3
16.1
8.2
15.6
13.1
58.2
17.6
19.5
13.8
17.7
5.1
10.8
12.9
8.9
9.6
12.0
12.9
24.7
10.6
2.8
3.5
6.8
12.3
(10.4)
Source: Datastream, MSCI, Bloomberg, J.P. Morgan estimates

189
Adrian Mowat
(852) 2800-8599

21 November 2012
190

21 November 2012
Top Picks
Adrian Mowat
(852) 2800-8599
191
Adrian Mowat
(852) 2800-8599

21 November 2012
Adani Ports and Special Economic Zone
Overweight
www.mundraport.com
Price Target: Rs155.00
Company overview
ADSEZ, a flagship company of the Adani Group, is the developer and operator of
India's largest and fastest growing private sector port (2nd largest in India in terms of
2Q FY13 cargo volumes). It is also developing the largest port-linked SEZ contiguous
to Mundra Port, with a notified area of ~16k acres. The company is actively developing
ports/terminals on Indias west coast. ADSEZ is an emerging multi modal logistics
provider; container rail operations and ICDs would synergize cargo growth at ports, in
our view. ADSEZ acquired ownership and oversight of operations at 50mtpa capacity
Abbot Point coal terminal (North Queensland, Australia) in Jun-2011.
India
Infrastructure
Investment case
Mundra Port is set to overtake Kandla as Indias largest port in FY14. Of the SEZ's
notified area of ~16k acres, less than 20% has been developed so far. We think Mundra
Port will be in a sweet spot over the next 5 years with spare capacity in high growth
segments like coal and container cargo. In FY14, we expect 47% growth in adjusted
EPS given the traffic growth at its flagship port with the increase in capacity as well as
commencement of operations at other ports like Mormugao and Hazira, with an RoE of
28% and relatively reasonable leverage of 2.4x compared to other infra peers.
Key attractions in an anemic growth environment
In an anemic but benign growth environment, traffic growth could remain robust and,
with margins largely under control and lower regulatory risks on tariff, earnings could
surprise on the upside, in our view.
Price: Rs127.45
Sumit KishoreAC
(91-22) 6157 3581
sumit.x.kishore@jpmorgan.com
Bloomberg JPMA KISHORE <GO>
P r ic e P e r fo r m a n c e
180
160
Rs 140
120
100
Nov-11
Feb-12
May-12
Aug-12
Nov-12
APSE.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
6.2%
-16.8%
1m
-0.5%
0.2%
3m
2.7%
-5.3%
12m
-21.1%
-28.9%
Source: Bloomberg.
Earnings risks in 2013

Earnings of the ADSEZ are sensitive to volume growth and pricing trends. Volumes
could be impacted by a delay in scale up of large infra/industrial projects and
development of competitive ports in the vicinity.
Price target, and risks to our investment view
Our SOTP based Sep-13 PT of Rs155 includes Rs131 for Mundra port & SEZ at
implied FY14E P/E of 16x and Rs24 for subsidiary ports. Lower-than-expected traffic
volumes, cost overruns on port projects and adverse newsflow (environment related
restrictions on port/SEZ development, weak macro) are key downside risks.
Adani Ports and Special Economic Zone (Reuters: APSE.BO, Bloomberg: ADSEZ IN)
Rs in mn, year-end Mar
FY10A
FY11A
FY12A
FY13E
FY14E
Revenue (Rs mn)
13,821
19,372
32,094
41,572
53,670
Adjusted Profit (Rs mn)
6,760
9,181
11,021
12,090
17,825
Adjusted EPS (Rs)
3.37
4.58
5.50
6.03
8.90
Revenue growth (%)
25.2%
33.7%
63.5%
29.5%
30.3%
Adjusted profit growth (%)
56.3%
35.8%
20.0%
9.7%
47.4%
ROCE
11.7%
14.2%
10.6%
10.0%
12.1%
ROE
21.1%
24.0%
24.4%
22.9%
27.7%
Adjusted P/E (x)
37.77
27.81
23.17
21.12
14.32
P/BV (x)
7.4
6.1
5.3
4.5
3.6
EV/EBITDA (x)
215.0
156.7
105.0
73.3
57.4
Source: Company data, Bloomberg, J.P. Morgan estimates.
192
Company Data
Shares O/S (mn)
Market cap (Rs mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
Free float (%)
3mth Avg daily volume
3M - Average daily Value (Rs mn)
NIFTY
Exchange Rate
Fiscal Year End
2,003
255,333
4,742
127.45
05 Nov 12
22.5%
1.61
194.13
5,697.70
53.84
Mar

21 November 2012
Adrian Mowat
(852) 2800-8599
Adani Ports and Special Economic Zone: Summary of Financials

Income Statement
Rs in millions, year end Mar
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Other income
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
% change Y/Y
Adjusted profit
% change Y/Y
Shares outstanding
EPS
% change Y/Y
Adjusted EPS
% change Y/Y
Balance sheet
Net fixed assets
CWIP
Investments
Cash and bank balances
Net current assets ex-cash
Total Assets
Total Debt
Paid-up common stock
Reserves and surplus
Shareholders' fund
Deferred tax liability
Minority interests
Total Liabilities
BVPS (Rs)
FY11
19,372
33.7%
12,994
37.6%
65.0%
10,606
40.0%
53.0%
309
-880
10,036
36.8%
-874
8.7%
9,181
36.1%
9,181
35.8%
2,003
4.58
36.1%
4.58
35.8%
FY11
63,508
21,174
1,070
2,515
132
88,400
35,925
4,035
37,864
41,899
3,468
987
45,514
20.91
Cash flow statement

FY12 FY13E FY14E FY15E Rs in millions, year end Mar
32,094 41,572 53,670 65,204 EBIT
63.5% 29.5% 30.3% 21.5% Depreciation & Amortization
20,653 29,894 37,953 46,226 Tax
58.9% 44.7% 27.0% 21.8% Other income
63.1% 70.6% 68.8% 68.9% Decrease in WC
16,022 23,962 30,474 38,641 Operating CF
51.1% 49.6% 27.2% 26.8%
49.0% 56.6% 55.2% 57.6% Capex
596
927
927
927 Change in investments
-4,796 -11,350 -11,437 -10,684 Investing CF
11,822 13,539 19,964 28,884 Free cash flow
17.8% 14.5% 47.5% 44.7%
-896 -1,355 -1,901 -5,832 Change in equity
7.6% 10.0%
9.5% 20.2% Change in debt
11,021 12,090 17,825 22,714 Other financing activities
20.0%
9.7% 47.4% 27.4% Financing CF
11,021 12,090 17,825 22,714 Change in cash
20.0%
9.7% 47.4% 27.4% Opening cash
2,003
2,003
2,003
2,003 Closing cash
5.50
6.03
8.90
11.34
20.0%
9.7% 47.4% 27.4%
5.50
6.03
8.90
11.34
20.0%
9.7% 47.4% 27.4%
Ratio Analysis
173,154 190,921 222,336 219,419 Revenue growth
36,378 47,970 14,970 12,970 EBITDA growth
11,823 11,823 11,823 11,823
11,184 10,299
4,542
3,453 PAT growth
8,024 10,770 12,530 15,334 EPS growth
240,563 271,782 266,200 262,998 EBITDA margin
Dividend payout ratio
175,650 197,813 177,813 155,813
4,035
4,035
4,035
4,035
44,350 53,312 67,493 85,953 Sales/GFA (x)
48,385 57,347 71,528 89,987 GFA/Equity (x)
15,179 15,179 15,179 15,179 Debt/Equity (x)
1,349
1,443
1,680
2,019 Net debt/Equity (x)
190,829 212,992 192,992 170,992 ROE (%)
ROCE (%)
24.15
28.62
35.70
44.92
FY11
10,606
2,388
-874
309
1,569
14,018
FY12 FY13E FY14E FY15E

16,022 23,962 30,474 38,641
4,630 5,933 7,480 7,585
-896 -1355 -1901 -5832
596
927
927
927
-7,893 -2,745 -1,760 -2,804
12,555 26,627 34,982 38,178
-20,395 -130,272 -36,838 -6,000 -2,775

1,553
-31
0
0
0
-18,841 -130,303 -36,838 -6,000 -2,775
-6,377 -117,717 -10,212 28,982 35,403
0
-1,138
285
-2,658
-7,481
9,997
2,515
0
0
0
0
139,725 22,163 -20,000 -22,000
-11,303 -9,710 -11,094 -10,238
126,418 9,326 -34,738 -36,492
8,670
-886 -5,756 -1,089
2,515 11,184 10,299 4,542
11,185 10,298 4,542 3,453
FY11
33.7%
37.6%

63.5% 29.5% 30.3% 21.5%
58.9% 44.7% 27.0% 21.8%
36.1%
36.1%
65.0%
19.7%
20.0%
20.0%
63.1%
18.2%
0.24
2.11
0.86
79.7%
24.0%
14.2%
9.7%
9.7%
70.6%
25.9%
47.4%
47.4%
68.8%
20.4%
27.4%
27.4%
68.9%
18.7%
0.20
0.17
0.21
0.25
4.97
4.74
3.72
2.92
3.63
3.45
2.49
1.73
339.9% 327.0% 242.2% 169.3%
24.4% 22.9% 27.7% 28.1%
10.6% 10.0% 12.1% 15.6%
193
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.appc.com.sa
Price Target: SRls34.00
Company overview
Advanced Petrochemical established in 2005 and started commercial operations in
2008. The only products of the company are propylene (455kt), which is internally
used to produce polypropylene (450kt). The company receives propane feedstock from
Saudi Aramco at a roughly 28% discount to the prevailing naphtha price. Most of the
polypropylene is produced for exports primarily to Asia. The company has a free float
of more than 85%.
Saudi Arabia
Chemicals
Price: SRls23.70
Investment case
Key points are as follows: i) one of the highest dividend yields in MENA Chemicals
coupled with a strong balance sheet: We forecast DPS of SAR1.75/2.0 in 2012/13,
which implies a yield of 7.5%/8.5%. Advanced announcement of a dividend of SAR1
for 1H12, gives us comfort in our FY12 forecast. The company has a strong balance
sheet with a low net debt/EBITDA ratio (less than 1) and a relatively high free cash
flow yield (more than 7%), ii) Access to discounted feedstock: Advanced receives
propane feedstock from Saudi Aramco at a roughly 28% discount to the prevailing
naphtha price on a long-term basis (more than 5 years), iii) attractive valuation: trades
at 8.3x 13e PE vs its peer average of 10.7x.
Neeraj KumarAC
(971) 4428-1740
Neeraj.z.kumar@jpmorgan.com
JPMorgan Chase Bank, N.A., Dubai
Branch
34
32
30
SRls 28
26
24
22
Oct-11
Abs
Jan-12
YTD
-3.5%
Apr-12
Jul-12
1m
-8.8%
Oct-12
3m
-1.3%
Source: Bloomberg.

One of the highest dividend yields in MENA Petrochemicals, strong balance sheet,
high free cash flow and attractive valuation.
Lower than expected polypropylene, soft end market demand, lower than expected
operating rates.
Valuation: We have derived our Dec 2013 price target of SAR34 using a DCF based
approach. Our key assumptions are a terminal growth rate of 2% and a weighted
average cost of capital (WACC) of 10.7%. Risks: Lower-than-expected polypropylene
price and volumes, greater-than-expected decrease in propane feedstock price discount
from Saudi Aramco, slower-than-expected recovery in key end markets especially
Asia, unforeseen technical or operational issues, reinstatement/imposition of an antidumping duty in some of the key end markets particularly in China and India.
Advanced Petrochemical (2330.SE;APPC AB)
FYE Dec
2011A
Adj. EPS FY (SRls)
3.63
Revenue FY (SRls mn)
2,791
EBIT FY (SRls mn)
534
Net Income (Recur) FY
513
(SRls mn)
EV/EBITDA FY
6.2
Adj P/E FY
6.5
Div Yield FY
6.7%
FCF Yield FY
15.7%
194
2012E
1.92
2,347
333
314
2013E
2.82
2,586
478
462
2014E
2.96
2,664
498
485
8.3
12.4
7.2%
8.9%
6.6
8.4
8.3%
12.8%
6.5
8.0
10.3%
12.9%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Price Target End Date
52-week Range (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
ADTV (US$ Mn)
23.70
02-Nov-12
34.00
31 Dec 13
34.30 - 22.25
3.9
164
6.67
12m
-2.2%

21 November 2012
Adrian Mowat
(852) 2800-8599
Advanced Petrochemical: Summary of Financials

Profit and Loss Statement
SRls in millions, year end Dec
Revenues
% Change Y/Y
Gross Margin (%)
EBITDA (pre - restructuring)
% Change Y/Y
EBITDA Margin (%)
EBIT (pre - restructuring)
% Change Y/Y
EBIT Margin
Net Interest
Earnings before tax (reported)
% change Y/Y
Tax
Reported tax rate (%)
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Cash and cash equivalent
Accounts Receivables
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Total current liabilities
Long term debt
Other liabilities
Total liabilities
Shareholders' equity
FY10
2,031
19.5%
570
28.0%
358
17.6%
(32)
328
(11)
3.2%
328
141.4
2.32
2.32
FY11
2,791
37.4%
20.6%
751
31.9%
26.9%
534
49.0%
19.1%
(23)
513
56.2%
(13)
2.5%
513
56.2%
141.4
3.63
3.63
FY10
197
166
820
3,364
FY11
343
155
1,007
3,380
165
277
537
1,005
1,542
1,811
175
408
585
750
1,335
2,029
Cash flow statement

FY12E FY13E FY14E SRls in millions, year end Dec
2,347 2,586 2,664 EBIT
-15.9% 10.2%
3.0% Depreciation & amortization
15.8% 20.4% 20.6%
512
647
658 Change in working capital
-31.9% 26.4%
1.8% Taxes
21.8% 25.0% 24.7% Cash flow from operations
333
478
498 Capex
-37.6% 43.6%
4.1% Acquisitions/disposals
14.2% 18.5% 18.7% Net Interest
(20)
(18)
(15) Free cash flow
314
462
485 FCF (pre - exceptionals)
-38.7% 47.1%
4.9% Equity raised/repaid
(8)
(12)
(12) Debt Raised/repaid
2.5%
2.5%
2.5% Other
314
462
485 Dividends paid
-38.7% 47.1%
4.9% Beginning cash
164.0 164.0 164.0 Ending cash
1.92
2.82
2.96 DPS
1.92
2.82
2.96
Ratio Analysis
- Market Cap
235
285
293 Net debt
199
155
200 EV
718
840
930 EV/Sales
- EV/EBITDA
- EV/EBIT
3,012 3,015 3,004 P/E (adjusted EPS)
FCF yield
170
145
130 Dividend per share
352
297
306 Dividend Yield
- EPS growth
524
444
438
387
243
112 Net debt /EBITDA
- Interest coverage (x)
911
686
551 Net debt to Total Capital
2,084 2,312 2,436 Net debt to equity
ROIC
FY10
358
(211)

534
333
478
498
(218)
(178) (168) (160)
865
1,434
(40)
(32)
611
611
0
-210
(176)
296
457
1.75
902
1,653
(24)
(23)
658
658
0
-339
(282)
457
476
2.00
FY10
2,856
713
3,580

4,199 3,969 3,969 3,969
449
274
-13
-195
4,664 4,259 4,259 4,259
631
1,142
(100)
(20)
351
351
0
-193
(287)
476
283
1.75
728
1,375
(50)
(18)
508
508
0
0
(328)
283
400
2.00
732
1,390
(60)
(15)
510
510
0
0
(410)
400
437
2.50
1.8
1.7
6.3
6.2
10.0
8.7
10.2
6.5
21.5% 15.7%
1.75
2.00
8.7% 6.7%
- 56.2%
1.8
8.3
12.8
12.4
8.9%
1.75
7.2%
NM
1.6
6.6
8.9
8.4
12.8%
2.00
8.3%
47.1%
1.6
6.5
8.5
8.0
12.9%
2.50
10.3%
4.9%
1.3
0.6
11.1
23.6
39.4% 22.1%
11.6% 17.5%
0.5
16.7
13.1%
12.2%
(0.0)
26.6
-0.6%
17.2%
(0.3)
33.2
-8.0%
18.0%
195
Adrian Mowat
(852) 2800-8599

21 November 2012
Air China
Overweight
www.airchina.com
Price Target: HK$7.00
Company overview
Air China is the national flag carrier of China, providing domestic and international
passenger and cargo transportation services. It is a member of the Star Alliance group.
Its 1H12 revenue breakdown was: passenger: 88%, cargo services: 8% and others: 4%.
Air China also owns a 29.9% stake in Cathay Pacific which in turn owns a 19.5% stake
in Air China.
Hong Kong
Transportation
Price: HK$5.33
Investment case
We like Air China best LT given its strong organic growth prospects (driven by rising
outbound Chinese traffic, premium/transit pax/cargo market share gains), leverage to
growing West China market, and low exposure to hi-speed rail competition.
Corrine PngAC
(65) 6882-1514
corrine.ht.png@jpmorgan.com
J.P. Morgan Securities (Asia Pacific)
Limited
7.0
HK$

We expect Air China to benefit from the growing outbound Chinese travel demand and
win over the share of Chinese passengers flying via Seoul and Hong Kong to other
destinations from competitor carriers as they improve their product and extend their
network reach. Air China will likely outperform its regional sector peers given its
lower US/Europe exposure and above-sector-average profitability in FY13E. Current
valuations are attractive at 1.1x P/BV, 40% below its historical average since listing.
6.0
5.0
4.0
Nov-11
Feb-12
May-12
Aug-12
Nov-12
0753.HK share price (HK$)

HSCEI (rebased)
Abs
Rel
YTD
-10.9%
-16.5%
1m
5.1%
-3.4%
3m
-0.7%
-10.5%
Source: Bloomberg.

Key downside risks would be weaker-than-expected economic conditions in China,
resulting in industry oversupply, rising competition from high-speed rail expansion,
volatile fuel prices and Cathay Pacifics results disappoint.
Our Dec-13 PT of HK$7.0 is based on 1.5x P/BV, a 20% discount to Air Chinas
average valuation since listing excluding the M&A speculation period given its lower
than historical average profitability. Key downside risks: 1) China economy weakens
further, resulting in industry oversupply, 2) rising competition from high-speed rail
expansion, 3) volatile fuel prices, and 4) weaker-than-expected earnings from Cathay.
Air China (Reuters: 0753.HK, Bloomberg: 753 HK)
Rmb in mn, year-end Dec
FY10A
FY11A
Revenue (Rmb mn)
82,488
98,410
Net Profit (Rmb mn)
12,005
7,082
EPS (Rmb)
1.01
0.58
DPS (Rmb)
0.13
0.13
Revenue Growth (%)
60.5%
19.3%
EPS Growth (%)
147.3%
-42.6%
ROCE
10.2%
4.8%
ROE
36.7%
16.2%
P/E
4.2
7.4
P/BV
1.2
1.1
EV/EBITDA
6.5
8.1
Div Yield (%)
3.0%
2.9%
196
FY12E
99,433
4,437
0.34
0.14
1.0%
-41.8%
4.6%
9.2%
12.7
1.1
7.8
3.3%
FY13E
107,682
4,905
0.37
0.14
8.3%
10.5%
4.6%
9.5%
11.5
1.1
7.4
3.3%
FY14E
115,529
5,969
0.46
0.18
7.3%
21.7%
4.9%
10.9%
9.4
1.0
6.8
4.1%
Company Data
Shares O/S (mn)
Market Cap (Rmb mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
Avg daily volume (mn)
Avg daily value (HK$ mn)
Avg daily value ($ mn)
HSCEI
Exchange Rate
Fiscal Year End
4,563
19,592
3,138
5.33
07 Nov 12
28.0%
79.35
112.10
14.46
10,734
8
Dec
12m
-17.4%
-19.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Air China: Summary of Financials

Income Statement
Rmb in millions, year end Dec
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income (reported)
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
82,488
60.5%
19,497
55.3%
10,928
98.6%
13.2%
-1,389
14,834
192.8%
-2,498
16.8%
12,005
147.3%
11,837
1.01
147.3%
Balance sheet
Cash and cash equivalents
Accounts receivable
Inventories
Others
Current assets
FY10
14,402
5,391
1,609
1,575
22,976
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
18,140
117,654
158,771
27,706
21,356
3,322
52,385
58,486
6,528
117,398
41,438
3.50
Cash flow statement

FY11 FY12E FY13E FY14E Rmb in millions, year end Dec
98,410 99,433 107,682 115,529 EBIT
19.3%
1.0%
8.3%
7.3% Depr. & amortization
15,820 17,317 18,916 20,967 Change in working capital
-18.9%
9.5%
9.2% 10.8% Taxes
6,259 6,566 6,971 7,829 Cash flow from operations
(42.7%)
4.9%
6.2% 12.3%
6.4%
6.6%
6.5%
6.8% Capex
-1,354
-768 -1,291 -1,212 Disposal/(purchase)
9,355 5,956 6,584 8,013 Net Interest
-36.9% -36.3% 10.5% 21.7% Other
-2,292 -1,459 -1,613 -1,963 Free cash flow
24.5% 24.5% 24.5% 24.5%
7,082 4,437 4,905 5,969 Equity raised/(repaid)
-41.0% -37.3% 10.5% 21.7% Debt raised/(repaid)
12,162 13,085 13,085 13,085 Other
0.58
0.34
0.37
0.46 Dividends paid
(42.6%) (41.8%) 10.5% 21.7% Beginning cash
Ending cash
DPS
Ratio Analysis
15,457 17,757 18,317 19,525 EBITDA margin
5,400 5,456 5,908 6,339 Operating margin
1,810 1,829 1,981 2,125 Net margin
686
686
686
686
23,353 25,728 26,892 28,675
Sales per share growth
18,091 18,599 19,502 20,898 Sales growth
134,406 144,176 152,752 160,135 Net profit growth
175,850 188,503 199,147 209,709 EPS growth
Interest coverage (x)
30,825 30,825 30,825 30,825
27,796 28,037 29,985 31,837 Net debt to equity
2,711 2,562 2,562 2,512 Sales/assets
61,332 61,424 63,372 65,175 Assets/equity
58,821 67,371 72,980 77,980 ROE
7,372 7,372 7,372 7,372 ROCE
127,525 136,167 143,723 150,526
46,116 50,066 53,089 56,767
3.79
3.83
4.06
4.34
FY10 FY11 FY12E FY13E FY14E

10,928 6,259 6,566 6,971 7,829
8,569 9,561 10,751 11,944 13,138
678 6,798
167 1,343 1,278
-503 -3466 -1459 -1613 -1963
18,366 19,670 15,108 17,354 19,020
-9,645 -21,147 -20,521 -20,521 -20,521
190 1,106
0
0
0
-1,389 -1,354
-768 -1,291 -1,212
-6,159 -3,330
0
0
0
8,720 -1,477 -5,413 -3,166 -1,501
0
0
0
0
0
22,431 4,165 8,550 5,608 5,000
-15,044
- 1,000
0 -1,524 -1,837 -1,882 -2,291
2,707 14,402 15,457 17,757 18,317
14,402 15,457 17,757 18,317 19,525
0.13
0.13
0.14
0.14
0.18
FY10
23.6%
13.2%
14.6%

16.1% 17.4% 17.6% 18.1%
6.4%
6.6% 6.5% 6.8%
7.2%
4.5% 4.6% 5.2%
60.5% 16.1% (6.1%) 8.3% 7.3%

60.5% 19.3%
1.0% 8.3% 7.3%
147.3% -41.0% -37.3% 10.5% 21.7%
147.3% (42.6%) (41.8%) 10.5% 21.7%
14.04 11.69 22.55 14.65 17.30
173.2% 160.9% 160.7% 161.0% 157.3%
0.62
0.59
0.55
0.56
0.57
4.44
4.27
3.77
3.75
3.69
36.7% 16.2%
9.2% 9.5% 10.9%
10.2%
4.8%
4.6% 4.6% 4.9%
197
Adrian Mowat
(852) 2800-8599

21 November 2012
AirAsia BHD
Overweight
www.airasia.com
Price Target: M$4.00
Company overview
AirAsia is a low-cost carrier operating domestic and international flights from its base
in Malaysia and also has joint venture operations based in Thailand, Indonesia,
Philippines and Japan. AirAsia Group has a single fleet of 105 A320 aircraft.
Malaysia
Transportation
Investment case
We expect AirAsia to achieve c.36% EBITDAR margin on average in 2012-14E, ahead
of sector peers. We also expect AirAsias earnings to grow 21% in FY13E. AirAsia is
one of our top picks in the transport logistics ecosystem.
Price: M$2.97

Recovery in its ancillary income per passenger with the increase in excess baggage
fees, and the successful listings of AirAsiaX and potentially Indonesia AirAsia
(targeted in 1Q13) which will unlock more value for the Group as these JV airlines will
be able to fund their own aircraft expansion going forward. AirAsia Japan could
potentially be earnings accretive earlier than expected and Malindo may not be as
significant a threat to AirAsia Malaysia in the longer term as viewed by the market.
Corrine PngAC
(65) 6882-1514
J.P. Morgan Securities Singapore Private

Limited
Hoy Kit Mak

(60-3) 2270-4728
hoykit.mak@jpmorgan.com
JPMorgan Securities (Malaysia) Sdn. Bhd.
(18146-X)
4.4
4.0
M$ 3.6

Key earnings risks would be aggressive fleet expansion plans, rising fuel prices,
inability to secure financing for aircraft deliveries at attractive interest rates, rising LCC
competition and potential equity-raising.
Our Dec-13 PT of M$4.0 is based on 10x 12M fwd Adj. EV/EBITDAR, 1 standard
deviation above its historical average valuation as we expect AirAsias 2013E
EBITDAR margin of 36% to surpass its historical 10-year average and the global LCC
sector average EBITDAR margin forecast. Key risks: 1) substantial aircraft orders and
capital commitments, 2) Indo AirAsias proposed listing fails to materialize or raises
less capital, making it challenging to fund its own fleet expansion, 3) weaker ringgit,
and 4) longer-than-expected losses in JV start-ups.
AirAsia BHD (Reuters: AIRA.KL, Bloomberg: AIRA MK)
M$ in mn, year-end Dec
FY10A
FY11A
FY12E
Revenue (M$ mn)
3,948
4,495
4,799
Net Profit (M$ mn)
1,061
555
1,533
EPS (M$)
0.38
0.20
0.55
DPS (M$)
0.00
0.00
0.00
Revenue Growth (%)
26.0%
13.9%
6.8%
EPS Growth (%)
86.5%
-48.0%
175.7%
ROCE
9.8%
10.0%
6.6%
ROE
33.9%
14.5%
31.6%
P/E
7.7
14.8
5.4
P/BV
2.3
2.0
1.5
EV/EBITDA
10.2
9.0
11.5
Div Yield (%)
0.0%
0.0%
0.0%
198
FY13E
5,225
602
0.22
0.00
8.9%
-60.7%
6.8%
10.1%
13.7
1.3
10.2
0.0%
FY14E
5,589
654
0.24
0.00
7.0%
8.6%
6.6%
9.9%
12.6
1.2
9.8
0.0%
3.2
2.8
Nov-11
Feb-12
May-12
Aug-12
Nov-12
AIRA.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
-19.3%
-26.8%
1m
-2.0%
-1.1%
3m
-19.5%
-20.4%
Source: Bloomberg.
Company Data
Shares O/S (mn)
Market Cap (M$ mn)
Market Cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
Avg daily value (M$ mn)
FBMKLCI
Exchange Rate
Fiscal Year End
2,780
8,256
2,705
2.97
07 Nov 12
17.0%
3,020.30
4.05
1.33
1,646
3
Dec
12m
-22.0%
-33.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
AirAsia BHD: Summary of Financials

Income Statement
M$ in millions, year end Dec
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
FY11
3,948
4,495
26.0% 13.9%
1,587
1,733
16.7%
9.2%
1,067
1,163
16.9%
9.0%
27.0% 25.9%
-318
-312
1,099
777
76.6% -29.3%
-37
-222
3.4% 28.5%
1,061
555
109.7% -47.7%
2,762
2,776
0.38
0.20
86.5% (48.0%)
FY10
1,505
841
18
511
2,874
FY11
2,105
1,110
20
559
3,794
LT investments
0
163
Net fixed assets
9,318
8,586
Total Assets
13,240 13,906
Liabilities
Short-term loans
554
632
Payables
913
1,137
Others
377
425
1,844
2,194
Long-term debt
7,303
7,187
Other liabilities
453
488
Total Liabilities
9,599
9,869
3,641
4,036
BVPS
1.32
1.45
Cash flow statement

FY12E FY13E FY14E M$ in millions, year end Dec
4,799
5,225 5,589 EBIT
6.8%
8.9% 7.0% Depr. & amortization
1,478
1,772 1,991 Change in working capital
-14.8% 19.9% 12.3% Taxes
874
1,057 1,159 Cash flow from operations
(24.8%) 21.0% 9.7%
18.2% 20.2% 20.7% Capex
-330
-505
-588 Disposal/(purchase)
1,655
627
681 Net Interest
113.0% -62.1% 8.6% Free cash flow
-122
-25
-27
7.4%
4.0% 4.0% Equity raised/(repaid)
1,533
602
654 Debt raised/(repaid)
176.0% -60.7% 8.6% Other
2,780
2,780 2,780 Dividends paid
0.55
0.22
0.24 Beginning cash
175.7% (60.7%) 8.6% Ending cash
DPS
Ratio Analysis
FY12E FY13E FY14E M$ in millions, year end Dec
1,888
1,997 2,133 EBITDA margin
1,185
1,290 1,380 Operating margin
21
23
25 Net margin
559
559
559
3,654
3,869 4,097
1,274
1,349 1,459 Sales growth
10,454 12,210 14,250 Net profit growth
16,744 18,790 21,168 EPS growth
1,032
1,032 1,032
1,214
1,322 1,414 Net debt to equity
451
488
519 Sales/assets
2,697
2,842 2,966 Assets/equity
7,887
9,187 10,787 ROE
488
488
488 ROCE
11,072 12,517 14,241
5,671
6,273 6,927
2.04
2.26
2.49
FY10
1,067
520
-96
-12
1,594
FY11 FY12E
1,163
874
571
604
9
27
-22
-20
1,404 1,155
FY13E FY14E
1,057 1,159
715
832
38
32
-25
-27
1,280 1,408
-1,903
0
-318
-308
-224
388
-312
1,179
-2,471
-330
-1,317
-2,471
-505
-1,192
-2,871
-588
-1,463
0
249
783
0
746
1,505
0.00
0
-38
-278
0
1,505
2,105
0.00
0
1,100
0
2,105
1,888
0.00
0
1,300
0
1,888
1,997
0.00
0
1,600
0
1,997
2,133
0.00
FY10
40.2%
27.0%
26.9%
FY11 FY12E
38.6% 30.8%
25.9% 18.2%
12.4% 31.9%
FY13E FY14E
33.9% 35.6%
20.2% 20.7%
11.5% 11.7%
12.1% 13.3%
6.6%
8.9%
26.0% 13.9%
6.8%
8.9%
109.7% -47.7% 176.0% -60.7%
86.5% (48.0%) 175.7% (60.7%)
5.00
5.56
4.48
3.51
7.0%
7.0%
8.6%
8.6%
3.39
174.5% 141.6% 124.0% 131.1% 139.8%

0.32
0.33
0.31
0.29
0.28
3.64
3.45
2.95
3.00
3.06
33.9% 14.5% 31.6% 10.1%
9.9%
9.8% 10.0%
6.6%
6.8%
6.6%
199
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
AmBev
Price: $39.04
www.ambev.com.br
Price Target: $46.00
End Date: Dec 2013
Company overview
AmBev (ABV) is regarded as the gold standard in the brewing industry. AmBev should
be analyzed like one peels an onion. The outer and most visible layer is the great
financial performance. Then the next layer one finds is strong brands. Then one finds
unique packaging innovation. Then at the next layer, world class brewing facilities.
Then one sees a debt-free balance sheet, high ROIC, and dividends, etc. But at the very
core are people with a unique business culture. That culture is the key reason why
AmBev is the largest consumer company by market cap in Latin America and the
largest company in the MSCI Emerging Markets Consumer Staples Index.
Investment case
In case of better economic times, AmBev should go from good to great. In 2013 we
expect a good balance of mid-single-digit volumes and pricing growth. New roll-outs
and packaging innovations should be key volume drivers along with an expected
recovery in the Brazilian consumer. Also, pricing power is always valuable but most
profitable in economic recoveries. AmBevs market leadership should pave the way for
pricing above taxes and inflation and facilitate margin expansion, leading to at least
mid-teens earnings growth.
Brazil
Food, Beverage and Tobacco
Alan Alanis AC
(1-212) 622-3697
alan.alanis@jpmorgan.com
44
40
$ 36
32
28
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ABV share price ($)

IBOV (rebased)
Source: Bloomberg.
How much recovery has already been priced in, what are the key metrics?
ABV trades at 23x 2013E P/E, on par with EM peers average. AmBevs earnings
growth is more consistent and faster than the EM brewers average. While further rerating is less likely, even with stable multiples, mid-teen earnings and ~5% dividend
yield may lead to ~20% total return for 2013E.
Earnings risk in 2013
The Brazilian beer division is the prime driver of AmBevs earnings. If volumes grow
at a significantly slower than expected pace or operating expenses surge at a rapid pace,
this may lead to an earnings shortfall. Also, margin expansion could be hurt if
commodity prices rise more than expected for a sustained period of time.
We use P/E to set our price target, but conservative DCF shows even more upside
Our Dec 2013 PT for AMBV4 is US$46, using 22x P/E multiple, similar to EM
average, even with its high-growth/high-dividend profile. Key risks include, along with
what is mentioned above, macro and FX risks. Also, a large acquisition that proves to
be dilutive for minority shareholders would be a risk.
Companhia de Bebidas das Americas (AmBev) ADR (ABV;ABV US)
FYE Dec
2011A
2012E
EPS Reported ($) FYI
Bloomberg EBITDA FY ($ mn)
P/E FY
EBITDA FY ($ mn)
EV/EBITDA FY
1.65
23.8
7,844
15.9
200
1.70
7,421
23.2
7,754
15.6
2013E
2014E
1.89
8,196
20.8
8,716
14.2
1.98
-
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
39.04
14 Nov 12
44.61 - 31.30
122,032.40
Dec
3,104
46.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
AmBev ADR: Summary of Financials

Income Statement
Revenues
Cost of goods sold
SG&A
Operating Profit (EBIT)
EBIT Margin
Depreciation
EBITDA
EBITDA margin
Net Interest
FX Gains (Losses)
Monetary gains (losses)
Other Nonoperating income
EBT
Taxes
Minority interest
Extraordinary
Net income
FY11A
16,192
(5,249)
(3,968)
6,975
43.1%
868
7,844
48.4%
6,710
(1,505)
5,205
FY12E
16,013
(5,250)
(3,884)
6,878
43.0%
875
7,754
48.4%
6,762
(1,402)
5,360
FY13E
17,724
(5,781)
(4,213)
7,730
43.6%
986
8,716
49.2%
7,651
(1,607)
6,044
FY14E
18,462
(6,017)
(4,382)
8,063
43.7%
1,043
9,106
49.3%
7,981
(1,676)
6,305
Number of ADRs (million)

EPADS
Revenue growth
EBITDA growth
3,118
13.5%
18.5%
3,118
(1.1%)
(1.1%)
3,118
10.7%
12.4%
3,118
4.2%
4.5%
Gross Profit growth
15.3%
(1.6%)
11.0%
4.2%
Operating Data, Ratios

Capex
Change in working capital
Free cash flow
FY11A
(1,910)
2,213
6,751
FY12E
(1,393)
512
4,162
FY13E
(1,329)
239
5,788
FY14E
(1,292)
438
6,335
Cash from Operating Activities
8,662
5,555
7,117
7,627
Cash from Investing Activities
(1,910)
(2,580)
(1,329)
(1,292)
Cash from Financing Activities
(5,458)
(4,197)
(5,920)
(6,331)
Net change in cash

Net cash at Beginning
Net Cash at End
Dividends
Dividend % of net income
Capex/depreciation
CAPEX/sales
Working capital
Working capital/sales
1,293
3,527
4,821
(3,865)
74.3%
2.2
11.8%
7,030
43.4%
(1,222)
4,168
2,946
(4,056)
75.7%
1.6
8.7%
6,271
39.2%
(133)
3,005
2,872
(5,920)
98.0%
1.3
7.5%
6,481
36.6%
3
2,728
2,732
(6,331)
100.4%
1.2
7.0%
6,443
34.9%
Balance Sheet
Cash
Accounts receivable
Inventories
Other current assets
Net PP&E
Goodwill
Other assets
Total assets
FY11A
4,342
2,086
1,203
261
4,981
10,065
24,806
FY12E
2,928
2,198
1,268
916
6,445
9,760
25,599
FY13E
2,872
2,407
1,389
951
6,958
10,071
26,860
FY14E
2,732
2,526
1,457
922
6,859
9,653
26,367
Short-term debt
Accounts payable
Other current liabilities
Long-term debt
Pension plan and seniority premium
Other liabilities
Total liabilities
Minority interest
Liabilities + Equity
1,189
6,069
481
1,016
862
481
10,920
117
13,770
24,806
1,008
6,395
706
955
1,039
706
11,599
193
13,807
25,599
1,034
7,003
773
981
1,137
773
12,566
349
13,944
26,860
983
7,409
812
932
1,194
812
13,047
489
12,830
26,367
Net debt
(2,137)
(964)
(857)
(818)
Net Debt/Equity
Net Debt/Capital
Net Debt/Annualized EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
P/S
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
ROIC
(15.5%)
(13.4%)
(0.3)
FY11A
15.9
23.8
8.2
7.0
3.2%
37.8%
32.1%
0.7
1.8
27.9%
(7.0%)
(6.1%)
(0.1)
FY12E
15.6
23.2
8.2
7.1
4.5%
3.3%
38.8%
33.5%
0.6
1.9
31.9%
(6.1%)
(5.4%)
(0.1)
FY13E
14.2
20.8
8.1
6.4
4.9%
4.8%
43.3%
34.1%
0.7
1.9
34.5%
(6.4%)
(5.5%)
(0.1)
FY14E
12.9
19.9
8.8
6.1
5.6%
5.2%
49.1%
34.2%
0.7
2.1
-
DCF Assumptions
WACC
Perpetual Growth
Cost of equity
Cost of debt

Note: $ in millions (except per-share data).Fiscal year ends Dec
201
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Anhanguera
Price: R$32.55
www.anhanguera.com
Price Target: R$45
End Date: Dec 2013
Company overview
Anhanguera (AEDU) is the largest player in Brazilian on-campus higher education and
one of the largest in distance learning. The company has 71 campuses in 47 cities and
has more than 500 associated learning centers. In 3Q12 ~80% of Anhangueras revenue
came from traditional on-campus courses, while the remaining came from distance
learning activities, including preparatory courses.
Investment case
Evolution of the FIES program, which offers subsidized loans for low income students,
is a key driver for higher education companies in Brazil. Penetration of these loans is
still low, with AEDU having 25% of students in the program. Also, maintenance of
high employment levels and wage mass growth are important to AEDU as most of its
students are working adults who depend on their salaries to pay for education.
Brazil
Education
(55-11) 4950-3756
marcelo.p.santos@jpmorgan.com
40
35
R$
30
25
20
15
Nov-11
Feb-12
May-12
Aug-12
Nov-12
AEDU3.SA share price (R$)

IBOV (rebased)
AEDU trades at 19x 12m fwd P/E, slightly below its historical average. We believe
most of the upside for the stock should come from earnings revisions.
Source: Bloomberg.

We see upside to consensus earnings for 2013 and beyond as we believe consensus
does not fully incorporate AEDUs organic growth potential related to increasing
capacity utilization as well as margin effects of the implementation of its academic
model in acquired campuses.
Our Dec 13 PT of R$45 is based on a DCF model with 12.8% WACC and 4.5%
terminal growth in R$ nominal terms. At our target, the stock would trade at 17x
forward P/E, which is lower than the current 20x multiple. The main downside risks
include increasing bad debt, a negative evaluation from the Education Ministry, and
restrictions on education funding from the government.
Anhanguera Educacional Participaes S.A. (AEDU3.SA;AEDU3 BZ)

FYE Dec
2011A
2012E
EPS (R$)
FY
0.29
1.11
Bloomberg EPS FY (R$)
1.66
2.48
EBITDA FY (R$ mn)
196
337
Bloomberg EBITDA FY (R$
310
415
mn)
P/E FY
119.3
31.4
202
2013E
1.90
3.38
444
514
18.4
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
32.55
14 Nov 12
35.90 - 15.20
5,078.83
Dec
146
45.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Anhanguera: Summary of Financials

Income Statement
Revenues
% Revenue growth
Cash Costs
EBITDA
%EBITDA margin
% EBITDA growth
Recurring EBITDA
% Rec. EBITDA margin
% Rec. EBITDA growth
EBITDA - consensus
D&A
Operating Income
Non-Operating Income/(Expenses)
Net Financial Expense
Equity income
Pre-tax Income
Income Tax
% tax rate
Minority interest
Net income
Shares Outstanding
EPS
Recurring EPS
% EPS growth
EPS - consensus
Fx eop
Cash Flow
Net Income
D&A
Cash Flow from Operations
Capex
Capex as % of Revenue
Free cash flow to Equity
Acquisitions / Licenses
Cash flow from Investing
Dividends Paid
Payout Ratio
Capital Increase
Change in debt
Other cash flow
Cash flow from Financing
Change in cash
FY11A
1,232
24.9%
(1,036)
196
15.9%
(18.5%)
120
9.7%
(34.8%)
310
(51)
120
0
(51)
0.01
68
(26)
(37.9%)
0
42
144
0.29
1.12
1.66
0.00
FY11A
42
51
(46)
59
(191)
(15.5%)
(132)
-529
(706)
FY12E
1,650
33.9%
(1,314)
337
20.4%
72.0%
275
16.7%
129.7%
415
(62)
275
0
(93)
0.00
182
(20)
(11.2%)
0
162
146
1.11
1.11
2.48
0.00
FY12E
162
62
(38)
185
(101)
(6.1%)
84
0
(101)
FY13E
1,981
20.0%
(1,537)
444
22.4%
31.7%
382
19.3%
38.8%
514
(62)
382
0
(75)
0.02
306
(31)
(10.0%)
0
276
146
1.90
1.90
3.38
0.00
FY13E
276
62
(34)
304
(119)
(6.0%)
185
-35
(154)
FY14E
2,333
17.8%
(1,765)
568
24.3%
28.1%
506
21.7%
32.5%
516
(62)
506
0
(72)
0.67
434
(43)
(10.0%)
0
391
146
2.68
2.68
2.44
0.00
FY14E
391
62
(49)
404
(128)
(5.5%)
276
-37
(165)
FY15E
2,718
16.5%
(2,003)
714
26.3%
25.7%
639
23.5%
26.4%
(75)
639
0
(65)
1.78
575
(57)
(10.0%)
0
517
146
3.56
3.56
0.00
FY15E
517
75
(53)
539
(149)
(5.5%)
390
-39
(188)
1
2.9%
0
380
(410)
(31)
(678)
0
0.0%
0
(7)
45
38
122
3
1.0%
0
0
0
(3)
147
98
25.0%
0
0
0
(98)
141
259
50.0%
0
0
0
(259)
93

Note: R$ in millions (except per-share data).Fiscal year ends Dec
Balance Sheet
Cash
Current assets
Net PP&E
Intangibles
Other Non Current Assets
Total assets
FY11A
281
536
817
743
2,088
3,648
FY12E
432
625
1,056
726
2,118
3,901
FY13E
579
735
1,314
783
2,153
4,250
FY14E
720
865
1,585
849
2,190
4,625
FY15E
813
1,007
1,820
924
2,229
4,973
Short-term debt
Other Current liabilities
Current Liabilities
Long Term Debt
Other Non Current liabilities
Total liabilities
Minority interest
217
211
211
211
211
332
382
459
540
629
549
593
670
751
840
759
758
758
758
758
334
340
340
340
340
1,642 1,691 1,768 1,849 1,938
0
0
0
0
0
2,006 2,210 2,483 2,775 3,034
Net debt
Net Debt/EBITDA
Net Debt, reported
Working Capital
Working Capital as % of Revenues
695
537
387
149 (203)
3.5
1.6
0.9
0.4
0.2
695
537
390
249
156
204
242
277
325
378
16.6% 14.7% 14.0% 13.9% 13.9%
Fx avg
1.68
1.94
2.01
2.07
2.14
Valuation, Macro
EV/EBITDA
P/E
FCF yield
Dividend yield
ROE, eop
ROE, avg
ROIC, eop
ROIC, avg
Net Debt / Capital (book)
Net Debt / Capital (market)
FY11A FY12E FY13E FY14E FY15E

25.9 14.7 10.8
8.0
5.9
119.3 31.4 18.4 13.0
9.8
(3.0%) 1.9% 4.2% 6.2% 8.8%
0.0% 0.0% 0.1% 1.9% 5.1%
2.1% 7.3% 11.1% 14.1% 17.1%
2.1% 7.3% 11.1% 14.1% 17.1%
4.0% 8.7% 11.1% 13.5% 16.0%
4.1% 8.7% 11.1% 13.5% 16.0%
19.1% 13.8% 9.2% 5.4% 3.1%
26.8% 24.8% 22.8% 21.0% 19.5%
Risk Free Rate

Country Risk
Beta
Ke
Kd, post tax
WACC
0.0%
7.1%
0.00
10.8%
6.0%
10.3%
203

21 November 2012
Adrian Mowat
(852) 2800-8599
ASE
Overweight
www.aseglobal.com
Price Target: NT$28.00
Company overview
ASE is the worlds largest OSAT, offering chip packaging and testing services to key
fabless/IDM customers like QCOM, BRCM, MTK, MRVL, Toshiba and Renesas.
Taiwan
Price: NT$21.95
Investment case
Continued market share gain against overseas peers to cement ASEs leadership should
be a structural thesis to support our bullish view on ASE, with growth drivers such as:
1) a multi-year gold-to-Cu WB transition where ASE has been leading (Cu), 2) IDM
outsourcing mainly from Japan focusing on discrete business (low pin count), and 3)
rising demand for advanced FC technology under mobile computing and leading-edge
tech migration at the front-end (high pin count).
Similar to the foundries/TSMC, we see structural market share gains as a key driver for
ASE in an anemic growth environment. ASE has been gaining market share in the
global OSAT space with its Cu lead. We expect the resumption of IDM outsourcing,
rising demand for advanced FC technology, on top of the continued Cu transition, to
help further ASEs market share gains.
Semiconductors
Rick HsuAC
(886-2) 2725-9874
Rick.ic.hsu@jpmorgan.com
Bloomberg JPMA RHSU <GO>
27
25
NT$ 23
21
19
Nov-11
Feb-12
May-12
Aug-12
Nov-12
2311.TW share price (NT$)

TSE (rebased)
Abs
Rel
YTD
-1.9%
-5.3%
1m
-2.0%
4.6%
3m
6.9%
7.3%
Source: Bloomberg.

We identify Cu-catch up from OSAT peers, price competition, 2.5D/3D IC packaging
threat from foundries, and any macro-driven demand shortfall and/or margin execution
risk as earnings risks in 2013.
Our Dec-13 PT of NT$28 is based on our ROE-adjusted P/BV of 1.9x, which is
derived from our comparison of projected normalized ROE of 13-14% with its
historical ROE average of 13.6% since FY94. This comparison yields roughly a 4%
discount, and applying the discount to its historical normalized P/BV of 2x yields our
target P/BV of 1.9x. Risks are holiday sell-through and margin execution.
Share Price: NT$21.95, Date of Price: (05 Nov 12), Bloomberg 2311 TT, Reuters 2311.TW
(Year-end Dec, NT$ B)
Revenue
Operating profit
EBITDA
Adjusted net profit
Profit growth (%)
EPS (NT$)*
BVPS (NT$, yr-end)
Cash dividend yield (%)
ROE(%)
ROIC (net of cash, %)
Net debt/equity (%)

185.3 190.5 215.1 237.0 P/E (x)
16.8
16.9
20.2
22.7 P/B (x)
39.8
40.4
46.4
50.3 EV/EBITDA (x)
13.7
13.1
16.7
18.9 FCF/Mkt cap (%)
-25.1
-4.5
27.4
13.3 Price target
1.78
1.73
2.20
2.49 PT (31 Dec 13)
15.14 14.53 16.05 17.78 Diff from consensus
3.0
3.0
3.0
3.4
14.1
12.3
14.4
14.7 Quarterly EPS (NT$)
9.6
9.0
10.6
12.5 FY11
50.2
41.2
36.9
17.5 FY12E
FY13E
204
FY11 FY12E FY13E

12.3 12.7 10.0
1.4
1.5
1.4
5.6
5.4
4.7
1.5
6.9
3.6
1Q
0.52
0.31
2Q
0.48
0.48
FY14E
8.8 52-Week range
NT$ 27.37 - 18.99
1.2 Share out'g
7,591M
3.9 Avg daily volume
23.9M
16.5 Avg daily val (US$)
17.98M
Local Free float
75.0%
NT$ 28.00 Market cap (US$)
5.7B
20.5% Exchange rate
NT$ 29.23/US$1
Index (TWSE)
7,185
3Q
4Q FINI holding (%)
67.0%
0.45
0.34
0.45
0.58
0.45
0.54
0.60
0.60
12m
-10.3%
-4.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
ASE: Summary of financials

Profit and loss statement
NT$ million (yr-end Dec)
Ratio analysis
FY11
FY12E
FY13E
FY14E
%, year-end Dec
FY11
FY12E
FY13E
FY14E
185,347
150,338
35,009
7,118
10,795
16,821
39,766
331
-1,666
742
770
16,997
-3,018
-253
13,726
13,726
1.78
1.78
15.14
0.65
7,699
190,503
154,801
35,702
7,785
10,775
16,880
40,403
391
-1,592
114
331
16,124
-2,627
-383
13,114
13,114
1.73
1.73
14.53
0.65
7,594
215,107
174,513
40,594
8,604
11,422
20,233
46,387
282
-1,503
400
600
20,012
-3,002
-300
16,710
16,710
2.20
2.20
16.05
0.75
7,594
237,041
192,094
44,947
9,482
12,351
22,737
50,296
322
-1,388
400
600
22,671
-3,401
-340
18,930
18,930
2.49
2.49
17.78
0.80
7,594
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/sales
18.9
21.5
9.1
7.4
3.8
5.8
18.7
21.2
8.9
6.9
4.1
5.7
18.9
21.6
9.4
7.8
4.0
5.3
19.0
21.2
9.6
8.0
4.0
5.2
Sales growth
Operating profit growth
Net profit growth
EPS (adjusted) growth
Net debt to equity
-1.8
-30.2
-25.1
-25.2
10.1
50.2
2.8
0.3
-4.5
-3.1
10.6
41.2
12.9
19.9
27.4
27.4
13.5
36.9
10.2
12.4
13.3
13.3
16.4
17.5
Days receivable
Days inventory
Days payable
Cash cycle
Asset turnover
ROE (single year)
ROIC (net of cash)
63
65
55
72
82.7
13.4
9.6
62
64
54
72
81.8
11.9
9.0
62
62
53
71
87.7
13.7
10.6
62
62
53
71
92.5
14.0
12.5
FY11
FY12E
FY13E
FY14E
FY11
FY12E
FY13E
FY14E

Accounts receivable
Inventories
Total current assets
25,268
30,476
30,070
4,317
90,132
27,629
34,476
24,070
4,000
90,175
25,138
38,476
35,070
4,000
102,684
38,389
42,476
30,070
4,000
114,935
LT investments
Gross PPE
Accumulated depreciation
Other assets
Total assets
2,221
240,390
137,123
28,573
224,192
2,321
271,100
154,559
23,826
232,864
2,421
294,385
175,939
21,826
245,377
2,521
317,801
199,842
20,826
256,241
Net Income
Depreciation & amortization
Change in receivables
Change in inventory
Change in payables
Other adjustments
Cash flow from operations
13,726
22,945
2,906
-6,774
-3,197
2,332
31,937
13,114
23,523
-4,000
6,000
3,500
0
42,136
16,710
26,153
-4,000
-11,000
1,500
0
29,364
18,930
27,559
-4,000
5,000
3,500
0
50,989
Short-term debts
Accounts payable
Accrued & other CL
Long term debt
Total liabilities
26,426
21,192
19,144
66,762
50,167
121,596
32,999
24,692
19,589
77,279
40,134
122,517
30,992
26,192
21,189
78,373
39,107
123,456
30,786
29,692
22,409
82,888
31,285
121,245
Capex
Purchase (sale) of investments
Other adjustments
Cash flow from investing
-29,418
1,819
-794
-32,031
-30,710
4,254
0
-34,964
-23,285
5,100
0
-28,385
-23,416
100
0
-23,516
Free cash flow
2,519
11,426
6,079
27,573
Share capital
Reserves
Retained earnings
Minority & other adjustments
67,536
13,437
21,770
-460
102,282
67,536
14,809
28,506
-504
110,347
67,536
16,121
38,469
-204
121,921
67,536
17,792
49,532
136
134,996
Equity raised/ (repaid)

Debt raised/ (repaid)
Dividends paid
Other adjustments
Cash flow from financing
0
7,045
-3,858
-2,068
1,118
0
-3,461
-5,004
-500
-8,965
0
-3,033
-4,936
-500
-8,469
0
-8,027
-5,696
-500
-14,222
Net change in cash

Beginning cash
Ending cash
1,024
23,398
24,422
-1,793
24,422
22,629
-7,491
22,629
15,138
13,251
15,138
28,389
Sales
Cost of goods sold
Gross profit
R&D expenses
SG&A expenses
Operating profit (EBIT)
EBITDA
Interest income
Interest expense
Investment income (loss)
Non-operating income (loss)
Earnings before tax
Income tax
Minority interest
Net income (adjusted)
EPS (reported)
EPS (adjusted)
BVPS
DPS (cash only)
Adjusted O/S (M)
Balance sheet
Cash flow statement

Source: company reports and J.P. Morgan estimates.
205
Adrian Mowat
(852) 2800-8599

21 November 2012
Aspen
Overweight
www.aspenpharma.com
Price Target: 17,300c
Company overview
Aspen is the leading supplier of generic medicines to both the private and public
sectors in South Africa. Aspen has grown its international footprint and now supplies
its products in over 150 countries across Africa, LATAM, Asia Pacific and Europe.
Aspen has 18 manufacturing facilities at 13 pharmaceutical manufacturing sites.
South Africa
Pharmaceuticals
Price: 15,534c
Alex Comer
AC
(44-20) 7134-5945
alex.r.comer@jpmorgan.com
Bloomberg JPMA COMER<GO>
Investment case
In our view Aspen has excellent entrepreneurial management and increasing exposure
to an emerging markets generics sector that continues to benefit from attractive
tailwinds. Over the next few years the company should benefit from significant cost
synergies as it relocates manufacturing from its recent acquisitions to its world-class
plant in Port Elizabeth.

16,000
14,000
c 12,000
Key attractions in a benign growth environment

Aspen has a strong pipeline of generic launches over the next 5 years in geographies
where average drug spend per capita is still relatively low. We see meaningful upside if
market share gains can be made in these international; markets. The companys
entrepreneurial spirit and solid M&A track record in our view suggest market share
gains are likely and this underpins our Overweight recommendation.
10,000
8,000
Nov-11
Abs
Feb-12
YTD
60.7%
May-12
1m
7.2%
Aug-12
Nov-12
3m
7.2%
12m
64.5%
Source: Bloomberg.

Earnings may be negatively affected by governments efforts to cut drug pricing
through international benchmarking. Market share gains in Aspens international
businesses may be slower than we currently forecast. Aspen could win a smaller share
of the ARV tender than we currently anticipate.
Our revised DCF now gives us a fair value of R161/ share. Our DCF uses a WACC of
7.6% and long-term growth rate of 3%. To reflect a one year forward DCF price we
inflate this by Aspens cost of capital to give us a target price of R173. Key Risks: 1)
Regulatory Pressure. 2) Under delivery on investments made in LATAM, SSA.
Aspen Pharmacare Holdings Ltd (APNJ.J;APN SJ)

FYE Jun
2011A
2012A
Adj. EPS FY (c)
520.30
649.92
Fully Diluted EPS FY (c)
523.09
636.20
Headline P/E FY
29.9
23.9
Revenue FY (R mn)
12,383
15,256
EBITDA FY (R mn)
3,697
4,555
EV/EBITDA FY
12.1
16.7
EBIT FY (R mn)
3,149
3,940
EBIT margin FY
25.4%
25.8%
206
2013E
785.58
785.58
19.8
18,215
5,818
13.2
5,176
28.4%
2014E
943.43
943.43
16.5
20,274
6,731
11.0
6,058
29.9%
2015E
1,048.05
1,048.05
14.8
21,780
7,253
9.7
6,549
30.1%
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
15,534
02 Nov 12
17,300
01 Nov 13
15,339 - 8,755
67.1
432

21 November 2012
Adrian Mowat
(852) 2800-8599
Aspen: Summary of Financials

Sales
Growth %
EBITDA
Margin %
EBIT
Margin %
Interest/Associates
PBT
Tax
Net Profit
HEPS
Growth %
CF/Share
Balance Sheet
FY12
FY13E
FY14E
FY15E
FY16E
15,256
18,215
20,274
21,780
23,795
23.2%
19.4%
11.3%
7.4%
9.3%
4,555
5,818
6,731
7,253
7,680
29.9%
31.9%
33.2%
33.3%
32.3%
3,940
5,176
6,058
6,549
7,095
28.2%
30.4%
31.7%
31.8%
30.8%
(776)
(542)
(419)
(199)
5
3,439
4,634
5,640
6,350
7,100
(772)
(1,066)
(1,353)
(1,587)
(1,917)
2,817
3,568
4,285
4,760
5,180
649.92
785.58
943.43 1,048.05 1,140.51
24.9%
20.9%
20.1%
11.1%
8.8%
888.15 1,190.29 1,400.32 1,519.75 1,606.26
FY12
FY13E
FY14E
FY15E
FY16E
3,807
10,432
(7,320)
-7,001
17,398
19,865
-7,066
4,188
3,962
11,162
(8,059)
-7,001
20,074
20,464
-7,430
4,750
4,116
14,870
(8,629)
-7,001
23,288
21,061
-4,634
5,271
4,268
18,781
(9,034)
-7,001
26,861
21,628
-1,510
5,772
4,417
23,104
(9,522)
-7,001
30,751
22,218
1,896
6,306
Cash Flow Statement
FY12
FY13E
FY14E
FY15E
FY16E
Operating cash flow

Interest
Dividends
Tax
Capex
Trading Cash flow
FCF before financing
Acquisition / disposals
Other
Change in Net Debt
3,875
(514)
(458)
(454)
(2,619)
896
750
(66)
(513)
-766
5,406
(542)
(685)
(1,066)
(830)
1,186
3,744
(2,648)
0
-364
6,360
(419)
(892)
(1,353)
(900)
1,476
4,239
0
0
2,796
6,903
(199)
(1,071)
(1,587)
(920)
1,765
4,357
0
0
3,125
7,296
5
(1,190)
(1,917)
(940)
1,765
4,394
0
0
3,405
Fixed assets
Current assets
Current liabilities
LT Liabilities
Net Assets
Invested Capital
Net Debt
Net Working Capital
Valuation
FY12
EV/ Sales
5.0
EV/EBITDA
16.7
EV/EBIT
19.3
EV/ Invested Capital
3.8
RoIC
18.5%
EPS
649.92
P/E
23.9
FCF yield
5.8%
Interest Cover
5.4
Divisionals
FY12
South Africa
Revenue
6,160
Growth
-2.2%
EBITA
1,767
EBITA Margin
28.7%
TEST
Sub Saharan Africa
Revenue
1,652
Growth
27.2%
EBITA
248
EBITA Margin
15.0%
TEST
Asia Pacific
Revenue
6,020
Growth
94.7%
TEST
LATAM
Revenue
1,024
Growth
10.7%
TEST
Rest of the World
Revenue
1,497
Growth
-6.5%
TEST
Total International (ex Africa)
Revenue
8,542
Growth
52.0%
EBITA
2,417
EBITA Margin
28.3%
FY13E
4.2
13.2
14.8
3.7
20.6%
785.58
19.8
7.8%
9.9
FY13E
FY14E
FY15E
FY16E
3.6
3.2
2.8
11.0
9.7
8.8
12.2
10.8
9.5
3.5
3.3
3.0
23.0%
23.8%
943.43 1,048.05 1,140.51
16.5
14.8
13.6
9.2%
10.0%
15.0
34.0
FY14E
FY15E
FY16E
7,180 8,153
16.6% 13.5%
2,030 2,414
28.3% 29.6%
8,789
7.8%
2,574
29.3%
9,716
10.5%
2,743
28.2%
2,103 2,580
27.3% 22.6%
337
439
16.0% 17.0%
3,064
18.8%
530
17.3%
3,643
18.9%
628
17.2%
7,056
17.2%
7,716
9.4%
8,106
5.1%
8,647
6.7%
1,552 1,799
51.5% 16.0%
2,089
16.1%
2,420
15.8%
1,700
13.5%
1,727
1.6%
1,771
2.6%
1,818
2.6%
10,307 11,242
20.7% 9.1%
3,177 3,582
30.8% 31.9%
11,967
6.4%
3,831
32.0%
12,884
7.7%
4,118
32.0%
207
Adrian Mowat
(852) 2800-8599

21 November 2012
Axis Bank
Overweight
www.axisbank.com
Price Target: Rs1,400.00
Company overview
Axis Bank is the third-largest private bank in India. It has a diversified exposure across
wholesale, retail and SME, backed by a strong deposit franchise. It has a strong and
growing branch network and has recently diversified into asset management and
investment banking, though both those businesses are still nascent.
India
Banks
Price: Rs1,232.05
Seshadri K Sen, CFAAC

(91-22) 6157 3575
seshadri.k.sen@jpmorgan.com
Bloomberg JPMA SEN <GO>
Investment case
Axis is our top pick among Indian financials. A key driver of the stock, in our view, is
the steady improvement in balance sheet quality with a stronger retail presence we
think this raises the longer-term growth rates for the bank. We expect the stock to
strongly re-rate in 2013.

1,300
1,100
Rs
900

Axis recent diversification of revenues has made it a more secular growth story. We
expect it to build on its large distribution to continue to take share from PSU banks,
which increases its resilience in an anemic growth environment.
The downside risks we see to earnings are 1) lumpy asset quality shocks from large
project exposures, and 2) a slowdown in retail asset demand, Axis main growth driver.
A key upside risk is asset quality, where our estimates are more conservative than
management expectations.
700
Nov-11
Feb-12 May-12
Aug-12 Nov-12
AXBK.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
55.0%
30.8%
1m
7.8%
7.6%
3m
12.9%
5.0%
12m
8.0%
-0.9%
Source: Bloomberg.

Our Mar-14 PT for Axis of Rs1,400 is based on our 2-stage Gordon growth model and
implies 1.8x FY14E book. Our valuation factors in a cost of equity of 15.2%,
normalized ROE of ~17%, and terminal growth of 5%. A key risk to our investment
case is an adverse policy environment affecting Axis valuations. Also, the government
owns 23% of Axis through an SPV called SUUTI any decision to sell that block
would be a significant overhang.
Axis Bank Ltd (Reuters: AXBK.BO, Bloomberg: AXSB IN)
FY11A
FY12A
FY13E
Operating Profit (Rs mn)
60,563
73,380
90,021
Net Profit (Rs mn)
33,882
42,423
51,619
Cash EPS (Rs)
82.54
102.67
121.40
Fully Diluted EPS (Rs)
76.76
101.15
114.26
DPS (Rs)
14.00
16.00
19.00
EPS growth (%)
34.9%
24.4%
18.2%
ROE
18.0%
20.0%
19.5%
P/E (x)
14.9
12.0
10.1
BVPS (Rs)
462.82
551.99
635.87
P/BV (x)
2.7
2.2
1.9
Dividend Yield
1.1%
1.3%
1.5%
208
FY14E
116,886
63,093
148.38
140.44
21.00
22.2%
20.1%
8.3
759.68
1.6
1.7%
FY15E
147,464
76,312
179.47
171.53
27.00
21.0%
20.6%
6.9
907.56
1.4
2.2%
Company Data
52-week Range (Rs)
Market Cap (Rs mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Rs)
Date Of Price
3M - Avg daily value (Rs mn)
3m Avg. Daily Value ($ mn)
3mth Avg daily volume (mn)
NIFTY
Exchange Rate
1,309.00-784.00
509,088
9,352
413
Mar
1,232.05
07 Nov 12
2,903.74
53.3
2.67
5760.10
54.44

21 November 2012
Adrian Mowat
(852) 2800-8599
Axis Bank Ltd: Summary of Financials

Income Statement
NIM (as % of avg. assets)
Earning assets/assets
Margins (as % of Avg. Assets)
FY11
3.2%
97.2%
3.1%
FY12
3.1%
97.0%
3.0%
FY13E
3.1%
96.8%
3.0%
FY14E
3.2%
96.7%
3.1%
Net Interest Income

Total Non-Interest Income
Fee Income
65,630
42,728
39,210
80,180
53,271
50,157
94,940
64,861
59,185
120,827
77,550
71,022
Total operating revenues
108,357
133,451
159,801
198,377
Operating costs
(47,794) (60,071)
(69,781)
(81,491)
Pre-Prov. Profits
Provisions
Other Inc (treasury Income)
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
60,563
73,380
(12,800) (11,430)
3,593
931
51,356
62,881
(17,474) (20,458)
0
0
33,882
42,423
90,021
(18,047)
4,500
76,473
(24,854)
0
51,619
116,886
(28,415)
5,000
93,471
(30,378)
0
63,093
Growth Rates
FY15E
3.3% Loans
96.7% Deposits
3.2% Assets
Equity
155,032 RWA
89,962 Net Interest Income
85,226 Non-Interest Income
of which Fee Grth
244,994 Revenues
Costs
(97,530) Pre-Provision Profits
Loan Loss Provisions
147,464 Pre-Tax
(39,409) Attributable Income
- EPS
- DPS
5,000
- Balance Sheet Gearing
113,055 Loan/deposit
(36,743) Investment/assets
0 Loan/Assets
76,312 Customer deposits/liab.
LT debt/liabilities
Per Share Data

EPS
DPS
Payout
Book value
Fully Diluted Shares
Key Balance sheet Rs in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Other earning assets
Avg. IEA
Goodwill
Assets
FY11
82.54
14.00
17.0%
462.82
411
FY11
1,424,076
(11,891)
1,435,967
15,994
277,938
46,321
2,056,670
2,427,129
FY12
102.67
16.00
15.6%
551.99
413
FY12
1,697,595
(13,337)
1,710,932
18,063
346,588
64,829
2,563,466
2,856,278
FY13E
121.40
19.00
15.7%
635.87
425
FY13E
2,071,066
(19,263)
2,090,330
28,329
403,099
80,272
3,075,302
3,494,614
FY14E
148.38
21.00
14.2%
759.68
425
FY14E
2,568,122
(33,188)
2,601,310
47,142
471,094
100,100
3,776,366
4,313,678
FY15E
179.47
27.00
15.0%
907.56
425
FY15E
3,210,153
(56,671)
3,266,824
80,959
553,052
125,648
4,677,407
5,362,071
Deposits
Long-term bond funding
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
1,892,376
209,365
1,815,680
2,116,774
189,988
1,965,626
1,688,662
2,201,043
253,204
2,277,994
2,641,703
228,085
2,317,114
2,141,370
2,735,207
292,123
2,740,789
3,175,446
270,373
2,826,879
2,571,996
3,426,984
332,212
3,393,263
3,904,146
323,018
3,505,330
3,166,104
4,322,746
380,328
4,231,136
4,837,874
385,898
4,381,662
3,943,496
Asset Quality/Capital
Loan loss reserves/loans
NPLs/loans
Specific loan loss reserves/NPLs
Growth in NPLs
Tier 1 Ratio
Total CAR
Du-Pont Analysis
Non-Int. Rev./ Revenues
Non IR/Avg. Assets
Revenue/Assets
Cost/Income
Cost/Assets
Pre-Provision ROA
LLP/Loans
Loan/Assets
Other Prov, Income/ Assets
Operating ROA
Pre-Tax ROA
Tax rate
Minorities & Outside Distbn.
ROA
RORWA
Equity/Assets
ROE
FY11
36.4%
33.9%
34.4%
18.4%
39.2%
31.1%
31.3%
28.4%
31.2%
27.0%
34.6%
(7.8%)
34.4%
36.7%
34.9%
16.7%
FY12
19.1%
16.3%
17.7%
20.1%
17.9%
22.2%
24.7%
27.9%
23.2%
25.7%
21.2%
(10.7%)
22.4%
25.2%
24.4%
14.3%
FY13E
22.2%
24.3%
22.3%
18.5%
22.0%
18.4%
21.8%
18.0%
19.7%
16.2%
22.7%
57.9%
21.6%
21.7%
18.2%
18.8%
FY14E
24.4%
25.3%
23.4%
19.5%
24.0%
27.3%
19.6%
20.0%
24.1%
16.8%
29.8%
57.4%
22.2%
22.2%
22.2%
10.5%
FY15E
25.6%
26.1%
24.3%
19.5%
25.0%
28.3%
16.0%
20.0%
23.5%
19.7%
26.2%
38.7%
21.0%
21.0%
21.0%
28.6%
FY11
75.3%
11.7%
58.8%
84.6%
8.4%
FY12
77.1%
11.8%
59.6%
83.7%
9.5%
FY13E
75.7%
11.8%
59.9%
84.8%
9.3%
FY14E
74.9%
11.2%
60.1%
85.9%
8.7%
FY15E
74.3%
10.6%
60.6%
86.9%
7.9%
FY11
(0.8%)
1.2%
0.0%
21.4%
9.4%
12.7%
FY11
3.2%
97.2%
3.1%
39.4%
2.0%
5.1%
44.1%
2.3%
2.9%
(1.0%)
58.8%
0.2%
2.3%
2.4%
34.0%
0.0%
1.5%
1.9%
8.3%
18.0%
FY12
(0.8%)
1.1%
0.0%
12.9%
9.5%
13.7%
FY12
3.1%
97.0%
3.0%
39.9%
2.0%
5.1%
45.0%
2.3%
2.8%
(0.7%)
59.6%
0.0%
2.3%
2.4%
32.5%
0.0%
1.6%
2.0%
7.9%
20.0%
FY13E
(0.9%)
1.2%
0.0%
56.8%
9.0%
12.9%
FY13E
3.1%
96.8%
3.0%
40.6%
2.0%
5.0%
43.7%
2.2%
2.8%
(0.9%)
59.9%
0.1%
2.3%
2.4%
32.5%
0.0%
1.5%
1.9%
7.8%
19.5%
FY14E
(1.3%)
1.6%
0.0%
66.4%
9.0%
12.3%
FY14E
3.2%
96.7%
3.1%
39.1%
2.0%
5.1%
41.1%
2.1%
3.0%
(1.2%)
60.1%
0.1%
2.3%
2.4%
32.5%
0.0%
1.5%
1.9%
7.6%
20.1%
FY15E
(1.7%)
2.2%
0.0%
71.7%
8.6%
11.5%
FY15E
3.3%
96.7%
3.2%
36.7%
1.9%
5.1%
39.8%
2.0%
3.0%
(1.3%)
60.6%
0.1%
2.2%
2.3%
32.5%
0.0%
1.5%
1.8%
7.3%
20.6%
209
Adrian Mowat
(852) 2800-8599

21 November 2012
Ayala Corporation
Overweight
www.ayala.com.ph
Price Target: Php550.00
Company overview
AC is the holding company of one of the largest business groups in the Philippines. It
maintains a leading presence in real estate (Ayala Land), financial services (Bank of
the Philippine Islands), telecom (Globe Telecom), water delivery, sewerage services
(Manila Water), and electronics manufacturing services (Integrated Microelectronics).
It also has exposure to the business process outsourcing sector through LiveIt.
Philippines
Price: Php449.60
Investment case
AC is our top pick in the Philippine conglomerates space given its leverage to the
robust macro, access to quality management, stock liquidity, and attractive valuations.
We also believe that AC is best positioned to win new projects from the infra project
roll-out of the government.
Conglomerates & Multi-industry

Jeanette G YutanAC
(632) 878 1131
jeanette.g.yutan@jpmorgan.com
Bloomberg JPMA YUTAN<GO>
500
450
Php
400
350
300

AC has a portfolio of well-managed companies that are either market leaders or
superior value generators, and operate in sectors that leverage on the robust growth of
the Philippine economy. New infra project roll-out is independent of the external
environment.
250
Nov-11
Feb-12
May-12
Aug-12
Nov-12
AC.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
44.4%
20.0%
1m
1.0%
1.0%
3m
4.0%
1.6%
12m
55.0%
29.0%
Source: Bloomberg.

Major disappointments in the operating performance of key subsidiaries particularly,
Ayala Land (ALI) is a key earnings risk in 2013. Should ALIs sales take-up contract
or margins contract, this pose a risk to our above-consensus AC earnings estimates.
Our Dec-13 PT of Php550 is derived from a 15% discount to our Php647 NAV; the
higher discount applied versus other conglomerates is justified given that more than
90% of AC's portfolio can be replicated in the market. Our NAV is a SOTP of the
major subsidiaries and associates. Key risks: Major disappointment in the operating
performance of its major subsidiaries/associates, ALIs failure to deliver on its longterm targets, and continued losses of LiveIt.
Ayala Corporation (Reuters: AC.PS, Bloomberg:
Php in mn, year-end Dec
FY09A
FY10A
Revenue (Php mn)
76,294
98,071
Net Profit (Php mn)
8,154.3
11,161.1
EPS (Php)
13.70
18.75
DPS (Php)
4.00
4.00
Revenue growth (%)
-3.6%
28.5%
EPS growth (%)
0.6%
36.9%
ROCE
10.5%
13.5%
ROE
8.2%
10.6%
P/E (x)
32.8
24.0
P/BV (x)
2.6
2.5
EV/EBITDA (x)
13.4
9.8
Dividend Yield
0.9%
0.9%
210
AC PM)
FY11A
107,532
9,394.9
16.14
4.00
9.6%
-13.9%
12.8%
8.8%
27.9
2.4
9.4
0.9%
FY12E
119,605
12,032.6
20.26
4.00
11.2%
25.5%
14.0%
10.9%
22.2
2.3
8.4
0.9%
FY13E
140,065
15,519.6
26.13
4.00
17.1%
29.0%
17.2%
13.0%
17.2
2.1
6.7
0.9%
FY14E
170,012
19,167.7
32.27
4.00
21.4%
23.5%
19.5%
14.7%
13.9
2.0
5.2
0.9%
Company Data
Shares O/S (mn)
Market cap (Php mn)
Market cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
3M - Avg daily Value (Php mn)
3M - Avg daily Value (USD) ($ mn)
PSE
Exchange Rate
Fiscal Year End
594
266,857
6,498
449.60
07 Nov 12
38.0%
0.57
244.06
5.93
5,471
41.07
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Ayala Corporation: Summary of Financials

Income Statement
Php in millions, year end Dec
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
98,071
28.5%
28,870
46.8%
23,642
44.8%
24.1%
-4,756
18,886
51.0%
-2,900
15.4%
11,161.1
36.9%
595
18.75
36.9%
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
53,143
25,935
18,375
6,912
104,364
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
11,699
315,370
15,757
37,713
3,867
57,336
67,080
70,153
207,829
107,541
180.65
Cash flow statement

FY11 FY12E FY13E FY14E Php in millions, year end Dec
107,532 119,605 140,065 170,012 EBIT
9.6% 11.2% 17.1% 21.4% Depr. & amortization
12.4%
2.1% 25.5% 18.7% Taxes
9.3% 17.7% 26.6% 19.3%
24.0% 25.4% 27.5% 27.0% Capex
-6,175 -5,942 -6,962 -7,144 Disposal/(purchase)
19,668 24,482 31,556 38,809 Net Interest
4.1% 24.5% 28.9% 23.0% Other
-3,869 -4,915 -7,079 -8,967 Free cash flow
19.7% 20.1% 22.4% 23.1%
9,394.9 12,032.6 15,519.6 19,167.7 Equity raised/(repaid)
-15.8% 28.1% 29.0% 23.5% Debt raised/(repaid)
582
594
594
594 Other
16.14
20.26
26.13
32.27 Dividends paid
(13.9%) 25.5% 29.0% 23.5% Beginning cash
Ending cash
DPS
Ratio Analysis
53,577 78,521 80,072 103,411 EBITDA margin
27,766 27,766 27,766 27,766 Net margin
9,289
9,289
9,289
9,289
121,951 146,896 148,447 171,785
- Sales growth
357,627 356,539 375,321 398,283 EPS growth
14,125
5,432
5,432
5,432
4,169
3,189
3,189
3,190 Sales/assets
69,308 59,635 59,635 59,636 Assets/equity
92,592 99,622 99,622 99,622 ROE
75,233 82,767 91,725 102,399 ROCE
250,583 242,024 250,982 261,657
107,044 114,515 124,339 136,625
183.92 192.79 209.32 230.01
FY10 FY11 FY12E FY13E

23,642 25,843 30,425 38,518
5,228 6,600 2,688 3,035
1,854 -2,588 -442 -5,394
-3122 -3869 -4915 -7079
11,807 12,416 14,494 12,114
FY14E
45,952
3,382
-5,585
-8967
16,400
-3,534 -3,741 -3,500

-4,756 -6,175 -5,942
-5,592 -15,892 11,661
8,272 8,675 10,994
-3,501
-7,144
17,318
12,899
199
18,108
-10,973
-4,569
45,657
53,143
4.00
-5,800
49,280
-28,680
-5,305
53,143
53,398
4.00
FY10
29.4%
24.1%
11.4%
FY11
30.2%
24.0%
8.7%
-3,500
-6,962
24,232
8,614
0
0
0
7,030
0
0
1
1
2
-4,562 -5,695 -6,881
53,398 78,521 80,072
78,521 80,072 103,411
4.00 4.00
4.00
FY12E
27.7%
25.4%
10.1%
FY13E
29.7%
27.5%
11.1%
FY14E
29.0%
27.0%
11.3%
28.5% 12.2% 9.0%

28.5%
9.6% 11.2%
36.9% -15.8% 28.1%
36.9% (13.9%) 25.5%
6.07
5.25 5.57
17.1%
17.1%
29.0%
29.0%
5.97
21.4%
21.4%
23.5%
23.5%
6.91
49.6% 23.2% 20.1%

0.32 0.33 0.38
2.15 3.11 3.02
8.8% 10.9% 13.0%
12.8% 14.0% 17.2%
1.2%
0.44
2.92
14.7%
19.5%
27.6%
0.36
2.15
10.6%
13.5%
Ayala Corporation: SOTP valuation

Major subsidiaries
Ayala Land
Globe
Bank of the Phils
Manila Water
Integrated Microelectronics
Unlisted subsidiaries
Net debt
NAV
PT
Value/share
350.5
68.0
223.6
50.2
7.6
33.8
-86.4
647
550
% of NAV
54%
11%
35%
8%
1%
5%
-13%
211
Adrian Mowat
(852) 2800-8599

21 November 2012
Ayala Land, Inc.
Overweight
www.ayalaland.com.ph
Company overview
Ayala Land (ALI) is the largest and most diversified developer in the Philippines, with
exposure in residential, retail, office, hotels, construction, and property management. It
is best known for being the developer and landlord of the Philippines premier financial
district, the Makati CBD. In the residential segment, it is increasing focus on the low
end segment, even as it is best know for its high-end products. With a land bank of
nearly 6,000 hectares, ALI has a good mix of vertical and horizontal products.
Philippines
Property
Investment case
We forecast ALI to have the fastest growth in the Philippines market, with a net profit
growth of 25% in 2013E. This would be driven by a healthy top line increase of 22%,
and margin improvement. We think that the bright macro picture of improving
consumption, low interest rates, and solid residential demand should complement
ALIs land bank, balance sheet, brand, and management advantages.
Price: Php22.90

ALIs good growth prospects, especially as a company that represents the sector's
largest player, makes it attractive in an anemic but benign growth environment
globally. The companys solid track record of execution helps the achievement of the
sweet spot of revenue growth and margin expansion.
Gilbert Y LopezAC
(632) 878 1188
gilbert.y.lopez@jpmorgan.com
26
22
Php
18
14
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ALI.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
49.9%
25.5%
1m
-1.7%
-3.1%
3m
1.1%
-2.9%
12m
44.0%
18.2%
Source: Bloomberg.

The key earnings risk for ALI would be drastically weaker demand, which may well be
triggered if there is a sharp rise in interest rates or a steep decline in remittances.
However we would consider the possibility of such risk to be low.
Our Dec-13 PT of Php30 is based on a 10% discount to our NAV of Php33.36. The
10% discount to NAV is based on ALIs historical upcycle average discount. Our NAV
uses a cap rate of 10% for the investment properties, a 10% WACC for residential with
is on DCF, and market price for land bank. Key risks: 1) marked slowdown in
remittances; 2) sharply higher interest rates; 3) erosion of buyer confidence on politics.
Ayala Land, Inc. (Reuters: ALI.PS, Bloomberg: ALI PM)
FY09A
FY10A
FY11A
Revenue (Php mn)
26,842
33,765
38,987
Net Profit (Php mn)
4,039.3
5,458.1
7,140.3
EPS (Php)
0.31
0.42
0.55
DPS (Php)
0.10
0.08
0.20
Revenue growth (%)
-8.4%
25.8%
15.5%
EPS growth (%)
-16.6%
35.1%
30.8%
ROCE
9.2%
9.8%
11.2%
ROE
8.0%
10.0%
12.0%
P/E (x)
73.9
54.7
41.8
P/BV (x)
5.7
5.3
4.8
EV/EBITDA (x)
51.4
44.3
33.8
Dividend Yield
0.5%
0.3%
0.9%
212
FY12E
48,001
9,128.7
0.69
0.24
23.1%
25.6%
11.9%
12.7%
33.3
3.7
26.5
1.1%
FY13E
58,637
11,394.7
0.83
0.33
22.2%
20.7%
13.4%
13.4%
27.6
3.5
20.7
1.5%
FY14E
70,264
14,415.9
1.05
0.50
19.8%
26.5%
15.8%
15.6%
21.8
3.3
16.8
2.2%
Company Data
Shares O/S (mn)
Market cap (Php mn)
Market cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
PSE
Exchange Rate
Fiscal Year End
13,751
314,895
7,668
22.90
09 Nov 12
49.0%
9,610,408.00
222.56
5.42
5,469
41.07
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Ayala Land: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY10
33,765 38,987 48,001 58,637 70,264 EBIT
25.8% 15.5% 23.1%
22.2%
7,273
15.4% 34.9% 32.9%
29.2%
25.2% Taxes
7,273
15.4% 34.9% 32.9%
29.2%
25.2%
21.5% 25.2% 27.2%
28.7%
30.0% Capex
-318
1
-576 -1,166
-1,122 Disposal/(purchase)
7,860 10,710 13,611 17,106 21,685 Net Interest
34.5% 36.3% 27.1%
25.7%
26.8% Other
-1,572 -2,619 -3,312 -4,282
-5,557 Free cash flow
20.0% 24.5% 24.3%
25.0%
25.6%
5,458.1 7,140.3 9,128.7 11,394.7 14,415.9 Equity raised/(repaid)
35.1% 30.8% 27.8%
24.8%
26.5% Debt raised/(repaid)
13,043 13,043 13,273 13,723 13,723 Other
0.42
0.55
0.69
0.83
1.05 Dividends paid
35.1% 30.8% 25.6%
20.7%
26.5% Beginning cash
Ending cash
DPS
Ratio Analysis
FY10
20,214 24,795 16,533 13,701
7,355 EBITDA margin
17,942 21,578 22,021 27,415 33,000 Operating margin
13,615 21,909 26,130 32,345 38,813 Net margin
4,860
7,035
7,035
7,035
7,035
56,631 75,317 71,718 80,496 86,203
44,969 55,170 79,741 87,684 99,002 Sales growth
20,702 24,132 26,348 28,912 30,261 Net profit growth
122,302 154,619 177,807 197,092 215,466 EPS growth
5,218
6,196
5,432
5,432
5,432
25,892 38,129 33,642 43,605 52,111 Net debt to equity
2,104
1,304
1,556
1,926
2,311 Sales/assets
33,215 45,629 40,630 50,963 59,853 Assets/equity
15,753 28,335 35,365 35,365 35,365 ROE
7,865
8,612
9,085
9,776
9,968 ROCE
56,832 82,577 85,079 96,104 105,186
56,857 62,357 81,873 88,703 96,282
4.36
4.78
6.17
6.46
7.02

7,273 9,810 13,034 16,838 21,086
0
0
0
0
0
5,370 -1,861 -8,900 -1,276 -3,162
-1572 -2619 -3312 -4282 -5557
13,083 10,159 4,876 15,772 17,318
-6,535 -12,393 -28,100 -13,831 -13,009
1,900 -1,623
973 3,076
-535
-318
1
-576 -1,166 -1,122
6,548 -2,235 -23,223 1,941 4,309
77
130 13,600
0
0
2,077 13,560 6,266
0
0
-1,441
373 -2,665 -3,284 -3,284
-1,034 -2,604 -3,213 -4,564 -6,837
10,529 18,656 24,795 16,533 13,701
18,656 26,258 16,533 13,701 7,355
0.08
0.20
0.24
0.33
0.50
FY10
21.5%
20.6%
16.2%

25.2% 27.2% 28.7% 30.0%
25.2% 26.0% 26.7% 28.4%
18.3% 19.0% 19.4% 20.5%
25.8%
25.8%
35.1%
35.1%
22.86
15.5%
15.5%
30.8%
30.8%
-
21.0%
23.1%
27.8%
25.6%
22.63
18.2%
22.2%
24.8%
20.7%
14.45
19.8%
19.8%
26.5%
26.5%
18.79
1.3%
0.29
1.86
10.0%
9.8%
15.6%
0.28
1.87
12.0%
11.2%
29.6%
0.29
2.17
12.7%
11.9%
30.5%
0.31
2.22
13.4%
13.4%
34.7%
0.34
2.24
15.6%
15.8%
213

21 November 2012
Adrian Mowat
(852) 2800-8599
Baidu.com
Overweight
www.baidu.com
Company overview
Baidu is a leading internet search provider in China with a focus on Chinese web
pages. Baidu is also the # 1 site in China in terms of traffic volume and reach,
according to Alexa. The company generates a majority of its revenue through pay-perclick advertising and customized search solutions. As of 3Q12, Baidu has 390k active
paying customers and quarterly ARPU of Rmb16,000. Baidu has a wide range of
investments besides core business, including Online video iQiyi and travel vertical
search engine Qunar.
China
Internet
Price: $105.94
Investment case
Baidu remains our top pick in the sector. (1) worst sentiment & lowest valuation in
years despite clarity in 30% CAGR earnings growth, (2) market share / barrier of
entry / monetization remain high, (3) fundamental need for information doesnt change
on mobile, (4) share price drivers to come from structural improvements in mobile
monetization and cyclical economic improvements.
Dick WeiAC
(852) 2800 8535
dick.x.wei@jpmorgan.com
Evan Zhou
(852) 2800 8505
evan.z.zhou@jpmorgan.com
Limited
160
$
140
120

We expect Qihoos search traffic share to gradually come down, while Baidu to
gradually improve in mobile monetization. In the next 1-2 years, we expect mobile
monetization to be the key revenue driver.
100
Nov-11
May-12
Aug-12
Nov-12
BIDU share price ($)

CCMP (rebased)
Abs
Rel

1) Slower-than-expected online search growth; 2) potential margin decline from
increasing TAC and investment; 3) large infrastructure-related expense.
Feb-12
YTD
-9.0%
-24.6%
1m
-7.2%
-3.2%
3m
-17.8%
-18.5%
12m
-24.7%
-36.4%
Source: Bloomberg.

Dec-13 PT of US$170. We use a 10-year DCF valuation with a 15% long-term growth
from 20162023E. Our nominal case DCF valuation is based on WACC of 12% and
0% terminal growth. PT implies 35.3x FY12E, 27.4x FY13E, and 20.8x FY14E diluted
EPS; or PEG ratio of 0.9x (FY13E P/E vs. long-term growth of 30%) or PEG ratio of
0.7x (FY14E PE vs. growth of 30%).
Bloomberg BIDU US, Reuters BIDU
(Year-end Dec, $ mn)
Net Sales
EBITDA
Pre Tax Profit
Reported Net profit
Reported EPS (US$)
P/E (x)
Adj. EPS *
Adj. P/E (X)
EV/EBITDA (x)
P/B (x)
Y/E BPS (US$)

2,258 3,524 4,946 6,685
1,180 1,792 2,404 3,138
1,341 2,037 2,731 3,607
1,216 1,888 2,553 3,398
1,034 1,660 2,195 2,917
2.96
4.72 6.13
8.10
35.8
22.4 17.3
13.1
3.02
4.81 6.20
8.19
35.0
22.0 17.1
12.9
28.5
18.7 14.0
10.6
15.5
8.9
5.7
3.9
6.82
11.90 18.64
FY11
ROE(%)
54.9%
ROIC(%)
52.3%
Cash
2,283.5
Equity
2,542.5
Qtr GAAP EPS ($)
1Q
EPS (11)
0.47
EPS (12) E
0.85
EPS (13) E
1.16
1M
Abs. Perf.(%)
1.5%
Rel. Perf.(%)
4.9%
27.47
Source: Company, J. P. Morgan estimates, Bloomberg. * Note: Excluding share-based compensation expense.
214
FY12E
48.9%
45.7%
3,690.4
4,327.3
2Q
0.72
1.25
1.50
3M
-4.0%
(7.3%)
FY13E
40.3%
37.5%
6,155.0
6,690.2
3Q
0.84
1.37
1.69
12M
-13.0%
(25.7%)
FY14E
35.8%
32.8%
9,320.0
9,794.7
4Q
0.93
1.25
1.77
52-Week range
Shares Outstg
Market Cap(US)
Free float
Avg daily vol.
Avg daily val ($)
Dividend Yield
Index (NASDAQ)
Price Target
Price Date
154.15 - 99.71
349.3MN
US$ 37,003MN
76.3%
5.5MM shares
628.67MN
0.0%
3,012
170.00
06 Nov 12

21 November 2012
Adrian Mowat
(852) 2800-8599
Baidu.com: Summary of Financials

$ in millions, year end Dec
Revenues
Cost of goods sold
Gross Profit
R&D expenses
SG&A expenses
Share-based Expenses
EBITDA
Interest income, net
Investment income (Exp.)
Other income (Exp.)
Earnings before tax
Tax
Net income (Reported)
Net income (Adjusted)*
USD
FY10
1,177.1
318.7
858.4
-99.3
-156.5
-13.9
588.7
668
10
0.0
5.2
603.9
-79.7
524.2
538
FY11
2,258.4
605.7
1,652.6
-193.1
-255.9
-23.7
1,180.0
1,341
52
0.0
-16.1
1,216.2
-185.2
1,033.9
1,058
FY12E
3,524.3
1,001.2
2,523.1
-329.2
-369.7
-32.1
1,792.1
2,037
120
0.0
-23.8
1,888.2
-239.3
1,659.8
1,692
FY13E
4,946.3
1,521.9
3,424.4
-450.1
-544.0
-26.9
2,403.5
2,731
182
0.0
-31.8
2,553.5
-369.0
2,194.8
2,222
FY14E
6,684.9
2,129.9
4,555.0
-608.7
-775.8
-32.2
3,138.3
3,607
291
0.0
-31.8
3,397.5
-490.5
2,917.4
2,950
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY11
73.2%
59.4%
52.2%
45.8%
8.6%
11.3%
FY12E
71.6%
57.8%
50.8%
47.1%
9.3%
10.5%
FY13E
69.2%
55.2%
48.6%
44.4%
9.1%
11.0%
FY14E
68.1%
54.0%
46.9%
43.6%
9.1%
11.6%
Sales growth
Net profit growth
Diluted EPS growth
80.7% 91.9%
150.5% 100.4%
141.0% 97.2%
140.3% 97.0%
56.1%
51.9%
60.5%
59.6%
40.3%
34.1%
32.2%
29.8%
35.2%
30.6%
32.9%
32.2%
Net debt to total capital

Net debt to equity
-97.5% 78.2%
-97.5% 681.2%
-85.3%
-85.3%
-92.0%
-92.0%
-95.2%
-95.2%
0.93
1.65
55.0%
54.2%
0.78
1.48
48.9%
45.7%
0.72
1.22
40.3%
37.5%
0.67
1.03
35.8%
32.8%
Diluted EPS (GAAP)

1.50
2.96
4.72
6.13
8.10 Asset turnover
Adj. Diluted EPS*
1.54
3.02
4.81
6.20
8.19 Working capital turns (x)
BVPS
3.59
6.82
11.90
18.64
27.47 ROE
DPS
0.00
0.00
0.00
0.00
0.00 ROIC
Shares outstanding (mn)
349.18 349.63 351.57 358.18 360.16
Balance sheet
Cash flow statement
FY10
FY11 FY12E FY13E FY14E $ in millions, year end Dec
1,219
2,284
3,690
6,155
9,320 Net income
Accounts receivable
44
93
152
218
286 Depr. & amortization
Inventories
0
0
0
0
Others
43
91
113
162
213 Other
Current assets
1,306
2,468
3,956
6,535
9,819 Cash flow from operations
LT investments
43
114
173
174
174 Capex
Net fixed assets
241
427
607
842
1,127 Other investing cashflow
Others LT assets
53
625
714
716
716 Cash flow from investing
Total Assets
1,643
3,635
5,450
8,268 11,836 Free cash flow
Liabilities
Equity raised/(repaid)
ST Loans
0 19,604
0
0
Payables
196
396
573
855
1,142 Other
Others
184
270
397
568
745 Dividends paid
379
686
969
1,424
1,887 Cash flow from financing
Long-term debt
0
0
0
0
0
Other liabilities
14
406
154
154
154 Net change in cash
Total Liabilities
393
1,093
1,123
1,578
2,041 Beginning cash
1,250
2,543
4,327
6,690
9,795 Ending cash
Source: Company reports and J.P. Morgan estimates. *Note: Excluding share-based compensation expenses.
FY10
72.9%
56.8%
50.0%
44.5%
8.4%
13.3%
0.86
1.67
54.9%
52.3%
FY10
524.2 1,033.9 1,659.8 2,194.8 2,917.4
66
138
213
301
437
123
245
213
337
345
-11
-71
21
17
22
702
1,343
2,107
2,849
3,721
-166
-754
-462
-534
-721
-15
41
-57
0
0
-182
-713
-519
-534
-721
535
589
1,645
2,315
3,000
5
176
46
127
155
0
20
-20
0
0
14
182
-249
10
10
0
0
0
0
0
19
378
-223
138
165
548
671
1,219
1,065
1,219
2,284
1,407
2,284
3,690
2,465
3,690
6,155
3,165
6,155
9,320
215
Adrian Mowat
(852) 2800-8599

21 November 2012
Bank Central Asia
Overweight
www.bca.co.id
Price Target: Rp10,000
Company overview
Bank Central Asia (BCA) was founded by the Salim Group, which relinquished control
during the Asian crisis. It is now controlled by the Djarum Group, whose other major
business is tobacco. The bank is the largest payment processor in Indonesia, and has
the highest market share of routine banking transactions. It has a strong deposit
franchise, supported by an 864 strong branch network and over 6275 ATMs supporting
its base of 8m accounts.
Indonesia
Banks
Price: Rp8,550
Investment case
We view BCA as a direct and early beneficiary of any trend toward higher rates in the
economy. Recently, JIBOR/BI deposit rates were increased 25bp and we expect upside
to margins as interest rate has already started to rise. Tighter money supply suggests
that rate increases might continue. Margins and multiples have both expanded in past
rising rates cycles. BCA has moved broadly sideways for a year, and we think the risk
of rates rising is not in the price.
1) As liquidity tightens and interest rate rises, BCA would easily benefit from yield
increase as 18% of BCA balance sheet consists of secondary placement. 2) We expect
10% EPS growth in 2013 on the back of better 2013E margin, in conjunction with good
asset quality. 3) Relatively low utilization rate (67% LDR) provides ample room for
credit growth.
Aditya SrinathAC
(62-21) 5291-8573
aditya.s.srinath@jpmorgan.com
Bloomberg JPMA SRINATH <GO>
9,500
8,500
Rp
7,500
6,500
Nov-11
Feb-12 May-12
Aug-12 Nov-12
BBCA.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
5.6%
-7.6%
1m
7.0%
5.6%
3m
7.6%
1.8%
Source: Bloomberg.

1) Deteriorating asset quality and higher-than-expected credit cost. 2) Monetary
conditions easing may pressure margins.
Our Dec 2013 PT of Rp10,000 is based on DDM. We estimate that over the long term
sustainable ROE could trend lower to 23.4%, and we peg long-term growth at 9%. At
our PT, BCA would trade at 17x 12M forward P/E and 3.8x current P/BV by December
2013, implying no change in valuations from present levels. BBCA's high valuations
are a downside risk to our PT. If our view on interest rates proves incorrect, our PT
could be at risk. BCA operates at low NPL levels, so any deterioration of asset quality
could be a risk to our PT.
Bank Central Asia Tbk (Reuters: BBCA.JK, Bloomberg: BBCA IJ)
FY09A
FY10A
FY11A
Operating Profit (Rp bn)
10,761
10,724
13,136
Net Profit (Rp bn)
6,807
8,479
10,819
Cash EPS (Rp)
277.73
348.01
444.05
DPS (Rp)
157.83
113.84
114.85
EPS growth (%)
18.5%
25.3%
27.6%
ROE
26.6%
27.4%
28.4%
P/E (x)
30.8
24.6
19.3
BVPS (Rp)
1,143.30
1,399.86
1,723.89
P/BV (x)
7.5
6.1
5.0
Dividend Yield
1.8%
1.3%
1.3%
Fully Diluted EPS (Rp)
277.73
348.01
444.05
216
FY12E
14,742
11,752
482.34
118.25
8.6%
25.1%
17.7
2,113.82
4.0
1.4%
482.34
FY13E
19,540
14,411
591.44
126.13
22.6%
24.8%
14.5
2,650.64
3.2
1.5%
591.44
Company Data
52-week Range (Rp)
Market Cap (Rp bn)
Market Cap ($ bn)
Shares O/S (mn)
Fiscal Year End
Price (Rp)
Date Of Price
3M - Avg daily value (Rp mn)
JCI
Exchange Rate
8,550-6,750
208,322.80
21.63
24,365
Dec
8,550
09 Nov 12
83,261.52
8.6
10.40
4333.64
9,632.06
12m
3.0%
-10.7%

21 November 2012
Adrian Mowat
(852) 2800-8599
Bank Central Asia (BCA): Summary of Financials

Income Statement
Rp in billions, year end Dec
FY10
6.1%
-
FY11
6.8%
-
FY12E
6.8%
-
FY13E
7.3%
-
Net Interest Income

Fee Income
Dealing Income
12,937
7,346
-
16,837
7,213
-
19,987
7,735
-
25,244
9,222
-
20,283
24,050
27,722
34,466
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
(9,558) (10,914) (12,979) (14,926)

10,724 13,136 14,742 19,540
(324)
161
(486) (1,877)
253
322
503
400
10,653 13,619 14,759 18,063
(2,174) (2,801) (3,009) (3,653)
0
2
3
0
8,479 10,819 11,752 14,411
Per Share Data Rp

EPS
DPS
Payout
Book value
FY10
FY11 FY12E FY13E
348.01 444.05 482.34 591.44
113.84 114.85 118.25 126.13
32.7% 25.9% 24.5% 21.3%
1,399.86 1,723.89 2,113.82 2,650.64
24,365 24,365 24,365 24,365
Key Balance sheet Rp in billions

Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY10
FY11 FY12E FY13E
150,891 199,451 253,717 301,447
(3,906) (3,815) (4,042) (4,803)
154,797 203,266 257,759 306,250
989
987
1,045
1,242
18,504 40,028 50,635 51,396
327,995 385,183 485,376 550,768
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
278,087 324,292 379,806 433,835

5,886
7,953
8,108
9,188
34,108 42,003 51,504 64,584
209,609 280,197 337,341 382,584
179,226 244,903 308,769 359,963
Growth Rates
FY14E
7.1% Loans
- Deposits
- Assets
Equity
28,016 RWA
- Non-Interest Income
of which Fee Grth
Revenues
38,418 Costs
Pre-Provision Profits
(16,957) Loan Loss Provisions
21,462 Pre-Tax
460 EPS
- DPS
19,703 Loan/deposit
0 Loan/Assets
LT debt/liabilities
FY14E Asset Quality/Capital
638.84 Loan loss reserves/loans
150.44 NPLs/loans
23.5% Loan loss reserves/NPLs
3,016.60 Growth in NPLs
24,365 Tier 1 Ratio
Total CAR
FY14E Du-Pont Analysis
339,467 NIM (as % of avg. assets)
(6,827) Earning assets/assets
346,293 Margins (as % of Avg. Assets)
1,750 Non-Int. Rev./ Revenues
- Non IR/Avg. Assets
59,512 Revenue/Assets
- Cost/Income
- Cost/Assets
624,923 Pre-Provision ROA
LLP/Loans
494,705 Loan/Assets
9,622 Other Prov, Income/ Assets
- Operating ROA
- Pre-Tax ROA
- Tax rate
73,500 Minorities & Outside Distbn.
443,722 ROA
413,153 RORWA
Equity/Assets
ROE
FY10
24.9% 31.3% 26.8% 18.8% 13.1%
13.4% 16.6% 17.1% 14.2% 14.0%
14.4% 17.4% 26.0% 13.5% 13.5%
22.4% 23.1% 22.6% 25.4% 13.8%
40.8% 33.7% 20.4% 13.4% 16.0%
(7.9%) 30.1% 18.7% 26.3% 11.0%
41.3% (1.8%)
7.2% 19.2% 12.8%
5.4% 18.6% 15.3% 24.3% 11.5%
12.6% 14.2% 18.9% 15.0% 13.6%
(0.3%) 22.5% 12.2% 32.5% 9.8%
(85.5%) (149.6%) (402.5%) 286.1% 18.2%
19.1% 27.8%
8.4% 22.4% 9.1%
24.6% 27.6%
8.6% 22.6% 8.0%
25.3% 27.6%
8.6% 22.6% 8.0%
(27.9%)
0.9%
3.0% 6.7% 19.3%
FY10
54.3%
95.9%
1.8%
FY10
(2.5%)
0.7%
435.8%
10.4%
14.7%
16.0%
FY10
6.1%
36.2%
2.4%
6.6%
47.1%
3.1%
3.5%
3.5%
3.5%
20.4%
0.0%
2.8%
27.4%
FY11
61.5%
95.6%
2.2%
FY11
(1.9%)
0.6%
390.6%
(0.2%)
13.8%
14.8%
FY11
6.8%
30.0%
2.0%
6.7%
45.4%
3.1%
3.7%
3.7%
3.7%
20.6%
0.0%
3.0%
28.4%
FY12E
66.8%
88.4%
2.1%
FY12E
(1.6%)
0.4%
386.5%
5.8%
14.3%
15.1%
FY12E
6.8%
27.9%
1.8%
6.4%
46.8%
3.0%
3.4%
3.4%
3.4%
20.4%
0.0%
2.7%
25.1%
FY13E
69.5%
90.1%
1.9%
FY13E
(1.6%)
0.4%
386.8%
18.8%
16.0%
16.7%
FY13E
7.3%
26.8%
1.8%
6.7%
43.3%
2.9%
3.8%
3.8%
3.8%
20.2%
0.0%
2.8%
24.8%
FY14E
68.6%
90.8%
1.8%
FY14E
(2.0%)
0.5%
388.7%
41.0%
15.8%
16.4%
FY14E
7.1%
27.1%
1.8%
6.5%
44.1%
2.9%
3.7%
3.7%
3.7%
21.0%
0.0%
2.6%
22.5%
217
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.klbaoxin.com
Company overview
Baoxin is a leading luxury- and ultra-luxury-brand-focused 4S dealership group in
China, with dealerships for brands such as BMW, MINI, Audi, Cadillac, and Jaguar
Land Rover. It is one of BMWs most important and largest dealerships in China in
terms of sales volume, and was the fastest-growing dealership group for Jaguar Land
Rover from November 2010, when it was first authorized by the car maker, to 2011.
China
Auto & Auto Parts Retailing
Price: HK$6.02
Nick LaiAC
(886-2) 2725-9864
nick.yc.lai@jpmorgan.com
Investment case
(1) Baoxin is one of the major distributors focusing mainly on luxury brands in China,
covering 13 different brands such as Land Rover, BMW, Mini, Jaguar, Audi, Cadillac,
and VW, as well as Toyota and Honda. (2) We forecast revenue from Baoxins AM
business will increase gradually from 5-6% in the last few years to 8%-9% by 2015.
Meanwhile, due to its high-margin nature, we estimate AM will account for 32% of
Baoxins gross profit in 2014, from 28% in 2011. (3) Acquisition of NCGA in Aug-12
should help boost Baoxins earnings and position in Chinese luxury car market.

Limited
9
HK$
7
5
3
Nov-11
Feb-12
May-12
Aug-12
Nov-12

R-CHIP (rebased)
Source: Bloomberg.

(1) Strong sales of luxury branded vehicles on the back of Chinas luxury boom, (2)
expansion of dealerships through both organic growth and selective acquisitions, and
(3) declining inventory turnover days.
We maintain our 2013 earnings estimate at Rmb1.3 billion as we need to see evidence
of how Baoxin turns NCGAs business into a profitable one. Earnings downside risks
include lower-than-expected margins and failure to meet its expansion target.
Our Dec-13 PT of HK$7.0 is based on DCF (WACC of 8% and terminal growth rate of
1%) and 11x forward P/E, the middle of the companys historical trading range of 913x. Risks to our view include worse-than-expected price competition and sell-through
in the high-end auto market in China.
Baoxin Auto Group Limited (Reuters: 1293.HK, Bloomberg: 1293 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
7,717
12,011
24,849
EBIT (Rmb mn)
457
951
1,305
Net Profit (Rmb mn)
304
602
749
Diluted EPS (Rmb)
0.14
0.28
0.32
DPS (Rmb)
Revenue growth (%)
49.4%
55.7%
106.9%
Diluted EPS growth (%)
71.3%
98.0%
14.4%
ROE
28.9%
26.2%
21.4%
P/E (x)
34.3
17.8
16.4
P/BV (x)
7.1
3.6
2.9
Dividend Yield
218
FY13E
39,098
2,053
1,325
0.52
57.3%
66.1%
25.0%
9.2
1.9
-
FY14E
43,516
2,523
1,655
0.65
11.3%
24.9%
22.0%
7.4
1.5
-
Company Data
52-week Range (HK$)
Shares O/S (mn)
Market Cap (HK$ mn)
Market Cap (US) ($ mn)
Price (HK$)
Date Of Price
Free float (%)
Average 3m Daily Turnover (US) ($ mn)
R-CHIP
Exchange rate (HK$/US$)
10.12 - 3.40
2,529
9,584
1,237
6.02
08 Nov 12
28.1%
2.72
1.56
4,285
7.75

21 November 2012
Adrian Mowat
(852) 2800-8599
Baoxin Auto Group Limited: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross Margin (%)
Operating Profit
% change Y/Y
Operating Margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
% change Y/Y
Net Margin
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Other LT assets
Total Assets
ST loans
Payables
Others
Total non-current liabilities
Total Liabilities
Minority Interest
Cash flow statement

FY10
7,717 12,011 24,849 39,098 43,516 Profit before tax
49.4% 55.7% 106.9% 57.3% 11.3% Depreciation & amortization
688 1,290 2,421 3,849 4,536 Change in working capital
57.0% 87.5% 87.7% 59.0% 17.9% Others
8.9% 10.7%
457
960 1,313 2,066 2,541
74.1% 109.9% 36.8% 57.4% 23.0% Purchase of fixed assets
5.9%
8.0%
5.3% 5.3% 5.8% Others
-10
-12
-15 Cash flow from investment
412
837 1,029 1,807 2,257
74.1% 103.2% 22.9% 75.6% 24.9% Equity raised/(repaid)
-104
-221
-257
-452
-564 Debt raised/(repaid)
304
602
749 1,325 1,655 Other
73.9% 98.0% 24.4% 77.0% 24.9% Dividends paid
3.9%
5.0%
3.0% 3.4% 3.8% Cash flow from financing
Beginning cash
Ending cash
Ratio Analysis
FY10
675 3,297 1,793 2,980 3,595 Gross margin
43
126
110
225
316 Operating margin
738 1,284 2,274 3,960 4,806 Net margin
932 2,061 2,142 2,085 2,097
2,387 6,767 6,319 9,249 10,813
Sales growth
8
13
13
23
33 Net profit growth
521
799 3,616 4,392 5,129 Gross profit growth
14
24
24
24
24 Operating profit growth
3,258 7,780 10,148 13,865 16,177
ROE
813 2,363 3,163 3,663 3,863
590 1,175 1,862 2,369 2,703
317 1,150 1,139 1,144 1,149
1,719 4,688 6,163 7,176 7,715
0
30
24
24
24
1,719 4,727 6,196 7,216 7,763
1,538 3,054 3,953 6,648 8,413
184
185
186
187
188
FY10
412
45
-488
-9
-121
FY11
837
66
-1,060
38
-333
FY12E FY13E FY14E

1,029 1,807 2,257
183
224
262
170
105
-548
-200
-132
509
1,121 1,702 1,434
0
-434
-580
0
-409
-693
0
10
-2,990
0
12
-988
0
15
-985
755
259
-138
-4
873
213
384
2,208
1,713
26
-411
3,536
384
2,884
0
794
-15
0
779
2,884
1,793
0
500
-27
0
473
1,793
2,980
0
200
-34
0
166
2,980
3,595
FY10
8.9%
5.9%
3.9%
FY11
10.7%
8.0%
5.0%
FY12E FY13E FY14E

9.7% 9.8% 10.4%
5.3% 5.3% 5.8%
3.0% 3.4% 3.8%
49.4% 55.7% 106.9% 57.3% 11.3%

73.9% 98.0% 24.4% 77.0% 24.9%
57.0% 87.5% 87.7% 59.0% 17.9%
74.1% 109.9% 36.8% 57.4% 23.0%
28.9%
26.2%
21.4% 25.0% 22.0%
219
Adrian Mowat
(852) 2800-8599

21 November 2012
Beijing Capital International Airport
Overweight
en.bcia.com.cn/
Company overview
Beijing Capital International Airport Company Limited (the Company) was
incorporated as a joint stock company with limited liability in China on 15 October
1999 to own and manage the aeronautical operations and certain ancillary commercial
businesses at the international airport in Beijing.
China
Price: HK$5.30
Airports
Karen Li, CFAAC
(852) 2800-8589
karen.yy.li@jpmorgan.com
Investment case
The newsflow has been quiet lately, while international traffic growth for both AXM
and PAX softened to 5-6% in September on growing tension between China and
Japan. The stock has been consolidating, possibly weighed down by concerns over
potential capex outlay (re: PEK 2nd Airport project). Management has emphasized that
BCIA would only participate in the project if the return generated is above the internal
hurdle rate.
Beijings new airport is currently undergoing the feasibility study, with official
approval expected to come by after the 18th People Congress. We assume the worst,
modeling in a scenario that the company will participate in the 2nd Airport project in
an asset-heavy way. We build in an estimated capex of Rmb35B related to the Phase 1
of this project (spread over 2013-2018) without factoring in any corresponding benefit
from that. Stripping out all the capex associated would lift our PT to HK$14.

Limited
5.5
5.0
HK$
4.5
4.0
3.5
3.0
Nov-11
Feb-12
May-12
Aug-12
Nov-12

MSCI-HK (rebased)
Abs
Rel
YTD
35.5%
14.6%
1m
0.8%
-2.4%
3m
1.5%
-9.0%
12m
53.2%
37.6%
Source: Bloomberg.

Given the company is macro driven with a very high degree of operational leverage,
The key earnings risk arises from a sudden collapse of air travel in Beijing, as a result
of unexpected pandemic disease or a sharp slowdown of global economy.
We use DCF-based valuation (WACC of 10.5% and terminal g of 1.5%) to derive our
Dec 13 PT of HK$9.30. Key risks are untimely launch, or cost overrun of the new
capex project (i.e. BCIAs participation in PEK 2nd Airport in an asset-heavy way).
Beijing Capital International Airport (Reuters: 0694.HK, Bloomberg: 694 HK)
FY09A
FY10A
FY11A
FY12E
FY13E
Total Revenue (Rmb mn)
4,749
5,540
6,215
6,758
7,386
Net Profit (Rmb mn)
296.0
595.2
1,113.9
1,371.1
1,690.9
EPS (Rmb)
0.07
0.14
0.26
0.32
0.39
DPS (Rmb)
0.03
0.00
0.08
0.05
0.06
Revenue growth (%)
7.5%
16.6%
12.2%
8.7%
9.3%
EPS growth (%)
236.7%
101.1%
87.1%
23.1%
23.3%
ROE
2.4%
4.5%
8.0%
9.1%
10.3%
P/E (x)
62.4
31.0
16.6
13.5
10.9
P/BV (x)
1.5
1.4
1.3
1.2
1.1
EV/EBITDA (x)
16.9
11.9
9.2
7.9
7.1
Dividend Yield
0.8%
0.0%
1.8%
1.1%
1.4%
220
FY14E
7,973
2,057.6
0.48
0.07
7.9%
21.7%
11.5%
9.0
1.0
6.7
1.7%
Company Data
Shares O/S (mn)
Market Cap (HK$ mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3M - Average daily Value (HK$ mn)
Average 3m Daily Turnover ($ mn)
MSCI-HK
Exchange Rate
Fiscal Year End
1,879
21,914.3
2,828
5.30
07 Nov 12
34.2%
4.90
25.63
3.23
11,144
7.75
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Beijing Capital International Airport: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Exceptionals/Non-recurring
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY11 FY12E FY13E FY14E FY15E

6,215 6,758 7,386 7,973 8,518
12.2% 8.7% 9.3% 7.9% 6.8%
3,566 3,992 4,563 5,112 5,639
23.1% 7.9% 14.3% 12.0% 10.3%
59.7% 59.2% 61.9% 64.3% 66.3%
2,204 2,450 2,972 3,424 3,815
46.5% 11.2% 21.3% 15.2% 11.4%
35.5% 36.3% 40.2% 42.9% 44.8%
-719 -622 -717 -681 -921
0
0
0
0
0
1,485 1,828 2,254 2,743 2,893
87.3% 23.1% 23.3% 21.7% 5.5%
-372 -457 -564 -686 -723
25.0% 25.0% 25.0% 25.0% 25.0%
1,113.9 1,371.1 1,690.9 2,057.6 2,169.9
87.1% 23.1% 23.3% 21.7% 5.5%
4,331 4,331 4,331 4,331 4,331
0.26 0.32 0.39 0.48 0.50
87.1% 23.1% 23.3% 21.7% 5.5%
FY11
949
986
130
75
2,139
FY12E
2,139
1,062
130
75
3,405
FY13E
2,420
1,138
130
75
3,762
FY14E
2,441
1,208
130
75
3,855
Net fixed assets

Other non-current assets
Total Assets
31,376 30,334 32,753 36,565

384
76
54
54
33,899 33,816 36,569 40,474
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total liabilities
BVPS
399
2,089
5
2,494
16,813
121
19,427
14,472
3.34
1,139
2,250
5
3,394
14,692
92
18,179
15,637
3.61
139
2,411
5
2,555
16,853
87
19,495
17,074
3.94
2,589
2,561
5
5,155
16,414
82
21,651
18,823
4.35
FY15E
2,557
1,277
130
75
4,039
Cash flow statement

EBIT
Depr. & amortization
Taxes
Other Operating Cash flow
Capex
Other
Net Interest
FY11
2,204
1,507
-431
-372
-729
2,179
-204
130
-719
Free cash flow
1,975 2,297
Debt raised/(repaid)
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net margin
0
0
0
0
0
-1,704 -1,381 1,161 2,011 1,961
0
0
-0
0
-0
-334 -206 -254 -309 -325
882
949 2,139 2,420 2,441
949 2,139 2,420 2,441 2,557
0.08 0.05 0.06 0.07 0.08
Sales growth
Net profit growth
40,254 EPS growth
54
44,348 Interest coverage (x)
Net debt to equity
139 Sales/assets
2,706 Assets/equity
5 ROE
2,850 ROCE
20,825
4
23,680
20,668
4.77
FY11
59.7%
35.5%
17.9%
FY12E
2,450
1,553
80
-457
-630
2,997
-700
481
-622
FY12E
59.2%
36.3%
20.3%
FY13E
2,972
1,603
80
-564
-734
3,357
-4,000
17
-717
FY14E
3,424
1,700
74
-686
-700
3,812
-5,513
19
-681
FY15E
3,815
1,836
-1
-723
-941
3,986
-5,525
20
-921
-643 -1,700 -1,539
FY13E
61.9%
40.2%
22.9%
FY14E
64.3%
42.9%
25.8%
FY15E
66.3%
44.8%
25.5%
12.2% 8.7% 9.3% 7.9%

87.1% 23.1% 23.3% 21.7%
87.1% 23.1% 23.3% 21.7%
6.8%
5.5%
5.5%
5.16 6.43 6.38 7.53 6.13

51.3% 43.5% 42.8% 43.8% 44.2%
112.3% 87.5% 85.3% 87.9% 89.0%
0.18 0.20 0.21 0.21 0.20
234.2% 216.3% 214.2% 215.0% 214.6%
8.0% 9.1% 10.3% 11.5% 11.0%
6.9% 7.8% 9.1% 9.5% 9.6%
221
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.brilliance-auto.com
Company overview
Brilliance China (Brilliance) is a key luxury-car producer in China focusing on the
manufacture and sale of BMW-branded cars. It currently produces and sells 3 and 5
Series sedans and X1 SUV through its 50%-owned BMW JV, which contributes most
of its consolidated profit. Brilliance is also a major minibus producer in China. The
companys products include Jinbei Haise minibus, which is based on Toyotas
technology.
China
Automobile Manufacture
Price: HK$8.89
Nick LaiAC
(886-2) 2725-9864
Limited
Investment case
(1) The strong sales momentum from its 50%-owned BMW JV; we expect its BMW
car sales volume to grow at a CAGR of 36% in 2011-2014; (2) sustained margin; and
(3) low leverage. ROE is 25-30% in our estimate period.
10.0
9.0
HK$
8.0
7.0

BMWs launch of new 3-series long-wheel base sedan in early July in 2012 should
help boost Brilliances volume in 2H12-2013. Brilliance fits well into our two major
investment themes for China autos: 1) luxury car boom; and 2) SUV trend. We expect
Brilliance to benefit from: 1) consumption upgrade trend, from upper-mid-range (e.g.
Japanese cars) to luxury cars (e.g. European); and 2) popularity of SUVs, a segment we
expect to grow at a 36% CAGR compared to 19% for overall PVs in 2008-13.
6.0
Nov-11
Feb-12 May-12
Aug-12 Nov-12

R-CHIP (rebased)
Abs
Rel
YTD
6.1%
-7.8%
1m
-1.3%
-5.2%
3m
21.4%
14.1%
12m
0.6%
-9.8%
Source: Bloomberg.

We expect Brilliance Chinas net profit to rise 17% Y/Y to Rmb2.6B in 2013. With
strong BMW sales, we believe there is potential upside potential to our current earnings
estimates. Earnings downside risks are weaker-than-expected BMW car sales.
Our Dec-13 PT of HK$11 is based on 15x forward P/E, which is at the higher level of
its average P/E range of 9-17x and our DCF analysis (WACC of 8% and terminal
growth rate of 1%). Risks to our PT and rating include worse-than-expected price
competition and inventory pressure in the luxury car segment, possibly due to
overcapacity in the broader Chinese vehicle market.
Brilliance China Automotive (Reuters: 1114.HK, Bloomberg: 1114 HK)
FY09A
FY10A
FY11A
FY12E
Revenue (Rmb mn)
6,149
8,949
6,443
6,385
Net Profit (Rmb mn)
(1,640)
1,271
1,812
2,208
EPS (Rmb)
(0.37)
0.25
0.36
0.44
DPS (Rmb)
Revenue growth (%)
12.4%
45.5%
-28.0%
-0.9%
ROE
NM
22.4%
27.2%
27.3%
P/E (x)
NM
28.1
19.7
16.3
P/BV (x)
6.4
5.6
5.1
3.9
Dividend Yield
222
FY13E
6,704
2,581
0.51
5.0%
24.6%
13.9
3.0
-
FY14E
8,161
3,250
0.65
21.7%
24.2%
11.1
2.4
-
Company Data
52-week Range (HK$)
Shares O/S (mn)
Market Cap (HK$ mn)
Price (HK$)
Date Of Price
Free float (%)
R-CHIP
9.89 - 6.15
447
4,300
555
8.89
08 Nov 12
61.0%
19.71
19.95
4,285
7.75

21 November 2012
Adrian Mowat
(852) 2800-8599
Brilliance China Automotive: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
Net income (core)
% change Y/Y
Shares Outstanding
EPS (core) (Rmb)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Net fixed assets
Other LT assets
Total Assets
ST loans
Payables
Others
Long term debt
Other LT liabilities
Total Liabilities
Minority Interest
BVPS
Cash flow statement

FY10
8,949 6,443 6,385 6,704 8,161 EBIT
45.5% (28.0%) (0.9%) 5.0% 21.7% Depreciation & amortization
1,224
856
844
837 1,087 Change in working capital
Others
1,388 2,064 2,467 2,858 3,559 Cash flow from operations
NM 48.7% 19.6% 15.8% 24.5%
15.5% 32.0% 38.6% 42.6% 43.6% Capex
-171
-194 -189 -195 -205
1,465 1,949 2,359 2,757 3,472 Free cash flow
NM 33.1% 21.0% 16.9% 25.9%
54
-58
-71
-83 -104 Equity raised/(repaid)
1,271 1,812 2,208 2,581 3,250 Debt raised/(repaid)
NM 42.6% 21.8% 16.9% 25.9% Dividends paid
4,993 4,998 5,021 5,021 5,021 Other
0.25
0.36
0.44
0.51
0.65 Beginning cash
NM 42.5% 21.3% 16.9% 25.9% Ending cash
Ratio Analysis
FY10
FY11 FY12E FY13E FY14E %, year end Dec
2,625 1,869 1,950 1,887 1,505 Net margin
2,445 1,418 1,205 1,273 1,539 a
791
737
759
804
969 Sales growth
7,098 6,032 8,142 10,348 13,532 a
Sales/assets
1,585 1,670 2,070 2,456 2,830 Assets/equity
1,402
923
923
923
923
13,220 12,811 15,322 17,923 21,492 ROE
165 1,297 1,397 1,597 1,797
6,215 4,256 4,316 3,985 3,953
1,581 1,019 1,012 1,005
999
7,962 6,572 6,725 6,587 6,748
0
0
0
0
0
2
2
2
10
18
2
2
2
10
18
7,964 6,573 6,726 6,597 6,766
6,325 6,989 9,197 11,778 15,028
-1,069
-752 -602 -452 -302
1.27
1.40
1.83
2.35
2.99
FY10
1,388
139
1,147
-1,494
1,180

2,064 2,467 2,858 3,559
138
99
115
126
-783
316
113
-207
-2,046 -2,385 -2,830 -3,528
-628
498
256
-49
-378
-306
-500
-500
-500
802
-934
-2
-244
-549
3
309
0
-1,212
-900
1,609
428
9
688
0
25
722
428
586
0
100
-46
0
54
586
717
0
200
-53
0
147
717
704
0
200
-67
0
133
704
372
FY10
14.2%

28.1% 34.6% 38.5% 39.8%
45.5% (28.0%)
NM 42.6%
(0.9%)
21.8%
5.0%
16.9%
21.7%
25.9%
67.7% 50.3% 41.7% 37.4% 38.0%

209.0% 183.3% 166.6% 152.2% 143.0%
22.4%
27.2%
27.3%
24.6%
24.2%
223
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
CCR
Price: R$18.60
www.grupoccr.com.br
Price Target: R$20.00
End Date: Dec 2013
Company overview
CCR is one of the largest toll road operators in Brazil, with concessions in the South
and Southeastern parts of the country. The company also operates other businesses,
including three airports in Latin America, an electronic payment system company, a
company that inspects motor vehicles, the consortium that operates a line of the So
Paulo Subway system, and a water transportation company in Rio de Janeiro.
Brazil
Transportation
Investment case
We see CCR as one of the best vehicles to be exposed to the expected new round of
concessions in Brazil. The company has a comfortable cash position, a proven track
record of accretive acquisitions, and it has already stated its willingness to invest in
new projects. We believe that CCRs focus should be on urban mobility and airport
projects, where higher returns could be achieved.
Bloomberg JPMA ABDALLA <GO>

We still see room for CCR to outperform if a scenario of new concessions
materializes as we do not include any new projects in our forecasts. The stock suffered
in Aug-Sep with concerns about regulation, but it recovered quickly and has been
trading ~R$18 since then. The stock is trading at 9.8x 2013E EV/EBITDA, 11%
above the historical average.
Fernando AbdallaAC
(55-11) 4950-3463
fernando.abdalla@jpmorgan.com
20
18
R$
16
14
12
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12
CCRO3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Despite being quite defensive, toll road traffic in the Brazilian concessions is closely
related to macroeconomic activity. As a result, the major earning risk that we see for
the name is a round of GDP expectations downgrade, which would, at some point,
lead to a reduction of traffic growth estimates (assuming traffic elasticity is
maintained).
We derive our Dec 2013 PT of R$20 using a finite DCF, in which our forecasts match
the concession term and no perpetuity is considered. We assume a 12.0% cost of
equity in R$ nominal. Main risks would be lower GDP prospects and regulatory
intervention.
Companhia de Concessoes Rodoviarias (CCRO3.SA;CCRO3 BZ)
FYE Dec
2010A
2011A
Revenues (R$ mn)
FY
3,776
4,578
EBITDA FY (R$ mn)
2,259
2,934
Net Income - GAAP FY (R$ mn)
672
899
EPS Reported FY (R$)
0.38
0.51
0.43
0.52
Source: Company reports, Bloomberg, J.P. Morgan estimates.
224
2012E
2013E
5,201
3,346
1,196
0.68
0.68
6,007
3,993
1,490
0.84
0.88
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
18.60
14 Nov 12
19.34 - 10.84
32,539.77
Dec
1,766
20.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
CCR: Summary of Financials

Income Statement, Cash Flow
Net Revenues
Cost and Expenses
EBITDA
Adjusted EBITDA
Adjusted EBITDA Margin (%)
Depreciation and Amortization
EBIT
Net Financial result
Non-operating result
Taxes
Minority interest
Net income
Shares outstanding
EPS

Capex
FCFF
FCFE
Dividends
Operating Data
Traffic (million vehicle-equivalent)
Traffic growth (YoY, %)
Revenue / vehicle (R$)
Capex / depreciation (x)
ROA (%)
Net margin (%)
Revenues / assets (%)
Assets / equity (x)
ROE (%)
FY11A FY12E FY13E FY14E FY15E Balance Sheet

4,578 5,201 6,007 6,866 7,526 Cash
(1,955) (2,135) (2,175) (2,234) (2,097) Accounts receivable
2,934 3,346 3,993 4,692 5,259 Other current assets
2,934 3,346 3,993 4,692 5,259 Long-term assets
64.1% 64.3% 66.5% 68.3% 69.9% Net PP&E
(435) (469) (484) (549)
(586) Other permanent assets
2,277 2,699 3,237 3,823 4,459 Total assets
(923) (858) (959) (1,051) (1,186) Short-term debt
0
0
0
0
0 Accounts payable
(444) (630) (775) (943) (1,113) Other current liabilities
(11)
(14)
(13)
(15)
(17) Long-term debt
899 1,196 1,490 1,815 2,351 Other long-term liabilities
1,766 1,766 1,766 1,766 1,766 Total liabilities
0.51
0.68
0.84
1.03
1.33 Minority interest
(36)
339
(5)
36
32 Liabilities and Equity
(1,002) (1,052) (714) (645)
(431)
1,319 1,839 2,660 3,289 3,782 Net debt
621 1,845 1,712 1,850 1,508 Net debt / Equity (x)
807
943 1,341 1,633 2,351 Net Debt / Total Capital (x)
89.7% 78.8% 90.0% 90.0% 100.0% Net Debt / EBITDA (x)
FY11A FY12E FY13E FY14E FY15E Macro, Valuation
962
995 1,077 1,163 1,193 GDP Growth (%)
10.8% 3.4% 8.2% 8.0%
2.6% FX rate (Ps/US$, eop)
4.76
5.23
5.58
5.90
6.31 Inflation (YoY, %)
91-day Cetes rate (%, eop)
2.3
2.2
1.5
1.2
0.7
7.0% 8.5% 10.3% 12.4% 17.1% EV/EBITDA
19.6% 23.0% 24.8% 26.4% 31.2% P/E
0.4
0.4
0.4
0.5
0.5 P/BV
4.0
4.1
4.0
3.9
3.6 FCFE Yield (%)
28.1% 34.6% 41.4% 48.0% 62.2% Dividend yield
FY11A
763
430
187
11,471
431
11,040
12,851
1,882
335
695
5,065
1,660
9,637
9
3,205
12,851
FY12E
1,274
428
264
12,105
599
11,507
14,072
3,501
429
745
4,325
1,605
10,606
13
3,453
14,072
FY13E
1,564
483
264
12,175
648
11,527
14,485
3,502
371
773
4,349
1,875
10,871
13
3,602
14,485
FY14E
1,698
516
264
12,122
694
11,429
14,601
3,307
367
798
4,171
2,161
10,805
13
3,783
14,601
FY15E
980
566
264
11,932
726
11,206
13,742
2,765
345
830
3,641
2,365
9,946
13
3,783
13,742
6,185 6,552 6,287 5,780 5,426

192.9% 189.7% 174.6% 152.8% 143.4%
48.1% 46.6% 43.4% 39.6% 39.5%
2.1
2.0
1.6
1.2
1.0
2.8%
1.4%
4.1%
4.0%
4.0%
1.80
1.98
1.95
2.00
2.05
6.5%
6.0%
5.0%
4.5%
4.5%
11.0%
7.5%
9.0%
9.0%
9.0%
13.1
36.2
10.0
1.9%
2.5%
11.6
27.2
9.3
5.7%
2.9%
9.6
21.8
8.9
5.3%
4.1%
8.1
17.9
8.5
5.7%
5.0%
7.2
13.8
8.5
4.7%
7.2%

225
Adrian Mowat
(852) 2800-8599

21 November 2012
Cebu Air, Inc.
Overweight
www.cebupacificair.com
Company overview
Cebu Air Inc is a Philippines-based low-cost carrier with a 45% market share on
domestic routes and 16% market share on international routes. 1H12 revenue
breakdown: passenger 79%, cargo services 5% and ancillary revenue 15%.
Philippines
Transportation
Investment case
Low-cost carriers continue to grow during the global economic slowdown/downturn as
their demand is driven by rising income and middle class population in Asia. Cebu Air
is well-positioned given its cost efficiency and strong B/S vs peers.
Price: Php58.60
Corrine PngAC
(65) 6882-1514

Limited
100

Cebu Air has no direct US/Europe route exposure and its Overseas Filipino Worker
(OFW) market demand is more resilient and continues to grow. Both AirAsia and Tiger
Airways likely found Philippines a more challenging market to compete in than
previously anticipated. Both LCCs are more focused on growing their JVs in other
markets and have deployed less new aircraft capacity in the Philippines. Furthermore,
longer-term expansion on Middle East routes will be a positive driver given the large
and underserved OFW market.
90
Php
80
70
60
50
Nov-11
Feb-12
May-12
Aug-12
Nov-12
CEB.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
-10.8%
-35.2%
1m
1.0%
1.0%
3m
-13.9%
-16.3%
Source: Bloomberg.

Uncertainty of international route expansion; rising fuel prices (as fuel could constitute
c.52% of FY12E costs); inability to secure financing for aircraft deliveries at attractive
interest rates; weaker peso; rising LCC competition; competition from PAL.
Our Dec-13 PT of Php90 is based on 8x 2013E adj. EV/EBITDAR, in line with the
Asian airline sector valuations even though Cebu Air can still achieve above sector
average profitability despite the rising competition. Key risks: 1) rising fuel prices; 2)
peso depreciation; 3) irrational pricing behavior by competitors; 4) unfavorable
financing terms for new aircraft deliveries; and 5) JG Summit Group-related risks.
Cebu Air, Inc. (Reuters: CEB.PS, Bloomberg: CEB PM)
FY10A
FY11A
FY12E
Revenue (Php mn)
29,089
33,935
39,866
Net Profit (Php mn)
6,922
3,624
2,483
EPS (Php)
11.78
5.93
4.10
Adj EPS (Php)
9.81
5.31
2.82
DPS (Php)
0.00
0.00
0.00
Revenue Growth (%)
24.8%
16.7%
17.5%
EPS Growth (%)
110.6%
(49.6%)
(30.9%)
Adj EPS Growth (%)
141.7%
(45.9%)
(46.9%)
ROCE
21.3%
9.2%
8.3%
ROE
55.0%
19.6%
12.4%
P/E
5.0
9.9
14.3
P/B (x)
1.9
1.9
1.7
EV/EBITDA
5.4
8.1
8.3
Div Yield (%)
0.0%
0.0%
0.0%
226
FY13E
47,648
2,978
4.91
4.91
0.00
19.5%
19.9%
74.5%
10.8%
13.3%
11.9
1.5
6.6
0.0%
FY14E
56,194
3,622
5.98
5.98
0.00
17.9%
21.6%
21.6%
11.5%
14.1%
9.8
1.3
5.4
0.0%
Company Data
Shares O/S (mn)
Mkt Cap (Php mn)
Mkt Cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
Avg Daily Volume (mn)
Avg Daily Value (Php mn)
Avg Daily Value ($ mn)
PSE
Exchange Rate
Fiscal Year End
606
35,509
857
58.60
07 Nov 12
35.0%
5.20
664.10
16.03
5,437
41
Dec
12m
-21.9%
-47.9%

21 November 2012
Adrian Mowat
(852) 2800-8599
Cebu Air, Inc.: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Adj EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
29,089
24.8%
8,551
68.3%
6,450
103.9%
22.2%
-694
6,940
114.3%
-18
123.2%
6,922
112.5%
588
11.78
110.6%
9.81
141.7%
FY11
33,935
16.7%
6,160
-28.0%
3,528
(45.3%)
10.4%
-207
3,747
-46.0%
-123
164.4%
3,624
-47.6%
611
5.93
(49.6%)
5.31
(45.9%)
FY10
9,763
862
370
264
15,139
FY11
8,958
837
398
279
13,732
LT investments
370
409
Net fixed assets
33,986 41,038
Total Assets
49,937 55,681
Liabilities
Short-term loans
2,056 2,467
Payables
5,598 6,711
Others
4,642 5,351
12,296 14,529
Long-term debt
16,377 18,404
Other liabilities
3,357 3,582
Total Liabilities
32,030 36,515
17,907 19,166
BVPS
30.47 31.38
Cash flow statement

FY12E FY13E FY14E Php in millions, year end Dec
39,866 47,648 56,194 EBIT
17.5% 19.5% 17.9% Depr. & amortization
6,322 8,575 10,230 Change in working capital
2.6% 35.6% 19.3% Taxes
3,402 4,946 5,921 Cash flow from operations
(3.6%) 45.4% 19.7%
8.5% 10.4% 10.5% Capex
-793
-888
3,449 4,136 5,031 Net Interest
-8.0% 19.9% 21.6% Free cash flow
-966 -1,158 -1,409
183.3% 207.3% 203.4% Equity raised/(repaid)
2,483 2,978 3,622 Debt raised/(repaid)
-31.5% 19.9% 21.6% Other
606
606
606 Dividends paid
4.10
4.91
5.98 Beginning cash
(30.9%) 19.9% 21.6% Ending cash
2.82
4.91
5.98 DPS
(46.9%) 74.5% 21.6%
Ratio Analysis
FY12E FY13E FY14E Php in millions, year end Dec
9,680 10,238 11,636 EBITDA margin
983 1,175 1,386 Operating margin
467
558
658 Net margin
327
391
461
11,458 12,362 14,141
477
555
645 Sales growth
59,480 70,201 76,836 EPS growth
2,467 2,467 2,467
6,269 7,473 8,796 Sales/assets
16,620 19,363 22,376 Assets/equity
18,404 23,404 23,404 ROE
3,582 3,582 3,582 ROCE
38,606 46,350 49,363
20,874 23,851 27,474
34.45 39.36 45.34
FY10
6,450
2,101
2,173
10,024
FY11
3,528
2,632
2,634
7,995
FY12E FY13E FY14E

3,402 4,946 5,921
2,920 3,629 4,309
1,827 2,397 2,632
-966 -1158 -1409
6,390 8,926 10,474
-2,199
-694
7,824
-4,230
-207
3,766
-9,036 -13,368 -9,076

-793
-888 -980
-2,646 -4,443 1,398
3,732
1,323
-3,233
3,841
9,763
0.00
0
2,439
-6,949
0
9,763
8,958
0.00
0
0
0
0 5,000
0
3,368
0
0
0
0
0
8,958 9,680 10,238
9,680 10,238 11,636
0.00
0.00
0.00
FY10
29.4%
22.2%
23.8%
FY11
18.2%
10.4%
10.7%
FY12E FY13E FY14E

15.9% 18.0% 18.2%
8.5% 10.4% 10.5%
6.2%
6.2% 6.4%
23.7% 12.2% 18.4%

24.8% 16.7% 17.5%
112.5% -47.6% -31.5%
110.6% (49.6%) (30.9%)
12.32 29.78
7.97
26.7%
0.68
2.79
55.0%
21.3%
45.1%
0.64
2.91
19.6%
9.2%
53.6%
0.69
2.85
12.4%
8.3%
19.5%
19.5%
19.9%
19.9%
9.66
17.9%
17.9%
21.6%
21.6%
10.44
65.5% 51.8%
0.73
0.76
2.94
2.80
13.3% 14.1%
10.8% 11.5%
227
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.cpfworldwide.com
Price Target: Bt43.00
Company overview
CPF is one of the world leading agro-industrial entities, with a fully-integrated
operation in both aquaculture and livestock (mainly poultry and swine). CPF has
growing investments overseas, mainly in various emerging Asian markets. The longterm goal is to duplicate the integrated formula in Thailand. The move is to partly
overcome non-tariff trade barriers that tend to erupt in the food industry.
Thailand
Food
Investment case
We like CPFs growing exposure to Asian countries rising food consumption, whereas
more stringent food safety standards should provide a tailwind for CPFs integrated and
technology-led business model. We believe supply-side issues may abate in 1H13,
providing room for farm margins to bottom out, hence operational turnaround.
Price: Bt35.00
Kae Pornpunnarath, CFAAC

(66-2) 684 2679
kae.pornpunnarath@jpmorgan.com
Bloomberg JPMA
PORNPUNNARATH<GO>
40
Bt
36
32

The acquisition of 74% of CPP has opened up exposure to fast-growing food demand
in China/Vietnam. The shift away from the volatile farm business to a more stable
feed/food business should underpin higher margin stability.
The prolonged farm price weakness and the rise in grain prices could deter our thesis of
operational turnaround.
28
Nov-11
Feb-12
May-12
Aug-12
Nov-12
CPF.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
9.1%
-15.5%
1m
7.5%
7.6%
3m
9.9%
3.9%
12m
20.0%
-13.4%
Source: Bloomberg.

Our SOTP price target of Bt43 incorporates Bt 26 for its core agro business (13x P/E)
and Bt17 for its holding in CPALL. Key risks: prolonged farm price weakness and a
rise in grain prices, execution of overseas expansion, a stretched balance sheet, and
regulatory issues.
Charoen Pokphand Foods (Reuters: CPF.BK, Bloomberg: CPF TB)

Bt in mn, year-end Dec
FY10A
FY11A
FY12E
FY13E
Revenue (Bt mn)
189,049
206,099
336,743
414,636
Net Profit (Bt mn)
13,562.6
15,836.8
20,549.5
19,027.9
EPS (Bt)
2.04
2.38
2.84
2.59
DPS (Bt)
1.05
1.20
1.02
1.29
Revenue growth (%)
14.8%
8.3%
63.9%
22.9%
EPS growth (%)
34.4%
16.8%
19.4%
-8.9%
ROCE
14.5%
13.5%
7.2%
11.2%
ROE
24.7%
26.0%
25.0%
17.9%
P/E (x)
17.7
15.1
12.7
13.9
P/BV (x)
4.1
3.8
2.6
2.4
EV/EBITDA (x)
2.1
1.8
6.1
3.8
Dividend Yield
2.9%
3.3%
2.8%
3.6%
Core EPS (Bt)
1.89
2.18
1.17
2.59
Core Profit (Bt mn)
12,601
14,479
8,442
19,028
228
FY14E
471,288
23,500.1
3.20
1.60
13.6%
23.5%
12.6%
19.9%
11.3
2.1
3.2
4.4%
3.20
23,500
Company Data
Shares O/S (mn)
Market cap (Bt mn)
Market cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
3M - Avg daily Value (Bt mn)
SET
Exchange Rate
Fiscal Year End
7,743
278,746
9,097
36.00
09 Nov 12
46.6%
26.45
901.34
29.42
1,291
30.64
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Charoen Pokphand Foods: Summary of Financials

Income Statement
Bt in millions, year end Dec
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY10
FY11 FY12E FY13E FY14E Bt in millions, year end Dec
189,049 206,099 336,743 414,636 471,288 EBIT
5.2%
4.6%
63.9%
22.9%
19,207 20,667 19,916 34,794 41,401 Change in working capital
7.9%
7.3%
-3.6%
74.7%
19.0% Taxes
6.8%
6.5%
NM 106.1%
20.9%
3.8%
3.9%
3.9%
6.6%
7.0% Capex
-2,334
-2,282
-4,353
-5,024
15,285 17,484 13,744 28,066 34,456 Net Interest
22.5%
14.4% -21.4% 104.2%
22.8% Other
-2,388
-2,885
-3,338
-5,738
18.8%
18.8%
24.3%
20.4%
20.3%
33.1%
16.8%
29.8%
-7.4%
6,656
6,656
7,351
7,351
7,351 Other
2.04
2.38
2.84
2.59
3.20 Dividends paid
11.2%
11.0%
19.4% (8.9%)
Ending cash
DPS
Ratio Analysis
FY10
7,761 24,341 13,684 11,153 14,964 EBITDA margin
33,863 35,673 63,690 75,808 82,411 Net margin
1,962
2,721
4,166
4,166
4,166
58,971 78,427 107,178 122,696 137,424
16,408 25,699 33,002 33,002 33,002 Sales growth
126,320 159,904 287,146 311,771 336,365 EPS growth
18,139 28,584 51,679 47,285 52,271
4,981
5,755
6,926
6,926
6,926 Sales/assets
32,827 46,071 78,621 78,036 86,119 Assets/equity
28,511 40,866 83,278 94,405 93,863 ROE
3,880
6,448
7,676
7,676
7,676 ROCE
65,217 93,385 169,575 180,116 187,658
58,015 63,597 100,685 111,469 124,560
8.72
9.55
13.70
15.16
16.94

14,484 16,009 13,297 27,401 33,117
5,618 6,087 6,619 7,393 8,284
-8,002
-91 -12,680 -14,240 -7,819
-2388 -2885 -3338 -5738 -6996
6,698 11,248 8,876 15,480 27,925
-6,284 -4,245 -15,000 -16,500 -18,150
-2,334 -2,282 -4,353 -5,024 -5,358
-146 2,638 -20,273
0
0
3,722 10,201 -6,124 -1,020 9,775
0
0 24,290
0
0
3,852 22,800 65,507 6,733 4,444
3,742
-6,656 -11,027 -7,751 -8,244 -10,408
10,523 7,761 24,341 13,684 11,153
7,761 23,532 13,684 11,153 14,964
1.05
1.20
1.02
1.29
1.60
FY10
10.0%
2.5%
7.1%

10.0%
5.9%
8.3%
8.7%
2.5%
3.9%
6.6%
7.0%
7.6%
6.0%
4.6%
5.0%
5.2%
5.2%
33.1%
11.2%
5.20
4.6%
4.6%
16.8%
11.0%
5.70
76.7%
1.58
2.12
24.7%
14.5%
70.4% 120.4% 117.1% 105.3%

1.63
1.52
1.40
1.46
2.06
2.85
2.80
2.70
26.0% 25.0% 17.9% 19.9%
13.5%
7.2% 11.2% 12.6%
50.8% 21.0%
63.9% 22.9%
29.8% -7.4%
19.4% (8.9%)
4.57
6.93
13.6%
13.6%
23.5%
23.5%
7.73
229
Adrian Mowat
(852) 2800-8599

21 November 2012
China Foods
Overweight
www.chinafoodsltd.com
Company overview
China Foods is a leading manufacturer and distributor of wines in China, under the
brand, Greatwall (), and one of the three key bottlers and distributors of CocaCola beverages in China. In addition, it distributes one of the top four edible oil brands,
Fortune (), in China.
China
Food & Food Manufacture
Price: HK$7.70
Jessica HongAC
(852) 2800-8559
jessica.ch.hong@jpmorgan.com
Bloomberg JPMA JHONG <GO>
Investment case
Wine is gaining stomach shares from beer in the alcoholic drinks market in China.
According to Euromonitor, sales of wine grew at a CAGR of 19% by value in 20062011, compared to 13% CAGR for beer during the same period. We believe the trend is
likely to be continued, driven by increasing popularity of red wine by young adults.
China Foods is the second-largest red wine company in China and is well-positioned to
benefit from the consumption trend, in our view.
China Foods wine margin expanded from 11.7% in 2010 to 17.1% in 2011 thanks to
the introduction of two mid-to high-end wine products, ie Sungod and Terroir. EBIT
margin for wine expanded further to 23% in 1H12 driven by stringent cost control.
Going forward, we expect product mix improvement to restart driven by two new
imported wine products, from France and Chile, which were introduced to the market
in Aug 2012.

Limited
8.5
HK$
7.5
6.5
5.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12

MSCI-Cnx (rebased)
Abs
Rel
YTD
26.4%
17.7%
1m
-7.9%
-14.0%
3m
5.9%
-1.3%
12m
18.8%
16.1%
Source: Bloomberg.

A key risk to 2013 earnings and our PT would be a sharp sudden slowdown in the
economy in China, which might impact the consumption of red wine, especially the
consumption of mid-to high-end and imported red wine.
Our Jun-13 PT of HK$10.0 is based on 1.0x PEG, in line with the sector average, with
two-year (2013-2015) EPS CAGR of 25%. We base our PT on 1.0x PEG, in line with
other China consumer staples companies.
China Foods Ltd (Reuters: 0506.HK, Bloomberg: 506 HK)
FY10A
FY11A
FY12E
Revenue (HK$ mn)
19,956
28,011
32,090
Net Profit (HK$ mn)
428
647
935
EPS (HK$)
0.15
0.23
0.33
Recurring EPS (HK$)
0.15
0.23
0.33
DPS (HK$)
0.06
0.08
0.12
Revenue growth (%)
40.4%
14.6%
Net Profit growth (%)
51.2%
44.6%
Recurring profit growth
51.2%
44.6%
EPS growth (%)
51.2%
44.6%
ROE
14.4%
10.3%
13.4%
ROA
5.7%
3.9%
4.9%
P/E (x)
50.3
33.3
23.0
P/BV (x)
3.6
3.2
3.0
EV/EBITDA (x)
18.5
14.2
10.9
Dividend Yield
0.7%
1.1%
1.6%
230
FY13E
38,462
1,257
0.45
0.45
0.16
19.9%
34.4%
34.4%
34.4%
16.4%
6.0%
17.1
2.7
8.3
2.1%
FY14E
45,810
1,600
0.57
0.57
0.21
19.1%
27.3%
27.3%
27.3%
18.6%
6.9%
13.4
2.4
6.5
2.7%
Company Data
Shares O/S (mn)
Market Cap (HK$ mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free Float(%)
3M - Avg daily value (HK$ mn)
MSCI-Cnx
Exchange Rate
Fiscal Year End
2,796
21,533
2,778
7.70
09 Nov 12
2.99
23.25
3.0
6004.47
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
China Foods Ltd: Summary of Financials

Income Statement
HK$ in millions, year end Dec
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross margin
Other operating income
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Share of JVs
Other non operating income
Earnings before tax
% change Y/Y
Tax
as % of EBT
Minorities
% change Y/Y
Recurring Net Income
% change Y/Y
EPS (reported)
% change Y/Y
Recurring EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Goodwill
Intangible assets
Long term investments
Net fixed assets
Other assets
Total Assets
FY10
19,956
5,081
25.5%
306
1,195
6.0%
862
4.3%
(45)
64
881
(260)
29.5%
(193)
428
428
0.15
0.15
-
FY11
28,011
40.4%
6,662
31.1%
23.8%
240
1,580
32.3%
5.6%
1,181
36.9%
4.2%
(37)
65
1,209
37.2%
(341)
28.2%
(222)
647
51.2%
647
51.2%
0.23
51.2%
0.23
51.2%
FY12E
32,090
14.6%
7,376
10.7%
23.0%
200
2,030
28.4%
6.3%
1,525
29.1%
4.8%
(40)
35
1,519
25.7%
(334)
22.0%
(250)
935
44.6%
935
44.6%
0.33
44.6%
0.33
44.6%
FY13E
38,462
19.9%
8,882
20.4%
23.1%
216
2,608
28.5%
6.8%
1,982
30.0%
5.2%
(40)
40
1,981
30.4%
(436)
22.0%
(289)
1,257
34.4%
1,257
34.4%
0.45
34.4%
0.45
34.4%
FY14E
45,810
19.1%
10,627
19.7%
23.2%
237
3,231
23.9%
7.1%
2,471
24.7%
5.4%
(40)
44
2,475
24.9%
(544)
22.0%
(330)
1,600
27.3%
1,600
27.3%
0.57
27.3%
0.57
27.3%
Cash flow statement

PBT
Tax & Other
FY10
881
332
(816)
181
125
FY11 FY12E FY13E

1,209 1,519 1,981
400
505
626
(517) (203)
(391)
138
208
351
666 1,446 1,843
Capex
Sale of assets
Acquisition of subsidiaries/intangibles
Other
(798)
(17)
(815)
(598)
(547)
(628)
(180)
(808)
(660)
(204)
(864)
(693)
(230)
(923)
Dividends paid
Other
0
713
(205)
(71)
438
0
301
(154)
(292)
(145)
0
18
(284)
0
(267)
0
27
(394)
0
(366)
0
32
(513)
0
(482)
FX gain/(loss)
Net change in cash
Ending cash
DPS
51
(202)
1,741
0.06
74
49
1,790
0.08
0
371
2,161
0.12
0
613
2,774
0.16
0
630
3,404
0.21
FY10
25.5%
6.0%
4.3%
2.1%
2.1%
-
FY11 FY12E FY13E

23.8% 23.0% 23.1%
5.6%
6.3%
6.8%
4.2%
4.8%
5.2%
2.3%
2.9%
3.3%
2.3%
2.9%
3.3%
40.4% 14.6% 19.9%
51.2% 44.6% 34.4%
51.2% 44.6% 34.4%
51.2% 44.6% 34.4%
FY14E
23.2%
7.1%
5.4%
3.5%
3.5%
19.1%
27.3%
27.3%
27.3%
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E HK$ in millions, year end Dec
1,741 1,790 2,161 2,774 3,404 Gross margin
1,616 1,945 2,116 2,410 2,813 EBITDA margin
3,490 5,702 6,206 7,066 8,247 Operating Margin
1,512 1,789 1,851 1,803 1,730 Net margin
8,359 11,225 12,334 14,052 16,194 Recurring net profit margin
- Sales growth
0
0
0
0
0 Recurring net profit growth
3,548 3,889 4,012 4,046 3,978 EPS growth
1,388 1,487 1,517 1,547 1,578
14,975 18,330 19,843 22,018 24,576 Interest coverage (x)
Net debt to equity
Liabilities
Sales/assets
Short-term loans
1,021 1,517 1,593 1,672 1,756 Assets/equity
Trade & other payables
2,663 3,939 4,423 5,195 6,064 ROE
Others
3,150 3,939 4,012 4,198 4,400 ROCE
6,834 9,396 10,027 11,065 12,220
Long-term debt
495
300
315
331
347
Others
96
120
138
165
197
Total Liabilities
7,426 9,816 10,480 11,561 12,764
Minorities
1,603 1,844 2,094 2,383 2,713
5,947 6,670 7,269 8,074 9,099
BVPS
2.13
2.39
2.60
2.89
3.26
FY14E
2,475
760
(721)
394
2,034
26.3
42.7
50.3
64.6
80.0
(3.0%)
0.3% (2.7%) (7.4%) (11.0%)
2.7
1.7
1.7
1.8
2.0
251.8% 264.0% 273.9% 272.8% 271.3%
14.4% 10.3% 13.4% 16.4% 18.6%
16.3% 10.6% 13.5% 16.1% 18.1%
231
Adrian Mowat
(852) 2800-8599

21 November 2012
China Shenhua Energy
Overweight
www.csec.com
Company overview
China Shenhua Energy (Shenhua) is Chinas leading largest integrated coal-based
energy company with production of 282Mt of commercial coal in 2011. The company
has a vertically integrated mine-rail-port network to sell coal products to its primarily
domestic customer base, along with a power generation business. Its primary
shareholder is its state-owned parent company Shenhua Group.
China
Metals & Mining
Investment case
Given its robust organic growth profile (+7% coal output growth in 2013E), potential
parent asset injections, solid dividend yield and attractive valuations (currently trading
well below its three-year historical PE of 12.8x), Shenhua is our top coal pick.
Lun Zhang
Price: HK$33.70

Shenhuas defensive attributes as a uniquely integrated, high-quality, low-operatingcost asset model has already been well recognized this year with its shares materially
outperforming its sector peers. In an anemic growth environment, the companys
growth is well underpinned by expansion plans in its existing coal fields and rail/port
infrastructure assets. Beyond this, there is potential for further asset injections from its
parent which we estimate can add another 100mtpa of coal output.
Key upside risks lie in tighter-than-expected coal markets a 5% change in coal prices
impacts EBITDA by 5%, or a hike in contract prices (we currently forecast rollover in
price or flat yoy). With an under-utilized balance sheet, we believe Shenhua is also
strongly positioned to grow both organically and through acquisitions. Containing cost
pressures and delivery of mine growth are key downside risk to earnings.
Daniel KangAC
(852) 2800 8570
daniel.kang@jpmorgan.com
Bloomberg JPMA KANG<GO>
(852) 2800 8561

lun.zhang@jpmorgan.com
Bloomberg JPMA ZHANG<GO>
Limited
45
40
HK$
35
30
25
20
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
-3.4%
-20.0%
1m
11.8%
7.1%
3m
13.3%
3.3%
12m
-7.2%
-19.0%
Source: Bloomberg.

Our Jun-13 PT of HK$35 is based on a blended average of: 1) P/BV-ROE valuation of
HK$26.69 (assuming 1.5x P/BV), 2) HK$40.74 using a EV/EBITDA multiple of 6.5x,
3) HK$39.86 using a P/E multiple of 12.8x and 4) DCF-based NPV of HK$44.15.
Risks: downside risk associated with production ramp-up or unanticipated mine
closures; changes in Chinese power tariff, potential parent asset injections, policy risk
downside associated with potential NDRC coal price controls and changes to Chinese
or Australian resource tax structure; fluctuations in the thermal coal price that are
materially above or below our existing forecasts.
China Shenhua Energy - H (Reuters: 1088.HK, Bloomberg: 1088 HK)
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
157,662
208,197
235,559
255,160
Net Profit (Rmb mn)
38,834.0
45,677.0
48,000.1
52,172.0
EPS (Rmb)
1.95
2.30
2.41
2.62
DPS (Rmb)
0.75
0.90
0.92
1.00
Revenue growth (%)
30.0%
32.1%
13.1%
8.3%
EPS growth (%)
22.5%
17.6%
5.1%
8.7%
ROCE
22.1%
24.4%
22.4%
23.2%
ROE
20.7%
21.2%
19.9%
19.1%
P/E (x)
13.9
11.8
11.3
10.4
P/BV (x)
2.6
2.4
2.1
1.9
EV/EBITDA (x)
8.0
6.9
6.6
5.8
Dividend Yield
2.8%
3.3%
3.4%
3.7%
232
FY14E
267,397
55,304.4
2.78
1.06
4.8%
6.0%
22.2%
18.0%
9.8
1.7
5.2
3.9%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3M - Avg daily Value (HK$ mn)
HSI
Exchange Rate
Fiscal Year End
3,399
92,352
14,778
33.70
05 Nov 12
27.0%
14.31
435.98
56.68
22,111
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
China Shenhua Energy - H: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBITDA margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Total Liabilities
BVPS
FY10
FY11 FY12E FY13E
157,662 208,197 235,559 255,160
30.0% 32.1% 13.1%
8.3%
42.8% 38.5% 33.7% 35.3%
70,854 82,911 85,306 96,036
21.1% 17.0%
2.9% 12.6%
44.9% 39.8% 36.2% 37.6%
57,525 68,305 67,575 77,253
22.1% 18.7%
NM 14.3%
36.5% 32.8% 28.7% 30.3%
-2,248 -1,848 -2,483 -2,106
55,942 66,460 65,379 75,475
22.1% 18.8%
-1.6% 15.4%
-11,473 -13,951 -10,522 -15,850
20.5% 21.0% 16.1% 21.0%
38,834.0 45,677.0 48,000.1 52,172.0
22.5% 17.6%
5.1%
8.7%
1.95
2.30
2.41
2.62
22.5% 17.6%
5.1%
8.7%
FY14E
267,397
4.8%
35.5%
102,680
6.9%
38.4%
81,538
5.5%
30.5%
-1,878
80,006
6.0%
-16,801
21.0%
55,304.4
6.0%
2.78
6.0%
Cash flow statement

EBIT
Taxes

57,525 68,305 67,575 77,253 81,538
13,329 14,606 17,730 18,783 21,142
-5,018 7,922 14,865 -17,363 1,157
58,537 70,665 80,596 53,756 77,586
Capex
Disposal/(purchase)
Net Interest
Free cash flow
-30,538 -44,713 -50,060 -35,000 -30,000

0
0
0
0
0
-2,248 -1,848 -2,483 -2,106 -1,878
27,999 25,952 30,536 18,756 47,586
Other
Dividends paid
Beginning cash
Ending cash
DPS
27,323
-39,330
-10,541
72,321
77,212
0.75
Ratio Analysis
FY10
77,212 61,437 74,072 74,588 102,349 Gross margin
11,424 13,365 16,973 17,477 18,315 EBITDA margin
11,574 12,628 17,208 18,099 18,903 Net profit margin
19,251 20,507 36,412 38,242 39,711 SG&A/Sales
119,461 107,937 144,664 148,405 179,278
Sales growth
3,789
3,900
3,900
3,900
3,900 Net profit growth
188,061 219,904 233,064 262,548 277,857
372,131 401,077 470,133 490,092 529,822 Current ratio
Quick ratio
15,317 16,389 16,389 16,389 16,389
19,661 23,668 27,902 29,410 30,717 Total debt to total asset
76,926 87,549 126,506 112,369 116,637
52,311 44,013 44,013 44,013 44,013 Sales/assets
134,704 136,763 175,720 161,747 165,998 Assets/equity
205,113 225,822 255,921 289,853 325,332 ROE
10.31
11.35
12.87
14.57
16.36 ROA
-16,143
0
0
0
-523
-14,917 -17,901 -18,240 -19,825
77,212 61,437 74,072 74,588
61,437 74,072 74,588 102,349
0.90
0.92
1.00
1.06

42.8% 38.5% 33.7% 35.3% 35.5%
44.9% 39.8% 36.2% 37.6% 38.4%
24.6% 21.9% 20.4% 20.4% 20.7%
5.8% 5.3% 5.0% 5.0%
5.0%
30.0% 32.1% 13.1%
22.5% 17.6% 5.1%
8.3%
8.7%
4.8%
6.0%
1.55
31.52
1.32
45.61
1.54
54.68
1.23
44.87
1.14
34.35
36.2% 34.1% 37.4% 33.0% 31.3%

-4.7% -0.5% -5.3% -4.9% -12.9%
0.46
0.54
0.54
0.53
1.81
1.78
1.84
1.69
20.7% 21.2% 19.9% 19.1%
11.4% 11.8% 11.0% 10.9%
0.52
1.63
18.0%
10.8%
233
Adrian Mowat
(852) 2800-8599

21 November 2012
China Shipping Container Lines
Overweight
www.cscl.com.cn
Company overview
China Shipping Container Lines (CSCL) provides container shipping and logistics
services. 1H12 container shipping revenue breakdown: Transpacific: 31%, AsiaEurope/Med: 26%, Asia Pacific: 18%, Domestic: 19% and Others: 6%.
China
Transportation
Investment case
CSCL provides unique exposure as the largest player in the domestic China shipping
trade. Overcapacity risks are lower as CSCLs newbuild vessel deliveries should be
more than offset by the return of chartered-in vessels. Valuations at 0.8x FY13E P/BV
are attractive and have discounted the challenging industry outlook, in our view.
Price: HK$2.38

We expect margins to expand by 300bp in 2013 and see no equity-raising risk. CSCL
also has a lower unit cost structure than sector average. China Cosco and CSCLs plans
to cooperate on domestic routes is a positive development in our view, as the two
liners combined services would likely serve c.70% of the domestic market, providing
stability and potential upside for freight rates on domestic routes.
Global demand weakens further, rising fuel prices, falling asset values, prolonged
industry oversupply.
Corrine PngAC
(65) 6882-1514

Limited
2.8
2.4
HK$ 2.0
1.6
1.2
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
29.3%
23.7%
1m
39.2%
30.7%
3m
17.2%
7.4%
12m
57.6%
56.0%
Source: Bloomberg.

Our Dec-13 PT of HK$2.85 is based on 1.0x P/BV, in line with CSCLs historical
average valuation since listing, as we expect it to turn profitable in FY13, with an EPS
growth of 170% in FY14. Key downside risks: 1) global container shipping demand
growth stalls or weakens; 2) rising bunker fuel prices and limited pass-through; 3)
prolonged industry oversupply; and 4) a slowdown in domestic China container
shipping trade.
China Shipping Container Lines (Reuters: 2866.HK, Bloomberg: 2866 HK)

FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
34,809
28,246
31,128
32,810
Net Profit (Rmb mn)
4,203.1
-2,743.5
-246.8
718.6
EPS (Rmb)
0.36
(0.23)
(0.02)
0.06
DPS (Rmb)
0.00
0.00
0.00
0.00
Revenue growth (%)
76.3%
-18.9%
10.2%
5.4%
EPS growth (%)
-164.8%
-165.3%
-91.0%
-391.2%
ROCE
11.6%
-6.1%
-0.1%
2.1%
ROE
15.4%
-9.9%
-1.0%
2.7%
P/E (x)
5.3
-8.2
-90.8
31.2
P/BV (x)
0.8
0.9
0.9
0.8
EV/EBITDA (x)
3.6
-34.4
20.4
14.0
Dividend Yield
0.0%
0.0%
0.0%
0.0%
234
FY14E
36,050
1,937.5
0.17
0.00
9.9%
169.6%
4.5%
7.1%
11.6
0.8
10.4
0.0%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSCEI
Exchange Rate
Fiscal Year End
3,751
7,192
1,152
2.38
07 Nov 12
59.63
108.33
11.74
10,734
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
China Shipping Container Lines: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
34,809
76.3%
6,062
-237.1%
4,466
NM
12.8%
-214
4,320
-167.0%
-86
2.0%
4,203.1
-164.8%
11,683
0.36
(164.8%)
FY11
28,246
(18.9%)
-862
-114.2%
-2,509
NM
-8.9%
-188
-2,626
-160.8%
-74
2.8%
-2,743.5
-165.3%
11,683
(0.23)
(165.3%)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
10,648
1,792
883
194
13,518
FY11
7,073
1,801
1,206
237
10,318
1,292
33,705
49,016
1,552
37,049
49,412
3,225
4,339
879
8,654
8,276
1,784
19,054
29,185
2.50
5,049
3,820
727
9,792
10,809
1,787
22,512
26,023
2.23
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY12E FY13E FY14E Rmb in millions, year end Dec
31,128 32,810 36,050 EBIT
10.2%
1,799
-308.7% 68.5% 49.9% Taxes
-34
NM
NM 133.0%
-0.1%
3.3% 7.1% Capex
-272
-343
-218
866 2,334 Net Interest
-91.7% -496.4% 169.6% Other
-33
-130
-350 Free cash flow
15.0% 15.0% 15.0%
-246.8
718.6 1,937.5 Equity raised/(repaid)
-91.0% -391.2% 169.6% Debt raised/(repaid)
11,683 11,683 11,683 Other
(0.02)
0.06
0.17 Dividends paid
(91.0%) (391.2%) 169.6% Beginning cash
Ending cash
DPS
Ratio Analysis
FY12E FY13E FY14E Rmb in millions, year end Dec
10,077
1,985
1,329
1,401 1,540 Net margin
237
237
237
13,629
9,943 7,624
1,640
1,750 1,892 Sales growth
59,221 62,026 66,199 EPS growth
5,049
5,049 5,049
3,880
727
727
727 Sales/assets
9,851
9,921 10,110 Assets/equity
20,809 22,809 24,809 ROE
1,787
1,787 1,787 ROCE
32,571 34,641 36,830
25,777 26,495 28,433
2.21
2.27
2.43
FY10
4,466
1,595
41
-86
5,438
FY11 FY12E
-2,509
-34
1,646 1,834
-851
-247
-74
-33
-2,394
969
FY13E FY14E
1,098 2,559
1,934 1,988
-110
-156
-130
-350
2,100 3,301
-1,961
154
-214
-39
3,478
-5,449 -7,965
62
0
-188
-272
61
-7,843 -6,996
-7,965 -7,965
-343
-366
0
0
-5,865 -4,664
465
-193
0
6,937
10,648
0.00
4,128 10,000
78
0
0
0
10,648 7,073
7,073 10,077
0.00
0.00
2,000
0
0
10,077
6,212
0.00
FY10
17.4%
12.8%
12.1%
FY11 FY12E
-3.1% 5.8%
(8.9%) (0.1%)
-9.7% -0.8%
FY13E FY14E
9.2% 12.6%
3.3% 7.1%
2.2% 5.4%
76.3%
76.3%
-164.8%
(164.8%)
28.31
4.8%
0.75
1.18
15.4%
11.6%
(18.9%)
(18.9%)
-165.3%
(165.3%)
4.58
2,000
0
0
6,212
3,548
0.00
10.2%
5.4% 9.9%
10.2%
5.4% 9.9%
-91.0% -391.2% 169.6%
(91.0%) (391.2%) 169.6%
6.62
8.85 12.41
35.0% 62.5%
0.57
0.57
1.90
2.30
(9.9%) (1.0%)
-6.1% -0.1%
82.9% 93.7%
0.54
0.56
2.34
2.33
2.7% 7.1%
2.1% 4.5%
235
Adrian Mowat
(852) 2800-8599

21 November 2012
CIMB Group Holdings
Overweight
www.cimb.com
Company overview
CIMB Group is Malaysias second-largest financial services provider and one of
Southeast Asias leading universal banking groups. It has moved rapidly from being a
Malaysian centric bank with a strong IB franchise to becoming one of the best placed
banks leveraging on Aseans growth.
Malaysia
Banks
Price: M$7.65
Harsh Wardhan ModiAC

(65) 6882 2450
harsh.w.modi@jpmorgan.com
Bloomberg JPMA MODI<GO>
Investment case
CIMB is one of the most leveraged beneficiaries of the Malaysian governments
ambitious Economic Transformation Program (ETP). This initiative has kick-started a
new investment cycle in the country, which should lead to a meaningful pick-up in
credit demand. The early stage funding is coming from the bond market, which we
expect to move to the banks balance sheet over the course of 2013. The bank should
make money on faster loan growth as well as higher fee income due to its capital
market expertise.

Limited
Hoy Kit Mak

(60-3) 2270 4728
Bloomberg JPMA MAK <GO>
(18146-X)

CIMB has been controlling costs for the last two years. We expect CIR to improve in
2013/14 to below 50% from 56% in 2011. This is a significant RoE driver, which is
being overlooked by the street, in our view. We expect positive earnings revisions to
drive the stock price higher.
8.5
8.0
M$ 7.5
7.0
6.5
Nov-11

Key risks to earnings include worse-than-expected NPLs and NIMs and a lack of
smooth integration of RBS and BoC acquisitions. Further consolidation of Malaysian
banks also poses a threat within the domestic space.
Feb-12
May-12
Aug-12
Nov-12
CIMB.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
6.9%
-2.4%
1m
0.5%
0.9%
3m
-1.8%
-2.7%
Source: Bloomberg.

Our Jun-13 PT of M$8.50 is based on 2-stage DDM. We use a fair P/BV multiple of
1.74x, with a normalised RoE of 15.9%. Perceived political linkages remains a key risk
to our PT as the election looms (by Mar 2013), as do worse-than-expected NPLs and
NIMs and a lack of smooth integration of RBS and BoC acquisitions.
CIMB Group Holdings (Reuters: CIMB.KL, Bloomberg: CIMB MK)
FY09A
FY10A
FY11A
FY12E
Operating Profit (M$ mn)
4,952
5,265
5,141
6,097
Net Profit (M$ mn)
2,807
3,501
4,031
4,470
Cash EPS (M$)
0.39
0.49
0.54
0.60
DPS (M$)
0.12
0.28
0.22
0.22
EPS growth (%)
40.6%
24.5%
10.3%
10.9%
ROE
15.0%
16.1%
16.0%
16.3%
P/E (x)
19.6
15.7
14.3
12.9
BVPS (M$)
2.88
3.23
3.49
3.87
P/BV (x)
2.69
2.39
2.22
2.00
Dividend Yield
1.6%
3.6%
2.8%
2.8%
Fully Diluted EPS (M$)
0.39
0.49
0.53
0.60
236
FY13E
7,353
5,274
0.71
0.24
17.9%
17.3%
10.9
4.34
1.78
3.1%
0.71
FY14E
8,723
6,196
0.83
0.24
17.4%
18.0%
9.3
4.93
1.57
3.1%
0.83
Company Data
52-week Range (M$)
Market Cap (M$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (M$)
Date Of Price
3M - Avg daily value (M$ mn)
FBMKLCI
Exchange Rate
7.96-6.64
57,553
18,876
7,436
Dec
7.74
05 Nov 12
66.44
21.8
8.67
1645.53
3.05
12m
5.7%
-6.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
CIMB Group Holdings: Summary of Financials

Income Statement
FY10
3.4%
91.2%
3.1%
FY11
3.1%
91.7%
2.9%
FY12E
3.2%
92.1%
2.9%
FY13E
3.3%
92.4%
3.0%
Net Interest Income

Fee Income
Dealing Income
7,935
3,943
1,546
1,350
8,147
3,624
1,495
1,202
9,164
4,302
1,673
1,562
10,529
4,767
1,859
1,735
11,878
11,771
13,466
15,296
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
(6,613) (6,630) (7,369) (7,943)

5,265
5,141
6,097
7,353
(607)
(237)
(324)
(523)
149
(127)
(40)
(40)
96
151
151
151
4,627
5,203
5,884
6,942
(957) (1,129) (1,353) (1,597)
(169)
(44)
(60)
(71)
3,501
4,031
4,470
5,274
Per Share Data MYR

EPS
DPS
Payout
Book value
PPOP per share
Key Balance sheet M$ in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY10
0.49
0.28
56.1%
3.23
7,123
0.74
FY10
159,181
(8,342)
167,524
10,284
46,666
11,784
232,360
9,703
269,365
FY11
0.54
0.22
40.6%
3.49
7,433
0.69
FY11
183,839
(7,953)
191,792
9,805
48,588
12,357
261,272
9,854
300,203
FY12E
0.60
0.22
36.6%
3.87
7,434
0.82
FY12E
208,830
(7,197)
216,027
8,846
58,306
14,075
290,348
9,854
329,974
FY13E
0.71
0.24
33.9%
4.34
7,437
0.99
FY13E
230,357
(7,245)
237,602
9,278
61,221
15,411
321,535
9,854
365,764
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
212,971
14,743
0
214,093
254,675
23,231
168,364
161,373
235,965
18,144
0
240,912
284,784
25,936
185,656
177,010
261,337
19,300
0
267,373
315,088
28,771
211,183
198,419
290,815
21,142
0
296,297
347,869
32,259
237,747
224,465
Growth Rates
FY14E
3.3% Loans
92.8% Deposits
3.1% Assets
Equity
11,879 RWA
1,993
of which Fee Grth
Revenues
17,226 Costs
8,723 Pre-Tax
(680) Attributable Income
- EPS
(40) DPS
151 Balance Sheet Gearing
8,155 Loan/deposit
(83) Loan/Assets
LT debt/liabilities
0.24 NPLs/loans
4.93 Growth in NPLs
7,440 Tier 1 Ratio
1.17 Total CAR
64,282 Non IR/Avg. Assets
358,141 Cost/Income
9,854 Cost/Assets
LLP/Loans
323,709 Loan/Assets
0 Operating ROA
329,417 Pre-Tax ROA
385,945 Tax rate
263,981 ROA
250,864 RORWA
Equity/Assets
ROE

12.5% 14.5% 12.6% 10.0% 10.0%
12.3% 10.8% 10.8% 11.3% 11.3%
12.2% 11.4% 9.9% 10.8% 11.0%
14.2% 11.6% 10.9% 12.1% 13.7%
9.1% 10.3% 13.7% 12.6% 11.0%
15.4%
2.7% 12.5% 14.9% 12.8%
9.3% (8.1%) 18.7% 10.8% 12.2%
2.3% (3.3%) 11.9% 11.1% 12.3%
13.3% (0.9%) 14.4% 13.6% 12.6%
19.6%
0.3% 11.2% 7.8% 7.1%
6.3% (2.4%) 18.6% 20.6% 18.6%
(40.6%) (60.9%) 36.5% 61.3% 30.0%
21.4% 12.5% 13.1% 18.0% 17.5%
24.7% 15.1% 10.9% 18.0% 17.5%
24.5% 10.3% 10.9% 17.9% 17.4%
122.0% (20.2%) 0.0% 9.1% (0.0%)
FY10
74.7%
18.0%
62.1%
86.8%
5.5%
FY10
(5.0%)
5.6%
85.2%
38.7%
11.4%
14.5%
FY10
3.4%
91.2%
3.1%
33.2%
1.5%
4.7%
55.7%
2.6%
2.1%
(0.4%)
62.1%
(0.0%)
1.8%
1.8%
20.7%
0.6%
1.4%
2.2%
8.6%
16.1%
FY11
77.9%
16.7%
63.1%
86.3%
6.3%
FY11
(4.1%)
5.6%
81.1%
(4.7%)
11.6%
15.4%
FY11
3.1%
91.7%
2.9%
30.8%
1.3%
4.1%
56.3%
2.3%
1.8%
(0.1%)
63.1%
0.1%
1.7%
1.8%
21.7%
0.3%
1.4%
2.2%
8.6%
16.0%
FY12E
79.9%
17.0%
64.7%
87.0%
6.5%
FY12E
(3.3%)
4.6%
81.2%
(9.8%)
11.5%
14.8%
FY12E
3.2%
92.1%
2.9%
31.9%
1.4%
4.3%
54.7%
2.3%
1.9%
(0.2%)
64.7%
0.0%
1.8%
1.9%
23.0%
0.2%
1.4%
2.3%
8.7%
16.3%
FY13E
79.2%
17.2%
65.2%
87.4%
6.4%
FY13E
(3.0%)
4.0%
79.7%
4.9%
11.7%
14.7%
FY13E
3.3%
92.4%
3.0%
31.2%
1.4%
4.4%
51.9%
2.3%
2.1%
(0.2%)
65.2%
0.0%
2.0%
2.0%
23.0%
0.2%
1.5%
2.3%
8.8%
17.3%
FY14E
78.5%
16.3%
64.7%
87.8%
6.3%
FY14E
(2.8%)
3.9%
76.0%
7.7%
12.2%
14.9%
FY14E
3.3%
92.8%
3.1%
31.0%
1.4%
4.5%
49.4%
2.2%
2.3%
(0.3%)
64.7%
0.0%
2.1%
2.1%
23.0%
0.2%
1.6%
2.5%
8.9%
18.0%
237
Adrian Mowat
(852) 2800-8599

21 November 2012
Coronation Fund Managers Limited
Overweight
www.coronation.com
Company overview
CML is the largest listed independent asset manager in SA. Given the focus on pension
fund money and the long-term relationships with these institutions, the flows have been
stable and strong.
South Africa
Asset Management
Investment case
We expect 50% earnings growth in FY13 from strong net inflows, a recovery in
performance fees, supportive equity markets, fixed cost gearing and the removal of
secondary tax on companies. The growth of the non-life savings industry is not
reflected in the share price rating despite CMLs market share gains in the non-life
savings sector that has grown at GDP plus 5% the past decade. Our FY13e dividend
yield is especially attractive at 8%.
Bloomberg JPMA FTOIT<GO>
Price: 3,350c
Francois Du Toit
AC
(27-11) 507 0378

francois.x.dutoit@jpmorgan.com
J.P. Morgan Equities Ltd

3,600
3,200
c 2,800
2,400

While we expect the savings sector to grow more slowly than GDP, the unit trust,
pension and LISP segments within the sector should continue to grow at c.10% pa
faster than the rest of the sector (as has been the case the past five years). CML has
benefited from these segments growth and seen GDP plus 10% growth to AUM in the
past 5 years which has accelerated to GDP + 15% the last 2 years.
2,000
Nov-11
Abs
Feb-12
YTD
54.1%
May-12
Aug-12
1m
12.0%
Nov-12
3m
17.0%
12m
50.5%
Source: Bloomberg.

The earnings are geared to market performance because 75% of AUM is invested in
equities and performance fees increase when market performance is strong. We
consequently see weak markets as the biggest downside risk for CML, but this is
mitigated to some extent by the low fixed cost gearing of just 15% of revenues.
We use a 3-stage dividend discount model (DDM). In the long-term (year 15 on), we
assume dividends will grow at GDP less 1%. Our discount rate is based on a beta of
140%, 4.5% equity risk premium and the 10-year SA government bond rate. We roll
forward our DDM valuation 12 months at the discount rate for the price target.
The main risks to our valuation (upside and downside) relate to fees and AUM levels,
impacted by (i) equity market movements; (ii) investment performance relative to peers
and (iii) retention of key staff and/or mandates.
Coronation Fund Managers Ltd (CMLJ.J;CML SJ)
FYE Sep
2011A
Adj. EPS FY (c)
176.10
Adj P/E FY
19.0
Dividend (Net) FY (c)
172.00
ROE FY
47.3%
Operating profit FY (R mn)
922
Bloomberg EPS FY (c)
166.50
NAV FY (R mn)
172
Gross Yield FY
5.1%
238
2012E
195.61
17.1
185.77
48.6%
1,002
194.90
186
5.5%
2013E
302.08
11.1
270.22
71.0%
1,477
265.00
270
8.1%
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
3,350
02-Nov-12
5,000
01 Nov 13
3,520 - 2,131
10.6
315
Adrian Mowat
(852) 2800-8599

21 November 2012
Coronation Fund Managers Ltd: Summary of Financials

R in millions, year end Sep
Revenues
% Change Y/Y
Gross Margin
AUM analysis
FY10A FY11A FY12E FY13E FY14E R in millions, year end Sep
1,316 1,760 2,063 2,830 3,150 Open market value
54.6% 33.7% 17.2% 37.2% 11.3% Net flows
- Charges
Market move
EBIT
660
922 1,002 1,477 1,586 Currency effect
Closing market value
EBIT Margin
50.1% 52.4% 48.6% 52.2% 50.3% average AUM
Interest expense
-9
-5
-2
0
0
Earnings before tax
651
919 1,001 1,480 1,588 Institutional
% change Y/Y
100.1% 41.2% 9.0% 47.8% 7.3% Retail
Tax on shareholder profit
(210) (295)
0
0
0 International
as % of EBT
32.3% 32.1% 34.0% 31.0% 29.0% Total
Net Income
437
624
684 1,050 1,161
% Change Y/Y
110.8% 42.7% 9.6% 53.5% 10.6%
Shares outstanding
314.7 314.8 349.7 349.7 349.7
Basic HEPS, cents
DPS, cents
127.00 172.00 185.77 270.22 298.82
Diluted HEPS, cents
128.00 176.10 195.61 302.08 332.08
Balance sheet
Ratio analysis
R in millions, year end Sep
FY10A FY11A FY12E FY13E FY14E R in millions, year end Sep
301
393
432
476
523 Net fee margin
Accounts receivable
227
242
267
293
323 Operating Margin
Inventories
- Net profit margin
Other
556
664
728
798
874
Current Assets
556
664
728
798
874 Assets under management
Intangible assets
1,097 1,088 1,088 1,088 1,088 Growth in AUM
Other assets
- Mkt Cap / AUM
Policyholders investments
Net Fixed assets
14
15
15
14
14 HEPS growth
Total assets
25,603 33,372 45,151 54,189 60,993 ROE
Payables
- Cost to income
Other
- Cost to Ave. AUM
341
372
425
389
352 Cost per employee
Long term debt
82
43
0
0
0 Cost to total assets
Policyholders' liabilities
23,908 31,548 43,282 52,250 58,977 Fixed staff costs (e/ee)
Total liabilities
24,013 31,609 43,300 52,269 58,996 Bonus as % of PBT
1,249 1,392 1,426 1,531 1,647
BVPS
13
17
15
22
24
FY10A FY11A FY12E FY13E FY14E

155,260 206,256 247,260 322,563 359,487
19,896 30,000 39,809 14,730 16,789
0
0
0
0
0
27,377
8,593 28,123 27,291 30,989
3,723
2,410
7,371
-5,096
788
206,256 247,260 322,563 359,487 408,053
143,289 162,914 194,497 215,024 237,707
206,256 247,260 322,563 359,487 408,053
FY10A
0.7%
33.2%
FY11A
0.7%
35.5%
FY12E
0.6%
33.2%
FY13E
0.7%
37.1%
FY14E
0.7%
36.9%
206,256 247,260 322,563 359,487 408,053

28.9%
25.4%
25.6%
19.7%
12.5%
2.6%
2.8%
110.8%
42.7%
9.6%
53.5%
10.6%
37.5%
47.3%
48.6%
71.0%
73.1%
49.9%
47.6%
51.4%
47.8%
49.7%
NM
NM
NM
NM
NM
2.9%
2.9%
2.7%
2.7%
2.7%
3
4
5
6
7
-
239
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Credicorp
Price: $136.56
www.credicorpnet.com
End Date: Dec 2013
Company overview
Credicorp is the largest financial services holding company in Peru and is closely
identified with its principal subsidiary, BCP, the countrys largest bank. BCP has the
leading market share in most banking products, including commercial and individual
loans, with market share of 47% and 22%, respectively, as of 9/30/12. At the end of
3Q12, the bank had US$20.3bn in loans and US$22.0bn in deposits.
Peru
Financials
Saul Martinez
(1-212) 622-3602
saul.martinez@jpmorgan.com
Investment case
Principal drivers include (1) continuation of orthodox macroeconomic policies and
strong economic growth, (2) continued NIM expansion driven by disproportionately
rapid growth in retail lending, (3) stable credit quality (e.g., limited deterioration in
consumer loan portfolio), and (4) stronger earnings contributions from insurance and
investment banks.
140
130
$ 120
110
100
Nov-11
The stock has risen 17.8% since the end of July 2012 as concerns regarding credit
quality deterioration have eased. Nonetheless, at 12.5x 2013E earnings, it trades at a
discount to all other major banks in our coverage universe outside Brazil. We think the
companys growth prospects and operating fundamentals are better than those of most
peers.
Feb-12
May-12
Aug-12
Nov-12
BAP share price ($)

IGBVL (rebased)
Source: Bloomberg.

We think the balance of risk is to the upside given (1) continued NIM expansion
resulting from better growth in retail lending and (2) better insurance results. We
forecast EPS of US$10.94 in 2013 compared to the consensus estimate of US$11.20
per share. We have an upside bias to our estimates.
We use two methodologies to establish our Dec 2013 price target of US$139: (1)
residual income model and (2) regression of risk-adjusted ROE (2013E and 2014E
ROE divided by estimated cost of equity) to price to book value using a cross-section
of Latin American financial institutions. Our price target is based on target multiples of
11.2x 2014E earnings and 2.4x 2013E BV. Key downside risks include (1) the
adoption of heterodox economic policies that hurt bank profitability, (2) a greater than
expected economic slowdown, and (3) greater than forecast expense growth.
Credicorp (BAP;BAP US)
EPS - Recurring ($)
Q1 (Mar)
Q2 (Jun)
Q3 (Sep)
Q4 (Dec)
FY
Bloomberg EPS FY ($)
2010A
2011A
2012E
2013E
1.55
2.03
1.96
1.62
7.16
7.26
2.19
2.18
2.14
2.37
8.89
8.66
2.37A
2.16A
2.31
2.46
9.29
9.44
10.94
11.15
240
Company Data
Price ($)
Date Of Price
52-week Range ($)
Market Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
136.56
14 Nov 12
137.35-98.90
10,831.41
Dec
80
139.00
31-Dec-13
Adrian Mowat
(852) 2800-8599

21 November 2012
Credicorp: Summary of Financials

Income Statement
Interest Income
Interest Expense
Net interest Income
LL Provision
Net Interest Income after Provision
Fee Income
Total Non Interest Income
Personnel Expenses
Total Non Interest Expenses
Pretax income
Taxes
Statutory Profit Sharing
Minority Interests
Net Income
Dividends
Per share analysis
EPS
BVPS
Dividend per Share
Growth
EPS growth
Fee income
Total Non Interest Expense
Loan
Deposits
Ratios
NIM
NPL/Loans
LL Reserves/Total Loans
LL Reserves/NPL
Cost/Income
Loans/Deposits
Loans/Assets
Equity/Assets
Dividend Payout
FY11A
1,838
(532)
1,306
(215)
896
991
(589)
(1,186)
896
(211)
0
(15)
709
709
1.95
FY11A
FY12E
2,283
(660)
1,623
(376)
993
1,129
(1,383)
993
(248)
0
(15)
741
741
2.99
FY12A
FY13E
2,687
(742)
1,945
(437)
1,185
1,306
(1,629)
1,185
(296)
0
(16)
873
873
2.79
FY13E
FY14E
3,099
(867)
2,232
(510)
1,345
1,475
(1,853)
1,345
(336)
0
(18)
991
991
3.28
FY14E
8.89
42.32
1.95
9.29
50.84
2.99
10.94
59.00
2.79
12.42
68.14
3.28
24.2%
16.9%
22.5%
15.2%
4.5%
16.6%
22.7%
16.4%
17.7%
17.7%
20.6%
21.0%
13.5%
13.7%
18.0%
16.0%
6.4%
1.5%
(3.0%)
199.5%
51.6%
89.1%
52.0%
10.5%
21.9%
6.2%
1.7%
(3.5%)
189.8%
50.3%
86.3%
54.7%
10.8%
32.2%
6.1%
2.0%
(4.0%)
187.0%
50.1%
87.3%
56.4%
10.9%
25.5%
6.1%
2.2%
(4.4%)
192.8%
50.0%
88.4%
58.9%
11.2%
26.4%
Balance Sheet
Securities
Loans, gross
Cash and due from Banks
Loan loss reserves
Other assets
Total assets
Total deposits
Other funding
Bonds and subordinated debts
Other liabilities
Total liabilities
Shareholder's equity
Valuation, Macro
P/E
P/BV
Dividend yield
ROE
ROA
Shares
ADRs
FY11A
6,058
17,443
5,636
(520)
2,300
30,916
18,988
2,129
3,962
2,461
27,540
3,376
FY12E FY13E FY14E

8,550
9,576 10,533
21,607 25,497 30,086
5,807
6,387
7,026
(751) (1,017) (1,320)
2,979
1,801
1,802
38,191 42,243 48,127
24,174 28,042 32,529
2,690
2,932
3,195
4,368
3,001
3,002
2,904
3,563
3,967
34,136 37,538 42,693
4,055
4,706
5,435
FY11A FY12A
15.3
14.6
3.2
2.7
1.4%
2.2%
22.8% 20.0%
2.4%
2.1%
FY13E
12.4
2.3
2.1%
19.9%
2.2%
FY14E
10.9
2.0
2.4%
19.5%
2.2%
80
80
80
80
80
80
80
80

241
Adrian Mowat
(852) 2800-8599

21 November 2012
CSR Corp Ltd.
Overweight
www.csrgc.com.cn/ens/
Company overview
Established in Dec-07 and listed on the main board of the HKSE in Aug-08, China
South Locomotive & Rolling Stock Corporation Limited (CSR) is a leading supplier of
transportation equipment in China with >50% market share in the Chinese locomotive
and rail car industry. CSR offers a comprehensive range of rail vehicle products,
including locomotives, multiple units and rapid transit vehicles.
China
Infrastructure
Price: HK$6.33
Investment case
We stay positive on CSR from 4Q12 through FY13 on: 1) potential margin expansions
driven by rising contribution from overseas sales, repair & maintenance, and new
products; 2) promising MU demand outlook driven by the addition of new HSR
operational mileage over 2013-2015 and a higher MU density ratio; 3) anticipated
surge in locomotive sales during 4Q12 from the orders obtained in early 3Q12; and 4)
visible rebound in RTV growth in 2013/2014.
Karen Li, CFA AC

(852) 2800-8589
karen.yy.li@jpmorgan.com
Limited
6.5
6.0
HK$
5.5
5.0
4.5
4.0
Nov-11

Government capex offers counter-cyclical protection in an anemic growth backdrop.
Higher intensity on civil works after the last four upward revisions on the 2012 railway
investment target translate into better demand outlook for trains and equipment,
spending of which is typically late-cycle investment.
Feb-12
May-12
Aug-12
Nov-12

HSCI (rebased)
Abs
Rel
YTD
40.7%
25.2%
1m
23.4%
17.5%
3m
10.5%
-0.3%
12m
26.6%
17.0%
Source: Bloomberg.

Visibility of orders is low due to thin order backlog. New orders are mainly driven by
customers like the MoR. Short-term earnings fluctuations may be almost inevitably
driven by timing of the orders awarded.
We use DCF-based valuation (WACC of 10.92% and terminal g of 2.0%) to derive our
Dec 13 PT of HK$8.80. Key risks to our price target/thesis are unexpected changes in
governments investment in railway development, major fluctuations in raw material
costs, and potential capacity constraints.
CSR Corp Ltd. (Reuters: 1766.HK, Bloomberg: 1766 HK)
FY10A
FY11A
FY12E
Total Revenue (Rmb mn)
64,132
79,517
88,250
Net Profit (Rmb mn)
2,526.3
3,864.2
4,378.0
EPS (Rmb)
0.21
0.33
0.32
DPS (Rmb)
0.04
0.21
0.06
Revenue growth (%)
40.6%
24.0%
11.0%
EPS growth (%)
50.5%
53.0%
-2.8%
ROE
13.8%
18.5%
15.3%
P/E (x)
23.9
15.6
16.1
P/BV (x)
2.5
2.2
1.7
EV/EBITDA (x)
10.7
6.9
4.9
Dividend Yield
0.8%
4.1%
1.2%
242
FY13E
102,487
5,692.3
0.41
0.08
16.1%
30.0%
15.3%
12.4
1.5
3.6
1.6%
FY14E
107,611
6,217.2
0.45
0.09
5.0%
9.2%
14.9%
11.3
1.3
2.9
1.8%
Company Data
Shares O/S (mn)
Market Cap (HK$ mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSCI
Exchange Rate
Fiscal Year End
2,024
11,840.0
1,528
6.33
07 Nov 12
41.5%
18.50
101.74
12.06
2,984
7.75
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
CSR Corp Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
% change Y/Y
Shares outstanding
EPS
% change Y/Y
Cash flow statement

FY11 FY12E FY13E FY14E FY15E Rmb in millions, year end Dec
79,517 88,250 102,487 107,611 112,992 EBIT
24.0% 11.0% 16.1%
5.0%
7,305
8,731 10,735 11,754 12,618 Other adjustment
57.1% 19.5% 23.0%
9.5%
7.4% Taxes
9.2%
9.9% 10.5% 10.9% 11.2% Cash flow from operations
5,768
6,820
8,450
9,152
9,754 Capex
71%
18%
24%
8%
7% Disposal/(purchase)
7.3%
7.7%
8.2%
8.5%
8.6% Other adjustments
-904
-535
-357
-290
-245 Cash flow from investing
5,442
6,813
8,712
48.7% 25.2% 27.9%
8.8%
6.8% Equity raised/(repaid)
-699 -1,226 -1,742 -1,896 -2,531 Debt raised / (repaid)
12.8% 18.0% 20.0% 20.0% 25.0% Other adjustments
3,864.2 4,378.0 5,692.3 6,217.2 6,226.8 Dividends paid
53.0% 13.3% 30.0%
9.2%
0.2% Cash flow from financing
11,840 13,803 13,803 13,803 13,803 Net changes in cash
0.33
0.32
0.41
0.45
0.45 Beginning cash
53.0% (2.8%) 30.0%
9.2%
0.2% Ending cash
DPS
Balance sheet
Ratio Analysis
FY11 FY12E FY13E FY14E FY15E Rmb in millions, year end Dec
22,455 24,083 27,939 31,852 37,053 Gross margin
Accounts receivable
21,953 24,403 28,340 29,757 31,244 EBITDA margin
Inventories
Others
1,358
1,172
1,141
1,141
1,141 Net profit margin
Current assets
63,607 69,243 80,107 86,512 94,389
Other LT investments
5,231
5,525
5,712
5,894
6,072 EBITDA / Interest Paid (x)
Net fixed assets
21,374 26,697 30,656 33,305 34,698 Net debt to total capital
Total Assets
Sales/assets
Liabilities
Assets/equity
Short-term loans
18,099 12,535 11,835 11,835 11,835 ROE
Trade Payables
27,856 29,014 33,694 35,379 37,148 ROA
Others
13,230 15,804 21,063 22,121 23,219
59,185 57,352 66,592 69,334 72,202 Accounts receivable % Sales
Long-term debt
2,325
1,940
1,640
1,640
1,640 Accounts payable % COGS
Other liabilities
3,188
3,534
3,850
4,101
4,340 Inventory % COGS
Total Liabilities
64,698 62,826 72,083 75,076 78,182 Asset Turnover (%)
Minority interests
5,526
6,405
7,614
8,891 10,257 Net WC to sales ratio
22,562 34,819 39,373 44,347 49,328
BVPS
2.37
2.99
3.40
3.86
4.32
FY11
5,768
1,538
130
399
-568
6,941
-6,197
146
-1,492
-7,543
890
39,201
-28,396
-689
-974
8,898
8,296
13,719
22,455
0.21
FY12E
6,820
1,911
148
7
-1226
7,652
-7,000
148
-204
-7,056
800
12,755
-20,704
10,654
-876
1,584
2,180
22,455
24,155
0.06
FY13E
8,450
2,285
3,354
-262
-1742
12,346
-6,000
117
-87
-5,970
6,463
4,000
-5,000
1,823
-1,138
-601
5,775
24,155
27,939
0.08
FY14E
9,152
2,602
672
-326
-1896
10,530
-5,000
121
-248
-5,127
5,651
0
0
2,403
-1,243
841
6,244
27,939
31,852
0.09
FY15E
9,754
2,864
614
-372
-2531
10,701
-4,000
131
-339
-4,208
6,832
0
0
3,015
-1,245
1,416
7,909
31,852
37,053
0.09

18.7% 19.0% 19.2% 19.4% 19.4%
9.2%
9.9% 10.5% 10.9% 11.2%
7.3%
7.7% 8.2% 8.5% 8.6%
4.9%
5.0% 5.6% 5.8% 5.5%
8.08 16.33 30.07 40.53 51.45
-4.7% -19.5% -27.4% -31.8% -37.5%
-9.0% -27.6% -36.7% -41.4% -47.8%
0.95
0.90
0.92
0.87
0.85
4.11
2.99
3.02
2.89
2.79
18.5% 15.3% 15.3% 14.9% 13.3%
4.6%
4.4% 5.1% 5.0% 4.7%
0.95
0.1
0.90
0.1
0.92
0.1
0.87
0.2
0.85
0.2
243
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
Cyrela
Price: R$16.69
www.cyrela.com.br
End Date: Dec 2013
Company overview
Cyrela is the largest Homebuilders company in Brazil with a market cap of US$3.6bn.
The company was founded and is still controlled by Mr. Elie Horn, who has a 33%
ownership stake in the company. Despite weak results during 2010/11 as a
consequence of costs overruns, Cyrela is one step ahead of its peers and is already
reporting a sequential recovery on results and margins. The company has exposure to
all income segments, and it uses the Living brand for the lower income segment. Its
launches are concentrated in the South and Southeast region.
Brazil
Homebuilders
Investment case
Given the sectors high beta, a bullish scenario with better than expected
macroeconomic data and higher GDP growth would likely lead to higher than expected
growth and faster than expected improvements in results.
The company is already trading at a premium to peers at 1.5x P/BV and 10x 2013E
P/E; however, this premium has long existed and is justified, in our view, by Cyrelas
superior execution and lower volatility in results, YTD it is the only stock under our
coverage with a positive performance, up 19% vs 3% for the IBOV.
Adrian HuertaAC
(52-81) 8152-8720
adrian.huerta@jpmorgan.com
J.P. Morgan Casa de Bolsa, S.A. de C.V.,
J.P. Morgan Grupo Financiero
19
R$
17
15
13
Nov-11
Feb-12
May-12
Aug-12
Nov-12
CYRE3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Main upside risks to our estimates include higher than expected FCF generation
leading to a reduction in net debt and higher margins as well as better than expected
contracted sales leading to higher revenue. On the negative side a lower than expected
recovery in results and lower growth would impact sentiment on the name.
We have a Neutral rating on Cyrela with a Dec 2013 price target of R$18.00, the
average of our GGM-based valuation and our yield-based valuation. For the GGM we
assume a COE of 12.6% and a sustainable ROE of 15.5%. In our yield-based valuation
we assume sustainable sales of R$8.0bn (100% stake), net margin of 12% with a cash
conversion ratio of 60%, and a yield of 8%. Main upside risks include higher than
expected FCF, and downside risks include lower than expected recovery in margins.
Cyrela Brazil Realty (CYRE3.SA;CYRE3 BZ)
FYE Dec
2011A
EPS Reported (R$)
FY
1.18
EBITDA FY (R$ mn)
1,001
P/E FY
15.0
Revenues FY (R$ mn)
6,127
1.18
2012E
2013E
2014E
2014E
1.44
1,110
12.2
6,220
1.73
1.75
1,237
10.1
6,343
2.15
1.94
1,271
9.1
6,486
2.50
1.94
1,271
9.1
6,486
2.50
244
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
16.69
14 Nov 12
19.73 - 12.40
7,354.03
Dec
417
18.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
Cyrela Brazil Realty: Summary of Financials

Income Statement - Annual
Net Revenues
Cost of goods sold
Gross profit
Gross margin
SG&A
Selling expenses
G&A
Depreciation
EBITDA
EBITDA margin, %
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net income
Net income margin
EPS
Net Revenue growth
EBITDA growth
Net income growth
FCF growth
Working Capital changes
FCFF-firm
Dividends
a
Working capital
Launches (Co's share)
Pre-sales (Co's share)
Units
a
Launches chg
Pre-sales chg
FY11A FY12E
6,127
6,220
(4,200) (4,136)
1,734
1,906
28.3% 30.7%
(913)
(960)
(511)
(498)
(402)
(462)
(27)
(26)
1,001
1,110
16.3% 17.8%
363
308
(314)
(287)
(50)
(5)
781
923
(178)
(149)
(94)
(75)
0
0
498
602
8.1%
9.7%
1.18
1.44
25.3%
1.5%
12.8% 10.9%
(17.0%) 20.8%
(122.5%) 139.2%
FY11A FY12E
(484)
(263)
249
595
150
125
30.1% 20.7%
FY13E
6,343
(4,123)
2,030
32.0%
(973)
(507)
(466)
(32)
1,237
19.5%
292
(273)
(5)
1,029
(152)
(70)
0
728
11.5%
1.75
2.0%
11.5%
21.0%
72.0%
FY13E
54
1,023
150
20.7%
FY14E
6,486
(4,216)
2,075
32.0%
(989)
(519)
(470)
(32)
1,271
19.6%
328
(269)
(5)
1,098
(155)
(65)
0
810
12.5%
1.94
2.2%
2.7%
11.2%
(2.0%)
FY14E
(9)
1,002
182
22.5%
Balance Sheet
Cash
Accounts receivable
Inventories
Land bank
Real Estate & Construction
Others current assets
Net PP&E
Other assets
Total Assets
ST Loans
Accounts Payables
Suppliers
Land Payables
LT Debt
Deferred taxes
Other liabilities
Total Liabilities
Minority Interests
Shareholders Equity
Liabilities and Equity
Net debt
Net Debt/Equity
Debt/Equity
NetDebt/EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
10,240 10,285 10,316 10,415 FCF yield

167.1% 165.4% 162.6% 160.6% Dividend yield
6,282
4,768
5,245
5,507 Capex/Revenues
5,169
5,339
5,106
5,295 Inventory/Revenues
26,123 23,163 24,500 24,735 Assets/Equity
Coverage (EBIT/Interest)
6%
(24%)
10%
5%
8%
3%
(4%)
4% ROE
ROIC
a
Days receivable
404
390
380
370 Shares
Days inventory
341
356
365
370
Days payable
163
143
146
149
FY11A
1,828
6,782
3,924
2,116
1,808
552
285
39
13,417
1,143
466
618
466
1,650
3,445
121.0
1,650
8,494
378
4,923
13417.00
2,760
60.7%
100.9%
2.8
FY11A
9.9
15.0
0.8
FY12E
2,191
6,646
4,031
1,958
2,073
650
320
49
13,894
1,382
392
596
392
1,454
3,256
169.3
1,454
8,466
385
5,428
13893.93
2,447
48.5%
92.0%
2.2
FY12E
8.6
12.2
0.7
FY13E
2,948
6,604
4,123
2,056
2,067
650
342
49
14,723
1,382
411
608
411
1,526
3,256
186.3
1,526
8,648
455
6,075
14723.21
1,690
30.1%
82.5%
1.4
FY13E
7.1
10.1
0.6
FY14E
3,691
6,574
4,272
2,159
2,113
650
366
49
15,609
1,382
432
622
432
1,603
3,256
204.9
1,603
8,841
520
6,768
15608.93
947
15.2%
74.2%
0.7
FY14E
6.2
9.1
0.6
3.3%
2.0%
(0.9%)
64.0%
3.0
2.5
7.9%
1.7%
(0.9%)
64.8%
2.8
3.2
13.6%
2.0%
(0.9%)
65.0%
2.6
3.7
13.4%
2.5%
(0.9%)
65.9%
2.5
3.9
11.2%
7.9%
423
12.6%
8.7%
417
13.7%
9.1%
417
13.6%
8.9%
417
245
Adrian Mowat
(852) 2800-8599

21 November 2012
Dialog Group Bhd
Overweight
www.dialogasia.com
Company overview
Dialog is Asias largest independent tank farm owner upon completion of the 5MM m3
Pengerang independent deepwater petroleum terminal project. The companys other
existing businesses include: (1) the distribution of base oil fluid for offshore drilling; (2)
catalyst handling; (3) plant maintenance, and 4) EPCC. The new growth area for the
company is from Marginal Oil Fields risk service contract and Enhanced Oil Recovery.
Investment case
Leveraged to Petronas M$300B capex spending over the next five years. We expect
Dialogs effective tank farm capacity will grow from 0.42MM m3 to 2.72MM m3, or a
6.4x increase in seven years. Apart from recurring tank farm earnings over the longterm, we believe earnings over the 5-6 years are driven by EPCC contracts to build the
tank farms M$5B for tank storagea key driver of our 20% p.a. 3-year EPS CAGR.
In a flat global growth environment, Dialogs recurring earnings, estimated at 82% of
group earnings is a key attraction. Domestic growth drivers as above are also highly
visible.
Upside risks to earnings (not reflected in our forecast) include 1) M$4.1B LNG terminal
at Pengerang, 2) M$3B Balai marginal oil field risk service contract, and 3) M$1B
Bayan EOR project.
Our SoTP-based Jun-13 PT of M$3.00 is based on DCF of cashflows from its 30% stake
in Kertih at WACC of 7%, DCF of cashflows from its 44% stake in Tanjung Langsat I
& II at WACC of 7%, and DCF of cashflows from its 46% stake in Pengerang at WACC
of 7%. We ascribe a FY14 P/E of 11x (1SD below historical average) to its EPCC and
plant maintenance division, and 8x P/E to catalyst handling and base oil on lower
growth. At our PT, Dialog would trade at a CY13E P/E of 28.6x, above its long-term
mean of 17x, and broadly in line with 2SD of 30x. Key risks are if the Pengerang project
is derailed; sharp increase in material prices for example steel, mitigated by some
projects that are on cost-plus; and Petronas cutting back on capex that could lead to
lower project flows.
Malaysia
Oil Services & Equipment
Dialog Group Bhd (Reuters: DIAL.KL, Bloomberg: DLG MK)

M$ in mn, year-end Jun
FY11A
FY12A
FY13E
Revenue (M$ mn)
1,208
1,634
1,875
EBITDA (M$ mn)
185
202
260
Net Profit (M$ mn)
152.3
177.0
219.2
Adjusted EPS (M$)
0.08
0.08
0.10
DPS (M$)
0.03
0.03
0.03
Revenue growth (%)
6.1%
35.2%
14.8%
Adjusted EPS Growth
29.7%
2.3%
20.5%
ROCE
26.5%
15.7%
13.4%
ROE
28.7%
19.9%
17.4%
Adjusted P/E
32.13
31.40
26.05
P/BV
8.4
4.8
4.5
EV/EBITDA
25.5
30.7
24.5
Dividend Yield
1.3%
1.2%
1.4%
246
Price: M$2.49
FY14E
1,766
305
266.9
0.11
0.04
-5.8%
19.2%
13.1%
19.0%
21.85
4.0
21.1
1.7%
FY15E
2,278
384
320.1
0.13
0.05
29.0%
18.0%
14.4%
20.2%
18.52
3.6
17.0
2.0%
Hoy Kit MakAC

(60-3) 2270 4728
(18146-X)
2.7
2.5
M$
2.3
2.1
Nov-11
Feb-12
May-12
Aug-12
Nov-12
DIAL.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
-5.7%
-13.2%
1m
3.8%
4.7%
3m
-0.8%
-1.7%
Source: Bloomberg.
Company Data
Shares O/S (mn)
Market Cap (M$ mn)
Market Cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
3-mth trading value (M$ mn)
3-mth trading value ($ mn)
3-mth trading volume (mn)
FBMKLCI
Exchange Rate
Fiscal Year End
2,411
5,993
1,963
2.49
07 Nov 12
59.6%
5.5
1.8
3.6
1,646
3.05
Jun
12m
6.0%
-5.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
Dialog Group Bhd: Summary of Financials

Income Statement
M$ in millions, year end Jun
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Cash flow statement

FY12 FY13E FY14E FY15E M$ in millions, year end Jun
1,634 1,875 1,766 2,278 Earnings before tax
35.2% 14.8% (5.8%) 29.0% Depr. & amortization
12.6% 13.5% 15.3% 14.8% Change in working capital
202
260
305
384 Taxes
9.0% 28.7% 17.6% 25.6% Others
174
216
236
294
5.3% 24.5% 9.3% 24.2% Capex
10.6% 11.5% 13.4% 12.9% Others
-4
-10
-12
225
272
326
393 Free cash flow
12.2% 20.9% 19.8% 20.6%
-43
-41
-45
-56 Equity raised/(repaid)
19.2% 15.2% 13.9% 14.3% Debt raised/(repaid)
177.0 219.2 266.9 320.1 Other
16.2% 23.9% 21.7% 19.9% Dividends paid
2,594 2,594 2,594 2,594 Beginning cash
0.08
0.08
0.10
0.12 Ending cash
(2.0%) 11.3% 21.7% 19.9% DPS
Ratio Analysis
FY11 FY12 FY13E FY14E FY15E M$ in millions, year end Jun
278
580
481
458
450 EBITDA margin
299
494
567
534
689 Net margin
65
98
80
74
96
17
5
0
0
0
660 1,177 1,129 1,066 1,235 Sales per share growth
Sales growth
LT investments
148
372
583
679
Others
50
84
91
98
106 EPS growth
Net fixed assets
224
333
529
690
889
Total Assets
Liabilities
Net debt to equity
Short-term loans
92
69
83
100
119 Sales/assets
Payables
326
465
528
487
570 Assets/equity
Others
21
20
48
63
93 ROE
439
554
659
649
783 ROCE
Long-term debt
18
255
295
335
375
Other liabilities
4
3
3
3
3
Total Liabilities
462
812
957
986 1,160
583 1,194 1,325 1,485 1,677
Minorities
37
44
49
61
74
BVPS
0.30
0.52
0.55
0.62
0.70
FY11
1,208
6.1%
15.6%
185
35.5%
15.3%
165
39.2%
13.7%
-3
201
33.7%
-40
20.1%
152.3
28.7%
1,965
0.08
29.7%
FY11
201
20
-30
-41
19
133

225
272
326
393
28
43
69
90
-77
-77
-77
-77
-51
-41
-45
-56
4
-42
-87
-126
78
100
97
124
-95
-36
0
2
-361
-18
0
-301
-150
-114
0
-165
-150
-53
0
-106
-150
-53
0
-79
15
35
-15
-62
261
274
0.03
504
214
-10
-71
274
578
0.03
0
100
0
-88
578
481
0.03
0
100
0
-107
481
458
0.04
0
100
0
-128
458
450
0.05
FY11
15.3%
12.6%

12.3% 13.9% 17.3% 16.8%
10.8% 11.7% 15.1% 14.1%
6.9%
6.1%
28.7%
29.7%
14.0%
35.2%
16.2%
(2.0%)
60.61 48.38
-27.0% -23.1%
-28.9% -21.4%
1.22
1.04
1.49
1.72
28.7% 19.9%
26.5% 15.7%
3.1% (5.8%)
14.8% (5.8%)
23.9% 21.7%
11.3% 21.7%
29.0%
29.0%
19.9%
19.9%
24.79
-6.4%
-7.8%
0.86
1.76
17.4%
13.4%
27.98
2.2%
2.6%
0.84
1.74
20.2%
14.4%
25.35
-1.3%
-1.6%
0.73
1.70
19.0%
13.1%
247
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Duratex
Price: R$14.11
www.duratex.com.br
End Date: Dec 2013
Company overview
Duratex S.A. is the Brazilian market leader in wood panels, metal fittings, and sanitary
ware with the Deca and Hydra brands. Duratex has a production capacity of nearly 4
mn m3/year wood paneling, 6 mn m2/year in laminated flooring, 1.5 mn m2/year in
components, and almost 23 mn metal fittings and/or sanitary ware units.
Brazil
Forestry, Pulp & Paper
Lucas FerreiraAC
(55-11) 4950-3629
Investment case
Duratex products are inputs to the housing and durable goods segments, which are
highly dependent on credit availability to be sold. The continued low interest rates, low
unemployment, and real income growth are important drivers for demand. We
conservatively forecast wood panel sales to grow 4.3% in 2013 (vs. a solid 12.1%
increase in 2012E).
Duratex has been gaining share and improving margins amid a faster than expected
growing market, and investors have been paying for this performance. The stock
outperformed the index by 5.8% in the past three months and is now trading at 8.5x
forward EV/EBITDA (~8% premium to the 5Y historical level). We believe such a
premium is deserved given improved profitability, higher growth, and earnings
visibility as well as positive government intervention in the sector.

15
13
R$ 11
9
7
Nov-11
Feb-12
May-12
Aug-12
Nov-12
DTEX3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Earnings risks are mainly related to (1) the slowdown of house launches that can affect
demand for Decas products and (2) weaker consumer credit conditions.
Our Dec 13 price target of R$16.0/share is an equal distribution of (1) DCF based on
9.3% WACC (USD nominal) and 1.2% nominal USD perpetuity growth; (2) 8.5x
EV/EBITDA target, (3) 15x P/E target. The risks to our target price are (1) the
slowdown of house launches that can affect demand for Decas products, (2) weaker
consumer credit conditions, and (3) cost pressures (urea, methanol, labor).
Duratex S.A. (DTEX3.SA;DTEX3 BZ)
FYE Dec
EBITDA (R$ mn)
FY
Bloomberg EBITDA FY (R$ mn)
Revenues FY (R$ mn)
2011A
2012E
2013E
799
863
0.64
0.68
2,970
961
954
0.71
0.76
3,304
1,071
1,075
0.80
0.88
3,714
248
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
3mth Avg daily value
(R$ mn)
14.11
14 Nov 12
14.55 - 8.08
7,828.11
Dec
548
16.00
31 Dec 13
19.82
Adrian Mowat
(852) 2800-8599

21 November 2012
Duratex: Summary of Financials

Revenues
Cost of products sold
Gross profit
SG&A
Operating income
D&A
EBITDA
Net interest income / (expense)
Total other income / (expense)
Pretax income
Income taxes
Net income - GAAP
Net income - recurring
Diluted shares outstanding
EPS - GAAP
EPS - recurring
Balance Sheet and Cash Flow Data
Accounts receivable
Inventories
Current assets
Total assets
Total debt
Total liabilities
BV/share
D&A
Other
Capex
Free cash flow
Free cash flow / share
Cash flow from investing activities
Cash flow from financing activities
Dividends
FY10A FY11A FY12E FY13E Income Statement - Quarterly

2,742 2,970 3,304 3,714 Revenues
1,436 1,716 1,860 2,114 Cost of products sold
(691) 1,408 1,584 1,742 Gross profit
428
464
496
553 SG&A
618
454
489
549 Operating income
(372)
(430) (506) (542) D&A
851
799
961 1,071 EBITDA
(98)
(122) (122) (132) Net interest income / (expense)
0
0
0
0 Other income / (expense)
618
454
489
549 Pretax income
(99)
(59) (109) (126) Income taxes
439
350
391
437 Net income - GAAP
439
350
391
437 Net income - recurring
549
548
548
548 Diluted shares outstanding
0.80
0.64
0.71
0.80 EPS - GAAP
0.80
0.64
0.71
0.80 EPS - recurring
FY10A FY11A FY12E FY13E Ratio Analysis
617
726
802 1,135 Sales growth
565
658
723
788 Organic sales growth
362
411
395
395 EBITDA growth
133
138
135
135 EPS growth (recurring)
1,677 1,933 2,055 2,452 BV/share growth
765
847
968
968
6,172 6,814 7,547 8,012 Gross margin
SG&A ratio
1,594 1,915 2,150 2,335 EBIT margin
6,171 6,814 7,546 8,011 EBITDA margin
3,466 3,693 4,125 4,380 Tax rate
6.31
6.74
7.53
7.99 Net margin
439
350
391
437 Net debt / EBITDA
(372)
(430) (506) (542) Net debt / Capital
(7)
(117)
(2)
(39) Interest coverage ratio
725
783
895
460
224
0.41
636
(78)
(0.14)
974
(116)
(0.21)
(460)
(636) (974)
72
162
94
112.77 159.43 139.78
923 Inventory turnover

Working capital turnover
609
301 Return on assets (ROA)
0.55 Return on equity (ROE)
Return on capital (ROC)
(609)
(135)
135.48
1Q12A 2Q12A 3Q12A 4Q12E

738A
809A
911A
846
418A
453A
503A
486
353A
393A
443A
395
111A
127A
132A
125
108A
120A
159A
103
(106)A (125)A (132)A
(144)
209A
237A
274A
241
(28)A
(30)A (32)A
(32)
0A
0A
0A
0
108A
120A
159A
103
(25)A
(40)A (21)A
(24)
86A
99A
126A
81
86A
99A
126A
81
548A
548A
548A
548
0.16A
0.18A 0.23A
0.15
0.16A
0.18A 0.23A
0.15
FY10A FY11A FY12E FY13E
36.6%
8.3% 11.2% 12.4%
36.6%
8.3% 11.2% 12.4%
37.6% (6.0%) 20.2% 11.5%
13.6% (20.2%) 11.9% 11.7%
(25.2%)
15.6%
26.1%
31.0%
16.0%
16.0%
1.1
28.2%
4.8
47.4%
15.6%
19.4%
26.9%
13.1%
11.8%
1.5
32.2%
2.6
48.0%
15.0%
18.5%
29.1%
22.4%
11.8%
1.4
32.7%
2.9
46.9%
14.9%
18.3%
28.8%
23.0%
11.8%
1.1
27.4%
3.1
0.1
0.2
0.1
0.3
0.1
0.2
0.1
0.2
7.1%
12.7%
13.9%
5.1%
9.5%
10.4%
5.2%
9.5%
8.9%
5.5%
10.0%
9.7%

249
Adrian Mowat
(852) 2800-8599

21 November 2012
Electricity Generating Company (EGCO)
Overweight
www.egco.com
Company overview
EGCO, the first independent power producer in EGCO, is a holding company with
interests in IPPs within Thailand and neighboring countries and also interests in
renewable energy in Thailand. EGCOs major shareholders include EGAT (25.41%)
and TEPDIA Generating B.V (22.42%).
Thailand
Independent Power Producers
Investment case
We expect the Street to continue with its earnings upgrades for EGCO as we suspect
that the Street has yet to fully credit EGCOs expansion into solar power. Our earnings
are currently 5% and 13% above consensus estimates for FY13-14. In addition we
believe that the new rounds of IPP biddings scheduled for late 2013 will act as a firm
catalyst for EGCO, limiting any possible downside in share price.
EGCO is protected from global growth concerns as its revenues are protected by longterm power purchase agreements with the state-owned Electricity Generating Authority
of Thailand (EGAT). This also confirms a steady dividend which makes it an attractive
investment in this anemic growth environment.
Key earnings risks in 2013 include delays in the start-up of its solar power plants. Any
delays would result in a drop in earnings on a Y/Y basis as earnings contribution from
its core plants REGCO and KEGCO approach the end of its PPA contracts.
Price: Bt129.50
Avin SonyAC
(66-2) 684-2683
avin.sony@jpmorgan.com
Bloomberg JPMA SONY<GO>
140
120
Bt
100
80
Nov-11
Feb-12
May-12
Aug-12
Nov-12
EGCO.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
32.1%
6.8%
1m
-1.1%
-1.0%
3m
18.8%
10.7%
12m
54.2%
18.5%
Source: Bloomberg.

Our Dec-13 PT of Bt155 is based on DCF valuation. The valuation comprises
estimated DCF values for all projects currently operated by EGCO, as well as projects
under development by EGCO (with construction risks applied as appropriate). It does
not include possible upside from Quezon expansion as well as new IPPs (3 new IPPs
with total capacity of 2700MW) which we expect EGCO to secure over the next 12
months. Key risks: EGCOs failure to win an additional bid to build a new IPP,
governments refusal to pay the adders as per contracts.
Electricity Generating Company (Reuters: EGCO.BK, Bloomberg: EGCO TB)
FY10A
FY11A
FY12E
FY13E
Revenue (Bt mn)
8,609
7,661
9,878
11,484
Net Profit (Bt mn)
6,792.0
4,988.6
10,351.0
6,787.4
EPS (Bt)
12.90
9.48
19.66
12.89
DPS (Bt)
5.25
5.25
5.25
5.25
Revenue growth (%)
-5.9%
-11.0%
28.9%
16.3%
EPS growth (%)
-14.4%
-26.6%
107.5%
-34.4%
ROCE
11.1%
8.6%
9.2%
8.7%
ROE
13.0%
8.9%
16.8%
10.0%
P/E (x)
10.0
13.7
6.6
10.0
P/BV (x)
1.3
1.2
1.0
1.0
EV/EBITDA (x)
7.2
8.7
7.8
6.9
Dividend Yield
4.1%
4.1%
4.1%
4.1%
Core Profit (Bt mn)
6,254
5,124
6,165
6,787
Core EPS (Bt)
11.88
9.73
11.71
12.89
250
FY14E
11,994
7,548.0
14.34
5.25
4.4%
11.2%
9.0%
10.5%
9.0
0.9
6.1
4.1%
7,548
14.34
Company Data
Shares O/S (mn)
Market cap (Bt mn)
Market cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
SET
Exchange Rate
Fiscal Year End
526
68,177
2,219
129.50
01 Nov 12
30.0%
0.64
78.82
2.53
1,298
30.72
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Electricity Generating Company: Summary of Financials

Income Statement
Cash flow statement
FY10
Revenues
8,609
7,661 9,878 11,484 11,994 EBIT
% change Y/Y
(5.9%) (11.0%) 28.9% 16.3%
Gross Margin (%)
59.4% 52.8% 51.5% 46.9% 52.0% Change in working capital
EBITDA
9,208
7,732 9,605 10,493 11,314 Taxes
% change Y/Y
-13.9% -16.0% 24.2%
9.3%
7.8% Cash flow from operations
EBITDA Margin (%)
107.0% 100.9% 97.2% 91.4% 94.3%
EBIT
6,974
5,759 7,306 8,026
8,745 Capex
% change Y/Y
NM
NM 26.9%
9.8%
9.0% Disposal/(purchase)
EBIT Margin (%)
81.0% 75.2% 74.0% 69.9% 72.9% Net Interest
Net Interest
-184
-245
-665
-712
-568 Free cash flow
Earnings before tax
6,790
5,514 6,642 7,314
8,177
% change Y/Y
-17.6% -18.8% 20.5% 10.1% 11.8% Equity raised/(repaid)
Tax
-421
-264
-351
-423
-514 Debt raised/(repaid)
as % of EBT
135.6% 140.2% 144.6% 143.5% 138.4% Other
Core net income (reported)
6,254
5,124 6,165 6,787
7,548 Dividends paid
% change Y/Y
-16.7% -18.1% 20.3% 10.1% 11.2% Beginning cash
Shares outstanding
527
527
527
527
527 Ending cash
Core EPS (reported) - (Bt)
11.88
9.73 11.71 12.89
14.34 DPS - (Bt)
% change Y/Y
-16.7% -18.1% 20.3% 10.1% 11.2%
Balance sheet
Ratio Analysis
FY10
11,403 12,623 16,487 21,203 24,374 EBITDA margin
Accounts receivable
791
794 1,087 1,263
1,319 Operating margin
Inventories
2,127
2,044 3,114 3,661
Others
6,332
6,595 6,600 6,600
6,600
Current assets
20,653 22,056 27,288 32,728 36,615
LT investments
30,962 36,739 52,616 54,394 55,768 Sales growth
Net fixed assets
13,407 13,345 11,502 10,549
Total Assets
65,654 72,955 92,205 98,471 102,843 EPS growth
Liabilities
ST loans
721
536 4,662 5,069
Payables
326
317
479
610
576 Net debt to equity
Others
765
863 1,000 1,000
1,000 Sales/assets (x)
1,812
1,716 6,141 6,679
6,553 Assets/equity (x)
Long-term debt
8,840 11,521 18,649 20,276 19,906 ROE
Other liabilities
186
1,185 1,200 1,200
1,200 ROCE
Total Liabilities
10,838 14,422 25,990 28,156 27,658
54,307 57,979 65,566 69,589 74,373
BVPS - (Bt)
103.15 110.12 124.53 132.17 141.26
FY10
6,974
2,234
481
-421
8,494
FY11
5,759
1,973
-94
-264
6,601
FY12E
7,306
2,298
-1,068
-351
6,666
FY13E FY14E
8,026 8,745
2,467 2,568
-593
-750
-423
-514
8,085 8,803
-573
0
-184
7,921
-1,911
0
-245
4,690
-455
0
-665
6,211
-1,515 -1,680
0
0
-712
-568
6,570 7,123
0
-1,155
278
-2,764
7,460
11,403
5.25
0
2,496
1,302
-2,764
11,403
12,623
5.25
0
11,254
4,420
-2,764
12,623
16,487
5.25
0
0
2,034
-464
0
0
-2,764 -2,764
16,487 21,203
21,203 24,374
5.25
5.25
FY10
FY11 FY12E
107.0% 100.9% 97.2%
81.0% 75.2% 74.0%
78.9% 65.1% 104.8%
FY13E
91.4%
69.9%
59.1%
FY14E
94.3%
72.9%
62.9%
(5.9%) (11.0%) 28.9% 16.3% 4.4%

-14.4% -26.6% 107.5% -34.4% 11.2%
(14.4%) (26.6%) 107.5% (34.4%) 11.2%
50.04
-3.4%
0.13
1.09
13.0%
11.1%
31.56
-1.0%
0.11
1.26
8.9%
8.6%
14.45
10.4%
0.12
1.41
16.8%
9.2%
14.74 19.92
6.0% 0.7%
0.12
0.12
1.42
1.38
10.0% 10.5%
8.7% 9.0%
251
Adrian Mowat
(852) 2800-8599

21 November 2012
Emaar Properties
Overweight
www.emaar.ae
Price Target: Dh4.50
Company overview
Emaar Properties specializes in master community developments incl. residential and
commercial real estate in Dubai and abroad. Since inception the company has delivered
more than 34,000 units and now operates as a global developer with planned projects in
over 18 countries and ongoing developments under various stages of construction in
more than 10 countries. Emaar is well known for its high quality investment property
portfolio, which is represented by retail and the hospitality business mostly in Dubai.
This business has helped Emaar generate a solid stream of recurring income over the
last 2.5 years. The foreign ownership restriction at 49% in Emaars stock is relatively
high compared to average 28% for UAE based property developers.
United Arab Emirates

MENA & Turkey Real Estate
Price: Dh3.66
Muneeza Hasan
AC
(971) 4428-1766
muneeza.z.hasan@jpmorgan.com
Branch
3.6
Investment case
We like Emaar due to its successful comeback into Dubai, its resilient rental income
growth and low N D/E at ~25%. Recurring income is now >50% of Emaars EBITDA
and ~50% of the SOTP-based PT, where Dubais retail and hospitality segment
continues to surprise on the upside. With the comeback in Dubai, we believe Saudi
Arabia, Egypt and Turkey form part of its core markets for property development,
while Dubai retains its place as the companys core investment portfolio.
Dh
3.2
2.8
2.4
Nov-11

We expect Dubais recovery to continue in 2013 and expect Emaar to record a healthy
growth in retail and hospitality segment with footfalls remaining strong and hotel
occupancy levels expected north of 90%. Encouraged by pick-up in property sales
activity with improving investor confidence, we expect Emaar to add more to its Dubai
pipeline in 2013 with the likely launch of the Opera House cultural district in Burj
Downtown.
Abs
Feb-12
YTD
46.4%
May-12
1m
1.7%
Aug-12
Nov-12
3m
7.0%
12m
35.6%
Source: Bloomberg.

Amlak write-off and potential refinancing risks for Emaar's Indian business remain key
downside risks to earnings in 2013
Our Dec 2013 SOTP based PT of AED4.5 is based on a 10% discount to our NAV. In
our NAV, we incl. 1) DCF for all local/intl projects with dev. details; 2) mkt value of
EEC AB; 3) BV of unlisted entities (Emaar MGF at 25% of BV); and 4) the value of
Emaars landbank captured in project wise DCFs due to limited information. Key risks
include 1. Delayed recovery in property prices, delay in completion and handover on
the intl front, weaker than forecast margin, Amlak write off and continued overhang
on Emaar's stock due to the Indian business's debt refinancing issues.
Emaar Properties PJSC and Subsidiaries (EMAR.DU;EMAAR DB)
FYE Dec
2011A
2012E
2013E
Adj. EPS FY (Dh)
0.32
0.33
0.33
Sales FY (Dh mn)
8,112
7,780
7,684
EBITDA FY (Dh mn)
3,060
3,256
3,169
EBITDA margin FY
37.7%
41.9%
41.2%
Net profit FY (Dh mn)
1,794
2,013
1,983
BV/Sh FY (Dh)
5.19
5.42
5.71
P/BV FY
0.7
0.7
0.6
Net D/E FY
23.5%
24.5%
21.0%
2014E
0.25
6,479
2,719
42.0%
1,505
5.56
0.7
22.4%
Source: Company data, Bloomberg, J.P. Morgan estimates. Please note that SOTP is based on fully
diluted shares outstanding of 6481Mn
252
Company Data
Price (Dh)
Date Of Price
Price Target (Dh)
52-week Range (Dh)
Mkt Cap (Dh bn)
Mkt Cap (US) ($ bn)
Shares O/S (mn)
3.66
01 Nov 12
4.50
31 Dec 13
3.76 - 2.39
22.3
6.1
6,091
Adrian Mowat
(852) 2800-8599

21 November 2012
Emaar Properties: Summary of Financials

Profit and Loss statement
in millions, year-end Dec
Sales
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
Net Interest
Share of profit from associates
Earnings before tax
% change Y/Y
Provisions/Write down
Tax
Net Income (Reported)
% change Y/Y
Profit attributable to equity holders
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Trading property under development
Property plant and equipment
Investment property
Investment in associates
Goodwill
Others
Total assets
FY11A
FY12E
FY13E
8,112
7,780
7,684
-33.2% -4.1% -1.2%
4,236
4,128
4,012
-6.8% -2.5% -2.8%
3,060
3,256
3,169
-14.2%
6.4% -2.7%
2,124
2,487
2,400
-17.3% 17.1% -3.5%
(170)
(360)
(302)
(71)
124
136
1,954
2,126
2,098
-21.2%
8.8% -1.3%
(36)
(64)
(63)
1,918
2,063
2,035
(22.6%)
7.5% (1.3%)
1,794
2,013
1,983
6,091.2 6,091.2 6,091.2
0.29
0.33
0.33
(26.7%) 12.2% (1.5%)
FY11A FY12E FY13E
2,865
776
26,611
8,300
7,999
6,684
46
6,772
60,054
4,759
700
25,816
8,344
8,299
6,684
46
6,300
60,948
4,064
768
26,144
8,416
8,699
6,684
46
5,498
60,319
Total debt
9,300
Trade payables
8,314
Customer advances
8,145
Others
70
Total liabilities
28,465
Minorities
281
31,589
Total Liabilities & Shareholders Equity
60,054
9,600
8,169
5,595
70
27,906
294
33,042
60,948
8,100
7,684
5,217
70
25,544
309
34,775
60,319
FY14E Cash flow statement

6,479 Net Income
-15.7% Depreciation & amortisation
3,306 Working capital changes ex capex
-17.6% Other
-14.2%
1,932 Capex
-19.5% Free cash flow
(323)
227 Other adjustments
1,609 Cash flow from investments
-23.3%
- Equity raised/(repaid)
(48) Debt raised/(repaid)
(23.3%) Cashflow from Financing
1,505 Change in Cash
6,480.6 Beginning cash
0.23 Ending cash
(28.6%)
FY14E Ratio Analysis
1,533 Gross Margin
518 EBITDA Margin
26,521 EBIT margin
8,497 Adjusted net profit margin
9,199 SG&A/Sales
6,684
46 Sales growth
5,520 EBITDA growth
58,519 Adjusted net profit growth
Adjusted EPS growth
6,329
4,807 Net debt to Total Capital
70 Net debt to Equity
22,480 Sales/assets
320 ROE
36,039 ROCE
58,519
FY11A FY12E FY13E
FY14E
1,794 2,013
762
769
(2,593) (2,648)
69
-424
536
184
1,983
768
(192)
-365
2,612
1,505
787
(1,112)
-371
1,236
(318) (1,568)
-
(1,746)
-
-1,557
-119
308
-805
-72
-1,312
14
-1,355
-45
(588)
-1,293
-653
1,773
1,080
2,136
(609)
1,540
1,894
1,080
2,973
-1,500
(302)
-1,786
-695
2,973
2,278
-1,772
(297)
-2,058
-2,531
2,278
-252
FY11A FY12E FY13E
FY14E
52.2%
37.7%
26.2%
23.6%
14.3%
53.1%
41.9%
32.0%
26.5%
13.5%
52.2%
41.2%
31.2%
26.5%
13.5%
51.0%
42.0%
29.8%
24.1%
13.5%
-33.2%
-14.2%
(27.0%)
NM
-4.1%
6.4%
2.3%
2.3%
-1.2% -15.7%
-2.7% -14.2%
(1.5%) (24.1%)
NM
NM
12.5
12.3%
23.1%
0.1
6.1%
5.9%
6.9
13.3%
24.1%
0.1
6.3%
6.1%
7.9
12.1%
20.6%
0.1
5.9%
5.8%
(467)
-
6.0
13.7%
22.0%
0.1
4.4%
4.6%
253
Adrian Mowat
(852) 2800-8599

21 November 2012
Emlak Konut
Overweight
www.emlakgyo.com.tr
Price Target: TL3.10
Company overview
Emlak Konut, founded in 1953, is the largest Real Estate Investment Company (REIC)
in Turkey with a total asset base of ~$4.2bn. The company primarily focuses on
residential developments across Turkey with currently 29 ongoing projects and 5.3mn
sq m land under its belt. Emlak primarily purchases its land from TOKI and to Emlak,
the construction risk remains muted given the unique revenue sharing agreement it uses
for more than 80% of its ongoing projects.
Turkey
Price: TL2.70
Investment case
We like Emlak for the scarcity value it offers given its unique business model. As the
largest listed REIC in Turkey by mkt cap (US$3.7Bn) and landbank (5.3Mn Sq m), it
offers ~4yrs of earnings visibility with a minimum revenue backlog of ~TL5Bn. With
TOKIs 75% stake in the company, Emlak benefits from strong indirect govt. support
and acts as a bridge b/w the govt. and Turkeys RE developers by providing land for
housing projects. Longer term, Turkey still remains one of the best GDP growth stories
in EM and as the largest listed developer Emlak is best positioned to benefit from any
improvement in macros moving forward.
Emlak has ~5.3Mn Sq m of land awaiting tender. Of this, land in Istanbul accounts for
75% by appraisal value and 49% by area. We expect the strategically located Istanbul
land to fetch at least our conservative valuation multiple of 1.7x (used in our SOTP cal)
for future tenders. This is well below the historical average of 2.54x (over and above
the base value of tender) that Emlak has managed to generate on completed projects.
Near to medium term, we expect stock performance to come from better than expected
multiples on land awaiting tender and pick up in monthly unit sales data.
Muneeza Hasan
AC
(971) 4428-1766
Branch
2.8
2.6
TL
2.4
2.2
2.0
1.8
Nov-11
Abs
Feb-12
YTD
38.5%
May-12
1m
8.4%
Aug-12
Nov-12
3m
14.9%
12m
14.9%
Source: Bloomberg.

Political, regulatory and below forecast revenue from land tenders remain key risks
Our Dec 2013 PT of TL3.10 for Emlak is derived using a SOTP valuation. In our
SOTP, we include a DCF of Emlaks ongoing RSM projects, DCF of ongoing PPM
based projects, the value of Emlaks landbank and the appraisal value of Emlaks small
inventory of completed units. Key risks include below forecast sales, changes in
Emlaks relationship with TOKI, any slowdown in Turkeys housing demand, below
forecast revenue from land tenders, and political/regulatory risk.
Emlak Konut Gayrimenkul Yati (EKGYO.IS;EKGYO TI)
FYE Dec
2011A
2012E
Adj. EPS FY (TL)
0.09
0.17
Sales FY (TL mn)
717
1,117
EBITDA FY (TL mn)
199
425
EBITDA margin FY
27.7%
38.0%
Net profit FY (TL mn)
228
435
BV/Sh FY (TL)
1.52
1.65
Net D/E FY
8.6%
8.4%
P/E FY
29.6
15.5
254
2013E
0.13
1,523
300
19.7%
330
1.71
-6.2%
20.5
2014E
0.15
1,519
312
20.6%
379
1.81
-11.3%
17.8
Company Data
Price (TL)
Date Of Price
Price Target (TL)
52-week Range (TL)
Mkt Cap (TL bn)
Mkt Cap (US) ($ bn)
Shares O/S (mn)
3Mnth Avg daily value
(US$ MM)
2.70
02 Nov 12
3.10
31 Dec 13
2.74 - 1.85
6.8
3.7
2,500
29.91

21 November 2012
Adrian Mowat
(852) 2800-8599
Emlak Konut: Summary of Financials

TL in millions, year end Dec
Sales
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
Net Interest
FY11
717
-52.1%
229
-69.0%
199
-68.4%
198
-68.4%
29
FY12E
1,117
55.9%
496
116.2%
425
113.6%
424
113.7%
11
FY13E
1,523
36.3%
395
-20.3%
300
-29.5%
299
-29.5%
31
FY14E
1,519
-0.3%
421
6.3%
312
4.2%
311
4.2%
67
Earnings before Taxes

% change Y/Y
228
-58.9%
435
90.9%
330
-24.2%
Net Income ex Minorities

% change Y/Y
228
(58.9%)
435
90.9%
330
(24.2%)
Shares Outstanding
2,500.0
2,500.0
2,500.0
0.09
0.17
0.13
(58.9%)
90.9%
(24.2%)
Balance sheet
Bank balance and cash
Trade and Other receivables
Land and residential inventories
Current assets
FY11
774
835
797
3,138
FY12E
595
835
1,065
3,227
FY13E
1,045
835
1,333
3,945
Other receivables
Land and residential inventories
Others
Total assets
783
3,582
11
7,514
783
3,649
12
7,671
783
2,926
13
7,666
Financial liabilities
Trade payables from related party
186
1,009
2,783
186
1,009
2,783
186
1,009
2,783
914
928
754
768
594
608
3,803
7,514
4,119
7,671
4,275
7,666
379
Decrease in payables to HAS
379 beneficiaries
14.9% Others
Cashflow from Financing
2,500.0
Change in Cash
0.15 Beginning cash
Project deposits and income
14.9% accruals
Ending cash
Ratio Analysis
FY14E year end Dec
1,130 Gross Margin
835 EBITDA Margin
1,455 EBIT margin
SG&A/Sales
783
2,805 Sales growth
13 EBITDA growth
Adjusted EPS growth
186
1,009
2,783 Interest coverage
Net debt to Total Capital
434 Net debt to Equity
448 Sales/assets
Assets/equity
4,522 ROE
7,753 ROCE
EPS (reported)
% change Y/Y
Long term debt

Cash flow statement

Total comprehensive income
Depreciation & amortisation
Other
FY11
228
(836)
(33)
(640)
FY12E
435
(334)
1
101
FY13E
330
455
1
785
FY14E
379
(2)
1
377
PP&E
Investment property
Other
Cash flow from investments
(1)
0
-0
-1
(2)
0
0
-2
(1)
0
0
-1
(1)
0
0
-1
-156
-160
-160
-160
7
(278)
-428
0
(119)
-279
0
(174)
-334
0
(132)
-292
-1,068
1,539
-179
470
450
291
85
742
304
774
304
595
304
1,045
304
1,130
FY11
32.0%
27.7%
27.7%
31.8%
7.4%
FY12E
44.4%
38.0%
37.9%
38.9%
7.0%
FY13E
26.0%
19.7%
19.6%
21.6%
5.9%
FY14E
27.7%
20.6%
20.5%
24.9%
6.8%
-52.1%
-68.4%
(58.9%)
(58.9%)
55.9%
113.6%
90.9%
90.9%
36.3%
-29.5%
(24.2%)
(24.2%)
-0.3%
4.2%
14.9%
14.9%
6.7
6.6%
8.6%
0.1
2.0
6.0%
4.8%
38.8
6.8%
8.4%
0.1
1.9
10.6%
8.9%
9.8
-5.3%
-6.2%
0.2
1.8
7.7%
6.7%
4.6
-9.9%
-11.3%
0.2
1.7
8.4%
7.6%
255
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.erajaya.com
Company overview
Indonesia
Communications Equipment
Erajaya Swasembada (Erajaya) is a leading retailer and distributor of mobile

communication products and services in Indonesia. The brands covered by the group
are Sony Ericsson, Nokia, Dell, Samsung, Acer, Apple, Blackberry, LG and Huawei, as
well as its own brand, Venera. The company owns a chain of retail stores primarily
under Erafone and TAM brands. It is also opening large-scale Mega Store under
Erafone and recently bought into iBox, an authorized retailer of Apple products. The
key competitive barriers to entry are: (1) wide distribution networks covering
20,000+independent retailers; (2) knowledge of creditworthiness of these retailers.
Price: Rp2,475
Stevanus JuandaAC
(62-21) 5291 8574
stevanus.x.juanda@jpmorgan.com
Bloomberg JPMA JUANDA<GO>
2,400
Investment case
(1) High growth potential given low penetration of handsets. (2) Shift to smartphones
with higher ASP with similar margin. (3) Competition not as keen as in other countries.
(4) Special deals from brand principals that expand margins. (5) Diversified brand
portfolio. (6) Retail store expansion. (7) Indirect consumption play with lower P/E.
Indonesia consumption is likely to experience a structural acceleration, especially on
discretionary spending such as handsets. Growth should continue in an environment in
which the number of retail outlets is growing at 15-20%. ERAA is an indirect
consumption story that trade at 11.4x FY13E P/E vs 20x of other consumer companies.
2,000
Rp 1,600
1,200
800
Nov-11
Feb-12 May-12
Aug-12 Nov-12
ERAA.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
147.5%
133.3%
1m
24.4%
23.5%
3m
20.7%
14.2%
Source: Bloomberg.

We do believe there is downside to our FY13E earnings forecast of Rp630bn if: (1)
lower than expected profit is delivered, (2) new competition coming from global
distributors, (3) brands starting to maintain their own distribution teams, and (4)
unexpected currency fluctuations.
Our DCF-based (risk free rate of 6.5%, 8.0% risk premium, and 7% terminal value) PT
of Rp3,000 implies 13.8x FY13E P/E. Key risks: (1) lower-than-expected profit
delivery; (2) new competition from global distributors; (3) brands starting to maintain
their own distribution team; and (4) unexpected currency fluctuations.
Bloomberg ERAA IJ, Reuters ERAA.JK
(Year-end Dec, Rp bn)
Sales
Gross Profit
Operating Profit
EBITDA
Pre-Tax Profit
Net profit
EPS (Rp)
BPS (Rp)

4,639 6,900 12,555 15,771 19,038
508
749 1,357 1,674 2,019
294
385 616
782
950
298
389 633
806 1,029
297
353 610
783
972
217.7 255.4 460.2 630.4 781.3
109.96 88.07 158.69 217.37 269.41
513.59 740.52 899.21 1,116.58 1,385.99

P/E (x)
22.5 28.1 15.6 11.4
9.2
P/BV (x)
4.8 3.3
2.8
2.2
1.8
EV/EBITDA (x) 11.7 9.4
5.4
4.2
3.3
Div. Yield (%)
0.0 0.0
0.0
0.0
0.0
ROE (%)
23.1 16.1 19.4 21.6 21.5
ROIC (%)
18.0 10.8 15.3 17.8 17.5
WC Turns (x) 4.28 3.62 5.90 6.11 5.62
Net Debt/Equity 8.2% 12.0% 1.7% 0.5% 0.3%
Company data, Bloomberg, J. P. Morgan estimates. Note: In Net Debt/Equity, NM means company has net cash
256
52-Week range Rp2,475 - 950

Market Cap
US$747MM
Enterprise Value
Rp3,437bn
Share Out. (Com)
2,900MM
Free float
Date of Price
07 Nov 12
Price
2,475
Dividend yield (%)
0.0
Jakarta Index
4,314
12m
147.5%
132.4%
Adrian Mowat
(852) 2800-8599

21 November 2012
Erajaya Swasembada Tbk PT: Summary of Financials

Rp in millions, year end Dec
FY10 FY11
Revenues
4,639 6,900
Cost of goods sold
4,131 6,151
Gross Profit
508
749
R&D expenses
0
0
SG&A expenses
-206
-356
294
385
EBITDA
298
389
Interest income
3
3
Interest expense
-3
-36
-0
-33
Non-operating income (Exp.)
-8
-8
Earnings before tax
297
353
Tax
-76
-97
217.7 255.4
222
255
EPS (reported)
109.96 88.07
EPS (adjusted)
112.06 88.07
BVPS
513.59 740.52
DPS
0.00
0.00
Shares outstanding
2
3
Balance sheet
FY10 FY11
97
200
Accounts receivable
361
826
Inventories
401
790
Others
300
391
Current assets
1,159 2,208
LT investments
Net fixed assets
62
109
Others
Total Assets
1,285 2,930
Liabilities
ST Loans
180
455
Payables
52
223
Others
24
80
256
759
Long-term debt
0
2
Other liabilities
12
21
Total Liabilities
268
782
1,017 2,147
Ratio Analysis
FY12E FY13E
FY14E Rp in millions, year end Dec
12,555 15,771
19,038 Gross margin
11,198 14,097
17,019 EBITDA margin
1,357
1,674
0
0
0 Net margin
-741
-892
-1,068 R&D/sales
616
782
950 SG&A/Sales
633
806
1,029
7
9
33 Sales growth
-28
-28
-29 Operating profit growth
-21
-19
4 Net profit growth
0
0
- EPS (reported) growth
610
783
972
-150
-153
-191 Interest coverage (x)
460.2
630.4
781.3 Net debt to total capital
460
630
158.69 217.37
269.41 Asset turnover
158.69 217.37
899.21 1,116.58 1,385.99 ROE
0.00
0.00
0.00 ROIC
3
3
3 ROIC (net of cash)
Cash flow statement
FY12E FY13E
358
246
312 Net income
723
946
1,304 Depr. & amortization
904
1,182
1,565 Change in working capital
470
615
835 Other
2,456
2,988
- Capex
228
266
284 Disposal/(purchase)
- Cash flow from investing
3,365
3,943
4,993 Free cash flow
402
263
257
338
560 Other
70
70
70 Dividends paid
729
671
954 Cash flow from financing
0
0
0
28
34
757
705
974 Beginning cash
2,608
3,238
4,019 Ending cash
FY10
10.9%
6.4%
6.3%
4.7%
0.0%
4.4%

10.9% 10.8% 10.6% 10.6%
5.6% 5.0% 5.1% 5.4%
5.6% 4.9% 5.0% 5.0%
3.7% 3.7% 4.0% 4.1%
0.0% 0.0% 0.0% 0.0%
5.2% 5.9% 5.7% 5.6%
(7.8%) 48.7%
-1.7% 31.1%
7.1% 17.3%
(70.7%) (19.9%)
82.0%
60.1%
80.2%
80.2%
25.6%
26.9%
37.0%
37.0%
20.7%
21.5%
23.9%
23.9%
3,221.71
7.7%
8.2%
3.65
4.28
23.1%
18.0%
18.0%
11.70 30.01 42.50

13.5% 1.6% 0.5% 0.3%
12.0% 1.7% 0.5% 0.3%
3.27
3.99
4.32
4.26
3.62
5.90
6.11
5.62
16.1% 19.4% 21.6% 21.5%
10.8% 15.3% 17.8% 17.5%
10.8% 15.3% 17.8% 17.5%
FY10
217.7
5
-179
-50
71
-36
0
-72
35
878
77
0
-50
25

255.4 460.2 630.4 781.3
4
16
23
78
-717
-66
-564
-739
56
-10
0
0
-77
410
90
120
-73
-135
-62
-96
0
0
0
0
-858
-204
-69
-101
-149
275
28
24
878
0
0
0
-146
-56
-139
61
0
0
0
-0
0
0
0
0
734
-49
-133
48
24
97
-201
200
157
358
-112
246
67
312
257

21 November 2012
Adrian Mowat
(852) 2800-8599
Erste Bank
Overweight
www.erstegroup.com
Price Target: 25.00
Company overview
Erste Bank is the 2nd largest retail bank (after Sberbank) in CEEMA region, having a
presence in 7 emerging markets, with an Austrian base. Erste is within the top 3 in
Czech, Croatia, Hungary; #1 in Romania and Slovakia and enjoys c.8-28% retail
deposit market share within these countries. It has c.217bn in assets, c.133bn in
loans, c.122bn in deposits and serves c.17mn clients via >3000 branches and c.50K
employees.
CEEMEA
Banks
Price: 19.92
Paul Formanko
AC
(44-20) 7134-4718
paul.formanko@jpmorgan.com
Investment case
Despite earning c.70% of profits from EM Europe, Erste trades at a significant 40-60%
discount to single country EM banks (Erste's mkt cap of 8.1bn compares to c.5.7bn
of Komercni- peer of EB's Czech subsidiary). We expect this discount to narrow, as
Erste's capital position continues on an improving trend (Q3 CT1 ex. govt capital at
9.2%- up 140bps vs. YE11) and earnings rebound, driven by gradual reduction in
provisioning charges (provisions have absorbed >70% of group pre-provision profits
over last 5 years). Erste currently trades at 13E PE 10.7x; PNAV 1x; 14E PE 6.9x;
PNAV 0.9x.
22
18
14
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ERST.VI share price ()

MSCI-Eu (rebased)
Abs
Rel

Whilst the revenue outlook remains weak, key driver for bottom-line growth would be
gradual normalization of asset quality (signs of which were visible in Q3'12 results), in
particular in Romania (where EB loss making in 2011-12; however management's
outlook for Romania has improved, with expectations of FY profits in 2013). We
expect costs to improve towards 80bps by 2014 (vs. 08-12E avg 147bps; 43bps in
2007).
YTD
46.4%
37.0%
1m
11.0%
10.9%
3m
36.5%
36.9%
12m
40.5%
28.2%
Source: Bloomberg.

Worst than expected economic slowdown in key geographies- lower revenues and
steeper asset quality deterioration. Upside risk from pickup in pace of Romanian
recovery.
Our Dec-13 price target (incorporating 2014 estimates), based on Gordon growth, SOP,
PE and NAV multiples is set at 25. Our Gordon growth model incorporates a long
term growth rate of 3%; 13% cost of equity and a 14% normalized RoNAV. Key risks
include- higher than expected asset quality deterioration, currency weakness (mainly in
Hungary & Romania) and continuation of low rate environment.
Erste Bank (ERST.VI;EBS AV)
FYE Dec
Adj. EPS FY ()
Adj P/E FY
NAV/Sh FY ()
P/NAV FY
ROA FY
RoNAV FY
Core Tier One Ratio FY
Net Attributable Income
FY ( mn)
2011A
0.21
94.8
17.7
1.1
0.0%
1.2%
7.8%
(719)
258
2012E
0.85
23.4
19.3
1.0
0.2%
4.7%
9.2%
626
2013E
1.92
10.4
21.1
0.9
0.3%
9.5%
9.5%
900
2014E
2.96
6.7
23.5
0.8
0.5%
13.3%
9.8%
1,320
Company Data
Price ()
Date Of Price
Price Target ()
52-week Range ()
Mkt Cap ( bn)
Shares O/S (mn)
19.92
02-Nov-12
25.00
31 Dec 13
20.78 - 10.40
7.6
381

21 November 2012
Adrian Mowat
(852) 2800-8599
Erste Bank: Summary of Financials

in millions, year end Dec
Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
Pre-provision operating profit
% change Y/Y
Loan loss provisions
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
Other interest earning assets
% change Y/Y
Average interest earnings assets
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Average interest bearing liabs
Other liabilities
Retirement benefit liabilities
Minorities
Total liabilities & Shareholders Equity
FY10A
FY11A
FY12E
FY13E
5,439
5,569
5,260
5,108
4.2%
2.4%
-5.5% -2.9%
1,723
227
1,653
1,505
1,843
1,787
1,717
1,725
3.9%
-3.0%
-3.9%
0.4%
-120
-1,561
-64
-220
-191.0% 1203.2% -95.9% 243.8%
0
0
0
0
7,162
5,796
6,913
6,613
0.5% -19.1% 19.3% -4.3%
-3,817
-3,851 -3,793 -3,795
0.2%
0.9%
-1.5%
0.1%
0
0
0
0
3,345
1,945
3,121
2,817
0.8% -41.9% 60.5% -9.7%
-2,021
-2,267 -2,119 -1,463
0
0
0
0
1,324
-322
1,002
1,354
5.0% -124.3% -411.1% 35.2%
(281)
(240)
(281)
(320)
21.2% (74.6%) 28.0% 23.6%
(165)
(156)
(95)
(134)
879
(719)
626
900
FY10A
FY11A
FY12E
FY13E
132,334 134,750 133,664 135,228

2.8%
1.8%
-0.8%
1.2%
6,119
7,027
8,340
8,459
196,036 202,907 210,114 215,650
4,675
3,532
3,214
3,182
6,636
3,326
2,377
2,226
205,770 210,006 215,926 219,978
117,016 118,880 122,446 124,895
4.4%
1.6%
3.0%
2.0%
31,298 30,782 30,474 30,169
20,154 23,785 24,974 24,475
178,870 186,012 190,881 193,227
13,114 12,037 12,593 13,262
3,444
3,143
3,238
3,372
205,770 210,006 215,926 219,978
Ratio Analysis
FY14E in millions, year end Dec
Per Share Data
5,299 EPS Reported
3.7% EPS Adjusted
1,671
% Change Y/Y
1,820 DPS
5.6%
% Change Y/Y
-149 Dividend yield
-32.3% Payout ratio
1 BV per share
6,971 NAV per share
5.4% Shares outstanding
-3,893
2.6% Return ratios
1 RoRWA
3,078 Pre-tax ROE
9.2% ROE
-1,096 RoNAV
1
1,982 Revenues
46.3% NIM (NII / RWA)
(468) Non-IR / average assets
23.6% Total rev / average assets
(194) NII / Total revenues
1,320 Fees / Total revenues
Trading / Total revenues

Cost ratios
139,614 Cost / income
3.2% Cost / assets
8,180 Staff numbers
- Loan / deposit
220,429 Investments / assets
3,150 Loan / assets
2,623 Customer deposits / liabilities
225,730 LT Debt / liabilities
Asset Quality / Capital
129,891 Loan loss reserves / loans
4.0% NPLs / loans
30,773 LLP / RWA
23,985 Loan loss reserves / NPLs
196,095 Growth in NPLs
- RWAs
% YoY change
14,168 Core Tier 1
3,567 Total Tier 1
225,730
FY10A
FY11A
FY12E
FY13E
FY14E
2.05
0.21
0.85
1.92
2.96
2.05
0.21
0.85
1.92
2.96
-14.4% -89.7% 305.9% 125.5% 54.1%
0.70
0.00
0.16
0.23
0.67
7.7% (100.0%)
- 43.9% 193.2%
4.9%
0.0%
1.1%
1.6%
4.7%
34.2%
- 18.6% 11.9% 22.6%
35
32
32
34
36
17.7
17.7
19.3
21.1
23.5
377.0
380.8
394.6 394.6
394.6
0.01
10.4%
6.1%
12.4%
0.00
(2.6%)
0.6%
1.2%
0.00
8.1%
2.7%
4.7%
0.01
10.5%
5.9%
9.5%
0.01
14.5%
8.5%
13.3%
2.77%
2.74% 2.50% 2.37% 2.40%
0.85%
0.11% 0.78% 0.69% 0.75%
3.52%
2.79% 3.25% 3.03% 3.13%
75.95% 96.09% 76.09% 77.25% 76.02%
25.73% 30.84% 24.84% 26.08% 26.12%
-1.67% -26.93% -0.93% -3.33% -2.14%
FY10A
FY11A
FY12E
FY13E
FY14E
53.3%
0.0
-
66.4%
0.0
-
54.9%
0.0
-
57.4%
0.0
-
55.8%
0.0
-
113.1%
23.6%
64.3%
61.8%
-
113.3% 109.2% 108.3% 107.5%

26.2% 27.9% 28.3% 28.2%
64.2% 61.9% 61.5% 61.9%
61.0% 61.2% 61.4% 62.4%
-
4.6%
7.6%
1.9%
60.9%
119,844
-3.3%
7.7%
10.2%
5.2%
6.2%
6.3%
5.9%
8.5% 10.4% 10.0%
8.9%
2.3%
2.2%
1.5%
1.1%
61.7% 60.1% 62.8% 65.7%
114,019 109,458 112,742 118,379
-4.9% -4.0%
3.0%
5.0%
7.8%
9.2%
9.5%
9.8%
10.4% 11.1% 11.4% 11.6%
259
Adrian Mowat
(852) 2800-8599

21 November 2012
Far EasTone Telecommunications
Overweight
www.fetnet.net/cs/Satellite/eCorporate/ecoHome
Company overview
Far EasTone (FET) is the third largest wireless operator in Taiwan with a subscriber
market share of 23% as of Oct-12 according to NCC statistics. It also has a fixed-line
operation focusing on the enterprise market, which contributes over 10% of the group's
total revenue. Douglas Hsus Far Eastern Group is FETs largest shareholder with a
45% stake. NTT DOCOMO also holds a 4.7% stake in the company.
Investment case
FET is our top pick in the Taiwan Telecoms sector for several reasons- 1) we believe it
is best positioned to benefit from the smartphone proliferation trend as over 80% of
revenue comes from mobile business, vs. Taiwan Mobile 70% and Chunghwa Telecom
50%. The management team has a good track record of executing its smartphone
strategies, which is reflected in FETs best mobile ARPU and margin trend among the
biggest three operators. We expect FET to maintain its leadership on the mobile front
and to continue gaining mobile service revenue market share in 2013; 2) the fixed-line
business has emerged as another growth driver thanks to enterprise market share gain
and the business nature of high operating leverage; and 3) we see upside risk to
dividend payout ratio (JPMe 110% vs. company guidance 100%+ and consensus 97%).
We estimate EPS will see a CAGR of 14% for 2012-2014E with a dividend yield of 68% based on current share price.
iPhone 5 related subsidy spending is a swing factor for 2013E earnings.
Our Dec-13 PT of NT$80 is based upon a 10-year DCF model. We assume a WACC of
8.3% derived from a cost of equity of 8.9%, cost of debt of 2.5%, equity risk premium
assumption of 6.5% and a risk free rate of 3.0% with 8% target gearing. It implies an
8.5x 2013E EV/EBITDA and 18.3x 2013E P/E vs. the current 7.2x EV/EBITDA and
15.5x P/E. The key downside risks include a failure to maintain mobile ARPU growth,
a slowdown in smartphone growth momentum and irrational market competition.
Taiwan
Far EasTone Telecommunications Co., Ltd. (Reuters: 4904.TW, Bloomberg: 4904 TT)
NT$ in mn, year-end Dec
FY10A
FY11A
FY12E
FY13E
FY14E
Revenue (NT$ mn)
63,436
75,749
87,014
96,278
103,262
EBITDA (NT$ mn)
22,028
22,483
25,558
28,956
31,620
EBITDA growth (%)
-8.0%
2.1%
13.7%
13.3%
9.2%
Net Profit (NT$ mn)
8,849
8,881
11,477
14,209
16,039
EPS (NT$)
2.72
2.73
3.52
4.36
4.92
EPS growth (%)
-3.7%
0.4%
29.2%
23.8%
12.9%
DPS (NT$)
2.50
3.00
3.88
4.80
5.42
EV/EBITDA (x)
9.6
9.4
8.1
7.0
6.3
P/E
25.0
24.9
19.2
15.5
13.8
Dividend Yield
3.7%
4.4%
5.7%
7.1%
8.0%
FCF to mkt cap (%)
6.6%
6.3%
5.9%
7.9%
8.5%
260
Price: NT$67.80
Telecommunications
Lucy LiuAC
(852) 2800-8566
lucy.y.liu@jpmorgan.com
Bloomberg JPMA LLIU <GO>
Limited
75
NT$
65
55
45
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
19.2%
16.9%
1m
-5.7%
-0.7%
3m
-7.9%
-7.2%
Source: Bloomberg.
Company Data
52-wk range (NT$)
Mkt cap (NT$ mn)
Mkt cap ($ mn)
Shares O/S (mn)
Free float (%)
3-mth avg trading value:
- Local (NT$ mn)
TSE
Exchange Rate
Price (NT$)
Date Of Price
75.60 - 52.60
220,926
7,575
3,259
53.0%
5.51
394.45
7,243
29.16
67.80
06 Nov 12
12m
23.0%
28.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
Far EasTone Telecom: Summary of Financials

NT$ in millions, year end Dec
Revenue
EBITDA
Depreciation
Amortization
EBIT
Interest income
Interest expense
Associates
Profit before tax
Tax
Net profit - reported
Net profit - adjusted
FY10
63,436
22,028
-10,036
-87
11,174
84
-47
10,966
-2,102
8,849
8,849
FY11
75,749
22,483
-10,048
-188
11,517
128
-61
10,875
-1,948
8,881
8,881
FY12E
87,014
25,558
-9,734
-175
14,919
158
-59
14,134
-2,558
11,477
11,477
Shares Outstanding
EPS (NT$) (Reported)
EPS (Adjusted)
DPS (NT$)
DPS payout ratio
3,259 3,259 3,259

2.72
2.73
3.52
2.72
2.73
3.52
2.50
3.00
3.88
92.1% 111.3% 110.1%
Revenue growth
EBITDA growth
Net profit growth
EPS growth
DPS growth
5.6%
-8.3%
-4.1%
(3.7%)
-10.7%
Ratio Analysis
%, year end Dec
EBITDA margin
FCF margin
ROE
ROC
ROA
Tax rate
Capex to sales
Debt/Capital
Net debt or (cash) to equity
Interest cover (x)
FY10 FY11 FY12E

34.7% 29.7% 29.4%
22.9% 18.5% 14.9%
12.1% 12.1% 15.6%
14.8% 15.0% 19.7%
9.6%
9.2% 11.9%
19.2% 17.9% 18.1%
-12.9% -11.4% -10.4%
4.8%
4.1%
1.7%
-7.4% -9.3% -14.3%
-
19.4%
2.1%
0.4%
0.4%
20.0%
14.9%
14.1%
29.2%
29.2%
29.2%
Balance Sheet statement

FY13E FY14E NT$ in millions, year end Dec
96,278 103,262 Cash and equivalents
28,956 31,620 Accounts receivable
-10,111 -10,617 Others
-175
-175 Total Current assets
17,939 20,097
192
288 ST loans
-59
-59 Others
- Total current liabilities
17,498 19,753
-3,167 -3,575 Net working capital
14,209 16,039
14,209 16,039 Net fixed assets
Other long term assets
3,259
3,259 Total non-current assets
4.36
4.92
4.36
4.92 Total Assets
4.80
5.42
110.1% 110.1% Long-term debt
Other liabilities
10.6%
7.3% Total Liabilities
13.7%
9.4%
23.8% 12.9% Shareholders' equity
23.8% 12.9%
23.8% 12.9% Total liabilities and equity
Net debt/(cash)
Book value per share
Cash flow statement
30.1% 30.6% Cash flow from operations
18.2% 18.3% Capex
18.9% 21.0% Cash flow from other investing
23.1% 25.3% Cash flow from financing
14.3% 15.5%
18.1% 18.1% Change in cash for year
-10.4% -10.6%
3.9%
3.9% Beginning cash
-19.6% -22.9% Closing cash
-
FY10 FY11 FY12E

9,162 9,906 11,977
6,225 6,641 7,629
6,904 6,636 6,756
23,315 25,168 28,642
FY13E
18,010
8,441
6,855
35,828
FY14E
20,665
9,053
6,930
39,353
3,739 2,946 1,146

14,133 11,743 13,965
22,139 20,085 19,637
2,946
15,241
23,484
2,946
16,316
25,253
9,005
12,344
14,100
49,469 47,279 45,168

6,697 6,418 7,028
74,333 70,263 68,032
42,962
8,320
66,387
41,171
9,624
65,169
1,176
5,082
97,647 95,431 96,673 102,215 104,522

6
171
168
1,950 2,398 2,398
24,094 22,654 22,204
165
2,398
26,047
165
2,398
27,816
73,553 72,776 74,469
76,168
76,705
97,647 95,431 96,673 102,215 104,522

-5,417 -6,789 -10,663 -14,899 -17,554
22.57 22.33 22.85
23.38
23.54
22,694 22,646 22,007 27,519 29,813
-8,183 -8,642 -9,049 -10,013 -10,946
-15,882
97
-820
-760
-710
-3,779 -13,406 -10,066 -10,714 -15,502
-5,161
14,323
9,162
744
2,071
6,033
2,655
9,162 9,906
9,906 11,977
11,977
18,010
18,010
20,665
261
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
Fibria
Price: R$19.24
www.fibria.com.br
End Date: Dec 2013
Company overview
The worlds leader in the production of eucalyptus pulp, Fibria has annual production
capacity of 5.25 million tons divided among four mills (including a joint venture with
Stora Enso). Fibria has a total forest base covering 958,000 hectares, of which 336,000
are native forests that have been set aside for environmental conservation.
Investment case
Market drivers: (1) Improvement in Chinese demand (we currently forecast Chinese
demand to increase 8% in 2013E); (2) new capacity shut downs. Industry drivers: (1)
Inclusion of Pulp & Paper sector in Reintegratax refunds to exporterswhich the
company guides for ~R$100m cash impact (we estimate ~+R$0.4/share or +2-3%
upside to current prices). Company-specific drivers: (1) continuation of the decline
trend of cash cogs per unit (in real terms); (2) non-core asset divestments.
Responding to higher pulp prices in 2Q and 3Q, Fibria has outperformed iBovespa by
20% in the past three months and is currently trading at 8.3x 12M forward
EV/EBITDA, in line with its five-year historical average. We believe the scope of a rerating would be limited (targeting 9x EV/EBITDA) given the challenging pricing
outlook in 2013. However, Fibrias disciplined approach toward capacity growth and
focus on deleveraging stands out. Finally, we estimate that the company should
generate a 5.3% FCF yield in 2013.
Brazil
Forestry, Pulp & Paper
Lucas FerreiraAC
(55-11) 4950-3629
20
18
R$ 16
14
12
Nov-11
Feb-12
May-12
Aug-12
Nov-12
FIBR3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Earnings risk are mostly market related, such as (1) weaker then expected demand,
which coupled with increasing capacity can drive prices lower; (2) stronger BRL.
At our Dec 2013 PT of R$19 ($10/ADR), Fibria trades at 8.4x, slightly above the fiveyear average of 8.3x. Our price target is a combination of 50% DCF (WACC of 8.5%)
and 50% target EV/EBITDA of 9x. Key upside and downside risks to our case are (1)
pulp prices; (2) devaluation (upside) or appreciation (downside) of BRL.
Fibria Celulose S.A. (FIBR3.SA;FIBR3 BZ)

FYE Dec
EBITDA (R$ mn)
FY
Revenues FY (R$ mn)
2011A
2012E
2013E
1,980
2,131
(1.85)
(1.51)
5,855
2,135
2,202
(0.42)
(0.56)
5,936
2,088
2,225
0.07
0.39
5,983
Source: Company data, Bloomberg, J.P. Morgan estimates. 'Bloomberg' above denotes Bloomberg consensus
estimates.
262
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
19.24
14 Nov 12
19.94 - 12.34
10,675.58
Dec
554
19.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Fibria: Summary of Financials

Income Statement
Revenues
Cost of goods sold
SG&A
Depreciation
EBITDA
EBITDA margin
Financial income
Financial expense
FX & Monetary gains (losses)
Other Nonoperarting income
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net income
Net income margin
EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth
Capex
Free cash flow
Dividends
Capex/depreciation
CAPEX/sales
Working capital
Shipments
Avg price/t
Cash COGS/t
EBITDA/t
Shipments chg
Avg price/t chg
Cash COGS/t chg
EBITDA/t chg
Capex
Maintenance
Expansion
FY11A
5,855
605
1,839
1,980
33.8%
(96)
(859)
(914)
0
0
(865)
(1.85)
FY11A
1,243
(218)
1,808
-
FY12E
5,936
599
1,792
2,135
36.0%
12
(922)
(637)
0
0
(221)
(0.42)
FY12E
1,109
49
717
-
FY13E
5,983
642
1,775
2,088
34.9%
255
(782)
186
0
0
40
0.07
FY13E
1,103
(118)
511
-
FY14E
6,045
665
1,775
1,948
32.2%
263
(790)
(153)
0
0
(552)
(1.00)
FY14E
1,109
(62)
189
-
FY15E
6,503
707
1,775
2,179
33.5%
480
(1,030)
(150)
0
0
(336)
(0.61)
FY15E
1,100
11
334
-
1,243
-
1,109
-
1,103
-
1,109
-
1,100
-
Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other assets
Total assets
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority interest
Net debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
EV/tonne
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
ROIC
Shares
ADRs
FY11A
2,060
945
1,179
436
27,854
326
13,315
14,511
-
FY12E
3,422
1,091
1,282
382
29,511
475
13,364
15,587
-
FY13E
4,380
984
1,282
382
29,822
475
13,704
15,431
-
FY14E
7,999
994
1,256
368
32,885
480
17,166
15,031
-
FY15E
8,510
1,069
1,256
368
32,941
516
17,408
14,845
-
9,264
35.8%
4.7
FY11A
9.4
NM
19.4%
1370.0%
(6.0%)
(1.7%)
-
7,533
28.3%
3.5
FY12E
8.0
NM
7.5%
0.0%
(1.4%)
0.9%
-
6,904
25.8%
3.3
FY13E
8.1
264.6
5.1%
52.3%
0.3%
19.0%
-
6,715
22.5%
3.4
FY14E
8.6
NM
1.9%
0.0%
(3.7%)
(0.1%)
-
6,381
21.4%
2.9
FY15E
7.5
NM
3.3%
0.0%
(2.3%)
0.9%
-
DCF
WACC
Perpetual Growth
Cost of equity
Cost of debt

263
Adrian Mowat
(852) 2800-8599

21 November 2012
First Gulf Bank
Overweight
www.fgb.ae
Price Target: Dh13.5
Company overview
First Gulf Bank is #2 UAE bank by market value and #4 by assets with UAE loans and
deposits market share of c.9%-10% backed by around 20 branches locally; FTE are
c.900, apart from c.1,500 outsourced sales agents for retail products. FGB is majority
(c.67%) owned by the Abu Dhabi ruling family members and there is a 25% foreign
ownership limit in the stock (actual foreign ownership c.13.4%).
United Arab Emirates

Banks
Price: Dh10.50
Naresh BilandaniAC
(971-44) 281 763
naresh.n.bilandani@jpmorgan.com
Bloomberg JPMA BILANDANI<GO>
JPMorgan Chase Bank, N.A., Dubai branch
Investment case
We see FGBs current valuation (c.1.3x book; 19% 13E tangible ROE improving to
20% 14E) not fully pricing in scope for attractive dividends and we recommend that
investors add shares ahead of year-end to enjoy a c.7% div yield (in $-pegged currency)
that we see in FGB (expected announcement with FY results end-Jan; ex-div midFeb/early Mar). We have a high conviction that dividend payout will be in line with our
estimates, in keeping with FGB's strong shareholder value-driven strategic focus.
22
18
Dh 14
10
6
Nov-11

FGB possesses a solid Tier I >18% 12E (o/w c.14% core) and we expect FGB to pay
out c.50% net income as dividends over 12E-14E to optimize its capital structure and
thereby improve tangible ROE from 17% 11A steadily to 20% 14E on c.13%yoy avg.
net income growth 12E-14E. Core profits (incl. NIM, >3.5% & fees, >0.8% of assets)
remain better vs. UAE peers and FGBs C/I ratio (c.20%) remains among the lowest in
CEEMEA banks; asset quality in FGB has continued to stabilize over the last 4-6qtrs.
Abs
Feb-12
YTD
-31.3%
May-12
1m
5.5%
Aug-12
Nov-12
3m
15.0%
12m
-30.1%
Source: Bloomberg.

Key earnings risks to UAE banks and FGB in 2013 would come from higher regulatory
pressure than currently anticipated, especially. in areas of liquidity management under
Basel III and higher provisioning charges.
Our Dec-13E, Gordon Growth based PT of AED13.5/sh for FGB offers c.30% upside
while the shares trade attractively (at 1.3x13E book, 6.8x13E earnings) vs. CEEMEA
banks for this return level. Key risks that we see to our est. are local economic growth
coming in worse than expected resulting in a lower than expected loan growth, higher
than expected NPLs resulting in provisioning charges coming in worse than our
estimates, increasing competition putting pressure on core revenues incl. margins &
fees and regulatory risks. FGB is on our CEEMEA Analyst Focus List.
First Gulf Bank (FGB.AD;FGB UH)
FYE Dec
Adj. EPS FY (Dh)
Adj P/E FY
P/BV FY
P/NAV FY
Gross Yield FY
Tier One Ratio FY
Pre-provision operating profit FY (Dh mn)
Net Attributable Income FY (Dh mn)
2011A
2.37
4.4
0.6
0.7
9.5%
18.5%
5,266
3,707
264
2012E
1.34
7.8
1.1
1.5
6.4%
18.1%
5,659
4,021
2013E
1.53
6.9
1.0
1.3
7.3%
17.4%
6,168
4,579
2014E
1.77
5.9
0.9
1.2
8.4%
17.2%
6,730
5,317
Company Data
Price (Dh)
Date Of Price
Price Target (Dh)
52-week Range (Dh)
Mkt Cap (Dh bn)
Shares O/S (mn)
Mkt Cap ($ bn)
10.50
02-Nov-12
13.50
31 Dec 13
10.98 - 7.08
31.5
3,000
8.6

21 November 2012
Adrian Mowat
(852) 2800-8599
First Gulf Bank: Summary of Financials

Dh in millions, year end Dec
Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Core Operating Revenues
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
Dh in millions, year end Dec
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other Interest Bearing Liabilities
Other liabilities
Minorities
FY10A
FY11A
FY12E
FY13E
4,257
11.0%
2,086
1,487
23.1%
161
-59.7%
438
6,343
3.4%
1,060
4.1%
61
5,221
3.3%
1,639
3,544
7.0%
0
0.0%
(124)
3,420
5,079
19.3%
1,412
1,212
-18.5%
106
-34.2%
93
6,490
2.3%
1,154
8.8%
70
5,266
0.9%
1,553
3,706
4.6%
0
0.0%
2
3,707
5,417
6.7%
1,610
1,348
11.2%
115
8.1%
147
7,026
8.3%
1,287
11.5%
81
5,659
7.4%
1,651
4,021
8.5%
0
0.0%
0
4,021
5,927
9.4%
1,763
1,478
9.7%
127
10.5%
158
7,690
9.4%
1,428
11.0%
93
6,168
9.0%
1,605
4,579
13.9%
0
0.0%
0
4,579
FY10A
FY11A
FY12E
FY13E
95,628 104,720 115,225 127,270

5.8%
9.5% 10.0% 10.5%
3,295
3,622
4,815
5,410
33,782 40,602 44,362 46,346
42.8% 20.2%
9.3%
4.5%
121,726 137,366 152,454 166,601
140,758 157,480 172,383 187,019
Ratio Analysis
FY14E Dh in millions, year end Dec
Per Share Data
6,529 EPSAdjusted
10.1%
% Change Y/Y
1,887 DPS
1,586
% Change Y/Y
7.3% Dividend yield
132 Payout ratio
4.4% BV per share
169 NAV per share
8,416 Shares outstanding
9.4%
- Return ratios
1,578 RoRWA
10.5% Pre-tax ROE
107 ROE
6,730 RoNAV
9.1%
1,435 Revenues
5,317 NIM (NII / RWA)
16.1% Non-IR / average assets
0 Total rev / average assets
0.0% NII / Total revenues
0 Fees / Total revenues
5,317 Trading / Total revenues
FY14E Dh in millions, year end Dec

Cost ratios
11.4% Cost / assets
5,864
48,409
4.5% Balance Sheet Gearing
181,910 Loan / deposit
- Investments / assets
- Loan / assets
LT Debt / liabilities
98,742 103,474 109,077 117,142 127,941 Asset Quality / Capital

14.3%
4.8%
5.4%
7.4%
9.2% Loan loss reserves / loans
0
0
0
0
0 NPLs / loans
1,527
8,247 12,371 15,464 19,330 LLP / RWA
11,724 15,082 17,495 17,495 17,495 Loan loss reserves / NPLs
105,088 119,398 132,874 144,523 157,434 Tangible Equity/Assets
- RWAs
24,126 26,651 27,612 30,181 33,208
% YoY change
505
116
116
116
116 Core Tier 1
140,758 157,480 172,383 187,019 204,140 Total Tier 1
Capital Adequacy Ratio
FY10A
FY11A
FY12E
FY13E
FY14E
2.10
2.37
1.34
1.53
1.77
-19.9% 12.9% -43.4% 13.9% 16.1%
0.65
1.00
0.67
0.76
0.89
32.9% 52.8% (33.0%) 13.9% 16.1%
6.6% 10.0%
6.7%
7.7%
8.9%
31.2% 42.2% 50.0% 50.0% 50.0%
18
18
9
10
11
14.0
14.1
7.2
8.0
8.8
1,375.0 1,500.0 3,000.0 3,000.0 3,000.0
0.03
15.2%
14.7%
17.2%
0.03
14.6%
14.6%
17.2%
0.03
14.8%
14.8%
17.7%
0.03
15.8%
15.8%
19.1%
0.03
16.8%
16.8%
20.1%
3.53% 3.74% 3.61% 3.56% 3.53%

1.57% 0.95% 0.98% 0.98% 0.97%
4.76% 4.35% 4.26% 4.28% 4.30%
67.12% 78.25% 77.09% 77.08% 77.57%
23.44% 18.68% 19.18% 19.22% 18.85%
2.54% 1.63% 1.63% 1.65% 1.57%
FY10A
FY11A
FY12E
FY13E
FY14E
17.7%
0.0
18.9%
0.0
19.5%
0.0
19.8%
0.0
20.0%
0.0
96.8% 101.2% 105.6% 108.6% 110.8%

10.6% 11.9% 12.1% 11.5% 11.0%
67.9% 66.5% 66.8% 68.1% 69.5%
88.2% 81.6% 78.5% 78.0% 77.7%
0.0%
0.0%
0.0%
0.0%
0.0%
3.4%
3.5%
4.2%
4.3%
4.2%
3.7%
3.4%
3.8%
3.7%
3.5%
2.7%
2.7%
3.2%
3.2%
3.2%
89.4% 98.4% 106.0% 111.3% 112.6%
120,659 135,980 150,208 166,541 184,781
4.3% 12.7% 10.5% 10.9% 11.0%
15.0% 14.8% 13.7% 13.7% 13.8%
19.6% 18.5% 18.1% 17.4% 17.2%
22.9% 21.5% 20.2% 18.8% 18.2%
265
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Fleury
Price: R$22.60
www.fleury.com.br
End Date: Dec 2013
Company overview
Fleury is the second largest medical diagnostic laboratory in Brazil. The group operates
labs that offer medical testing services in a variety of Brazilian states. As part of the
groups recent strategy of diversification, it has increasingly focused on preventive and
therapeutic medicine. The group is the market leader in individualized health
assessment programs for executives.
Brazil
Latin American Retail and
Healthcare
Andrea Teixeira, CFA
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
Investment case
The key triggers for the stock would be (1) sales growth acceleration derived from a
better than expected macro environment and acceleration of floor space growth and (2)
margin improvement.
Fleury trades at 17.9x 2013E P/E, a 20% discount to Neutral-rated DASA, with better
earnings visibility, and more stable margins than DASA (which is in the middle of a
restructuring). We believe most of the upside for the stock should come from
acceleration in organic sales growth through 2013.
Bloomberg JPMA TEIXEIRA <GO>

26
R$
24
22
20
Nov-11
Feb-12
May-12
Aug-12
Nov-12
FLRY3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

We see limited room for upward revisions to 2013 earnings. However, we see upside
risk to consensus for the A+ brand (focused on middle income segment), regarding its
long-term growth potential.
We rate Fleury OW and have an R$31 PT for Dec 2013. Our price target is based on a
10-year discounted free cash flow to equity, using an 11.7% cost of equity in nominal
reais and a 6.0% perpetuity growth rate The key risks of not performing well would be
if sales growth in Brazil does not accelerate, margins deteriorate, and if the company
does not accelerate organic floor space expansion.
Fleury (FLRY3.SA;FLRY3 BZ)

FYE Dec
Adj. EPS (R$)
FY
2011A
2012E
2013E
1.01
0.86
0.93
0.85
1.19
1.25
Source: Company data, Bloomberg, J.P. Morgan estimates. * Adj. P/E includes goodwill tax shield
266
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
22.60
14 Nov 12
27.17 - 20.45
3,639.55
Dec
156
31.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Fleury: Summary of Financials

Income Statement
Revenues
Cost of Services
SG&A
EBIT Margin
Depreciation
EBITDA
EBITDA margin
Financial income
Financial expense
Equity income
Taxes
Minority interest
Extraordinary
Adjusted Net Income
Net income margin
Technical Reserve Provisions
Goodwill Amortisation
Adj.EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth
FY11A
1,126
(733)
(226)
141
12.5%
59
261
23.2%
66
0
(33)
151
13.4%
0
1.01
29.2%
29.4%
(0.3%)
-
FY12E
1,488
(1,097)
(159)
227
15.3%
97
335
22.5%
47
1
(28)
198
13.3%
0
0.93
32.2%
28.4%
31.6%
-
FY13E
1,712
(1,259)
(184)
268
15.6%
136
404
23.6%
53
1
(33)
260
15.2%
0
1.19
15.0%
20.7%
31.0%
-
FY14E
1,916
(1,398)
(204)
312
16.3%
147
459
24.0%
58
1
(41)
314
16.4%
0
1.54
11.9%
13.6%
21.0%
-
FY15E
-

Capex
Free cash flow
Dividends
Capex/depreciation
CAPEX/sales
Working capital
FY11A
181
83
(182)
27
3.1
16.1%
255
22.7%
FY12E
148
34
(46)
16
1.5
9.9%
290
19.5%
FY13E
169
40
(7)
68
1.2
9.9%
330
19.3%
FY14E
182
40
42
139
1.2
9.5%
370
19.3%
FY15E
-
181
148
169
182
Capex

Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other assets
Total assets
Technical Reserves
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority Interests
Net debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
Valuation, Macro
Adj.P/E
EV/EBITDA
P/BV
P/S
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
ROIC
Shares
FY11A
486
313
18
FY12E
528
362
22
FY13E
572
416
25
FY14E
590
466
28
FY15E
-
57
376
108
2,832
36
75
268
600
114
1,200
0
1,632
2,832
67
421
126
3,029
90
94
334
537
133
1,275
0
1,754
3,029
77
454
145
3,117
90
111
383
417
153
1,246
0
1,871
3,117
86
489
163
3,175
90
123
426
297
171
1,203
0
1,972
3,175
150
6.6%
28.0%
0.6
FY11A
22.6
18.7
2.3
3.3
(4.7%)
0.7%
10.4%
13.4%
13.0%
156
99
4.2%
26.3%
0.3
FY12E
24.6
11.3
2.1
2.5
(1.2%)
0.5%
8.4%
13.3%
19.1%
156
(65)
(2.7%)
21.3%
(0.2)
FY13E
19.3
8.7
2.0
2.2
(0.2%)
1.9%
10.2%
15.2%
23.1%
156
(203)
(8.6%)
16.4%
(0.4)
FY14E
14.9
7.5
1.9
2.0
1.2%
3.9%
12.5%
16.4%
27.5%
156
FY15E
-
267
Adrian Mowat
(852) 2800-8599

21 November 2012
Federal Grid Company (FSK)
Overweight
www.fsk-ees.ru/
Company overview
Federal Grid Company (FSK) transmits electricity, operating power grid equipment in
73 regions of Russia. FSK was the first power grid company which fully switched to
the RAB regulation back in 2010. The Russian government holds ~79.55% of the
company.
Russia Electric Utilities
Price: $0.00651
Sergey V ArininAC
(7-495) 967 7031
sergey.v.arinin@jpmorgan.com
Bloomberg JPMA ARININ <GO>
Investment case
FSK underperformed the market and the sector in 1H12 on a collapse in confidence
and ongoing tariff limitations by the government during the elections. The revised tariff
growth was a disappointment and the uncertainty with the potential merger with MRSK
Holding raised questions on the companys strategy. The stock is down by 27% YTD
(vs. -17% for the sector and +3% for the market). However there is much more clarity
on tariffs right now and the controversial FSK/MRSK merger has been cancelled which
may result in a recovery of investors interest in the story. We believe that the budget
deficit may put FSK privatization back on the agenda of the government which may
result in an improvement in corporate governance and regulation visibility. Currently
the government aims to reduce its stake in FSK to 75% by 2016.
Nadezhda Timokhova, CFA

(7-495) 967-7037
nadezhda.a.timokhova@jpmorgan.com
Price Performance
0.014
0.012
$
0.010
0.008
0.006
0.004
Jun-11

We believe that demand for electricity is relatively inelastic, which accompanied with
the mid-term tariff growth clarity for FSK makes the company well positioned for the
flat economy growth. In addition FSK is inexpensive, based on relative valuations its
2013E EV/EBITDA of 5.2x is at 38% discount to its international peers, on our
estimates.
Abs
Sep-11
YTD
-43.9%
Dec-11
1m
4.5%
Mar-12
Jun-12
3m
-48.8%
12m
-57.3%
Source: Bloomberg.

FSKs mid-term tariff growth is determined by RAB parameters so we see a limited
risk for top-line. However the companys OPEX underperformance may have a
negative effect on the bottom line. In addition, the delay in capital projects
commissioning may also have negative impact on earnings.
Our end-2013 RAB-based price target is $0.00878 /share. Key downside risks to our
rating and price target: uncertain M&A prospects and changes in management.
Federal Grid Company (FEES.RTS;FEES RU)
FYE Dec
2011A
Adj. EPS FY ($)
0.00134
Revenue FY ($ mn)
4,745
EBITDA FY ($ mn)
2,722
EBITDA margin FY
57.4%
EBIT FY ($ mn)
1,564
NI (attr.) FY ($ mn)
1,671
EV/EBITDA FY
3.6
Adj P/E FY
4.9
2012E
0.00059
4,523
2,681
59.3%
1,200
733
4.9
11.1
268
2013E
0.00064
5,181
3,182
61.4%
1,511
801
4.8
10.2
2014E
0.00066
5,624
3,548
63.1%
1,727
822
4.7
9.9
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
0.00651
02-Nov-12
0.00878
31 Dec 13
0.01200 - 0.00555
8.1
1,246,659

21 November 2012
Adrian Mowat
(852) 2800-8599
FSK: Summary of Financials

Sales
EBITDA
Depreciation & Amortisation
Operating Profit
Other income
Net Interest
Profit before tax
Income Tax
Minority Interests
Discontinued items
Attributable Net income
Cashflow statement
Profit before tax
DD&A
Other items
Changes in Working capital
Capex & Acquisitions
Other investing cash flows
Cash from investing
Dividends paid
Cash from financing
Free Cash flow
Balance Sheet
Net fixed assets
Current assets
Total assets
Total Debt
Shareholders' equity total
Minorities
Total liabilities
Net debt
FY11
4,745
2,722
1,158
2,603
(591)
125
2,137
472
(5)
1,671
FY12E
4,523
2,681
1,481
1,200
0
(285)
916
183
0
733
FY13E
5,181
3,182
1,671
1,511
0
(511)
1,001
200
0
801
FY14E FY15E
5,624 6,323
3,548 4,134
1,821 1,963
1,727 2,171
0
0
(701)
(813)
1,027 1,358
205
272
0
0
822 1,086
FY11
2,137
1,158
-235
(152)
2,334
(5,225)
984
-4,241
2,317
(1,907)
FY12E
916
1,481
-162
(369)
2,149
(5,311)
1,206
-4,105
1,712
(1,956)
FY13E
1,001
1,671
-177
(272)
2,733
(4,512)
0
-4,512
1,864
(1,779)
FY14E FY15E
1,027 1,358
1,821 1,963
-180
-243
(258)
(230)
3,110 3,661
(3,535) (3,526)
0
0
-3,535 -3,526
500
-37
(425)
135
FY11
30,702
2,772
36,174
4,128
27,918
25
8,255
2,650
FY12E
35,870
2,298
40,500
6,372
29,923
26
10,577
5,748
FY13E
38,520
2,572
43,412
8,884
30,391
26
13,022
8,178
FY14E
39,632
2,783
44,700
10,179
30,503
25
14,197
9,410
FY15E
41,160
3,104
46,547
11,193
31,316
25
15,231
10,326
Valuation ratios
P/E adjusted
P/E (reported)
Price to book value
EV/EBITDA
EV/EBIT
Dividend yield (%)
FY11
4.9
4.9
0.3
3.6
6.3
0.0%
FY12E
11.1
11.1
0.3
4.9
10.8
1.0%
FY13E
10.2
10.2
0.3
4.8
10.2
0.9%
FY14E
9.9
9.9
0.3
4.7
9.6
0.9%
FY15E
7.5
7.5
0.3
4.3
8.1
0.9%
FY11
0.00134
0.00
FY12E
0.00059
0.00
FY13E
0.00064
0.00
FY14E
0.00066
0.00
FY15E
0.00087
0.00
FY12E
59.3%
26.5%
-53.9%
-56.1%
2.5%
1.8%
19.2%
2.1
FY13E
61.4%
29.2%
25.9%
9.3%
2.6%
1.8%
26.9%
2.6
FY14E
63.1%
30.7%
14.3%
2.6%
2.7%
1.8%
30.8%
2.7
FY15E
65.4%
34.3%
25.7%
32.2%
3.5%
2.3%
32.9%
2.5
Per share
Adjusted EPS
Reported EPS
Performance, leverage and return ratios

%
FY11
EBITDA margin
57.4%
EBIT margin
33.0%
Operating profit growth y-o-y
166.1%
Net Income growth y-o-y
166.9%
Reported ROE
6.0%
ROA
4.6%
Net debt/ (equity+minorities) (%)
9.5%
Net debt /EBITDA (%)
1.0
Market valuation
in millions
FY11
Number of Shares (million)
1,255,948.1
EV
9,905
FY12E
FY13E
FY14E
FY15E
1,260,386.7 1,260,386.7 1,260,386.7 1,260,386.7
13,004
15,435
16,666
17,582
269
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.fubon.com
Company overview
Fubon Financial Holdings (Fubon) is principally engaged in banking, life insurance,
securities, investment consulting, and asset management sectors. Fubon has a relatively
balanced business mix between life/non-life insurance and banking segments. Fubon
Bank (HK) was delisted and became a 100% subsidiary of Fubon in 1Q11. Its 19.99%
stake in Xiamen City Bank is directly owned by the holding parent. Fubon is also
interested in acquiring another small China bank to expand its presence.
Taiwan
Insurance
Investment case
Fubon has a stronger capital base to support both insurance and bank for acquisition
opportunities without too much capital raising concerns. Fubon brokerage and
insurance will be the direct beneficiary of mild equity market recovery. Fubon life
could be the main driver in 2013 as investment yield gradually increases from a 2012
low, due to lower FX hedging cost and better fixed income outlook.
Price: NT$30.70

Fubon share price underperformed the broader Taiwan index by 3.5% year to October
due to concerns over its investment portfolio. The market remains concerned about the
EUR fiscal crisis and doesn't factor in the possibility of recovery. Fubon cut down its
EUR zone fixed income investment from 29% in 2011 to 20% in 3Q2012 of total
overseas pool.
James WuAC
(886-2) 2725- 9870
james.yh.wu@jpmorgan.com
Bloomberg JPMA JWU<GO>
38
34
NT$
30
26
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12

TSE (rebased)
Abs
Rel
YTD
-0.9%
-7.0%
1m
0.0%
4.9%
3m
4.6%
-0.3%
Source: Bloomberg.

A prolonged EUR fiscal crisis may further push down the benchmark interest rate and
fixed income yield. Investment yield of the life insurance business may decrease as a
result. A volatile equity market may also cause unrealized mark-to-market loss.
Overpaying for a China acquisition could be another short-term risk.
Dec-13 price target is NT$40 (SOTP-based). Downside risks to our PT: 1) prolonged
economic slowdown drive down interest rate; 2) mark-to-market losses on equity
investments; and 3) M&A overpaying risk for China acquisition.
Fubon Financial Holdings (Reuters: 2881.TW, Bloomberg: 2881 TT)
Year-end Dec (NT$ in mn)
FY10A
FY11A
FY12E
Operating Profit (NT$ mn)
21,770
34,507
28,492
Net Profit (NT$ mn)
19,905
30,543
25,753
EPS (NT$)
2.25
3.21
2.70
DPS (NT$)
0.97
1.28
1.08
EPS Growth
-5.3%
42.5%
-15.7%
ROE
9.3%
13.5%
10.7%
P/E
13.6
9.6
11.4
BVPS (NT$)
25.40
25.97
25.88
P/BV
1.2
1.2
1.2
Div. Yield
3.2%
4.2%
3.5%
270
FY13E
30,046
27,174
2.85
1.14
5.5%
10.7%
10.8
27.44
1.1
3.7%
FY14E
32,733
29,579
3.11
0.00
8.8%
11.0%
9.9
29.19
1.1
0.0%
Company Data
52-wk range (NT$)
Market cap (NT$ mn)
Market cap ($ mn)
Fiscal Year End
Price (NT$)
Date Of Price
Avg daily value (NT$ mn)
Avg daily vol (mn)
TSE
Exchange Rate
35.14 - 26.29
290,540
9,937
9,464
Dec
30.70
05-Nov-12
1,503.2
51.4
42.3
7,185
29.24
12m
-8.5%
-7.2%

21 November 2012
Adrian Mowat
(852) 2800-8599
Fubon Financial Holdings: Summary of Financials

NT$ in millions, year-end Dec
Income statement - NT$ mn
2010
2011
2012E
2013E
2014E
Growth Rates
NIMs (as % of Avg. IEA)

Avg. IEA/Avg. Assets
1.82%
83.8%
1.52%
1.90%
85.8%
1.63%
2.06%
89.9%
1.85%
2.15%
92.7%
1.99%
2.23%
92.5%
2.06%
Interest Earned
Interest Suspended
Interest Expense
Net Interest Income
57,854
0
-8,235
49,619
68,599
0
-10,868
57,731
79,385
0
-13,917
65,468
89,287
0
-17,039
72,248
101,831
1
-20,141
81,691
Loans
Deposits
Assets
Equity
RWA
Non-Interest Income
Fees
Insurance
Dealing
Other Revenues
Total Revenues
Costs
Pre-Prov. Profits
Provisions
Other Inc/Exp.
Exceptionals
Disposals/ Other income
Pre-tax
Tax
Minorities
Other Distbn.
Attributable Income
26,411
14,608
-4,868
11,731
4,939
76,030
-53,240
22,790
-1,020
0
0
0
21,770
-1,865
0
0
19,905
36,578
14,586
-5,753
15,033
12,713
94,309
-58,742
35,567
-1,060
0
0
0
34,507
-3,964
0
0
30,543
23,220
15,601
-12,727
15,748
4,598
88,688
-60,862
27,826
870
-205
0
0
28,492
-2,739
0
0
25,753
22,521
16,858
-15,746
15,839
5,570
94,769
-63,368
31,401
-1,135
-220
0
0
30,046
-2,872
0
0
27,174
18,171
18,083
-23,869
17,517
6,440
99,863
-65,855
34,007
-1,035
-239
0
0
32,733
-3,155
0
1
29,579
Per Share Data (NT$/ share)
2010
2011
2012E
2013E
2014E
EPS
DPS
Payout
Book Value
2.25
0.97
43%
25.40
8,845
3.38
1.28
38%
27.51
9,024
2.70
1.08
40%
25.88
9,525
2.85
1.14
40%
27.44
9,525
3.11
0.00
0%
29.19
9,525
Key balance sheet - NT$ mn
2010
2011
2012E
2013E
2014E
Net Loans
LLR
Gross Loans
NPLs
Investments
Other Earning Assets
Avg. IEA
Goodwill
Assets
879,441
974,402 1,025,889 1,077,843
-6,615
-9,289
-7,049
-7,485
886,056
983,691 1,032,938 1,085,328
2,998
2,240
3,097
4,109
1,860,853 2,030,594 2,020,733 2,262,677
133,202
111,327
120,886
150,851
2,693,441 3,002,862 3,150,084 3,336,706
9,453
0
0
0
3,450,747 3,618,135 3,464,398 3,785,530
1,133,783
-7,954
1,141,736
5,175
2,510,638
163,893
3,657,561
0
4,140,091
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
1,188,018 1,188,907 1,246,156 1,284,351 1,352,731

78,534
91,143
80,929
83,133
85,476
102,466
85,402
81,732
78,006
73,408
1,310,647 1,367,235 1,387,135 1,427,153 1,478,553
3,255,500 3,534,441 3,541,267 3,624,964 3,962,811
217,390
233,683
246,478
261,351
278,059
853,180
638,189
649,226
673,680
702,798
809,889
745,685
643,708
661,453
688,239
2010
2011
2012E
2013E
2014E
3.2%
6.9%
12.8%
4.3%
11.3%
10.8%
0.1%
4.9%
7.5%
-25.2%
5.3%
4.8%
-4.2%
5.5%
1.7%
5.1%
3.1%
9.3%
6.0%
3.8%
5.2%
5.3%
9.4%
6.4%
4.3%
16.1%
-10.1%
-0.7%
5.4%
15.6%
-12.6%
-74.1%
-1.6%
-0.2%
-5.3%
-50.1%
16.3%
38.5%
-0.2%
24.0%
10.3%
56.1%
3.9%
58.5%
53.4%
50.4%
32.4%
13.4%
-36.5%
7.0%
-6.0%
3.6%
-21.8%
-182.1%
-17.4%
-15.7%
-20.1%
-15.7%
10.4%
-3.0%
8.1%
6.9%
4.1%
12.8%
-230.4%
5.5%
5.5%
5.5%
5.5%
13.1%
-19.3%
7.3%
5.4%
3.9%
8.3%
-8.8%
8.9%
8.8%
8.8%
-100.0%
Balance Sheet Gearing
2010
2011
2012E
2013E
2014E
Loan/Deposits
Investment/Assets
Loan/Assets
Customer deposits/Liab.
LT Debt/Liabilities
74.0%
53.9%
25.5%
36.6%
2.4%
82.0%
56.1%
26.9%
35.0%
2.7%
82.3%
58.3%
29.6%
38.6%
2.5%
83.9%
59.8%
28.5%
36.3%
2.4%
83.8%
60.6%
27.4%
34.9%
2.2%
Loan loss reserves/Loans
NPL/Loans
Coverage
Growth in NPLs
2010
0.75%
0.34%
220.7%
-36.0%
2011
0.94%
0.23%
414.7%
-25.3%
2012E
0.68%
0.30%
227.6%
38.3%
2013E
0.69%
0.38%
182.2%
32.7%
2014E
0.70%
0.45%
153.7%
26.0%
9.18%
13.0%
13.37%
19.6%
13.93%
19.4%
13.63%
18.5%
13.49%
17.9%
2010
2011
2012E
2013E
2014E
1.66%
0.87%
35.7%
2.45%
46.3%
1.13%
0.00%
1.31%
1.66%
60.8%
0.07%
0.37%
-17.2%
0.00%
0.31%
2.46%
6.74%
4.55%
1.65%
0.69%
30.9%
2.24%
48.7%
1.09%
0.00%
1.15%
0.87%
62.8%
0.07%
0.67%
-23.1%
0.00%
0.52%
4.10%
6.64%
7.79%
0.96%
0.80%
47.1%
1.70%
56.4%
0.96%
0.00%
0.74%
0.64%
63.0%
0.10%
0.44%
-7.5%
0.00%
0.40%
4.00%
6.22%
6.49%
0.92%
0.73%
45.9%
1.59%
60.4%
0.96%
0.00%
0.63%
0.23%
61.0%
0.07%
0.56%
-7.9%
0.00%
0.51%
4.11%
5.86%
8.75%
1.00%
0.77%
45.2%
1.70%
54.6%
0.93%
0.00%
0.77%
0.28%
62.1%
0.10%
0.70%
-13.8%
0.00%
0.61%
4.30%
5.93%
10.22%
Net Interest Income

Non-Interest Income
of which Fee Grth
Revenues
Costs
Pre-Tax
Attributable Income
EPS
DPS
Tier 1 Ratio
Total CAR
Bank: Du-Pont Analysis

Non IR/Avg. Assets
Revenue/Assets
Cost/Income
Cost/Assets
of which Goodwill Amort.
Operating ROA
Gross LLP/Loans
Loan/Assets
Pre-Tax ROA
Tax Rate
ROA
RoRWA
Equity/Assets
ROE
Source: Company reports, J.P. Morgan estimates.
271
Adrian Mowat
(852) 2800-8599

21 November 2012
Geely Automobile Holdings Ltd.
Overweight
www.geely.com
Company overview
Geely Automobile (Geely) is among the top local branded auto producers in China. It is
engaged in the production and sale of small cars in China. The company has major
production bases in Zhejiang and Shanghai. Geely operates six production bases
including Linhai, Luqiao, Ningbo, Xiangtan and Shanghai with an annual capacity of
600,000 units. In 2010, Geely completed its acquisition of Volvo Cars (Volvo), through
which the company aims to upgrade its technology in the automobile industry and
further expand its presence outside China in the long term.
China
Price: HK$3.50
Investment case
We believe Geely will be a potential multi-bagger driven by its strong SUV model
launches in 2013. We expect Geelys share price to be driven by continued consensus
upgrades and, more importantly, re-rating as Great Wall did in 2009-10 from 9x to 18x.
Nick LaiAC
(886-2) 2725-9864
Limited
4.0
3.5
HK$
3.0
2.5
2.0
1.5

(1) Geely as a proxy to China SUV sectors strong secular growth; (2) Geelys strategic
transformation to a multi-brand company with emphasis on quality and innovation;
(3) we see Volvo as Geelys means of entry into Chinas luxury PV segment; and (4)
Geely is among the most competitive local-branded vehicle producers.
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
105.9%
100.0%
1m
16.7%
9.7%
3m
39.4%
32.7%
12m
70.7%
72.2%
Source: Bloomberg.

YTD, consensus 2012E EPS has risen by 5%, according to Bloomberg. Our 2013
earnings estimate for Geely is 30% above the Street. We expect consensus estimate
increases to continue. Earnings downside risk is weaker-than-expected SUV sales
volume.
Our Dec-13 PT of HK$6.0 is based on a P/E of 14x. We believe this is achievable
considering Geelys strong product line-up in the SUV segment in 2H12-14E.
Similarly, GWMs multiple expanded from 9x to 18x in 2009-10 when it successfully
launched several SUV models and enjoyed robust earnings momentum. We expect
Geely will follow Great Walls re-rating pattern of a few years ago. Risks: worse-thanexpected SUV sell-through and cooperation with Volvo in terms of technology transfer
and new model launch.
Geely Automobile Holdings Ltd. (Reuters: 0175.HK, Bloomberg: 175 HK)
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
20,099
20,965
27,068
37,710
EBIT (Rmb mn)
1,964
2,222
2,695
3,553
Net Profit (Rmb mn)
1,368
1,543
1,951
2,616
EPS (Rmb)
0.19
0.21
0.26
0.35
DPS (Rmb)
0.01
0.02
0.02
0.02
Revenue growth (%)
42.9%
4.3%
29.1%
39.3%
EPS growth (%)
8.8%
11.5%
26.0%
34.0%
ROE
19.0%
17.5%
18.5%
20.4%
P/E (x)
15.2
13.7
10.8
8.1
P/BV (x)
2.6
2.2
1.8
1.5
Dividend Yield
0.5%
0.7%
0.8%
0.9%
272
FY14E
45,867
4,300
3,214
0.43
0.05
21.6%
22.9%
20.4%
6.6
1.2
1.7%
Company Data
52-week Range (HK$)
Shares O/S (mn)
Market Cap (HK$ mn)
Price (HK$)
Date Of Price
Free float (%)
HSCEI
3.56 - 1.65
7,480
23,636
3,049
3.50
08 Nov 12
49.0%
36.40
11.95
10,813
7.75

21 November 2012
Adrian Mowat
(852) 2800-8599
Geely Automobile Holdings Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross Margin (%)
Operating profit
% change Y/Y
Operating margin
Net Interest
Earnings before tax
% change Y/Y
Tax
% change Y/Y
Net profit margin
Wt. Avg. Shares (MM)
Wt. Avg. EPS (Rmb)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Other LT assets
Total Assets
ST loans
Payables
Others
Long term debt
Total Liabilities
Minority Interest
FY10
20,099
42.9%
3,720
46.4%
18.5%
2,152
28.7%
10.7%
-245
1,900
22.6%
-351
1,368
15.7%
6.8%
7,363
0.19
FY11
20,965
4.3%
3,820
2.7%
18.2%
2,402
11.6%
11.5%
-211
2,183
14.9%
-467
1,543
12.8%
7.4%
7,450
0.21
FY12E
27,068
29.1%
4,958
29.8%
18.3%
2,829
17.8%
10.5%
-222
2,606
19.4%
-521
1,951
26.4%
7.2%
7,477
0.26
FY13E
37,710
39.3%
7,073
42.6%
18.8%
3,693
30.5%
9.8%
-248
3,445
32.2%
-689
2,616
34.0%
6.9%
7,477
0.35
FY14E
45,867
21.6%
8,687
22.8%
18.9%
4,454
20.6%
9.7%
-244
4,210
22.2%
-842
3,214
22.9%
7.0%
7,477
0.43
FY10
4,636
7,524
987
2,538
15,684
0
5,467
2,823
23,974
9
5,683
6,086
11,778
3,045
73
3,118
14,897
8,022
1,056
FY11
3,384
10,551
1,358
1,714
17,006
87
6,796
3,708
27,597
6
7,386
7,592
14,985
2,370
92
2,462
17,447
9,582
568
FY12E
4,564
12,140
2,484
2,696
21,883
87
9,478
3,708
35,157
3,156
8,805
8,185
20,146
2,670
92
2,762
22,908
11,530
718
FY13E
5,395
13,612
2,938
3,614
25,559
97
11,550
4,008
41,215
4,683
11,200
9,078
24,961
1,143
100
1,243
26,204
14,143
868
FY14E
8,633
15,582
3,056
5,616
32,887
107
13,042
4,408
50,445
4,683
15,072
11,071
30,826
1,143
108
1,251
32,077
17,350
1,018
Cash flow statement

Profit before tax
Others

1,900 2,183 2,606 3,445 4,210
504
642
317
428
508
-701 -1,647 -1,304
462 1,777
278
30
-491
-645
-782
1,983 1,208 1,129 3,690 5,712
Purchase of fixed assets

Others
Cash flow from investment
-1,529 -1,420 -3,000 -2,500 -2,000

184 -1,533
0
-300
-400
-1,346 -2,953 -3,000 -2,800 -2,400
Other
Dividends paid
Beginning cash
Ending cash
Ratio Analysis
%, year end Dec
Gross margin
Operating margin
Net profit margin
106
-639
-52
-148
-732
4,498
4,393

18.5% 18.2% 18.3% 18.8% 18.9%
10.7% 11.5% 10.5% 9.8% 9.7%
6.8% 7.4% 7.2% 6.9% 7.0%
Sales growth
Net profit growth
Gross profit growth
ROE
42.9% 4.3% 29.1% 39.3% 21.6%

15.7% 12.8% 26.4% 34.0% 22.9%
46.4% 2.7% 29.8% 42.6% 22.8%
28.7% 11.6% 17.8% 30.5% 20.6%
19.0% 17.5% 18.5% 20.4% 20.4%
14
716
-166
-170
393
4,393
3,030
0
3,450
0
-45
3,405
3,030
4,564
0
0
0
-59
-59
4,564
5,395
0
0
0
-74
-74
5,395
8,633
273
Adrian Mowat
(852) 2800-8599

21 November 2012
HCL Technologies
Overweight
www.hcltech.com
Company overview
HCL Technologies (HCLT) is one of Indias largest IT services vendors, with presence
in software services, infrastructure management, and BPO. HCLT has several Fortune
500 names as its top clients. The company has 85,000+ employees working for 500+
clients. HCL Tech acquired Axon in FY09, which operates in the package
implementation space. HCL Tech has good leverage to high-growth services, with 27%
of its revenues coming from Infrastructure management.
Investment case
HCLT has consistently delivered on revenue growth over the last several quarters
primarily driven by its strong positioning in Infra management space. However,
margins of the company were a concern. HCLT has shown strong performance on the
margin front (particularly gross margins) as well over the last two quarters despite
wage rises suggesting that management has complete control on cost structure.
Moreover, HCLT has also improved its account mining skills over the last two
quarters, which was another concern about the company. If the company is able to
deliver on both revenue growth and margin expansion/maintenance simultaneously; we
believe there is meaningful upside from current stock price.
We believe HCLT has strong revenue growth momentum despite slower growing
Indian IT industry. The company expects churn in a large number of deals coming for
renewal. HCLT has shown strong performance in winning some of these large deals
particularly in Infra management space (HCLT won US$ 2.5 billion worth of deals
between Sep-11 and Mar-12). We expect HCLT to continue gaining market share and
drive superior revenue and profit growth even in benign environment.
A key risk for HCLTs earnings are a meaningful decline in IT spending due to macro
weakness/event. Developed markets in recession will impact IT budgets/spending.
Pricing decline and supply-side pressures are the other key risks for earnings.
Our Jun-13 PT of Rs650 is based on a one-year forward P/E multiple of 13x. Our target
multiple embeds a one-year forward valuation discount of ~30% to TCS, which we
believe is fair and warranted, given the weaker margin profile and return ratios of
HCLT. Downside risks: slowdown in deal ramp-ups and appreciation of the rupee
against the US$. Taking on higher-than normal share of lower-margin and/or assetheavy risky deals can impact operating margins and return ratios impacting HCLTs
valuation.
India
Price: Rs614.70
Bloomberg HCLT IN, Reuters HCLT.BO

(Year-end Jun, Rs mn)
Revenue
Operating Profit
EBITDA
Net profit (Reported)
EPS
P/E (x)
EV/EBITDA (x)
Cash
Equity
FY11
FY12 FY13E FY14E
160,338 210,315 249,093 274,435
21,617 33,909 42,502 44,661
26,537 39,728 49,156 51,715
16,199.5 24,567.0 32,959.2 35,846.7
23.20
35.06 46.63 50.15
26.5
17.5
13.2
12.3
15.1
10.0
7.7
7.0
22,428 23,851 40,449 57,157
84,410 100,577 139,653 170,089
274
ROE(%)
CORE ROIC(%)
Quarterly EPS (Rs)
EPS (13) E
EPS (14) E
Local
Abs. Perf.(%)
Rel. Perf.(%)
Target Price (30 Jun 13)
FY11
20.9
16.7
1Q
12.28
11.76
1M
9.6%
9.9%
FY12
26.6
22.3
2Q
10.82
11.82
3M
14.5%
7.7%
FY13E
27.4
23.1
3Q
11.45
12.74
12M
44.1%
35.2%
Rs
eBusiness/IT Services
Viju K GeorgeAC
(91-22) 6157 3597
viju.k.george@jpmorgan.com
650
550
Rs
450
350
Nov-11
Feb-12
May-12
Aug-12
Nov-12
HCLT.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
58.4%
35.4%
1m
9.6%
9.9%
3m
14.5%
7.7%
12m
44.1%
35.2%
Source: Bloomberg.
FY14E
23.1 52-Week range
21.6 Share Out. (Com)
4Q Market Cap
12.08 Market Cap(US)
13.83 Free float
Avg daily val (Rs)
Dividend Yield
Index
650.00 Exchange rate
621.00 - 372.65
694MN
426.75BN
US$7,794MN
28.7%
50MN
0.8%
5,686
54.76
Adrian Mowat
(852) 2800-8599

21 November 2012
HCL-Technologies: Summary of Financials

Ratio Analysis
Rs in millions, year end Jun
FY11
FY12
FY13E
FY14E Rs in millions, year end Jun
Revenues
160,338 210,315 249,093 274,435 - Gross margin
Cost of goods sold
87,975 141,265 165,782 186,494 - EBITDA margin
Gross Profit
50,304
69,050
83,310
87,940 - Operating margin
R&D expenses
0
0
0
0 - Net margin
SG&A expenses
-23,711 -29,499 -34,098 -36,225 - R&D/sales
21,617
33,909
42,502
44,661 - SG&A/Sales
EBITDA
26,537
39,728
49,156
51,715 Interest income
0
0
0
0 - Sales growth
Interest expense
0
0
0
0 - Operating profit growth
0
0
0
0 - Net profit growth
-562
-1,169
855
2,506 - EPS (reported) growth
Earnings before tax
21,056
32,740
43,357
47,167 Tax
-4,813
-8,390 -10,307 -11,320 - Interest coverage (x)
16,199.5 24,567.0 32,959.2 35,846.7 - Net debt to total capital
16,200
24,567
32,959
35,847 - Net debt to equity
EPS (reported)
23.20
35.06
46.63
50.15 - Asset turnover
EPS (adjusted)
23.20
35.06
46.63
50.15 - Working capital turns (x)
BVPS
120.42
143.09
198.43
238.96 - ROE
DPS
7.34
10.61
4.93
4.00 - ROIC
Shares outstanding
701
703
704
712 - ROIC (net of cash)
Balance sheet
Cash flow statement
Rs in millions, year end Jun
FY11
FY12
FY13E
FY14E Rs in millions, year end Jun
22,428
23,851
40,449
57,157 - Net income
Accounts receivable
34,089
50,085
57,582
61,996 - Depr. & amortization
Inventories
0
0
0
0 - Change in working capital
Others
0
0
0
0 - Other
Current assets
69,072
88,193 114,814 137,680 - Cash flow from operations
LT investments
13,182
19,680
18,284
17,950 - Capex
Net fixed assets
64,094
69,525
78,263
82,779 - Disposal/(purchase)
Others
11,348
17,808
17,877
17,550 - Cash flow from investing
Total Assets
146,348 177,397 211,362 238,409 - Free cash flow
Liabilities
ST Loans
0
0
0
0 - Debt raised/(repaid)
Payables
33,789
46,294
44,023
42,327 - Other
Others
33,789
46,294
44,023
42,327 - Dividends paid
33,789
46,294
44,023
42,327 - Cash flow from financing
Long-term debt
21,256
18,016
15,938
14,459 Other liabilities
6,893
12,510
11,748
11,534 - Net change in cash
Total Liabilities
61,938
76,820
71,709
68,320 - Beginning cash
84,410 100,577 139,653 170,089 - Ending cash
FY11
31.4%
16.6%
13.5%
10.1%
0.0%
14.8%
FY12
32.8%
18.9%
16.1%
11.7%
0.0%
14.0%
FY13E
33.4%
19.7%
17.1%
13.2%
0.0%
13.7%
FY14E
32.0% 18.8% 16.3% 13.1% 0.0% 13.2% -
27.4%
8.7%
33.0%
29.9%
31.2%
56.9%
51.7%
51.1%
18.4%
25.3%
34.2%
33.0%
10.2% 5.1% 8.8% 7.5% -
-1.2%
-1.4%
1.14
6.43
20.9%
16.7%
-
-5.2%
-5.8%
1.30
6.33
26.6%
22.3%
-
-17.9%
-17.6%
1.28
5.22
27.4%
23.1%
-
--25.1% -25.1% 1.22 4.55 23.1% 21.6% --
FY11
FY12
FY13E
FY14E
16,199.5 24,567.0 32,959.2 35,846.7 4,919
5,819
6,654
7,054 -1,132
-3,491
-9,768
-6,109 0
0
0
019,829
27,441
29,558
36,792 0
0
0
00
0
0
0-10,150 -17,748 -13,997 -11,236 19,829
27,441
29,558
36,792 0
0
0
0-5,916
2,377
-2,840
-1,693 0
0
0
0-5,126
-7,437
-3,485
-2,859 -7,997
-6,569
3,563
-7,103 1,681
24,446
22,428
3,124
22,428
23,851
19,124
23,851
40,449
18,452 40,449 57,157 -
275
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
HOMEX
Price: Ps25.81
www.homex.com.mx
Price Target: 38.00
End Date: Dec 2013
Company overview
Homex is the largest homebuilder in Mexico, building around 50k homes in 2011. The
company focuses most of its activities on the affordable entry-level and middle income
housing markets in Mexico with a small operation in Brazil; it also acts on the
concession front as it has a 20-year contract to build and operate two prisons in
Mexico, which will provide stable cash flow starting next year. Homex was founded in
1989 by the De Nicolas family, which still runs the company and holds a 34% stake.
Mexico
Homebuilders
Adrian HuertaAC
(52-81) 8152-8720
J.P. Morgan Casa de Bolsa, S.A. de C.V.,
Investment case
Homex is a high-beta name that could reverse its underperforming trend once it starts
to generate income from its prison business and also as it starts to generate positive
FCF from a housing business that burned Ps780mn in 2011 but that is expected to be
positive at Ps500-800mn this year. We also believe that a new contract to operate new
prisons could be a positive catalyst for the stock as we estimate that its current contract
is worth Ps12-14 per share, which represents almost half of its market value.
Homexs homebuilding business is currently trading at around 0.4x P/BV, which is the
lowest level among peers, mainly due to the large amount of cash it burned last year.
Thus, we dont see any upside priced in now.
50
40
Ps
30
20
Nov-11
Feb-12
May-12
Aug-12
Nov-12
HOMEX.MX share price (Ps)

MEXBOL (rebased)
Source: Bloomberg.

The major upside earnings risks for Homex are related to better than expected
performance from its housing business, which hasnt performed well in 9M12. Also,
lower leverage going forward could be translated into lower than expected financing
costs. The operating income coming from its penitentiary business could be a risk given
that there is no visibility on the operating margins that this concession will have.
We rate Homex OW with a Dec 2013 price target of Ps38, which is the average of our
DCF-based and GGM-based valuations. The COE of 14.1% is based on a beta of 1.80,
country risk of 1.6%, and risk free rate of 5.0%, resulting in a WACC of 12.7%. In our
GGM we used a sustainable ROE of 11%. The main downside risks are lower than
expected profitability and FCF from its prison business and further cash burn from its
housing division.
Desarrolladora HOMEX (HOMEX.MX;HOMEX* MM)
FYE Dec
2011A
EPS Reported (Ps)
FY
3.88
Bloomberg EPS FY (Ps)
5.45
EBITDA FY (Ps mn)
4,705
P/E FY
6.9
Revenues FY (Ps mn)
21,853
2012E
2013E
2014E
9.38
9.13
7,640
2.9
32,650
6.32
6.48
5,850
4.3
24,829
7.67
6.89
6,527
3.5
26,219
estimates.
276
Company Data
Price (Ps)
Date Of Price
52-week Range (Ps)
Mkt Cap (Ps mn)
Fiscal Year End
Shares O/S (mn)
Price Target (Ps)
25.81
14 Nov 12
47.75 - 24.22
9,006.78
Dec
335
38.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
HOMEX: Summary of Financials

Net Revenues
Cost of goods sold
Gross profit
Gross margin
SG&A
Other Operating Expenses
EBIT
Depreciation
EBITDA
EBITDA margin, %
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net income
Net income margin
EPS
Net Revenue growth
EBITDA growth
Net income growth
FCF growth
FCFF-firm
Dividends
Working capital
Units
Avg. price/Unit (Ps '000)
Units chg
Avg.price/Unit chg
FY11A
21,853
(14,381)
7,473
34.2%
(2,768)
(432)
4,705
21.5%
194
(391)
2,180
(10)
1,304
6.0%
3.88
11.2%
11.6%
(13.7%)
(120.8%)
FY11A
(4,059)
468
-
FY12E
32,650
(22,187)
10,463
32.0%
(2,823)
(480)
7,640
23.4%
240
(1,103)
5,268
(10)
3,152
9.7%
9.38
49.4%
62.4%
141.6%
(778.8%)
FY12E
(1,433)
(3,174)
-
FY13E
24,829
(16,043)
8,786
35.4%
(2,936)
(504)
5,850
23.6%
170
(1,309)
3,279
(10)
2,122
8.5%
6.32
(24.0%)
(23.4%)
(32.7%)
(190.5%)
FY13E
(2,009)
2,872
-
FY14E
26,219
(16,947)
9,271
35.4%
(2,744)
(529)
6,527
24.9%
218
(1,256)
3,979
(10)
2,577
9.8%
7.67
5.6%
11.6%
21.4%
35.9%
FY14E
(1,388)
3,903
-
29,017
132.8%
52,486
385,137
18%
(8%)
30,450
93.3%
50,466
403,242
(4%)
5%
32,459
130.7%
51,980
415,339
3%
3%
33,847
129.1%
53,539
427,799
3%
3%
40
816
470.1
103
754
-
40
810
470.1
107
743
-
Days receivable
33
40
Days inventory
794
814
adj. (excl. land)
467.3
470.1
Days payable
108
107
adj. (excl. land)
Cash Conversion Cycle
719
747
Adj. Cash Conversion Cycle
Note: Ps in millions (except per-share data).Fiscal year ends Dec
Balance Sheet
Cash
Accounts receivable
Inventories
Land bank
Net PP&E
Other assets
Total Assets
ST Loans
Accounts Payables
Suppliers
Land Payables
LT Debt
Deferred taxes
Other non current liabilities
Total Liabilities
Minority Interests
Shareholders Equity
Net debt
Net Debt/Equity
Debt/Equity
NetDebt/EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
P/CE
FCF yield
Dividend yield
Capex/Revenues
Cash Earnings
Coverage EBIT/Interest)
ROE
ROIC
Shares
FY11A
3,993
1,993
31,272
12,859
18,413
786
41,371
3,851
4,248
11,513
4501.5
27,685
198
13,686
41,371
11,371
84.3%
113.9%
2.4
FY11A
4.5
6.9
0.7
3.4
4.7%
0.0%
1.0%
2,848
12.0
10.2%
12.8%
336
FY12E FY13E FY14E

2,827
3,633
5,518
2,405
2,541
2,685
32,299 34,229 35,903
13,642 14,518 15,075
18,657 19,711 20,828
606
423
237
52,166 54,354 57,371
5,606
5,606
5,606
4,254
4,311
4,741
16,758 16,758 16,758
5028.4 5028.4 5028.4
35,318 35,375 35,805
208
218
227
16,848 18,979 21,566
52,166 54,354 57,371
19,537 18,731 16,846
117.4% 99.8% 78.9%
134.4% 119.2% 104.8%
2.6
3.2
2.6
FY12E FY13E FY14E
3.8
4.8
4.1
2.9
4.3
3.5
0.6
0.5
0.5
2.3
3.7
3.1
(32.2%) 29.1% 39.6%
0.0%
0.0%
0.0%
0.9%
1.3%
1.3%
4,168
2,636
3,116
6.9
4.5
5.2
20.9% 12.0% 12.9%
16.6% 13.0% 13.0%
336
336
336
WACC
Perpetual Growth
Cost of equity
Cost of debt
277
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.hmd.co.kr
Price Target: W185,000
Company overview
Hyundai Mipo Dockyard Co., Ltd. is a shipbuilder of medium-sized conventional ships
and specialized vessels. The company constructs and delivers medium-range product
carriers, chemical tankers, containerships, LPG carriers and pure car truck carriers.
South Korea
Ship Building & repairs
Price: W115,000
Investment case
We think Mipo will be the biggest beneficiary of the pending eco-ship boom due to its
outstanding engineering and designing skills. Mipos market share should grow
following the massive restructuring of its competitors, and we expect it to show
improving margins post the earnings bottom in 2Q12.
We expect Mipo to show stellar growth in new orders and market share in 2013 helped
by its newly designed eco-ships. Already, the company has confirmed its superior fuel
efficiency (saving 30% fuel vs. peers) based on comments of ship owners. We think
Mipo's superior position will be confirmed throughout 2013. Firstly, the company has
experienced designers: Mipo has over 600 designers; none of its competitors has such
scale. Secondly, Mipos competition should have lessened following the massive
restructuring of the industry. We expect earnings to turn around from 2013, one year
earlier than yards building bigger ships. Demand for smaller vessels began to recover
in 2011, 2~3 years ahead of the expected demand recovery for bigger vessels.
Sokje LeeAC
(82-2) 758-5729
sokje.lee@jpmorgan.com
Bloomberg JPMA SOKJELEE <GO>
J.P. Morgan Securities (Far East) Ltd,
Seoul Branch
180,000
160,000
W 140,000
120,000
100,000
Nov-11 Feb-12 May-12 Aug-12 Nov-12
010620.KS share price (W )

KOSPI (rebased)
Abs
Rel
YTD
-28.1%
-33.7%
1m
-12.5%
-9.1%
3m
-5.0%
-7.2%
12m
-28.1%
-28.6%
Source: Bloomberg.

We believe a fall in oil prices is the biggest risk for the company, as its advantage in
fuel efficiency would be diluted. Slower than expected recovery of the global economy
is another threat.
We are Overweight with a Jun-13 PT of W185,000, based on 1.0x P/B multiple (2014E
BPS of W184,870) based on a 3-year forward average P/B of 0.8x with a 20%
premium to reflect potential re-rating. Key downside risks to our PT include negative
sentiment on the global macro outlook, potential use of surplus cash holdings.
Hyundai Mipo Dockyard (Reuters: 010620.KS, Bloomberg: 010620 KS)
Year-end Dec
FY11A
FY12E
FY13E
FY14E
Revenue (W bn)
4,624
4,417
4,402
4,883
Operating Profit (W bn)
378
173
168
278
Net Profit (W bn)
200
118
178
261
EPS (W)
9,992
5,879
8,918
13,063
BVPS (W)
160,863
165,576
173,151
184,870
Revenue growth
11.7%
-4.5%
-0.3%
10.9%
EPS growth
-59.4%
-41.2%
51.7%
46.5%
ROE
5.2%
3.4%
5.0%
6.9%
ROIC
35.4%
15.7%
16.9%
28.7%
P/E (x)
11.5
19.6
12.9
8.8
P/BV (x)
0.7
0.7
0.7
0.6
EV/EBITDA (x)
8.2
12.0
10.7
6.3
Dividend Yield
1.7%
1.3%
1.3%
1.3%
FY15E
5,203
364
326
16,281
199,808
6.6%
24.6%
8.0%
37.4%
7.1
0.6
4.1
1.3%
Source: Company data, Bloomberg, J.P. Morgan estimates. *NP, EPS and ROE based on Owners' net income; BVPS based on
Owners of parent equity.
278
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily Value (W bn)
3M Avg daily Value ($ mn)
3M Avg daily vol
KOSPI
Exchange Rate
167,000 - 98,600
2,300
2,084
20
Dec
115,000
06 Nov 12
43.3%
16.00
13.36
0
1,928
1,103.45

21 November 2012
Adrian Mowat
(852) 2800-8599
Hyundai Mipo Dockyard: Summary of Financials

Balance sheet
W in billions, year end Dec
Assets
Current assets
Trade and Other Current Receivables
Inventories
Others
Non-current Assets
Property, Plant and Equipment
Intangible Assets
Investments in Associates
Others
Liabilities
Current liabilities
Trade and Other Current Payables
Others
Non-current Liabilities
Long-term debt
Non-Current Provisions for Employee
Others
Stockholders' Equity
Total Debt
Net Debt(Cash)
Cash flow statement
Cash Flows from Operating
Net Income(Net Loss)
Gains (Losses) in FC Translation
Gains (Losses) on Disposal of Assets
Recovery (Impairment Losses) on Assets
Gains (Losses) in Equity Method
Inc (Dec) in working capital
Payments of Income Taxes
Others
Cash Flows from Investing
Free cash flow
Cash Flows from Financing
Inc(Dec) in Cash
Cash at The Beginning
Cash at The End
FY11
7,825
4,133
564
1,001
283
0
3,691
889
340
34
2,429
4,416
3,914
799
0
502
35
27
0
3,409
1,673
1,051
FY12E
7,116
3,375
712
920
245
0
3,741
938
341
34
2,428
3,608
3,285
771
0
323
28
25
0
3,508
1,073
299
FY13E
7,126
3,392
834
917
245
0
3,735
931
342
34
2,428
3,457
3,140
770
0
318
22
25
0
3,669
866
-33
FY14E
7,300
3,556
962
1,017
271
0
3,744
940
343
34
2,428
3,382
3,069
841
0
313
18
25
0
3,917
661
-369
FY15E
7,518
3,766
1,167
1,084
289
0
3,753
947
344
34
2,428
3,284
2,975
885
0
310
14
25
0
4,234
456
-782

-581
862
422
427
504
200
118
178
261
326
63
65
68
69
70
-0
-2
-2
-2
-2
0
0
0
0
0
-98
-98
-98
-98
0
-0
-0
-0
-0
-0
716
-55
-62
-33
-42
-135
-47
-70 -103 -128
0
0
0
0
0
265 -100
-80
-80
-80
-428
249
202
207
286
152 -614 -221 -219 -218
-163
149
122
127
206
731
564
712
834
962
564
712
834
962 1,167
Income Statement
Net Sales
Growth(%)
Cost of Sales
Gross Profit on Sales
Gross margin
SG&A
Other Operating Income
Other Operating Expenses

4,624 4,417 4,402 4,883 5,203
11.7% (4.5%) (0.3%) 10.9%
6.6%
3,975 3,966 3,961 4,326 4,553
649
451
440
557
650
14.0% 10.2% 10.0% 11.4% 12.5%
-271
-277
-272
-279
-286
0
0
0
0
0
0
0
0
0
0
Operating Income
Growth(%)
378
173
-44.7% -54.2%
8.2%
3.9%
168
-2.6%
3.8%
278
65.1%
5.7%
364
31.0%
7.0%
Income Before Income Taxes

Income Taxes Expenses
Tax Rate (%)
Net Income
Growth(%)
315
167
112
47
35.7% 28.0%
200
118
-59.4% -41.2%
251
70
28.0%
178
51.7%
366
103
28.0%
261
46.5%
456
128
28.0%
326
24.6%
EBITDA
Growth(%)
441
238
-40.5% -46.0%
237
-0.5%
348
46.7%
435
25.1%
Ratio Analysis
W, year end Dec
EPS
EPS Growth(%)
BPS
DPS
Dividend Yield(%)
PER (x)
PBR (x)
EV/ EBITDA (x)
ROE(%)
Gross Margin (%)
Net margin(%)
EBITDA Margin (%)
Working Capital Turnover (x)
Inventory Turnover (days)

9,992 5,879 8,918 13,063 16,281
(59.4%) (41.2%) 51.7% 46.5% 24.6%
160,863 165,576 173,151 184,870 199,808
2,000 1,500 1,500 1,500 1,500
1.7%
1.3%
1.3%
1.3%
1.3%
11.5
19.6
12.9
8.8
7.1
0.7
0.7
0.7
0.6
0.6
8.2
12.0
10.7
6.3
4.1
5.2%
3.4%
5.0%
6.9%
8.0%
14.0% 10.2% 10.0% 11.4% 12.5%
8.2%
3.9%
3.8%
5.7%
7.0%
4.3%
2.7%
4.1%
5.4%
6.3%
9.5%
5.4%
5.4%
7.1%
8.4%
-8.70
22
Source: Company reports and J.P. Morgan estimates. Net profit, EPS and ROE based on Owners' net income; BVPS based on Owners of parent equity.
-6.57
20
-6.08
20
-6.79
20
-7.10
20
279
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.hyundai.com
Company overview
Hyundai Motor Company manufactures, sells, and exports passenger cars, trucks, and
commercial vehicles. The company also sells various auto parts and operates auto
repair service centers throughout South Korea. Hyundai Motor provides financial
services through its subsidiaries.
South Korea
Price: W208,000
Wan Sun ParkAC

(82-2) 758-5722
wansun.c.park@jpmorgan.com
Bloomberg JPMA WPARK <GO>
Investment case
Hyundai Motor is our preferred OEM pick as we see the biggest mis-location between
valuation vs. FY13 outlook. Market share gain in emerging markets, mix improvement
and much waited capacity additions are likely to be the key share-price drivers.

Seoul
Branch
270,000

We think 2013 will be a better year from a bottom-up fundamental perspective on: (1)
incrementally higher-capacity growth which will ease the extreme inventory shortage
in markets such as the US; (2) SUV launch in China; and (3) penetration in the Brazil
market.
Segment upgrade in China and the US should provide upside risk to earnings. Sharp
FX volatility could create short-term downside risk. However, platform integration
continues to increase and reach 90% in 2013, which should cushion the adverse impact
from sharp FX movements on an annualized basis. Potential marketing cost increase
post MPG restatement could create earnings downside risk, although we already
reflected potential cost conservatively.
250,000
W 230,000
210,000
190,000

KOSPI (rebased)
Abs
Rel
YTD
-2.1%
-7.7%
1m
-14.2%
-10.8%
3m
-10.9%
-13.1%
12m
-12.2%
-12.7%
Source: Bloomberg.

Our Dec-13 PT of W290,000 is based on 9.0x FY13E EPS. Our target multiple of 9x is
at a 20% premium to the long-term average trading multiple of 7.5x. Key downside
risks include sharp F/X volatility, competitive dynamics (incentives/model launching)
in the US and China markets and uncertainty from potential ownership reform.
Hyundai Motor Company (Reuters: 005380.KS, Bloomberg: 005380 KS)
Year-end Dec
FY11A
FY12E
FY13E
Revenue (W bn)
77,798
84,744
93,785
8,075
9,135
9,600
Net Profit (W bn)
8,105
9,251
9,942
Adjusted EPS (W)
28,213
32,432
34,979
Revenue growth
16.1%
8.9%
10.7%
Operating Profit growth
36.4%
13.1%
5.1%
Adjusted EPS growth
37.4%
15.0%
7.9%
ROA
7.9%
8.2%
8.3%
ROE
22.1%
21.5%
19.8%
P/E (x)
7.4
6.4
5.9
P/BV (x)
1.4
1.2
1.0
EV/EBITDA (x)
7.2
6.3
5.8
280
FY14E
100,904
10,258
10,654
37,603
7.6%
6.9%
7.5%
8.4%
17.8%
5.5
0.9
5.4
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily value ($ mn)
3M Avg daily vol
KOSPI
Exchange Rate
272,500 - 200,500
45,818
42,004
220
Dec
208,000
06 Nov 12
62.2%
141.56
120.06
1
1,928
1,090.80
Adrian Mowat
(852) 2800-8599

21 November 2012
Hyundai Motor Company: Consolidated Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBITDA margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
Owners of Parent Equity
% change Y/Y
Non-Controlling Interests Equity
EPS (reported)
% change Y/Y
Balance sheet
ST financial instruments
Accounts receivable
Inventories
Others
Current assets
FY11
77,798
16.1%
24.3%
10,410
28.9%
13.4%
8,075
36.4%
10.4%
-36
10,447
39.5%
-2,342
22.4%
7,656
8,105
35.1%
449
38,760
37.4%
FY12E
84,744
8.9%
23.7%
11,602
11.5%
13.7%
9,135
13.1%
10.8%
31
11,921
14.1%
-2,670
22.4%
8,801
9,251
14.1%
450
44,239
15.0%
FY13E
93,785
10.7%
23.6%
12,214
5.3%
13.0%
9,600
5.1%
10.2%
86
12,811
7.5%
-2,870
22.4%
9,492
9,942
7.5%
450
47,544
7.9%
FY14E
100,904
7.6%
23.2%
12,963
6.1%
12.8%
10,258
6.9%
10.2%
102
13,729
7.2%
-3,075
22.4%
10,204
10,654
7.2%
450
50,949
7.5%
FY11
6,232
9,183
3,846
6,238
0
48,926
FY12E
8,779
9,183
4,035
6,795
0
54,280
FY13E
9,214
9,183
4,304
8,879
0
59,749
FY14E
9,017
9,183
4,459
11,328
0
64,268
31,271
19,496
2,660
7,127
109,480
32,835
19,567
2,660
7,127
116,468
34,476
19,491
2,660
7,127
123,504
Short-term loans
16,200
Payables
6,666
Others
10,297
33,164
35,989
Total Liabilities
69,152
40,328
BVPS (W)
148,616
16,200
6,595
11,216
34,011
36,911
70,922
45,546
167,845
15,200
6,639
12,413
34,252
34,365
68,617
54,886
202,267
LT investments
Net fixed assets
Intangible assets
Total Assets
Cash flow statement

EBIT
Add:Depr. & amortization
Less:tax paid
Interest paid
Gross cash flow
FY11
8,075
2,335
-2342
-36
8,032
FY12E
9,135
2,468
-2670
31
8,963
FY13E
9,600
2,615
-2870
86
9,430
FY14E
10,258
2,705
-3075
102
9,990
Capital expenditures
Investments
Free cash flow
-2,899
-5,861
-994
-1,722
-3,500
-1,564
-852
3,047
-3,500
-1,642
-2,354
1,935
-3,500
-1,724
-3,463
1,302
Dividends paid
New shares issued
Other
Net cash flow
-428
0
4,742
-2,965
-500
0
0
2,547
-500
0
-1,000
435
-500
0
-1,000
-197
Ratio Analysis
%, year end Dec
EBITDA margin
Operating margin
Net margin
SG&A/sales
FY11
13.4%
10.4%
10.4%
14.0%
FY12E
13.7%
10.8%
10.9%
13.2%
FY13E
13.0%
10.2%
10.6%
13.7%
FY14E
12.8%
10.2%
10.6%
13.3%
16.1%
36.4%
35.1%
37.4%
8.9%
13.1%
14.1%
15.0%
10.7%
5.1%
7.5%
7.9%
7.6%
6.9%
7.2%
7.5%
289.25
36.0%
69.2%
0.71
2.71
22.1%
7.9%
29.4%
55.7%
0.73
2.56
21.5%
8.2%
25.7%
43.6%
0.76
2.25
19.8%
8.3%
22.7%
35.6%
0.78
2.00
17.8%
8.4%
Sales growth
19,324 EPS growth
2,660
129,579 Net debt to total capital
Net debt to equity
14,200 Sales/assets
5,815 Assets/equity
13,355 ROE
33,371 ROA
31,269
64,640
64,939
239,314
281
Adrian Mowat
(852) 2800-8599

21 November 2012
ICICI Bank
Overweight
www.icicibank.com
Price Target: Rs1,200
Company overview
ICICI Bank is one of India's largest banks, with significant market share in retail
lending. After the ~38% credit CAGR over FY04-08, ICICI consolidated its loan book
over FY08-10 to increase focus on profitability. It has subsequently re-started growing,
but is cautious on pricing and credit controls. It has a high T1 CAR of 12.7%.
India
Financials
Price: Rs1092.95
Seshadri K SenAC
(91-22) 6157 3575
Investment case
ICICI is one of our top banking picks we think management is steadily delivering on
improved profitability with reasonable growth, especially in the retail segment, where it
has been losing share for the last three years. This should drive significant re-rating
over the next year.
ICICIs much-expanded distribution (2750 branches, up~2x in four years) is driving
significant market share improvement without the necessity to add risk. It has also
eliminated cyclicality from revenues with lower upfront loan fees and reduced
dependence on treasury so we see little risk to growth from an adverse environment.
ICICI has a significant exposure to project loans, and this exposes it to large and lumpy
credit charges. The other earnings risk is margin pressure from increased competitive
intensity.

1,100
1,000
Rs
900
800
700
600
Nov-11
Feb-12 May-12
Aug-12 Nov-12
ICBK.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
56.9%
33.4%
1m
2.5%
1.6%
3m
12.2%
3.8%
12m
24.0%
15.8%
Source: Bloomberg.

Our Mar-14 PT for ICICI Bank of Rs1200 is based on our sum of the parts analysis.
The core bank is valued using a two-stage Gordon growth model implying 1.6x FY14E
book. The subsidiaries (mainly insurance) are valued at Rs218/share. Our core bank
valuations factor in cost of equity at 14.3%, normalized ROE of ~20%, and terminal
growth of 5%. The key risk, apart from the earnings risk above, is a de-rating triggered
by adverse policy environment for infrastructure.
ICICI Bank (Reuters: ICBK.BO, Bloomberg: ICICIBC IN)
FY11A
FY12A
92,498
103,865
Net Profit (Rs mn)
51,514
62,449
Cash EPS (Rs)
44.72
54.17
46.48
54.83
DPS (Rs)
14.00
16.50
EPS growth (%)
23.9%
21.1%
ROE
10.0%
10.9%
P/E (x)
24.4
20.2
BVPS (Rs)
478.29
523.98
P/BV (x)
2.3
2.1
Dividend Yield
1.3%
1.5%
282
FY13E
129,648
77,025
66.82
65.08
19.00
23.3%
11.9%
16.4
568.57
1.9
1.7%
FY14E
170,103
97,315
84.42
82.68
23.00
26.3%
13.8%
12.9
626.08
1.7
2.1%
FY15E
214,614
119,729
103.86
102.13
29.00
23.0%
15.4%
10.5
696.01
1.6
2.7%
Company Data
52-week Range (Rs)
Market Cap (Rs mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Rs)
Date Of Price
NIFTY
Exchange Rate
1,102.80-641.00
1,259,918
23,145
1,153
Mar
1,092.95
07 Nov 12
3,688.37
67.8
3.66
5724.40
54.44

21 November 2012
Adrian Mowat
(852) 2800-8599
ICICI Bank: Summary of Financials

Income Statement
FY11
2.5%
94.3%
2.3%
FY12
2.6%
94.9%
2.4%
FY13E
2.7%
95.0%
2.6%
FY14E
2.9%
95.0%
2.8%
Net Interest Income

Fee Income
90,169
68,501
59,259
107,342
75,028
61,715
131,952
87,524
69,121
169,346
104,629
84,328
158,670
182,369
219,476
273,975
Operating costs
(66,172) (78,504) (89,829) (103,872)
Pre-Prov. Profits
Provisions
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
92,498 103,865 129,648 170,103

(22,868) (15,830) (23,407) (35,876)
(2,023)
(757)
67,607
87,278 106,241 134,227
(16,093) (24,828) (29,216) (36,913)
0
0
0
0
51,514
62,449
77,025
97,315
Growth Rates
FY15E
3.0% Loans
95.0% Deposits
2.9% Assets
Equity
210,127 RWA
of which Fee Grth
335,282 Revenues
Costs
214,614 Pre-Tax
- EPS
- DPS
0 Loan/Assets
LT debt/liabilities
Per Share Data

EPS
DPS
Payout
Book value
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY11
44.72
14.00
31.3%
478.29
1,152
FY11
2,163,659
(76,269)
2,239,928
100,333
696,384
163,476
3,630,570
4,062,336
FY12
54.17
16.50
30.5%
523.98
1,153
FY12
2,537,277
(76,135)
2,613,412
94,744
721,716
195,130
4,173,294
4,736,447
FY13E
66.82
19.00
28.4%
568.57
1,153
FY13E
2,940,450
(88,526)
3,028,975
110,163
792,215
224,660
4,848,732
5,475,101
FY14E
84.42
23.00
27.2%
626.08
1,153
FY14E
3,566,066
(107,025)
3,673,090
133,183
883,771
282,124
5,748,832
6,627,642
FY15E
103.86
29.00
27.9%
696.01
1,153
FY15E
4,337,136
(137,132)
4,474,268
170,648
990,857
353,407
6,967,600
8,045,383
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
2,256,021
1,095,543
312,172
3,157,512
3,848,496
550,909
3,414,980
3,178,393
2,555,000
1,401,649
316,615
3,654,106
4,399,392
604,029
3,985,858
3,700,419
3,356,055
1,261,484
316,615
4,287,093
5,105,774
655,427
4,619,210
4,302,534
4,321,793
1,330,290
316,615
5,134,810
6,051,371
721,721
5,602,003
5,110,607
5,518,108
1,406,964
316,615
6,288,577
7,336,512
802,337
6,813,293
6,207,648
NPLs/loans
Growth in NPLs
Tier 1 Ratio
Total CAR
Du-Pont Analysis
Non IR/Avg. Assets
Revenue/Assets
Cost/Income
Cost/Assets
Pre-Provision ROA
LLP/Loans
Loan/Assets
Operating ROA
Pre-Tax ROA
Tax rate
ROA
RORWA
Equity/Assets
ROE
FY11
19.9%
11.6%
11.8%
6.7%
16.1%
11.1%
3.6%
14.0%
7.8%
12.9%
4.3%
(48.0%)
26.7%
28.0%
23.9%
16.7%
FY12
16.7%
13.3%
16.6%
9.6%
16.7%
19.0%
9.5%
4.1%
14.9%
18.6%
12.3%
(30.8%)
29.1%
21.2%
21.1%
17.9%
FY13E
15.9%
31.4%
15.6%
8.5%
15.9%
22.9%
16.7%
12.0%
20.3%
14.4%
24.8%
47.9%
21.7%
23.3%
23.3%
15.2%
FY14E
21.3%
28.8%
21.1%
10.1%
21.3%
28.3%
19.5%
22.0%
24.8%
15.6%
31.2%
53.3%
26.3%
26.3%
26.3%
21.1%
FY15E
21.8%
27.7%
21.4%
11.2%
21.6%
24.1%
19.6%
20.0%
22.4%
16.2%
26.2%
37.9%
23.0%
23.0%
23.0%
26.1%
FY11
95.9%
15.8%
53.4%
64.2%
30.7%
FY12
99.3%
16.1%
55.2%
61.8%
32.7%
FY13E
87.6%
14.8%
55.3%
69.6%
29.7%
FY14E
82.5%
13.8%
55.4%
73.2%
24.2%
FY15E
78.6%
12.8%
55.5%
76.2%
20.8%
FY11
(3.4%)
4.7%
68.0%
5.8%
13.2%
19.5%
FY11
2.5%
94.3%
2.3%
43.2%
1.8%
4.1%
41.7%
1.7%
2.4%
(1.1%)
53.4%
(0.1%)
1.8%
1.8%
23.8%
0.0%
1.4%
1.7%
13.9%
10.0%
FY12
(2.9%)
4.0%
78.1%
(5.6%)
12.7%
18.5%
FY12
2.6%
94.9%
2.4%
41.1%
1.7%
4.1%
43.0%
1.8%
2.4%
(0.7%)
55.2%
(0.0%)
2.0%
2.0%
28.4%
0.0%
1.4%
1.7%
13.1%
10.9%
FY13E
(2.9%)
3.6%
80.4%
16.3%
12.5%
17.5%
FY13E
2.7%
95.0%
2.6%
39.9%
1.7%
4.3%
40.9%
1.8%
2.5%
(0.8%)
55.3%
2.1%
2.1%
27.5%
0.0%
1.5%
1.7%
12.3%
11.9%
FY14E
(2.9%)
3.6%
80.4%
20.9%
11.5%
15.6%
FY14E
2.9%
95.0%
2.8%
38.2%
1.7%
4.5%
37.9%
1.7%
2.8%
(1.1%)
55.4%
2.2%
2.2%
27.5%
0.0%
1.6%
1.9%
11.4%
13.8%
FY15E
(3.1%)
3.7%
80.4%
28.1%
10.6%
14.0%
FY15E
3.0%
95.0%
2.9%
37.3%
1.7%
4.6%
36.0%
1.6%
2.9%
(1.2%)
55.5%
2.3%
2.3%
27.5%
0.0%
1.6%
1.9%
10.4%
15.4%
283
Adrian Mowat
(852) 2800-8599

21 November 2012
IJM Land
Overweight
www.ijmland.com
Company overview
IJM Land (IJML) is the result of the merger between IJM Properties and Road Builder
completed in Sept-08. IJMLs total land bank size currently stands at 6,127 acres
(project GDV: M$31.4B) spread across the Northern, Central and Southern regions of
the Peninsula as well as in Sabah, East Malaysia, which would sustain earnings in the
next 8-10 years, in our view. IJML is both a niche and township developer with its
properties ranging from residential mass market to high-end, as well as commercial
projects.
Malaysia
Real Estate
Price: M$2.17
Investment case
We believe the election overhang or risk is largely priced-in and we see the recent
launch of new flagship project, 'Bandar Rimbayu', as a key upside catalyst for IJML.
The stock has also underperformed the KLCI Index over the last 12 months.
The new Bandar Rimbayu project in the Klang Valley (GDV: M$11B) is in a sweet
spot given its focus on affordable housing below M$1MM per unit where demand
remains strong. The maiden launch in Sept-12 has received a strong response and IJML
is on track to achieve our full year property sales forecast of M$1.5B for FYE Mar-13E
(+11% Y/Y). Other potential catalysts in 2013 include land-banking prospects (the
government's tender award of the prime land), and new launches in Johor.
Simone YeohAC
(60-3) 2270 4710
simone.x.yeoh@jpmorgan.com
Bloomberg JPMA YEOH<GO>
(18146-X)
2.6
M$
2.4
2.2
2.0
Nov-11
Feb-12
May-12
Aug-12
Nov-12
IJML.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
-5.2%
-12.7%
1m
5.3%
6.2%
3m
-14.9%
-15.8%
12m
-2.3%
-13.4%
Source: Bloomberg.

Key downside risk to our PT is slower property sales versus our forecast from external
shocks or an unfavorable outcome from the Malaysian general elections. However, our
base case expectation is for the ruling party to continue to win with a simple majority.
Also, IJMLs diverse product range which includes commercial projects and the mass
or the mid market residential segment, will help mitigate impact in our view.
Our Jun-13 PT of M$2.90 is based on a 30% discount to RNAV, or close to the stock's
historical mean discount. A key risk is a poor election outcome but this risk is largely
priced in, we believe, given IJMLs 45% RNAV discount and 2013E P/BV of 1.2x,
which are both just below -1SD from historical mean.
IJM Land (Reuters: IJML.KL, Bloomberg: IJMLD MK)
M$ in mn, year-end Mar
FY11A
FY12A
Revenue (M$ mn)
1,162
1,206
Reported Net Profit (M$ mn)
217.4
193.7
Core Net Profit (M$ mn)
153
194
Reported EPS (M$)
0.20
0.14
Adjusted EPS (M$)
0.13
0.13
DPS (M$)
0.04
0.04
Revenue growth (%)
5.6%
3.8%
Core EPS growth (%)
55.5%
0.4%
ROCE
12.3%
9.2%
ROE
12.5%
9.1%
Adjusted P/E (x)
17.1
16.8
P/BV (x)
1.3
1.2
EV/EBITDA (x)
7.9
8.8
Dividend Yield
1.8%
1.8%
284
FY13E
1,367
229.3
229
0.16
0.15
0.05
13.3%
17.4%
11.3%
9.2%
14.4
1.2
7.2
2.3%
FY14E
1,522
260.4
260
0.19
0.17
0.06
11.4%
13.6%
12.1%
9.7%
12.7
1.1
6.3
2.6%
FY15E
1,599
272.5
271
0.19
0.18
0.06
5.0%
3.9%
12.0%
9.5%
12.1
1.0
6.1
2.7%
Company Data
Shares O/S (mn)
Market cap (M$ mn)
Market cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
3M - Average daily Value (M$ mn)
FBMKLCI
Exchange Rate
Fiscal Year End
1,403
3,045
996
2.17
07 Nov 12
22.3%
0.63
1.40
0.85
1,646
03.06
Mar
Adrian Mowat
(852) 2800-8599

21 November 2012
IJM Land: Summary of Financials

M$ in millions, year end Mar
Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Core EPS - MYR
% change Y/Y
Balance sheet
M$ in millions, year end Mar
Accounts receivable
Inventories
Others
Current assets
Cash flow statement

FY11
FY12 FY13E FY14E FY15E M$ in millions, year end Mar
1,162
1,206 1,367 1,522 1,599 Operating Profit
5.6%
308
247
328
372
75.1% (19.7%) 32.7% 13.3% 5.4% Taxes
26.5% 20.5% 24.0% 24.4% 24.5% Others
-23
35
-14
-15
-15 Cash flow from operations
285
282
315
357
377
91.6%
-1.2% 11.6% 13.5% 5.5% Capex
-62
-82
-77
-87
21.6% 28.9% 24.3% 24.3% 25.1% Net Interest
217.4
193.7 229.3 260.4 272.5 Free cash flow
100.0% -10.9% 18.4% 13.6% 4.6%
153
194
229
260
271 Equity raised/(repaid)
55.5% 26.3% 18.4% 13.6% 3.9% Debt raised/(repaid)
1,103
1,388 1,399 1,399 1,399 Other
0.20
0.14
0.16
0.19
0.19 Dividends paid
100.0% (29.2%) 17.4% 13.6% 4.6% Beginning cash
0.14
0.14
0.16
0.19
0.19 Ending cash
55.5%
0.4% 17.4% 13.6% 3.9% DPS
Ratio Analysis
FY11
FY12 FY13E FY14E FY15E M$ in millions, year end Mar
691
625
455
462
399 EBIT Margin
554
569
616
661
229
178
202
225
236 Net margin
1,413
1,476 1,666 1,666 1,666 SG&A/Sales
2,887
2,849 2,939 3,014 2,985
LT investments
1,241
1,388 1,455 1,569 1,794 Sales growth
Net fixed assets
150
230
241
253
Total Assets
4,279
4,467 4,635 4,837 5,047 EPS growth
Liabilities
ST Loans
86
113
113
113
113 Net debt to total capital
Payables
832
667
675
682
Others
11
2
2
2
3 Sales/assets
929
782
790
797
802 Assets/equity
Long-term debt
625
287
287
287
287 ROE
Other liabilities
845
918
918
918
918 ROCE
Total Liabilities
2,399
1,987 1,995 2,002 2,007
1,836
2,430 2,582 2,766 2,959
BVPS
1.66
1.75
1.85
1.98
2.11
FY11
308
10
-41
-62
215

254
314
347
360
10
11
13
13
-145
-63
-60
-29
-82
-77
-87
-95
37
187
212
250
-57
341
-23
477
-90
-154
35
-171
-23
-53
-14
97
-25
-90
-15
83
-26
-193
-15
16
7
-123
-12
-44
387
691
0.04
455
51
-346
-55
691
625
0.04
-8
0
-190
-69
625
455
0.05
2
0
-0
-78
455
462
0.06
2
0
1
-82
462
399
0.06
FY11
26.5%
26.5%
18.7%
-

20.5% 24.0% 24.4% 24.5%
21.1% 23.0% 22.8% 22.5%
16.1% 16.8% 17.1% 17.0%
-
5.6% (17.5%) 12.4%

5.6%
3.8% 13.3%
100.0% -10.9% 18.4%
100.0% (29.2%) 17.4%
13.94
- 24.94
0.8%
-8.4% -1.9%
1.1%
-9.3% -2.2%
0.27
0.28
0.30
2.33
1.84
1.80
12.5%
9.1% 9.2%
12.3%
9.2% 11.3%
11.4%
11.4%
13.6%
13.6%
25.92
-2.0%
-2.3%
0.32
1.75
9.7%
12.1%
5.0%
5.0%
4.6%
4.6%
26.55
-0.0%
-0.0%
0.32
1.71
9.5%
12.0%
285
Adrian Mowat
(852) 2800-8599

21 November 2012
Industrial and Commercial Bank of China
Overweight
www.icbc.com.cn/icbc/
Price Target: HKS6.25
Company overview
ICBC was established in 1984 as it assumed PBOCs commercial banking function. It
is Chinas largest bank with the No.1 share in most banking areas. The bank has the
most extensive customer base in the nation in both retail and corporate banking. Post
financial restructuring in 2005, ICBC has one of the most de-leveraged balance sheets
among Chinese banks. Its key competitive strengths include powerful distribution
channels and sector-leading IT capabilities.
Investment case
1) ICBC remains our top pick based on the resilience of its balance sheet (LDR 63%)
& deposit franchise(funding cost low at 2.1%), which drives upside to our NIM
estimates. 2) The bank continues to fortify its capital position, with Tier 1 of 10.51%
(up +44bps YTD, best in sector), while growing book value/share by 12% YTD. 3)
Asset quality was strong, with NPLs down 50bp Q/Q in 3Q & up 2% YTD second
only to ABC. Coverage continues to build, +7% Q/Q to 288%, which justifies YTD
provisions at just 27bp. The stability of the funding franchise & build of capital is more
impressive because ROE (23.9% in 3Q and 24.6% YTD) is at the top of the sector.
As China's economy stabilizes, and liquidity and credit demand improves, we have
turned positive on China banks with a better outlook for asset quality and credit
pricing. ICBC has a particular edge in lower funding cost to defend NIMs amid interest
rate down-cycle. Its prudent risk control also ensures benign asset quality - NPL is only
+2% YTD, lowest in the sector.
Key earnings risks are: lower-than-expected fee growth; further rate cuts (particularly if
asymmetric) which would impact NIMs; and/or a sharp rise in non-performing loans,
which could push up credit costs.
Our PT (Dec-13, DDM-derived) of HK$6.25 implies a forward P/BV of 1.3x and P/E
of 7.5x (FY13E). Besides the earnings risks above, other risks to PT are prolonged
global economic weakness, deterioration in domestic economic recovery and liquidity
tightening by PBOC.
China
Banks
Industrial and Commercial Bank of China - H (Reuters: 1398.HK, Bloomberg: 1398 HK)
FY09A
FY10A
FY11A
FY12E
FY13E
Operating Profit (Rmb mn)
188,592
241,268
300,588
331,634
369,883
Net Profit (Rmb mn)
128,645
165,156
207,865
220,410
232,414
Cash EPS (Rmb)
0.38
0.48
0.60
0.63
0.67
Fully Diluted EPS (Rmb)
0.38
0.48
0.60
0.63
0.67
DPS (Rmb)
0.17
0.18
0.20
0.20
0.21
EPS growth (%)
14.0%
28.2%
22.8%
6.0%
5.4%
ROE
20.2%
22.1%
23.4%
21.4%
19.6%
P/E (x)
10.5
8.2
6.7
6.3
6.0
BVPS (Rmb)
2.02
2.35
2.74
3.17
3.63
P/BV (x)
2.0
1.7
1.5
1.3
1.1
Dividend Yield
4.3%
4.6%
5.1%
5.1%
5.3%
286
Price: HK$4.96
Josh KlaczekAC
(852) 2800-8534
josh.klaczek@jpmorgan.com
Bloomberg JPMA KLACZEK<GO>
Limited
6.0
5.5
HK$
5.0
4.5
4.0
3.5
Nov-11
Abs
Feb-12
YTD
7.6%
May-12
1m
0.4%
Aug-12
Nov-12
3m
10.5%
12m
2.1%
Source: Bloomberg
Company Data
52-week Range (HK$)
Market Cap (Rmb mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (HK$)
Date Of Price
Index 1
Exchange Rate
5.72-3.97
1,391,610
223,390
349,083
Dec
4.96
13 Nov 12
1,220.46
126.6
261.64
9.64

21 November 2012
Adrian Mowat
(852) 2800-8599
Industrial and Commercial Bank of China - H: Summary of Financials

Income Statement

FY10
2.5%
98.5%
2.4%
FY11
2.6%
95.9%
2.5%
FY12E
2.5%
96.8%
2.4%
FY13E
2.5%
97.2%
2.5%
Net Interest Income

Fee Income
Dealing Income
303,749
76,999
72,840
1,051
362,764
107,437
101,550
1,392
406,529
121,103
115,272
662
458,735
130,179
123,341
894
380,748
470,201
527,632
588,914
(139,480)
241,268
(27,888)
0
0
2,146
215,426
(49,401)
(869)
165,156
(169,613)
300,588
(31,832)
0
0
2,444
271,911
(63,866)
(180)
207,865
(195,998)
331,634
(46,958)
0
0
2,884
288,342
(67,725)
(207)
220,410
(219,032)
369,883
(70,074)
0
0
3,403
304,072
(71,420)
(238)
232,414
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
Per Share Data CNY
EPS
DPS
Payout
Book value
PPOP per share
Key Balance sheet Rmb in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY10
FY11
FY12E
FY13E
0.48
0.60
0.63
0.67
0.18
0.20
0.20
0.21
37.9%
34.1%
32.0%
32.0%
2.35
2.74
3.17
3.63
340,599
349,024
349,083
349,083
0.71
0.86
0.95
1.06
FY10
FY11
FY12E
FY13E
6,623,372 7,594,019 8,697,153 9,775,589
(167,134) (194,878) (234,490) (287,367)
6,790,506 7,788,897 8,931,643 10,062,957
73,241
73,011
99,577
145,242
3,732,268 3,915,902 5,047,904 5,547,449
178,115
236,101
259,580
285,514
12,431,871 13,881,755 15,942,318 17,919,343
27,369
22,223
22,223
22,223
13,458,622 15,476,868 17,450,373 19,421,195
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
11,145,557 12,261,219 13,852,953 15,404,531

100,410
204,161
214,369
225,088
100,410
204,161
214,369
225,088
11,649,010 13,311,585 15,570,635 17,405,196
12,621,838 14,467,745 16,463,621 18,435,784
820,430
956,742 1,106,288 1,268,171
7,112,357 8,447,263 9,524,401 10,600,074
6,516,844 7,779,810 8,985,832 10,062,237

Cost of equity assumptions
Risk free rate:
Market risk premium:
Cost of equity
Terminal g:
Fair P/B
PV of Terminal Value
PV of Dividends to 13E
Dec-13 fair value (Rmb)
Equity/assets
Normalised ROE
Growth Rates
FY14E
2.5% Loans
97.4% Deposits
2.4% Assets
Equity
493,386 RWA
1,206
of which Fee Grth
Revenues
634,637 Costs
396,107 Pre-Tax
0 EPS
- DPS
0
4,016 Balance Sheet Gearing
(274) Loan/Assets
LT debt/liabilities
0.23 NPLs/loans
4.13 Growth in NPLs
349,083 Tier 1 Ratio
1.13 Total CAR
10,848,928 NIM (as % of avg. assets)
11,197,221 Margins (as % of Avg. Assets)
6,099,842 Non IR/Avg. Assets
19,894,583 Cost/Income
22,223 Cost/Assets
21,422,367 Pre-Provision ROA
LLP/Loans
16,946,318 Loan/Assets
236,342 Operating ROA
19,235,068 Pre-Tax ROA
20,421,781 Tax rate
1,442,329 Minorities & Outside Distbn.
12,317,861 ROA
11,458,968 RORWA
Equity/Assets
ROE
FY10
18.5%
14.1%
14.2%
21.7%
20.1%
23.6%
21.1%
32.1%
23.1%
15.4%
27.9%
28.6%
28.8%
28.4%
28.2%
8.2%
FY10
59.4%
29.0%
49.6%
88.2%
0.7%
FY10
(2.5%)
1.3%
193.3%
(17.2%)
10.6%
12.3%
FY10
2.5%
98.5%
2.4%
20.2%
0.6%
3.0%
36.6%
1.1%
1.9%
(0.4%)
49.6%
0.0%
1.7%
1.7%
22.9%
0.0%
1.3%
2.5%
5.9%
22.1%

14.7% 14.7% 12.7% 11.3%
10.0% 13.0% 11.2% 10.0%
15.0% 12.8% 11.3% 10.3%
16.6% 15.6% 14.6% 13.7%
18.8% 12.8% 11.3% 16.2%
19.4% 12.1% 12.8% 7.6%
39.5% 12.7%
7.5% 8.5%
39.4% 13.5%
7.0% 8.0%
23.5% 12.2% 11.6% 7.8%
21.6% 15.6% 11.8% 8.9%
24.6% 10.3% 11.5% 7.1%
14.1% 47.5% 49.2% 8.3%
26.2% 6.0%
5.5% 6.9%
25.9% 6.0%
5.4% 6.9%
22.8% 6.0%
5.4% 6.9%
10.3% (0.5%)
5.4% 6.9%
FY11
61.9%
26.4%
50.4%
84.4%
1.1%
FY11
(2.5%)
1.0%
247.5%
(0.3%)
10.4%
13.2%
FY11
2.6%
95.9%
2.5%
22.8%
0.7%
3.2%
36.1%
1.2%
2.1%
(0.4%)
50.4%
0.0%
1.9%
1.9%
23.5%
0.0%
1.4%
2.7%
6.1%
23.4%
FY12E
62.8%
27.2%
50.8%
84.8%
1.4%
FY12E
(2.6%)
1.0%
248.8%
36.4%
10.6%
13.3%
FY12E
2.5%
96.8%
2.4%
23.0%
0.7%
3.2%
37.1%
1.2%
2.0%
(0.6%)
50.8%
0.0%
1.7%
1.7%
23.5%
0.0%
1.3%
2.5%
6.3%
21.4%
FY13E
63.5%
28.7%
51.5%
84.9%
1.3%
FY13E
(2.9%)
1.3%
213.2%
45.9%
11.0%
13.7%
FY13E
2.5%
97.2%
2.5%
22.1%
0.7%
3.2%
37.2%
1.2%
2.0%
(0.7%)
51.5%
0.0%
1.6%
1.6%
23.5%
0.0%
1.3%
2.3%
6.4%
19.6%
FY14E
64.0%
28.5%
52.1%
84.9%
1.2%
FY14E
(3.1%)
1.6%
192.7%
27.1%
11.0%
13.5%
FY14E
2.5%
97.4%
2.4%
22.3%
0.7%
3.1%
37.6%
1.2%
1.9%
(0.7%)
52.1%
0.0%
1.6%
1.6%
23.5%
0.0%
1.2%
2.2%
6.6%
18.3%
4.5%
7.0%
13.3%
1.5%
1.26x
4.02
0.51
5.25
7%
16%
287
Adrian Mowat
(852) 2800-8599

21 November 2012
Industries Qatar
Overweight
www.industriesqatar.com
Price Target:QR199.00
Company overview
Industries Qatar (IQ) is a Qatari based industrial conglomerate involved in
Petrochemicals, Fertilizers and Steel. The company is 70% owned by the state
controlled Qatar Petroleum (QP) and 30% by external shareholders. IQ benefits from
cost advantaged feedstock (gas at ~ USD 2/BTU) which it receives under long-term
contract from QP. The company is at or near the bottom of the cost curve in
petrochemicals and fertilizers. The Steel business is less advantaged but import tariffs
and a strong outlook for local construction (World Cup, infrastructure, etc) suggest it
will fare better than many other steel peers
South Africa
Petrochemicals
Price: QR154.60
Investment case
IQ is due to bring on-stream new plants equal to ~32% of 2011 capacity by end 2013.
These low-cost projects should lift earnings materially regardless of the macro. With
capex declining after a period of heavy investment, strong cash generation should
underpin an already strong balance sheet and dividend payments.
The company has a net cash position and capex is expected to decline following a
period of heavy investment, helping to drive cash flows and support a strong balance
sheet. IQ trades on a 2012E PE of 9.6x versus its historical average of 10.9x and
SABIC on 10.4x; consequently we think the stock looks cheap. A free cash flow yield
of 10% and a dividend yield of 5.7% add to the attraction
Alex Comer
AC
(44-20) 7134-5945
155
150
145
QR 140
135
130
125
Nov-11
Abs
Feb-12
YTD
13.0%
May-12
Aug-12
1m
7.5%
Nov-12
3m
12.4%
12m
11.8%
Source: Bloomberg

Lower than expected oil prices/weaker GDP growth. In addition a decoupling of gas
and oil prices would threaten fertilizer prices.
We use an average of our PE and DCF based valuation methodologies to derive our
12M target price of QR 199. Our PE based valuation is derived by multiplying IQ's
2013E EPS of QR 18.6 by the companys historical average PE of 10.9x to derive a
value of QR 202. Our DCF valuation suggests a value of QR 196 using a CoC of 8.9%
and 2% terminal growth rate. Apart from the earnings risk mentioned above, Industries
Qatar may also struggle to obtain additional gas allocations from government.
Industries Qatar (IQCD.QA;IQCD QD)

FYE Dec
2011A
Adj. EPS FY (QR)
14.41
Adj P/E FY
10.7
Div Yield FY
5.7%
Adj EBITDA Margin FY
50.9%
EV/EBITDA FY
8.5
EBITDA FY (QR mn)
8,418
OpFCF FY (QR mn)
2,335
Net Debt FY (QR mn)
98
2012E
16.04
9.6
5.2%
52.5%
8.2
9,674
6,369
3,884
288
2013E
18.57
8.3
6.0%
52.8%
6.7
11,050
8,337
9,382
2014E
21.13
7.3
6.9%
52.7%
5.5
12,402
9,083
15,120
2015E
19.82
7.8
6.4%
50.1%
5.4
11,639
10,421
20,110
Company Data
Price (QR)
Date Of Price
Price Target (QR)
52-week Range (QR)
Mkt Cap (QR bn)
Shares O/S (mn)
Average Volume
154.60
02-Nov-12
199.00
04 Nov 12
154.90 - 124.90
85.0
550
244,137.00

21 November 2012
Adrian Mowat
(852) 2800-8599
Industries Qatar: Summary of Financials

QR in millions, year end Dec
Revenues
% Change Y/Y
Gross Margin (%)
% Change Y/Y
EBITDA Margin (%)
% Change Y/Y
EBIT Margin
Net Interest
% change Y/Y
Tax
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
FY11
16,548
34.2%
53.8%
8,418
47.4%
50.9%
7,744
53.0%
46.8%
(156)
7,924
44.6%
7,930
44.8%
550.0
14.41
14.41
FY12E
18,411
11.3%
55.0%
9,674
14.9%
52.5%
8,527
10.1%
46.3%
(50)
8,821
11.3%
8,819
11.2%
550.0
16.04
16.04
FY13E
20,922
13.6%
55.6%
11,050
14.2%
52.8%
9,753
14.4%
46.6%
100
10,214
15.8%
10,212
15.8%
550.0
18.57
18.57
FY14E
23,545
12.5%
55.6%
12,402
12.2%
52.7%
11,043
13.2%
46.9%
200
11,623
13.8%
11,621
13.8%
550.0
21.13
21.13
FY15E
23,229
-1.3%
53.2%
11,639
-6.2%
50.1%
10,231
-7.4%
44.0%
300
10,898
-6.2%
10,896
-6.2%
550.0
19.82
19.82
FY11
6,960
2,665
2,231
598
12,454
1,983
21,495
36,779
FY12E
10,747
2,965
2,482
598
16,791
2,043
21,989
41,629
FY13E
16,244
3,370
2,820
598
23,032
2,111
21,692
47,640
FY14E
21,983
3,792
3,174
598
29,546
2,188
21,834
54,373
FY15E
26,972
3,741
3,131
598
34,442
2,259
21,925
59,432
(1,327) (1,327) (1,327) (1,327)

(1,384) (1,540) (1,750) (1,970)
-1,130 -1,416 -2,113 -2,817
(3,842) (4,283) (5,190) (6,114)
(5,535) (5,535) (5,535) (5,535)
-770
-770
-770
-770
(10,147) (10,588) (11,495) (12,418)
26,632 31,041 36,146 41,955
Cash flow statement

EBIT

7,744 8,527 9,753 11,043 10,231
674 1,148 1,297 1,359 1,409

Taxes
Capex
Acquisitions/disposals
Net Interest
Free cash flow
FCF (pre - exceptionals)
Equity raised/repaid
Debt Raised/repaid
Other
Dividends paid
Beginning cash
Ending cash
DPS
(489) (395) (533) (557)

67
7,929 9,279 10,517 11,845 11,706
(2,866) (1,600) (1,000) (1,500) (1,500)
(336)
(156)
(50)
100
200
300
5,103 7,737 9,583 10,421 10,276
5,103 7,737 9,583 10,421 10,276
804
283
291
300
294
(3,025) (4,125) (4,411) (5,107) (5,811)
5,290 6,960 10,747 16,244 21,983
6,960 10,747 16,244 21,983 26,972
7.50
8.02
9.29 10.57
9.91
Ratio Analysis
Market Cap($bn)
Net debt
EV

85
85
85
85
85
98 3,884 9,382 15,120 20,110
71,333 79,587 74,021 68,206 63,145
EV/Sales
EV/EBITDA
EV/EBIT
P/E (adjusted EPS)
FCF yield
(1,327) Dividend per share
(1,943) Dividend Yield
-2,455 EPS growth
(5,725)
(5,535) Net debt /EBITDA
(12,030) Net debt to Total Capital
47,402 Net debt to equity
ROIC
4.3
4.3
3.5
2.9
2.7
8.5
8.2
6.7
5.5
5.4
9.2
9.3
7.6
6.2
6.2
10.7
9.6
8.3
7.3
7.8
6.8% 9.1% 11.4% 12.5% 12.5%
7.50
8.02
9.29 10.57
9.91
5.7% 5.2% 6.0% 6.9% 6.4%
44.6% 11.3% 15.8% 13.8%
NM
0.0
0.4
0.8
1.2
1.7
49.5 170.5
97.5
55.2
34.1
0.4% 12.4% 25.7% 35.7% 42.1%
28.8% 30.6% 34.7% 38.2% 35.3%
289
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Iochpe Maxion
Price: R$25.30
www.iochpe.com.br
End Date: Dec 2013
Company overview
Iochpe Maxion produces both light and heavy steel wheels, aluminum wheels,
automotive components, chassis/frames, and products for its railway business. The
company is based in Sao Paulo, but its geographic footprint includes greater Brazil,
Mexico, China, the US, Mexico, South Africa, and various countries in Europe and
Asia. The companys top line is divided across the following regions: South America
(44%), Europe (28%), North America (24%), and others (4%).
Brazil
Capital Goods and Agribusiness
A rebound in Brazilian GDP would positively affect trucks production

We recently designated MYPK3 as our top pick in the capital goods sector as its
exposure to trucks positions it well for a recovery in 2013. This performance should be
further bolstered by exposure to light vehicles, which have recovered strongly YTD
given lower IPI taxes, and which should continue strong in 2013 as consumption
improves.
Though above historical averages, MYPK3 is trading below its Brazilian peers
EV/EBITDA is the key valuation metric for companies in the automotive sector in
Brazil, and MYPK3 is currently trading slightly below the peer average of ~7.2x
EBITDA. The sector is trading above historical averages, in part due to government
support of the industry, and has been working as a relative safe haven, but we see a
combination of deleverage and earnings growth that support our thesis.
Cassio LucinAC
(55-11) 4950 3893
cassio.lucin@jpmorgan.com
Thomas McElwee
(55-11) 4950 6719
thomas.mcelwee@jpmorgan.com
Bloomberg JPMA LUCIN <GO>

40
35
R$ 30
25
20
Nov-11
Feb-12
May-12
Aug-12
Nov-12
MYPK3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Fate of Iochpe Maxion closely tied to trucks industry and Europe environment
If truck sales do not recover and inventories do not normalize and the European auto
industry worsens, we can expect production and thus demand for products supplied by
MYPK3 and its competitors to remain low. We expect margins to remain pressured for
the remainder of 2012 but see them returning in 2013.
We are OW with a Dec 2013 13 of R$31.00
We estimate the equity value of Iochpe using a finite FCF to firm calculation (DCF)
with explicit forecasts to 2020 and a perpetual value calculation thereafter. Downside
risks include a delay in the trucks recovery, declining margins in the companys
aluminum business, cyclical cash flow issues from international exposure, mainly from
EUROPE, and issues with the companys financing costs for its acquisitions.
Iochpe-Maxion SA (MYPK3.SA;MYPK3 BZ)
FYE Dec
2011A
EPS Reported (R$)
FY
6.08
Revenues FY (R$ mn)
6,256
EBITDA FY (R$ mn)
710
EV/EBITDA FY
4.3
P/E FY
4.4
Source: Company data, Reuters, J.P. Morgan estimates.
290
2012E
2013E
0.55
5,680
490
10.6
48.4
1.61
5,907
716
7.1
16.5
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Free Float
Average Volume
Price Target (R$)
25.30
14 Nov 12
37.72 - 19.80
2,514.83
Dec
95
45.0%
1.50
31.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
Iochpe-Maxion: Summary of Financials

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
Other income / (expense)
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
EBITDA
Accounts receivable
Inventories
Current assets
PP&E
Total assets
Total debt
Total liabilities
FY11A FY12E FY13E FY14E

6,256 5,680 5,907 7,133
(5,136) (5,076) (4,962) (5,992)
1,120
604
945 1,141
(411) (292) (414) (499)
0
178
184
195
710
312
532
642
(15) (110) (223) (229)
0
0
0
0
695
202
309
413
(120) (111) (114) (153)
575
52
152
209
575
52
152
209
6.08
0.55
1.61
2.21
6.08
0.55
1.61
2.21
710
490
716
837
95
95
95
95
291
421
542
494
1,200
814
847 1,022
850
664
649
784
130
221
221
221
2,472 2,120 2,259 2,521
1,107 2,471 2,448 2,490
3,764 5,608 5,724 6,028
857
1,948
1,319
2,895
4,706
902
2,895
4,727
998
2,895
4,899
1,129
519
343
0
(67)
2,474
52
178
614
2,353
152
184
3
2,401
209
195
(138)
376
915
339
265
Capex
Free cash flow
(197)
179
(261)
654
(162)
178
(236)
29

Dividends
(197)
1
2.25
(261)
2,019
0.20
(162)
(56)
0.59
(236)
(77)
0.82
Net debt
Net income (including charges)
D&A
Other
Income Statement - Quarterly

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
EBITDA
Ratio Analysis
Sales growth (total)
Sales growth (organic)
EBITDA growth
EPS growth
1Q12E 2Q12E 3Q12E 4Q12E

1,188
1,510
1,573 1,409
(1,076) (1,360) (1,400) (1,240)
112
150
173
169
(68)
(75)
(79)
(70)
33
45
50
51
44
75
94
99
(11)
(38)
(30)
(31)
0
0
0
0
32
37
65
68
(18)
(27)
(32)
(34)
9
1
20
21
9
1
20
21
0.10
0.01
0.22
0.23
0.10
0.01
0.22
0.23
76
120
144
149
95
95
95
95
- (9.2%)
4.0% 20.8%
- (9.2%)
4.0% 20.8%
- (31.0%) 46.1% 16.9%
- (91.0%) 192.8% 37.3%
Gross margin
EBIT margin
EBITDA margin
Tax rate
Net margin
17.9% 10.6%
11.3%
7.0%
11.3%
8.6%
(17.2%) (55.0%)
9.2%
0.9%
SG&A (% of revenue)
D&A (% of revenue)
Net debt / EBITDA
Interest coverage ratio
Return on assets (ROA)
Return on equity (ROE)
Return on invested capital (ROIC)
FCF / share
P/E
Enterprise value / EBITDA
16.0%
5.5%
12.1%
37.0%
2.6%
16.0%
9.0%
11.7%
37.0%
2.9%
6.6%
0.0%
0.7
9.2
5.1%
3.1%
5.1
2.6
7.0%
3.1%
3.3
2.8
7.0%
2.7%
2.9
3.1
15.3%
43.6%
30.5%
0.9%
5.8%
1.5%
2.7%
15.2%
4.5%
3.5%
18.5%
5.9%
1.89
4.4
4.3
6.91
48.4
10.6
1.88
16.5
7.1
0.30
12.1
6.2

291
Adrian Mowat
(852) 2800-8599

21 November 2012
ITC Limited
Overweight
www.itcportal.com
Price Target: Rs 325.00
Company overview
ITC Limited (ITC) is the largest cigarette manufacturer in India with 70%+ volume
market share with strong brands across price points and has a wide and efficient
distribution network nation wide. ITC also has business interests into other areas such
as hotels, paperboards & specialty papers, agri-business, packaged foods, branded
apparel, personal care and other FMCG products.
India
Price: Rs 288.65
Investment case
ITC dominates cigarette business in India with over 70% share. Tobacco is probably
the only Indian consumer business whose pricing power is intact given low
competition, high entry barriers and strong brand affinity. With favorable
demographics and potential to raise prices (and trade up), it remains a growth business
for foreseeable future. It is also far less susceptible to input cost pressures. Steadily
expanding margins for cigarettes, stable capex requirements coupled with improved
profitability of non-tobacco businesses would lead to higher FCF generation which
would eventually lead to higher dividend payout for ITC in our view.
We believe pricing will continue to support healthy mid-to-high-teen EBIT growth for
cigarette business over the medium term we estimate 18% cigarette EBIT CAGR
over FY12-15E. The non-tobacco businesses have also emerged as an important
valuation driver. The financial trends in most of these businesses have shown
significant improvement in the recent past. We expect them to deliver EBIT growth of
20% over FY12-15E. We expect increased focus on business such as foods, paper and
hotels to drive long-term earnings and value for the company.
Tobacco
Latika Chopra, CFA
(91-22) 6157-3584
latika.chopra@jpmorgan.com
Bloomberg JPMA CHOPRA <GO>
300
260
Rs
220
180
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ITC.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
45.3%
22.3%
1m
4.7%
5.4%
3m
11.7%
3.7%
Source: Bloomberg.

Any sharp excise hike or further VAT hikes by state governments could necessitate
significant price increases for cigarettes which in turn may impact volume growth
adversely. Any regulatory change on point of sales or packaging for cigarettes could
also pose risk to growth. Higher investments and/or worsening of profitability in other
businesses such as other FMCG and Hotels may also act as an earnings drag.
We have a SOTP-based Dec-13 price target of Rs325. Our target EV/EBITDA multiple
for the cigarette division is 16x in line with the benchmark to global tobacco multiples
adjusted for growth. Key downside risks to our earnings and PT are substantial decline
in volume growth for cigarettes, any business diversification that is substantially
dilutive of earnings and any legislative changes that impact cigarette demand.
ITC Limited (Reuters: ITC.BO, Bloomberg: ITC IN)
FY11A
FY12A
Revenue (Rs mn)
211,676
247,984
Net Profit (Rs mn)
49,876
61,624
EPS (Rs)
6.41
7.84
Revenue growth (%)
16.6%
17.2%
EPS growth (%)
21.4%
22.3%
ROE
33.2%
35.5%
P/E (x)
45.0
36.8
EV/EBITDA (x)
30.2
25.3
Dividend Yield
1.5%
1.6%
292
FY13E
289,212
72,751
9.25
16.6%
18.1%
36.5%
31.2
21.4
1.9%
FY14E
337,849
86,388
10.99
16.8%
18.7%
38.4%
26.3
17.8
2.3%
FY15E
391,905
101,708
12.93
16.0%
17.7%
39.8%
22.3
14.9
2.6%
Company Data
Shares O/S (mn)
Market Cap (Rs mn)
Market Cap ($ mn)
Price (Rs)
Date Of Price
NIFTY
Fiscal Year End
7,863
2,269,778
42,180
288.65
05 Nov 12
6.28
31.6
5697.70
Mar
12m
36.9%
29.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
ITC Limited: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Cash flow statement

FY11
211,676 247,984 289,212 337,849 391,905 EBIT
16.6% 17.2% 16.6% 16.8% 16.0% Depr. & amortization
17.9% 18.6% 17.8% 19.8% 18.0% Taxes
19.4% 19.1% 18.7% 19.9% 18.0%
33.3% 33.8% 34.4% 35.3% 36.0% Capex
(583)
(670)
(670)
(670)
(670) Disposal/(purchase)
72,682 88,975 105,436 126,113 148,478 Net Interest
20.8% 22.4% 18.5% 19.6% 17.7% Other
(22,806) (27,352) (32,685) (39,726) (46,771) Free cash flow
31.4% 30.7% 31.0% 31.5% 31.5%
49,876 61,624 72,751 86,388 101,708 Equity raised/(repaid)
7,783
7,863
7,863
7,863
7,863 Other
6.41
7.84
9.25
10.99
12.93 Dividends paid
21.4% 22.3% 18.1% 18.7% 17.7% Beginning cash
Ending cash
DPS
Balance sheet
Ratio Analysis
FY11
62,346 71,822 80,073 93,715 113,044 EBITDA margin
Accounts receivable
9,076
Inventories
52,675 56,378 64,974 75,900 88,045 Net margin
Others
17,656 18,311 18,311 18,311 18,311
Current assets
141,753 156,372 175,243 201,811 235,505
LT investments
15,633 19,533 19,533 19,533 19,533 Sales growth
Net fixed assets
Total Assets
254,171 289,664 320,786 357,722 401,974 EPS growth
Liabilities
Short-term loans
Payables
Others
41,807 44,869 44,869 44,869 44,869 Sales/assets
85,628 92,227 100,334 109,662 120,029 Assets/equity
Long-term debt
992
791
791
791
791 ROE
Other liabilities
8,019
8,727
8,727
8,727
8,727 ROCE
Total Liabilities
94,638 101,745 109,852 119,180 129,547
159,533 187,919 210,934 238,542 272,428
BVPS
21.09
24.84
27.88
31.53
36.01
FY11
70,497 83,930 99,584 119,409 140,956
6,560
6,985
7,090
7,899
9,027
737 (4,868) (2,513) (3,598) (3,999)
(22,806) (27,352) (32,685) (39,726) (46,771)
53,327 60,156 77,328 90,689 106,736
(13,499) (23,036) (19,341) (18,268) (19,584)
81
559
0
0
0
(583)
(670)
(670)
(670)
(670)
(4,526)
2,839
0
0
0
40,309 38,143 58,449 72,880 87,610
9,038
7,650
0
0
0
(105)
(99)
0
0
0
(4,222) (2,368)
0
0
0
(38,182) (34,435) (49,736) (58,779) (67,822)
54,963 62,346 71,822 80,073 93,715
56,875 73,612 80,073 93,715 113,045
4.45
4.50
5.50
6.50
7.50
FY11
35.2%
33.3%
23.6%
FY12
35.7%
33.8%
24.8%
FY13E
36.0%
34.4%
25.2%
FY14E
36.9%
35.3%
25.6%
FY15E
37.6%
36.0%
26.0%
15.2%
16.6%
22.8%
21.4%
127.8
16.0%
17.2%
23.6%
22.3%
132.0
16.6%
16.6%
18.1%
18.1%
155.5
16.8%
16.8%
18.7%
18.7%
186.2
16.0%
16.0%
17.7%
17.7%
219.8
(38.5%) (37.8%) (37.6%) (39.0%) (41.2%)

0.9
0.9
0.9
1.0
1.0
161.3% 156.5% 153.1% 151.0% 148.7%
33.2% 35.5% 36.5% 38.4% 39.8%
32.0% 33.3% 34.3% 36.3% 37.7%
SOTP valuation for ITC Limited

Cigarettes
FMCG
Hotel
Paper
Agri
EV
Net Cash
Equity Value
Methodology
EV/EBITDA
EV/Sales
EV/EBITDA
EV/EBITDA
EV/EBITDA
Multiple (X) Per Share

16.0x
234
3.5x
43
13.0x
8
8.0x
17
7.0x
9
310
14
324
293
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.jollibee.com.ph
Price Target: Php125
Company overview
JFC is the Philippines largest quick service restaurant (QSR) operator with a portfolio
of six domestic brands and over 1900 stores across the archipelago. Flagship brand is
Jollibee which is more than twice the size of McDonalds. JFC has also expanded its
market coverage with overseas operations in countries like United States, Vietnam,
Middle East, and China. In China, JFC has three brands including Yonghe King, the
biggest of the three with a total of 265 stores.
Philippines
Investment case
We expect JFC to deliver a 25% earnings CAGR in 2014E-2016E driven by a
economies of scale led margin expansion as the company accelerates its new store rollout in China. Domestic operations are also expected to provide steady earnings support
amid perception of high market saturation due to ample structural growth opportunities.
Price: Php105.80

90% of JFC's systemwide sales are derived from the Philippines which is seeing a
strong cyclical uptrend and has lots of structural growth opportunities (under
penetration of QSR, geographic coverage opportunities for JFC's other domestic
brands). While China's macro growth is uncertain, we believe that the underpenetration of QSR will propel JFC's margin expansion as it aims to double its store
network and systemwide sales contribution to 20% by 2015.
Food Retailing
Jeanette G YutanAC
(632) 878 1131
jeanette.g.yutan@jpmorgan.com
115
Php
105
95
85
Nov-11
Feb-12
May-12
Aug-12
Nov-12
JFC.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
13.8%
-10.6%
1m
5.7%
3.8%
3m
5.8%
2.0%
12m
12.9%
-12.7%
Source: Bloomberg.

The roll-out of new stores in China is a key risk to earnings in 2013. A deterioration of
the overall QSR market in China will adversely affect JFC's China new store expansion
program. Energy, wage, rent, and food inflation are also a risk in 2013 for JFC.
Our Dec-13 PT of Php125 is based on an implied 29x FY13E P/E on a 25% FY14EFY16E EPS CAGR. Key risks: execution risk relating to China, deterioration of China
QSR environment, steep rise in inflation and commodity prices.
Jollibee Foods Corp. (Reuters: JFC.PS, Bloomberg: JFC PM)
FY10A
FY11A
FY12E
FY13E
Revenue (Php mn)
53,372
62,555
69,832
80,852
Net Profit (Php mn)
3,197.8
3,231.7
3,727.4
4,522.2
EPS (Php)
3.08
3.10
3.55
4.31
DPS (Php)
2.46
1.15
1.31
1.59
Revenue growth (%)
11.3%
17.2%
11.6%
15.8%
EPS growth (%)
19.2%
0.6%
14.6%
21.3%
ROCE
17.8%
16.8%
18.0%
21.7%
ROE
19.1%
17.6%
18.0%
19.4%
P/E (x)
34.4
34.2
29.8
24.6
P/BV (x)
6.4
5.7
5.1
4.5
EV/EBITDA (x)
-0.5
0.0
0.2
0.2
Dividend Yield
2.3%
1.1%
1.2%
1.5%
294
FY14E
92,858
5,918.6
5.63
2.09
14.8%
30.9%
27.4%
22.3%
18.8
3.9
0.1
2.0%
FY15E
106,037
7,533.0
7.17
2.66
14.2%
27.3%
30.8%
24.4%
14.8
3.3
-0.1
2.5%
FY16E
120,462
9,245.9
8.80
3.26
13.6%
22.7%
32.6%
25.6%
12.0
2.8
-0.4
3.1%
Company Data
Shares O/S (mn)
Market cap (Php mn)
Market cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
PSE
Exchange Rate
Fiscal Year End
1,044
110,404
2,688
105.80
12 Nov 12
30.0%
0.44
44.47
1.08
5,471
41.07
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Jollibee Foods Corp.: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY10
53,372 62,555 69,832 80,852 92,858 EBIT
3.5% 13.0% 18.5% 21.0% 26.5% Taxes
9.0%
8.4% 18.4% 21.7% 32.2%
6.7%
6.2%
6.6%
7.0%
8.0% Capex
-30
-112
-96
-46
4 Disposal/(purchase)
4,186 4,358 5,025 6,095 7,970 Net Interest
14.5%
4.1% 15.3% 21.3% 30.8% Other
- Free cash flow
20.0%
1,039 1,044 1,050 1,050 1,050 Other
3.08
3.10
3.55
4.31
5.63 Dividends paid
19.2%
0.6% 14.6% 21.3% 30.9% Beginning cash
Ending cash
DPS
Ratio Analysis
FY10
8,170 6,655 4,179
595
816 EBITDA margin
2,134 2,860 2,744 3,150 3,578 Net margin
1,330 1,169 1,355 1,355 1,355
13,572 13,259 10,783 8,000 9,080
778
772
772
772
772 Sales growth
33,746 38,908 39,836 39,948 43,635 EPS growth
4,183 1,677 3,413
756
0
5,741 5,543 5,543 5,543 5,543 Sales/assets
13,694 12,102 13,686 11,706 11,665 Assets/equity
52 3,943
940
185
185 ROE
1,152 1,297 1,297 1,297 1,297 ROCE
16,065 18,686 17,267 14,531 14,490
17,120 19,519 21,866 24,714 28,441
16.47 18.70 20.82 23.53 27.08
FY10
3,599
1,978
-1069
5,504

3,902 4,620 5,621 7,430
2,402 2,853 3,419 4,004
-1207 -1273 -1544 -2019
5,880 6,453 7,845 9,811
-2,553 -3,700 -5,531 -5,588 -5,885

-30 -112
-96
-46
4
57 -2,826
-726
-726
-726
2,951 2,180
922 2,258 3,927
28
1,483
-5
-2,557
8,977
8,170
2.46
69
0
0
0
1,309 -1,267 -3,413
-756
-0
0
-1,197 -1,380 -1,674 -2,192
8,170 6,655 4,179
595
6,655 4,179
595
816
1.15
1.31
1.59
2.09

10.4% 10.1% 10.7% 11.2% 12.3%
6.7% 6.2% 6.6% 7.0% 8.0%
6.0% 5.2% 5.3% 5.6% 6.4%
10.5% 16.7% 10.9% 15.8% 14.8%
11.3% 17.2% 11.6% 15.8% 14.8%
20.0% 1.1% 15.3% 21.3% 30.9%
19.2% 0.6% 14.6% 21.3% 30.9%
185.17 56.50 77.89 195.31
-16.2% 1.6% 6.9% 6.8% 2.5%
1.68 1.72
1.77
2.03
2.22
1.97 1.99
1.82
1.62
1.53
19.1% 17.6% 18.0% 19.4% 22.3%
17.8% 16.8% 18.0% 21.7% 27.4%
295
Adrian Mowat
(852) 2800-8599

21 November 2012
Ju Teng International Holdings Limited
Overweight
www.juteng.com.hk
Company overview
Ju Teng manufactures casings for notebook computers. Ju Tengs manufacturing
includes plastic injection modeling, spray painting, metal tooling. It has leading
technology and over 30% share in the global NB casing market. Its key customers
include HP, Acer, Apple and Asustek.
Hong Kong
Price: HK$3.31
William Chen AC
(886-2) 2725-9871
william.chen@jpmorgan.com
Bloomberg JPMA WCHEN <GO>
Investment case
We believe Ju Teng has entered into an upcycle. As Alvin Kwock, our downstream
tech research head, argued: Casing stocks are just like fashion- each cycle lasts for
around 3 years. Intel identified the moves from CNC-machined aluminum casing
(made by Catcher) to Innovative Composite (made by Ju Teng) as one of the cost-down
drivers for Ultrabooks during Computex. We forecast Ju Teng to keep outperforming
its peers riding on the trend of surging Ultrabook penetration.

Limited
3.5
HK$
2.5
1.5

We believe Ju Teng will keep enjoying better a pricing environment in plastic casing in
2013. In addition, Ju Teng's material diversification strategy would work in 2013
since NB OEMs need to use different combinations of casing materials to achieve the
thin form factor without too much cost increase, and use different surface treatment
technologies to differentiate, in our view.
0.5
Nov-11
Abs
Feb-12
YTD
248.4
%
May-12
1m
0.3%
Aug-12
Nov-12
3m
40.9%
12m
125.2
%
Source: Bloomberg.

Key downside risks are: (1) further delay in Ultrabook launches; (2) serious price
competition; (3) NB demand deterioration; (4) unfavorable Rmb appreciation.
Our HK$5.0 PT (Jun-13) is based on 8x forward P/E (a normal valuation average when
the company enjoys an industry up-cycle), which implies more than 50% upside
potential from current levels. We regard lower-than-expected Ultrabook penetration as
the major risk since we assume Ultrabook to be the biggest profit driver next year.
Bloomberg 3336 HK, Reuters 3336.HK
(Year-end Dec, HK$ mn)
Sales
Operating Profit
EBITDA
Pretax Profit
Adj. Net Profit
EPS (HK$)
Net Debt / Equity
Y/E BPS (HK$)

7,166 8,235 9,336 10,697
456 292
693
940
871 782 1,282 1,595
420 287
673
893
331 252
534
702
0.29 0.22
0.47
0.62
23.5% 32.6% 42.6% 38.0%
3.87 4.24
4.49
5.03
P/E (x)
P/BV (x)
ROE(%)
Cash Div (HK$)
FY10
11.2
0.9
06.8
0.08
FY11
14.8
0.8
04.5
0.08
Source: Company data, Bloomberg, J. P. Morgan estimates. Note: In Net Debt/Equity, NM means company has net cash
296
FY12E FY13E
7.0
5.3
0.7
0.7
08.8
10.7
0.08
0.08
Target Price (HK$)

52-Week range (HK$)
Share Outstanding
Free float
Avg daily volume
Avg daily val (USD)
Dividend Yield (2012)
Index (HSI)
Market Cap(USD)
5.00
3.65 - 0.87
1,132mn
70.0%
6.869mn
2.63mn
2.4%
483mn
Adrian Mowat
(852) 2800-8599

21 November 2012
Ju Teng International Holdings Limited: Summary of Financials

Revenues
Cost of goods sold
Gross Profit
R&D expenses
SG&A expenses
EBITDA
Interest income
Interest expense
Earnings before tax
Tax
FY09 FY10
7,464 7,166
6,119 6,244
1,345 922
-405 -480
983 456
1,297 871
0
0
-49
-35
-49
-36
934 420
-173
-65
705 331
705 331
EPS (reported)
EPS (adjusted)
BVPS
DPS
Shares outstanding
0.66 0.29
0.66 0.29
3.55 3.87
0.08 0.08
1,118 1,133
Balance sheet
FY09 FY10
617 884
Accounts receivable
3,267 2,499
Inventories
869 1,029
Others
409 427
Current assets
5,162 4,839
LT investments
Net fixed assets
4,205 4,838
Others
Total Assets
9,521 9,912
Liabilities
ST Loans
883 761
Payables
2,850 2,416
Others
11 146
3,745 3,322
Long-term debt
1,202 1,353
Other liabilities
14
11
Total Liabilities
4,961 4,686
4,561 5,225
Ratio Analysis
FY11 FY12E FY13E HK$ in millions, year end Dec
8,235 9,336 10,697 Gross margin
7,367 7,997 9,008 EBITDA margin
868 1,339 1,688 Operating margin
- Net margin
-576
-646
-749 R&D/sales
292
693
940 SG&A/Sales
782 1,282 1,595
0
0
0 Sales growth
-45
-55
-5
-20
-47 Net profit growth
287
673
893 EPS (reported) growth
-50
-131
-183
252
534
702 Interest coverage (x)
252
534
Net debt to equity
0.22
0.47
0.62
0.22
0.47
0.62 Asset turnover
4.24
4.49
0.08
0.08
0.08 ROE
1,119 1,132 1,132 ROIC
ROIC (net of cash)
Cash flow statement
FY11 FY12E FY13E HK$ in millions, year end Dec
698
546
613 Net income
2,732 3,310 3,887 Depr. & amortization
568
734
862 Other
- Capex
5,974 6,674 6,874 Disposal/(purchase)
11,373 12,891 14,099 Free cash flow
541
713
2,717 3,240 3,795 Other
130
186
218 Dividends paid
3,389 4,139 4,771 Cash flow from financing
2,081 2,497 2,463
4
4
5,474 6,640 7,238 Beginning cash
5,899 6,250 6,861 Ending cash
FY09
18.0%
17.4%
13.2%
9.4%
5.4%
FY10
12.9%
12.2%
6.4%
4.6%
6.7%
FY11
10.5%
9.5%
3.5%
3.1%
7.0%
FY12E FY13E
14.3% 15.8%
13.7% 14.9%
7.4% 8.8%
5.7% 6.6%
6.9% 7.0%
3.0% (4.0%) 14.9% 13.4%

9.9% -53.6% -36.0% 137.5%
7.1% -53.0% -23.8% 111.7%
0.0% (55.3%) (23.9%) 110.7%
14.6%
35.5%
31.4%
31.4%
26.69
25.5%
32.2%
25.19
17.6%
23.5%
17.34
24.3%
32.6%
23.10
29.6%
42.6%
33.97
26.7%
38.0%
0.90
5.42
18.7%
14.0%
14.0%
0.74
4.88
6.8%
5.1%
5.2%
0.77
5.22
4.5%
2.6%
2.8%
0.77
5.38
8.8%
5.7%
5.9%
0.79
10.7%
7.0%
7.3%
FY09
705
315
-330
-63
1,091
-2,174
-2,089
-1,083
446
208
462
-89
1,031
FY10
331
415
768
134
1,060
-1,048
-1,128
12
238
28
-19
91
335
FY11
252
491
-233
-15
639
-1,627
-1,763
-987
319
509
207
-90
938
33
584
617
267
617
884
-186
884
698
FY12E FY13E
534
702
589
656
-578
-577
55
32
614 1,012
-1,288
-856
-1,164
-856
-674
156
11
0
589
10
-111
-8
-91
-91
398
-89
-152
698
546
67
546
613
297
Adrian Mowat
(852) 2800-8599

21 November 2012
KEPCO
Overweight
www.kepco.co.kr
Company overview
KEPCO is an integrated electric-utility company in Korea with 100% market share in
transmission and distribution, and a 94% market share in generation. KEPCO is the
largest listed utility in the Asia Pac by installed capacity. The government holds a 51%
stake, which is the minimum requirement of the government holding by KEPCO Act.
South Korea
Electric Utilities
Price: W27,350
Investment case
We expect KEPCOs fundamentals to improve through 2013 on multiple factors. First,
fuel prices have been trending down amidst slowing global economy and this trend, for
coal in particular, is expected to continue throughout 2013. Coal and LNG accounted
for 88% of fuel cost in 2011 and as such lower fuel prices should be a big plus to
earnings. Second, KEPCO is activating 4 new nuclear plants from 3Q12 to 3Q13 and
this will lead to a declining dependence on LNG and bunker C. Utilization of existing
nuclear plants will also improve from historical lows in 1H12. Third, stronger currency
is positive, as it lowers overall cost of fuel that is mostly imported. Lastly, we expect
the government to announce an annual price hike sometime in 2Q12, and this should
improve overall pricing to a level closer to fair level.
Alongside regulatory support and favorable changes in macro variables, we believe
KEPCO to go through an earnings normalization process throughout 2013 following an
abnormal period of earnings deterioration between 2008 and 2012 on artificially low
tariff and surging fuel cost.
Sungmin Chang, CFAAC

(82-2) 758 5719
sungmin.chang@jpmorgan.com
Bloomberg JPMA CHANG <GO>
Seoul Branch
30,000
28,000
W
26,000
24,000
22,000
20,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12

KOSPI (rebased)
Abs
Rel
YTD
9.0%
2.9%
1m
-1.3%
0.9%
3m
14.7%
12.0%
Source: Bloomberg.

Key downside risks to our earnings and PT include Won depreciation, negative
changes in public perception on nuclear plants, an unexpected rise in fuel costs and a
change in government stance on electricity tariff.
Our Jun-13 price target of W33,000 is based on 2012E P/BV of 0.39x, representing
32% premium to the average multiple for the stock over the past 12 months and the
mid-point of the trading range over the past five years or so.
Korea Electric Power Corporation (Reuters: 015760.KS, Bloomberg: 015760 KS)
Year-end Dec
FY11A
FY12E
FY13E
Revenue (W bn)
43,532
49,729
53,420
-654
-1,041
2,707
Net Profit (W bn)
-3,293
-1,923
343
EPS (W)
-5,289
-3,088
551
Revenue growth
10.2%
14.2%
7.4%
Operating Profit growth
-129%
59%
-360%
EPS growth
4672.5%
(41.6%)
(117.8%)
ROA
-2.5%
-1.4%
0.2%
ROE
-5.9%
-3.6%
0.7%
P/E (x)
NM
NM
49.6
P/BV (x)
0.3
0.3
0.3
EV/EBITDA (x)
9.7
11.4
7.7
EPS growth
4672%
-42%
-118%
298
FY14E
57,544
5,535
2,011
3,230
7.7%
104%
486.2%
1.3%
3.8%
8.5
0.3
6.6
486%
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg Daily vol (mn)
KOSPI
Exchange Rate
30,250 - 21,200
17,558
16,096
642
Dec
27,350
07 Nov 12
40.9%
51.84
46.08
2.0
1,938
1,090.80
12m
13.3%
12.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
KEPCO: Summary of Financials

Income Statement
Revenues
Industrial
Commercial
Residential
Other
Operating expenses
Fuel
Power purchase for resale
Maintenance
Depreciation
Other
Operating Profit
Non operating Income
Interest Income
Forex gains/loss
Other
Non-operating expenses
Interest Expense
Other
Recurring Profit
Extraordinary income/expense
Pretax Profit
Taxes
Net profit
EBITDA
EPS
FY11
FY12E FY13E
FY14E
43,532
49,729 53,420
57,544
-44,841
-51,425 -51,367 -52,664
-6,894
-7,101 -7,243
-7,460
-44,841
-51,425 -51,367 -52,664
-654
-1,041 2,707
5,535
-1,942
-1,964 -2,344
-2,697
292
110
110
110
-2,124
-2,170 -2,529
-2,881
-2,473
-2,870
512
3,002
820
-947
169
991
-3,293
-1,923
343
2,011
6,240
6,060 9,950
12,995
(5,288.79) (3,087.83) 551.06 3,230.40
Cash flow statement

FY11
FY12E
FY13E
FY14E
Operating cash flow

Net Profit
Forex losses (gains)
Other
4,145
-3,293
6,894
-
5,143
-1,923
7,101
-
9,383
343
7,243
-
9,099
2,011
7,460
-
-13,598 -17,537
-12,243 -17,533
-
-17,253
-16,350
-
Investment cash flow

Capex
Chg in investment assets
Other
Financing cash flow
Chg in short-term debt
Chg in long-term debt
Inc (dec) in common shares
Inc (dec) in share premium reserve
Dividends paid
Others
Cash flow from Others
Chg in cash
Cash at beg of year
Cash at end of year
-11,196
-10,560
6,341
0
-702
2,090
1,388
8,455
0
1
1,388
1,389
8,155
0
1
1,389
1,390
8,155
0
1
1,390
1,391
Balance sheet
Current assets
St. Investment Assets
Accounts receivable
Accrued Receivable
Inventories
Fixed assets
Investments assets
Tangible assets
Intangible assets
Total Assets
Current liabilities
Accounts payable
Short-term borrowings
CPLTD
Long-term liabilities
Long-term debt
Other long-term liabilities
Total Liabilities
Capital stock
Capital surplus
Retained earnings
Capital adjustments
Total equity
Financial ratios
W, year end Dec
Growth (% y-y)
Revenue
Operating profit
Recurring profit
Net profit
EBITDA
EPS
Margins (%)
Operating profit
Recurring profit
Net profit
EBITDA
ROE
ROA
Ratios
Net debt/equity (%)
Liabilities/equity (%)
Receivables turnover (x)
Per share data (Won)
Sales
Book value
DPS
EBITDA
FY11 FY12E
14,126 15,228
1,388
1,389
531
581
6,267
6,600
3,852
4,287
343
423
9,108 10,140
112,385 117,927
849
959
FY13E FY14E
15,880 16,933
1,390
1,391
781
981
7,118
7,698
4,007
4,058
503
583
10,424 10,710
124,494 131,061
979
999
136,468
17,741
3,133
7,006
7,602
64,923
39,199
25,724
82,664
35,769
53,804
144,254
19,041
3,333
7,806
7,902
73,376
46,899
26,478
92,417
33,802
51,837
151,777
20,341
3,533
8,606
8,202
79,300
54,299
25,002
99,642
34,100
52,135
159,704
21,641
3,733
9,406
8,502
83,961
61,699
22,262
105,602
36,067
54,102
FY11
FY12E
FY13E
FY14E
14.2%
7.4%
59%
-360%
-41.6% -117.8%
-2.9%
64.2%
(41.6%) (117.8%)
7.7%
104%
486.2%
30.6%
486.2%
10.2%
-129%
4672.5%
-24.5%
4672.5%
(1.5%)
-7.6%
14.3%
(5.9%)
(2.5%)
(2.1%)
-3.9%
12.2%
(3.6%)
(1.4%)
5.1%
0.6%
18.6%
0.7%
0.2%
9.6%
3.5%
22.6%
3.8%
1.3%
82.3%
153.6%
3.41
6.95
101.7%
178.3%
2.94
7.53
116.5%
191.1%
4.11
7.50
127.0%
195.2%
4.69
7.48
69,916
86,413
0
10,022
79,869
83,253
0
9,732
85,796
83,733
0
15,980
92,420
86,891
0
20,871
299
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.kpjhealth.com.my
Company overview
KPJ is the largest private healthcare provider in Malaysia, predominantly with a
community-based network, with 21 hospitals across Malaysia (22% market share) and
two more in Indonesia. Major shareholder, Johor Corporation, holds a ~40% stake.
Malaysia
Hospitals
Investment case
KPJ is a clear beneficiary of Malaysias rising healthcare spending. We believe the
company is poised to benefit from Malaysias step-up in healthcare spending (only 5%
of its developed peers like US and Australia). Benchmarking against Singapores
healthcare spending per capita of US$1,373 from Malaysias US$307 currently
suggests an addressable market of US$38.2B vs.US$8.5B currently.
Price: M$6.01
Hoy Kit, MakAC

(60-3) 2270 4728
JPMorgan Securities (Malaysia) Sdn Bhd

(18146-X)
6.5
5.5
M$

Visible domestic-led growth is a key attraction, in our view. KPJs asset-light managed
expansion plan has managed to achieve 26% earnings CAGR over the last six years.
Going forward, we expect a three-year earnings CAGR of 20% p.a. led by seven new
hospitals, adding 990 new beds (+38% to existing capacity) at M$884MM. KPJ is able
to expand rapidly while maintaining low net gearing levels (22%) by disposing its
hospital buildings to 49%-owned Al-Aqar REIT. This asset light model, we estimate,
drives ROE expansion from 15.9% if FY11 to 19.6% in FY14E.
4.5
3.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12
KPJH.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
29.5%
21.1%
1m
-0.8%
0.5%
3m
-3.5%
-3.4%
12m
47.7%
37.5%
Source: Bloomberg.

Key earnings risks include stronger-than-expected competition form other private
healthcare operators and potentially from liberalisation of sector. Any delays to KPJs
expansion plans could also have a negative impact on earnings.
Our Dec-13 PT of M$7.10 is based on our DCF valuation, using a WACC of 10% and
terminal growth rate of 3%. After ascribing a 20% discount (due to liquidity
constraints), we arrive at our PT, implying 2013 P/E of 20.2x, comfortably below
regional peers at 30.7x. Key risks to investment view as above.
KPJ Healthcare Berhad (Reuters: KPJH.KL, Bloomberg: KPJ MK)
FY10A
FY11A
FY12E
Revenue (M$ mn)
1,655
1,891
2,119
Core Net Profit (M$ mn)
112
130
152
Reported EPS (M$)
0.23
0.24
0.26
Adjusted EPS (M$)
0.22
0.20
0.25
DPS (M$)
0.08
0.16
0.13
Revenue growth (%)
13.6%
14.3%
12.0%
Adj. EPS growth (%)
1.0%
-7.3%
23.9%
ROCE
13.2%
14.0%
15.7%
ROE
17.0%
15.9%
16.4%
Adjusted P/E (x)
27.9
30.1
24.3
P/BV (x)
4.4
4.0
3.6
EV/EBITDA (x)
14.8
12.4
10.5
Dividend Yield
1.3%
2.6%
2.2%
300
FY13E
2,430
187
0.32
0.30
0.16
14.7%
21.1%
18.2%
18.1%
20.1
3.2
8.6
2.7%
FY14E
2,782
226
0.39
0.36
0.19
14.5%
20.1%
20.8%
19.6%
16.7
2.9
7.1
3.2%
Company Data
Shares O/S (mn)
Market cap (M$ mn)
Market cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
FBMKLCI
Exchange Rate
Fiscal Year End
641
3,850
1,257
6.01
09 Nov 12
24.3%
0.64
3.96
1.32
1,641
03.06
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
KPJ Healthcare Berhad: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Adjusted EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Cash flow statement

FY11 FY12E FY13E FY14E M$ in millions, year end Dec
1,891 2,119 2,430 2,782 Earnings before tax
242
283
346
417 Taxes
19.7% 16.7% 22.3% 20.5% Others
171
206
254
312
19.6% 20.5% 23.1% 22.7% Capex
9.0%
9.7% 10.5% 11.2% Disposal/(purchase)
-6
-9
-7
-7 Free cash flow
192
223
273
332
14.3% 16.1% 22.6% 21.3% Equity raised/(repaid)
47
56
68
24.7% 25.0% 25.0% 25.0% Other
131.7 152.2 186.6 226.4 Dividends paid
10.8% 15.6% 22.6% 21.3% Beginning cash
585
585
585
585 Ending cash
0.24
0.26
0.32
0.39 DPS
6.8%
7.9% 22.6% 21.3%
0.20
0.25
0.30
0.36
-7.3% 23.9% 21.1% 20.1%
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E M$ in millions, year end Dec
197
177
212
171
164 EBITDA margin
298
301
330
374
428 EBIT margin
42
45
45
51
57 Net margin
12
10
11
12
12
550
534
598
607
661
LT investments
28
29
29
29
29 Sales growth
Net fixed assets
537
617
740
848
Intangibles
136
166
171
176
181 EPS growth
Other LT Assets
429
420
429
439
449 Adjusted EPS growth
Total Assets
1,680 1,765 1,967 2,099 2,263
Liabilities
Short-term loans
363
120
114
108
Payables
308
249
425
483
547 Sales/assets
Others
54
72
72
72
72 Assets/equity
725
440
610
663
722 ROE
Long-term debt
37
274
260
247
235 ROCE
Other liabilities
55
60
29
29
33
Total Liabilities
817
774
900
939
990
Minorities
95
108
93
74
52
769
883
974 1,086 1,221
BVPS
1.37
1.51
1.67
1.86
2.09
FY10
1,655
13.6%
30.5%
203
9.2%
12.2%
143
2.9%
8.7%
-6
168
15.3%
42
24.8%
118.9
5.5%
560
0.23
2.6%
0.22
1.0%
FY10
168
59
-19
-36
16
188

192
223
273
332
71
76
92
105
-65
147
8
4
-32
-56
-68
-83
-13
-33
-34
-34
152
358
271
324
-250
65
3
-197
40
-4
-200
0
158
-200
0
71
-200
0
124
69
31
-8
-42
144
197
0.08
13
-5
42
-64
197
177
0.16
0
-20
0
-104
177
212
0.13
0
-19
0
-93
212
171
0.16
0
-18
0
-113
171
164
0.19

12.2% 12.8% 13.3% 14.2% 15.0%
8.7% 9.0%
9.7% 10.5% 11.2%
7.2% 7.0%
7.2%
7.7%
8.1%
10.5% 10.2%
13.6% 14.3%
5.5% 10.8%
2.6% 6.8%
1.0% -7.3%
4.6%
12.0%
15.6%
7.9%
23.9%
14.7%
14.7%
22.6%
22.6%
21.1%
14.5%
14.5%
21.3%
21.3%
20.1%
31.44
18.7%
26.3%
1.08
2.19
17.0%
13.2%
30.63
12.4%
16.7%
1.14
2.02
16.4%
15.7%
47.52
13.3%
17.0%
1.20
1.93
18.1%
18.2%
56.19
11.6%
14.3%
1.28
1.85
19.6%
20.8%
38.08
17.7%
24.5%
1.10
2.00
15.9%
14.0%
301
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Kroton
Price: R$42.70
www.kroton.com.br
Price Target: R$45
End Date: Dec 2013
Company overview
Kroton is the leading provider of undergraduate distance learning in Brazil, with 270k
students, while also being a major player in on-campus higher education with 141k
students. The company also provides learning systems for the K-12 segment, serving
289k students and 822k schools. On-campus higher education, distance learning, and
K-12 represent 61%, 27%, and 11% of 2012E net revenues, respectively.
Investment case
Kroton should continue to benefit from FIES (subsidized loans for low income
students) expansion. Also, maintenance of high employment levels and increasing
wage mass are important as more than half of its students are not in FIES. Another
important driver for Kroton would be permission from the Education Ministry to open
new learning centers for its distance learning operation, expected for 2013.
Brazil
Education
(55-11) 4950-3756
marcelo.p.santos@jpmorgan.com
45
R$
35
25
15
Nov-11
Feb-12
May-12
Aug-12
Nov-12
KROT11.SA share price (R$)

IBOV (rebased)
Kroton trades at 20x 12m fwd P/E, which is in line with Brazilian peers. We believe
most of the upside for the stock should come from earnings revisions.
Source: Bloomberg.

Kroton is expected to open new distance learning centers during 2013 and 2014, and
earnings might be revised down if the company is unable to do so. The company may
open 40 new centers in 2013, but it needs permission from the government to open
more centers.
Our Dec 2013 PT of R$45 is based on a DCF model employing a 13% WACC and
4.5% perpetuity growth rate, all in R$ nominal terms. At our target, Kroton would trade
at 16x P/E forward, and the upside we expect for the stock should come from strong
earnings growth. Key downside risks include Kroton not receiving permission to open
new distance learning centers, bad debt increasing, negative evaluation from the
Education Ministry and restrictions on education funding from the government.
Kroton Educacional SA (KROT11.SA;KROT11 BZ)
FYE Dec
2011A
EPS (R$)
FY
0.00
0.52
EBITDA FY (R$ mn)
91
93
mn)
P/E FY
302
2013E
2014E
2015E
1.98
2.11
482
466
2.56
2.64
569
556
3.23
664
-
22.9
17.7
14.0
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
42.70
14 Nov 12
45.88 - 17.38
5,402.11
Dec
119
45.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Kroton: Summary of Financials

Income Statement
Revenues
% Revenue growth
Cash Costs
EBITDA
%EBITDA margin
% EBITDA growth
Recurring EBITDA
% Rec. EBITDA margin
% Rec. EBITDA growth
EBITDA - consensus
D&A
Operating Income
Net Financial Expense
Equity income
Pre-tax Income
Income Tax
% tax rate
Minority interest
Net income
Shares Outstanding
EPS
Recurring EPS
% EPS growth
EPS - consensus
Fx eop
Cash Flow
Net Income
D&A
Cash Flow from Operations
Capex
Capex as % of Revenue
Free cash flow to Equity
Acquisitions / Licenses
Cash flow from Investing
Dividends Paid
Payout Ratio
Capital Increase
Change in debt
Other cash flow
Change in cash
FY11A
714
11.3%
(623)
91
12.7%
251.4%
49
6.8%
(540.8%)
93
(42)
49
0
(5)
0.00
43
(5)
(12.0%)
0
38
85
0.00
0.62
0.52
0.00
FY11A
38
42
(68)
12
(46)
(6.4%)
(34)
-1,300
(1,346)
0
0.0%
364
937
158
1,459
125
FY12E
1,360
90.5%
(1,023)
337
24.8%
270.7%
245
18.0%
402.2%
351
(92)
245
0
(59)
0.00
186
(12)
(6.2%)
0
177
133
1.33
1.76
1.59
0.00
FY12E
177
92
(118)
150
(150)
(11.0%)
0
-22
(172)
FY13E
1,704
25.3%
(1,221)
482
28.3%
43.3%
369
21.7%
50.7%
466
(113)
369
0
(88)
0.49
281
(17)
(6.2%)
0
263
133
1.98
2.23
2.11
0.00
FY13E
263
113
(28)
349
(162)
(9.5%)
187
-45
(207)
FY14E
1,972
15.8%
(1,403)
569
28.8%
17.9%
438
22.2%
18.5%
556
(131)
438
0
(75)
0.64
363
(23)
(6.2%)
0
340
133
2.56
2.81
2.64
0.00
FY14E
340
131
(45)
426
(158)
(8.0%)
269
-47
(205)
FY15E
2,261
14.6%
(1,596)
664
29.4%
16.8%
520
23.0%
18.8%
(145)
520
0
(61)
0.81
459
(28)
(6.2%)
0
430
133
3.23
3.49
0.00
FY15E
430
145
(48)
527
(181)
(8.0%)
346
-49
(230)
Balance Sheet
Cash
Current assets
Net PP&E
Intangibles
Other Non Current Assets
Total assets
FY15E
783
711
1,494
573
2,943
5,010
Short-term debt
Other Current liabilities
Current Liabilities
Long Term Debt
Other Non Current liabilities
Total liabilities
Minority interest
421
218
218
218
218
162
197
247
286
328
584
415
465
504
546
607
750
750
750
750
300
433
433
433
433
1,491 1,599 1,648 1,687 1,729
0
0
0
0
0
1,475 2,505 2,703 2,958 3,281
Net debt
Net Debt/EBITDA
Net Debt, reported
Working Capital
Working Capital as % of Revenues
877
586
444
223
(74)
9.7
1.7
1.1
0.7
0.3
877
586
510
374
185
143
261
289
335
383
20.1% 19.2% 17.0% 17.0% 16.9%
Fx avg
Valuation, Macro
EV/EBITDA
P/E
FCF yield
Dividend yield
ROE, eop
ROE, avg
ROIC, eop
ROIC, avg
Net Debt / Capital (book)
Net Debt / Capital (market)
0
66
85
108
0.0% 25.0% 25.0% 25.0% Risk Free Rate
852
0
0
0 Country Risk
(61)
0
0
0 Beta
133
0
0
0 Ke
925
(66)
(85) (108) Kd, post tax
903
76
136
189 WACC


151
382
458
594
306
459
537
621
457
840
994 1,215
246
360
443
503
2,263 2,903 2,914 2,927
2,966 4,104 4,351 4,646
1.68
1.94
2.01
2.07
2.14

41.7 15.3 10.4
8.4
6.7
- 34.1 22.9 17.7 14.0
(1.2%) 0.0% 4.1% 5.9% 7.6%
0.0% 0.0% 1.1% 1.4% 1.8%
2.6% 7.0% 9.7% 11.5% 13.1%
3.5% 7.0% 9.7% 11.5% 13.1%
1.9% 7.1% 10.1% 11.1% 12.2%
3.4% 7.1% 10.1% 11.1% 12.2%
29.6% 14.3% 11.7% 8.1% 3.7%
34.7% 23.6% 22.2% 20.8% 19.3%
0.0%
7.6%
0.00
11.2%
6.3%
0.0%
303
Adrian Mowat
(852) 2800-8599

21 November 2012
Kunlun Energy Company Limited
Overweight
www.cnpc.com.hk
Company overview
The designated listed platform for CNPCs natural gas business, Kunlun Energy, has
successfully transformed from a pure exploration and production (E&P) player in oil and
gas into a major natural gas player in the nation through a series of asset injections since
2008. Kunlun has one of the most diversified natural gas assets amongst listed peers,
from long distance pipelines and LNG terminals in the midstream to city gas projects
and CNG / LNG refueling stations in the downstream.
Hong Kong
Utilities
Price: HK$15.00
Investment case
While the timing of the next asset injection from the parent is uncertain and no other
major company-specific catalysts are on the horizon over the next three months, the
following positives can drive the stock for further outperformance over the next 6-18
months, in our view, even without any new assets coming in: 1) NT and MT midstream
pipeline demand growth; 2) lower regulatory risks; and (3) market expectations on
Kunluns LNG terminals & refueling stations are relatively conservative due to concerns
on potential utilization disappointments.
With the expected cold weather in the upcoming winter, we believe gas demand will
remain strong in Northern China where Kunluns Shaanjing Pipelines are located. Also,
thanks to its mid-stream gas pipelines, Kunlun is least affected by any potential
upstream gas cost hikes and connection fee cuts amongst listed peers.
Boris KanAC
(852) 2800 8573
boris.cw.kan@jpmorgan.com
Bloomberg JPMA KAN <GO>
Limited
15
13
HK$
11
9
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
31.8%
29.7%
1m
9.8%
4.9%
3m
20.2%
15.3%
12m
35.1%
39.3%
Source: Bloomberg.

Key investment positives include: 1) strong government support, good growth prospects;
(2) strong support & potential asset injections; (3) mid-stream pipeline offers defensive
growth; (4) LNG refueling stations a LT growth driver; (5) E&P business a cash cow.
Key investment risks include: 1) uncertainty on timing & valuation of asset injections;
(2) slower-than-expected ramp-up of LNG terminals; and (3) earnings impact due to
merger accounting.
Our Dec-13 PT of HK$17.5 is based on our SOTP valuation: Downstream natural gas
(HK$3.8), Mid-stream pipeline (HK$9.5), LNG terminal & plant (HK$1.1), E&P
(HK$1.5) and premium from asset injection (HK$1.6). Key risks include: 1) uncertainty
on timing & valuation of asset injections; (2) slower-than-expected ramp-up of LNG
terminals; and (3) earnings impact due to merger accounting.
Kunlun Energy Company Limited (Reuters: 0135.HK, Bloomberg: 135 HK)
HK$ in mn, year-end Dec
FY10A
FY11A
FY12E
FY13E
Revenue (HK$ mn)
17,336
25,398
34,499
43,697
EBIT (HK$ mn)
6,418
8,099
11,003
14,165
Net Profit (HK$ mn)
4,194
5,609
7,482
8,684
EPS (HK$)
0.59
0.78
0.96
1.08
Net profit growth (%)
239.9%
33.7%
33.4%
16.1%
EPS growth (%)
113.8%
33.6%
23.0%
11.8%
Net Gearing (%)
-50.4%
52.1%
18.2%
12.5%
P/E (x)
25.5
19.1
15.5
13.9
EV/EBITDA (x)
38.1
11.7
8.7
7.2
P/BV (x)
4.0
3.5
2.6
2.3
ROE (%)
20.1%
19.5%
19.5%
17.6%
DPS (HK$)
0.10
0.22
0.27
0.31
Dividend yield (%)
0.6%
1.5%
1.8%
2.0%
304
FY14E
56,505
18,142
10,636
1.32
22.5%
22.5%
-0.9%
11.4
5.8
2.0
18.9%
0.37
2.5%
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSCEI
Exchange Rate
Fiscal Year End
8,048
120,726
15,577
15.00
09 Nov 12
38.0%
22.39
10,527
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Kunlun Energy Company Limited: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY11
25,398
46.5%
12,187
32.5%
8,099
26.2%
31.9%
-226
10,450
25.2%
-2,281
21.8%
5,609
33.7%
7,169
0.78
56.4%
FY12E
34,499
35.8%
15,899
30.5%
11,003
35.9%
31.9%
-288
14,018
34.1%
-3,060
21.8%
7,482
33.4%
8,048
0.96
23.0%
FY13E
43,697
26.7%
19,619
23.4%
14,165
28.7%
32.4%
-295
16,466
17.5%
-3,594
21.8%
8,684
16.1%
8,048
1.08
11.8%
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY11
11,689
724
563
3,572
16,548
FY12E
22,140
983
765
5,797
29,685
FY13E
27,071
1,246
969
7,343
36,628
8,020
57,831
84,069
9,799
66,435
107,589
11,234
74,481
124,013
2,611
8,853
1,045
12,509
24,964
1,009
38,482
30,476
4.25
3,133
9,662
1,419
14,215
27,460
1,009
42,684
46,317
5.75
3,447
12,239
1,798
17,483
30,206
1,009
48,698
52,539
6.53
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY14E
56,505
29.3%
24,005
22.4%
18,142
28.1%
32.1%
-294
20,153
22.4%
-4,399
21.8%
10,636
22.5%
8,048
1.32
22.5%
Cash flow statement

EBIT
Taxes
Others
Capex
Disposal/(purchase)
Free cash flow
Net Interest
Others
Cash flow from financing act.
Net Inc (dec) in cash
Effect of exchange rate
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net profit margin
FY14E
34,184
1,611
1,253
9,495
46,543 SG&A/Sales
12,535 Sales growth
140,866 EPS growth
2,325 Sales/assets
21,597 Assets/equity
30,206 ROE
1,009
52,813
60,160
7.47
FY11
8,099
4,088
-1,520
-2212
9,584
-16,576
247
-6,992
-226
96
9,670
7,946
3,259
8,168
11,689
0.22
FY12E
11,003
4,896
-1,503
-3060
11,336
-13,500
0
-2,164
-288
10,480
3,019
10,851
10,451
11,689
22,140
0.27
FY13E
14,165
5,454
943
-3594
16,968
-13,500
0
3,468
-295
0
3,059
16
4,931
22,140
27,071
0.31
FY14E
18,142
5,863
1,313
-4399
20,919
-11,500
0
9,419
-294
0
0
-3,624
7,113
27,071
34,184
0.37
FY11
48.0%
22.1%
FY12E
46.1%
21.7%
FY13E
44.9%
19.9%
FY14E
42.5%
18.8%
6.3%
46.3%
6.3%
25.2%
6.3%
22.0%
6.3%
29.3%
33.7%
56.4%
53.92
31.1%
52.1%
0.34
2.76
19.5%
33.4%
23.0%
55.26
12.5%
18.2%
0.36
2.32
19.5%
16.1%
11.8%
66.51
8.1%
12.5%
0.38
2.36
17.6%
22.5%
22.5%
81.65
-0.6%
-0.9%
0.43
2.34
18.9%
305
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.lenovo.com
Company overview
Lenovo is the worlds largest personal computer (PC) manufacturer. In 2005, it
acquired IBMs PC division. Lenovo overtook Hewlett-Packard in terms of global PC
shipments in 2012. The Beijing-based company has recently been expanding into
smartphones, tablets and all-in-one PC/TV monitors.
China
Computer Hardware
Investment case
1) The company has very strong traction in smartphones. Lenovo is currently No. 2 in
China with 14% market share and we expect it to overtake Samsung as the No. 1
smartphone vendor in China in the next few quarters. 2) Its ability to deliver strong
growth in PC units and profits even though demand of PCs in China has been tepid. 3)
Lenovo has gained market share in every geography and PC vertical.
Bloomberg JPMA HARIHARAN<GO>
Price: HK$6.82
Gokul HariharanAC
(852) 2800-8564
gokul.hariharan@jpmorgan.com

Limited
7.5

1) In 3Q12, Lenovo sold more smartphones than feature phones, so its average selling
price (ASP) actually went up as the overall ASP for cell phones in the market fell. 2)
We believe that sluggish growth in Chinas PC market is a short-term problem. PC
penetration in China's small cities and towns remain quite low. Lenovo is one of three
domestic PC makers to qualify for the Chinese government's energy efficiency subsidy
scheme; 3) Out of Lenovos Top 7 markets, Lenovo is making money in all of them
and No. 1 in five markets. Lenovo is No. 4 in the U.S., but profitable. Lenovo is losing
money in Brazil, but the company recently acquired Digibas, which owns the domestic
consumer electronics CCE brand. We believe that Lenovo will be able to start making
money in Brazil after the CCE acquisition closes in 1Q13.
HK$
6.5
5.5
4.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12

MSCI-Cnx (rebased)
Abs
Rel
YTD
31.7%
21.0%
1m
10.9%
8.7%
3m
12.2%
6.2%
12m
23.3%
19.8%
Source: Bloomberg.

1) Execution issues in the European consumer PC market and, hence, pressure on
margins. 2) A sharp slowdown in enterprise, which could result in downside to
enterprise demand. 3) A near-term slowdown in Chinas economic growth.
Our Mar-13 PT of HK$8.10 is based on 14x FY14E earnings (fully diluted). Lenovo
has historically traded at 11x-21x, with multiples at the high end of the range during
periods of margin expansion. As we expect stronger earnings in PCs and strong
Smartphone momentum in FY13, we believe a 14x forward P/E multiple is justified.
(Year-end Mar, $ mn)
Sales
Operating Profit
EBITDA
Pretax Profit
Adj. Net Profit
EPS ($)
Net Cash
Y/E BPS ($)

21,594 29,574 33,896 37,895
382
583
794
993
740
934 1,119 1,364
362
582
793
993
266
473
596
758
0.028 0.047 0.058 0.074
2,433 3,385 3,480 4,523
0.19
0.26
0.23
0.28
Source: Company data, Bloomberg, J. P. Morgan estimates.
306
P/E
P/BV (x)
ROE(%)
Cash Div ($)
Quarterly EPS ($)
EPS (12)
EPS (13) E
EPS (14) E
FY11
31.1
4.5
15.9
0.013
1Q
0.011
0.013
0.017
FY12
18.9
3.4
22.1
0.018
2Q
.014
.015
.020
FY13E
15.2
3.9
26.0
0.024
3Q
.014
.018
.025
FY14E
11.9
3.2
32.0
0.028
4Q
0.006
0.011
0.010
Target Price (HK$)

52-Week range (HK$)
Share Outstanding
Free float
Avg daily volume
Avg daily val (USD)
Dividend Yield (FY2013)
Index (HSI)
Market Cap(USD)
8.1
7.71 - 5.00
10,322mn
43.0%
12mn
48.42mn
2.8%
5,966
9,082mn
Adrian Mowat
(852) 2800-8599

21 November 2012
Lenovo Group Limited: Summary of Financials

$ in millions, year end Mar
FY11
Revenues
21,594
Cost of goods sold
19,230
Gross Profit
2,364
R&D expenses
-303
SG&A expenses
-2
382
EBITDA
740
Interest income
25
Interest expense
-45
-20
Earnings before tax
362
Tax
-85
273.2
266
EPS (reported)
0.03
EPS (adjusted)
0.03
BVPS
0.19
DPS
0.013
Shares outstanding
9,419
Balance sheet
FY11
2,954
Accounts receivable
1,761
Inventories
804
Others
2,418
Current assets
7,936
LT investments
Net fixed assets
2,769
Others
Total Assets
10,706
Liabilities
ST Loans
521
Payables
Others
7,511
8,033
Long-term debt
0
Other liabilities
838
Total Liabilities
8,871
1,835
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY12
29,574
26,128
3,446
-453
-2
583
934
43
-43
-1
582
-107
473.0
473
0.05
0.05
0.26
0.018
9,419
FY13E
33,896
29,856
4,039
-520
-2
794
1,119
42
-43
-1
793
-180
595.5
596
0.06
0.06
0.23
0.024
9,419
FY14E
37,895
33,433
4,462
-497
-2
993
1,364
47
-47
0
993
-206
758.0
758
0.07
0.07
0.28
0.028
9,419
FY11
10.9%
3.4%
1.8%
1.3%
1.4%
7.3%
FY12
11.7%
3.2%
2.0%
1.6%
1.5%
7.6%
FY13E
11.9%
3.3%
2.3%
1.8%
1.5%
7.0%
FY14E
11.8%
3.6%
2.6%
2.0%
1.3%
6.6%
Sales growth
Net profit growth
EPS (reported) growth
30.0%
181.7%
111.2%
97.8%
37.0%
52.7%
73.1%
65.1%
14.6%
36.3%
25.9%
24.3%
11.8%
25.0%
27.3%
27.4%

Net debt to equity
Asset turnover
Working capital turns (x)
ROE
ROIC
ROIC (net of cash)
Cash flow statement
Net income
Other
Capex
Disposal/(purchase)
Free cash flow
Other
Dividends paid
36.22
-103.3%
-132.6%
2.20
15.9%
-
1,182.14
-120.0%
-138.3%
2.23
22.1%
-
1,962.01
-138.1%
-163.2%
2.17
26.0%
-
-151.1%
-173.6%
2.36
32.0%
-
FY12
3,758
2,994
1,218
3,850
11,820
4,040
15,861
FY13E
3,868
3,428
1,338
2,960
11,594
3,749
15,343
FY14E
4,911
3,735
1,458
3,226
13,330
3,452
16,782
FY11
273.2
359
610
1,025
-44
-195
1,025
0
-181
112
-125
-194
FY12
473.0
351
844
460
19
-411
460
0
-148
765
-187
429
FY13E
595.5
324
-519
565
-5
-180
565
0
15
638
-268
386
FY14E
758.0
372
273
1,278
0
79
1,278
0
0
0
-314
-314
373
11,437
11,810
0
1,603
13,413
2,448
388
10,581
10,969
0
2,242
13,210
2,133
388
11,548
11,935
0
2,242 Net change in cash
2,606 Ending cash
636
2,238
2,954
478
2,954
3,758
771
3,758
3,868
1,043
3,868
4,911
307
Adrian Mowat
(852) 2800-8599

21 November 2012
LG Display
Overweight
www.lgdisplay.com
Company overview
LG Display Co Ltd develops and manufactures digital display products. The
companys products include thin-film transistor-liquid crystal displays (TFT-LCD) for
notebooks and desktop computer monitors, TVs, mobile phones, and medical
equipment. LGDs key customers are Apple, LG Electronics, Phillips, Vizio and
Panasonic/Toshiba.
South Korea
Semiconductors
Investment case
LGD had been de-rated due to saturated TV market and prolonged losses. Meanwhile,
the company has significantly changed its product mix and cost structure along with
prudent capex management. Those efforts are paying off and we expect to see both
earnings growth and valuation multiple expansion going forward.

Seoul Branch
Price: W35,400

Amid stagnant macro economies and muted LCD TV market growth, LGD continued
its growth in specialty products and mobile display. Although we expect business
revenue and OP contribution from smartphone/smartbook display in 2013 to decline,
we think momentum remains intact and estimate combined revenue and OP to grow by
~30% in 2013.
Although we expect near-term panel prices to remain stable, decelerating demand from
TV and PC remain our major concerns for panel makers. Mobile display, on the other
hand, could continue to show robust growth in 2013. We believe LGD has
technological leadership in mobile display, a solid customer base and healthy balance
sheet that could continue to widen its lead against peers.
JJ ParkAC
(822) 758 5717
jj.park@jpmorgan.com
Bloomberg JPMA PARK <GO>
40,000
35,000
W 30,000
25,000
20,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12

KOSPI (rebased)
Abs
Rel
YTD
44.5%
40.2%
1m
34.3%
38.1%
3m
40.2%
42.1%
12m
53.6%
53.8%
Source: Bloomberg.

LGD's share price has appreciated by 30% over the past three months thanks to
substantial earnings improvement coupled with progress in product mix. Given
meaningful FCF and mid-teens ROE, we expect the stock to maintain its upward trend.
Our P/BV-based June-2013 PT of W40,000 implies 1.2x FY13E book. Key downside
risks are lower-than-expected TV panel prices and margins; prolonged uncertainty
around end-demand / inventories.
Bloomberg 034220 KS, Reuters 034220.KS
(YE Dec, W bn)
FY10
FY11 FY12E FY13E
Sales
25,512 24,291 28,912 31,402 Sales growth
Operating Profit
1,310
-924
498
1,922 OP growth
EBITDA
4,236
2,727 4,904
6,127 NP growth
Net profit
1,159
-788
280
1,676 Quarterly EPS (W)
EPS
3,240
-2,202
783
4,683 EPS (11)
BPS (W)
30,912 28,314 29,115 33,298 EPS (12) E
P/E (x)
10.9
NM
45.2
7.6 EPS (13) E
P/BV (x)
1.1
1.3
1.2
1.1 Price Target
ROE (%)
10.9
-7.4
2.7
15.0 Consensus PT
Net Debt
1,510
33 -1,334
-154 Difference (%)
308
FY10 FY11
27% -5%
30%
NM
4%
NM
1Q
2Q
-323
60
-361 -314
1,007 1,144
40,000
33,149
20.7
FY12E
19%
NM
NM
3Q
-1,922
442
1,386
FY13E Date of Price

9% 52-Week range
286% Market Cap
498% Market Cap
4Q Share Out. (Com)
-17 Free float
1,017 Avg daily val
1,146 Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Exchange Rate
09 Nov 12
W31,450 - 19,600
W12,667B
US$11,536MM
358MM
56.0%
W68.2B
54.75MM
2.4MM shares
0.0
1,098.05

21 November 2012
Adrian Mowat
(852) 2800-8599
LG Display: Summary of Financials

Income Statement
Revenues
COGS
Depreciation
Gross Profit
EBIT
Net Interest Income
Pre-tax Profit
Tax Expense/(Credit)
Net income
Shares outstanding (mil.)
EPS (W)
Sequential Growth
Revenues
Gross Profit
EBIT
Pre-tax Profit
EPS
FY10
25,512
-21,781
-2,926
3,731
1,310
-53
1,266
-106
1,159
358
3,240
FY11
24,291
-23,081
-3,651
1,210
-924
-86
-1,081
293
-788
358
-2,202
FY12E
28,912
-25,949
-4,406
2,963
498
-121
383
-103
280
358
783
FY13E
31,402
-27,144
-4,204
4,258
1,922
-72
1,862
-186
1,676
358
4,683
27%
46%
30%
25%
4%
-5%
-68%
NM
-185%
NM
19%
145%
NM
-135%
NM
9%
44%
286%
386%
498%
FY10
1,159
2,926
1,439
1,740
5,826
-274
-6,783
-60
1,043
-75
-179
729
-228
3,362
3,134
500
FY11
-788
3,651
1,509
2,511
5,375
5
-5,939
0
-95
37
-179
-237
-801
3,134
2,333
500
FY12E
280
4,406
-188
220
4,907
44
-4,137
0
-542
6
0
-536
234
2,333
2,567
0
FY13E
1,676
4,204
-277
-1,466
4,414
19
-3,801
0
-1,614
0
-179
-1,793
-1,180
2,567
1,387
500
Quarterly Data
1Q12A
2Q12A
Sales
6,184
6,910
Net income
-129
-112
EPS (W)
-361
-314
3Q12E
4Q12E
Cash flow statement

Net income
Other non-cash items
Disposal/(purchase)
Other charges
Cash dividends
Net Changes in Cash
Beginning cash
Ending cash
DPS (W)
7,593
158
442
8,225
364
1,017
Balance sheet
Accounts receivable
Inventories
Current assets
FY10
3,134
3,001
2,215
491
8,840
FY11
2,333
2,317
2,740
468
7,858
FY12E
2,567
2,740
2,794
689
8,790
FY13E
1,387
2,592
2,644
652
7,274
LT investments
Net fixed assets
Total Assets
1,662
12,815
540
23,858
2,073
14,697
535
25,163
2,228
14,316
491
25,826
2,249
13,912
472
23,907
ST Debt and CPLTD

Account Payables
Long-term debt
Other Long term liabilities
Total Liabilities
Total Liabilities and Equity
BVPS (W)
Ratio Analysis
(%)
Gross margin
EBIT margin
Net profit margin
COGS/sales
2,101
2,962
3,819
8,882
2,543
1,372
12,797
11,061
23,858
30,912
22
3,783
5,328
9,911
2,344
1,398
15,032
10,131
25,163
28,314
38
4,888
5,140
11,067
1,195
1,800
15,408
10,418
25,826
29,115
38
3,364
4,863
8,505
1,195
1,347
11,992
11,915
23,907
33,298
FY10
15%
5.1%
5%
-
FY11
5%
-3.8%
-3%
-
FY12E
10%
1.7%
1%
-
FY13E
14%
6.1%
5%
-

Sales growth
EBIT growth
Net profit growth
EPS growth
27%
27%
30%
4%
4%
-5%
-5%
NM
NM
NM
19%
19%
NM
NM
NM
9%
9%
286%
498%
498%

Inventory Turnover (x)
Net debt to equity
Sales/assets
Assets/equity
ROE
Quarterly Data
Sales
Net income
EPS (W)
79.44
11.52
10%
14%
1.2
1.81
11%
1Q13E
31.53
8.87
0%
0%
1.0
2.48
-7%
2Q13E
40.37
10.35
-11%
-13%
1.1
2.48
3%
3Q13E
85.11
11.88
-1%
-1%
1.3
2.01
15%
4Q13E
7,736
360
1,007
7,894
409
1,144
7,991
496
1,386
7,781
410
1,146
309
Adrian Mowat
(852) 2800-8599

21 November 2012
LG Electronics
Overweight
www.lg.com
Company overview
LG Electronics manufactures and markets digital display equipment and home
appliances, televisions, washers, air-conditioners, and microwaves. The company also
produces telecommunications equipment such as handsets (incl. smartphones).
South Korea
Semiconductors
Investment case
Management expressed confidence in the smartphone business with competitive
productsOptimus G and Optimus Vu:2. LGE will do aggressive marketing activities
to drive strong volume growth and cautiously expects to reach quarterly smartphone
shipments of 10 million units by 2Q13 or 3Q13. We believe this is an inflection point
for LGE to generate sustainable handset OP, given finalization of restructuring in its
feature phone business.
Bloomberg JPMA PARK<GO>
Price: W76,700
JJ ParkAC
(822) 758 5717

Seoul Branch
95,000
85,000
W 75,000
65,000

Amid stagnant macro economics, we estimate global smartphone shipment growth to
maintain strong momentum in 2013. Despite the wide gap with SEC and Apple, LGE
stands out among second-tier smartphone makers, in our view.
Although the company has experienced meaningful earnings decline in the last two
years, it has continuously beat consensus YTD on normalized core operations along
with breakeven results in the handset business. With normalized core operations and
meaningful bottom-line earnings growth in LGD, we forecast LGE to post 130% EPS
growth next year.
55,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12

KOSPI (rebased)
Abs
Rel
YTD
0.8%
-4.8%
1m
9.9%
13.3%
3m
16.9%
14.7%
12m
23.3%
22.8%
Source: Bloomberg.

We maintain our high-end-of-consensus earnings and P/E-based Jun-13 PT of
W100,000, implying 8.9x to 2013E EPS, which is a mid-cycle valuation. We
recommend investors accumulate the stock from a long-term perspective given its
undemanding valuation, M/S gain story, and sustainable OP in handset business. Key
downside risks to our PT are potential margin pressure on its TV operation, weakerthan-expected smartphone shipments, and unfavorable F/X movements.
(YE Dec, W bn)
FY10
FY11 FY12E FY13E
Sales
55,754 54,257 50,818 53,371 Sales growth
Operating Profit
176
280
1,230 1,765 OP growth
EBITDA
1,531
1,483
2,539 3,163 NP growth
Net profit
1,282
-399
802 1,844 Quarterly EPS (W)
EPS
8,863
-2,761
4,903 11,266 EPS (11)
BPS (W)
79,462 81,245 76,218 86,413 EPS (12) E
P/E (x)
8.7
NM
15.6
6.8 EPS (13) E
P/BV (x)
1.0
0.9
1.0
0.9 Price Target
ROE (%)
10.1
-3.1
6.0
12.5 Consensus PT
Net Debt
4,482
3,435
3,500 2,485 Difference (%)
310
FY10
0%
-93%
NM
1Q
-109
1,482
2,560
100,000
85,059
17.6
FY11
-3%
59%
NM
2Q
725
948
3,199
FY12E
-6%
339%
NM
3Q
-2,886
960
2,793
FY13E Date of Price

5% 52-Week range
44% Market Cap
130% Market Cap
4Q Share Out. (Com)
-541 Free float
1,490 Avg daily val
Avg daily vol.
Dividend yield (%)
Exchange Rate
06 Nov 12
W94,300 - 55,800
W12,552B
US$11,380MM
164MM
58.3%
W111.5B
100.04MM
1.6MM shares
0.3
1,102.97

21 November 2012
Adrian Mowat
(852) 2800-8599
LG Electronics: Summary of Financials

Income Statement
Revenues
COGS
Depreciation
Gross Profit
EBIT
Net Interest Income
Pre-tax Profit
Tax Expense/(Credit)
Net income
Shares outstanding (mil.)
EPS (W)
Sequential Growth
Revenues
Gross Profit
EBIT
Pre-tax Profit
EPS
FY10
55,754
-43,724
-1,354
12,030
176
-219
434
-0
1,282
145
8,863
FY11
54,257
-42,058
-1,202
12,199
280
-228
-399
-0
-399
145
-2,761
FY12E
50,818
-38,543
-1,309
12,275
1,230
-242
1,151
-349
802
164
4,903
FY13E
53,371
-40,001
-1,398
13,371
1,765
-205
2,195
-351
1,844
164
11,266
0%
-15%
-93%
-85%
-45%
-3%
1%
59%
-192%
-131%
-6%
1%
339%
-388%
-278%
5%
9%
44%
91%
130%
FY10
1,282
1,354
848
-699
1,089
-146
40
-1,954
-461
247
736
-276
247
-618
2,647
2,029
FY11
-399
1,202
849
1,652
-1,992
-272
-2,274
975
400
-220
-67
1,088
466
2,029
2,495
FY12E
802
1,309
-191
1,920
-1,121
-7
-1,039
-0
-1,254
-131
-37
-1,422
-541
2,495
1,955
FY13E
1,844
1,398
317
3,560
-1,200
-42
-1,845
-0
-1,400
-0
0
-1,400
315
1,955
2,269
Quarterly Data
1Q12A
2Q12A
Sales
12,228
12,859
Net income
243
159
EPS (W)
1,482
948
3Q12E
4Q12E
Cash flow statement

Net income
Extraordinaries
Net Capex
Disposal/(purchase)
Other charges
Cash dividends
Net Changes in Cash
Beginning cash
Ending cash
12,376
157
960
13,355
244
1,490
Balance sheet
Accounts receivable
Inventories
Current assets
FY10
2,029
7,002
5,872
1,611
16,515
FY11
2,495
6,753
4,947
1,588
15,783
FY12E
1,955
6,879
4,830
1,581
15,244
FY13E
2,269
6,451
5,192
1,700
15,612
LT investments
Net fixed assets
Total Assets
8,540
6,500
763
32,318
8,549
7,290
1,036
32,658
8,460
7,102
1,043
31,850
9,063
6,904
1,085
32,664
ST Debt and CPLTD

Account Payables
Long-term debt
Other Long term liabilities
Total Liabilities
BVPS (W)
Ratio Analysis
(%)
Gross margin
EBIT margin
Net profit margin
COGS/sales
3,327
5,824
5,560
15,394
3,184
881
19,459
12,860
32,318
79,462
1,673
5,487
5,549
14,215
4,257
1,038
19,510
13,148
32,658
81,245
2,018
5,505
5,342
13,618
3,437
1,013
18,067
13,783
31,850
76,218
1,618
5,474
5,743
12,988
3,137
913
17,038
15,626
32,664
86,413
FY10
22%
0.3%
2%
-78%
FY11
22%
0.5%
-1%
-78%
FY12E
24%
2.4%
2%
-76%
FY13E
25%
3.3%
3%
-75%

Sales growth
EBIT growth
Net profit growth
EPS growth
0%
0%
-93%
NM
-45%
-3%
-3%
59%
NM
-131%
-17%
-6%
339%
NM
-278%
5%
5%
44%
130%
130%

Inventory Turnover (x)
Net debt to equity
Sales/assets
Assets/equity
ROE
Quarterly Data
Sales
Net income
EPS (W)
6.98
9.49
23%
35%
1.7
1.84
10%
1Q13E
6.49
10.97
18%
26%
1.7
2.48
-3%
2Q13E
10.48
10.52
18%
25%
1.6
2.31
6%
3Q13E
15.42
10.28
13%
16%
1.7
2.09
13%
4Q13E
12,410
419
2,560
13,288
524
3,199
13,315
457
2,793
14,358
444
2,713
311
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
Localiza
Price: R$35.50
www.localiza.com
End Date: Dec 2013
Company overview
Localiza is a company active in the car rental, fleet rental, used car sales, and
franchising industries. As of 2011 its network comprised 452 branches in
approximately 300 cities in Brazil. The businesses complement each other, resulting in
significant synergies.
Brazil
Transportation
Investment case
Localiza is highly leveraged to Brazilian GDP as historically the revenue elasticity has
been 6x for car rental and 4x for fleet rental. In a recovery environment, results could
benefit by significant top-line expansion, as a reflection of GDP growth and a
fragmented car rental industry in Brazil. That said, Localiza offers prospect for ROIC
expansion driven by the expected higher growth in the car and fleet rental divisions.
Localizas shares are up 38.7% this year, in our view mostly due to the decrease in
interest rates in Brazil. The stock is currently trading with 9.9% upside to our PT, but
any stronger than expected performance of the domestic economy could improve such
upside. The stock trades at 17.7x 2013E P/E, below its historical average of 18-20x.
Fernando AbdallaAC
(55-11) 4950-3463

38
34
R$ 30
26
22
Nov-11
Feb-12
May-12
Aug-12
Nov-12
RENT3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

We believe there could be downside risk to Localizas earnings next year if the market
starts to revise GDP expectations downwards, which could impact demand for car and
fleet rental. Our R$1,085mm 2013E EBITDA is 5.6% above Bloomberg consensus.
Any deterioration in credit for autos next year could also negatively impact the
companys used car sales business.
Our Dec 2013 PT for RENT3 is R$39, based on a 10-year DCF methodology, using a
WACC of 11.9% in nominal R$ and a long-term growth rate of 5%. Key downside
risks: (1) deterioration of the macroeconomic environment, (2) a tougher competitive
landscape, and (3) a sharp increase in interest rates in Brazil. Key upside risks: (1)
stronger Brazilian GDP performance could lead to higher demand for car and fleet
rental and (2) improvement in auto credit could boost used car sales.
Localiza Rent A Car (RENT3.SA;RENT3 BZ)
FYE Dec
2010A
Revenues (R$ mn)
FY
2,497
EBITDA FY (R$ mn)
650
251
1.24
1.24
312
2011A
2012E
2013E
2,918
821
292
1.45
1.43
3,305
900
241
1.20
1.21
3,828
1,085
404
2.00
1.95
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
35.50
14 Nov 12
37.65 - 23.90
7,003.30
Dec
202
39.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
Localiza: Summary of Financials

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
EBITDA
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
Accounts receivable
Inventories
Current assets
PP&E
Total assets

2,918 3,305 3,828 4,479
(1,797) (2,032) (2,322) (2,733)
1,121 1,273 1,506 1,747
(300)
(374)
(421)
(479)
(226)
(414)
(328)
(370)
596
486
757
897
821
900 1,085 1,267
(179)
(137)
(145)
(279)
0
0
0
0
417
348
612
618
(125)
(107)
(208)
(176)
292
241
404
543
292
241
404
543
202
202
202
202
1.45
1.20
2.00
2.69
1.45
1.20
2.00
2.69
711
438
388
442
353
426
496
516
0
0
0
0
0
0
0
0
1,148
959
985 1,060
2,794 2,943 3,414 3,870
4,010 3,972 4,468 5,000
Total debt
Total liabilities
2,074
2,889
1,121
1,929
2,625
1,347
2,029
2,819
1,650
2,129
2,943
2,057

D&A
Other
Capex
Free cash flow
Dividends
292
(226)
1,359
241
(414)
1,234
404
(328)
1,611
543
(370)
1,895
2,056 2,027 2,488 3,364

(1,777) (1,963) (2,392) (2,719)
279
64
96
268
(1,777) (1,963) (2,392) (2,719)
273
(283)
(45)
(78)
0.40
0.30
0.50
0.67

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
EBITDA
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
Ratio Analysis
Sales growth
EBITDA growth
EPS growth
1Q12A 2Q12A 3Q12E 4Q12E

775A
790A
816
925
(482)A (483)A (496)
(570)
292A
307A
319
355
(82)A
(91)A
(95) (105)
(66)A (173)A
(85)
(90)
144A
42A
140
159
210A
216A
225
249
(44)A
(34)A
(30)
(29)
0A
0A
0
0
101A
8A
110
130
(28)A
3A
(37)
(44)
73A
11A
72
86
73A
11A
72
86
202A
202A
202
202
0.36A
0.05A
0.36
0.42
0.36A
0.05A
0.36
0.42
16.9% 13.3% 15.8% 17.0%
26.4%
9.5% 20.6% 16.8%
16.4% (17.3%) 67.4% 34.5%
Gross margin
EBIT margin
EBITDA margin
Tax rate
Net margin
38.4%
20.4%
28.1%
30.0%
10.0%
38.5%
14.7%
27.2%
30.7%
7.3%
39.3%
19.8%
28.3%
34.0%
10.5%
39.0%
20.0%
28.3%
28.4%
12.1%
Net debt / EBITDA

Net debt / capital (book)
1.7
42.7%
1.7
45.5%
1.5
44.6%
1.3
40.3%

7.3%
26.0%
18.2%
6.1%
17.9%
13.1%
9.0%
24.5%
16.3%
10.9%
26.4%
18.9%

313
Adrian Mowat
(852) 2800-8599

21 November 2012
LW Bogdanka
Overweight
www.lw.com.pl
Price Target: zl169.00
Company overview
LW Bogdanka SA is the only coal mine operating in the Lublin Coal Basin. The
company has 8% market share in thermal coal sales in Poland, mostly sold to the local
power utilities in Eastern Poland, where it has a considerable transportation cost
advantages.
Poland
Metals & Mining
Price: zl121.50
Michal KuzawinskiAC
(48-22) 44 19534
Bloomberg JPMA KUZAWINKSI <GO>
Investment case
Bogdanka is our top pick within Poland Metals & Mining on superior asset quality
demonstrated by volume growth (23.5% 11-14E CAGR), economies of scale, LT
EBITDA margin of 44% as well as a strong balance sheet (13E Net Debt / EBITDA
0.3x). In 2013E we are looking at 40% EPS growth driven by continued ramp-up of
the Stefanow field with projected 14% yoy increase in thermal coal volumes. Finally,
the long term dividend outlook supports our bullish view on Bogdanka: we forecast
22.6% cum div yield 12-14E funded by 19% cum 12-14E FCF yield.

130
zl
120
110
100
Key attraction in an anemic growth environment

We believe that Bogdankas ability to sell the increased thermal coal volumes at decent
prices stems from: the local thermal coal pricing mechanism, Bogdankas competitive
cost advantage vs. local peers, the continued dominant role of coal in the local power
generation, and around 90% of sales to captive customers based on long-term contracts
which already capture the future growth.
Nov-11
Abs
Feb-12
YTD
15.6%
May-12
1m
0.2%
Aug-12
Nov-12
3m
1.8%
12m
10.8%
Source: Bloomberg.

In a scenario of an inflationary 3% increase for Bogdanka's realized coal prices in
2013E, our EPS forecast would increase by 11% vs. our current flat prices assumption.
We believe there is a high probability of higher 13E prices, given that Bogdankas
thermal coal is approx 10% cheaper than that of local competition, adjusting for
calorific value.
Our September 2013 PT of zl169 is based on peer group valuation (target 6.5x 13E
EV/EBITDA) and corresponds with 1.0x P/NPV multiple (Base Case until concession
expiry in 2034, zero Terminal or Residual Value). The key risks are lower realized
thermal coal price and sales volumes and higher production costs and capex.
Lubelski Wegiel Bogdanka SA (LWBP.WA;LWB PW)
FYE Dec
2011A
2012E
Adj. EPS FY (zl)
4.98
10.23
DPS (Net) FY (zl)
4.00
6.14
Adj EBITDA FY (zl mn)
388
744
Adj P/E FY
24.4
11.9
EV/Adj EBITDA FY (zl)
12.1
6.5
Div Yield FY
3.2%
4.9%
Revenue FY (zl mn)
1,301
1,923
Net Att. Income FY (zl mn)
221
348
314
2013E
14.28
8.57
967
8.5
4.9
6.9%
2,219
486
2014E
21.12
12.67
1,292
5.8
3.5
10.2%
2,668
718
Company Data
Price (zl)
Date Of Price
Price Target (zl)
52-week Range (zl)
Mkt Cap (zl bn)
Shares O/S (mn)
121.50
02 Nov 12
169.00
30 Sep 13
130.60 - 102.20
4.1
34
Adrian Mowat
(852) 2800-8599

21 November 2012
LW Bogdanka: Summary of Financials

zl in millions, year end Dec
Revenues
Cost of Sales
Gross Profit
SG&A
Net other operating items
EBITDA (Adjusted)
EBIT (Adjusted)
Net Interest
Exceptionals
Earnings before tax
Tax
Net Income (Adjusted)
Shares Outstanding (m)
EPS (Reported)
EPS (Adjusted)
DPS
Balance sheet
Accounts Receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
BVPS
Cash flow statement

FY10 FY11 FY12E FY13E FY14E zl in millions, year end Dec
1,230 1,301 1,923 2,219 2,668 Net Income (Reported)
821 963 1,289 1,385 1,529 Depreciation & amortization
410 338
634
834 1,138 Working capital movement
106 119
163
176
192 Other operating cash flow
-27 -16
-25
-25
415 388
744
967 1,292
138 185
298
334
371 Capex
276 203
446
633
921 Disposals/(purchase)
12
6
(11)
(26)
(23) Other investment cash flow
0
63
0
0
0 Cash flow from investment
288 272
435
607
898
(58) (51)
(87) (121) (180) Equity raised/repaid
230 221
348
486
718 Debt Raised/repaid
230 169
348
486
718 Dividends paid
34.0 34.0 34.0 34.0 34.0 Other
Cash Flow from Financing
FX movement
6.76 6.50 10.23 14.28 21.12
6.76 4.98 10.23 14.28 21.12 Beginning cash
1.40 4.00 6.14 8.57 12.67 Ending cash
Movement in cash
Ratio Analysis
FY10 FY11 FY12E FY13E FY14E zl in millions, year end Dec
472 103
241
283
526 Operating margin (%)
127 256
290
334
402 EBITDA margin (%)
61
43
71
76
84 Net margin (%) (Adjusted)
4
0
0
0
0 SG&A/Sales
664 402
602
694 1,012
0
0
0
0
0 Sales growth (%)
2,101 2,605 2,951 3,160 3,304 EBITDA growth
2,828 3,076 3,622 3,922 4,385 EPS growth (%) (Adjusted)
50
0
0
0
0 Net debt/(cash) to Total Capital
241 234
318
342
377 Sales/assets (x)
112
73
73
73
73 Total Assets/Equity
403 307
391
414
450 ROE
200 341
591
591
591 ROCE
256 286
286
286
286
859 934 1,267 1,291 1,327
1,969 2,143 2,355 2,632 3,059
2,828 3,076 3,622 3,923 4,385
58
63
69
77
90
FY10
230
138
58
(57)
368

221
348
486
718
185
298
334
371
(118)
23
(26)
(40)
26
0
0
0
314
669
793 1,050
(716)
138
-578
(698)
-29
-726
(644)
0
-644
(543)
0
-543
(516)
0
-516
0
0
0
0
0
0
0
91
(48)
0
43
0
0
250
(136)
0
114
0
0
0
(209)
0
-209
0
0
0
(291)
0
-291
0
682
472
-210
472
103
-369
103
241
139
241
283
42
283
526
243
FY10
22.5%
33.7%
18.7%
8.6%

15.6% 23.2% 28.5% 34.5%
29.8% 38.7% 43.6% 48.4%
13.0% 18.1% 21.9% 26.9%
9.1%
8.5% 7.9% 7.2%
10.0%
5.8% 47.7% 15.4% 20.2%
12.7% -6.5% 92.0% 29.8% 33.7%
20.0% (26.3%) 105.6% 39.5% 47.9%
23.4
32.5
40.8 24.7 39.9
-11.4%
9.1% 11.9% 9.7% 1.9%
0.4
0.4
0.5
0.6
0.6
1.4
1.4
1.5
1.5
1.4
12.4%
8.2% 15.5% 19.5% 25.3%
14.2%
7.8% 15.2% 20.0% 27.5%
315

21 November 2012
Adrian Mowat
(852) 2800-8599
Magnit
Overweight
magnit-info.ru
Company overview
Magnit operates the largest network of retail stores in Russia, counting more than 6,000
retail spots, and is the second-largest retailer in terms of revenue. The company's core
format is convenience stores; however, it is actively diversifying into formats with
greater exposure to higher-margin non-food products hypermarkets and cosmetics
stores. The distinct features of Magnits business model are its focus on organic
expansion as opposed to M&A, its vast logistics backbone and its presence in areas
with less pronounced competitive pressures, i.e. smaller regional markets.
Russia
Retail
Price: $36.56
AC
(7-495) 967-3888
elena.jouronova@jpmorgan.com
40
Investment case
Magnit is by far the best quality play on the Russian retail sector, in our opinion, as
reflected in superior organic growth prospects, high profitability and returns, and an
impeccable execution track record. We rate the stock Overweight and recommend a
buy-on-weakness strategy.
35
$
30
25
20
15
Nov-11

Magnit is relatively immune to consumption slowdown given its focus on value-formoney formats and high operating efficiencies that leave more room for price
investments, in our opinion. Rapid store network expansion enables the company to
obtain better terms from suppliers and protect or even increase gross margins.
Abs
Feb-12
YTD
75.2%
May-12
Aug-12
1m
7.1%
Nov-12
3m
12.3%
12m
65.1%
Source: Bloomberg.

Our 2013 revenue growth projection is above managements expectation of 25-27%
(JPMe), as we expect stronger food inflation of 8% on average for the year. Key risks
for our earnings forecasts are stronger than expected cannibalization leading to traffic
outflow, and operating cost pressures.
Our DCF-based Dec-13 PT is $40.5/GDR We use: 1) 6.8% after-tax cost of debt; 2)
COE of 14% for GDRs (13% base COE + 100bps liquidity premium) and 3) target
leverage of 30% to derive a WACC of 11.9% for GDRs. We assume what we see as a
conservative terminal growth rate of 3% beyond the 10 year forecasting period. The
main risks to our price target and rating include: a worse than expected macroeconomic
environment could affect consumption in Russia and hence our earnings forecasts for
Magnit; and tighter regulation of retail trade could also negatively affect returns.
Magnit (MGNTq.L;MGNT LI)
FYE Dec
Adj. EPS FY ($)
Revenue FY ($ mn)
EBITDA FY ($ mn)
EBITDA margin FY
EBIT FY ($ mn)
Net Att. Income FY ($ mn)
FCF FY ($ mn)
Adj P/E FY
EV/EBITDA FY
2011A
0.89
11,423
934
8.2%
668
419
(765)
41.3
19.3
2012E
1.44
14,230
1,377
9.7%
1,021
683
(655)
25.3
13.1
316
2013E
1.67
18,106
1,659
9.2%
1,206
788
(379)
21.9
10.9
2014E
2.03
22,472
2,032
9.0%
1,470
958
166
18.0
8.9
2015E
2.46
26,629
2,390
9.0%
1,724
1,163
597
14.9
7.6
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
36.56
02-Nov-12
40.50
31 Dec 13
37.88 - 18.26
17.3
473

21 November 2012
Adrian Mowat
(852) 2800-8599
Magnit: Summary of Financials

Revenues
Cost of goods sold
Gross profit
Operating costs
EBITDA
EBIT
Net Interest
Other
Earnings before tax
Tax
as % of EBT
Net Income (reported)
Net Income (adjusted)
EPS (adjusted)
Balance sheet
Cash & cash equivalents
Accounts receivables
Inventories
Other
PP&E
FY11 FY12E
11,423 14,230
-8,644 -10,630
2,779
3,600
-2,129 -2,579
934
1,377
668
1,021
(116)
(123)
18
0
0
561
898
(142)
(216)
(25.4%) (24.0%)
419
683
419
683
0.89
1.44
FY13E FY14E
18,106 22,472
-13,579 -16,854
4,526
5,618
-3,320 -4,148
1,659
2,032
1,206
1,470
(170)
(209)
0
0
1,036
1,261
(249)
(303)
(24.0%) (24.0%)
788
958
788
958
1.67
2.03
FY11
534
18
905
73
1,530
3,816
100
FY12E
98
24
1,219
73
1,415
5,128
100
FY13E
34
30
1,558
73
1,695
6,324
100
FY14E
(7)
37
1,934
73
2,037
7,146
100
Total assets
5,447
6,643
8,120
9,283
Short term debt

Payables
Other
Long term debt
Other
192
1,043
215
1,450
1,424
129
1,554
406
1,340
215
1,960
1,500
129
1,629
606
1,711
215
2,532
1,750
129
1,879
606
2,124
215
2,945
1,700
129
1,829
Total equity & liabilities
2,441
5,447
3,050
6,644
3,705
8,120
4,506
9,284
Cash flow statement

FY15E $ in millions, year end Dec
26,629 EBT
-19,972 Depreciation & amortisation
6,657 Change In working capital
-4,933 Other
1,724
(194) Capex
Other
(367)
(24.0%) Financing cash flow
1,163 Forex effect
2.46 Net change in cash
Ratio Analysis
99 Gross margin
43 EBITDA margin
73 Net profit margin
2,507 SG&A/sales
7,741
100 Sales growth
EBITDA growth
10,348 EBIT growth
Net profit growth
506
2,517 Gross Debt
215 Net Debt
3,238 Net Debt/EBITDA
129 Net Debt to Equity
1,629 Sales/assets
Assets/equity
5,478 ROE
10,348 ROA
ROIC

561
898 1,036 1,261 1,531
266
356
453
562
666
182
(26)
29
30
29
-60
-216
-249
-303
-367
949 1,013 1,269 1,550 1,858
(1,657) (1,668) (1,648) (1,384) (1,260)
(57)
0
0
0
0
(765) (655) (379)
166
597
1,150
(35)
16
402
213
(70)
6
-436
316
(134)
0
-64
-208
(158)
0
-41
-492
(192)
0
106

24.3% 25.3% 25.0% 25.0% 25.0%
8.2%
9.7%
9.2%
9.0%
9.0%
5.8%
7.2%
6.7%
6.5%
6.5%
3.7%
4.8%
4.3%
4.3%
4.4%
-18.9% -18.4% -18.6% -18.7% -18.8%
46.9%
47.9%
38.8%
25.5%
24.6%
47.4%
52.9%
63.1%
27.2%
20.5%
18.1%
15.4%
24.1%
22.5%
21.9%
21.7%
18.5%
17.6%
17.3%
21.4%
1,617
1,082
1.2
5.7
44.3%
2.1
2.2
20.1%
9.2%
14.7%
1,906
1,808
1.3
8.3
59.3%
2.1
2.2
24.9%
11.3%
17.2%
2,356
2,322
1.4
62.7%
2.2
2.2
23.3%
10.7%
16.6%
2,306
2,313
1.1
51.3%
2.4
2.1
23.3%
11.0%
17.4%
2,006
1,907
0.8
34.8%
2.6
1.9
23.3%
11.9%
18.3%
317
Adrian Mowat
(852) 2800-8599

21 November 2012
Mahindra and Mahindra
Overweight
www.mahindra.com
Company overview
Mahindra & Mahindra is Indias largest manufacturer of utility vehicles (market share
of ~ 50%) and tractors (market share of 40%). Besides, M&M has several listed
subsidiaries, which operate in high-growth segments of the Indian economy. These
companies include Tech Mahindra, Mahindra Lifespace Developers Ltd, and M&M
Financial Services Ltd.
India
Price: Rs909.40
Aditya MakhariaAC
(91-22) 6157-3596
aditya.s.makharia@jpmorgan.com
Bloomberg JPMA MAKHARIA <GO>
Investment case
M&Ms margins are likely to benefit from improved sales in the high-margin tractor
segment from hereon. Also, SUV growth is likely to be sustained in the mid teens in
2013E as well.
900
Rs
800
700

i) We expect demand for UVs to remain healthy, driven by the continued shift towards
diesel powered vehicles. While competition is rising in the SUV segment, M&M is
broad basing into new sub segments. ii) Tractor sales are likely to benefit from a low
base (sales had declined in 2H last year) as well as a late revival in monsoons, which
will improve agri productivity from hereon.
600
Nov-11
Feb-12
May-12
Aug-12
Nov-12
MAHM.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
33.4%
9.3%
1m
4.6%
3.5%
3m
22.4%
14.9%
12m
11.9%
2.0%
Source: Bloomberg.

Mahindras earnings are vulnerable to any further increase in competition, particularly
in the SUV segment. Global OEMs are launching new products in this high growth
segment, with Ford likely to roll out its global SUV Ecosport in 2013. As ~80% of
tractors are bought on finance, any increase in agri NPA's may restrict the availability
of finance to this segment.
We have a Sep13 PT of Rs985 based on our sum of parts methodology. Key risks are:
sharper than expected increase in competition in the SUV segment, a delayed recovery
in tractor segment sales.
Mahindra & Mahindra (Reuters: MAHM.BO, Bloomberg: MM IN)
FY10A
FY11A
FY12A
Net sales (Rs mn)
185,296
232,950
318,535
Net Profit (Rs mn)
20,878
26,621
28,789
19,571
24,433
26,501
Adjusted EPS (Rs)
34.58
41.61
44.88
P/E (x)
24.6
20.1
18.6
ROE
25.0%
23.7%
21.7%
EV/EBITDA (x)
17.3
16.1
14.4
318
FY13E
382,650
30,139
30,139
51.17
17.8
21.1%
12.2
FY14E
434,996
34,786
34,786
59.06
15.4
20.6%
10.6
Company Data
52-week Range (Rs)
Shares O/S (mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
NIFTY
899.70 - 621.10
614
10,376
909.40
09 Nov 12
1.35
19.96
5,739

21 November 2012
Adrian Mowat
(852) 2800-8599
Mahindra & Mahindra: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA margin
Depreciation
Other Income
Net Interest
Earnings before tax
Tax
as % of EBT
Net income (Adjusted)
% change Y/Y
EPS (adjusted)
% change Y/Y
Dividend Per Share
Div Payout (%)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Trade Investments
Net fixed assets
Misc. Expenses
Total Assets
Liabilities
Payables
Others
Deferred Tax
Total debt
Total Liabilities
BVPS
Cash flow statement

FY11
232,950 318,535 382,650 434,996 494,491 EBIT
32,835 37,708 44,580 51,329 58,350 Dec/(Inc) in Working Capital
10.3% 14.8% 18.2% 15.1% 13.7% Taxes
14.1% 11.8% 11.7% 11.8% 11.8% Cash flow from operations
-4,139 -5,761 -7,028 -7,564 -8,426 Extra ordinary Items
3,264
3,566
4,339
4,796
5,247 Net Capex
503
-536 -1,106 -1,201 -1,260 Net Interest (Paid)/ Recd
35,196 36,059 40,783 47,361 53,911 (Put) / Sale of investments
-8,575 -7,270 -10,644 -12,574 -14,313 Free cash flow
24.4% 20.2% 26.1% 26.6% 26.6% Income from Investments
26,621 28,789 30,139 34,786 39,598
24,433 26,501 30,139 34,786 39,598
24.8%
8.5% 13.7% 15.4% 13.8% Inc / (Dec) in Net worth
41.61
44.99
51.17
59.06
67.22 Debt raised/(repaid)
20.3%
8.1% 13.7% 15.4% 13.8% Dividends paid
Cash generated
12.03
13.03
13.03
13.03
13.03 Beginning cash
26.5% 26.7% 25.5% 22.1% 19.4% Ending cash
Ratio Analysis
FY11
FY12 FY13E FY14E FY15E %, year end Mar
6,146 11,884 14,442 19,532 32,409 EBITDA margin
16,942 23,584 30,687 37,218 44,960
24,799 29,856 33,477 37,641 42,427 Sales growth
EPS growth
93,253 103,105 115,605 125,105 136,605
43,719 50,808 54,779 58,216 60,790 PE (x)
- Cash PE (x)
198,407 239,120 274,564 310,276 354,216 EV/EBITDA (x)
EV/Sales (x)
Price to Book Value (x)
47,617 57,876 69,558 76,762 87,275 Dividend Yield
20,059 18,453 19,375 20,344 21,361
- Sales/assets
24,053 35,808 36,808 37,808 38,808 Assets/equity
95,272 117,408 131,540 141,292 154,460 ROE
103,133 121,711 143,024 168,984 199,756 ROCE
175.65 206.63 242.81 286.88 339.12
FY11
28,695
4,140
1,625
-7435
33,029
-10,830
503
22,199
-29,273
FY12
31,946
5,762
-10,041
-5543
26,772
-12,850
-536
13,922
-9,852
FY13E
37,550
7,029
-3,950
-10117
34,850
-11,000
-1,106
23,850
-12,500
FY14E
43,766
7,564
-9,514
-11994
34,617
-11,000
-1,201
23,617
-9,500
FY15E
49,924
8,426
-5,458
-13676
44,464
-11,000
-1,260
33,464
-11,500
6,271 -1,525
0
-0
-0
-4,749 11,755 1,000 1,000 1,000
-6,238 -8,026 -8,686 -8,826 -8,826
-11,287 5,738 2,558 5,090 12,878
17,432 6,146 11,884 14,442 19,532
6,146 11,884 14,443 19,532 32,409
FY11
14.1%
11.4%

11.8% 11.7% 11.8% 11.8%
9.0%
7.9%
8.0%
8.0%
25.7%
27.5%
22.9%
36.7%
8.1%
7.8%
20.1%
4.7%
4.7%
13.7%
15.4%
15.4%
13.7%
13.8%
13.8%
20.1
18.69
16.1
2.27
5.2
1.3%
18.6
16.64
14.4
1.70
4.4
1.4%
17.8
14.41
12.2
1.42
3.7
1.4%
15.4
12.65
10.6
1.25
3.2
1.4%
13.5
11.15
9.3
1.10
2.7
1.4%
17.4%
1.17
2.55
23.7%
24.4%
19.7%
1.33
1.96
21.7%
21.8%
15.6%
1.39
1.92
21.1%
22.6%
10.8%
1.40
1.84
20.6%
22.8%
3.2%
1.40
1.77
19.8%
22.5%
Sum of Parts Table (INR per Share)

Dividend on Investments (Rs m)
Contribution to M&M EPS
M&M's EPS
Core EPS (post dividends)
PE Multiple
Value
Value of Subsidiaries (at 25% discount to listed price)
Total
Sep'13
2,536
4.3
63.1
58.8
13
765
220
985
Source: Company, J.P. Morgan estimates
319
Adrian Mowat
(852) 2800-8599

21 November 2012
MediaTek Inc.
Overweight
www.mediatek.com
Company overview
MediaTek is a fabless semiconductor company that builds SOC system solutions for
wireless communications, HDTV, optical storage, and DVD/Blu-ray.
Taiwan
Semiconductors
Price: NT$318.00
Alvin KwockAC
Investment case
Assuming that MediaTeks acquisition of MStar goes through, MediaTek will become
the fourth-largest fabless semiconductor company by revenues. Top-tier fabless
semiconductor companies, such as Qualcomm, Broadcom, nVidia and Marvell, are
trading 12.5x-15.4x FY14E P/E on a U.S. GAAP basis. We believe that MediaTek is
also fairly valued at 14x FY13E earnings based on positive customer feedback on
MediaTeks new quad-core chipset.
(852) 2800-8533
alvin.yl.kwock@jpmorgan.com
Bloomberg JPMA KWOCK<GO>
Limited
340
NT$

On a trip to China in November 2012, we found that TCL Comm will likely be the first
to launch smartphones using MediaTeks quad-core solution (6589). We expect
MediaTek to have a big wave of growth in January 2013. As a result, we raised
MediaTeks earnings estimates, for the fifth time since June. In the long term, the
Android tablet and Windows-on-ARM will be a growth driver for the Taiwanese
company. MediaTek has started shipping standalone/3G-integrated application
processors for Android tablets. We do not expect material contribution from tablets
until 2014/15.
300
260
220
Nov-11
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
17.2%
14.6%
1m
0.0%
4.0%
3m
9.0%
13.0%
12m
-0.3%
4.9%
Source: Bloomberg.

Key risks for earnings and PT: high unpredictability of earnings (earnings forecasts can
move by 30% within a year). We think the risk is on the upside as MediaTek is in an
earnings up-cycle, but one needs to watch for when SPRD/ RDA starts volume
shipments in WCDMA smartphones.
Our Dec-13 price target of NT$450 is based on 20x/14x FY13E/14E P/E, on par with
the global top 5 fabless semiconductor companies.
Bloomberg 2454 TT, Reuters 2454.TW
(Year-end Dec, NT$ bn)

Sales
86.86 103.32 128.11 147.30
Operating Profit
12.35 13.59 24.59 34.47
EBITDA
13.07 14.32 25.31 35.19
Pretax Profit
14.08 16.62 26.15 36.37
Adj. Net Profit (New TW GAAP) 13.49 15.65 24.96 34.72
New TW GAAP EPS (NT$)
12.40 14.24 22.69 31.57
Net Debt / Equity
NM NM NM NM
Y/E BPS (NT$)
82.93 88.92 103.55 121.26
New TW GAAP P/E

P/BV (x)
ROE(%)
Cash Div (NT$)
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E
FY11
25.6
3.8
13.3
21.7
1Q
3.01
2.27
4.31
FY12E FY13E
22.3
14.0
3.6
3.1
16.6
23.6
10.6
12.0
2Q
3Q
3.02
3.69
3.05
4.49
5.34
6.77
320
FY14E
10.1
2.6
28.1
19.3
4Q
2.79
4.26
6.28
Target Price (NT$)

52-Week range (NT$)
Share Outstanding
Free float
Avg daily volume
Avg daily val (USD)
QFII Holding (%)
Market Cap(USD)
450
344.50 - 235.00
1,349mn
86.6%
13mn
121.67mn
3.3%
34.3%
14,800mn
Adrian Mowat
(852) 2800-8599

21 November 2012
MediaTek Inc.: Summary of Financials

FY10
FY11
Revenues
113,522 86,858
Cost of goods sold
52,614 47,512
Gross Profit
60,908 39,346
R&D expenses
-23,311 -21,185
SG&A expenses
-6,519 -5,815
31,078 12,346
EBITDA
31,769 13,070
Interest income
576
1,249
Interest expense
0
0
576
1,249
1,232
1,732
Earnings before tax
32,310 14,078
Tax
-1,350
-587
30,960.0 13,490.7
30,960 13,491
EPS (reported)
28.26
12.40
EPS (adjusted)
28.26
12.40
BVPS
101.56
82.93
DPS
25.87
21.70
Shares outstanding
1,100
1,100
Balance sheet
FY10
FY11
45,574 41,713
Accounts receivable
4,016
9,921
Inventories
6,443
7,552
Others
3,541
4,115
Current assets
59,573 63,302
LT investments
59,535 62,816
Net fixed assets
6,745
7,211
Others
8,788
8,310
Total Assets
134,641 141,638
Liabilities
ST Loans
0
0
Payables
6,323
8,874
Others
15,837 40,608
22,159 49,482
Long-term debt
0
0
Other liabilities
768
939
Total Liabilities
22,927 50,421
111,714 91,217
Ratio Analysis
FY12E FY13E FY14E NT$ in millions, year end Dec
103,324 128,111 147,298 Gross margin
60,258 72,055 79,288 EBITDA margin
43,066 56,056 68,010 Operating margin
-23,132 -24,399 -25,858 Net margin
-6,343 -7,067 -7,684 R&D/sales
13,592 24,590 34,468 SG&A/Sales
14,315 25,313 35,191
973
1,156
1,501 Sales growth
0
0
973
1,156
3,029
1,556
1,901 EPS (reported) growth
16,621 26,146 36,368
-966 -1,187 -1,651 Interest coverage (x)
15,654.9 24,958.1 34,717.7 Net debt to total capital
14.24
22.69
14.24
22.69
88.92 103.55 121.26 ROE
10.57
11.99
19.34 ROIC
1,100
1,100
1,100 ROIC (net of cash)
Cash flow statement
56,776 72,905 97,590 Net income
5,600
5,869
6,892 Other
63,216 63,616 64,016 Capex
8,487
9,764 11,040 Disposal/(purchase)
8,310
8,310
8,310 Cash flow from investing
166,614 185,234 216,628 Free cash flow
0
0
12,603 12,481 14,293 Other
55,258 57,912 68,011 Dividends paid
0
0
0
939
939
68,800 71,332 83,243 Beginning cash
97,815 113,902 133,385 Ending cash
FY10
53.7%
28.0%
27.4%
27.3%
20.5%
5.7%
FY11
45.3%
15.0%
14.2%
15.5%
24.4%
6.7%
FY12E
41.7%
13.9%
13.2%
15.2%
22.4%
6.1%
FY13E
43.8%
19.8%
19.2%
19.5%
19.0%
5.5%
FY14E
46.2%
23.9%
23.4%
23.6%
17.6%
5.2%
(1.7%) (23.5%)
-14.6% -60.3%
-15.7% -56.4%
(16.5%) (56.1%)
19.0%
10.1%
16.0%
14.8%
24.0%
80.9%
59.4%
59.4%
15.0%
40.2%
39.1%
39.1%
-41.3%
NM
0.85
2.74
28.1%
27.6%
52.4%
-60.1%
NM
0.67
6.35
16.6%
15.6%
32.0%
-68.9%
NM
0.73
4.94
23.6%
22.6%
57.0%
-78.9%
NM
0.73
3.50
28.1%
27.0%
84.8%
-41.1%
NM
0.63
3.39
13.3%
12.2%
21.1%
FY10
30,960.0 13,490.7 15,654.9 24,958.1 34,717.7
691
724
723
723
723
-6,250 19,733 10,141
1,718
6,878
-2,546 24,197 13,165
2,385
9,076
25,402 33,948 26,520 27,400 42,319
-1,539 -1,190 -2,000 -2,000 -2,000
0
0
0
0
0
-12,034 -3,992 -2,400 -2,400 -2,400
23,862 32,758 24,520 25,400 40,319
3,919 14,570
2,738
4,318
6,032
489
171
0
0
0
0
0
0
0
0
-28,343 -23,605 -11,618 -13,188 -21,267
-23,936 -8,865 -8,880 -8,871 -15,235
-10,568
59,833
45,574
21,091
45,574
41,713
15,240
41,713
56,776
16,129
56,776
72,905
24,684
72,905
97,590
321
Adrian Mowat
(852) 2800-8599

21 November 2012
Mega Holdings
Overweight
www.megaholdings.com.tw/
Company overview
Mega Financial Holdings (Mega) is a state-owned, bank-centric holding company.
Mega FHC is engaged in banking, brokerage, P&C, asset management and bills
businesses. It is the biggest foreign currency settlement bank in Taiwan and owns 108
domestic branches and 19 overseas branches. Mega also has the biggest market share in
RMB deposits among Taiwan banks. Bank of China and Bank of Communications
signed an MOU with Mega Bank in 1Q11.
Taiwan
Financials
Investment case
Mega remains the largest FX lender in Taiwan with 30% to 35% market share in
OBUs Rmb deposit market. While the domestic market remains ultra competitive,
Mega has gradually expanded into Asia regional borrowers markets to expand its
reach to non-Taiwan corporation clients. Thus, we expect Mega to start differentiating
itself from domestic lenders through its greater regional reach.
Price: NT$21.60

Mega has been a consistent cash dividend payer with a 60% payout ratio, offering a 4%
to 5% dividend yield to investors. Consistency is Megas best attribute, with it
historically paying the highest dividend yield in Taiwans banking sector.
James WuAC
(886-2) 2725-9870
james.yh.wu@jpmorgan.com
Bloomberg JPMA JWU <GO>
25
23
NT$ 21
19
17
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
4.5%
1.7%
1m
-3.9%
-1.6%
3m
-9.6%
-7.3%
Source: Bloomberg.

Key upside risks include 1) Taiwan resuming its interest rate hike cycle in 2H2013 as
margin expansion would re-rate Mega's strong deposit franchise, and 2) Rmb business
development. The key downside risk is margin contraction due to competition.
Our Dec-13 DDM-based price target of NT$28.6 implies a fair 13E 1.4x P/BV and 14x
P/E. Key downside risks are: (1) corporate sector defaults increase; (2) unfavorable
outcome of Rmb/NT$ settlement agreement.
Mega Holdings (Reuters: 2886.TW, Bloomberg: 2886 TT)

Year-end Dec (NT$ in mn)
FY10A
FY11A
Operating Profit (NT$ mn)
20,863
24,665
Net Profit (NT$ mn)
15,111
17,680
Cash EPS (NT$)
1.37
1.57
Fully Diluted EPS (NT$)
1.37
1.57
DPS (NT$)
0.88
1.02
EPS growth (%)
5.4%
14.7%
ROE
7.6%
8.8%
P/E
15.4
13.5
BVPS (NT$)
18.16
17.98
P/BV
1.2
1.2
Div. Yield
4.2%
4.8%
322
FY12E
24,881
20,014
1.77
1.77
1.15
13.2%
9.7%
11.9
18.70
1.1
5.5%
FY13E
27,861
21,678
1.92
1.92
1.25
8.3%
10.1%
11.0
19.46
1.1
5.9%
FY14E
30,049
22,905
2.03
2.03
1.32
5.7%
10.2%
10.4
20.25
1.0
6.3%
Company Data
52-wk range (NT$)
Market cap (NT$ mn)
Market cap ($ mn)
Fiscal Year End
Price (NT$)
Date Of Price
Avg daily value (NT$ mn)
Avg daily vol (mn)
TSE
Exchange Rate
24.14 - 17.34
241,591
8,332
11,450
Dec
21.10
12 Nov 12
650.7
22.4
29.1
7,136
28.99
12m
1.9%
5.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
Mega Holdings: Summary of Financials

Income Statement
Margins (% of earning assets)
Growth Rates
FY13E
FY09 FY10 FY11 FY12E FY13E
1.4% Loans
-2.3% 4.4% 7.4% 4.2% 5.3%
90.0% Deposits
12.8% 5.0% 1.9% 5.3% 5.3%
1.2% Assets
3.6% 0.5% 4.3% 2.4% 4.8%
Equity
10.3% 2.5% 1.0% 3.8% 4.1%
Net Interest Income
26,497 25,079 28,080 30,586 34,319 RWA
18,637 16,019 16,839 16,137 16,098 Net Interest Income
-12.6% -5.3% 12.0% 8.9% 12.2%
Fee Income
9,129
9,230
8,607
8,605
6090.0% -14.0% 5.1% -4.2% -0.2%
Dealing Income
6,454
1,832 -1,014
2,627
1,930
of which Fee Grth
10.6% 1.1% -6.7% -0.0% 6.5%
Other Operating Income
-5,182
1,153
8,763
1,321
2,008
45,133 41,099 44,919 46,723 50,416 Costs
2.7% 5.8% 0.1% 7.8% 3.3%
116.8% -19.8% 18.2% 0.9% 12.0%
Operating costs
-19,118 -20,235 -20,254 -21,842 -22,556 Loan Loss Provisions
-4.8% -38.0% -42.2% -21.9% 26.4%
Pre-Tax
413.4% -1.0% 13.9% 9.4% 9.3%
Pre-Prov. Profits
26,016 20,863 24,665 24,881 27,861 Attributable Income
4766.2% 5.4% 17.0% 13.2% 8.3%
Provisions
-9,739 -6,036 -3,488 -2,723 -3,441 EPS
4766.2% 5.4% 14.7% 13.2% 8.3%
Other Inc/Exp.
- DPS
300.0% -11.8% 15.5% 13.2% 8.3%
Exceptionals
Disposals/ other income
Pre-tax
18,783 18,590 21,177 23,158 25,319 Loan/deposit
83.0% 85.0% 91.3% 88.6% 88.7%
Tax
-4,146 -3,207 -3,188 -3,145 -3,642 Investment/assets
2.5% 3.0% 2.9% 2.5% 2.5%
Minorities
13
39
6
-40
-40 Loan/Assets
51.2% 53.4% 55.6% 56.0% 56.3%
Other Distbn.
-318
-311
-315
40
40 Customer deposits/liab.
64.0% 67.0% 65.3% 67.2% 67.5%
Attributable Income
14,332 15,111 17,680 20,014 21,678 LT debt/liabilities
3.3% 3.2% 3.1% 2.9% 2.9%
Per Share Data NT$
FY09
FY10
FY11 FY12E FY13E Asset Quality/Capital
EPS
1.30
1.37
1.57
1.77
0.5% 0.1% 0.2% 0.1% 0.1%
DPS
1.00
0.88
1.02
1.15
1.25 NPLs/loans
0.9% 0.3% 0.2% 0.3% 0.4%
Payout
938.8% 77.2%
65.9% 65.0%
0.1% 0.0% 0.1% 0.0% 0.0%
Book value
17.69
18.16
17.98
18.70
19.46 Growth in NPLs
11,059.43 11,059.43 11,280.62 11,280.62 11,280.62 Tier 1 Ratio
9.9% 9.4% 9.2% 9.9% 10.1%
PPOP per share
- Total CAR
11.7% 11.3% 11.6% 13.0% 13.2%
Key Balance sheet NT$ in millions
FY09
FY10
FY11 FY12E FY13E Du-Pont Analysis
Net Loans
1,279,560 1,339,253 1,454,913 1,502,080 1,582,229 NIM (as % of avg. assets)
1.1% 1.1% 1.2% 1.3% 1.4%
LLR
-17,816 -14,967
0 -14,556 -14,518 Earning assets/assets
97.2% 89.0% 90.4% 89.6% 90.0%
Gross Loans
1,297,376 1,354,220 1,454,913 1,516,636 1,596,747 Margins (as % of Avg. Assets)
1.1% 1.0% 1.1% 1.2% 1.2%
NPLs
- Non-Int. Rev./ Revenues
46.6% 37.9% 31.4% 33.6% 30.7%
Investments
61,245 74,201 76,209 66,936 70,923 Non IR/Avg. Assets
0.8% 0.6% 0.7% 0.6% 0.6%
666,543 594,347 533,035 556,528 542,312 Revenue/Assets
1.8% 1.6% 1.8% 1.8% 1.8%
Avg. IEA
2,385,886 2,227,386 2,318,175 2,374,172 2,472,509 Cost/Income
42.4% 49.2% 45.1% 46.7% 44.7%
Goodwill
0
0
0
0
0 Cost/Assets
0.8% 0.8% 0.8% 0.8% 0.8%
Assets
2,497,532 2,509,708 2,618,402 2,681,509 2,810,560 Pre-Provision ROA
1.1% 0.8% 1.0% 0.9% 1.0%
LLP/Loans
-0.7% -0.5% -0.2% -0.2% -0.2%
Deposits
1,473,470 1,547,309 1,577,120 1,660,424 1,748,872 Loan/Assets
53.5% 53.0% 54.8% 56.1% 56.7%
82,512 80,541 80,200 77,900 81,901 Other Prov, Income/ Assets
Other Borrowings
47,153 50,550 58,901 56,601 60,602 Operating ROA
1.1% 0.8% 1.0% 0.9% 1.0%
Avg. IBL
2,207,178 2,031,888 2,105,883 1,718,372 1,776,264 Pre-Tax ROA
0.7% 0.6% 0.8% 0.8% 0.9%
Avg. Assets
2,453,572 2,503,620 2,564,055 2,649,955 2,746,034 Tax rate
22.1% 17.3% 15.1% 13.6% 14.4%
Common Equity
196,295 201,241 203,179 210,949 219,618 Minorities & Outside Distbn.
RWA
- ROA
0.6% 0.6% 0.7% 0.8% 0.8%
Avg. RWA
- RORWA
0.8% 0.9% 1.0% 1.1% 1.1%
Equity/Assets
7.9% 8.0% 7.8% 7.9% 7.8%
ROE
7.7% 7.6% 8.8% 9.7% 10.1%
FY09
1.1%
97.2%
1.1%
FY10
1.1%
89.0%
1.0%
FY11
1.2%
90.4%
1.1%
FY12E
1.3%
89.6%
1.2%
323
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Metalrgica Gerdau
Price: R$22.38
www.gerdau.com
End Date: Dec 2013
Company overview
Metalrgica Gerdau is a holding company with its main asset being Gerdau, in which it
holds a 40.9% stake (78.4% of ONs and 22.1% of PNs). Gerdau is the largest long steel
producer in the Americas and the second largest in the world, with total capacity of
25.3Mtpy. In addition, Gerdau has ~7Mtpy iron ore capacity with plans to expand up to
18Mtpy by 2016. Metalrgica Gerdaus shares are listed on the Bovespa under the
tickers GOAU4 (PNs) and GOAU3 (ONs).
Brazil
Metals & Mining
Investment case
We expect stronger demand in Brazil (as investments for the 2014 World Cup pick up)
and in the US (driven by continued recovery in the US non-residential construction
market). In addition, 2013 should see improved sales mix in Brazil as the companys
HRC facility is started as well as improved costs given 100% self-sufficiency in iron
ore. Finally, we expect improved capex discipline, as hinted during 3Q12 results. We
see Metalrgica as a cheaper way to gain exposure on Gerdau S.A.
Gerdau is trading at 6.4x 2013E EBITDA, which is below peers average of 6.8x. In
addition, we believe a relatively benign competitive environment vs. flat steel and an
encouraging bottom-up story (adding value, iron ore capacity) may warrant a valuation
premium vs. peers.

(55-11) 4950-3888
rodolfo.r.angele@jpmorgan.com
28
24
R$
20
16
Nov-11
Feb-12
May-12
Aug-12
Nov-12
GOAU4.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

We believe the earnings forecasts for Gerdau are balanced with JPM estimates in line
with consensus. There is, however, some downside risk to earnings if the recovery in
demand is weaker than expected.
Our Overweight rating and Dec 13 price target of R$32.0 is based on a SOTP valuation
with a holding discount to NAV of 10%. In the SOTP, we value Metalrgicas
participation in Gerdau BG Participaes and other assets at book value. The stake in
Gerdau S.A. is valued at our estimated fair value for GGBR4 shares, which is extended
to GGBR3 shares. We estimate the fair value for Gerdau (GGBR4) with a combination
of DCF (80% weight; WACC of 9.4%) and multiples (20% weight) analysis. Key
downside risks are weaker than expected steel demand in the US and Brazil, weaker
than expect steel prices, lack of capex discipline, expensive acquisitions, among others.
Metalrgica Gerdau S.A. (GOAU4.SA;GOAU4 BZ)
FYE Dec
2007A
2008A
EPS - Recurring (R$)
FY
3.90
3.06
324
2009A
2010A
2011A
1.20
2.10
1.87
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
22.38
14 Nov 12
27.02 - 16.26
9,429.04
Dec
406
32.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Sum of the Parts Valuation of Metalrgica Gerdau in BRL

S.No.
Particulars
Unit
JPM
Thousands
439,482
BRL
21.00
Thousands
252,841
BRL
21.00
Metalrgica Gerdau Stake in Gerdau S.A.
(R$M)
14,539
Metalrgica Gerdau Stake in Other Investments (30th Jun, 12)
(R$M)
1,602
Metalrgica Gerdau SOTP Equity Value
(R$M)
16,141
Net Debt - Metalrgica Gerdau (Holding) (30th Jun, 12)
(R$M)
1,306
i = g-h
Metalrgica Gerdau SOTP Equity Value (Adjusted)
(R$M)
14,834
10%
(R$M)
13,351
N of GGBR3 Shares Owned
GGBR3 Stock Price
N of GGBR4 Shares Owned
d
e=
a*b+c*d
f
g = e+f
j
k = i*(1-j)
GGBR4 Stock Price
Holding Company Discount

Metalrgica Gerdau SOTP Estimated Equity Value (Adj)
N of GOAU3 Shares
Thousands
137,619
N of GOAU4 Shares
Thousands
268,805
n = l+m
Total number of Metalrgica Gerdau Shares
Thousands
406,424
o = k/n
Metalurgica Gerdau - Price Per Share
BRL
32.00
GOAU4 Stock Price
BRL
22.38
43%
p
q = p/o-1
Upside - BRL

Note: Priced as of close on 14 Nov. 2012
325
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.mpic.com.ph
Company overview
MPI is an investment holding company of the First Pacific Group that focuses on
infrastructure business in the Philippines. The company has assembled a portfolio of
quality infrastructure assets which include water utility, Maynilad Water, electricity
distribution utility, Meralco, tollroad company, Metro Pacific Tollways Corp., and a
group of healthcare facilities and service provider.
Philippines
Conglomerates
Price: Php4.27
Jeanette YutanAC
(632) 878 1131
Jeanette.g.yutan@jpmorgan.com
Investment case
MPIs organic growth opportunities are aplenty. Meralco is going upstream into power
generation which potentially enhances returns above those of the regulatory-capped
returns of the distribution business. Expansion of existing tollroads are in the works
too, e.g. Harbour Link. Rate rebasing of Maynilad is also set to be completed within
1H13. NAV upside should also come from new projects, e.g. LRT1, NAIA
Expressway.
MPI has a portfolio of defensive assets, two-thirds of which are counter-cyclical.
Earnings trajectory is expected to be robust given the ample organic growth
opportunities.
4.4
Php
4.0
3.6
3.2
Nov-11
Feb-12
May-12
Aug-12
Nov-12
MPI.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
17.3%
-7.1%
1m
1.9%
0.5%
3m
1.9%
-2.1%
12m
26.3%
0.5%
Source: Bloomberg.

Delays in rate rebasing of Maynilad beyond the July 2013 target will negatively affect
our earnings estimate for 2013. A sharp drop in key operating metrics of Maynilad
(billed volume), tollroad (vehicle traffic), and Meralco (kwh sales) is also a risk.
Our Dec-13 PT of Php5.00 is derived after applying a 10% discount to our NAV of
Php5.62. Our NAV is SOTP of MPIs business units. Beacon is valued based on its
SOTP. Maynilad, and MPTC based on their DCF while hospital assets are valued based
on a 15x PER. Key risks include delay in Maynilad's rate rebasing, lower-thanexpected Maynilad rate rebasing tariff adjustment, disappointment in key operating
metrics of key business units, and zero new business wins.
Metro Pacific Investments Corp. (Reuters: MPI.PS, Bloomberg: MPI PM)
FY09A
FY10A
FY11A
FY12E
FY13E
Revenue (Php mn)
16,108
18,564
22,070
23,343
25,867
Net Profit (Php mn)
2,299.7
2,871.1
5,062.7
6,504.6
7,595.7
EPS (Php)
0.11
0.14
0.22
0.24
0.28
DPS (Php)
0.00
0.01
0.04
0.04
0.04
Revenue growth (%)
219.5%
15.3%
18.9%
5.8%
10.8%
EPS growth (%)
52.8%
24.7%
52.0%
11.3%
16.8%
ROCE
8.4%
9.1%
10.2%
10.6%
11.7%
ROE
6.6%
5.4%
8.5%
9.6%
10.3%
P/E (x)
37.4
30.0
19.7
17.7
15.2
P/BV (x)
1.4
1.3
1.2
1.3
1.2
EV/EBITDA (x)
3.5
2.3
2.3
1.8
1.3
Dividend Yield
0.0%
0.2%
1.0%
0.9%
0.9%
326
FY14E
28,441
8,506.7
0.32
0.04
10.0%
12.0%
12.7%
10.6%
13.5
1.1
0.8
0.9%
Company Data
Shares O/S (mn)
Market cap (Php mn)
Market cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
PSE
Exchange Rate
Fiscal Year End
24,601
105,048
2,558
4.27
09 Nov 12
40.0%
19.29
80.48
1.96
5,469
41.07
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Metro Pacific Investments Corp.: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY10
18,564 22,070 23,343 25,867 28,441 EBIT
15.3% 18.9%
5.8% 10.8% 10.0% Depr. & amortization
13.7% 17.1%
9.1% 14.6% 12.9% Taxes
8,074
33.7% 17.6% 15.6% 15.2% 13.1%
43.5% 43.0% 47.0% 48.8% 50.2% Capex
-3,969 -3,234 -3,120 -2,759 -2,293 Disposal/(purchase)
5,413
8,246 11,110 13,612 15,790 Net Interest
25.0% 52.3% 34.7% 22.5% 16.0% Other
102
414
1,367
1,634
1.9%
5.0% 12.3% 12.0% 15.4%
20,152 23,382 26,982 26,982 26,982 Other
0.14
0.22
0.24
0.28
0.32 Dividends paid
24.7% 52.0% 11.3% 16.8% 12.0% Beginning cash
Ending cash
DPS
Ratio Analysis
FY10
4,942
7,715 11,213 13,770 16,511 EBITDA margin
2,381
2,120
2,402
2,629
159
55
104
111
119 Net margin
3,422
3,782
3,447
3,447
3,447
25,806 11,272 13,337 17,166 19,957
36,125 36,671 38,360 40,527 42,751 Sales growth
131,376 141,723 156,836 162,940 174,747 EPS growth
0
0
0
0
0
6,218
7,711
5,441
7,064
4,680
5,327
5,419 Sales/assets
14,805 14,461 15,862 16,611 17,386 Assets/equity
29,569 36,550 35,482 33,413 30,112 ROE
21,723 14,743 24,082 24,976 31,865 ROCE
66,097 65,754 75,427 74,999 79,364
54,218 64,908 70,348 76,880 84,322
3.24
3.42
3.31
3.58
3.88
FY10
8,074
2,535
2,048
-85
14,187

9,493 10,971 12,635 14,289
2,931 2,581 2,895 3,242
-2,698
646
92
96
-414 -1367 -1634 -2428
7,522 10,254 11,019 12,287
-9,203 -11,103 -6,652 -8,387 -8,294

0
0
0
0
0
-3,969 -3,234 -3,120 -2,759 -2,293
4,984 -3,581 3,601 2,632 3,993
66
-10,401
12
0
6,380
4,942
0.01
6,600
0
0
0
6,981 -1,067 -2,069 -3,301
-961 -1,064 -1,064 -1,064
4,942 7,715 11,213 13,770
7,715 11,213 13,770 16,511
0.04
0.04
0.04
0.04
FY10
57.1%
43.5%
15.5%
FY11
56.3%
43.0%
22.9%
FY12E
58.1%
47.0%
27.9%
FY13E
60.0%
48.8%
29.4%
FY14E
61.6%
50.2%
29.9%
15.1%
15.3%
24.8%
24.7%
2.67
2.5% (8.3%) 10.8% 10.0%

18.9% 5.8% 10.8% 10.0%
76.3% 28.5% 16.8% 12.0%
52.0% 11.3% 16.8% 12.0%
3.84
4.34
5.63
7.65
45.4%
0.14
2.42
5.4%
9.1%
44.4% 34.5% 25.6% 16.1%

0.16
0.16
0.16
0.17
2.18
2.23
2.12
2.07
8.5% 9.6% 10.3% 10.6%
10.2% 10.6% 11.7% 12.7%
327
Adrian Mowat
(852) 2800-8599

21 November 2012
Mindray Medical
Overweight
www.mindray.com
Price Target: US$39.0
Company overview
Mindray is Chinas largest exporter of medical devices and the most profitable medical
device manufacturer in China. It is based in Shenzhen, develops new products in-house
and assembles most of its products in two factories in Shenzhen. Key products include
patient monitors and life support, in-vitro diagnostic products and medical imaging.
China
Healthcare
Investment case
Mindrays global presence minimizes the companys risks with over-exposure to any
particular markets. The company derives cost advantage from China-based R&D and
manufacturing, which allows the company's to compete effectively against MNCs with
favorable quality to price trade-off in international markets. Recent share pullback due
to perceived weakness of 3Q results may allow for an attractive entry point for
investors seeking balanced growth.
Price: US$32.69
Sean WuAC
(852) 2800 8538
sean.wu@jpmorgan.com

Limited
36
32
$ 28
24

After recording six quarters of 20%+ Y/Y growth in China, we see continued growth to
be sustained from: 1) government unabated spending on building up county-level
hospitals; 2) deepening penetration to key accounts; and 3) opportunistic M&A. US
sales are expected to recover as Obamacare will not be repealed and the medical
services sector should expand in the US with 30 million more people with insurance
coverage.
20
Nov-11
Feb-12
May-12
Aug-12
Nov-12
MR share price ($)

MSCICNX-HLTH (rebased)
Abs
Rel
YTD
27.5%
-4.5%
1m
-0.8%
-0.3%
3m
-7.9%
-21.4%
Source: Bloomberg.

Stronger-than-expected performance of newly launched products and potentially
impaired sales of Japanese products due to Sino-Japan conflicts may drive earnings
upside. Budget constraints should relax eventually in Europe, leading to higher hospital
capex spending and purchase of medical equipment.
MR trades at a 17.3x FY13E P/E. Our DCF based Dec-13 PT of US$39.0 implies a
FY13E P/E of 20.1x. Key risks to our PT are the sustainability of the domestic market
and tender sales for new hospitals might be lower than we expect.
Mindray Medical (Reuters: MR, Bloomberg: MR US)
$ in mn, year-end Dec
FY09A
FY10A
Revenue ($ mn)
634
704
Net Profit ($ mn)
138.6
155.7
EPS ($)
1.28
1.37
DPS ($)
0.26
0.30
Revenue growth (%)
15.8%
11.1%
EPS growth (%)
25.2%
6.8%
ROCE
19.2%
17.5%
ROE
24.3%
19.4%
P/E (x)
25.5
23.8
P/BV (x)
5.4
3.6
EV/EBITDA (x)
-0.2
-2.1
Dividend Yield
0.8%
0.9%
328
FY11A
881
166.6
1.47
0.32
25.1%
7.6%
16.0%
16.0%
22.2
3.1
-2.2
1.0%
FY12E
1,060
194.3
1.72
0.38
20.3%
16.6%
17.0%
16.2%
19.0
2.7
-2.2
1.2%
FY13E
1,255
225.2
1.99
0.44
18.4%
15.9%
17.1%
16.1%
16.4
2.3
-2.3
1.3%
Company Data
Shares O/S (mn)
Market cap ($ mn)
Market cap ($ mn)
Price ($)
Date Of Price
Free float (%)
MSCICNX-HLTH
Exchange Rate
Fiscal Year End
86
2,814
2,814
32.69
09 Nov 12
4000.0%
0
0
0
130
1.00
Dec
12m
27.1%
5.4%

21 November 2012
Adrian Mowat
(852) 2800-8599
Mindray Medical: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
704
11.1%
401
13.4%
204
11.0%
156
10.8%
22.1%
9
173
3.6%
-18
10.2%
155.7
12.3%
106
1.37
6.8%
FY10
434
143
79
39
695
136
254
1,151
0
44
130
175
0
9
184
967
9.12
Cash flow statement

881 1,060 1,255 1,447 EBIT
486
584
685
21.3% 20.1% 17.3% 14.8% Taxes
221
265
306
348 Cash flow from operations
8.4% 19.9% 15.4% 13.9%
167
205
240
276 Capex
7.2% 22.7% 17.0% 14.9% Net Interest
19.0% 19.3% 19.1% 19.1% Other
19
15
18
21 Free cash flow
190
224
262
303
9.4% 18.0% 17.3% 15.4%
-23
-29
-37
166.6 194.3 225.2 256.8 Other
7.0% 16.6% 15.9% 14.0% Dividends paid
106
106
106
106 Beginning cash
1.47
1.72
1.99
2.27 Ending cash
7.6% 16.6% 15.9% 14.0% DPS
Ratio Analysis
493
592
714
867 Gross margin
170
195
219
240 EBITDA margin
99
119
141
41
35
52
81 Net margin
804
941 1,126 1,350
139
142
144
147 Sales growth
314
369
430
1,316 1,504 1,749 2,038 EPS growth
0
0
0
0
55
67
79
132
134
138
142 Working Capital to Sales
187
201
217
233 Sales/assets
0
0
0
0 Assets/equity
12
14
17
19 ROE
199
215
234
253 ROCE
1,117 1,289 1,514 1,784
10.54 12.16 14.29 16.83
FY10
156
48
65
0
261
FY11
167
54
-39
0
186
FY12E
205
60
-35
0
228
FY13E
240
66
-35
0
272
FY14E
276
73
-31
0
323
-63
9
0
199
-90
19
-0
96
-90
15
-0
138
-103
18
-0
169
-116
21
-0
207
4
-31
215
434
0.30
2
-35
434
493
0.32
2
-39
493
592
0.38
3
-46
592
714
0.44
3
-53
714
867
0.50
FY10
57.0%
29.0%
22.1%
22.1%
FY11
55.2%
25.1%
19.0%
18.9%
FY12E
55.1%
25.0%
19.3%
18.3%
FY13E
54.6%
24.4%
19.1%
18.0%
FY14E
54.4%
24.1%
19.1%
17.8%
5.6%
11.1%
12.3%
6.8%
-
25.7%
25.1%
7.0%
7.6%
-
20.3%
20.3%
16.6%
16.6%
-
18.4%
18.4%
15.9%
15.9%
-
15.3%
15.3%
14.0%
14.0%
-
-44.8% -44.2% -45.9% -47.1% -48.6%

25.3% 24.3% 23.3% 22.4% 21.5%
0.67
0.71
0.75
0.77
0.76
1.25
1.25
1.17
1.15
1.14
19.4% 16.0% 16.2% 16.1% 15.6%
17.5% 16.0% 17.0% 17.1% 16.7%
DCF Calculation
329
Adrian Mowat
(852) 2800-8599

21 November 2012
Mobily
Overweight
www.mobily.com.sa
Price Target: SR88.00
Company overview
Etihad Etisalat (Mobily) is Saudi Arabias 2nd mobile operator, also providing data and
internet services. As a single-country operator, Mobily has c.40% customer market
share and covers over 90% of the populated area with its mobile network. Through its
subsidiaries, Mobily also develops software programmes, maintains telecom networks
and participates in the wholesale / retail trading of telecom equipment, electronics,
computers and computer peripherals. Mobily also owns a major stake in the 13,800km
long Saudi National Fiber Network.
Saudi Arabia
Telecommunications
Investment case
We believe Mobily is a rare investment opportunity offering an attractive mix of strong
growth in combination with good FCF yields and healthy dividend yields. Mobily's
focus on the under-penetrated broadband market in Saudi continues to be the key driver
of its operational growth and we forecast 2011-14E rev/EBITDA CAGR of 7%/8% for
Mobily. Supported by Mobilys rising FCF yield to 11% in 2014E, we expect 2012E
and 2013E DPS of SR4.25/sh and SR5.0/sh implying a healthy divi yield of 6.1% and
7.2%, respectively. Our scenario analysis suggests substantial upside potential to total
shareholder remuneration based on Mobilys conservative balance sheet.

Mobilys strong rev growth continues to be mainly driven by a) increasing contribution
of higher-margin data rev (26% of total rev in 9M12), b) growing post-paid rev (+15%
yoy in 9M12), c) strong 9M12 business sector rev growth of 64% yoy, and d) mobile
device sales (especially, smartphones). Mobilys financial performance is underpinned
by growing mobile data usage and government spending on projects.
Source: Bloomberg.
Price: SR75.25
Christian KernAC
(971-4) 428-1789
Bloomberg JPMA KERN <GO>
JPMorganChase Bank, N.A, Dubai Branch
75
70
SRls
65
60
55
50
Oct-11
Abs
Jan-12
YTD
38.8%
Apr-12
1m
6.2%
Jul-12
Oct-12
3m
11.1%
12m
40.1%

We believe Mobilys earnings risk remains on the upside following a strong track
record of beating estimates. Given Mobilys strong growth and cash flow profile, we
see potential for positive surprises with regards to shareholder returns.
Our Dec 2013 PT of SR88.0 is derived from our DCF-based valuation analysis (riskadj WACC 11.1%, terminal growth 2%). Key regulatory risks include licensing,
termination fees and access to infrastructure. Any potential change to the economic
environment is likely to have an impact on our f/c. Our f/c already factor in reasonable
levels of competition. However, less or irrational competition could impact our growth
and margin f/c more than expected. Etisalat, Mobilys parent company, has started an
assessment of the balance sheets of its opcos and this, in our view, could result in
potential upside to shareholder remuneration.
Etihad Etisalat Company (7020.SE;EEC AB)
FYE Dec
2011A
20,052
EBITDA FY (SRls mn)
7,454
EBITDA margin FY
37.2%
EBIT FY (SRls mn)
5,305
Adj. EPS FY (SRls)
7.26
DPS (Gross) FY (SRls)
3.25
EV/EBITDA FY
7.3
Dividend Yield FY
4.7%
Adj P/E FY
10.4
330
2012E
22,632
8,351
36.9%
5,982
8.18
4.25
6.6
6.1%
9.2
2013E
23,976
8,979
37.5%
6,212
8.43
5.00
6.0
7.2%
8.9
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
3M Avg Daily Trading
Val (USD mn)
75.25
02-Nov-12
88.00
31 Dec 13
70.75 - 49.90
52.7
700
13.20
Adrian Mowat
(852) 2800-8599

21 November 2012
Mobily: Summary of Financials

Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Balance sheet
ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Total Liabilities & Shareholders' Equity
FY11
20,052
25.2%
7,454
20.9%
37.2%
5,305
21.8%
26.5%
(213)
5,138
20.1%
5,083
20.7%
700.00
7.26
20.7%
3.25
FY12E
22,632
12.9%
8,351
12.0%
36.9%
5,982
12.8%
26.4%
(204)
5,830
13.5%
5,725
12.6%
700.00
8.18
12.6%
4.25
FY13E
23,976
5.9%
8,979
7.5%
37.5%
6,212
3.8%
25.9%
(218)
6,049
3.8%
5,898
3.0%
700.00
8.43
3.0%
5.00
FY14E
24,786
3.4%
9,357
4.2%
37.8%
6,156
-0.9%
24.8%
(184)
6,028
-0.3%
5,878
(0.3%)
700.00
8.40
NM
5.25
FY11
1,690
6,323
0
1,880
9,893
11,195
16,412
37,501
6,096
7,808
4,142
18,047
977
89
19,113
37,501
FY12E
2,398
6,790
0
2,116
11,304
10,596
18,648
40,548
633
7,242
3,914
11,790
7,935
342
20,066
40,548
FY13E
3,660
7,193
0
2,241
13,094
9,961
20,713
43,768
633
7,432
4,147
12,212
7,935
610
20,757
43,768
FY14E
5,618
7,436
0
2,317
15,371
9,465
21,725
46,561
633
7,560
4,287
12,480
7,935
889
21,304
46,561
Cash flow statement

FY15E SRls in millions, year end Dec
25,449 Cash EBITDA
2.7% Interest
9,607 Tax
2.7% Other
6,079
-1.3% Capex PPE
23.9% Net investments
(138) CF from investments
5,998 Dividends
-0.5% Share (buybacks)/ issue
5,848
(0.5%) CF to Shareholders
700.00 FCF to debt
8.35
NM OpFCF (EBITDA - PPE)
5.43 EFCF pre Div, PPE
Ratio Analysis
FY15E SRls in millions, year end Dec
8,005 EBITDA margin
7,635 EBIT Margin
0 Net profit margin
2,379 Capex/sales
18,019 Depreciation/Sales
8,956
22,269 Revenue growth
49,244 EBITDA Growth
633 EPS Growth
7,762
4,401 Net debt/EBITDA
12,797 CF to Shareholders
7,935 FCF to debt
1,176
21,908 OpFCF (EBITDA - PPE)
49,244 EFCF pre Div, PPE

2,149 2,369 2,767 3,201 3,529
(150) (204) (218) (184) (138)
(72) (105) (151) (151) (150)
(559) (1,191)
217
284
401
11,978 12,833 15,039 15,462 15,799
(3,700) (4,006) (4,196) (3,718) (3,563)
292
0
0
0
0
-3,408 -4,006 -4,196 -3,718 -3,563
(2,275) (3,631) (3,369) (3,631) (3,770)
0
0
0
0
0
(2,275) (3,631) (3,369) (3,631) (3,770)
990
-786 1,262 1,957 2,387
3,754
3,265
4,345
2,845
4,783
4,631
5,639
5,589
6,044
6,157
FY11
37.2%
26.5%
25.4%
18.5%
0.1
FY12E
36.9%
26.4%
25.3%
17.7%
0.1
FY13E
37.5%
25.9%
24.6%
17.5%
0.1
FY14E
37.8%
24.8%
23.7%
15.0%
0.1
FY15E
37.8%
23.9%
23.0%
14.0%
0.1
25.2% 12.9%
20.9% 12.0%
20.7% 12.6%
5.9%
7.5%
3.0%
3.4%
4.2%
NM
2.7%
2.7%
NM
0.7
0.7
0.5
0.3
0.1
(2,275) (3,631) (3,369) (3,631) (3,770)
990
-786 1,262 1,957 2,387
3,754
3,265
4,345
2,845
4,783
4,631
5,639
5,589
6,044
6,157
331
Adrian Mowat
(852) 2800-8599

21 November 2012
Naspers Limited
Overweight
www.naspers.com
Company overview
Exposure to market leadership positioning in social networking, gaming and broader
mobile and internet value added services in both China and Russia through the groups
large stakes in Tencent (34.6%) and Mail.ru (30.8%). Naspers has a dominant position
in Pay TV services in 48 countries in the African continent and South Africa. Also, the
company operates an attractive portfolio of EM eCommerce internet assets across
markets in Eastern Europe, LATAM, South East Asia and India.
South Africa
Media
Price: 56,600c
Ziyad Joosub
AC
(27 11) 507-0456

ziyad.x.joosub@jpmorgan.com
Bloomberg JPMA JOOSUB <GO>
Investment case
Market yet to fully appreciate medium-term earnings growth potential. Core Internet
earnings destruction has already occurred we believe a change in earnings operating
leverage is set to occur at Naspers in FY14E (March 2013 onwards). The combination
of robust Tencent growth, solid Pay TV growth and attractive year-over-year base
effects brought about by loss-reversal in the Core Internet will support a 3yr CAGR of
28%+ at Naspers in our view. We expect Naspers to hold its PE and capital upside to be
driven by earnings expansion.
(1) Growth dynamics particularly in the Core Internet remain very robust (JPMe
FY13E revenue growth of c80% yoy). (2) Development spend starts to initially
stabilise (12 -18 months) and potentially reverse (2-3 years). We estimate that for every
1% drop in development spend-to-revenue ratio HEPS growth at Naspers could
increase by 8-9%. (3) Earnings growth at Naspers could prove to be very macro and
FX proof as costs unwind will be a dominant factor driving earnings surprises. (4)
Tencent which accounts for c80% of earnings at Naspers through the investment cycle
has a favourable outlook.
60,000
55,000
50,000
c 45,000
40,000
35,000
30,000
Nov-11
Abs
Feb-12
YTD
59.8%
May-12
1m
5.5%
Aug-12
Nov-12
3m
18.7%
Source: Bloomberg.

Near-term shock risk include - 1) greater than expected competition and regulation in
key markets 2) prolonged unstable macro and political environment 3) unanticipated
M&A that could be dilutionary on a group level.
Our TP of R625.1 is derived using a sum-of-the-parts (SoTP) methodology and have
preferred DCF methodology blended with the multiple valuation methodology (where
appropriate) to value the underlying assets of Naspers. Key risks include increased
emerging market risk aversion and macro shocks, disappointing operational
performance and exchange rate fluctuations.
Naspers Ltd (NPNJn.J;NPN SJ)
FYE Mar
Adj. EPS FY (c)
Adj P/E FY
EBITDA margin FY
Revenue FY (R mn)
FCF FY (R mn)
EBIT margin FY
Adj EBITDA FY (R mn)
2012A
1,850.38
30.6
1,769.70
17.6%
39,487
3,246
8.1%
6,960
332
2013E
2,230.01
25.4
1,911.90
14.2%
49,046
1,641
9.0%
6,944
2014E
2,874.20
19.7
2,316.30
13.8%
57,171
2,328
8.9%
7,862
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
Free Float
56,600
02-Nov-12
62,511
30 Oct 13
54,200 - 33,450
212.0
375
100.0%
12m
44.6%
Adrian Mowat
(852) 2800-8599

21 November 2012
Naspers Ltd: Summary of Financials

R in millions, year end Mar
Revenues
% change Y/Y
Gross Margin (%)
EBITDA
% change Y/Y
EBITDA Margin (%)
EBIT
% change Y/Y
EBIT Margin (%)
Net Interest and associates
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
Non-cash current assets
Current assets
Tangible assets
Investments
Intangible assets
Total assets
Liabilities
ST loans
Long term debt
Other liabilities
Total liabilities
Cash flow statement

FY11
FY12 FY13E FY14E FY15E R in millions, year end Mar
33,085 39,487 49,046 57,171 65,912 EBIT
18.2% 19.4% 24.2% 16.6% 15.3% Depreciation & amortisation
46.2% 47.2% 47.5% 48.4% 48.6% Change in working capital
7,149
6,960
6,944 7,862 10,048 Cash flow from ops (pre tax)
10.1%
-2.6%
-0.2% 13.2% 27.8%
21.6% 17.6% 14.2% 13.8% 15.2% Taxes
4,056
3,202
4,420 5,068 6,966 Capex
0.4% -21.1% 38.0% 14.7% 37.4% Acquisitions / divestments
12.3%
8.1%
9.0%
8.9% 10.6% Net interest
(1,018)
(697)
(784)
(794)
(802)
4,541
1,765
3,636 4,275 6,164 Free cash flow (post interests)
20.6% -61.1% 106.0% 17.6% 44.2% Equity raised/(repaid)
(1,861) (2,059) (2,135) (2,521) (3,283) Debt raised/(repaid)
41.0% 116.7% 58.7% 59.0% 53.3% Dividends received
5,260
2,894
6,077 7,948 10,397
61.5% -45.0% 110.0% 30.8% 30.8% Beginning cash
375.4
384.7
384.7 384.7 384.7 Ending cash
1850
2230
2874
3678
- DPS
Ratio Analysis
FY11
FY12 FY13E FY14E FY15E R in millions, year end Mar
8,731
9,825
9,031 9,577 11,517 Revenue growth
1,487
1,522
1,807 2,169 2,611 EBIT growth
27,862 31,650 34,131 35,912 37,920
24,068 30,659 33,112 35,761 38,622 Net debt/EBITDA
EV/EBITDA
69,855 81,278 84,233 90,010 97,775 P/E
EV-FCF Yield (%)
Equity-FCF Yield (%)
2,840
2,647
3,037 3,369 3,726
10,047 10,992 11,416 12,167 12,964
11,962 13,857 13,849 14,950 16,172
12,893 15,552 16,019 16,499 16,994
893
978
1,140 1,314 1,517
26,913 31,702 33,716 35,948 39,276
42,942 49,576 50,516 54,062 58,500
FY11
4,056
2,212
(966)
6,129
FY12
3,202
2,310
(268)
6,842
FY13E FY14E FY15E

4,420 5,068 6,966
2,524 2,794 3,082
(1,713) (1,339) (1,468)
622 1,346 2,358
(1,802) (2,013)
(2,736) (2,102)
-
(2,600) (3,022) (3,497)

(369)
(385)
(384)
-
3,851
(83)
3,666
-
3,246
305
2,429
-
1,641
(222)
443
-
2,328
0
330
-
5,829
7,401
7,401
8,791
8,791
7,997
7,997 8,543
8,543 10,483
273.76 335.00
3,848
0
296
-
405.46 522.58 668.70

18.2% 19.4% 24.2% 16.6% 15.3%
0.4% -21.1% 38.0% 14.7% 37.4%
20.6% -61.1% 106.0% 17.6% 44.2%
1.0
15.5%
26.6
30.0
2.2%
2.1%
1.2
16.2%
27.7
30.0
2.0%
1.7%
1.4
19.0%
28.0
25.4
1.7%
0.9%
1.3
18.3%
24.9
19.7
0.8%
1.3%
0.9
15.1%
19.5
15.4
1.2%
2.1%
333
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Natura
Price: R$55.62
www.natura.net
End Date: Dec 2013
Company overview
Natura is the leading player in the beauty and personal care market in Brazil with 15%
market share. The company also has operations in other Latin American markets such
as Argentina, Bolivia, Chile, Colombia, Mexico, and Peru, which together represent
10% of its sales. Natura sells exclusively through direct selling with a 1.5m sales rep
base in LatAm, of which 1.2m are in Brazil.
Investment case
The key triggers for the stock would be (1) sales growth acceleration in Brazil not only
derived from a better than expected macro environment but also a faster maturation of
several measures being implemented and successful new product launches; (2)
international operations positively surprising or if management executes accretive
M&A to enhance the international footprint.
Brazil
Latin American CF&T and
Pharma
Felipe Oliveira, CFA
(55-11) 4950-3892
felipe.r.oliveira@jpmorgan.com
60
50
R$
40
30
Nov-11
We think the market is pricing in 12-13% sales growth for Brazil vs. 11% in 2011.
Natura is a lower beta stock as it has a very resilient sale mix, but in an expansionary
cycle it has grown at ~2.5x GDP. The stock trades at 22.9x 2013E P/E, in line with
consumer staples names but with mid teens EPS vs. low teens for staples. Relative to
retailers it is trading at a limited 4% premium that we think is unfair considering its
higher ROE and cash flow.
AC
Feb-12
May-12
Aug-12
Nov-12
NATU3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Key earnings risks are lower than expected sales growth and the margin outlook.
We rate Natura OW and have a R$62 PT for Dec 2013. Our price target is based on a
10-year FCFF valuation using a WACC of 11.8% in nominal reais and a 6% growth
rate in perpetuity. The key risk to not performing well would be if sales growth in
Brazil does not accelerate.
Natura Cosmeticos SA (NATU3.SA;NATU3 BZ)

FYE Dec
2011A
EPS Reported (R$)
FY
1.83
1.85
EBITDA FY (R$ mn)
1,425
P/E FY
30.0
2012E
2013E
2.13
2.10
1,570
25.8
2.42
2.39
1,794
22.7
estimates.
334
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
55.62
14 Nov 12
56.99 - 33.52
23,696.58
Dec
431
62.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
NATURA: Summary of Financials

Income Statement
Revenues
Cost of goods sold
SG&A
EBIT Margin
Depreciation
EBITDA
EBITDA Margin
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net Income
Net income margin
EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth
Capex
Free Cash Flow
Dividends
Capex/Depreciation
Capex/Sales
Working capital
Sales Area (Sq,m)

Floor Space Growth
No. of Stores
SSS growth (nominal terms)
# of PL cards issued
% of sales in 0+5x (no interest)
% of sales on interest plans
Bad Debt Provisions
Personal Loans Portfolio
Capex
Maintenance
Expansion
FY11A
5,591
(1,666)
(2,673)
1,315
23.5%
(110)
1,425
25.5%
149
(190)
0
0
1,238
(407)
0
789
14.1%
1.83
8.9%
13.4%
6.1%
(50.0%)
FY11A
(346)
(242)
352
763
96.7%
3.1
(6.2%)
582
10.4%
FY12E
6,371
(1,873)
(3,076)
1,421
22.3%
(149)
1,570
24.6%
133
(227)
0
1,327
(427)
0
0
919
14.4%
2.13
13.9%
10.2%
16.5%
90.7%
FY12E
(400)
23
672
856
93.2%
2.7
(6.3%)
559
8.8%
FY13E
7,257
(2,132)
(3,505)
1,620
22.3%
(174)
1,794
24.7%
92
(176)
0
1,535
(491)
0
0
1,044
14.4%
2.42
13.9%
14.3%
13.6%
18.1%
FY13E
(350)
(75)
793
856
81.9%
2.0
(4.8%)
635
8.7%
FY14E
8,245
(2,417)
(3,972)
1,857
22.5%
(198)
2,055
24.9%
90
(182)
0
1,765
(565)
0
0
1,200
14.6%
2.78
13.6%
14.6%
14.9%
24.0%
FY14E
(330)
(85)
984
996
83.0%
1.7
(4.0%)
719
8.7%
(346)
-
(400)
-
(350)
-
(330)
-
FY15E
9,319
(2,730)
(4,471)
2,118
22.7%
(217)
2,334
25.1%
90
(191)
0
2,017
(646)
0
0
1,371
14.7%
3.18
13.0%
13.6%
14.2%
19.1%
FY15E
(326)
(90)
1,171
1,141
83.3%
1.5
(3.5%)
809
8.7%
Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other Assets
Total assets
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority interest
Net Debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
P/S
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
- ROIC
- Shares
- ADRs
- DCF
- WACC
- Perpetual Growth
- Cost of equity
- Cost of debt
(326)
-
FY11A
516
642
689
FY12E
699
669
772
FY13E
604
763
879
FY14E
560
866
996
FY15E
557
979
1,125
357
408
465
528
597
800
1,041
1,216
1,348
1,457
789
900
950
997
1,047
3,793
4,490
4,876
5,296
5,762
169
1,089
1,089
1,089
1,089
489
588
672
765
868
617
702
799
906
1,024
1,018
476
476
476
476
0.0
0.0
0.0
0.0
0.0
250
300
317
333
349
2,543
3,156
3,354
3,569
3,806
0
0
0
0
0
1,250
1,334
1,523
1,727
1,956
3792.90 4489.80 4876.09 5296.14 5762.38
671
27.5%
48.7%
0.5
FY11A
16.4
30.0
18.1
4.1
1.6%
3.2%
66.3%
14.1%
1.5
3.0
40.0%
431
-
866
29.9%
54.0%
0.6
FY12E
15.0
25.8
17.0
3.6
3.0%
3.6%
69.6%
14.4%
1.4
3.4
37.5%
431
-
961
31.1%
50.7%
0.5
FY13E
13.2
22.7
14.9
3.1
3.5%
3.6%
73.1%
14.4%
1.5
3.2
38.2%
431
-
1,005
30.5%
47.5%
0.5
FY14E
11.5
19.7
13.1
2.8
4.3%
4.2%
73.9%
14.6%
1.6
3.1
40.0%
431
-
1,009
28.6%
44.4%
0.4
FY15E
10.1
17.3
11.6
2.4
5.2%
4.8%
70.1%
14.7%
1.6
2.9
42.2%
431
-

335
Adrian Mowat
(852) 2800-8599

21 November 2012
Novatek
Overweight
www.novatek.ru
Company overview
Novatek is Russias largest independent natural gas producer with over 15tr boe of 2P
hydrocarbon reserves located in Yamal-Nenets and Yamal regions of Russia. The
company supplied 15% of the domestic gas market in 2011, and has established an
advanced value chain in liquid hydrocarbons at its Purovsky and Ust-Luga facilities.
Novatek plans to expand its gas business beyond Russian borders through its Yamal
LNG project, by creating a new production center on the Yamal peninsula and building
15mn tn LNG facility in partnership with TOTAL.
Russia
Oil and Gas
Price: $101.2
Artem KonchinAC
(7-495) 937-7323
artem.v.konchin@jpmorgan.com
Bloomberg JPMA KONCHIN <GO>
Investment case
Growth of hydrocarbon production and support from the states program of domestic
gas price liberalization remain key investment points for the company. We expect
2012E sales volumes to rise by up to 12% y/y on the back of increased core production
(up 5.5% y/y), along with the rising share of output from the equity subsidiaries and
gas resale business. Gas sales are forecast by us to exceed 74bcm in 2017, up from
59bcm projected for 2012, with gas business appended by strong liquids component in
the companys sales mix (34% of 2013E revenue generated by the liquids segment).
Organic and equity-based output growth, strong M&A track record, prudent fiscal
control and total market focus, excellent management team and political backing. We
see 2013 as a key year for the company's to secure its position on the domestic market
and as it prepares to enter the global LNG business.
150
130
110
90
Nov-11
Abs
Feb-12
YTD
-15.4%
May-12
Aug-12
1m
-14.3%
Nov-12
3m
-11.5%
Source: Bloomberg.

Oil price fluctuations have a reduced effect on Novateks P&L, as the companys
domestic gas business remains regulated. Loss of a large gas offtaker (Gazprom
remains Novateks largest customer) could be the companys biggest risk, though an
abrupt termination of gas contracts appears to us unlikely at this point.
Our end-13 PT for Novatek is $180/GDR, established through DCF-based fair value
method. Direct competition from state-supported independent gas producers appears to
us as the key risk to the mid-term outlook, followed by a higher govt tax levy.
Escalation of capex for Yamal LNG and global gas supply overhang represent crucial
long-term risks, we believe.
OAO Novatek (NVTKq.L;NVTK LI)
FYE Dec
Adj. EPS FY ($)
Revenue FY ($ mn)
EBITDA FY ($ mn)
FY ($ mn)
Adj P/E FY
EV/EBITDA FY
EBITDA margin FY
Dividend (Gross) FY ($)
2011A
13.40
5,989
5,132
4,070
2012E
7.74
7,674
3,435
2,349
2013E
10.44
10,311
4,298
3,170
7.5
7.7
85.7%
0.19
13.1
11.5
44.8%
0.23
9.7
9.2
41.7%
0.31
Source: Company data, Reuters, J.P. Morgan estimates.
336
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
101.20
02-Nov-12
180.00
31 Dec 13
156.00 - 88.25
30.7
304
12m
-29.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Novatek: Summary of Financials

Revenues
% change Y/Y
Gross Margin (%)
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as a % of EBT
% change Y/Y
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
FY11 FY12E
5,989
7,674
55.4% 28.1%
91.4% 50.5%
5,132
3,435
174.2% -33.1%
85.7% 44.8%
4,817
3,104
191.2% -35.6%
80.4% 40.5%
(92)
(2)
4,593
2,977
173.1% -35.2%
(535)
(621)
11.7% 20.8%
4,070
2,349
204.9% -42.3%
303.63 303.63
13.40
7.74
204.9% (42.3%)
FY13E
10,311
34.4%
46.3%
4,298
25.1%
41.7%
3,946
27.1%
38.3%
2
3,970
33.3%
(790)
19.9%
3,170
34.9%
303.63
10.44
34.9%
FY14E
13,058
26.6%
44.4%
5,305
23.4%
40.6%
4,916
24.6%
37.6%
8
5,247
32.2%
(985)
18.8%
4,249
34.0%
303.63
13.99
34.0%
FY11
742
520
52
501
1,815
FY12E FY13E FY14E

920 1,384 2,047
666
895 1,133
67
90
114
642
863 1,093
2,296 3,232 4,387
4,927
5,190
11,931
5,278 6,156 7,033

5,455 7,025 8,899
13,029 16,412 20,319
Liabilities
ST loans
632
750
Payables
775
1,067
Others
152
156
1,559
1,973
Long term debt
2,339
1,921
Other liabilities
512
512
Total liabilities
4,411
4,406
7,500
9,213
BVPS
25
30
Cash flow statement

15,469 EBIT
18.5% Depreciation & amortisation
43.5% Change in working capital/Other
6,244 Taxes
40.4%
5,801 Capex
18.0% Disposal/(Purchase)/Other
37.5% Net Interest
12 Free cash flow
6,484
(1,162) Debt Raised/repaid
17.9% Other
303.63 Ending cash
17.47 DPS
24.8%
Ratio Analysis
2,699 EBITDA margin
1,295 SG&A/Sales
5,471
7,033 EPS growth
10,880
23,384 ROE
ROCE
890
790
690 Production (mboe/day)
1,486 1,901 2,257 Production oil (mbpd)
198
272
330 Production gas (mboe/day)
2,574 2,963 3,277 Refining throughput (mbpd)
1,481 1,281
781
512
512
11,555 14,692 18,563 Net debt
38
49
61 Net debt/EBITDA (ny)
FY11
4,817
316
(142)
(535)
4,456
FY12E
3,104
331
3
(621)
2,818
FY13E FY14E FY15E

3,946 4,916 5,801
351
389
443
4
14
(4)
(790) (985) (1,162)
3,512 4,334 5,078
(1,451)
367
(92)
3,279
(1,766)
0
(2)
1,051
(1,987) (2,329) (2,469)

0
0
0
2
8
12
1,527 2,012 2,621
0
582
(25)
(922)
319
742
0.19
0
-300
0
(636)
742
920
0.23
0
0
0
-300
-300
-600
0
0
0
(828) (1,113) (1,433)
920 1,384 2,047
1,384 2,047 2,699
0.31
0.42
0.52
FY11
85.7%
80.4%
68.0%
5.7%
FY12E
44.8%
40.5%
30.6%
5.8%
FY13E FY14E FY15E

41.7% 40.6% 40.4%
38.3% 37.6% 37.5%
30.7% 32.5% 34.3%
4.7%
3.7%
3.1%
55.4% 28.1%
204.9% (42.3%)
34.4%
34.9%
26.6%
34.0%
18.5%
24.8%
54.3%
38.8%
25.5%
19.7%
27.4%
22.7%
28.9%
25.3%
28.6%
26.4%
1,044
96
851
96
1,106
101
907
99
1,165
98
968
98
1,277
99
1,080
98
1,437
136
1,202
98
52.4
29.6%
2,229
0.6
2057.6 (1595.5) (647.6) (497.1)

18.9%
8.5%
0.2% -6.6%
1,751
987
24 -1,228
0.5
0.2
0.0
(0.2)
337

21 November 2012
Adrian Mowat
(852) 2800-8599
Overweight
www.novatek.com.tw
Company overview
Novatek Microelectronics is arguably the largest display driver (D/D) IC design
company in the world with its business focus on large, small and medium D/D & SoC
solutions. The company is working towards development and customer qualification
for its TV SoC products and touch controller ICs for diversification, which we expect
to be major earnings drivers in the coming years.
Taiwan
Semiconductors
Price: NT$113.00
Investment case
We believe Novateks prudent repositioning of its model to capture mobile computing
trend, smooth diversification into TV SoC/ touch controllers and resolution upgrades in
mobile devices and TVs should result in margin expansion and sustainable earnings
cycle, given our view of a multi-year growth story in mobile devices and market share
gains in the new product categories.
Rick HsuAC
(886-2) 2725-9874
rick.ic.hsu@jpmorgan.com
120
100
NT$
80
60

Despite our muted outlook on TV and PC market for 2013 amid the muted macros,
Novateks improving mix towards higher-margin SoC and small & medium D/D
should structurally lift the companys GM and ROE, and drive a new earnings cycle
extending into 2014, potentially offsetting any shortfall in the LCD cycle, in our view.
Nov-11
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
48.9%
45.8%
1m
6.6%
10.5%
3m
21.5%
23.4%
Source: Bloomberg.

Slower-than-expected customer qualification for TV SoC product, and/or meaningful
erosion for China-targeted small D/D ASP due to intensification of competition pose
realistic downside risks to our 2013 earnings estimates.
Our Dec-13 PT of NT$135 is based on 13x average FY13/14 EPS estimates, in line
with the mid-cycle valuation (since the financial crisis of 2008-09). Key downside risks
to our PT are intensification of competition in China smartphone/ TV SoC space and
limited resolution upgrade in TVs.
Revenue
Gross profit
Operating profit
EBITDA
Net Income
Profit growth (%)
EPS (NT$)*
BVPS (NT$, yr-end)
ROE(%)
Net debt/equity (%)

35.0
36.4
42.4
48.1
8.9
10.1
12.3
14.5
4.2
5.2
6.5
8.0
4.6
5.6
7.0
8.5
3.7
4.3
5.6
6.9
-19.4
17.7
28.0
23.1
6.15
7.21
9.22 11.35
36.9
39.5
43.4
47.8
5.1
4.1
4.8
6.1
16.7
18.9
22.2
24.9
26.5
33.2
40.1
45.3
-72.2
-73.8
-70.4
-71.2
338
P/E (x)
P/B (x)
EV/EBITDA (x)
FCF/Mkt cap (%)
Price target
PT (31 Dec 13)
Diff from consensus
Quarterly EPS (NT$)
EPS (12)E
EPS (13) E
EPS (14) E
FY11 FY12E FY13E

18.4 15.7 12.3
3.1
2.9
2.6
11.5
9.3
7.3
6.0
7.4
7.6
1Q
1.30
1.79
2.42
2Q
1.71
2.11
2.76
FY14E
10.0 52-Week range
NT$ 119 - 68
2.4 Share Out'g
603M
5.8M
19.61M
Local Free float
73.9%
NT$ 135.00 Market Cap (US$)
2.3B
19.3% Exchange rate
NT$ 29/US$1
Index (TWSE)
7,293
3Q
4Q FINI Holding (%)
48.1%
2.15
2.05
2.61
2.71
3.10
3.06
12m
45.4%
49.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Novatek: Summary of financials

TWD in billions, year-end Dec
Ratio analysis
FY11
FY12E
FY13E
FY14E
%, year-end Dec
FY11
FY12E
FY13E
FY14E
Revenues
Cost of Goods Sold
Gross Profit
35.0
26.1
8.9
36.4
26.3
10.1
42.4
30.1
12.3
48.1
33.6
14.5
R&D Expenses
SG&A Expenses
EBITDA
3.7
1.0
4.2
4.6
3.9
1.0
5.2
5.6
4.6
1.2
6.5
7.0
5.2
1.3
8.0
8.5
Gross Margin
EBITDA margin
Operating Margin
Net Margin
R&D/sales
SG&A/Sales
25.4
13.2
12.1
10.5
10.5
2.8
27.8
15.3
14.3
11.9
10.8
2.8
29.1
16.4
15.4
13.1
10.9
2.8
30.2
17.6
16.7
14.2
10.8
2.8
0.1
(0.1)
(0.2)
0.1
4.2
(0.5)
0.1
(0.1)
(0.4)
0.1
5.0
(0.6)
0.2
(0.1)
(0.3)
0.1
6.4
(0.8)
0.2
(0.1)
(0.3)
0.1
7.9
(1.1)
-3.4
-18.6
-19.4
-20.0
67
net cash
4.0
22.3
17.7
17.2
102
net cash
16.3
25.7
28.0
27.8
109
net cash
13.6
22.9
23.1
23.1
134
net cash
3.7
4.3
5.6
6.9
107.2
45.1
59.0
93.3
106.9
44.7
60.2
91.5
101.2
43.3
59.9
84.5
97.8
43.2
57.3
83.7
6.2
36.9
5.8
600.6
7.2
39.5
4.6
603.0
9.2
43.4
5.4
603.5
11.4
47.8
6.9
603.5
1.0
16.6
26.5
1.0
18.2
33.2
1.0
21.3
40.1
1.1
23.7
45.3
FY11
16.0
10.6
2.8
0.5
30.0
FY12E
17.6
10.8
3.6
0.6
32.6
FY13E
18.4
12.7
3.5
0.7
35.3
FY14E
20.6
13.1
4.5
0.8
38.9
LT investments
Net fixed assets
Others
Total assets
1.9
1.5
3.1
36.5
1.5
1.6
3.0
38.8
2.3
1.6
3.0
42.2
2.0
1.7
3.0
45.6

Net Income
Change in inventory
Change in payables
Other
FY11
3.7
0.4
(0.6)
0.8
(0.4)
0.2
4.1
FY12E
4.3
0.4
(0.2)
(0.8)
0.7
0.7
5.0
FY13E
5.6
0.4
(1.9)
0.1
0.5
0.5
5.2
FY14E
6.9
0.5
(0.4)
(1.0)
0.2
0.3
6.4
Capex
Disposal/ (purchase)
(0.2)
0.2
(0.7)
(0.3)
0.3
(0.0)
(0.3)
(1.0)
(1.3)
(0.3)
0.1
(0.2)
ST loans
Payables
Long term debt
Other long term liabilities
Total liabilities
7.9
4.0
2.3
14.2
0.0
0.1
14.2
7.1
4.7
3.1
14.8
0.0
0.1
14.9
7.2
5.2
3.6
16.0
0.0
0.1
16.1
7.3
5.4
4.0
16.7
0.0
0.1
16.7
3.9
4.8
4.9
6.1

Dividends paid
Other
(0.0)
(3.5)
0.1
(3.4)
(0.8)
(2.8)
0.0
(3.5)
0.1
(3.2)
(3.1)
0.1
(4.2)
(4.1)
Share capital
Reserves
Retained earnings
Other adjustments
6.0
3.9
12.2
0.1
22.2
6.0
3.9
13.8
0.1
23.8
6.0
3.9
16.1
0.1
26.2
6.0
3.9
18.8
0.1
28.9
Net change in cash

Beginning cash
Ending cash
0.0
16.0
16.0
1.6
16.0
17.6
0.8
17.6
18.4
2.1
18.4
20.6
Interest Income
Interest Expense
Investment Income (Exp.)
Non-Operating Income (Exp.)
Earnings before tax
Tax
EPS (adjusted)
BVPS
DPS (cash only)
Shares Outstanding (mn)
Balance sheet
Accounts receivable
Inventories
Current assets
Sales growth
Operating Profit Growth
Net Profit growth
Net debt to equity
Days receivable
Days inventory
Days payable
Cash cycle
Asset Turnover
ROE (single year)
ROIC (net of cash)
Cash flow statement
Free cash flow
Source: Company reports, J.P. Morgan estimates.
339
Adrian Mowat
(852) 2800-8599

21 November 2012
Oberoi Realty
Overweight
www.oberoirealty.com
Company overview
Incorporated in 1998, Oberoi Realty is a leading Mumbai-based real estate
development company primarily focused on the higher income segment. ORL enjoys a
fairly strong brand name in the local market, as reflected in premium pricing and
healthy offtake in its projects. The company has a development pipeline of 20msf
across various segments to be developed over the next 5-6 years. Most of ORLs assets
are located in city-centric locations in Mumbai, where visibility on both pricing and off
takes is high. The companys two main township projects (in Goregaon Andheri) have
gone on to become marquee locations within the respective areas.
India
Real Estate
Price: Rs294.95
Saurabh KumarAC
(91-22) 6157 3590
saurabh.s.kumar@jpmorgan.com
Bloomberg JPMA KUMAR<GO>
300
Investment case
Oberoi is well placed to benefit from the improving policy environment in Mumbai and
expected monetary easing ahead. Policy thaw in Mumbai should aid approvals/new
launches and improve execution of the companys ongoing projects. Further, the
companys luxury residential project in Worli is expected to be formally launched in
the next few months. We expect the project to garner good pre-sales given visibility on
project construction, potential tie up with a high-end brand and importantly a better
location than competition. This project could be a big driver of earnings over the next
year.
Rs
260
220
180
Nov-11
Feb-12
May-12
Aug-12
Nov-12
OEBO.BO share price (Rs)

BSE30 (rebased)
Abs
Rel
YTD
35.4%
15.9%
1m
10.1%
11.4%
3m
25.6%
21.0%
12m
33.5%
24.1%
Source: Bloomberg.

The companys net cash position and strong annuity stream (can be securitized)
positions it well for any sizeable and attractive buying opportunity that comes in the
market, even as the funding environment for most other developers remains tight.
Delay in new launches remains the key risk to earnings. Further, slow leasing in
commercial projects/ usage of cash remain key areas of concern. We think we are
closer to the end of the office down-cycle and expect a pickup in FY14.
We have an OW rating with a Mar-14 PT of Rs330. Our PT is based on 10x EBITDA
inline with other residential RE developers. This implies a 15% discount to forward
NAV. Key downside risk is sustained weakness in Mumbai markets and further launch
delays especially for Worli project.
Oberoi Realty (Reuters: OEBO.BO, Bloomberg: OBER IN)
FY11A
FY12A
Revenue (Rs mn)
9,659
3,835
Net Profit (Rs mn)
5,177
2,177
EPS (Rs)
15.8
6.6
Net debt to Equity
-43.7%
-34.6%
EPS growth (%)
6.1%
-57.9%
ROE
19.9%
6.1%
P/E (x)
18.7
44.5
P/BV (x)
2.9
2.6
340
FY13E
10,950
4,951
15.1
-31.3%
127.4%
12.5%
19.6
2.3
FY14E
16,130
7,245
22.1
-9.5%
46.3%
16.0%
13.4
2.0
Company Data
Shares O/S (mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
BSE30
Exchange Rate
328
1,768
294.95
15 Nov 12
0.11
28
0.52
18,619
54.76

21 November 2012
Adrian Mowat
(852) 2800-8599
Oberoi Realty: Summary of Financials

Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY11
9,659
26.8%
5,534
26.9%
57.3%
626
6,160
36.4%
-983
16.0%
5,177
20.7%
5,177
20.7%
328
15.77
6.1%
FY12
3,835
(60.3%)
1,928
NM
50.3%
883
2,811
-54.4%
-633
22.5%
2,177
-57.9%
2,177
-57.9%
328
6.63
(57.9%)
FY13E
10,950
185.5%
5,750
198.3%
52.5%
1,032
6,782
141.3%
-1,831
27.0%
4,951
127.4%
4,951
127.4%
328
15.08
127.4%
FY14E
16,130
47.3%
9,147
59.1%
56.7%
915
10,063
48.4%
-2,818
28.0%
7,245
46.3%
7,245
46.3%
328
22.07
46.3%
FY11
14,643
468
7,747
7,742
30,600
FY12
12,934
679
10,196
11,529
35,339
FY13E
13,129
2,737
10,196
17,532
43,595
Investments
Net fixed assets
Total Assets
0
9,309
39,909
0
9,853
45,192
0
11,281
54,877
9,642
783
10,425
0
0
10,425
37,342
113.77
12,187
783
12,970
0
0
12,970
41,907
127.67
FY14E
4,612
4,032
13,992
28,532
51,169 Sales growth
Net profit growth
0 EPS growth
14,483
Net debt to equity
16,102 Sales/assets
783 Assets/equity
16,885 ROE
0 ROCE
0
16,886
48,766
148.57
Liabilities
Current Liabilities
4,939
Others
410
5,349
Total debt
0
Other liabilities
0
Total Liabilities
5,349
33,476
BVPS
101.99
Cash flow statement

EBIT
Others
FY11
5,534
237
-4,576
2
839
FY12
1,928
131
-4,021
1
-1,711
FY13E
5,750
323
-2,866
3
2,411
FY14E
9,147
388
-12,176
4
-4,539
Capex
Disposal/(purchase)
Net Interest
Free cash flow
-1,364
0
-524
-807
0
-2,518
-1,622
0
789
-3,414
0
-7,953
Other
Dividends paid
Beginning cash
Ending cash
Ratio Analysis
EBIT Margin
Operating margin
Net margin
10,074
0
0
-413
4,420
14,643
2,074
0
0
-386
14,643
12,934
-0
0
0
-386
12,934
13,129
-0
0
0
-386
13,129
4,612
FY11
57.3%
57.3%
53.6%
FY12
50.3%
50.3%
56.8%
FY13E
52.5%
52.5%
45.2%
FY14E
56.7%
56.7%
44.9%
26.8%
20.7%
6.1%
(60.3%)
-57.9%
(57.9%)
185.5%
127.4%
127.4%
47.3%
46.3%
46.3%
-56.2%
-43.7%
0.30
1.19
19.9%
21.2%
-36.5%
-34.6%
0.09
1.21
6.1%
5.4%
-33.1%
-31.3%
0.22
1.31
12.5%
14.5%
-10.2%
-9.5%
0.27
1.35
16.0%
20.2%
341
Adrian Mowat
(852) 2800-8599

21 November 2012
Orion
Overweight
www.orionworld.com
Price Target: W1,300,000
Company overview
Orion was established in 1956 and has been a leading Korean confectionary company
for the past 50 years it is the second largest player after Lotte. Since its first
appearance overseas in China in 1993, Orion is becoming a major confectionary
company not only in China but also in Vietnam, Russia and Japan.
South Korea
Food and Food Manufacture
Investment case
Orions brand equity and skill at regional penetration with innovative products in China
should continue in 2013 due to its 1) still relatively low penetration ratio in China and
the consistently increasing number of wholesalers, and 2) its competitive advantage in
R&D to roll out new products, which some major players have been failing to deliver.
Bloomberg JPMA YKIM<GO>
Price:W1,052,000

Orions China strategy in 2013 will be similar to 2012 with continued focus on
confectionarys regional expansion, along with the launch of several new products.
Further OPM expansion is likely to come from economies of scale, while A&P amount
is likely to be similar, given Orions strong belief that raising brand equity is one of the
most important ways to boost sales growth. Domestic confectionary growth is likely to
slow in 2013, but we think further OPM expansion is likely with better product mix.
Key upside risks to earnings are faster-than-expected sales growth in China due to
strong demand and CNY appreciation against KRW. We assume mid-single-digit sales
growth in Korea confectionary, which we think is conservative compared to company
guidance and Street estimates. However, weaker-than-expected sales growth in Korea
due to ongoing macro headwinds and the governments regulation on hypermarkets are
downside risks.
Youna KimAC
(82-2) 758 5715
Youna.kim@jpmorgan.com

Seoul Branch
1,100,000
900,000
W
700,000
500,000

KOSPI (rebased)
Abs
Rel
YTD
59.4%
53.8%
1m
3.7%
7.1%
3m
19.4%
17.2%
12m
73.9%
73.4%
Source: Bloomberg.

Our Dec-13 PT of W1,300,000 is based on 1.2x PEG, which is the weighted average
PEG of Want Want and Lotte Confectionary, weighted for sales growth contribution
from Korea and China, and EPS CAGR of 27.8% in 2013-2015. Key risks are: 1)
sharp increase in raw material price, which the company might not be able to readily
pass on to consumers, and 2) news flow that could bring into question the company's
strict controls over food safety.
Orion (Reuters: 001800.KS, Bloomberg: 001800 KS)
Year-end Dec
FY11A
FY12E
Revenue (W bn)
1,914
2,387
210
305
Operating Margin
11.0%
12.8%
Net Recurring Profit (W bn)
111
193
Net Profit (W bn)
111
193
EPS (W)
18,923.13
31,828.67
BVPS (W)
192,265
224,192
Revenue growth
18.1%
24.7%
Operating growth
24.8%
45.2%
Net Recurring Profit growth
18.9%
75.0%
EPS growth
-48.1%
68.2%
ROE
11.2%
15.3%
P/E (x)
63.1
37.5
P/BV (x)
5.5
4.7
342
FY13E
2,746
344
12.5%
225
225
39,020.15
261,841
15.1%
12.8%
16.5%
22.6%
16.1%
30.6
4.0
FY14E
3,325
440
13.2%
298
298
51,586.61
312,437
21.1%
27.9%
32.2%
32.2%
18.0%
23.1
3.4
Company Data
52-week Range (W)
Market cap (W mn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily value (W bn)
3M Avg daily vol
KOSPI
Exchange Rate
1,069,000 - 573,000
6,276,232
5,752
6
Dec
1,052,000
06 Nov 12
56.2%
16.01
14.67
0.02
1928.17
1,091.10
Adrian Mowat
(852) 2800-8599

21 November 2012
Orion: Summary of Financials

Income Statement
Net Sales
COGS
Gross Profit
SG&A Expenses
Operating Profit
Non-operating income
Non-operating expense
Pre-tax Profit
Income Taxes
Net recurring profit
Net Profit
Growth
Sales
Operating profit
Net recurring profit
Net Profit
Cash flow statement

FY11 FY12E FY13E FY14E W in billions, year end Dec
1,914 2,387 2,746 3,325 Operating CF
1,077 1,313 1,537 1,861 Net Profit
837 1,073 1,209 1,464
Additions
-624 -766 -865 -1,024
Financial cost
210
305
344
440
Depreciation
30
16
14
22
Amortization
62
43
36
36
Others
176
276
322
426
Deductions
65
83
97
128 Net change in assets/liabilities from oper.
111
193
225
298
Decr.(incr.) in assets from oper.
111
193
225
298
Incr(Decr.) in liabilities from Oper.
18.1%
24.8%
18.9%
-46.9%
24.7%
45.2%
75.0%
75.0%
15.1%
12.8%
16.5%
16.5%
Balance sheet
in billions, year end Dec
Asset
Current Asset
Inventory
Others
Non-current asset
Intangible Assets
Investment in Properties
Inv. in associates, subsidiaries, JV
Financial assets
Others
FY11 FY12E FY13E

2,320 2,650 3,049
899 1,103 1,406
216
160
348
175
208
249
269
321
383
157
102
114
1,421 1,548 1,643
1,234 1,369 1,458
93
89
95
15
15
15
16
15
15
12
12
12
50
48
48
Liabilities
Current liabilities
St. Debt
Current portion of LT debt
Others
Non-current liabilities
LT Debt
1,310
826
221
250
139
338
484
256
1,472
846
346
298
134
67
626
237
1,673
944
414
298
134
97
729
237
Total shareholders' equity

Paid-in Capital
Capital Surplus
Retained Earnings
Capital Adjustment
1,010
30
64
789
127
1,178
30
64
944
140
1,376
30
64
1,142
140
21.1% Cash Flows from Investing

27.9%
Capex - Tangible
32.2%
Capex - Intangible
32.2%
St. Investment
Debt
FY14E
Dividends
3,956 Increase in Cash
1,831
Cash at the Beginning
612
Cash at the End
305
470
132
2,124
1,543
101
15
15 Ratio Analysis (%)
12 % year end Dec
439 Margin
GPM
2,314 OPM
1,058 NPM
508
298 EPS (W)
134 BVPS (W)
117 DPS (W)
1,256
237 RoE (%)
NP/PBT (x)
1,642 PBT/EBIT (x)
30 EBIT/sales (%)
64 Sales/assets (x)
1,407 Assets/equity (x)
140 Net debt/equity (%)
Total Liab./Equity (x)
FY11
170
99
269
0
-62
-48
12
30
-45
-54
9
FY12E
179
167
232
0
-66
-47
6
17
-184
-120
-64
FY13E
382
205
223
0
-71
-55
0
14
-53
-120
68
FY14E
462
271
258
0
-75
-55
0
22
-72
-166
93
-99
-190
-3
13
14
42
-17
90
0
216
-339
-210
-4
-126
105
176
-21
103
216
160
-166
-160
-6
0
-27
0
-27
77
160
348
-166
-160
-6
0
-32
0
-32
21
348
612
FY11
FY12E
FY13E
FY14E
43.7%
11.0%
5.2%
45.0%
12.8%
7.0%
44.0%
12.5%
7.5%
44.0%
13.2%
8.2%
18,923 31,829 39,020 51,587

192,265 224,192 261,841 312,437
2,887
3,546
4,608
5,368
11.2%
0.6
0.8
11.0%
0.89
2.30
39.0%
1.3
15.3%
0.6
0.9
12.8%
0.96
2.25
35.4%
1.2
16.1%
0.6
0.9
12.5%
0.96
2.22
16.7%
1.2
18.0%
0.6
1.0
13.2%
0.95
2.41
-2.1%
1.4
343
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.pacbasin.com
Company overview
Pacific Basin Shipping provides dry bulk shipping and towage services. It has a large,
young and uniformly-sized fleet of shallow-draft Handysize and Handymax vessels.
1H12 revenue breakdown: Handysize TCE: 72% and Handymax TCE: 28%.
Hong Kong
Transportation
Investment case
PacBasin provides a low-risk play on the gradual recovery of the bulk shipping sector
given its diversified cargo base and strong direct customer relationships. Valuations at
0.7x P/BV have already discounted the weak outlook. It is one of our top picks in the
transport logistics ecosystem.
Price: HK$4.04
Corrine PngAC
(65) 6882-1514

Limited
4.6
4.2

We expect PacBasins earnings outlook to improve markedly from 2013E with a net
profit of US$32MM (from US$127MM loss in 2012, hurt by the US$190MM RoRo
asset impairment charge) and increase 415% y/y to US$166MM in 2014 as the
industry's demand-supply balance improves. Managements counter-cyclical strategy to
acquire cheap vessels should also provide a significant cost advantage over peers when
the cycle recovers.
HK$ 3.8
3.4
3.0
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
27.8%
10.7%
1m
4.9%
-0.3%
3m
5.5%
-4.6%
12m
14.1%
1.8%
Source: Bloomberg.

A key downside risk would be industry overcapacity given a large global vessel
orderbook and less leverage to a cyclical upturn.
Our Dec-13 PT of HK$4.5 is based on 0.8x P/BV, a 40% discount to PacBasins
historical average valuation since listing to factor in the challenging industry outlook in
the near term. Key downside risks are a delayed dry bulk market recovery, further asset
write-downs, and management changes.
Pacific Basin Shipping (Reuters: 2343.HK, Bloomberg: 2343 HK)

FY10A
FY11A
FY12E
Revenue ($ mn)
1,269
1,343
1,441
Net Profit ($ mn)
104.3
32.0
-126.8
EPS ($)
0.05
0.02
(0.07)
DPS ($)
0.03
0.01
0.00
Revenue growth (%)
33.5%
5.8%
7.3%
EPS growth (%)
NM
NM
NM
ROCE
5.7%
3.1%
-4.4%
ROE
7.0%
2.1%
-8.9%
P/E (x)
9.6
31.5
-8.0
P/BV (x)
0.7
0.7
0.7
EV/EBITDA (x)
6.1
8.1
-58.9
Dividend Yield
5.3%
2.5%
0.0%
344
FY13E
1,427
32.3
0.02
0.01
-0.9%
NM
2.2%
2.4%
31.3
0.7
8.9
1.6%
FY14E
1,567
166.2
0.09
0.04
9.8%
414.6%
7.6%
11.7%
6.1
0.7
3.9
8.2%
Company Data
Shares O/S (mn)
Market cap ($ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSI
Exchange Rate
Fiscal Year End
1,937
1,009
1,009
4.04
07 Nov 12
5.27
19.61
2.28
21,944
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Pacific Basin Shipping: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
1,269
33.5%
192
9.5%
134
(0.2%)
10.6%
-31
105
(6.4%)
-0
0.4%
104.3
(5.4%)
1,929
0.05
(8.9%)
FY11
1,343
5.8%
146
-23.9%
73
(45.7%)
5.4%
-31
32
(69.3%)
-0
0.6%
32.0
(69.3%)
1,934
0.02
(69.4%)
FY12E
1,441
7.3%
-21
-114.4%
- 102
(239.7%)
-7.1%
-25
-126
(490.1%)
-1
1.0%
-126.8
(496.5%)
1,937
(0.07)
(496.0%)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
690
111
40
10
852
FY11
599
101
67
29
796
FY12E
729
109
72
204
1,112
1,519
2,555
1,525
2,432
1,276
2,500
1,330
2,581
166
127
9
302
694
15
1,010
1,545
0.80
65
145
3
214
714
20
947
1,485
0.77
65
157
3
226
896
20
1,142
1,358
0.70
65
160
3
228
958
20
1,206
1,374
0.71
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY13E
1,427
(0.9%)
136
-748.8%
52
(150.6%)
3.6%
-20
33
(126.0%)
-0
1.0%
32.3
(125.5%)
1,937
0.02
(125.5%)
FY14E
1,567
9.8%
280
105.0%
189
266.2%
12.1%
-22
168
414.6%
-2
1.0%
166.2
414.6%
1,937
0.09
414.6%
FY13E FY14E
814
985
107
118
71
78
145
87
1,138 1,269
Cash flow statement

EBIT
Taxes
Capex
Disposal/(purchase)
Net Interest
Other
Free cash flow
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net margin

- Sales growth
2,726 EPS growth
65
3 Sales/assets
228 Assets/equity
1,020 ROE
20 ROCE
1,268
1,457
0.75
FY10
134
58
-12
-0
199
FY11
73
73
1
-0
159
FY12E
- 102
81
0
-1
144
FY13E FY14E
52
189
85
91
4
-17
-0
-2
120
239
-524
0
-31
62
-325
-166
4
-31
131
-7
-196
0
-25
0
-53
-81
58
-20
0
39
-46
58
-22
0
193
16
-10
-52
-50
1,049
690
0.03
0
0
53
-53
690
599
0.01
0
0
0
0
599
729
0.00
0
0
16
-16
729
814
0.01
0
0
83
-83
814
985
0.04
FY10
15.2%
10.6%
8.2%
FY11
10.9%
5.4%
2.4%
FY12E
-1.5%
(7.1%)
-8.8%
FY13E FY14E
9.6% 17.9%
3.6% 12.1%
2.3% 10.6%
28.5%
5.5%
7.2%
(0.9%)
9.8%
33.5%
5.8%
7.3%
(0.9%)
9.8%
(5.4%) (69.3%) (496.5%) (125.5%) 414.6%
(8.9%) (69.4%) (496.0%) (125.5%) 414.6%
6.17
4.67
0.85
6.83 12.69
11.0%
0.50
1.21
7.0%
5.7%
12.2%
0.54
1.27
2.1%
3.1%
17.2%
0.58
1.29
(8.9%)
-4.4%
15.3%
0.56
1.88
2.4%
2.2%
6.9%
0.59
1.87
11.7%
7.6%
345

21 November 2012
Adrian Mowat
(852) 2800-8599
Overweight
Pacific Rubiales Energy
Price: C$22.00
www.pacificrubiales.com
Price Target: C$36.00
End Date: Dec 2013
Company overview
Pacific Rubiales is the biggest E&P company in Colombia; it is incorporated in Canada
with shares listed on the Toronto Stock Exchange. The companys production net of
royalties reached ~93kboed in 2Q12, which puts it in second place in terms of
hydrocarbon production in Colombia after Ecopetrol. The companys net 2P reserves
(before royalties) reached 407mn boe. Since the beginning of 2012, Pacific Rubiales went
through several transactions for a total of ~$1.0bn, increasing its exposure to Colombian
and international assets, including offshore assets in Brazils Santos basin.
Colombia
Oil, Gas & Petrochemicals
Caio CarvalhalAC
(55-11) 4950 3946
caio.m.carvalhal@jpmorgan.com
In our view, Pacific Rubiales is the best investment in the Colombian Oils market
We consider PRE to be the company least affected by the two main issues in Colombia
today: worsening in security and delays in environmental permitting. Moreover, recent
acquisitions and JV are likely to help the company to reach net production after royalties
of 109kboed by 2013, up 10% y/y. We consider PRE as naturally shielded from the recent
pipeline attacks as it has no exposure to the main targets (Cano-Limon pipeline in the
north and the Transandino Pipeline in the south). Moreover, although not included in our
NAV calculation, we expect the companys own Enhanced Oil Recovery technology,
named STAR, to be an important catalyst for PRE shares over 2013.
30
C$
26
22
18
Nov-11
Feb-12
May-12
Aug-12
Nov-12
PRE.TO share price (C$)

S&P500 (rebased)
Source: Bloomberg.
PRE is valued only on its producing fields

In our view, current market price reflects only producing fields probable and extension
and cash, assigning no value to net risked resources in Colombia and in other countries.
PRE is trading at ~$14/boe, a discount to other E&P players such as GTE trading at
$25/boe.
PREs main earnings risks are (1) oil prices decrease below JPMs Global Commodities
Research estimate of $113/bbl for 2013; (2) disappointing results from Enhanced
Recovery Technique know as STAR; and (3) production delays from the environmental
licensing process and/or pipeline securities issues.
We derive our CAD$36 Dec 2013 price target from our reserve depletion model,
assuming a production schedule based on the companys targets and using our own
assumptions beyond that. We apply our own assumptions in terms of price realizations for
crude and gas, lifting costs, and development costs, and we discount the cash flow
schedule using a 10.0% discount rate (CAPM using 8.0% risk-free rate, cost of levered
equity of 14.5%, cost of debt of 8.0%, and a theoretical leverage ratio of 40% of capital)
for proved reserves and increasing to 11% for contingent resources and 12% for
i
Pacific Rubiales
Energy Corp (PRE.TO;PRE CN)
FYE Dec
EPU ($)
FY
P/E FY
EBITDA FY ($ mn)
EV/EBITDA FY
ROE FY
ROCE FY
2010A
2011A
2012E
2013E
0.75
0.84
31.0
807
8.3
12.3%
12.4%
1.88
2.44
12.4
1,776
3.8
22.4%
21.9%
2.84
2.62
8.2
2,180
3.4
26.7%
24.0%
3.60
2.78
6.5
2,568
2.7
29.1%
27.3%
estimates.
346
Company Data
Price (C$)
Date Of Price
52-week Range (C$)
Mkt Cap (C$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (C$)
22.00
14 Nov 12
31.10 - 18.03
7,116.86
Dec
304
36.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Pacific Rubiales: Summary of Financials

Revenues
Gross profit
SG&A
DD&A
Other operating expenses
Operating Income
EBIT
EBITDA
Income applicable to minority interests
Pretax income
Taxes
Tax rate (%)
Reported net income
Non-recurring items, disc ops
Adjusted net income
Average diluted shares outstanding
EPS
EPS growth rate (%)
Dividend per share
WTI crude price ($/bbl)
Henry Hub natural gas price ($/mcf)
Net PP&E
Other assets
Total assets
Total debt
Total liabilities
Minority interests
Preferred stock
Net Income
DD&A
Deferred taxes
Other
Cash earnings
Capex
Dividends
Share buybacks (net)
Change in debt
Change in preferred stock
Other uses of cash
Change in cash
Free cash flow
FY11A
3,381
(1,902)
1,479
(359)
(656)
(1,246)
1,120
1,120
1,776
(86)
0
1,002
(448)
554
554
292
1.88
149.6%
0.38
110.98
3.81
FY11A
730
24
1,710
2,483
1,256
5,449
FY12E
3,918
(2,338)
1,580
(264)
(863)
(1,475)
1,316
1,316
2,180
(73)
0
1,223
(377)
847
847
304
2.84
50.8%
0.44
110.59
3.12
FY12E
301
79
1,198
2,854
1,528
5,580
FY13E
4,564
(2,554)
2,009
(298)
(858)
(1,697)
1,711
1,711
2,568
(67)
0
1,684
(589)
1,095
1,095
304
3.60
26.8%
0.57
113.00
4.75
FY13E
880
79
2,049
2,854
1,528
6,432
925
2,541
2,908
554
(656)
-
838
2,155
3,425
847
(863)
-
838
2,328
4,104
1,095
(858)
-
1,076 1,303 1,711

(150)
(63)
101
1,224 1,585 2,013
(1,153) (1,323) (1,059)
(102) (130) (168)
(93)
31
0
30 (480)
786
(259) (202) 1,021

Revenues
Gross profit
SG&A
DD&A
Other operating expenses
Operating Income
EBIT
EBITDA
Income applicable to minority interests
Pretax income
Taxes
Tax rate (%)
Reported net income
Non-recurring items, disc ops
Adjusted net income
Average diluted shares outstanding
EPS
EPS growth rate (%)
Dividend per share
WTI crude price ($/bbl)
Henry Hub natural gas price ($/mcf)
Ratio Analysis
Valuation
P/E (adjusted)
P/CF
Enterprise value/EBITDA
EV/DACF
Ratios
Net debt/equity
Net debt/capital
Net coverage ratio
ROE
ROCE
Yield and cash returns
CFPS
CF yield
FCF yield
Dividend yield
Buyback yield
Total cash returns (%)
1Q12A
FY11A
2Q12A 3Q12E
FY12E FY13E
12.1
207.2
3.8
5.0
8.0
NM
3.4
4.4
6.3
8.5
2.7
3.2
6.7%
24.1%
20.5
22.4%
21.9%
15.7%
19.7%
29.8
26.7%
24.0%
(1.0%)
17.0%
38.3
29.1%
27.3%
0.11 (1.63)
2.67
5.8% (57.5%) 74.2%
1.7%
1.9% 2.5%
18.5% 15.3% 15.3%
-
Mkt Cap (current) ()

Enterprise Value (current)
347
Adrian Mowat
(852) 2800-8599

21 November 2012
Ping An Insurance Group
Overweight
www.pingan.com/
Company overview
Ping An is one of the few financial conglomerates in China that provides insurance
(both life and non-life), banking, securities, trust and asset management services.
China
Insurance
Price: HK$62.15
Investment case
We like Ping An for its best life insurance franchise (which is agency driven and
focuses on high margin products) and its rapid growing non-life insurance operation
(which has gained market share over the years by leveraging on tele-marking platform).
With integration at the banking operation carried through, we expect more synergy to
be realized (e.g. in bancassurance sales).
Given limited demand for savings-type insurance policies as a result of tight liquidity
in China, the insurers are transitioning to selling protection-type insurance policies. We
expect Ping An to fare well on this front given its large agency sales force which is
well equipped to sell protection-type insurance policies. It will continue to see more
steady earnings growth compared to its peers given a diversified operation.
Ping An is vulnerable to equity market movements because of the need to recognize
impairment losses should equity prices stay low. Its earnings are also vulnerable to
possible deterioration in combined ratio at the non-life operation and worsening of
asset quality at the banking operation. Risk to NBV growth comes from the still weak
insurance sales.
Bao Ling ChanAC

(852) 2800 8592
baoling.chan@jpmorgan.com
Bloomberg JPMA BCHAN <GO>
Limited
75
65
HK$
55
45
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
18.9%
2.7%
1m
3.8%
-1.6%
3m
0.8%
-8.9%
12m
-0.2%
-11.7%
Source: Bloomberg.

Our Ping An-H Dec-13 PT of HK$70 (SOTP-based) is derived by using the appraisal
value approach for the life insurance business, P/BV approach for the non-life
insurance and banking business, P/E approach for the securities business and a 20%
discount to holding company capital. Key downside risks are worsening asset quality in
its banking operation, further equity raising plans and weak agency sales.
Ping An Insurance Group - H (Reuters: 2318.HK, Bloomberg: 2318 HK)
FY10A
FY11A
FY12E
FY13E
EPS (Rmb)
2.31
2.50
2.72
3.85
BVPS (Rmb)
14.66
16.53
18.85
22.25
DPS (Rmb)
0.56
0.41
0.40
0.45
EV per share (Rmb)
26.3
29.8
33.7
38.5
NBV per share (Rmb)
2.03
2.13
2.06
2.25
P/E (x)
21.7
20.0
18.4
13.0
P/BV (x)
3.4
3.0
2.7
2.2
P/EV
1.9
1.7
1.5
1.3
Dividend Yield
1.1%
0.8%
0.8%
0.9%
ROE
17.6%
16.0%
15.4%
18.7%
348
FY14E
4.23
25.93
0.55
43.5
2.46
11.8
1.9
1.2
1.1%
17.6%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSI
Exchange Rate
Fiscal Year End
3,130
156,701
25,098
62.15
06 Nov 12
100.8%
10.85
644.44
81.29
22,006
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Ping An Insurance Group - H: Summary of Financials

Income Statement (Rmb in
millions)
FY10
FY11
FY12E
FY13E
FY14E Capital Strength
GWP & Policy fees
159,384 207,802 235,196 274,243 320,574
Net written premiums

Net earned premiums
Total technical outgo
Total expenses
Underwriting profit
Net Investment Income
Realized & unreal. Investment
income
Other income/expenses
Pre-tax profit
151,203
141,124
-115,077
-46,314
-20,267
25,972
Tax
Minorities
Net profit
Balance sheet (Rmb in millions)
Bonds
Equities
Deposits
Other Investments
-4,409 -7,444 -7,528 -11,365

-627 -3,107 -6,243 -6,589
17,311.0 19,475.0 21,545.0 30,485.5
FY10
FY11 FY12E FY13E
451,882 504,909 563,495 682,253
74,288 99,870 125,780 158,800
218,915 226,212 288,791 291,722
17,868 36,310 28,175 43,523
1,006,24 1,176,29
762,953 867,301
1
9
1,171,62 2,285,42 2,629,52 2,850,38
7
4
7
2
1,089,79
669,938 791,215 927,217
1
7,540 26,633 35,633 35,633
1,054,74 2,114,08 2,433,56 2,620,90
4
2
4
7
4,853 40,475 46,718 53,307
112,030 130,867 149,246 176,169
196,832
186,662
-145,764
-64,686
-23,788
34,285
5,111
11,531
22,347
Total Investments
Total Assets
Total insurance reserves
Subordinated debts
Total liabilities
Minority Interest
Shareholders' funds
222,436
210,340
-165,223
-77,391
-32,274
39,773
259,020
244,587
-201,165
-89,465
-46,043
46,050
-5,020 -11,609
24,549 39,425
30,026 35,315
5,714
42,718
48,440
302,408
285,181
-237,413
-103,238
-55,470
54,282
7,060 Loss ratio

47,511 Expense ratio
53,384 Combined ratio
Total investment yield (incl.
-12,527 gains/losses)
-7,372 ROA
33,484.1 ROE
FY14E Per share data
820,714 EPS
198,339 Y/Y
280,411 DPS
68,393 Payout ratio
1,367,85
7 BVPS
3,097,58
4 No. of shares
1,274,43
5 Group embedded value
35,633 Life operation embedded value
2,831,60
5 Y/Y
60,679 New business value
205,299 Y/Y
Income Statement growth rates

GWP & policy fees
Net earned premiums
Net Investment Income
Total technical outgo
Total expenses
Underwriting profit
10,Y/Y
42.0%
42.8%
36.2%
37.1%
30.4%
6.1%
11,Y/Y 12E, Y/Y 13E, Y/Y 14E, Y/Y

30.4% 13.2% 16.6% 16.9%
30.2% 13.0% 16.4% 16.8%
32.0% 16.0% 15.8% 17.9%
26.7% 13.3% 21.8% 18.0%
39.7% 19.6% 15.6% 15.4%
17.4% 35.7% 42.7% 20.5%
Pre-tax profit
Net profit
12.2%
24.7%
34.4%
12.5%
17.6%
10.6%
37.2%
41.5%
FY10 FY11
452.8
Shareholders' funds to insurance liab. 52.6%
%
197.9 166.7
Solvency margin ratio (group operation)
%
%
First-year premiums
FY10 FY11
Single premiums
35,714 31,416
Regular premiums
40,336 39,501
AFYPs
27,616 31,262
Profitability measure
FY10 FY11
Balance sheet growth rates

Bonds
Equities
Deposits
Total investments
Total Assets
Total insurance reserves
10.2% Total liabilities

9.8% Shareholders' funds
FY12E FY13E FY14E

309.5% 226.6% 147.9%
171.2%
FY12E
19,027
39,898
32,272
FY12E
166.0%
FY13E
20,364
43,396
36,309
FY13E
162.9%
FY14E
22,195
47,573
40,530
FY14E
81.5% 78.1% 78.6% 82.2% 83.3%

32.8% 34.7% 36.8% 36.6% 36.2%
0.0% 0.0% 0.0% 0.0% 0.0%
4.6%
1.6%
17.6%
FY10
2.31
22.2%
0.56
24.3%
3.6% 3.0% 4.7% 4.8%

1.1% 0.9% 1.1% 1.1%
16.0% 15.4% 18.7% 17.6%
2.50
2.72
3.85
4.23
8.4% 8.7% 41.5% 9.8%
0.41
0.40
0.45
0.55
16.3% 14.7% 11.7% 13.0%
14.66 16.53
18.85
22.25
25.93
7,644 7,916
7,916
7,916
7,916
33.7
20.2
38.5
23.3
43.5
26.6
15.5% 15.2% 10.7%

2.03 2.13
2.06
26.2% 4.8% -3.2%
12E,
10,Y/Y 11,Y/Y
Y/Y
28.6% 11.7% 11.6%
16.8% 34.4% 25.9%
36.5% 3.3% 27.7%
29.4% 13.7% 16.0%
25.2% 95.1% 15.1%
22.3% 18.1% 17.2%
100.4
25.0%
% 15.1%
31.8% 16.8% 14.0%
15.5%
2.25
9.6%
13E,
Y/Y
21.1%
26.3%
1.0%
16.9%
8.4%
17.5%
14.0%
2.46
9.2%
14E,
Y/Y
20.3%
24.9%
-3.9%
16.3%
8.7%
16.9%
26.3
15.8
29.8
18.2
7.7% 8.0%
18.0% 16.5%
SOTP valuation for Ping An-H

Life operation
Embedded value
Goodwill
Non-life operation
Banking operation
Securities operation
Holding company
Share price equivalent
HK$
47.73
28.89
18.84
10.09
8.81
1.06
2.99
70.68
349
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.pruksa.com
Company overview
PS is one of the leading property developers in Thailand. The company focuses on
developing residential units for low/mid income people in greater Bangkok. Having its
own pre-cast factories, PS should be able to control cost and speed of construction.
PSs overall market share is 50% for TH, 15% for SDH, and 2-3% for condo.
Thailand
Property
Price: Bt19.80
Investment case
Monetary conditions are easy in Thailand with a good level of liquidity. Banks lending
appetite is strong and expanding into low-end segment, favoring PS well. Land prices
have started to rise supported by mass transit expansion, benefiting landed property
such as that of PS.
Anne JirajariyavechAC
(66-2) 684 2684
anne.x.jirajariyavech@jpmorgan.com
Bloomberg JPMA JIRAJARIYAVECH
<GO>
22
18
Bt

We expect improving sales and expected decline in B/S leverage to drive a share price
and multiple re-rating. We forecast operating cashflow to turn positive this year from
being negative in the past 2 years.
Tight labor conditions are a key risk to the property sector as it could delay
construction work and product deliveries which would impact revenue. However, for
PS we see this risk mitigated by the fact that the company uses pre-casts and owns precast factories.
14
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12
PS.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
70.7%
43.3%
1m
3.1%
3.0%
3m
11.9%
2.8%
12m
70.7%
35.4%
Source: Bloomberg.

Our Dec13 PT of Bt22 is based on 11x P/E, which is PSs long-term average P/E.
Risks to PT are an inability to sustain employees and contractors which could risk
quality and timing of product deliveries, higher-than-expected land acquisition which
could require higher working capital, and accessibility of PSs customers to bank
mortgages.
Pruksa Real Estate Pcl (Reuters: PS.BK, Bloomberg: PS TB)

FY10A
FY11A
FY12E
Revenue (Bt mn)
23,307
23,263
25,462
Net Profit (Bt mn)
3,488.1
2,834.8
3,480.1
EPS (Bt)
1.58
1.28
1.58
DPS (Bt)
0.50
0.50
0.55
Revenue growth (%)
22.9%
-0.2%
9.5%
EPS growth (%)
-4.0%
-18.8%
22.7%
ROCE
21.2%
12.3%
12.1%
ROE
24.7%
17.6%
19.2%
P/E (x)
12.5
15.4
12.6
P/BV (x)
2.9
2.6
2.3
EV/EBITDA (x)
10.7
13.3
11.8
Dividend Yield
2.5%
2.5%
2.8%
350
FY13E
32,037
4,462.0
2.02
0.71
25.8%
28.2%
13.3%
21.5%
9.8
2.0
10.2
3.6%
FY14E
32,282
4,250.3
1.92
0.67
0.8%
-4.7%
11.8%
18.1%
10.3
1.8
10.3
3.4%
Company Data
Shares O/S (mn)
Market cap (Bt mn)
Market cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
SET
Exchange Rate
Fiscal Year End
2,211
43,782
1,428
19.80
02 Nov 12
26.0%
7.61
140.66
3.98
1,307
30.67
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Pruksa Real Estate Pcl: Summary of Financials

Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
DPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Cash flow statement

FY10
23,307 23,263 25,462 32,037 32,282 EBIT
22.9% (0.2%)
9.5% 25.8%
4,603
4,044
4,698
5,767
NM
NM 16.2% 22.8%
NM Others
-67
-137
-236
-259
-264
4,536
3,906
4,462
5,509
5,247 Capex
-5.5% -13.9% 14.2% 23.5% -4.7% Disposal/(purchase)
-1,048 -1,071
-982 -1,047
-997 Net Interest
23.1% 27.4% 22.0% 19.0% 19.0% Free cash flow
3,488.1 2,834.8 3,480.1 4,462.0 4,250.3
-3.7% -18.7% 22.8% 28.2% -4.7% Equity raised/(repaid)
3,388
2,675
3,340
4,301
4,065 Debt raised/(repaid)
-4.7% -21.0% 24.8% 28.8% -5.5% Other
2,207
2,209
2,209
2,209
1.58
1.28
1.58
2.02
1.92 Beginning cash
(4.0%) (18.8%) 22.7% 28.2% (4.7%) Ending cash
0.50
0.50
0.55
0.71
0.67 DPS
-9.4%
0.1% 10.2% 28.2% -4.7%
Ratio Analysis
FY10
1,439
837
890
919
952 EBIT Margin
120
0
0
0
0 Operating margin
27,801 36,160 39,708 45,919 46,988 Net margin
1,805
726
726
726
726 SG&A/Sales
31,356 38,916 42,517 48,757 49,859
LT investments
0
0
0
0
0 Sales growth
Net fixed assets
2,855
3,066
2,727
2,388
Total Assets
34,211 41,982 45,244 51,145 51,907 EPS growth
Liabilities
ST Loans
4,004
9,333
9,333
9,333
Payables
2,997
1,479
1,479
1,479
Others
2,790
3,014
3,014
3,014
3,014 Sales/assets
9,791 13,827 13,827 13,827 13,827 Assets/equity
Long-term debt
9,100 10,962 11,962 14,962 12,962 ROE
Other liabilities
57
198
198
198
198 ROCE
Total Liabilities
18,948 24,986 25,986 28,986 26,986
15,263 16,996 19,258 22,158 24,921
BVPS
6.92
7.69
8.72
10.03
11.28
FY10
4,603
246
-14,598
6,002
-9,648
FY11 FY12E
4,044 4,698
339
339
-8,790 -3,548
5,713 4,801
-4,151
271
FY13E FY14E
5,767 5,512
339
339
-6,211 -1,069
5,848 5,587
-1,410 3,520
2,114
-7,534
-1,002
-5,152
0
271
0
-1,410
0
3,520
0
10,732
-1,214
846
1,439
0.50
38
6,322
-1,104
1,439
837
0.50
0
1,000
-1,218
837
890
0.55
0
3,000
-1,562
890
919
0.71
0
-2,000
-1,488
919
952
0.67
FY10
19.8%
19.3%
15.0%
-
FY11 FY12E
17.4% 18.4%
16.7% 17.9%
12.2% 13.7%
-
FY13E FY14E
18.0% 17.1%
17.5% 16.5%
13.9% 13.2%
-
22.5% (0.2%) 9.4% 25.8% 0.8%

22.9% (0.2%) 9.5% 25.8% 0.8%
-3.7% -18.7% 22.8% 28.2% -4.7%
(4.0%) (18.8%) 22.7% 28.2% (4.7%)
72.29
31.89 21.34
23.60 22.13
52.8% 55.6% 49.4% 51.0% 43.0%
75.2% 107.5% 99.8% 100.1% 80.9%
0.88
0.61
0.58
0.66
0.63
2.24
2.47
2.35
2.31
2.08
24.7% 17.6% 19.2% 21.5% 18.1%
21.2% 12.3% 12.1% 13.3% 11.8%
351
Adrian Mowat
(852) 2800-8599

21 November 2012
PTT Exploration and Production (PTTEP)
Overweight
www.pttep.com
Company overview
PTTEP is Thailands sole exploration and production (E&P) company. The company is
67% owned by state owned company PTT Plc. PTTEP operates more than 40 projects
around the world. As of year-end 2011, PTTEP had 969mBOE of net proved reserves,
equivalent to a reserve life of nine years. 72% of its reserves are gas based while the
remaining is liquid based.
Thailand
Oil & Gas
Investment case
With the completion of capital-raising we expect the key driver for PTTEPs share
price to be its rising sales volumes. We forecast sales volumes to rise 20% in 2013
following the start up of Montara and full year contribution from Bongkot south and
second phase of Vietnam 16-1. Unlike the past, we believe PTTEP will not miss
volume guidance in 2013 hence should help in restoring investor confidence.
PTTEP in our view is defensive and the most attractive name within the PTT group due
to its volume growth, making it less dependent on price rise for earnings growth. While
PTTEPs earnings are susceptible to oil price movements considering every US$1/bbl
move in oil prices would result in 0.9% move in EPS, we believe its 20% volume
growth in 2013 along with its 75% of sales volume being gas means it is more
defensive than other oil and gas companies in this environment.
Price: Bt168.50
Avin SonyAC
(66-2) 684-2683
Avin.sony@jpmorgan.com
Bloomberg JPMA SONY<GO>
220
200
Bt 180
160
140
Nov-11
Feb-12
May-12
Aug-12
Nov-12
PTTE.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
0.0%
-27.4%
1m
6.3%
6.2%
3m
13.9%
4.8%
12m
8.4%
-26.9%
Source: Bloomberg.

Further delays to the start up of Montara remains the key risk to our 2013 earnings
estimates. On top of this a weaker than expected oil price along with any production
problems could result in 2013 earnings being lower than our estimates.
Our Dec-13 PT of Bt180 is based on a fully diluted DCF/NAV reserve estimate. We
already factor the capital-raising into our estimates. Downside risks would be lower oil
and gas prices, and missing on production targets.
PTT Exploration & Production (Reuters: PTTE.BK, Bloomberg: PTTEP TB)
FY10A
FY11A
FY12E
FY13E
Revenue (Bt mn)
138,474
165,865
180,811
213,359
Net Profit (Bt mn)
41,739.0
44,747.0
52,054.7
63,295.0
EPS (Bt)
12.58
13.48
15.68
15.94
DPS (Bt)
5.03
5.40
5.34
5.42
Revenue growth (%)
19.0%
19.5%
9.0%
17.8%
EPS growth (%)
88.1%
7.1%
16.3%
1.7%
ROCE
27.9%
28.7%
24.5%
23.5%
ROE
26.5%
24.0%
24.0%
20.8%
P/E (x)
13.4
12.5
10.7
10.6
P/BV (x)
3.2
2.8
2.4
1.8
EV/EBITDA (x)
5.7
5.5
5.7
4.9
Dividend Yield
3.0%
3.2%
3.2%
3.2%
Core Profit (Bt mn)
39,804
46,104
52,163
63,295
Core EPS (Bt)
12.00
13.89
15.71
15.94
352
FY14E
211,875
59,528.2
14.99
5.10
-0.5%
-6.0%
18.4%
15.1%
11.2
1.6
5.0
3.0%
59,528
14.99
Company Data
Shares O/S (mn)
Market cap (Bt mn)
Market cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
SET
Exchange Rate
Fiscal Year End
3,320
559,418
18,210
168.50
02 Nov 12
30.0%
3.86
604.37
19.66
1,307
30.72
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
PTT Exploration & Production: Summary of Financials

Income Statement
FY10
FY11
Revenues
138,474 165,865
% change Y/Y
19.0% 19.5%
Gross Margin (%)
76.0% 73.3%
EBITDA
101,661 116,331
% change Y/Y
26.0% 14.4%
EBITDA Margin (%)
71.6% 68.6%
EBIT
64,836 82,277
% change Y/Y
27.5% 26.9%
EBIT Margin (%)
45.7% 48.5%
Net Interest
292
-43
Earnings before tax
63,185 81,730
% change Y/Y
54.4% 29.4%
Tax
-23,381 -35,626
as % of EBT
160.9% 142.3%
39,804 46,104
% change Y/Y
76.8% 15.8%
Shares outstanding
3,317
3,320
12.00
13.89
% change Y/Y
76.6% 15.7%
Balance sheet
FY10
FY11
59,515 42,800
Accounts receivable
13,263 27,372
Inventories
8,548
9,142
Others
3,749
8,320
Current assets
85,075 87,634
LT investments
4,816 11,301
Net fixed assets
227,251 295,561
Total Assets
342,217 448,712
Liabilities
ST loans
7,945 31,796
Payables
1,958
2,313
Others
48,293 66,264
58,196 100,373
Long-term debt
69,893 90,949
Other liabilities
41,836 57,365
Total Liabilities
169,925 248,687
172,293 200,024
BVPS - (Bt)
51.94
60.25
FY12E
180,811
9.0%
73.6%
127,886
9.9%
69.1%
90,010
9.4%
48.7%
-3,073
86,938
6.4%
-34,775
147.1%
52,163
13.1%
3,320
15.71
13.1%
FY13E
213,359
17.8%
75.8%
156,782
22.6%
71.9%
111,920
24.3%
51.4%
-3,724
108,197
24.5%
-44,902
144.9%
63,295
21.3%
3,970
15.94
1.5%
FY12E FY13E
7,439 69,963
27,845 32,857
9,834 11,600
3,800
3,800
48,918 118,220
10,000 10,000
427,318 515,829
540,235 698,049
Cash flow statement

FY14E Bt in millions, year end Dec
211,875 EBIT
(0.5%) Depr. & amortization
75.5% Change in working capital
155,157 Taxes
-1.0% Cash flow from operations
71.5%
105,959 Capex
NM Disposal/(purchase)
48.9% Net Interest
101,758
-6.0% Equity raised/(repaid)
-42,229 Debt raised/(repaid)
152.5% Other
-6.0% Beginning cash
3,970 Ending cash
14.99 DPS - (Bt)
-6.0%
Ratio Analysis
FY14E Bt in millions, year end Dec
3,800
144,326
10,000 Sales growth
764,731 EPS growth
40,000
0
2,458
2,900
68,579 84,775 84,055 Sales/assets (x)
111,037 87,675 87,097 Assets/equity (x)
137,745 167,745 197,745 ROE
57,505 68,600 67,211 ROCE
306,287 324,021 352,053
233,948 374,029 412,677
70.47
94.21 103.95
FY10
64,836
36,825
10,458
-23,381
86,258
FY11
82,277
34,054
-948
-35,626
79,791
FY12E FY13E FY14E

90,010 111,920 105,959
37,876 44,862 49,197
5,816
9,860
-918
-34,775 -44,902 -42,229
95,901 118,017 107,808
-56,392 -102,364 -169,633 -133,374 -89,773

0
0
0
0
0
292
-43
-3,073
-3,724 -4,202
29,866 -22,573 -73,732 -15,357 18,035
-410
6,067
2,593
-12,439
48,678
59,515
5.03
-347
44,907
13,591
-16,899
59,515
42,800
5.40
0
55,000
-14
-18,130
42,800
7,439
5.34
97,500
0
-10,000 30,000
11,095 -1,389
-21,364 -20,880
7,439 69,963
69,963 95,730
5.42
5.10
FY10
71.6%
45.7%
29.4%
FY11
68.6%
48.5%
26.4%
FY12E
69.1%
48.7%
28.1%
FY13E
71.9%
51.4%
29.0%
FY14E
71.5%
48.9%
27.4%
19.0%
88.4%
88.1%
19.5%
7.2%
7.1%
9.0%
16.3%
16.3%
17.8%
21.6%
1.7%
(0.5%)
-6.0%
(6.0%)
- 2,705.37
10.6%
40.0%
0.44
0.43
1.89
1.79
26.5%
24.0%
27.9%
28.7%
41.62
72.8%
0.37
2.31
24.0%
24.5%
42.10
26.1%
0.35
1.87
20.8%
23.5%
36.93
24.7%
0.30
1.85
15.1%
18.4%
PTT E&P DCF
353

21 November 2012
Adrian Mowat
(852) 2800-8599
PZU
Overweight
www.pzu.pl
Company overview
Powszechny Zakad Ubezpiecze SA is a Poland based company which offers various
insurance products and services for retail and corporate customers. It offers
property/casualty insurance products like motor, property, agricultural, as well as life
insurance products (group and individual) and insurance guarantees. It also manages
investment programs and pension funds. The company uses various distribution
channels, like exclusive agents, multi-agents, insurance brokers, and bancassurance,
and also the internet.
Poland
Insurance
Price: zl384.50
Michael Huttner, CFAAC

(44-20) 7134-4572
michael.huttner@jpmorgan.com
Bloomberg JPMA HUTTNER<GO>
Michal Kuzawinski
Investment case
We recommend to own PZU for its strong and sustainable dividend yield >7.0%
reflecting the benefit of PLN5bn excess capital and a business model which is based on
risk rather than investment income and is more capital efficient than its peers. We
believe that earnings sustainability is supported by continued cost saving potential,
which could be materialized by the roll-over of the new IT system in 13-14E. The
company recently showed a willingness to pay out dividends up to 100% of net profit
which offers a potential 8.9% yield payable in 13E.
(48-22) 44 19534
Bloomberg JPMA KUZAWINSKI<GO>
400
380
360
zl 340

PZUs unique group life business has stable cash flows with strong operating margin
(>20%) and 75% market share both stable in the mid-term as barriers to entry for
competitors are high. We believe there is some potential in non-life which is why we
forecast 95.5% combined ratio in 2013 vs. company target 96%.
320
300
280
Nov-11
Abs
Feb-12
YTD
25.5%
May-12
1m
4.7%
Aug-12
Nov-12
3m
6.9%
12m
15.2%
Source: Bloomberg.

The main earnings risk for 2013 is more intense competition and higher combined
ratios in non-life. Our forecasts already reflect a slowdown in premiums growth driven
by slowing economy.
Our Dec13e target price of PLN421 offers upside of 9% which is conservative as we no
longer value the excess capital to reflect potential deal risk. On top we forecast 7.1%
dividend yield payable mid-2013. The key downside risks are a large dilutive deal or
worsening combined ratio and life margins due to price competition.
PZU Group (PZU.WA;PZU PW)
FYE Dec
Adj. EPS FY (zl)
Adj P/E FY
Headline EPS FY (zl)
FY (zl mn)
Combined Ratio FY
Dividend (Net) FY (zl)
P/NAV FY
P/BV FY
Gross Yield FY
2011A
27.14
14.2
27.14
2,344
2012E
34.16
11.3
34.16
2,950
2013E
34.24
11.2
34.24
2,957
2014E
34.93
11.0
34.93
3,016
95.1%
22.43
2.6
2.6
5.8%
92.7%
27.33
2.4
2.4
7.1%
95.5%
27.00
2.3
2.3
7.0%
95.0%
27.94
2.2
2.2
7.3%
354
Company Data
Price (zl)
Date Of Price
Price Target (zl)
52-week Range (zl)
Mkt Cap (zl bn)
Shares O/S (mn)
384.50
02-Nov-12
421.00
31 Dec 13
389.70 - 290.10
33.2
86
Adrian Mowat
(852) 2800-8599

21 November 2012
PZU: Summary of Financials
Profit and Loss Statement (IFRS)

Ratio Analysis (IFRS)
FY10
FY11 FY12E FY13E FY14E zl in millions, year end Dec
Premiums
14,214 14,892 15,497 15,775 16,276 Shares Outstanding
% change Y/Y
-1.9%
4.8%
4.1%
1.8%
3.2%
Life
6,514
6,753
7,114
7,398
7,731 EPS
% change Y/Y
2.7%
3.7%
5.3%
4.0%
4.5%
% change Y/Y
Non Life
7,700
8,139
8,383
8,377
8,545 DPS
% change Y/Y
-5.5%
5.7%
3.0%
-0.1%
2.0%
% change Y/Y
Investment income
2,782
1,594
2,460
2,406
2,443
Other income
- Payout Ratio
Total revenues
17,372 17,251 18,543 18,724 19,310
% change Y/Y
-6.4%
-0.7%
7.5%
1.0%
3.1% NAV/Share
Insurance related expenses
(10,299) (10,221) (10,574) (10,953) (11,401) EV/share
Admin expenses
-1,663
-1,384
-1,436
-1,307
-1,331
Acquisition expenses
(1,851) (1,962) (2,012) (2,028) (2,079) ROE
Other expenses
(294)
(760)
(662)
(549)
(539) RONAV
Earning before tax
3,029
2,908
3,659
3,668
3,741 ROEV
% change Y/Y
-33.6%
-4.0%
25.8%
0.2%
2.0%
Tax
(590)
(564)
(709)
(711)
(725)
EBT
-19.5% -19.4% -19.4% -19.4% -19.4%
Minorities
1
2
0
0
0
2,439
2,344
2,950
2,957
3,016
% change Y/Y
-35.2%
-3.9%
25.8%
0.2%
2.0%
Balance sheet (IFRS)
Ratio Analysis
FY10
FY11 FY12E FY13E FY14E zl in millions, year end Dec
ASSETS
50,534 52,129 53,447 54,440 55,525 Key ratios:
Cash
424
238
245
252
260 Combined ratio
Investments
45,345 46,775 47,932 48,760 49,675
Loans
Deferred tax
17
9
9
9
9
Other
Intangible
109
166
171
176
181 PBT Break up
Life
LIABILITIES
37,734 39,260 39,652 40,049 40,449 Non Life
Policyholder liabilities
- Pension
Bank loans
- Other
Debt
Other
12,800 12,870 13,795 14,391 15,076 Mix of Total revenue
Minorities
- Life
50,534 52,129 53,447 54,440 55,525 Non Life
FY10
86.35

86.35 86.35 86.35 86.35
28.25 27.14 34.16

(35.2%) (3.9%) 25.8%
26.00 22.43 27.33
138.3% -13.7% 21.8%
92.0%
34.24
0.2%
27.00
-1.2%
34.93
2.0%
27.94
3.5%
82.6% 80.0% 78.9% 80.0%
146.9 146.0 157.7 164.5 172.4

294.00 294.66 283.99 271.84 259.81
21.6%
21.9%
12.0%
18.3% 23.1% 21.4% 21.0%

18.5% 23.4% 21.7% 21.2%
12.1% 15.7% 16.7% 18.2%
FY10
104.5%
95.1% 92.7% 95.5% 95.0%
85.2% 64.2% 53.0% 57.3% 54.7%

117.3% 92.8% 33.0% 31.0% 33.0%
4.0%
3.1%
-106.6% -60.2% 14.0% 11.8% 12.3%
45.8%
54.2%
-
45.4% 45.9% 46.9% 47.5%

54.7% 54.1% 53.1% 52.5%
-
355
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.quantatw.com
Company overview
Quanta Computer Inc. manufactures and markets notebook computers and related
peripheral equipment. It's the largest notebook ODM company in the world. Besides,
high growth, high quality and high value creation in notebook computers, Quanta has
extended into enterprise network systems, home entertainment, mobile
communications, automotive electronics and digital home markets. Its customers
include Apple, HP, Dell, Google, Amazon etc.
Taiwan
Computer Hardware
Price: NT$71.60
Investment case
Besides promising growth of tablet PCs, we believe Quantas datacenter hardware
momentum will remain strong in 2013. Quanta is expecting direct sales to data-center
customers to account for 75-80% of server revenue in 2013 (up from 65% in 2012),
highlighting strong growth in this segment.
Gokul Hariharan AC
(852) 2800-8564
Bloomberg JPMA HARIHARAN <GO>
Limited
90
80
NT$ 70
60
50

We expect Quanta to have a big pickup from new customers (Microsoft, NTT) while
existing customers like Google should also see organic growth in 2013. We expect
data-center hardware to reach 30% of Quantas OP in 2013. Second, tablet PC
momentum is likely to remain strong since Win8 may trigger innovation of new tablet
models.
Nov-11
Feb-12
May-12
Aug-12
Abs
Rel
YTD
12.4%
9.3%
1m
-0.8%
3.1%
Source: Bloomberg.

We think more competition in white-box servers could put pressure on margin
expansion for Quanta. Besides, slower-than-expected margin recovery also acts as a
downside risk. There could be an upside to tablet in 2013 due to Quantas close
partnership with Google and Amazon.
Our Jun-13 PT of NT$85 is based on 10x FY13E forward earnings. We believe 10x is a
fair multiple as we believe the Street will revise up estimates to factor in strong margin
improvement. We expect steady margin improvement driven by better product mix
(servers/storage/tablets) and better pricing in notebooks. Slower-than-expected margin
recovery of these products is the key risk to our assumption.

Sales
1,109.73 1,046.86 1,128.02 1,149.39
Operating Profit
15.88 17.83 29.67 33.72
EBITDA
21.44 23.44 35.34 39.40
Pretax Profit
32.54 31.68 39.26 42.16
6.00
6.41
8.11
8.75
Net Debt / Equity
14.3%
NM
NM
NM
Y/E BPS (NT$)
30.29 34.35 38.36 41.93
New TW GAAP P/E

P/BV (x)
ROE(%)
Cash Div (NT$)
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E

11.9 11.2 8.8 8.2
2.4 2.1 1.9 1.7
20.2 19.9 22.3 21.8
3.6 4.0 4.0 5.1
1Q
2Q
3Q
4Q
1.49 1.40 1.42 1.70
1.33 1.56 1.68 1.85
1.69 1.85 2.28 2.29
356
Nov-12

TSE (rebased)
Target Price (NT$)

85
52-Week range (NT$) 86.40 - 53.40
Share Outstanding
3,846mn
Free float
60.2%
Avg daily volume
22mn
Avg daily val (USD)
22.85mn
5.6%
QFII Holding (%)
37.9%
Market Cap(USD)
9,491mn
3m
-10.1%
-8.2%
12m
15.5%
19.1%
Adrian Mowat
(852) 2800-8599

21 November 2012
Quanta Computer Inc.: Summary of Financials

Ratio Analysis
FY10
FY11
FY12E
FY13E
FY14E NT$ in millions, year end Dec
Revenues
1,124,728 1,109,728 1,046,863 1,128,021 1,149,388 Gross margin
3.5%
3.8%
4.1%
4.8%
5.1%
Cost of goods sold
-1,085,917 -1,067,205 -1,004,461 -1,073,380 -1,090,588 EBITDA margin
1.9%
1.9%
2.2%
3.1%
3.4%
Gross Profit
38,810
42,523
42,403
54,642
1.4%
1.4%
1.7%
2.6%
2.9%
R&D expenses
-7,580
-7,723
-9,337 -10,431 -10,344 Net margin
1.7%
2.1%
2.4%
2.8%
2.9%
SG&A expenses
-13,107 -16,846 -12,913 -11,542 -11,494 R&D/sales
0.7%
0.7%
0.9%
0.9%
0.9%
15,976
15,885
17,825
29,667
33,723 SG&A/Sales
1.2%
1.5%
1.2%
1.0%
1.0%
EBITDA
20,996
21,445
23,442
35,341
39,397
Interest income
1,548
7,336
14,418
12,740
13,401 Sales growth
33.9% (1.3%) (5.7%)
7.8%
1.9%
Interest expense
-1,496
-5,423
-9,212
-9,784 -10,715 Operating profit growth
-27.5% -0.6% 12.2% 66.4% 13.7%
53
1,914
5,206
2,956
-16.7% 24.0%
7.0% 26.5%
7.9%
(Exp.)
10,733
16,657
13,856
9,594
(20.0%) 23.2%
6.8% 26.5%
7.9%
Earnings before tax
26,709
32,541
31,681
39,261
42,156
Tax
-7,378
-9,043
-6,799
-8,064
-8,494 Interest coverage (x)
18,592.4 23,052.8 24,662.7 31,197.0 33,661.9 Net debt to total capital
-4.8%
4.8% -1.7% -3.4% -5.3%
18,592
23,052
24,662
31,197
NM 14.3%
NM
NM
NM
EPS (reported)
4.87
6.00
6.41
8.11
8.75 Asset turnover
2.53
1.88
1.38
1.31
1.29
EPS (adjusted)
4.87
6.00
6.41
8.11
34.60 18.31 14.55 16.08 15.68
BVPS
29.11
30.29
34.35
38.36
41.93 ROE
17.0% 20.2% 19.9% 22.3% 21.8%
DPS
3.70
3.60
4.00
4.04
5.11 ROIC
8.4%
6.1%
4.0%
0.0%
0.0%
Shares outstanding
3,834
3,841
3,847
3,847
19.9% 16.9% 14.3%
0.0%
0.0%
Balance sheet
Cash flow statement
FY10
FY11
FY12E
FY13E
FY14E NT$ in millions, year end Dec
171,642 284,781 426,176 450,796 468,357 Net income
18,592.4 23,052.8 24,662.7 31,197.0 33,661.9
Accounts receivable
183,158 189,698 180,985 184,563 188,129 Depr. & amortization
5,019 5,560 5,617 5,674 5,674
Inventories
-25,409 -30,774 8,041 -4,384 -1,932
Others
12,147
17,810
17,663
17,498
17,836 Other
694 2,820 -5,964
-424
451
Current assets
-1,059 -1,716 38,540 32,486 37,404
LT investments
12,102
8,570
8,456
8,456
8,456 Capex
0
0
0
0
0
Net fixed assets
48,233
53,323
52,035
51,861
51,687 Disposal/(purchase)
0
0
0
0
0
Others
3,328
2,821
2,951
2,951
-10,657 -6,610 -4,345 -5,500 -5,500
Total Assets
511,984 670,909 848,512 879,538 903,987 Free cash flow
-1,059 -1,716 38,540 32,486 37,404
Liabilities
519
72
58
0
0
ST Loans
95,928 140,223 116,292 13,393 5,592
Payables
192,420 197,898 249,529 252,315 256,656 Other
-1,487 -5,454 6,014
-222
-281
Others
231,464 245,425 290,946 293,142 298,272 Dividends paid
-13,379 -13,376 -15,163 -15,537 -19,654
362,641 514,138 685,114 699,942 710,346 Cash flow from financing
81,580 121,466 107,200 -2,367 -14,343
Long-term debt
29,784
32,680
23,767
24,528
24,846
Other liabilities
7,956
7,747
7,496
7,496
69,865 113,140 141,395 24,620 17,561
Total Liabilities
400,381 554,565 716,377 731,966 742,689 Beginning cash
101,777 171,642 284,781 426,176 450,796
111,603 116,344 132,134 147,572 161,298 Ending cash
171,642 284,781 426,176 450,796 468,357
357
Adrian Mowat
(852) 2800-8599

21 November 2012
Rosneft
Overweight
www.rosneft.com
Price Target: $8.40
Company overview
Rosneft is the largest oil company in Russia. Crude oil production is expected to reach
2.5 mmbpd in 2012. Proven hydrocarbon reserves (as of end-11) amounted to 23.4 bn
boe, 3P reserves to 44.8 bn boe. The government currently owns 75.2% stake in
Rosneft, 12.8% stake is in treasury. Recently, Rosneft agreed to acquire TNK-BP,
which is expected to raise the companys output to 5.0 mmboepd next year (JPMe) and
proven reserve base to 38.3 bn boe. As a result of the transaction, the government stake
is to decrease to 69%, while BP is to raise its holding in the company to 19.8%.
Russia
Oil and Gas
Price: $8.10
Andrey GromadinAC
(7-495) 967-1037
andrey.gromadin@jpmorgan.com
8.5
Investment case
Rosnefts hydrocarbon production growth profile returns to high single-digits (5% in
12E and 8% in 13E) on the back of the oil and gas production increase we expect at
Vankor and the contribution from Iteras business. The dividend policy improved
drastically, as the company started paying 25% of IFRS net income in dividends from
11. Rosneft just announced two major deals (which we consider value accretive):
TNK-BP acquisition and an unprecedented gas contract with InterRAO.
8.0
7.5
$ 7.0
6.5
6.0
5.5
Nov-11

The risk of refining-upgrade budget overruns, the expensive acquisition of Ruhr Oel
and the financial leverage increase in 2011-2012 are mostly priced in at this stage,
while there is strong turnaround momentum in the companys growth profile, improved
position in the gas segment and TNK-BP acquisition related positive implications.
Abs
Feb-12
YTD
22.7%
May-12
Aug-12
1m
18.2%
Nov-12
3m
31.7%
12m
10.5%
Source: Bloomberg.

Although volatility in the oil price, the key risk factor for the earning stream increased
recently we see a moderate upside to our 2012-2013 earning forecasts on the back of
strong 3Q12 results. TNK-BP acquisition and InterRAO gas deal are to boost the
earning profile in the medium-term.
Our end-13 PT for Rosneft of $8.4 is based on 50% weight of DCF-based fair value
and 50% weight of value based on target (normalized) EV/EBITDA (13E). Politically
motivated downstream greenfield projects, capex overspend in downstream and M&As
represent important downside risks. A strong oil price, state support via extra crude oil
tax holidays and gas business development could be the key upside risks, in our view.
OAO Rosneft (ROSNq.L;ROSN LI)
FYE Dec
Adj. EPS FY ($)
Revenue FY ($ mn)
EBITDA FY ($ mn)
FY ($ mn)
EV/EBITDA FY
Adj P/E FY
EBITDA margin FY
Dividend (Gross) FY ($)
2011A
1.21
91,964
22,030
10,749
2012E
0.97
97,139
18,751
9,432
2013E
1.00
105,656
19,750
9,277
3.7
6.7
24.0%
0.08
4.4
8.4
19.3%
0.09
4.1
8.1
18.7%
0.22
358
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
8.10
02-Nov-12
8.40
31 Dec 13
8.18 - 5.83
75.1
9,266
Adrian Mowat
(852) 2800-8599

21 November 2012
Rosneft: Summary of Financials

Revenues
% change Y/Y
Gross Margin (%)
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as a % of EBT
% change Y/Y
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Cash flow statement

FY11 FY12E FY13E FY14E FY15E $ in millions, year end Dec
91,964 97,139 105,656 98,967 92,707 EBIT
45.9%
5.6%
8.8%
-6.3%
25.9% 21.5% 20.9% 20.7% 23.5% Change in working capital/Other
22,030 18,751 19,750 18,257 19,586 Taxes
15.0% -14.9%
5.3%
-7.6%
24.0% 19.3% 18.7% 18.4% 21.1%
14,785 11,142 11,144
9,488 10,758 Capex
18.3% -24.6%
0.0% -14.9% 13.4% Disposal/(Purchase)/Other
16.1% 11.5% 10.5%
9.6% 11.6% Net Interest
34
(68)
(208)
(321)
(427) Free cash flow
13,674 11,716 11,557
9,533 10,596
18.3% -14.3%
-1.4% -17.5% 11.2% Equity raised/repaid
(2,925) (2,283) (2,279) (1,833) (2,066) Debt Raised/repaid
21.4% 19.5% 19.7% 19.2% 19.5% Other
10,749
9,432
9,277
7,700
11.4% -12.2%
-1.6% -17.0% 10.8% Beginning cash
9,590.00 9,266.00 9,266.00 9,266.00 9,266.00 Ending cash
1.12
1.02
1.00
0.83
0.92 DPS
11.5% (9.2%) (1.6%) (17.0%) 10.8%
Ratio Analysis
5,290
4,188
4,857
5,970
6,279 EBITDA margin
6,752
7,463
8,117
7,603
3,921
4,537
4,582
4,178
4,730
5,359
5,829
5,460
5,114 SG&A/Sales
25,360 24,692 23,384 23,211 22,347
3,547
5,198
5,916
6,364
6,723 EPS growth
69,422 77,143 83,321 86,487 89,148
105,081 113,818 119,405 122,847 125,003 ROE
ROCE
Liabilities
ST loans
4,730
4,194
Payables
5,632
7,506
Others
2,520
2,460
12,882 14,160
Long term debt
18,546 22,155
Other liabilities
-3,610 -4,374
Total liabilities
27,818 31,940
63,323 66,643
BVPS
7
7
4,194
8,240
2,732
15,166
19,310
-5,380
29,096
73,970
8
4,194
7,793
2,512
14,499
17,151
-3,420
28,231
78,861
9
4,194 Production (mboe/day)

7,123 Production oil (mbpd)
2,297 Production gas (mboe/day)
13,615 Refining throughput (mbpd)
13,987
-2,535 Interest coverage (x)
84,972 Net debt
FY11
14,785
7,245
(2,540)
2,925
16,565
FY12E
11,142
7,610
(748)
2,283
15,720
FY13E
11,144
8,606
3,440
2,279
20,911
FY14E
9,488
8,769
548
1,833
16,971
FY15E
10,758
8,827
107
2,066
17,627
(13,300) (15,486) (14,784) (11,935) (11,489)

(1,769) (1,160)
0
0
0
34
(68)
(208)
(321)
(427)
1,531
(994)
5,920
4,716
5,711
(102)
306
(282)
(918)
4,192
5,290
0.08
(2,190)
3,074
(1,221)
(2,214)
5,290
4,188
0.09
0
-2,844
342
(2,064)
4,188
4,857
0.22
0
-2,159
(509)
(1,953)
4,857
5,970
0.22
0
-3,164
620
(1,618)
5,970
6,279
0.21
FY11
24.0%
16.1%
11.7%
1.9%
FY12E
19.3%
11.5%
9.7%
2.2%
FY13E
18.7%
10.5%
8.8%
2.2%
FY14E
18.4%
9.6%
7.8%
2.2%
FY15E
21.1%
11.6%
9.2%
2.4%
46.0%
11.5%
9.3%
(9.2%)
8.8% (6.3%)
(1.6%) (17.0%)
(6.3%)
10.8%
17.0%
15.9%
14.2%
10.9%
12.5%
10.1%
9.8%
8.5%
10.0%
9.3%
2,595
2,384
210
1,163
2,726
2,453
273
1,259
2,929
2,574
355
1,353
3,016
2,587
429
1,275
3,042
2,573
469
1,275
(647.7)
27.9%
17,985
0.7
275.2
32.7%
22,161
1.0
95.1
24.8%
18,648
1.0
56.9
19.2%
15,376
0.8
45.9
13.8%
11,902
0.6
359
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.samba.com
Price Target: SRIs63.00
Company overview
Samba is #3 bank by assets in Saudi Arabia with a loans & deposits mkt share of 10%11% each. It commands a domestic network of over 70 branches, >500 ATMs and over
5,200 POS in addition to international presence in UAE, Pakistan, UK and other
markets. Samba has a diversified corp. & comml, pvt. & consumer and inv. banking &
mgmt product offering catering mainly to Saudi Arabia based & affiliated client base.
Saudi Arabia
Banks
Price: SRIs44.00
Naresh BilandaniAC
(971-44) 281 763
Investment case
We see Samba's balance-sheet displaying the highest potential for aggressive lending
book expansion ahead of the competition or a higher vs. peers dividend payout given
its strong liquidity, low leverage characteristics. Over the past few years, Sambas b/s
growth has been conservatively driven by low yielding securities resulting in a sluggish
earnings expansion. We believe that strategic change in asset mix, underlying a liquid,
well-capitalized, low risk b/s, will lead to an improved earnings delivery 12E-14E.
Samba exhibits fundamentals which, in our view, are superior to its Saudi banking
peers like i) best L/D at 69% 12E; ii) better NIM stability - NIM stays steady at
c.2.65% 12E-14E vs. peers which are expected to see 5-10bps NIM contraction 12E13E; iii) better 12E-13E fee inc. growth vs. peers where upside risk remains when the
local stock mkt opens to direct foreign inv. given Samba's strong brokerage positioning
(#3); iv) cost efficiency with C/I 29% avg. 12E-14E near to best in the space; iv) best
cost of risk, c.30bps avg. 12E-14E, while avg. >165% coverage level better vs. nearest
peers; v) the best Tier I ratio, >17% 12E-14E, despite 12%yoy avg. RWA growth 12E14E and 11%yoy avg. 13E-14E DPS growth.
58
54
SRls 50
46
42
Nov-11
Abs
Feb-12
YTD
-3.4%
May-12
Aug-12
1m
0.9%
Nov-12
3m
-4.7%
Source: Bloomberg.

Key risks to our 13E estimates in Samba and other Saudi banks come from higher than
expected provision charges from select pockets of weakness in Saudi contracting sector
and somewhat higher than anticipated pressure on NIMs less so on Samba vs. peers.
Our Dec-13 PT for Samba is SAR63 (offers a >40% upside from the current price). We
value Samba on a Gordon growth model using 16% ROE, 5% growth rate and c.12%
COE. Key risks are higher than expected margin pressure, risk of higher than expected
asset quality deterioration & lower lending growth.
Samba Financial Group (1090.SE;SAMBA AB)
FYE Dec
2011A
Adj. EPS FY (SRls)
4.78
Adj P/E FY
9.2
P/NAV FY
1.4
RoNAV FY
16.5%
ROA FY
2.3%
Gross Yield FY
4.1%
Tier One Ratio FY
18.1%
4,306
FY (SRls mn)
360
2012E
4.88
9.0
1.3
15.2%
2.2%
4.1%
17.3%
4,391
2013E
5.71
7.7
1.2
15.9%
2.4%
4.5%
17.3%
5,136
2014E
6.52
6.7
1.1
16.4%
2.5%
5.0%
17.4%
5,870
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
Mkt Cap ($ bn)
44.00
02-Nov-12
63.00
31 Dec 13
57.00 - 43.10
39.6
900
10.6
12m
-8.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Samba Financial Group: Summary of Financials

Net interest income
% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
Ratio Analysis
FY10A FY11A FY12E FY13E FY14E SRls in millions, year end Dec
Per Share Data
4,536 4,376 4,297 4,713 5,193 EPS Reported
-10.5% -3.5% -1.8%
9.7% 10.2% EPSAdjusted
2,364 2,187 2,578 2,955 3,320
% Change Y/Y
1,258 1,399 1,885 2,181 2,454 DPS
4.0% 11.2% 34.8% 15.7% 12.5%
% Change Y/Y
1,004
665
631
706
791 Dividend yield
24.9% -33.8% -5.0% 11.9% 12.0% Payout ratio
102
123
62
68
75 BV per share
6,901 6,562 6,875 7,668 8,513 NAV per share
-2.9% -4.9%
4.8% 11.5% 11.0% Shares outstanding
-1,563 -1,580 -1,657 -1,777 -1,907
-4.2%
1.1%
4.9%
7.2%
7.3% Return ratios
(347) (376) (407) (439) (474) RoRWA (%)
4,991 4,606 4,811 5,452 6,132 Pre-tax ROE
-3.2% -7.7%
4.5% 13.3% 12.5% ROE
-559
-301
-420
-316
-263 RoNAV
4,432 4,305 4,391 5,136 5,869 Revenues
-2.7% -2.9%
2.0% 17.0% 14.3% NIM (NII / RWA)
0
0
0
0
1 Non-IR / average assets
0.0%
0.0%
0.0%
0.0% 100.0% Total rev / average assets
(3)
2
0
0
1 NII / Total revenues
4,429 4,306 4,391 5,136 5,870 Fees / Total revenues
Cost ratios
80,251 89,111 101,115 114,115 128,658 Cost / income
-4.6% 11.0% 13.5% 12.9% 12.7% Cost / assets
3,707 3,439 3,627 3,715 3,849
64,883 60,175 60,128 63,292 66,660
- Loan / deposit
152,694 149,821 160,728 177,725 195,183 Investments / assets
28
26
30
30
30 Loan / assets
- Customer deposits / liabilities
187,416 192,774 209,643 223,713 239,462 LT Debt / liabilities
133,463 137,257 146,267 153,788 161,508 Loan loss reserves / loans
-9.3%
2.8%
6.6%
5.1%
5.0% NPLs / loans
1,875
0
0
0
0 LLP / RWA
154,983 156,512 163,422 173,853 183,856 Growth in NPLs
- RWAs
% YoY change
25,430 28,130 31,168 34,627 38,505 Core Tier 1
173
127
111
111
111 Total Tier 1
187,416 192,774 209,643 223,713 239,462

4.93
4.93
-2.8%
1.79
0.0%
4.0%
36.2%
28
27.6
900.0
4.78
4.78
-2.9%
1.79
0.0%
4.0%
37.3%
31
30.4
900.0
4.88
4.88
2.0%
1.79
0.2%
4.0%
36.7%
35
33.9
900.0
5.71
5.71
17.0%
2.00
11.7%
4.5%
35.0%
38
37.6
900.0
6.52
6.52
14.3%
2.20
10.0%
4.9%
33.7%
43
41.9
900.0
3.12
18.6%
18.6%
19.0%
2.88
16.1%
16.1%
16.5%
2.63
14.8%
14.8%
15.2%
2.73
15.6%
15.6%
15.9%
2.82
16.1%
16.1%
16.4%
2.97% 2.92% 2.67% 2.65% 2.66%

1.27% 1.15% 1.28% 1.36% 1.43%
3.70% 3.45% 3.42% 3.54% 3.68%
65.74% 66.68% 62.51% 61.46% 61.00%
18.23% 21.31% 27.41% 28.44% 28.83%
14.55% 10.13% 9.18% 9.21% 9.29%
27.7%
1.02
29.8%
1.03
30.0%
1.03
28.9%
1.02
28.0%
1.03
60.1%
34.6%
42.8%
82.5%
1.2%
64.9%
31.2%
46.2%
83.4%
0.0%
69.1%
28.7%
48.2%
82.0%
0.0%
74.2%
28.3%
51.0%
81.4%
0.0%
79.7%
27.8%
53.7%
80.4%
0.0%
4.3%
3.9%
3.7%
3.3%
3.1%
3.7%
3.0%
2.2%
1.9%
1.7%
0.4%
0.2%
0.3%
0.2%
0.1%
118.1% 124.4% 156.4% 166.2% 174.0%
8.0% (11.9%) (16.1%) (3.6%) (1.1%)
143,487 156,050 178,289 197,386 219,177
2.4%
8.8% 14.3% 10.7% 11.0%
17.8% 18.1% 17.3% 17.3% 17.4%
17.8% 18.1% 17.3% 17.3% 17.4%
361
Adrian Mowat
(852) 2800-8599

21 November 2012
Samsung Electronics
Overweight
www.samsung.com
Price Target: W1,800,000
Company overview
South Korea
Semiconductors
Price: W1,341,000
Samsung Electronics Co., Ltd. Manufactures a wide range of consumer and industrial
electronic equipment and products, such as semiconductors, TFTLCD panels, handsets,
televisions, and home appliances.
Investment case
AP, NAND, LCD, and TV likely to be major earnings drivers in near-term and now we
foresee SECs earnings momentum remaining intact even in 4Q12, on the back of
strong sales growth in component businesses (except DRAM) along with seasonal
upticks in TV demand, fully offsetting the potential margin contraction in the handset
business, in our view.
JJ ParkAC
(822) 758 5717
Bloomberg JPMA JJ PARK <GO>
Seoul Branch
1,500,000
1,300,000
W
1,100,000
Amid anemic global consumer spending growth, we believe SEC will sustain its strong
growth in handset and TV, which should benefit the relevant supply chains. Moreover,
we forecast its tablet PC business should drive top-line growth for MC division and
help component business given that smartphone and tablets share same components.
900,000

KOSPI (rebased)
Abs
Rel

Although the market fears significantly reduced earnings growth in 2013, we believe
earnings momentum will continue in 2013 on the back of meaningful growth in
Display Panel and System LSI businesses. Although we believe the recovery in
memory division seems slower than our previous estimates, its handset momentum
should remain intact on the back of multi-year growth in smartphone business at the
expense of feature phone and tablet PC opportunities.
YTD
24.2%
19.9%
1m
-2.3%
1.5%
3m
0.1%
2.0%
12m
36.1%
36.3%
Source: Bloomberg.

We have a Jun-13 PT of W1.8 million based on 9.0x FY13E P/E, which is a mid-cycle
valuation. Our estimates are still at the high end of consensus. Key downside risks to
our price target are sudden and substantial changes in DRAM and LCD prices, the
global economy, and higher-than expected end-demand for PC, handset, and TVs. A
key upside catalyst is a further increase in memory prices.
(YE Dec, W bn)
FY10
FY11 FY12E FY13E
FY10 FY11
Sales
154,630 165,002 202,755 241,438 Sales growth
13.4% 6.7%
Operating Profit
17,297
16,250 29,018 35,927 OP growth
58.3% -6.1%
EBITDA
28,295
29,344 45,046 53,301 NP growth
65.4% -14.9%
Net profit
16,147
13,734 23,698 30,132 Quarterly EPS (W)
1Q
2Q
EPS (W)
109,617
93,239 160,882 204,564 EPS (11)
18,905 23,804
BPS (W)
521,921 594,916 718,900 891,775 EPS (12) E
33,000 35,258
P/E (x)
14.2
16.7
9.7
7.6 EPS (13) E
42,662 48,160
P/BV (x)
2.6
2.3
1.9
1.5 Price Target
1,800,000
ROE (%)
19.5
14.0
20.8
21.9 Consensus PT
1,746,471
Net Debt
-12,829 -12,231 -20,046 -26,547 Difference (%)
3.1
362
FY12E
22.9%
78.6%
72.5%
3Q
23,365
44,568
57,848
FY13E Date of Price

19.1% 52-Week range
23.8% Market Cap
27.2% Market Cap
4Q Share Out. (Com)
25,607 Free float
46,102 Avg daily val
Avg daily vol.
Dividend yield (%)
Exchange Rate
09 Nov 12
W1,418,000 - 919,000
W197,528B
US$179,890MM
147MM
72.5%
W405.4B
391.27MM
0.3MM shares
0.3
1,098.05

21 November 2012
Adrian Mowat
(852) 2800-8599
Samsung Electronics: Summary of financials

Won in billions, year-end December
Income Statement
FY10
Revenues
154,630
% change
13.4
Gross margin (%)
33.6
EBITDA
28,295
% change
31.4
EBITDA margin (%)
18.3
EBIT
17,297
% change
58.3
EBIT margin (%)
11.2
Net interest
-23
Earnings before tax
19,329
% change
58.5
Tax
-3,182
as % of EBIT
18.4
Net income
16,147
% change
65.4
147.3
EPS (Won)
109,617
FY11
165,002
6.7
32.0
29,344
3.7
17.8
16,250
-6.1
9.8
62
17,159
-11.2
-3,425
21.1
13,734
-14.9
147.3
93,239
FY12E
202,755
22.9
36.6
45,046
53.5
22.2
29,018
78.6
14.3
199
30,098
75.4
-6,400
22.1
23,698
72.5
147.3
160,882
FY13E
241,438
19.1
36.8
53,301
18.3
22.1
35,927
23.8
14.9
586
37,902
25.9
-7,770
21.6
30,132
27.2
147.3
204,564
Balance Sheet
FY10
22,480
19,153
13,365
6,405
61,403
FY11
26,878
21,882
15,717
7,026
71,502
FY12E
29,906
29,242
21,149
9,046
89,344
FY13E
29,181
33,748
24,408
10,440
97,778
LT investments
Net fixed assets
Total Assets
11,375
52,965
134,289
12,428
62,044
155,631
13,620
68,284
182,390
14,961
73,265
197,597
Liabilities
ST Bank loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
BVPS (Won)
8,430
9,149
22,366
39,945
1,222
3,773
44,940
89,349
521,921
9,654
10,277
24,389
44,319
4,963
4,504
53,786
101,845
594,916
6,147
13,125
30,958
50,229
3,713
5,377
59,319
123,071
718,900
797
12,060
25,478
38,335
1,837
4,760
44,932
152,665
891,775
1Q
2Q
3Q
4Q
45,271
5,048
33,000
47,597
5,193
35,258
52,177
6,565
44,568
57,710
6,891
46,102

Accounts receivable
Inventories
Others
Current assets
Quarterly Data
2012E
Sales
Net Profit
EPS (Won)
Cash Flow Statement

EBIT
Depreciation & Amortization
Taxes
FY10
17,297
10,998
3,054
-3,182
30,198
FY11
16,250
13,094
-2,582
-3,425
24,247
FY12E
29,018
16,029
-5,366
-6,400
34,360
FY13E
35,927
17,374
-15,703
-7,770
31,803
CAPEX
Disposal / (Purchase)
Net Interest
-20,402
-5,490
-23
-25,916
-22,174
-2,225
62
-24,337
-22,269
-2,876
199
-24,945
-22,355
-2,379
586
-24,148
Equity raised / (repaid)

Debt raised / (repaid)
Other
Dividends
Beginning cash
Ending cash
DPS (Won)
-880
257
-566
-1,497
20,884
22,480
10,000
0
4,995
318
-824
22,480
26,878
5,500
0
-4,786
-776
-824
26,878
29,906
5,500
0
-7,227
-405
-749
29,906
29,181
5,500
FY10
18.3
11.2
10.4
22.4
FY11
17.8
9.8
8.3
22.2
FY12E
22.2
14.3
11.7
22.3
FY13E
22.1
14.9
12.5
21.9
Sales per share growth (%)

Sales growth (%)
EPS growth (%)
13.4
13.4
65.4
65.4
6.7
6.7
-14.9
-14.9
22.9
22.9
72.5
72.5
19.1
19.1
27.2
27.2

Net debt to total capital (%)
Net debt to equity (%)
Sales / Assets (%)
Assets / Equity (%)
ROE (%)
ROIC (%)
752.7
net cash
net cash
115.1
150.3
19.5
20.3
net cash
net cash
net cash
106.0
152.8
14.0
15.6
net cash
net cash
net cash
111.2
148.2
20.8
10.6
net cash
net cash
net cash
122.2
129.4
21.9
10.6
1Q
2Q
3Q
4Q
53,566
6,284
42,662
57,894
7,094
48,160
63,376
8,521
57,848
66,603
8,233
55,212
Ratio Analysis
%
EBITDA margin (%)
Operating margin (%)
Net profit margin (%)
SG&A / sales (%)
2013E
Sales
Net Profit
EPS (Won)
363
Adrian Mowat
(852) 2800-8599

21 November 2012
Samsung Engineering
Overweight
www.samsungengineering.co.kr
Company overview
Samsung Engineering Co., Ltd. provides engineering and construction services in the
domestic and international markets. The company constructs governmental buildings,
petrochemical plants, industrial plants, power plants, and gas plants.
South Korea
Construction
Price: W149,000
Investment case
Samsung Engineering is our preferred pick in the Korean E&C space due to its solid
top line and backlog growth in 2013E, and aggressive investment in engineering
capability expansion.
Among domestic peers, Samsung Engineering has shown a notable top-line expansion
in the past few years (2007-11A sales CAGR 42%). We believe the companys strong
earnings growth is the main differentiating factor among its peers, deserving a
valuation premium (2013E ROE 33% vs. Northeast Asian peers 14%). Also, Samsung
Engineerings consistent investment in engineering staff since 2005 has supported its
significant growth. We believe the company's engineering capability expansion will
strengthen its business outlook in the long term.
Due to increasing competition overseas, particularly in the Middle East region, the
companys selective new order wins and project execution will be key to its earnings in
2013. Also, slower-than-expected ramp up in the companys non-hydrocarbon business
may present further downside risks to Samsung Engineerings margins.
Sokje LeeAC
(82-2) 758-5729
Sokje.lee@jpmorgan.com
Bloomberg JPMA SOKJELEE <GO>
Seoul Branch
260,000
220,000
W
180,000
140,000

KOSPI (rebased)
Abs
Rel
YTD
-26.1%
-30.2%
1m
-12.4%
-10.7%
3m
-24.9%
-22.6%
12m
-37.0%
-36.9%
Source: Bloomberg.

Our Jun-13 price target is based on 15x 2013E earnings. We arrive at our target
multiple by taking its three-year 1-year forward P/E average of 13.5x and applying a
10% premium as a result of the companys consistent order flows and higher expected
EPS growth than peers (11% CAGR) until 2014E. Key downside risks are: (1)
stronger-than-expected competition in overseas markets, and (2) a fall in oil and gas
pricesprices.
Samsung Engineering Co. Ltd (Reuters: 028050.KS, Bloomberg: 028050 KS)
Year-end Dec
FY11A
FY12E
FY13E
Revenue (W bn)
9,298
11,308
13,234
717
877
953
Net Profit (W bn)
512
629
688
EPS (W)
12,793
15,724
17,202
BVPS (W)
33,766
46,438
59,994
Revenue growth
78.2%
21.6%
17.0%
EPS growth
44.2%
22.9%
9.4%
ROE
44.5%
40.1%
32.8%
ROA
12.2%
11.6%
11.0%
P/E (x)
11.6
9.5
8.7
P/BV (x)
4.4
3.2
2.5
EV/EBITDA (x)
7.4
6.1
5.1
Dividend Yield
2.0%
2.3%
2.7%
364
FY14E
14,412
968
701
17,526
73,875
8.9%
1.9%
26.5%
9.8%
8.5
2.0
4.9
2.7%
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily vol
KOSPI
Exchange Rate
255,500 - 141,000
5,960
5,479
40
Dec
149,000
12 Nov 12
64.2%
33.62
30.89
0
1,901
1,087.85
Adrian Mowat
(852) 2800-8599

21 November 2012
Samsung Engineering: Summary of Financials

Balance sheet
Assets
Current assets
Inventories
Others
Non-current Assets
Intangible Assets
Investments in Associates
Others
Liabilities
Current liabilities
Others
Non-current Liabilities
Long-term debt
Non-Current Provisions for Employee
Others
Stockholders' Equity
Total Debt
Net Debt(Cash)
Cash flow statement
Cash Flows from Operating
Net Income(Net Loss)
Gains (Losses) in FC Translation
Gains (Losses) on Disposal of Assets
Recovery (Impairment Losses) on Assets
Gains (Losses) in Equity Method
Inc (Dec) in working capital
Payments of Income Taxes
Others
Cash Flows from Investing
Free cash flow
Inc(Dec) in Cash
Cash at The Beginning
Cash at The End
Income Statement
FY11 FY12E FY13E FY14E W in billions, year end Dec
5,189 5,666 6,836 7,425 Net Sales
4,157 4,392 5,240 5,634
Growth(%)
560
545
844
897 Cost of Sales
2,723 3,141 3,676 4,003 Gross Profit on Sales
0
0
0
0
Gross margin
0
0
0
0 SG&A
1,032 1,274 1,596 1,790 Other Operating Income
700
872 1,190 1,382 Other Operating Expenses
34
36
38
39
0
0
0
0 Operating Income
297
366
367
368
Growth(%)
3,875 3,839 4,466 4,500
3,645 3,636 4,263 4,297
2,126 1,954 2,414 2,221 Income Before Income Taxes
0
0
0
0
Income Taxes Expenses
230
202
202
202
Tax Rate (%)
0
0
0
0 Net Income
24
25
25
25
Growth(%)
0
0
0
0
1,313 1,828 2,370 2,925 EBITDA
4
0
0
0
Growth(%)
-724
-722 -1,029 -1,092
Ratio Analysis
FY11 FY12E FY13E FY14E W, year end Dec
175
426
733
488 EPS
512
629
688
701 EPS Growth(%)
38
43
78
106 BPS
0
1
1
1 DPS
-21
-21
-21
-21 Dividend Yield(%)
0
0
0
0 PER (x)
-0
0
0
0 PBR (x)
-455
-187
243
-83 EV/ EBITDA (x)
-96
-172
-210
-230 ROE(%)
0
0
0
0 Gross Margin (%)
91
-320
-300
-300 Operating Margin (%)
67
305
599
353 Net margin(%)
-108
-120
-135
-135 EBITDA Margin (%)
158
-15
299
53
248
560
545
844
560
545
844
897

9,298 11,308 13,234 14,412
78.2% 21.6% 17.0%
8.9%
8,219 10,013 11,819 12,953
1,079 1,294 1,414 1,458
11.6% 11.4% 10.7% 10.1%
-460
-513
-556
-587
335
333
335
337
236
238
240
240
717
65.8%
7.7%
877
22.2%
7.8%
953
8.7%
7.2%
968
1.6%
6.7%
687
172
25.1%
512
44.2%
841
210
25.0%
629
22.9%
920
230
25.0%
688
9.4%
937
234
25.0%
701
1.9%
756
64.8%
920
21.7%
1,031
12.1%
1,073
4.2%

12,793 15,724 17,202 17,526
44.2% 22.9%
9.4%
1.9%
33,766 46,438 59,994 73,875
3,000 3,500 4,000 4,000
2.0%
2.3%
2.7%
2.7%
11.6
9.5
8.7
8.5
4.4
3.2
2.5
2.0
7.4
6.1
5.1
4.9
44.5% 40.1% 32.8% 26.5%
11.6% 11.4% 10.7% 10.1%
7.7%
7.8%
7.2%
6.7%
5.5%
5.6%
5.2%
4.9%
8.1%
8.1%
7.8%
7.4%
Source: Company reports and J.P. Morgan estimates. Net profit, EPS and ROE based on Owners' net income; BVPS based on Owners of parent equity.
365
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.samsunglife.com
Company overview
Samsung Life Insurance (SLI) is the largest life insurer in Korea with 25.9% market
share (as of FY10).
South Korea
Insurance
Price: W94,000
Investment case
Unlike other life insurers in Korea, SLIs business base is largely supported by the
retirement pension market and/or the HNWIs market. Given that the Korean baby
boomers, which account for 30% of total population, have just started to retire, we
believe this demographic change could support its annuity APE growth for the next 10
years. More importantly, given that the inheritance tax rate in Korea is the highest
among OECD countries (i.e. 50%), the tax efficient characteristics of the high-margin
whole life product would support continuous APE growth for the company, enough to
deliver >10% NBV growth per annum, in our view.
MW KimAC
(822) 758 5724
mw.kim@jpmorgan.com
Bloomberg JPMA MKIM <GO>
Seoul Branch
105,000
100,000
W
95,000
90,000
85,000
80,000

Given that 95% of revenue/earnings comes from the existing policies, we expect >20%
earnings growth for the next two years supported by >15% y/y growth of mortality
profit. And, we believe that strengthened RBC standards, its strong balance sheet and
largest tied-agent channel could support significant market share gain for the next
several years.

KOSPI (rebased)
Abs
Rel
YTD
16.9%
11.8%
1m
-2.2%
1.7%
3m
0.0%
-2.6%
12m
7.7%
6.6%
Source: Bloomberg.

If the 10-year bond yield falls further to/below 2% from current 3%, we expect overall
earnings growth to be slower or to show some contraction. Furthermore, potential
strong regulations on insurance product margin (i.e., commission/ mortality margin) for
customer protection might add pressure on its earnings base.
Based on our RoEV estimate of 11.4% for FY13E (Mar-14) and FY13E NBV multiple
of 1.0x, we apply a 1.1x FY13E P/EV to derive our Jun-13 PT of W140,000. Key risks
to our PT include: (1) prolonged low interest rates; (2) weaker-than-expected
penetration in HNWI market; and (3) implementation of IFRS II.
Samsung Life Insurance (Reuters: 032830.KS, Bloomberg: 032830 KS)
Year-end Mar
FY11A
FY12E
FY13E
Net profit (W bn)
947
1,021
1,221
Net Profit growth
-39.6%
7.8%
19.6%
EPS (W)
4,782
5,254
6,294
P/E (x)
19.7
17.9
14.9
BVPS (W)
91,423
97,701
101,916
P/BV (x)
1.0
1.0
0.9
ROE
5.6%
5.5%
6.3%
ROA
0.6%
0.6%
0.7%
DPS (W)
2,000
1,800
2,200
Dividend Yield
2.1%
1.9%
2.3%
EV per share (W)
118,705
130,249
143,930
P/EV (x)
0.8
0.7
0.7
366
FY14E
1,463
19.8%
7,543
12.5
106,778
0.9
7.2%
0.8%
2,600
2.8%
160,474
0.6
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily value (W bn)
3M Avg daily vol
KOSPI
Exchange Rate
102,000 - 79,500
18,800
16,917
200
Mar
94,000
02 Nov 12
38.7%
12.16
11.65
0
1,919
1,111.30
Adrian Mowat
(852) 2800-8599

21 November 2012
Samsung Life Insurance: Summary of Financials

W in billions, year end Mar
Income statement
Written premium (General account)
-1st premium
-Recurring premium
Reinsurance profit
Claims payment
Refund
Policyholder dividend
Insurance provision
Total expense
Underwriting profit
Investment profit
Non-operating profit
Pre-tax profit
Tax
Net profit
FY11 FY12E FY13E FY14E Balance sheet

14,603 15,129 15,713 16,541 Cash and cash equivalents
1,784 2,141 2,569 3,108 Loan
12,911 12,988 13,144 13,433 Stock
-22
-24
-24
-24 Bond
1,228 1,252 1,277 1,303 Real Estate
7,834 8,037 8,149 8,345 Invested asset
102
107
113
118 DAC
7,342 7,916 8,289 8,751 Separate account
1,539 1,516 1,807 1,902 Total Assets
-5,320 -5,628 -6,020 -6,382 Policy reserve
5,825 6,117 6,823 7,392 Other liabilities
611
703
808
921 Total Liabilities
1,116 1,192 1,611 1,930 Paid In Capital
229
289
390
467 Capital Surplus
947 1,021 1,221 1,463 Retained Earnings
AOCI
Growth rate - income statement
FY11 FY12E FY13E FY14E Total shareholders' equity
Written premium (General account)
0.1%
3.6%
3.9%
5.3%
-1st premium
18.0% 20.0% 20.0% 21.0% Per share data, W
-Recurring premium
-1.3%
0.6%
1.2%
2.2% Avg # of O/S shares (mil shares)
Total expense
0.3% -1.5% 19.2%
5.3% EPS
Underwriting profit
2.6%
5.8%
7.0%
6.0% BVPS
Investment profit
-8.6%
5.0% 11.5%
8.3% DPS
Net profit
-39.6%
7.8% 19.6% 19.8% EVPS
Growth rate - balance sheet
FY11 FY12E FY13E FY14E Ratio
Invested asset
9.4%
7.8%
6.9%
8.5% P/E (x)
DAC
3.5% 17.6%
0.5%
8.9% P/B (x)
Separate account
8.7%
7.5% 10.9% 14.3% P/EV (x)
Total assets
9.6%
7.4%
7.2%
7.2% ROE
Total liabilities
9.0%
7.7%
7.6%
7.5% ROA
15.0%
4.8%
4.1%
4.8% ROEV
FY11
2,986
24,348
21,864
75,361
5,713
130,272
3,984
23,342
161,072
106,634
36,325
142,959
100
6
8,565
9,658
18,113
FY12E
6,673
27,062
17,830
82,877
6,028
140,469
4,686
25,084
172,992
114,551
39,450
154,001
100
6
9,226
9,658
18,991
FY13E
5,281
30,042
19,067
89,376
6,446
150,212
4,710
27,817
185,447
122,839
42,836
165,676
100
6
10,007
9,658
19,772
FY14E
2,471
34,233
20,692
98,624
6,995
163,015
5,129
31,808
198,799
131,590
46,495
178,084
100
6
10,950
9,658
20,715
FY11
198
4,782
91,423
2,000
118,705
FY11
19.7
1.0
0.8
5.6%
0.6%
13.9%
FY12E
194
5,254
97,701
1,800
130,249
FY12E
17.9
1.0
0.7
5.5%
0.6%
10.6%
FY13E
194
6,294
101,916
2,200
143,930
FY13E
14.9
0.9
0.7
6.3%
0.7%
11.4%
FY14E
194
7,543
106,778
2,600
160,474
FY14E
12.5
0.9
0.6
7.2%
0.8%
11.5%
367
Adrian Mowat
(852) 2800-8599

21 November 2012
SASOL
Overweight
www.sasol.com
Price Target: 45,700
Company overview
Sasol is an integrated energy and chemical company with exposure to 38 countries.
Sasol develop and commercialise technologies, and build and operate world-scale
facilities to produce a range of product streams, including liquid fuels, chemicals and
electricity.
Alex Comer
Price: 37,299
AC
(44-20) 7134-5945
Investment case
We rate Sasol Overweight as we believe the company represents good value at this
point trading on a 2013FY PE of 8.6x vs its historical average of 10x: Volumes should
improve, cash flow, balance sheet and dividend outlook remain strong and the gas
franchise offers significant optionality. We also expect Sasol to go ahead with its
planned GTL and Chemical investments in the US which we value at NPV R129/share.
41,000
39,000
c 37,000
35,000

Sasols earnings are highly geared to the rand oil price and its share price has
traditionally shown a strong correlation with the rand oil price. This has broken down
in recent times as the market prices in falling demand and less risky supply of oil
causing a drop in oil prices (our model suggests the market is pricing in ~USD87/bbl).
Whilst we do believe that oil prices will fall, our marginal cost oil model suggests that
it will find a support level above USD90/bbl. Sasol has a strong balance sheet, a
healthy dividend ~4.8% and improving domestic volume growth in FY13 which are
good attributes to have in a weak global economy.
33,000
Nov-11
Abs
Feb-12
YTD
-3.2%
May-12
1m
-1.8%
Aug-12
Nov-12
3m
5.1%
Source: Bloomberg.

Our earnings hinge on an assumption of a higher than previously witnessed long term
oil price (USD90-110). Anything materially lower would hit earnings significantly,
Sasol estimates that for 2012, a USD1 per barrel movement in the oil price would have
a ~R580m impact on its EBIT.
Our 12M target price of R 457 is derived from the average of our DCF value (R 515)
and our 12M forward HEPS ex Arya x Sasols long-term average historical PE of 10x
(R 399). Biggest risks: 1) Lower long term oil price. 2) Inability of management to
execute on projects. 3) Environmental Factors - Clean Fuels, CO2 tax.
Sasol Ltd. (SOLJ.J;SOL SJ)

FYE Jun
Adj. EPS FY (c)
EV/EBITDA FY
Adj P/E FY
EBITDA FY (R mn)
EBITDA margin FY
Revenue FY (R mn)
OpFCF FY (R mn)
FCF Yield FY
2011A
3,385.85
6.1
11.0
37,354
26.2%
142,436
7,200
5.9%
368
2012A
4,228.07
5.5
8.8
46,408
27.4%
169,446
4,217
3.9%
2013E
4,344.49
5.7
8.6
47,698
28.3%
168,540
6,787
2.5%
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
37,299
02 Nov 12
45,700
01 Nov 13
41,150 - 33,321
251.1
673
12m
3.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
Sasol: Summary of Financials

Sales
EBITDA
D&A
EBIT
Financing
Associates
PBT
Tax
Minorities
Net Profit
Ave No Shares
HEPS
DPS
CF/Share
Balance Sheet
Fixed Assets
Current Assets
Current Liabilities
LT Liabilities
Net Assets
Invested Capital
Net debt
Net Working Capital
Cash Flow
EBIT
D&A
Wcap
Other
Operating cash flow
Interest
Dividends
Tax
Capex
Trading Cash flow
FCF before financing
Acquisition / disposals
Other
Change in Net Debt
FY12
169,446
46,408
9,651
36,758
(1,234)
479
36,003
(11,746)
(674)
23,583
601.30
4,228.07
1,750.00
7,340.30
FY13E
168,540
47,698
10,733
36,964
(500)
482
36,946
(10,057)
(692)
26,197
603.00
4,344.49
1,800.00
7,933.38
FY14E
183,574
50,426
11,584
38,842
(700)
834
38,976
(11,341)
(703)
26,932
603.00
4,466.39
1,850.00
7,976.07
FY15E
195,772
54,118
12,505
41,614
(800)
1,287
42,101
(12,176)
(782)
29,143
603.00
4,833.04
1,900.00
8,661.26
FY12
FY13E
FY14E
FY15E
138,282
65,471
(30,889)
-44,550
128,314
163,547
-3,549
26,268
FY12
36,758
9,651
(2,271)
44,137
(500)
(9,600)
(10,760)
(29,160)
(1,137)
4,217
0
(1,440)
-1,864
159,100
65,237
(30,795)
-48,955
144,586
184,223
-7,663
26,128
FY13E
36,964
10,733
140
47,838
(1,076)
(10,327)
(10,057)
(31,476)
(4,040)
6,787
0
0
-4,114
181,119
69,125
(32,353)
-56,583
161,308
208,572
-14,996
28,458
FY14E
38,842
11,584
(2,331)
48,096
(3,282)
(10,619)
(11,341)
(37,181)
(11,287)
408
1
0
-7,333
230,726
72,280
(33,617)
-89,365
180,024
260,071
-47,483
30,349
FY15E
41,614
12,505
(1,891)
52,227
(5,872)
(10,914)
(12,176)
(59,557)
(32,413)
(18,218)
2
0
-32,487
Production
Vol bbl/d
Growth
Secunda costs per barrel
Macro
Global GDP est
Rand/USD (Sasol Year)
Oil Price Brent (Sasol Year)
Refining Margin
Forecast Macro Effect on EBIT
Oil Hedge gain/ (loss)
Valuation
EV/ Sales
EV/EBITDA
EV/EBIT
RoIC
P/E
FCF yield
Debt/ EBITDA
Interest Cover
FY12
216,135
4.2%
(58)
FY13E
227,498
5.3%
(58)
FY14E
229,190
0.7%
(66)
FY15E
239,486
4.5%
(71)
FY12
FY13E
FY14E
FY15E
2.5
7.68
113.50
471.8%
18,709
-
2.8
8.20
100.00
881.4%
(3,589)
-
3.0
8.20
110.00
780.1%
5,904
-
3.3
8.20
112.20
934.9%
1,353
-
FY12
FY13E
FY14E
FY15E
1.5
5.5
6.9
1.6
16.7%
8.8
3.9%
0.1
(76.1)
1.6
5.7
7.3
1.5
15.8%
8.6
2.5%
0.2
73.9
1.5
5.5
7.1
1.4
14.3%
8.4
-0.7%
0.3
36.1
1.6
5.7
7.4
1.2
12.8%
7.7
-9.9%
0.9
12.7
369
Adrian Mowat
(852) 2800-8599

21 November 2012
Saudi Arabian Fertilizer Company
Overweight
www.safco.com.sa
Company overview
Saudi Arabia Fertilizer Company (SAFCO) is the largest fertilizer manufacturing
company in the Kingdom with a total nitrogen fertilizers capacity of ~4.4mn. It is one
of the key associates of Saudi Arabia's largest listed entity SABIC, which is also the
largest petrochemical company in the region. SABIC, which also markets and
distributes SAFCOs products, owns 43% stake in the company. SAFCO has its
registered office in Jubail industrial city and trades on the Tadawul (Saudi exchange)
with a total market cap of ~$13bn and average daily volumes of >US$6Mn.
Saudi Arabia
MENA Fertilizer
Price: SRls194.25
Muneeza Hasan
AC
(971) 4428-1766
Branch
Investment case
Despite its limited earnings growth potential, we like SAFCO as it offers one of the
highest dividend yields in our coverage universe at 7.2%. As the only pure nitrogen
play in the MENA region, we see SAFCO as a defensive stock with 8% FCF yield,
80% payout ratio and continued strong cash flow generation given promising outlook
for nitrogen fertilizers with recent rise in soft commodity prices on US drought. At
current prices, SAFCO trades at 12.5x 2013 earnings slightly ahead of its global peer
group average though it remains attractive on dividend yield and EBITDA margin
comparison. Within our fertilizer coverage, we prefer OCI for earnings growth coming
from capacity expansions and highlight SAFCO as a defensive play with stable
earnings and an attractive dividend yield.
200
SRls
190
180
170
Nov-11
Abs
Feb-12 May-12
YTD
13.1%
1m
3.6%
Aug-12 Nov-12
3m
3.4%
Source: Bloomberg.

Following the US drought, we believe that the need to improve crop yields in 2013 will
drive fertilizer applications higher benefiting SAFCO as the pure nitrogen play.
Weakness in demand and reduction/removal of gas price subsidies could hurt earnings.
We calculate our Dec 2013 PT for SAFCO at SAR221 using DCF method. We
discount the consolidated cash flows from the sale of SAFCOs nitrogen fertilizers
(urea and ammonia) using a WACC of 10.8% and terminal growth rate of 2%. Key
downside risks to PT include lower than forecast fertilizer prices, weak oil prices
leading to reduction/removal of gas subsidies, delay in capacity expansion and
unannounced plant shutdowns.
Saudi Arabian Fertilizer Co. (2020.SE;SAFCO AB)

FYE Dec
2011A
2012E
Reported EPS FY (SRls)
16.44
15.69
5,051
4,908
EBITDA FY (SRls mn)
4,034
3,891
EBITDA margin FY
79.9%
79.3%
Net Income FY (SRls mn)
4,109
3,923
Dividend Yield FY
6.9%
7.1%
Headline P/E FY
11.8
12.4
FCF Yield FY
8.1%
8.3%
370
2013E
15.55
4,859
3,833
78.9%
3,887
7.4%
12.5
6.1%
2014E
15.34
4,956
3,791
76.5%
3,835
7.3%
12.7
7.5%
2015E
17.10
5,650
4,301
76.1%
4,275
7.7%
11.4
9.2%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
194.25
02-Nov-12
221.00
31 Dec 13
201.50 - 168.25
48.6
250
12m
6.4%
Adrian Mowat
(852) 2800-8599

21 November 2012
Saudi Arabian Fertilizer Co.: Summary of Financials

Sales
% change Y/Y
Net Attributed Profit

% change Y/Y
Cash flow statement

FY11 FY12E FY13E FY14E SRls in millions, year end Dec
5,051 4,908 4,859 4,956 Net income attributable to equity holders
33.3% -2.8% -1.0% 2.0% Depreciation
Other Adjustments
3,765 3,710 3,656 3,600 Working capital changes
-91
-98
-97
248
240
240
256 a
Capex
4,034 3,891 3,833 3,791 Other investing cash flow
79.9% 79.3% 78.9% 76.5% Cash Flows from Investing activities
a
4,187 4,018 3,967 3,914 Free cash flow
(78)
(95)
(80)
(79) a
Debt raised/repaid
4,109 3,923 3,887 3,835 Dividends paid
27.0% -4.5% -0.9% -1.3% Cash flow from financing activities
Shares outstanding
EPS
% change Y/Y
250.00 250.00 250.00 250.00 Change in cash

16.44 15.69 15.55 15.34
27.0% (4.5%) (0.9%) (1.3%) Cash at the beginning of the year
Gross Profit
SG&A
Depreciation
EBITDA
EBITDA margin
a
Earnings before zakat
Zakat
DPS
Payout ratio
Balance sheet
Cash
Trade other receivables
Current assets
13.00 13.34 13.99 13.81 a

79.1% 85.0% 90.0% 90.0% Cash at the end of the year
Ratio analysis
3,261 3,806 3,186 3,178 Valuation
1,075 1,044 1,034 1,054 P/E multiple
4,708 5,212 4,577 4,597 EV/EBITDA
Property, plant and equipment

Investment in Associates
Non current assets
Total assets
3,195
1,319
4,618
9,326
3,355 4,465 4,809

1,319 1,319 1,319
4,778 5,888 6,232
9,990 10,465 10,829
P/B
FCF yield
A
Leverage
Net debt to equity
Trade and other payables

Short Term loans
Current liabilities
Long term Loans
Long term liabilities
324
80
521
80
1,116
315
80
512
80
1,107
Net Debt/ Capital

Net debt /EBITDA (x)
A
Ratios
Net margin
Shareholders' Equity
8,210
9,326
312
80
509
80
1,104
318
80
515
80
1,110
ROE
8,883 9,361 9,719 ROA
9,990 10,465 10,829

4,109 3,923 3,887 3,835
314
240
240
256
-489
-462
-453
-459
66
32
11
(22)
4,162 3,923 3,844 3,770
(266)
499
-237
(400) (1,350)
367
374
-33
-976
(600)
379
-221
3,832
3,890
3,549
2,868
-193
0
0
0
(3,000) (3,250) (3,408) (3,477)
-3,193 -3,250 -3,408 -3,477
649
545
-620
-8
2,256
2,905
3,449
2,829
2,905
3,449
2,829
2,821

11.8
10.9
12.4
11.3
12.5
11.5
12.7
11.6
5.9
8.1%
5.5
8.3%
5.2
6.1%
5.0
7.5%
-37.8% -41.0% -32.3% -31.0%

-37.1% -40.3% -31.8% -30.5%
(0.8)
(0.9)
(0.8)
(0.8)
346.4 215.8 215.0 236.3
81.3% 79.9% 80.0% 77.4%
50.1% 44.2% 41.5% 39.5%
44.1% 39.3% 37.1% 35.4%
371
Adrian Mowat
(852) 2800-8599

21 November 2012
Saudi Industrial Investment Group
Overweight
www.siig.com.sa
Company overview
SIIG is an integrated petrochemical company based in Al Jubail, Saudi Arabia. The
company's main projects are Saudi Chevron Phillips with a total capacity of c.1.2mmt
and Jubail Chevron Phillips with a total capacity of c.1.1mmt. Key products of SIIG are
ethylene, propylene, benzene, styrene, cyclohexane and motor gasoline. Next leg of
growth will come with Petrochem, which started commercial operations this quarter
only. Petrochem has a total capacity of more than 3mmt. SIIG has a strategic alliance
with Arabian Chevron Phillips for technology and market access.
Saudi Arabia
Chemicals
Price: SRls23.90
Neeraj KumarAC
(971) 4428-1740
Investment case
Key investment points are as follows: i) Petrochems commercial ops to contribute
from this quarter. We expect SIIG to benefit from the start-up of the commercial ops of
Petrochem from this quarter. We forecast 2011-14e earnings CAGR of more than 40%,
ii) Potential of margin improvement- We forecast EBIT margins to improve from 13%
in 2011 to about 19% in 2013e as SIIG benefits from ramp-up of Petrochem operations
which are based on discounted ethane/propane feedstock vs natural gasoline for SIIGs
existing ops, iii) Healthy dividends to provide support to share price. We forecast DPS
of SAR1.25/1.5, which implies a dividend yield of 5.3%/6.3% and a payout ratio of
74%/56% ( vs 85% in 2011) for 2012e/13e, iv) attractive valuation- SIIG shares trade
on 8.9x 2013e P/E vs its peer average of 10.7x.
26
24
SRls 22
20
18
Oct-11
Abs
Jan-12
YTD
24.8%
Apr-12
1m
1.5%
Jul-12
Oct-12
3m
19.1%
12m
22.9%
Source: Bloomberg.

SIIG to benefit from commercial ops of Petrochem from this quarter. We expect
Petrochem to reach healthy operating rates of >80% in 2H13e.
Lower than expected product prices, lower than expected ramp-up of Petrochems ops,
initial teething issues.
We have derived our Dec 2013 price target of SAR29 using a DCF-based approach.
Our key DCF assumptions are as follows: i) terminal growth rate of 2%, ii) weighted
average cost of capital of 10.7%. Risks: A slower than expected ramp-up of operations
for Petrochem, teething issues with operations, further deterioration in the global macro
situation, increase in feedstock prices from Saudi Aramco, decreased product prices
following a lower oil price.
Saudi Industrial Investment Group (2250.SE;SIIG AB)
FYE Dec
2011A
Adj. EPS FY (SRls)
1.18
4,501
EBIT FY (SRls mn)
589
Net Att. Income FY (SRls
528
mn)
EV/EBITDA FY
30.5
Adj P/E FY
20.3
EV/Revenue FY
5.5
FCF Yield FY
-16.7%
372
2012E
1.68
6,078
881
754
2013E
2.67
12,206
2,258
1,201
19.8
14.3
4.1
-10.1%
7.5
8.9
2.0
10.4%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
23.90
02-Nov-12
29.00
31 Dec 13
25.60 - 18.50
10.7
450

21 November 2012
Adrian Mowat
(852) 2800-8599
Saudi Industrial Investment Group: Summary of

Financials
Revenues
% Change Y/Y
Gross Margin (%)
% Change Y/Y
EBITDA Margin (%)
% Change Y/Y
EBIT Margin
Net Interest
% change Y/Y
Tax
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
FY10
4,952
31.7%
501
36.9%
14.1%
501
36.9%
10.1%
(2)
514
29.8%
(110)
21.3%
405
32.2%
449.5
0.90
0.90
FY11
4,501
-9.1%
809
61.7%
18.0%
589
17.6%
13.1%
(17)
636
23.6%
(107)
16.9%
528
30.6%
449.5
1.18
1.18
FY10 FY11
3,769 3,515
452
743
255
356
4,599 4,614
23,674 25,602
161
173
565
689
866
992
12,777 14,365
13,957 15,629
-
Cash flow statement

6,078 12,206 14,590 EBIT
35.0% 100.8% 19.5% Depreciation & amortization
809
809
0.0%
0.0% 0.0% Taxes
881
2,258 2,991 Capex
49.6% 156.2% 32.5% Acquisitions/disposals
14.5% 18.5% 20.5% Net Interest
(35)
(350) (370) Free cash flow
866
1,413 1,892 FCF (pre - exceptionals)
36.3% 63.1% 33.9% Equity raised/repaid
(113)
(212) (284) Debt Raised/repaid
13.0% 15.0% 15.0% Other
754
1,201 1,608 Dividends paid
42.6% 59.3% 33.9% Beginning cash
449.5
449.5 449.5 Ending cash
1.68
2.67
3.58 DPS
1.68
2.67
3.58
Ratio Analysis
2,447
2,854 3,860 Market Cap
729
732
875 Net debt
790
854
875 EV
3,967
4,440 5,611 EV/Sales
- EV/EBITDA
- EV/EBIT
26,390 26,627 27,194 P/E (adjusted EPS)
FCF yield
400
250
851
610
730 Dividend Yield
- EPS growth
1,381
991 1,560
14,565 14,315 13,615 Net debt /EBITDA
16,219 15,579 15,449 Net debt to Total Capital
- Net debt to equity
ROIC
FY10
501
(200)
FY11
589
(220)
FY12E
881
(365)
FY13E
2,258
(1,037)
FY14E
2,991
(1,021)
(705)
(5)
(4,740)
33
(2)
(4,724)
-4,724
0
4,240
(220)
4,618
3,769
0.50
(361)
449
(2,106)
0
(17)
(1,604)
-1,604
0
1,599
(223)
3,769
3,515
1.00
(517)
729
(1,800)
0
(35)
(1,079)
-1,079
0
600
(562)
3,515
2,447
1.25
(549)
2,746
(800)
0
(350)
1,108
1,108
0
0
(674)
2,447
2,854
1.50
(700)
3,312
(400)
0
(370)
1,820
1,820
0
0
(787)
2,854
3,860
1.75
FY10
9,081
9,169
22,309
FY11
9,611
11,024
24,659
FY12E
9,611
12,518
24,659
FY13E
9,611
11,712
24,659
FY14E
9,611
10,455
24,659
4.5
31.8
44.6
26.6
-52.0%
0.50
2.5%
32.3%
5.5
30.5
41.9
20.3
-16.7%
1.00
4.7%
30.6%
4.1
19.8
28.0
14.3
-10.1%
1.25
5.3%
42.6%
2.0
7.5
10.9
8.9
10.4%
1.50
6.3%
59.3%
1.7
6.1
8.2
6.7
17.1%
1.75
7.4%
33.9%
13.6
10.0
3.6
2.6
249.1
34.2
25.2
6.5
8.1
227.3% 276.3% 307.6% 282.1% 246.9%
1.7%
2.0%
3.0%
7.4%
9.7%
373
Adrian Mowat
(852) 2800-8599

21 November 2012
Sberbank
Overweight
Sbrf.ru
Price Target: RUB147.31 ($4.60)
Company overview
Sberbank is the largest bank in Russia and CEEMEA with over 19,000 branches
spanning through all country regions; in 2012 JPMe assets should exceed $400 bn; the
bank controls an outsized 45% share of Russias aggregate deposits.
Russia
Banks
Investment case
The stock is the best vehicle for gaining exposure to the secular growth of credits in
Russia in our view. It offers fundamental strength owing to an oligopolistic set up of
the market, also benefiting from the government support during times of tighter
liquidity. Sberbank is taking advantage of the ongoing retrenchment of foreign banks
and funding difficulties of domestic peers as it continues to deliver a superior
combination of growth and profitability.
Bloomberg JPMA KANTAROVICH<GO>
Price: RUB92 ($2.93)
Alex Kantarovich, CFAAC

(7-495) 967 3172
Alex.kantarovich@jpmorgan.com

105
100
95
R
90
85

Sberbank continues to monetize on its unique competitive positioning allowing for low
funding costs and market muscle; in 2013 we expect to see continuation of a steady
expansion of volumes accompanied by robust margin, tighter control over opex and
normalization of provisioning costs. Strong profitability translates into steady internal
capital generation which should allow it to maintain or gain market share.
80
75
Nov-11
Abs
Feb-12
YTD
9.4%
May-12
1m
-5.1%
Aug-12
Nov-12
3m
-6.8%
Source: Bloomberg.

Macro risks may result in slower than expected credit growth; among the main
company-specific risks, we highlight the potential for opex overruns and provision
overshoots as well as value destroying M&A.
Our end-2013 target prices of RUB147.31 ($4.60) per common share and RUB117.85
($3.68) per preference share are based on the Gordon Growth model. The key risks to
our target price and rating include lower than expected loan growth, cost overruns and
possible increase in provisioning charges.
Savings Bank of the Russian Federation (SBER.MM;SBER RX)
FYE Dec
2011A
2012E
Adj. EPS FY ($)
0.48
0.50
BV/Sh FY ($)
1.74
2.19
Adj P/E FY
6.1
5.8
P/BV FY
1.7
1.3
NII FY ($ mn)
19,081
21,496
Fees & comms FY ($ mn)
4,783
5,319
10,754
11,328
Tier One Ratio FY
11.6%
12.1%
374
2013E
0.53
2.62
5.5
1.1
25,744
6,749
11,879
12.5%
2014E
0.59
3.09
4.9
0.9
29,346
7,974
13,438
12.9%
Company Data
Price (R)
Date Of Price
Price Target (R)
52-week Range (R)
Mkt Cap (R bn)
Shares O/S (mn)
92.00
02-Nov-12
147.31
31 Dec 13
103.85 - 73.75
1,986.0
21,587
12m
8.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Sberbank: Summary of Financials

Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
Per Share Data & Ratio Analysis

FY10A FY11A FY12E FY13E FY14E $, year end Dec
FY10A
Per Share Data
15,774 19,081 21,496 25,744 29,346 EPS Reported
0.27
-0.4% 21.0% 12.7% 19.8% 14.0% EPS Adjusted
0.27
5,621 6,183 6,991 8,612 9,942
% Change Y/Y
680.2%
4,068 4,783 5,319 6,749 7,974 DPS
0.03
27.8% 17.6% 11.2% 26.9% 18.2%
% Change Y/Y
1101.9%
789
232
268
375
403 Dividend yield
1.0%
-35.3% -70.7% 15.8% 39.8% 7.5% Payout ratio
11.4%
764 1,169 1,403 1,488 1,565 BV per share
1.43
21,395 25,264 28,486 34,356 39,288 NAV per share
1.4
4.8% 18.1% 12.8% 20.6% 14.4% Shares outstanding
22,586.9
-8,754 -11,847 -13,588 -16,028 -18,078
21.2% 35.3% 14.7% 18.0% 12.8% Return ratios
0
0
0
0
0 RoRWA
0.03
12,641 13,417 14,899 18,328 21,210 Pre-tax ROE
26.1%
-4.2% 6.1% 11.0% 23.0% 15.7% ROE
20.7%
-5,064
41
-560 -3,480 -4,413 RoNAV
20.7%
7,577 13,457 14,339 14,848 16,797 Revenues
705.4% 77.6% 6.5% 3.6% 13.1% NIM (NII / RWA)
6.51%
(1,596) (2,712) (3,011) (2,970) (3,359) Non-IR / average assets
2.17%
21.1% 20.2% 21.0% 20.0% 20.0% Total rev / average assets
8.26%
16
9
0
0
73.73%
19.02%
3.69%
FY10A FY11A FY12E FY13E FY14E Year end Dec

Cost ratios
179,762 240,212 302,878 363,007 429,710 Cost / income
11.0% 33.6% 26.1% 19.9% 18.4% Cost / assets
-23,006 -20,612 -19,129 -21,115 -24,924 Staff numbers
59,719 50,591 56,250 57,656 59,098
25,684 23,707 38,408 42,199 43,384 Balance Sheet Gearing
-0.6% -7.7% 62.0% 9.9% 2.8% Loan / deposit
0
0
0
0
0 Loan / assets
17,395 22,643 26,219 27,573 28,989 Customer deposits / liabilities
20.3% 13.3% 22.2% 18.6% 16.4% NPLs / loans
24,641 25,399 35,500 36,783 38,130 LLP / RWA
227,502 267,822 326,580 393,013 451,703 Growth in NPLs
3,540 8,911 9,563 9,563 9,563 RWAs
% YoY change
32,192 39,346 49,383 59,219 69,867 Core Tier 1
16
9
0
0
0 Total Tier 1
282,723 337,153 423,755 490,436 561,180
FY10A
FY11A
FY12E
FY13E
FY14E
0.48
0.50
0.53
0.59
0.48
0.50
0.53
0.59
79.3%
5.3%
4.9% 13.1%
0.07
0.09
0.12
0.18
133.6% 26.4% 36.3% 47.1%
2.4%
3.0%
4.2%
6.1%
14.9% 17.8% 23.2% 30.1%
1.74
2.19
2.62
3.09
1.7
2.2
2.6
3.1
22,586.9 22,586.9 22,586.9 22,586.9
0.04
37.6%
28.1%
28.1%
0.03
32.3%
25.5%
25.5%
0.03
27.3%
21.9%
21.9%
0.03
26.0%
20.8%
20.8%
6.22% 6.10% 6.05% 5.96%

2.00% 1.84% 1.88% 1.89%
7.63% 7.49% 7.52% 7.47%
75.53% 75.46% 74.93% 74.69%
18.93% 18.67% 19.64% 20.30%
0.92% 0.94% 1.09% 1.03%
FY11A
FY12E
FY13E
FY14E
40.9% 46.9% 47.7% 46.7% 46.0%

0.0
0.0
0.0
0.0
0.0
262,779 266,187 276,834 276,834 276,834
82.5%
21.1%
63.6%
87.0%
9.8%
97.3% 100.4% 101.5% 103.2%

15.0% 13.3% 11.8% 10.5%
71.2% 71.5% 74.0% 76.6%
82.9% 80.7% 82.9% 84.7%
8.5%
9.5%
8.5%
7.8%
11.3%
7.9%
5.9%
5.5%
5.5%
7.3%
4.9%
3.5%
3.7%
3.7%
2.0% (0.0%)
0.1%
0.8%
0.9%
155.3% 162.6% 170.0% 150.0% 150.0%
(1.4%) (9.9%) (11.6%) 25.1% 18.0%
246,487 317,915 381,379 441,393 505,062
17.4% 29.0% 20.0% 15.7% 14.4%
11.9% 11.6% 12.1% 12.5% 12.9%
11.9% 11.6% 12.1% 12.5% 12.9%
375
Adrian Mowat
(852) 2800-8599

21 November 2012
Semen Gresik
Overweight
www.semengresik.com
Company overview
Semen Gresik Group is the largest cement producer in Indonesia. The group has three
subsidiaries: Semen Padang, Semen Tonasa, and Semen Gresik, operating in West
Sumatera, South Sulawesi, and East Java, respectively. At the end of FY12, its
effective cement capacity is expected to be 22.5mn MT.
Indonesia
Infrastructure
Price: Rp14,900
Liliana BambangAC
(62-21) 5291-8572
liliana.bambang@jpmorgan.com
Bloomberg JPMA BAMBANG <GO>
Investment case
We view that cement demand will continue to grow robustly at 7% in FY13E, with
Java in the lead. Industry dynamics (oligopolistic and tight utilization rate >90%)
remain conducive to pricing power to benefit the big three players. We like SMGR due
to its new 5mn capacity (via commissioning of its new Tuban and Tonasa plant). With
the increased capacity, we expect the company to be able to gain market share in 2013.
1) Commissioning of new capacity enables the company to gain market share. 2) We
expect increase in sales volume and ASP, coupled with declining energy cost to
improve gross and EBITDA margins in 2013. 3) We estimate SMGRs earnings will
increase c.20% y/y in FY13, exceeding consensus JCI earnings growth of 14% y/y.

14,000
Rp
12,000
10,000
8,000
SMGR.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
33.0%
18.8%
1m
-0.3%
-1.2%
3m
17.3%
10.8%
12m
57.7%
42.6%
Source: Bloomberg.

Rising prices in energy (especially coal) would directly impact SMGRs bottom line.
However, the biggest risk would be the impact of a slowdown in major commodity
(CPO and coal) prices on Indonesia discretionary income and consumption. There is
also a risk of increased competition, though we view the risk as more mid-to-long term.
Our Dec 13 PT of Rp16,000 is based on DCF, assuming a risk-free rate of 6.5%, and a
market risk premium of 8.0%. Key downside risks to our PT are weaker-than-expected
industry volume growth in FY13E, as we are wary of the impact of commodity prices
on cement demand.
Semen Gresik (Persero) Tbk (Reuters: SMGR.JK, Bloomberg: SMGR IJ)

Rp in bn, year-end Dec
FY10A
FY11A
FY12E
FY13E
Revenue (Rp bn)
14,344
16,379
18,924
21,846
Net Profit (Rp bn)
3,633.3
3,925.5
4,629.5
5,600.5
EPS (Rp)
612.55
661.81
780.49
944.19
DPS (Rp)
308.45
249.50
330.90
390.24
Revenue growth (%)
-0.3%
14.2%
15.5%
15.4%
EPS growth (%)
9.2%
8.0%
17.9%
21.0%
ROCE
39.2%
33.5%
33.1%
35.2%
ROE
32.7%
29.7%
29.6%
30.3%
P/E (x)
24.3
22.5
19.1
15.8
P/BV (x)
7.4
6.1
5.2
4.4
EV/EBITDA (x)
17.1
16.0
13.1
10.3
Dividend Yield
2.1%
1.7%
2.2%
2.6%
376
FY14E
25,446
6,583.4
1,109.91
472.10
16.5%
17.6%
35.9%
29.9%
13.4
3.7
8.6
3.2%
Company Data
Shares O/S (mn)
Market cap (Rp mn)
Market cap ($ mn)
Price (Rp)
Date Of Price
Free float (%)
3M - Avg daily Value (Rp mn)
JCI
Exchange Rate
Fiscal Year End
5,932
88,379,650
9,174
14,900
07 Nov 12
23.5%
6.12
84,142.18
8.73
4,319
9,634.00
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Semen Gresik (Persero) Tbk: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
ASP/Tonne
Cash cost/Tonne
EBITDA/Tonne
EBITDA/Tonne (USD)
Domestic Sales
Domestic Sales growth
Export Sales
Cement Capacity
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
14,344
(0.3%)
4,964
4.1%
4,489
3.4%
31.3%
203
4,723
1.5%
-1,064
22.5%
3,633.3
9.2%
6
612.55
9.2%
FY11
16,379
14.2%
5,396
8.7%
4,838
7.8%
29.5%
183
5,090
7.8%
-1,135
22.3%
3,925.5
8.0%
6
661.81
8.0%
FY12E
18,924
15.5%
6,575
21.8%
5,854
21.0%
30.9%
167
6,036
18.6%
-1,364
22.6%
4,629.5
17.9%
6
780.49
17.9%
FY13E
21,846
15.4%
8,439
28.3%
7,302
24.7%
33.4%
-15
7,302
21.0%
-1,650
22.6%
5,600.5
21.0%
6
944.19
21.0%
813,154.0 836,260.6 886,436.2 921,893.7

531,753.6 560,741.9 578,441.5 565,775.7
281,400.3 275,518.7 307,994.7 356,118.0
30.4
31.7
32.4
36.7
17,640.2 19,586.0 21,348.7 23,697.1
2.9%
11.0%
9.0%
11.0%
0.0
0.0
0.0
0.0
19,500.0 20,200.0 22,500.0 25,900.0
FY10
3,789
1,717
1,624
214
7,344
FY11
3,429
1,828
2,007
382
7,646
FY12E
4,125
2,357
1,910
382
8,773
FY13E
3,383
2,716
2,118
382
8,599
7,663
15,563
11,641
19,662
13,864
23,012
17,713
26,687
63
1,453
1,001
2,518
547
276
3,423
12,006
2,024.18
59
1,826
1,005
2,889
1,738
347
5,047
14,465
2,438.60
0
1,831
1,505
3,336
2,220
374
5,930
16,864
2,843.10
0
1,961
1,713
3,674
2,220
374
6,268
20,149
3,397.05
FY14E
25,446
16.5%
10,100
19.7%
8,648
18.4%
34.0%
-80
8,583
17.6%
-1,940
22.6%
6,583.4
17.6%
6
1,109.91
17.6%
Cash flow statement

EBIT
Taxes
FY10
4,489
475
-278
-1064
3,914
Capex
Disposal/(purchase)
Net Interest
Other
Free cash flow
-4,123 -4,537 -2,945 -4,986 -4,522

203
183
167
-15
-80
0
0
0
0
0
-209
-71 2,365 1,572 3,275
Other
Dividends paid
Beginning cash
Ending cash
958,769.4 DPS
578,207.9
380,561.6
40.1
26,540.8
12.0%
0.0
27,300.0
Ratio Analysis
FY14E Rp in billions, year end Dec
3,457 EBITDA margin
2,466 Net margin
382
9,472
- Sales growth
30,630 EPS growth
0
1,998 Sales/assets
4,174 Assets/equity
1,820 ROE
374 ROCE
6,367
23,933
4,034.87

4,838 5,854 7,302 8,648
559
722 1,137 1,452
-138
94 -230 -299
-1135 -1364 -1650 -1940
4,466 5,310 6,558 7,797
-133
-0
-0
535 1,205
432
-1,830 -1,480 -1,963
5,273 3,636 3,291
3,636 3,291 4,125
308.45 249.50 330.90
0
0
-2,315
4,125
3,383
390.24
0
-400
-2,800
3,383
3,457
472.10

34.6% 32.9% 34.7% 38.6%
31.3% 29.5% 30.9% 33.4%
25.3% 24.0% 24.5% 25.6%
FY14E
39.7%
34.0%
25.9%
(0.3%) 14.2% 15.5% 15.4% 16.5%

(0.3%) 14.2% 15.5% 15.4% 16.5%
9.2% 8.0% 17.9% 21.0% 17.6%
9.2% 8.0% 17.9% 21.0% 17.6%
- 549.49 126.87
-26.5% -11.3% -11.3% -5.8% -6.8%
1.01
0.93
0.89 0.88 0.89
1.85
1.79
1.36 1.32 1.28
32.7% 29.7% 29.6% 30.3% 29.9%
39.2% 33.5% 33.1% 35.2% 35.9%
377
Adrian Mowat
(852) 2800-8599

21 November 2012
Sesa Goa
Overweight
www.sesagoa.com
Company overview
Sesa Goa in its present form is an iron ore mining company, however, the restructuring
of the group corporate structure earlier this year would merge Sterlite with Sesa to
create a global Resource Giant. The merger is still awaiting High Court approval and is
likely to be completed by the end of this year. Sesa Sterlite (SESA STLT) is one of the
largest diversified non-ferrous metal companies in India with operations in aluminum,
copper, zinc, iron ore, oil and power. It is a subsidiary of Vedanta Group, a Londonbased company controlled by Anil Agarwal.
India
Metal & Mining
Price: Rs175.50
Investment case
In our view, the new merged entity will offer resource diversification across
commodities and a relatively stable earnings stream given diversification. We believe
the company will include the best-in-class resource base in zinc and oil with low
operating costs and decent mine life. The companys aggressive capex is nearly
complete as spending will be limited to its power business and no new projects have
been announced so far. Cash flows at the operating entity would be more than enough
to meet the interest component while dividend upstream from the subs should allow
dividend distribution from SESA STLT. The merged entity would be the biggest
beneficiary from any improvement in the regulatory environment in India.
Pinakin Parekh, CFAAC

(91-22) 6157 3589
pinakin.m.parekh@jpmorgan.com
Bloomberg JPMA PAREKH <GO>
260
220
Rs
180
140
Nov-11
Feb-12
May-12
Aug-12
Nov-12
SESA.NS share price (Rs)

BSE30 (rebased)
Abs
Rel
YTD
11.7%
-9.6%
1m
2.7%
2.1%
3m
-4.3%
-12.4%
Source: Bloomberg.

We like SESA STLTs diversified earnings profile (oil 37%, zinc 34%, power 9%
FY14E attributable EBITDA) with no single commodity generating more than 40% of
EBITDA. Over the next three years we estimate an 8-10% CAGR volume growth in
oil, +20% volume growth in power to drive attributable EBITDA CAGR of 11% over
FY12-14E. Currently the ~$7B in VAL aluminum and the $1.4B in BALCO is being
written off by investors. We believe its aluminum investments would benefit from any
potential change in regulatory environment. Coal remains the missing part in the
diversified portfolio and any step to address this would likely be positive, in our view.
Weakness in commodity prices (especially zinc, silver & oil prices) is a key risk to
earnings in 2013. While a weaker Rs is positive operationally, given the ~$7.5B debt,
MTM impact is sharp on Rs weakness (1% change = Rs4B MTM as per JPMe).
We value the company on an SOTP basis and we assign EV/EBITDA multiples to
underlying EBITDA. Our Sep-13 PT of Rs220 implies EV/EBITDA of 5.5x FY14E.
Key risks to our PT and rating are sharp decline in zinc and oil prices, sharp increase in
royalty rates in India and inability to ramp up volumes in power and oil segments.
Sesa Goa (Reuters: SESA.NS, Bloomberg: SESA IN)
FY12A
FY13E
Net Sales (Rs mn)
544,762
591,117
Net Profit (Rs mn)
61,426.0
78,910.5
EPS (Rs)
20.72
26.61
28.5%
ROE
20.1%
15.6%
P/E (x)
8.5
6.6
P/BV (x)
0.9
1.3
EV/EBITDA (x)
5.8
5.5
FY14E
667,188
95,187.9
32.10
20.6%
21.6%
5.5
1.1
4.5
FY15E
740,731
105,571.3
35.61
10.9%
20.2%
4.9
0.9
3.7
Source: Company data, Bloomberg, J.P. Morgan estimates. Note: Revenue, net profit and valuations based on attributable data.
378
Company Data
52-week Range (Rs)
Market cap (Rs mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
Shares O/S (mn)
BSE30
270.00 - 145.00
152,527
2,826
175.50
06 Nov 12
869
18,763
12m
-17.4%
-24.5%
Adrian Mowat
(852) 2800-8599

21 November 2012
Sesa Goa: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net Income (Pre exceptionals)
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY13E
591,117
8.5%
166,701
5.8%
28.2%
128,534
3.9%
21.7%
-20,881
176,672
47.6%
22,742
12.9%
78,910.5
28.5%
2,965
26.61
28.5%
FY14E
667,188
12.9%
193,569
16.1%
29.0%
152,257
18.5%
22.8%
-18,802
203,701
15.3%
27,267
13.4%
95,187.9
20.6%
2,965
32.10
20.6%
FY15E
740,731
11.0%
205,532
6.2%
27.7%
161,208
5.9%
21.8%
-12,896
218,323
7.2%
31,740
14.5%
105,571.3
10.9%
2,965
35.61
10.9%
FY13E
427,271
58,249
69,497
2,151,549
FY14E
533,214
62,857
75,677
2,342,224
FY15E
686,726
67,682
82,966
2,513,844
Cash flow statement

Net Income (Pre exceptionals)
FY13E
78,910.5
38,167
80,060
275,567
FY14E
95,187.9
41,312
196
227,274
FY15E
105,571.3
44,324
2,972
244,538
Net Capex
Free cash flow
-128,470
147,097
-138,731
88,543
-75,259
169,279
Other
Dividends paid
Beginning cash
Ending cash
DPS
-337,877
38,351
-527,461
-11,837
267,477
427,271
3.99
-70,925
20,500
82,103
-14,278
427,271
533,214
4.82
-71,661
-10,000
81,730
-15,836
533,214
686,726
5.34
FY13E
28.2%
13.3%
FY14E
29.0%
14.3%
FY15E
27.7%
14.3%
8.5%
28.5%
28.5%
12.9%
20.6%
20.6%
11.0%
10.9%
10.9%
7.98
23.7%
70.5%
0.27
5.34
15.6%
10.7%
10.29
17.1%
41.4%
0.30
4.88
21.6%
13.1%
15.94
2.8%
6.2%
0.31
4.45
20.2%
12.9%
Ratio Analysis
EBITDA margin
Operating margin
Net margin
Sales growth
Net profit growth
LT investments
- EPS growth
Net fixed assets
844,340
918,284
924,278
Total Assets
2,151,549
2,342,224
2,513,844 Interest coverage (x)
Liabilities
Net debt to equity
Short-term loans
63,520
63,520
63,520 Sales/assets
Payables
102,595
112,475
Others
49,503
50,607
52,295 ROE
215,618
226,602
241,689 ROCE
Long-term debt
647,750
668,250
658,250
Other liabilities
399,383
414,383
429,383
Total Liabilities
1,262,751
1,309,235
1,329,322
402,561
479,650
564,453
BVPS
135.77
161.77
190.37
Source: Company reports and J.P. Morgan estimates. Note: The P&L estimates are attributable data.
379
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.scb.co.th
Company overview
Siam Commercial Bank (SCB) is the third-largest bank in Thailand. The bank has the
leading position in retail banking (No.1) and corporate banking (2nd to BBL). SCB has
improved its position in SME market from No.6 to No.3. It has the largest branch and
ATM network and this has brought the bank a significant retail client and income base.
Thailand
Banks
Price: Bt162.00
Investment case
We like the quality of SCBs management team. This has brought good strategies and
effective executions and implementation. The market share gain story for SCB is likely
to continue as other banks have weaker balance sheet and/or weaker business platform
esp. in retail banking which is the growing area. The governments tax rebate on firsttime car purchase has come to an end hence auto loan growth is expected to slowdown.
However, this is only 10% of SCB's book. The majority (27%) of the book consists of
housing loans and is expected to show growth acceleration given strong condo
completion pipeline in FY13. Income story esp. at low-end segment remains solid and
favors retail banking outlook and SCB.
Low interest rate with better liquidity and less deposit competition from Specialized
Financial Institutions bode well for banks esp. those with higher retail exposure. SCB
still has good level of capital and hence will likely gain more market share.
(66-2) 684 2684
Anne.x.jirajariyavech@jpmorgan.com
<GO>
180
160
Bt 140
120
100
Nov-11
Feb-12
May-12
Aug-12
Nov-12
SCB.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
39.1%
11.7%
1m
-4.4%
-4.5%
3m
3.2%
-5.9%
Source: Bloomberg.

To prevent risk of excessive lending, the Bank of Thailand may consider issuing some
measures. Also, due to vulnerable global economy, higher credit costs cannot be ruled
out.
Our Jun13 PT is Bt200 based on DDM with 21.0% ROE, 12.1% COE, and 8% growth
rate. Risks are higher opex, competition in retail, and change in asset quality condition
esp. given that SCB has been aggressive in growing assets in the past few years.
Siam Commercial Bank (Reuters: SCB.BK, Bloomberg: SCB TB)
FY10A
FY11A
FY12E
Operating Profit (Bt mn)
36,935
48,822
60,213
Net Profit (Bt mn)
24,205
36,273
40,608
Cash EPS (Bt)
7.12
10.67
11.95
Fully Diluted EPS (Bt)
7.12
10.67
11.95
DPS (Bt)
3.00
3.50
4.00
EPS growth (%)
16.6%
49.9%
12.0%
ROE
16.4%
21.3%
20.4%
P/E (x)
22.7
15.2
13.6
BVPS (Bt)
45.40
54.68
62.63
P/BV (x)
3.6
3.0
2.6
Dividend Yield
1.9%
2.2%
2.5%
380
FY13E
69,798
48,219
14.19
14.19
4.75
18.7%
21.1%
11.4
72.06
2.2
2.9%
FY14E
83,107
57,544
16.93
16.93
5.50
19.3%
21.8%
9.6
83.49
1.9
3.4%
Company Data
52-week Range (Bt)
Market Cap (Bt mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Bt)
Date Of Price
3M - Avg daily value (Bt mn)
SET
Exchange Rate
172.00-102.00
550,669
17,925
3,399
Dec
162.00
02 Nov 12
778.93
25.4
4.86
1306.60
30.72
12m
38.5%
3.2%

21 November 2012
Adrian Mowat
(852) 2800-8599
Siam Commercial Bank: Summary of Financials

Income Statement
FY10
3.0%
95.2%
2.9%
FY11
3.2%
94.8%
3.0%
FY12E
3.1%
95.6%
3.0%
FY13E
3.0%
96.6%
2.9%
Net Interest Income

Fee Income
Dealing Income
39,753
27,717
20,563
5,002
50,526
35,180
26,064
6,689
59,820
40,256
29,974
7,564
68,373
45,086
33,571
8,471
67,470
85,706
100,076
113,460
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
(30,535) (36,883) (39,862) (43,662)

36,935
48,822
60,213
69,798
(4,699) (6,630) (7,731) (9,056)
1,655
5,330
334
0
33,891
47,521
52,817
60,741
(9,563) (11,213) (11,884) (12,148)
(123)
(36)
(325)
(374)
24,205
36,273
40,608
48,219
Per Share Data THB

EPS
DPS
Payout
Book value
PPOP per share
Key Balance sheet Bt in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY10
7.12
3.00
42.1%
45.40
3,399
10.87
FY10
1,018,803
(41,595)
1,060,398
38,752
153,746
80,675
1,318,348
0
1,476,735
FY11
10.67
3.50
32.8%
54.68
3,399
14.36
FY11
1,249,688
(45,995)
1,295,683
36,281
330,774
92,134
1,590,799
0
1,877,836
FY12E
11.95
4.00
33.5%
62.63
3,399
17.71
FY12E
1,465,015
(50,544)
1,515,559
40,168
330,774
86,606
1,915,134
0
2,126,882
FY13E
14.19
4.75
33.5%
72.06
3,399
20.53
FY13E
1,721,805
(55,867)
1,777,671
44,715
330,774
86,606
2,252,572
0
2,535,723
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
1,092,109
110,649
0
1,132,199
1,385,362
154,316
1,057,431
993,155
1,184,388
309,274
0
1,348,210
1,677,286
185,871
1,262,694
1,160,062
1,506,168
199,488
0
1,599,659
2,002,359
212,882
1,430,157
1,346,425
1,882,710
199,488
0
1,893,927
2,331,302
244,955
1,705,070
1,567,613
Growth Rates
FY14E
3.0% Loans
97.3% Deposits
3.0% Assets
Equity
80,437 RWA
9,488
of which Fee Grth
Revenues
130,934 Costs
83,107 Pre-Tax
0 EPS
- DPS
72,467 Loan/deposit
(430) Loan/Assets
LT debt/liabilities
5.50 NPLs/loans
3,399 Tier 1 Ratio
24.45 Total CAR
2,029,163 NIM (as % of avg. assets)
2,091,278 Margins (as % of Avg. Assets)
2,643,109 Cost/Income
0 Cost/Assets
2,894,907 Pre-Provision ROA
LLP/Loans
2,202,771 Loan/Assets
0 Operating ROA
2,242,228 Pre-Tax ROA
2,715,315 Tax rate
1,946,591 ROA
1,825,830 RORWA
Equity/Assets
ROE
FY10
12.6%
14.2%
14.1%
10.1%
13.8%
5.9%
20.0%
20.4%
11.3%
9.2%
13.1%
(11.1%)
21.4%
16.6%
16.6%
20.0%
FY11
22.2%
8.4%
27.2%
20.4%
19.4%
27.1%
26.9%
26.8%
27.0%
20.8%
32.2%
41.1%
40.2%
49.9%
49.9%
16.7%
FY12E
17.0%
27.2%
13.3%
14.5%
13.3%
18.4%
14.4%
15.0%
16.8%
8.1%
23.3%
16.6%
11.1%
12.0%
12.0%
14.3%
FY13E
17.3%
25.0%
19.2%
15.1%
19.2%
14.3%
12.0%
12.0%
13.4%
9.5%
15.9%
17.1%
15.0%
18.7%
18.7%
18.8%
FY14E
17.6%
17.0%
14.2%
15.9%
14.2%
17.6%
12.0%
12.0%
15.4%
9.5%
19.1%
17.5%
19.3%
19.3%
19.3%
15.8%
FY10
93.3%
11.5%
72.3%
82.6%
8.7%
FY10
(3.9%)
4.2%
101.1%
(13.5%)
11.6%
15.5%
FY10
3.0%
95.2%
2.9%
41.1%
2.0%
4.9%
45.3%
2.2%
2.7%
(0.5%)
72.3%
0.1%
2.3%
2.4%
28.2%
0.1%
1.7%
2.4%
10.6%
16.4%
FY11
105.5%
14.4%
70.2%
70.1%
13.9%
FY11
(3.5%)
3.2%
116.7%
(6.4%)
11.1%
14.5%
FY11
3.2%
94.8%
3.0%
41.0%
2.1%
5.1%
43.0%
2.2%
2.9%
(0.6%)
70.2%
0.3%
2.5%
2.8%
23.6%
0.1%
2.2%
3.1%
10.1%
21.3%
FY12E
97.3%
16.5%
70.2%
78.8%
14.1%
FY12E
(3.3%)
2.7%
126.3%
10.7%
11.7%
14.6%
FY12E
3.1%
95.6%
3.0%
40.2%
2.0%
5.0%
39.8%
2.0%
3.0%
(0.5%)
70.2%
0.0%
2.6%
2.6%
22.5%
0.1%
2.0%
3.0%
10.0%
20.4%
FY13E
91.5%
14.2%
70.6%
82.2%
9.5%
FY13E
(3.1%)
2.6%
125.4%
11.3%
11.7%
14.2%
FY13E
3.0%
96.6%
2.9%
39.7%
1.9%
4.9%
38.5%
1.9%
3.0%
(0.5%)
70.6%
0.0%
2.6%
2.6%
20.0%
0.1%
2.1%
3.1%
9.8%
21.1%
FY14E
92.1%
12.2%
71.2%
84.4%
8.1%
FY14E
(3.0%)
2.4%
124.5%
11.9%
12.2%
14.4%
FY14E
3.0%
97.3%
3.0%
38.6%
1.9%
4.8%
36.5%
1.8%
3.1%
(0.5%)
71.2%
0.0%
2.7%
2.7%
20.0%
0.1%
2.1%
3.2%
9.7%
21.8%
381
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.sinobiopharm.com/viewHome.do
Company overview
Sino Biopharmaceutical (SB) produces medicines in two core therapeutic categories:
cardio cerebral diseases and hepatitis. The company is extending its development
efforts to oncology, analgesic and respiratory medicines in order to meet the increasing
demand from medical practitioners and patients.
China
Healthcare
Price: HK$3.11
Sean WuAC
(852) 2800 8538
Investment case
SBP operates the No.1 hepatitis franchise with 20% market share. It also has the No.1
position for alprostadil, a top-5 drug in China, with 75% market share. SBP has several
newly-launched products and a strong product pipeline, including raltitrexed and
Kaifen patch, which have the potential to become blockbuster drugs with total sales of
over Rmb100MM, in our view.

Limited
3.0
HK$
2.6
2.2

We believe Sino Biopharma will continue performing well in 2013, as the company has
shown continued strength with its products sales and has shouldered price cuts better
than most competitors. We believe while SBP has achieved great sales for some of its
key products, there are still substantial market opportunities left. SBP's entecavir
achieved sales of HK$497mn in 2011, its first full year in the market, a remarkable
achievement. However, the sales paled in comparison to the originator BMS's sales for
entecavir (Rmb1.8bn). The key drivers for the company going forward are: 1) good
acquisitions to complement growth; and 2) strong performance by new products.
1.8
Nov-11
Feb-12
May-12
Aug-12
Nov-12

Abs
Rel
YTD
35.2%
3.2%
1m
9.5%
10.0%
3m
6.5%
-7.0%
12m
31.8%
10.1%
Source: Bloomberg.

Larger-than-expected price cuts for anti-viral products would be a key earnings risk for
SBP. On the other hand, better-than-expected sales ramp-up for new products may
drive earnings upside.
Our DCF-based Dec-12 PT of HK$3.6 implies 20.4x FY13E P/E. Key risks to our PT
are the timing of commercialization of new drugs and pricing pressure from regulators.
Sino Biopharmaceutical (Reuters: 1177.HK, Bloomberg: 1177 HK)
HK$ in mn, year-end Dec
FY09A
FY10A
FY11A
Revenue (HK$ mn)
3,244
4,086
5,782
Net Profit (HK$ mn)
397.0
566.9
462.8
EPS (HK$)
0.09
0.12
0.09
DPS (HK$)
0.05
0.08
0.07
Revenue growth (%)
42.2%
26.0%
41.5%
EPS growth (%)
33.3%
33.2%
-20.0%
ROCE
31.1%
27.1%
28.9%
ROE
16.9%
18.5%
12.4%
P/E (x)
35.5
26.6
33.3
P/BV (x)
5.7
4.2
4.0
EV/EBITDA (x)
13.0
10.7
8.1
Dividend Yield
1.6%
2.6%
2.3%
382
FY12E
7,689
737.4
0.15
0.11
33.0%
59.3%
33.9%
18.8%
20.9
3.8
6.6
3.6%
FY13E
8,918
874.5
0.18
0.13
16.0%
18.6%
39.1%
21.2%
17.6
3.6
5.4
4.3%
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
MSCICNX-HLTH
Exchange Rate
Fiscal Year End
4,941
15,368
1,983
3.11
09 Nov 12
47.6%
8,765,418.00
26.18
3.38
130
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Sino Biopharmaceutical: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
FY11
4,086
5,782
26.0% 41.5%
3,301
4,539
26.8% 37.5%
939
1,255
16.6% 33.6%
851
1,116
13.9% 31.1%
20.8% 19.3%
-6
-11
1,088
996
27.5%
-8.4%
-228
-167
21.0% 16.7%
566.9
462.8
42.8% -18.4%
4,854
4,952
0.12
0.09
33.2% (20.0%)
FY12E
7,689
33.0%
6,075
33.8%
1,533
22.1%
1,362
22.0%
17.7%
-10
1,460
46.6%
-275
18.8%
737.4
59.3%
4,952
0.15
59.3%
FY10
2,338
626
369
0
4,030
FY11 FY12E
2,110 2,228
914 1,216
452
601
0
0
3,871 4,845
348
1,243
5,621
430
1,688
6,295
429
1,867
7,142
28
160
908
1,096
127
97
1,319
3,648
0.74
51
221
1,099
1,371
35
114
1,519
3,836
0.77
19
293
1,221
1,533
86
114
1,734
4,021
0.81
Cash flow statement

FY13E FY14E HK$ in millions, year end Dec
8,918 10,532 EBIT
16.7% 18.8% Taxes
20.4% 22.2%
1,658 2,049 Capex
18.6% 19.5% Other
-12
-13 Free cash flow
1,759 2,154
20.5% 22.5%
-340
19.3% 19.3% Debt raised/(repaid)
874.5 1,065.2 Other
18.6% 21.8% Dividends paid
4,952 4,952 Beginning cash
0.18
0.22 Ending cash
18.6% 21.8% DPS
Ratio Analysis
FY13E FY14E HK$ in millions, year end Dec
2,304 2,393 Gross margin
697
0
0 Net margin
5,567 6,457
428
426 Sales growth
2,057 2,262 Net profit growth
8,052 9,146 EPS growth
23
23
340
1,301 1,394 Working Capital to Sales
1,664 1,819 Sales/assets
102
102 Assets/equity
114
114 ROE
1,881 2,035 ROCE
4,240 4,506
0.86
0.91
FY10
851
88
-296
-135
508

1,116 1,362 1,658 2,049
139
171
189
208
-256
-386
-247
-337
-228
-167
-275
-340
771
980 1,324 1,580
-544
-6
35
-383
-11
377
-349
-10
621
-377
-12
936
-411
-13
1,156
1,137
-101
-389
1,739
2,338
0.08
-53
-367
2,338
2,110
0.07
20
-297
2,110
2,228
0.11
20
-604
2,228
2,304
0.13
0
-727
2,304
2,393
0.16
FY10
80.8%
23.0%
20.8%
13.9%
FY11
78.5%
21.7%
19.3%
8.0%
FY12E FY13E FY14E

79.0% 79.5% 80.0%
19.9% 20.7% 21.4%
17.7% 18.6% 19.5%
9.6% 9.8% 10.1%
17.5% 38.7% 33.0% 16.0%

26.0% 41.5% 33.0% 16.0%
42.8% -18.4% 59.3% 18.6%
33.2% (20.0%) 59.3% 18.6%
161.90 111.21 159.06 158.29
-59.9%
20.4%
0.87
1.54
18.5%
27.1%
-52.8%
19.8%
0.97
1.64
12.4%
28.9%
18.1%
18.1%
21.8%
21.8%
178.02
-52.8% -51.4% -50.3%

19.8% 19.8% 19.8%
1.14
1.17
1.22
1.78
1.90
2.03
18.8% 21.2% 24.4%
33.9% 39.1% 45.6%
383
Adrian Mowat
(852) 2800-8599

21 November 2012
Sinopec Corp.- H
Overweight
www.english.sinopec.com
Company overview
Sinopec is one of the three big oil companies of China and is integrated with E&P,
R&M and Chemicals. In 2011, oil production was 0.9 mn BOPD and gas 0.2 mn
BOEPD, refining throughout was 4.4 mn BOPD, ethylene production 10 mn tonnes.
Sinopec has SEC proven reserves of 4.0 bn BOE (30% is natural gas, 75% of crude is
developed). Major profit drivers are crude price and refining margins in China. Sinopec
controls over 50% of the petroleum retail market with 29,000 retail stations, and
presence primarily in south and east of China.
China
Integrated Oils
Investment case
From generating refining losses in 1H12, we expect refining to break even in 2H12
(which is on its way) and further turn positive in 1H13 (and beyond) driven by more
active product price adjustments by the NDRC. This is expected to drive about 20%
earnings growth in 2013. Stock trades at 7.7x FY13E P/E, at a 30-40% discount to
regional and Chinese peers, generating similar ROEs.
Price: HK$8.28

An anemic but benign growth environment should weigh on global crude demand and
hence oil prices, which should give NDRC the leg-room to adjust down the product
prices in a way so to let the refiners make money. NDRC has shown willingness to
adjust product prices corresponding to around US$100-110/bbl crude price, and any
decline in oil prices bodes well for the Chinese refining margin. Sinopecs greater
leverage to refining makes it more attractive than peers, given current valuations.
Brynjar BustnesAC
(852) 2800 8578,
brynjar.e.bustnes@jpmorgan.com
Limited
10.0
9.0
HK$
8.0
7.0
6.0
Nov-11
Feb-12 May-12
Aug-12 Nov-12

HSCEI (rebased)
Abs
Rel
YTD
-3.9%
-9.1%
1m
14.2%
6.1%
3m
13.7%
4.0%
Source: Bloomberg.

Our 2013 EPS growth is based on refining improving in 2013, while we expect
Chemicals to remain weak. In case the chemicals segment picks up meaningfully, full
year earnings could come in about 10-15% higher than current estimate.
Dec-13 PT of HK$9.50 is based on 1.2x 2013E BV, which is at a 10% premium to
PetroChinas (PTR) valuations at our PTR PT which we believe is justified given
Sinopec is expected to generate higher ROE than PetroChina. Risks are much lower oil
price or NDRC cutting the product prices to below profitability levels.
Sinopec Corp - H (Reuters: 0386.HK, Bloomberg: 386 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
1,913,134
2,505,643
2,714,970
Net Profit (Rmb mn)
71,752
73,185
62,828
EPS (Rmb)
0.83
0.84
0.72
DPS (Rmb)
0.21
0.20
0.22
Revenue Growth (%)
42%
31%
8%
EPS Growth (%)
16%
2%
(14%)
ROCE
19%
17%
14%
ROE
18%
16%
13%
P/E
8.1
7.9
9.2
P/BV
1.4
1.2
1.1
EV/EBITDA
4.4
4.4
4.8
Dividend Yield
3.1%
3.0%
3.3%
384
FY13E
2,655,253
75,082
0.87
0.26
(2%)
20%
15%
14%
7.7
1.0
4.2
3.9%
FY14E
2,640,208
79,433
0.92
0.27
(1%)
6%
14%
13%
7.3
0.9
3.9
4.1%
Company Data
Market Cap (Rmb mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
Avg Daily Value (HK$ mn)
HSCEI
Exchange Rate
Fiscal Year End
86,702
695,354
111,267
8.28
05 Nov 12
19.6%
205
1,098
142
10,834
7.75
Dec
12m
3.9%
2.8%
Adrian Mowat
(852) 2800-8599

21 November 2012
Sinopec Corp - H: Summary of Financials
Income Statement
Cash flow statement
FY10
Revenues
1,913,134 2,505,643 2,714,970 2,655,253 2,640,208 EBIT
% change Y/Y
42%
31%
8%
(2%)
(1%) Depr. & amortization
EBITDA
% change Y/Y
22%
3%
(2%)
15%
4% Taxes
EBIT
% change Y/Y
24%
1%
(8%)
19%
4%
EBIT Margin
3%
2%
2%
2%
2% Capex
Net Interest
-7,312
-7,657 -10,186 -11,787 -10,539 Disposal/(purchase)
Earnings before tax
103,645 104,525 90,718 107,054 112,855 Net Interest
% change Y/Y
29%
1%
(13%)
18%
5% Other
Tax
-25,689 -26,120 -22,670 -26,752 -28,202 Free cash flow
as % of EBT
24.8%
25.0%
25.0%
25.0%
25.0%
% change Y/Y
16%
2%
(14%)
20%
6% Debt raised/(repaid)
Shares outstanding
86,702 86,702 86,702 86,702 86,702 Other
EPS (reported)
0.83
0.84
0.72
0.87
0.92 Dividends paid
% change Y/Y
16%
2%
(14%)
20%
6% Beginning cash
Ending cash
DPS
Balance sheet
Ratio Analysis
FY10
17,008 24,647
9,089 22,014 49,092 EBITDA margin
Accounts receivable
Inventories
156,546 203,417 220,411 215,563 214,341 Net margin
Others
42,450 55,420 60,050 58,729 58,396
Current assets
260,229 342,755 353,727 359,084 384,254
LT investments
- Sales growth
Net fixed assets
Total Assets
995,154 1,144,528 1,262,981 1,307,700 1,368,673 EPS growth
Liabilities
Short-term loans
17,019 68,224 68,224 68,224 68,224
Payables
Others
186,859 199,014 208,637 199,611 197,187 Sales/assets
336,406 444,240 463,493 445,435 440,585 Assets/equity
Long-term debt
136,465 116,894 166,894 171,894 176,894 ROE
Other liabilities
71,915 76,050 76,050 76,050 76,050 ROCE
Total Liabilities
544,786 637,184 706,437 693,379 693,529
419,047 472,328 516,308 568,865 624,468
BVPS
4.83
5.45
5.95
6.56
7.20
FY10
104,956
59,223
-5,781
-25689
170,333
FY11 FY12E FY13E

105,490 96,601 114,553
63,816 69,726 77,313
-14,484 -7,276 -10,490
-26120 -22670 -26752
150,622 133,199 150,192
FY14E
119,119
80,860
-2,943
-28202
166,017
-97,637 -141,038 -179,908 -119,742 -120,110

16,126 1,216
0
0
0
-7,312 -7,657 -10,186 -11,787 -10,539
72,696 9,584 -46,709 30,450 45,907
11,687 -2,977 50,000 5,000 5,000
-16,391 -19,469 -18,849 -22,525 -23,830
8,806 17,008 24,647 9,089 22,014
17,082 24,647 9,089 22,014 49,092
0.21
0.20
0.22
0.26
0.27
FY10
4%
3%
2%
FY11
3%
2%
1%
FY12E
3%
2%
1%
FY13E FY14E
4%
4%
2%
2%
1%
2%
42%
42%
16%
16%
22.45
31%
31%
2%
2%
22.11
8%
8%
(14%)
(14%)
16.33
(2%)
(2%)
20%
20%
16.28
(1%)
(1%)
6%
6%
18.98
32%
4.09
2.23
18%
19%
34%
4.68
2.42
16%
17%
44%
4.51
2.45
13%
14%
38%
4.13
2.30
14%
15%
31%
3.95
2.19
13%
14%
385
Adrian Mowat
(852) 2800-8599

21 November 2012
Skyworth Digital
Overweight
www.skyworth.com.hk
Company overview
Skyworth Digital is the largest LCD TV manufacturer (~15% China market share) and
the second-largest TV maker by revenue. The company, founded in 1988 and listed in
Hong Kong in 2000, has manufacturing facilities in Shenzhen, Guangzhou Inner
Mongolia, China. Skyworth has diversified distribution channels and also manufactures
OEM and ODM TVs.
China
SMID Caps
Investment case
Strong demand driven by new TVs and government rebates. Skyworth has seen a
dramatic improvement in growth rates for August and September (avg 27% Y/Y
growth) compared to June and July (up 10% Y/Y) mainly due to the introduction of
more high-end TVs and the start of an energy savings rebate (approx 10% of the cost of
the TV) that the government introduced in June but did not start to stimulate demand
until after July. We stay OW and maintain it as an AFL stock.

Limited
Price: HK$4.35

Price competition at the retail level appears to be less severe than last year. Skyworth
has mentioned that due to lower prices (after the ~10% government rebates), customers
are feeling much better about buying TVs in Oct 12 compared to Jun12. Retailers,
including on-line retailers, have less incentive to cut prices in order to attract
sales. New features of the new TVs are also a factor in attracting customers to a brand
compared to price this year.
Leon Chik, CFAAC

(852) 2800 8590
leon.hk.chik@jpmorgan.com
Bloomberg JPMA CHIK<GO>
5.0
4.5
HK$
4.0
3.5
3.0
2.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
59.9%
50.9%
1m
18.2%
8.0%
3m
41.2%
29.2%
Source: Bloomberg.

Controlling SGA expenses is the key for FY13. Skyworth hopes to lower distribution
costs by reducing the reliance on large electronic chain stores that charges the highest
fees for selling TVs. The company is continuing to roll out its own dedicated outlets
(5.8% of FY12 sales vs 0% in FY11) which entail much lower distribution costs.
Our PT (Dec-13, DCF-derived with market risk premium of 6.0% and a risk-free rate
of 4.2% and beta of 1.5) of HK$6.0 implies a fwd P/BV (FCY14E) of 1.4x and implies
a fwd P/E of 8.7x (CY14E). Key risks are the timing of the commencement of
government subsidy schemes for TVs, and higher cost of components cutting into
margins.
Skyworth Digital Holdings (Reuters: 0751.HK, Bloomberg: 751 HK)
HK$ in mn, year-end Mar
FY11A
FY12A
FY13E
Revenue (HK$ mn)
24,339
28,137
33,169
Net Profit (HK$ mn)
1,174.0
1,252.0
1,726.9
EPS (HK$)
0.44
0.46
0.62
DPS (HK$)
0.14
0.14
0.19
Revenue growth (%)
6.9%
15.6%
17.9%
EPS growth (%)
-10.7%
4.8%
34.9%
ROCE
13.4%
14.3%
17.2%
ROE
18.3%
16.1%
19.0%
P/E (x)
9.8
9.4
7.0
P/BV (x)
1.6
1.4
1.2
EV/EBITDA (x)
6.5
6.1
4.5
Dividend Yield
3.1%
3.2%
4.4%
386
FY14E
37,778
1,915.5
0.68
0.21
13.9%
9.3%
17.4%
18.5%
6.4
1.1
3.9
4.8%
FY15E
41,772
2,000.9
0.69
0.21
10.6%
1.5%
16.4%
17.1%
6.3
1.0
3.7
4.9%
Company Data
Shares O/S (mn)
Market cap (HK$ mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3-mth trading value (HK$ mn)
HSCEI
Exchange Rate
Fiscal Year End
2,764
12,025
1,552
4.35
02 Nov 12
64.2%
13
59
8
10,701
7.75
Mar
12m
3.6%
-0.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
Skyworth Digital Holdings: Summary of Financials

Income Statement
HK$ in millions, year end Mar
Revenues
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
HK$ in millions, year end Mar
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY11 FY12 FY13E FY14E FY15E HK$ in millions, year end Mar
24,339 28,137 33,169 37,778 41,772 EBIT
-4.3% 27.7% 20.6% 13.4%
7.4% Taxes
-3.8%
9.1% 31.3% 11.0%
3.7%
1,604 1,723 2,300 2,544 2,622 Capex
NM
7.4% 33.5% 10.6%
3.1% Net Interest
6.6%
6.1%
6.9%
6.7%
6.3% Other
-139
-177
-166
-166
-166 Free cash flow
1,494 1,576 2,170 2,438 2,581
-3.7%
5.5% 37.7% 12.3%
5.9%
-213
-308
-424
-501
1,174.0 1,252.0 1,726.9 1,915.5 2,000.9 Other
-6.2%
6.6% 37.9% 10.9%
4.5% Dividends paid
2,657 2,705 2,765 2,805 2,887 Beginning cash
0.44
0.46
0.62
0.68
0.69 Ending cash
(10.7%)
4.8% 34.9%
9.3%
1.5% DPS
Ratio Analysis
FY11 FY12 FY13E FY14E FY15E HK$ in millions, year end Mar
2,524 2,164 2,590 2,909 3,259 Gross margin
9,302 11,623 12,332 13,343 14,458 EBITDA margin
1,560 2,002 2,836 3,686 4,486 Net margin
16,043 18,940 21,472 24,168 26,881
629
956
963
975 1,000 Sales growth
18,645 22,224 25,170 28,174 31,128 EPS growth
3,577 3,568 3,568 3,568 3,568
1,292 1,446 1,904 2,392 2,925 Working Capital to Sales
10,031 12,121 13,850 15,502 17,044 Sales/assets
778
715
715
715
715 Assets/equity
504
720
720
720
720 ROE
11,396 13,556 15,285 16,937 18,479 ROCE
7,074 8,469 9,667 10,997 12,386
2.72
3.14
3.59
3.96
4.33

1,604 1,723 2,300 2,544 2,622
200
245
284
324
352
-226 -348
-531
-780
-806
-226 -244
-308
-424
-501
1,352 1,376 1,745 1,664 1,668
-577 -1,128
-139 -177
636
161
-707
-166
873
-641
-166
857
-605
-166
898
83 -322
-347 -199
2,191 2,524
2,524 2,164
0.14 0.14
0
-455
2,164
2,590
0.19
0
-557
2,590
2,909
0.21
0
-598
2,909
3,259
0.21

19.2% 21.2% 21.7% 21.6% 20.9%
7.4% 7.0% 7.8% 7.6% 7.1%
6.6% 6.1% 6.9% 6.7% 6.3%
4.8% 4.4% 5.2% 5.1% 4.8%
1.8% 13.6% 15.3% 12.3% 7.4%
6.9% 15.6% 17.9% 13.9% 10.6%
-6.2% 6.6% 37.9% 10.9% 4.5%
(10.7%) 4.8% 34.9% 9.3% 1.5%
12.98 11.12 15.60 17.32 17.96
25.9%
27.9%
1.29
2.64
18.3%
13.4%
25.0%
27.2%
1.38
2.62
16.1%
14.3%
17.5%
23.1%
1.40
2.60
19.0%
17.2%
12.5% 8.3%
21.3% 20.6%
1.42
1.41
2.56
2.51
18.5% 17.1%
17.4% 16.4%
387
Adrian Mowat
(852) 2800-8599

21 November 2012
Summarecon Agung
Overweight
www.summarecon.com
Company overview
Summarecon Agung, established in 1975, is a real estate developer. Its flagship
development, Summarecon Kelapa Gading, comprises of residential and commercial
complexes spanning 550ha, and is one of the first township developments in Jakarta.
The company focuses on developing integrated townships with facilities supporting
residential and commercial activities in the area. Summarecon currently manages three
township developments in Kelapa Gading, Serpong, and Bekasi.
Indonesia
Infrastructure
Price: Rp1,810
Investment case
Summarecon is the market leader in upper-middle class residential properties. The
company has an excellent track record on new projects and land-banking. We expect
strong marketing sales growth, driven by the launches in Bekasi and Serpong projects.
Momentum is positive for Summarecon, driven by earnings upgrade momentum and
potential land acquisitions.
1) Marketing sales are projected to grow 21% and 24% for 12E and 13E. 2) We expect
a target ASP increase of 19% y/y in FY13E for Bekasi, driven by the opening of the
Mall and finishing of the flyover, which we view as achievable. 3) Potential land bank
acquisition in South Jakarta should provide further upside to NAV.
Liliana BambangAC
(62-21) 5291-8572
liliana.bambang@jpmorgan.com
Bloomberg JPMA BAMBANG <GO>
2,000
1,800
Rp
1,600
1,400
1,200
1,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12
SMRA.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
46.0%
32.5%
1m
5.8%
3.9%
3m
11.0%
5.0%
12m
56.0%
40.7%
Source: Bloomberg.

Unsuccessful new project launches in Serpong and Bekasi, their source of growth.
Difficulties in securing contractors, due to recent property boom, could cap revenue
growth potential in FY13.
Our Dec-13 PT of Rp2,500 is based on a 30% discount to Dec-13 equity value per
share of Rp3,640, the discount it has traded on during up cycles. The key risks to our
price target are: (1) limitations on land bank availability could cap expansion
opportunities; (2) diversification risk as the company plans to expand into tourism
business in Bali; and (3) valuation concerns may cap outperformance.
Summarecon Agung (Reuters: SMRA.JK, Bloomberg: SMRA IJ)
Rp in mn, year-end Dec
FY09A
FY10A
FY11A
Revenue (Rp mn)
1,197,693
1,700,832
2,359,331
Net Profit (Rp mn)
167,343.4
233,477.9
392,019.5
EPS (Rp)
26.00
33.97
57.04
DPS (Rp)
8.49
10.00
0.00
Revenue growth (%)
-5.5%
42.0%
38.7%
EPS growth (%)
77.7%
30.7%
67.9%
ROCE
11.3%
12.9%
16.2%
ROE
10.2%
12.1%
17.0%
P/E (x)
69.6
53.3
31.7
P/BV (x)
6.8
5.8
5.0
EV/EBITDA (x)
31.0
24.5
17.2
Dividend Yield
0.5%
0.6%
0.0%
388
FY12E
2,939,476
562,607.5
74.95
0.00
24.6%
31.4%
19.6%
17.2%
24.1
3.3
11.7
0.0%
FY13E
3,658,331
744,369.8
99.16
0.00
24.5%
32.3%
19.9%
16.7%
18.3
2.8
9.5
0.0%
Company Data
Shares O/S (mn)
Market cap (Rp mn)
Market cap ($ mn)
Price (Rp)
Date Of Price
Free float (%)
JCI
Exchange Rate
Fiscal Year End
7,213
13,056,240
1,357
1,810
02 Nov 12
70.0%
5.43
8,792.91
0.89
4,339
9,623.00
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Summarecon Agung: Summary of Financials

Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
DPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY11
FY12E
2,359,331 2,939,476
38.7%
24.6%
567,133 856,742
48.1%
51.1%
24.0%
29.1%
-34,762
-80,821
530,916 745,922
54.4%
40.5%
-142,209 -186,627
26.8%
25.0%
392,019.5 562,607.5
67.9%
43.5%
392,019 562,608
67.9%
43.5%
6,873
7,506
57.04
74.95
67.9%
31.4%
0.00
0.00
-100.0%
FY11
FY12E
1,495,901 1,022,207
34,427
42,893
2,741,082 3,091,789
491,135 587,895
4,766,244 4,748,483
LT investments
Net fixed assets
3,073,435 4,497,728
Total Assets
8,099,175 9,505,707
Liabilities
ST Loans
0
0
Payables
246,765 261,282
Others
259,168 259,168
505,933 520,450
Long-term debt
1,431,040 773,450
Other liabilities
3,685,101 4,122,760
Total Liabilities
5,622,075 5,416,661
2,464,196 4,076,143
BVPS
358.53
543.02
Cash flow statement

FY13E
3,658,331
4,552,320 EBIT
24.5%
1,029,179
1,299,171 Change in working capital
20.1%
26.2% Others
28.1%
-26,107
26,981
973,072
1,296,153 Capex
30.5%
33.2% Disposal/(purchase)
-232,015
-288,314 Net Interest
23.8%
22.2% Free cash flow
744,369.8 1,011,151.4
32.3%
744,370
1,011,151 Debt raised/(repaid)
32.3%
35.8% Other
7,506
99.16
32.3%
35.8% Ending cash
0.00
0.00 DPS
Ratio Analysis
FY13E
1,280,660
1,764,602 EBIT Margin
53,382
3,556,941
4,015,977 Net margin
731,666
910,464 SG&A/Sales
5,626,348
6,761,168
- Sales growth
4,888,501
5,090,794 Net profit growth
10,774,345 12,111,458 EPS growth
0
330,337
259,168
259,168 Sales/assets
589,505
648,185
326,613 ROE
4,703,239
5,276,085 ROCE
5,940,929
6,266,890
4,820,513
5,831,664
642.18
776.89
FY11
567,133
105,904
-7,454
-266,587
398,995
FY12E
FY13E
FY14E
856,742 1,029,179 1,299,171
115,832 128,732 137,732
-3,757
30,121
-3,345
-294,135 -284,809 -288,020
674,682 903,223 1,145,538
-405,915 -1,540,125
-6,919
-865,443
0
454,790
-4,743
0
1,120,483
1,495,901
0.00
-519,504
383,719
-340,024
805,513
981,629
0
0
-657,589 -125,266 -321,572
0
0
0
0
0
0
1,495,901 1,022,207 1,280,660
1,022,207 1,280,660 1,764,602
0.00
0.00
0.00
FY11
24.0%
24.0%
16.6%
-
FY12E
29.1%
29.1%
19.1%
-
FY13E
28.1%
28.1%
20.3%
-
FY14E
28.5%
28.5%
22.2%
-
38.7%
38.7%
67.9%
67.9%
19.36
-2.0%
-2.8%
0.33
3.29
17.0%
16.2%
14.1%
24.6%
43.5%
31.4%
12.03
-5.8%
-6.2%
0.33
2.33
17.2%
19.6%
24.5%
24.5%
32.3%
32.3%
44.35
-12.3%
-13.2%
0.36
2.24
16.7%
19.9%
24.4%
24.4%
35.8%
35.8%
-24.8%
-24.7%
0.40
2.08
19.0%
22.3%
389
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
www.tcs.com
Company overview
TCS is Asias largest IT services company with significant experience across vertical
domains (BFSI, manufacturing, telecom, energy & utilities and healthcare) and
technology platforms. TCS serves 1000+ clients. It has the widest portfolio of service
offerings in the Indian IT space and its skill-set straddles the entire IT services value
chain from pure IT outsourcing to traditional application development and
maintenance to package implementation to consulting assignments to complex turnkey
projects to BPO.
India
Investment case
TCS has unmatched full-service positioning with specific focus on bread-and-butter
service lines such as ADM, testing, infrastructure management, which constitute more
than 70% of total IT services spending. Moreover, TCS is highly proactive in playing
in relatively less addressed and new markets/themes such as Latin America or SMB
(small and medium businesses) to drive revenue growth. TCS' versatile business model
is likely to help the company gain market share in a slower-growing industry.
Price: Rs1,324.95

TCS will have to watch for potentially intense pricing pressures precipitated by
growing competitiveness. This could be a drag on TCSs margins. Also, TCS needs to
watch the shape/trajectory of margins on its platform-based BPO offerings. Lastly,
TCSs BFSI exposure at 43% of its revenues is something that investors must monitor
in the event of global macro weakness.
Viju K GeorgeAC
(91-22) 6157 3597
1,500
1,300
Rs
1,100
900
Nov-11
Feb-12 May-12
Aug-12 Nov-12
TCS.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
14.2%
-8.8%
1m
2.3%
2.6%
3m
5.3%
-1.5%
12m
18.0%
9.1%
Source: Bloomberg.

The key risk for TCS' earnings is a meaningful decline in IT spending due to macro
weakness/event, pricing decline, meaningful rupee appreciation and supply-side
pressures are the other key risks for earnings.
We are Neutral on TCS with Mar-13 price target of Rs1,400, which is based on oneyear forward P/E multiple of 18x, about a 25% premium to Infosyss target multiple of
14.5x. TCS has exhibited a much better revenue growth profile over the last several
quarters than Infosys; top-line growth has been accompanied by improved profitability,
which we believe justifies the premium. Negative risks: Further weakness in demand
environment, rupee appreciation against the US$, and supply side pressures (higher
attrition or wage increases). Positive risks: Better pricing & volume growth relative to
expectations, rupee depreciation and a better-than-expected demand environment.
Bloomberg TCS IN, Reuters TCS.BO
(Year-end Mar, Rs mn) FY11

FY12 FY13E FY14E
Revenue
373,245 488,938 621,827 691,623
Operating Profit
104,769 135,141 168,721 187,208
EBITDA
109,692 140,948 175,179 194,305
Net profit (Reported) 87,163.6 106,383.1 136,164.2 150,613.6
EPS
44.53
54.35
69.57
76.95
P/E (x)
29.8
24.4
19.0
17.2
EV/EBITDA (x)
22.6
17.4
13.7
11.8
Cash
50,905 67,722 130,055 228,058
Equity
257,191 330,509 416,951 539,944
390
FY11 FY12
ROE(%)
37.0 36.2
CORE ROIC(%)
48.7 45.5
Quarterly EPS (Rs)
1Q
2Q
EPS (13) E
16.76 17.95
EPS (14) E
17.63 18.89
Local
1M
3M
Abs. Perf.(%)
2.3% 5.3%
Rel. Perf.(%)
2.6% (1.5%)
Target Price (31 Mar 13)
FY13E FY14E
36.4
31.5 52-Week range
45.0
3Q
4Q Market Cap
16.84
18.03 Market Cap(US)
19.73
20.69 Free float
12M
Avg daily val (Rs)
18.0%
Dividend Yield
9.1%
Index
Rs 1400.00 Exchange rate
1,439.80 - 1,034.34
1,957MN
2,593.22BN
US$47,360MN
23.5%
236MN
1.1%
5,686
54.76
Adrian Mowat
(852) 2800-8599

21 November 2012
Tata Consultancy Services: Summary of Financials

Ratio Analysis
FY11
FY12
FY13E
FY14E FY15E Rs in millions, year end Mar
Revenues
373,245 488,938 621,827 691,623
- Gross margin
Cost of goods sold
185,562 219,776 337,814 378,343
- EBITDA margin
Gross Profit
168,948 224,358 284,013 313,280
- Operating margin
R&D expenses
0
0
0
0
- Net margin
SG&A expenses
-64,180 -89,217 -115,292 -126,072
- R&D/sales
104,769 135,141 168,721 187,208
- SG&A/Sales
EBITDA
109,692 140,948 175,179 194,305
Interest income
5,085
8,236
9,608
12,920
- Sales growth
Interest expense
-774
-480
-333
0
- Operating profit growth
4,310
7,756
9,275
12,920
- Net profit growth
(Exp.)
5,324
4,041
9,503
12,920
- EPS (reported) growth
Earnings before tax
110,093 139,182 178,224 200,128
Tax
-21,739 -31,688 -40,663 -48,031
87,163.6 106,383.1 136,164.2 150,613.6
- Net debt to total capital
88,354 107,494 137,560 152,098
EPS (reported)
44.53
54.35
69.57
76.95
- Asset turnover
EPS (adjusted)
45.14
54.92
70.28
77.71
- Working capital turns (x)
BVPS
129.80
166.17
210.08
272.92
- ROE
DPS
9.41
30.58
14.11
14.11
- ROIC
Shares outstanding
1,957
1,957
1,957
1,957
- ROIC (net of cash)
Balance sheet
Cash flow statement
FY11
FY12
FY13E
FY14E FY15E Rs in millions, year end Mar
50,905
67,722 130,055 228,058
- Net income
Accounts receivable
82,016 114,992 129,412 146,082
- Depr. & amortization
Inventories
13,489
22,478
32,163
36,307
- Change in working capital
Others
22,536
25,045
34,744
39,220
- Other
Current assets
168,946 230,236 326,374 449,666
- Cash flow from operations
LT investments
- Capex
Net fixed assets
51,996
64,548
72,239
77,143
- Disposal/(purchase)
Others
Total Assets
327,883 411,990 507,733 639,949
- Free cash flow
Liabilities
ST Loans
328
112
1,844
1,844
- Debt raised/(repaid)
Payables
0
0
0
0
- Other
Others
59,335
69,064
80,289
89,512
- Dividends paid
59,663
69,175
82,134
91,356
- Cash flow from financing
Long-term debt
386
1,154
1,184
1,184
Other liabilities
10,643
11,152
7,465
7,465
- Net change in cash
Total Liabilities
70,692
81,481
90,782 100,005
- Beginning cash
257,191 330,509 416,951 539,944
- Ending cash
FY11
45.3%
29.4%
28.1%
23.4%
0.0%
17.2%
FY12
45.9%
28.8%
27.6%
21.8%
0.0%
18.2%
FY13E
45.7%
28.2%
27.1%
21.9%
0.0%
18.5%
FY14E FY15E
45.3%
28.1%
27.1%
21.8%
0.0%
18.2%
-
24.3%
31.6%
26.8%
31.0%
29.0%
22.0%
27.2%
24.8%
28.0%
11.2%
11.0%
10.6%
26.8%
22.1%
28.0%
10.6%
-21.1%
-19.5%
1.24
6.39
37.0%
48.7%
-
-22.5%
-20.1%
1.32
5.24
36.2%
45.5%
-
-33.8%
-30.5%
1.35
5.45
36.4%
45.0%
-
-46.7%
-41.7%
1.21
5.31
31.5%
43.3%
-
FY11
FY12
FY13E
FY14E FY15E
87,163.6 106,383.1 136,164.2 150,613.6
4,924
5,807
6,458
7,096
-16,194 -34,744 -22,579 -16,067
0
0
0
0
77,084
78,556 121,439 143,127
0
0
0
0
0
0
0
0
77,084
78,556 121,439 143,127
0
0
0
0
-2,703
552
1,762
0
1,816
1,527
-4,579
-1,484
-18,413 -59,843 -27,620 -27,620
-43,518 -33,115 -53,044 -29,104
4,131
46,774
50,905
16,817
50,905
67,722
62,333
67,722
130,055
98,003
130,055
228,058
391
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Televisa
Price: $22.24
www.televisa.com.mx
End Date: Dec 2013
Company overview
Televisa (TV) is a media company producing content, operating free-to-air television
channels in Mexico, as well as a cable network and a DTH company, among other
smaller business. More recently the company has acquired 50% of Iusacell, a small
mobile operator in Mexico. TV is the largest provider of media content in Spanish in
the world, which accounted for 48% of its revenue in 2011. Pay-TV is the second
largest segment, accounting for 41% of revenues 2011.
Investment case
Televisa would benefit from higher growth in advertising in Mexico, as well as for the
continued growth of Pay-TV services in the country. Regulatory measures intended to
increase competition in the mobile arena should also be positive for the company, as
they would support Iusacell.
Brazil
LatAm TMT
(55-11) 4950-3427
andre.baggio@jpmorgan.com
24
$
22
20
18
Nov-11
We believe recent weakness in broadcasting revenues coupled with uncertainty about
Iusacell has been weighing on share prices. TV trades at 16x 12m fwd P/E, in line with
its historical five-year average.
Feb-12
May-12
Aug-12
Nov-12
TV share price ($)

MEXBOL (rebased)
Source: Bloomberg.

The main risk we see for 2013 earnings is a downgrade in Mexican GDP growth
expectations, which would result in lower advertising spending, affecting the core
business of Televisa.
Our Dec 2013 $31 PT is based on a 50/50 blend of (1) SoTP valuation of each
operating segment; and (2) DCF assuming 8.4% WACC and 2.5% terminal growth in
US$ nominal terms. At our target, TV would trade at 16.7x P/E. Risks: Weak
performance on Iusacell might prevent the stock from appreciating in a market
recovery.
Grupo Televisa, S.A.B. (TV;TV US)

FYE Dec
2011A
EPS (Ps)
FY
12.18
Bloomberg EPS FY (Ps)
13.10
Revenues FY (Ps mn)
62,582
EBITDA FY (Ps mn)
23,635
EBITDA Margin FY (Ps)
37.8%
P/E FY
24.4
2012E
2013E
2014E
2015E
13.80
12.73
70,051
27,420
39.1%
21.5
19.79
15.07
77,049
30,086
39.0%
15.0
23.66
16.04
84,434
32,374
38.3%
12.6
26.78
89,869
33,744
37.5%
11.1
Source: Company data, Bloomberg, J.P. Morgan estimates. EPS defined as: Net Income in Mx Ps divided by total
ADRs Outstanding.
392
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
Div. Yield
Debt/Total Capital
22.24
14 Nov 12
24.88 - 18.60
12,858.01
Dec
571
31.00
31 Dec 13
1.0%
35.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
Televisa: Summary of Financials

Income Statement
Revenues
Cost of goods sold
Gross Profit
SG&A
EBITDA
EBITDA margin
Depreciation
Amortisation
Net Interest Expense
Other Non-Operating Income
EBT
Taxes
Minority interest
Extraordinary
Net income
Adj.Net Income
Shares Outstanding
EPS
Adj.EPS
FY11A
62,582
(28,166)
34,415
(10,163)
23,635
37.8%
(7,362)
0
(594)
11,590
(3,410)
(1,291)
6,890
6,890
566
12.18
12.18
FY12E
70,051
0
0
0
27,420
39.1%
(8,184)
0
(475)
14,335
(4,284)
(2,167)
7,885
7,885
571
13.80
13.80
FY13E
77,049
0
0
0
30,086
39.0%
(8,289)
0
(522)
19,582
(5,683)
(2,723)
11,176
11,176
565
19.79
19.79
FY14E
84,434
0
0
0
32,374
38.3%
(8,223)
0
(573)
22,954
(6,580)
(3,208)
13,166
13,166
556
23.66
23.66
FY15E
89,869
0
0
0
33,744
37.5%
(8,211)
0
(609)
25,014
(7,063)
(3,517)
14,434
14,434
539
26.78
26.78
Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other assets
Total assets
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority interest

21,699 24,758 31,979 39,076 39,139
22,153 23,749 26,121 28,625 30,467
5,563 6,298 6,298 6,298 6,298
1,246 1,707 1,707 1,707 1,707
40,875 44,020 46,117 48,786 51,745
62,435 62,041 62,680 63,699 65,169
153,969 162,572 174,901 188,190 194,524
1,552
522
522
522
522
7,688 8,394 9,232 10,117 10,768
26,763 28,378 30,094 32,028 32,926
54,795 53,609 53,609 53,609 53,609
4,083 4,295 4,295 4,295 4,295
94,880 95,198 97,753 100,571 102,121
7,314 9,158 11,881 15,089 18,606
51,775 58,216 65,267 72,530 73,798
153,969 162,572 174,901 188,190 194,524
Net debt
34,648 29,373
8.2% 11.9% 10.0%
9.6%
6.4% Adj.Net Debt
72,441 62,782
9.4% 16.0%
9.7%
7.6%
4.2% Net Debt/Capital
23.6% 19.1%
(10.3%) 14.4% 41.7% 17.8%
9.6% Debt/Capital
38.4% 35.3%
72.8% (13.9%) 46.5% 13.6%
4.3% Net Debt/EBITDA
1.5
1.1
FY11A FY12E FY13E FY14E FY15E Valuation, Macro
FY11A FY12E
(10,005) (11,107) (10,386) (10,892) (11,170) EV/EBITDA
9.6
7.9
2,384
(470)
0
0
(293) P/E
24.4
21.5
8,897
7,659 11,218 12,740 13,284 Adj.P/E
24.4
21.5
990
1,722
1,971
2,794
6,583 P/BV
3.1
2.8
14.4% 21.8% 17.6% 21.2% 45.6% FCF yield
(7.7%)
5.5%
13
0
1,971
2,794
6,583 Dividend yield
0.6%
1.0%
1.4
1.4
1.3
1.3
1.4
(16.0%) (15.9%) (13.5%) (12.9%) (12.4%) ROE
13.3% 13.5%
(5,489) (5,019) (5,201) (5,516) (5,223)
Net revenue/Assets 40.6% 43.1%
(8.8%) (7.2%) (6.8%) (6.5%) (5.8%)
Assets/Equity
3.0
2.8
11.0% 11.3% 14.5% 15.6% 16.1%
ROIC
15.1% 17.1%
Pay-TV Subs
6,191
7,306
8,357
9,349 10,242 Shares
566
571
Broadband Subs
1,067
1,297
1,505
1,692
1,860 ADRs
566
571
Dial-Up Subs
VoIP Subs
650
768
875
971
1,057 WACC
8.4%
Circulation
- Perpetual Growth
2.5%
RGUs
7,908
9,371 10,737 12,012 13,159 Cost of equity
9.1%
Cost of debt
4.0%
Fx,Avg
12.65
13.07
12.62
12.87
13.12
Source: Company reports and J.P. Morgan estimates. EPS defined as: Net Income in Mx Ps divided by total ADRs Outstanding.
Note: Ps in millions (except per-share data).Fiscal year ends Dec
Revenue growth
EBITDA growth
Net income growth
FCF growth
Capex
Free cash flow Equity
Dividends
Share buybacks
Capex/depreciation
Capex/Sales
Working capital
Net income margin
22,152
52,525
13.6%
33.2%
0.7
FY13E
6.9
15.0
15.0
2.5
7.9%
1.2%
15,055
43,311
8.7%
31.3%
0.5
FY14E
6.0
12.6
12.6
2.2
9.1%
1.7%
14,992
36,137
8.5%
30.8%
0.4
FY15E
5.4
11.1
11.1
2.1
10.0%
4.1%
17.1%
44.1%
2.7
18.2%
44.9%
2.6
19.6%
46.2%
2.6
18.3%
565
565
19.1%
556
556
20.0%
539
539
393

21 November 2012
Adrian Mowat
(852) 2800-8599
Tencent
Overweight
www.tencent.com
Company overview
Tencent is a leading internet media company in China. The companys QQ IM
software has more than 780 million active users in China, making Tencent the largest
online community in China. Tencent operates one of the most visited portals in China,
QQ.com; Chinas No 1 social network Qzone; and popular casual gaming portal, QQ
Games. Company is also the leading player in advanced causal game and MMORPG.
China
Internet
Price: HK$275.80
Investment case
We maintain Tencent as one of our sector top picks. We expect new game launches,
opportunities from the mobile platform, and eCommerce growth with prior investments
paying off and increasing platform monetization to showcase Tencents franchise
power from its sticky QQ platform.
Dick WeiAC
(852) 2800 8535
Evan Zhou
(852) 2800 8505
Limited
260

We expect potential earnings upside to drive its share price: (1) potential upside in
gaming, with new title YL Online and Blade & Soul in 2013; (2) new open-platform
applications across QQ platforms, which also creates synergy in the QQ ecosystem, (3)
better-than-expected ad growth with online video and targeted advertising, and (4) in
medium-term mobile-related services could likely be another driver.
Risks to earnings and PT include higher-than-expected costs from investments in open
platform, Tencent Microblog, eCommerce, search, mobile platform, online videos and
online security services. Revenue growth slowdown from older games, and other
regulatory changes.
HK$
220
180
140
Nov-11
Feb-12 May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
73.5%
57.3%
1m
5.8%
0.4%
3m
18.1%
8.4%
12m
58.1%
46.6%
Source: Bloomberg.

Our Dec-13 PT of HK$306 is based on a 10-year DCF valuation (WACC of 12% and
terminal growth rate of 0). We expect Tencent to post a revenue CAGR of >20% in
2010-2015, and subsequently around 17% growth in 2016-2022. Our PT implies 24.6x
FY13E, and 19.7x FY14E adj. EPS, with 33.2%/24.9% FY13E/14E EPS growth.
(Year-end Dec, Rmb mn) FY11 FY12E FY13E FY14E

Net Sales
28,496.1 43,616.3 54,993.7 68,843.4
Operating Profit (EBIT) 11,363.8 15,798.2 21,408.1 26,853.6
EBITDA
14,026.6 19,196.0 25,276.7 31,456.6
Pre Tax Profit
12,289.1 16,172.8 22,218.2 28,145.8
Reported Net profit
10,203.1 13,191.0 18,203.7 23,087.8
Reported EPS (Rmb)
5.48
7.01
9.49 11.93
P/E (x)
40.5
31.7
23.4
18.6
Adj. EPS (Rmb)*
5.88
7.64 10.18 12.71
Adj. P/E (X)
37.8
29.1
21.8
17.5
EV/EBITDA (x)
27.5
19.8
15.1
12.1
P/B (x)
14.4
10.0
7.0
5.1
Y/E BPS (Rmb)
15.39
22.11
31.54
43.23
FY11 FY12E
ROE(%)
41
38
ROIC(%)
30
29
Cash
26,328.2 35,958.2
Equity
28,463.8 41,319.3
Qtr GAAP EPS (Rmb)
1Q
2Q
EPS (11)
1.54
1.26
EPS (12) E
1.59
1.67
EPS (13) E
2.07
2.30
1M
3M
Abs. Perf.(%)
2.9% 11.4%
Rel. Perf.(%)
0.7% 5.9%
FY13E
36
30
51,490.0
59,584.4
3Q
1.31
1.83
2.49
12M
60.4%
53.5%
FY14E
32
28
70,989.9
82,536.4
4Q
1.37
1.92
2.63
Source: Company, J. P. Morgan estimates, Bloomberg. *Note: Excluding share-base compensation, amortization from acquisition and one-time items.
394
52-Week range
Shares Outstg
Market Cap(US)
Free float
Avg daily vol.
Avg daily val (HK$)
Dividend Yield
Index (NASD)
Price Target
Price Date
281.00 - 139.80
1,851MN
US$65,851MN
0.2%
3.0MM shares
749.51MN
0.3%
21,384
306.00
06 Nov 12

21 November 2012
Adrian Mowat
(852) 2800-8599
Tencent: Summary of Financials

Revenues
Cost of goods sold
Gross Profit
S&M Expenses
G&A Expenses
Others
EBITDA
Interest income
Non-operating income (exp.)
Earnings before tax
Tax
Diluted Reported EPS (Rmb)
Adj. Diluted EPS* (Rmb)
BPS (Rmb)
DPS (Rmb)
Diluted shares outstanding (MM)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Others LT assets
Total Assets
Liabilities
ST Loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
FY10
19,646.0
6,320.2
13,325.8
-945.4
-2,836.2
0.0
9,544.2
10,323.5
293.1
0.0
0.0
9,837.4
-1,797.9
8,053.6
8,658.8
4.33
4.66
11.89
0.46
1,858.17
FY11
28,496.1
9,928.3
18,567.8
-1,920.9
-5,283.2
0.0
11,363.8
13,298.2
817.3
0.0
108.0
12,289.1
-1,874.2
10,203.1
10,935.9
5.48
5.88
15.39
0.61
1,860.30
FY12E
43,616.3
17,614.3
26,002.0
-2,368.1
-7,835.7
0.0
15,798.2
18,330.4
374.6
0.0
0.0
16,172.8
-2,917.2
13,191.0
14,377.5
7.01
7.64
22.11
0.72
1,882.02
FY13E
54,993.7
21,359.4
33,634.3
-2,781.2
-9,445.1
0.0
21,408.1
24,220.7
810.1
0.0
0.0
22,218.2
-3,956.6
18,203.7
19,517.2
9.49
10.18
31.54
0.97
1,917.63
FY14E
68,843.4
26,342.7
42,500.6
-3,865.0
-11,782.0
0.0
26,853.6
30,189.4
1,292.2
0.0
0.0
28,145.8
-5,000.2
23,087.8
24,612.5
11.93
12.71
43.23
1.22
1,935.82
FY10
22,134
1,715
0
1,524
25,374
5,272
3,680
1,505
35,830
FY11
26,328
2,021
0
7,155
35,503
8,744
6,044
6,514
56,804
FY12E
35,958
2,846
0
6,088
44,892
10,667
8,007
8,627
72,192
FY13E FY14E
51,490 70,990
3,554
4,423
0
0
7,531
9,464
62,574 84,876
10,667 10,667
12,262 17,618
8,627
8,627
94,130 121,788
5,299
1,380
6,343
13,022
0
1,051
14,073
21,757
7,999
2,244
10,940
21,183
3,733
3,424
28,341
28,464
3,609
3,783
11,984
19,376
8,511
2,986
30,873
41,319
3,609
4,477
14,963
23,049
8,511
2,986
34,546
59,584
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
S&M/sales
G&A/Sales
FY10
67.8%
52.5%
48.6%
41.0%
4.8%
14.4%
FY11
65.2%
46.7%
39.9%
35.8%
6.7%
18.5%
FY12E
59.6%
42.0%
36.2%
30.2%
5.4%
18.0%
FY13E
61.2%
44.0%
38.9%
33.1%
5.1%
17.2%
FY14E
61.7%
43.9%
39.0%
33.5%
5.6%
17.1%
Sales growth
Net profit growth
Diluted EPS growth
57.9%
60.6%
56.2%
55.1%
45.0%
19.1%
26.7%
26.5%
53.1%
39.0%
29.3%
27.8%
26.1%
35.5%
38.0%
35.4%
25.2%
25.4%
26.8%
25.6%

Net debt to equity
Asset turnover
ROE
ROIC
-62.2%
-77.4%
0.74
1.88
47.5%
42.1%
-36.3%
-51.3%
0.62
2.14
40.6%
30.2%
-44.6%
-57.7%
0.68
2.19
37.8%
29.3%
-54.9%
-66.1%
0.66
1.69
36.1%
29.7%
-62.2%
-71.3%
0.64
1.42
32.5%
28.0%
Cash flow statement

Net income
Other
Capex
Other investing cashflow
Free cash flow
Other
Dividends paid
FY10
8,053.6 10,203.1 13,191.0 18,203.7 23,087.8
779
1,934
2,532
2,813
3,336
1,926
-475
2,825
1,522
1,904
1,561
1,695
930
1,114
1,325
12,319 13,358 19,478 23,652 29,653
-7,715 -11,883 -6,608 -7,068 -8,692
-4,300 -3,472 -1,924
0
0
-12,015 -15,355 -8,532 -7,068 -8,692
4,604
1,475 12,870 16,584 20,961
1,808 -2,937
615
826
906
5,097
6,434
387
0
0
-1,954
1,984
-999
-58
-58
-838 -1,108 -1,319 -1,820 -2,309
4,112
4,373 -1,316 -1,052 -1,461
3,609
5,524
18,622
27,755
8,511
4,365
2,204
9,630
39,252 Net Effect of Exch. Rate Chg.
-52
-172
0
11,354 22,134 26,328
Ending cash
22,134 26,328 35,958
Source: Company reports and J.P. Morgan estimates. *Note: Excluding share-base compensation, amortization from acquisition and one-time items.
15,532
0
35,958
51,490
19,500
0
51,490
70,990
395
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Price: Bt71.50
www.thaiuniongroup.com
Company overview
TUF is now leading processor and exporter of frozen seafoods with canned tuna as the
main product. Acquisition of facilities and brand is the main growth strategy. Its
position in the industry gets a big leg up by its acquisition of MWB in Europe. TUF is
one of the few companies in Thailand that owns a brand recognized globally, such as
Chicken of the Sea, John West, Petite Navire and many more. In Thailand its canned
tuna is known as Sealect and the snacks are under the name Fisho.
Thailand
Food & Food Manufacture
Kae Pornpunnarath, CFAAC
(66-2) 684 2679
kae.pornpunnarath@jpmorgan.com
Bloomberg JPMA KPORNPUNNARATH
<GO>
Investment case
We believe low-cost production base and strong distribution network will ensure
volume growth despite a mature tuna business, while margins could be sustained
through its ability to pass on costs. Realization of synergies with MW Brands is still
ongoing, in our view. Catalysts are potential M&A, sales growth acceleration from
2H12, and incremental margin expansion.
80
70
Bt
60
50
Nov-11

The rights offering earlier this year to ease the stretched B/S has reaffirmed TUFs
commitment to M&A as a key growth strategy and also a share price driver. Past
records indicate TUFs ability to locate strategic-focused deals with potential synergies
and new market access.
Feb-12
May-12
Aug-12
Nov-12
TUF.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
21.7%
-4.5%
1m
-5.9%
-5.1%
3m
0.4%
-6.2%
12m
30.0%
-1.5%
Source: Bloomberg.

GPM deterioration caused by rapid fluctuation in raw material prices. Highly
competitive landscape in the US could remain the key challenge.
We value TUF at Bt90 (Dec-13) pegged to 15x P/E, 1.5 S.D. above its historical
average which we believe is justified by rising contribution from consumer brands post
MW Brands acquisition. Risks: Inability to pass on rising costs, removal of EU's
preferential tariff, labor shortage, and Baht appreciation.
Thai Union Frozen Products (Reuters: TUF.BK, Bloomberg: TUF TB)
FY10A
FY11A
FY12E
FY13E
Revenue (Bt mn)
71,507
98,670
111,000
124,941
Net Profit (Bt mn)
2,873.7
5,074.5
5,882.4
7,216.3
EPS (Bt)
2.93
4.99
5.22
5.98
DPS (Bt)
1.66
1.47
2.67
2.99
Revenue growth (%)
3.8%
37.9%
12.5%
12.5%
EPS growth (%)
-17.2%
70.4%
4.5%
14.6%
ROCE
9.0%
13.2%
13.8%
15.0%
ROE
15.4%
22.4%
18.8%
18.0%
P/E (x)
24.4
14.3
13.7
12.0
P/BV (x)
3.5
3.0
2.3
2.1
EV/EBITDA (x)
24.2
13.0
10.7
9.3
Dividend Yield
2.3%
2.1%
3.7%
4.2%
396
FY14E
135,967
8,072.1
6.62
3.31
8.8%
10.8%
15.7%
18.3%
10.8
1.9
8.4
4.6%
Company Data
Shares O/S (mn)
Market cap (Bt mn)
Market cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
SET
Exchange Rate
Fiscal Year End
1,148
82,053
2,672
71.50
08 Nov 12
53.4%
2.80
205.94
6.71
1,294
30.71
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Thai Union Frozen Products: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
Cash flow statement

FY10
71,507 98,670 111,000 124,941 135,967 EBIT
3.8% 37.9% 12.5% 12.5%
-7.9% 89.8% 13.1% 15.2%
9.6% Taxes
3,909 8,091
NM 107.0% 13.6% 16.2%
9.9%
5.4%
8.1%
8.2%
8.5%
8.6% Capex
-758 -2,262 -1,882 -1,501 -1,469 Disposal/(purchase)
3,174 5,912
7,424
9,314 10,419 Net Interest
-19.2% 86.3% 25.6% 25.5% 11.9% Other
-629
-192
-358
-826
-924 Free cash flow
19.8%
3.3%
4.8%
8.9%
8.9%
-14.1% 76.6% 15.9% 22.7% 11.9% Debt raised/(repaid)
1,016 1,016
1,207
1,207
1,253 Other
2.93
4.99
5.22
5.98
6.62 Dividends paid
(17.2%) 70.4%
4.5% 14.6% 10.8% Beginning cash
Ending cash
DPS
Ratio Analysis
FY10
1,037
903
847
750
1,144 EBITDA margin
20,934 26,132 31,057 34,548 37,243 Net margin
2,811 1,735
1,735
1,735
1,735
34,001 39,930 46,194 51,166 55,502
950 1,031
1,643
1,643
1,643 Sales growth
74,777 83,230 91,359 98,299 103,485 EPS growth
12,080 15,461 15,461 15,461 15,461
2,952 1,762
1,762
1,762
1,762 Sales/assets
20,941 25,142 27,615 28,877 29,891 Assets/equity
25,392 24,306 15,306 15,806 14,306 ROE
5,209 6,713
6,713
6,713
6,713 ROCE
51,541 56,161 49,633 51,396 50,909
20,967 24,418 38,038 41,943 46,193
20.64 24.03
31.51
34.74
36.87
FY10
3,909
1,206
-573
-629
3,423

8,091 9,190 10,682 11,741
1,616 1,791 1,968 2,123
-1,864 -3,847 -3,805 -2,929
-192
-358
-826
-924
5,462 4,863 6,651 8,689
-6,018
-758
-748
-2,595
-3,179 -3,045 -3,936 -2,972

-2,262 -1,882 -1,501 -1,469
682
0
0
0
2,283 1,818 2,715 5,716
73
25,222
3,591
-1,996
728
1,037
1.66
0 9,534
0
0
2,295 -9,000
500 -1,500
-2,666
0
0
0
-1,996 -1,796 -3,311 -3,822
1,037
903
847
750
903
847
750 1,144
1.47
2.67
2.99
3.31
FY10
7.1%
5.4%
4.0%

9.8% 9.8% 10.1% 10.1%
8.1% 8.2% 8.5% 8.6%
5.1% 5.3% 5.7% 5.9%
0.1%
3.8%
-14.1%
(17.2%)
6.75
33.1% 1.3% 5.1% 7.8%

37.9% 12.5% 12.5% 8.8%
76.6% 15.9% 22.7% 11.9%
70.4% 4.5% 14.6% 10.8%
4.29
5.84
8.43
9.44
173.8% 159.2% 78.7% 72.8% 62.0%

1.30
1.26
1.28
1.32
1.35
3.57
3.41
2.40
2.34
2.24
15.4% 22.4% 18.8% 18.0% 18.3%
9.0% 13.2% 13.8% 15.0% 15.7%
397
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
Tim Participaes
Price: R$8.02
www.tim.com.br
End Date: Dec 2013
Company overview
Tim provides mobile voice and data and long distance services countrywide, as well as
corporate data, being almost a pure mobile pay in Brazil. In terms of mobile subs, it
ranks #2 in the country with 27% subscriber share. Tim introduced innovative concepts
to the Brazilian mobile industry, such as pay-per-call and unlimited calls (on net traffic
only). The company is controlled by Telecom Italia, which owns 67% of its capital.
Brazil
LatAm TMT
(55-11) 4950-3427
Investment case
The stock might re-rate if it is able to show sustainable high-single-digit growth in
mobile service revenue coupled with the maintenance of capex at the R$3bn/year level.
Better growth might come from a successful marketing strategy, with Tim gaining
subscriber share (25%+ share of monthly adds would be a positive indicator).
Tim has experienced a de-rating since March 2012, when it was trading at 5.0x 12m
fwd EV/EBITDA, declining 34% to 3.3x currently, following a series of negative
events including the departure of the CEO, a sales ban of two weeks applied to the
company in July due to network quality issues, and revisions in the interconnection
model.
12
10
R$
8
6
Nov-11
Feb-12
May-12
Aug-12
Nov-12
TIMP3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

Tim earnings might disappoint if competitive intensity increases in 2013, thus forcing a
decline in prices and a ramp-up in subsidies in the industry. On the other hand, if Tim
is able to re-establish differentiation from competitors, there would be upside risk to
earnings.
Our Dec 2013 PT of R$11 is based on a 50/50 blend of (1) relative valuation assuming
Tim would trade at 12x P/E, in line with peers, and (2) DCF, assuming 8% WACC and
2% perpetuity growth, in US$ nominal terms. At our PT, Tim would trade at 4.2x
EV/EBITDA and 14.1x P/E. Risks: Tim might not follow the market in a recovery if
th
titi
i
t
l t
i t ifi
TIM Participacoes (TIMP3.SA;TIMP3 BZ)
FYE Dec
2011A
EPS (R$)
FY
0.59
0.51
Revenues FY (R$ mn)
17,224
EBITDA FY (R$ mn)
4,768
EBITDA Margin FY (R$)
28%
P/E FY
13.3
2012E
2013E
2014E
2015E
0.61
0.61
19,044
5,021
26%
12.9
0.74
0.72
20,299
5,479
27%
10.7
0.78
0.82
21,578
5,967
28%
10.1
0.87
22,735
6,359
28%
9.1
398
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
Div. Yield
Debt/Total Capital
8.02
14 Nov 12
11.89 - 6.66
19,117.18
Dec
2,417
11.00
31 Dec 13
3.5%
14.7%
Adrian Mowat
(852) 2800-8599

21 November 2012
TIM Participacoes: Summary of Financials

Income Statement
Net Revenue
Cash Costs
EBITDA
EBITDA margin
Depreciation and Amortisation
EBIT
Net interest expense
Other nonoperating income
EBT
Taxes
Minority interest
Extraordinary
Net Income
Adj. Net Income
Shares Outstanding
EPS
Adj. EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth

17,224 19,044 20,299 21,578 22,735 Cash
4,768
5,021
5,479
5,967
6,359 Inventories
28%
26%
27%
28%
28% Other current assets
(2,598) (2,665) (2,837) (2,978) (3,166) Net PP&E
2,170
2,356
2,641
2,989
3,192 Other Assets
(137)
(96)
(119)
(75)
(75) Total assets
0
0
0
0
0 Short-term debt
1,933
2,164
2,523
2,913
3,117 Accounts payable
(583)
(682)
(729) (1,026) (1,015) Other current liabilities
0
0
0
0
0 Long-term debt
- Deferred taxes
1,350
1,482
1,794
1,888
2,101 Other liabilities
1,350
1,482
1,794
1,888
2,101 Total liabilities
2,416
2,417
2,417
2,417
2,417 Minority interest
0.59
0.61
0.74
0.78
0.87 Shareholders' equity
0.56
0.61
0.74
0.78
0.87 Liabilities + Equity
19.1% 10.6%
6.6%
6.3%
5.4% Net Debt
13.7%
5.3%
9.1%
8.9%
6.6% Adj. Net Debt
(39.0%)
9.8% 21.0%
5.3% 11.3% Net Debt/Capital
(3.5%) (77.5%) 403.5% (8.5%) 17.6% Debt/Capital
Net Debt/EBITDA
Capex
(3,002) (3,432) (3,312) (3,659) (3,851) EV/EBITDA
141
(518)
(12)
(12)
(11) Adj. P/E
Free Cash Flow Equity
1153.21 259.51 1306.68 1195.11 1405.97 P/BV
Dividends/Share
0.20
0.28
0.31
0.49
0.58
36.0% 45.5% 41.3% 63.3% 66.9% FCF yield
Consolidated Dividends
486
675
741
1,195
1,406 Dividend yield
Share buybacks
0
0
0
0
0 ROE
Capex/Depreciation
1.2
1.3
1.2
1.2
1.2 Net revenue/Assets
Capex/Sales
17.4% 18.0% 16.3% 17.0% 16.9% Assets/Equity
Working capital
(336)
183
195
207
218
(1.9%)
1.0%
1.0%
1.0%
1.0% ROIC
Net income margin
7.8%
7.8%
8.8%
8.7%
9.2% Shares
ADRs
Lines in Service
0
0
0
0
0
Broadband Subs
0.0
40.0
190.0
340.0
490.0
Broadband Net Adds
0
0
0
0
0 WACC
Mobile Subs
64,083 74,943 83,361 89,842 95,787 Perpetual Growth
Mobile Net Adds
13,055 10,860
8,418
6,482
5,945 Cost of equity
Mobile ARPU
21
19
17
17
16 Cost of debt
Mobile MOU
129
0
0
0
0 Subsidiary Share
PayTV subs
0.0
0.0
0.0
0.0
0.0
Fx, Avg
1.72
1.95
2.01
2.07
2.14
FY11A
FY12E
FY13E
FY14E
FY15E
3,265
2,259
2,825
2,825
2,825
3,286
3,818
4,070
4,326
4,559
273
315
315
315
315
1,463
1,550
1,672
1,795
1,907
6,624
7,783
8,258
8,938
9,623
8,527
8,858
8,858
8,858
8,858
23,438
24,584
25,997
27,058
28,086
1,090
1,062
1,062
1,062
1,062
0
0
0
0
0
5,705
5,572
5,933
6,301
6,634
2,570
2,559
2,559
2,559
2,559
1,115
1,333
1,333
1,333
1,333
10,481
10,527
10,888
11,255
11,588
0
0
0
0
0
12,957
14,057
15,110
15,802
16,498
23438.22 24583.90 25997.39 27057.67 28086.04
441
1,319
753
753
753
441
1,319
753
753
753
1.9%
5.4%
2.9%
2.8%
2.7%
15.6%
14.7%
13.9%
13.4%
12.9%
0.1
0.3
0.1
0.1
0.1
FY11A
FY12E
FY13E
FY14E
FY15E
4.3
4.3
3.8
3.5
3.3
14.2
12.9
10.7
10.1
9.1
1.6
1.4
1.3
1.3
1.2
5.7%
2.5%
10.4%
0.7
1.8
1.3%
3.5%
10.5%
0.8
1.7
6.5%
3.9%
11.9%
0.8
1.7
5.9%
6.3%
11.9%
0.8
1.7
7.0%
7.4%
12.7%
0.8
1.7
9.5%
2,416
483
9.5%
2,417
483
10.2%
2,417
483
10.1%
2,417
483
10.8%
2,417
483
7.9%
2.0%
8.3%
3.5%
399
Adrian Mowat
(852) 2800-8599

21 November 2012
TMK
Overweight
www.tmk-group.com
Company overview
TMK is Russias largest manufacturer and exporter of steel pipes and ranks among the
global top three pipe producers with manufacturing facilities in Russia, Europe and the
US. Most of the companys customers are Russians/global oil & gas majors.
Russia
Metals & Mining
Price: $14.56
Yuriy A VlasovAC
(7-495) 967-7033
yuriy.a.vlasov@jpmorgan.com
Investment case
TMK topline is driven by the RU and the US oil & gas capital expenditure. In Russia
we forecast integrated oils 2013 downstream capex to grow (+10% y/y) while we
estimate a change to positive dynamics for Russian gas capex of +35% y/y (from -35%
in 2012). In the US we see stability in oil rig count (+1% y/y, 4Q13) and recovery in
gas rig count (+18% y/y, 4Q13). On the top of the well-publicized South Stream
project, investors will become familiar with Chayanda, the new Gazprom pipeline
linking Chayanda/Kovykta fields to the Pacific Ocean coast (announced in late
Oct12). We estimate LD capacity of the above projects at 5.3 mnt (South Stream, 4
lines) and 9.4 mnt (Chayanda, 2 lines) over 2013-16 against TMK 2012 LD output of
0.4 mnt.
Bloomberg JPMA VLASOV<GO>
Roman M Gorokhov
(7-495) 967-7057
roman.m.gorokhov@jpmorgan.com
16
14
$ 12
10
8

Providing exposure to the Russian/global energy capex, TMK is forecast to grow 2013
EPS by 15% y/y and, courtesy of moderate capex requirements, should deliver 2013
FCF growth of 45% y/y and 9% 2013E FCF yield.
Nov-11
Abs
Feb-12
YTD
60.7%
May-12
Aug-12
1m
-9.2%
Nov-12
3m
-3.9%
12m
18.0%
Source: Bloomberg.

Official announcement of South Stream development is the key upside risk to earnings
while lower gas/integrated oils capex and lower US gas pricing is the main downside
risk.
To value TMK, we use a combination of DCF and comparable multiple analysis. Given
TMKs relatively stable production plans, we assign a 33.3% weight to our DCF model
while the remaining 66.7% is assigned to our comparative valuation. For the latter we
use 2013E EV/EBITDA of 6.5x and 2013E PE of 11.0x (both based on current
Bloomberg industry valuations). Our analysis delivers an end-2013 PT of $19.0/GDR,
implying 31% upside from current levels and 2013E EV/EBITDA of 6.6x and 2013E
PE of 12.4x (COB 5 November 2012, Bloomberg). Risks: lower energy prices may
affect pipe demand while currency risk is also a factor due to TMKs international
Trubnaya Metalurgicheskaya Kompaniya (TRMKq.L;TMKS LI)
FYE Dec
2011A
2012E
Adj. EPS FY ($)
1.62
1.46
Adj P/E FY
9.0
10.0
EBITDA FY ($ mn)
1,050
1,090
EV/EBITDA FY
7.1
6.3
EBITDA margin FY
15.5%
15.5%
P/BV FY
1.9
1.6
ROE FY
21.9%
17.2%
Revenue FY ($ mn)
6,753
7,039
400
2013E
1.68
8.7
1,170
5.7
15.6%
1.4
17.2%
7,506
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
14.56
02-Nov-12
19.00
31 Dec 13
16.30 - 8.30
3.4
234

21 November 2012
Adrian Mowat
(852) 2800-8599
TMK: Summary of Financials

Revenues
% Change Y/Y
Gross Margin (%)
EBITDA
% Change Y/Y
EBITDA Margin (%)
EBIT
% Change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares Outstanding (GDR)
EPS (Reported)
% Change Y/Y
Balance sheet
Accounts Receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
BVPS (GDR)
FY11
6,753
21.1%
21.4%
1,050
33.6%
15.5%
814
36.2%
12.0%
(271)
543
192.6%
(159)
29.4%
379
272.1%
234.4
1.62
272.1%
FY12E
7,039
4.2%
20.7%
1,090
3.8%
15.5%
707
-13.1%
10.0%
(273)
434
-20.1%
(87)
20.0%
342
-9.7%
234.4
1.46
(9.7%)
FY13E
7,506
6.6%
20.9%
1,170
7.4%
15.6%
775
9.6%
10.3%
(276)
499
15.0%
(100)
20.0%
394
15.2%
234.4
1.68
15.2%
FY11
231
766
1,418
206
2,625
FY12E
116
806
1,493
206
2,625
FY13E
10
857
1,587
206
2,665
2
3,348
7,132
599
863
243
1,705
3,188
414
5,307
1,825
8
2
3,445
7,230
599
908
243
1,750
2,979
414
5,144
2,086
9
2
3,480
7,305
599
966
243
1,808
2,696
414
4,918
2,387
10
Cash flow statement

7,909 EBIT
1,309 Taxes
16.5%
901 Capex
16.2% Disposals/(purchase)
11.4% Net Interest
622
20.0% Other
493 Dividends paid
234.4 Ending cash
2.10 DPS (GDR)
25.0%
Ratio Analysis
3 EBITDA margin
1,649 Net Profit margin
206 SG&A/Sales
2,753
2 Sales growth
7,315 EPS growth
2,294 Assets/Equity
414 ROE
4,554 ROCE
2,761
12
FY11
543
336
62
(107)
1,112
FY12E
434
353
(69)
(87)
1,021
FY13E
499
365
(88)
(100)
1,082
FY14E
622
378
(58)
(124)
1,251
(402)
(271)
122
(450)
(273)
181
(400)
(276)
276
(300)
(279)
518
0
4
158
229
0.21
0
-206
229
116
0.37
0
-280
116
10
0.42
0
-399
10
3
0.53
FY11
15.5%
10.1%
5.6%
-6.1%
FY12E
15.5%
10.0%
4.9%
-6.1%
FY13E
15.6%
10.3%
5.3%
-6.0%
FY14E
16.5%
11.4%
6.2%
-6.0%
21.1%
21.1%
272.1%
272.1%
3.0
50.5%
188.0%
0.9
3.9
21.9%
-
4.2%
4.2%
-9.7%
(9.7%)
2.6
48.5%
161.0%
1.0
3.5
17.2%
-
6.6%
6.6%
15.2%
15.2%
2.8
45.6%
134.4%
1.0
3.1
17.2%
-
5.4%
5.4%
25.0%
25.0%
3.2
40.1%
102.9%
1.1
2.6
18.5%
-
401
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.tpk.com
Company overview
TPK was founded in 2003. It is the co-inventor of glass-based projected capacitive (PCap) touch solutions and the first company to undertake mass production of these. TPK
has five major product categories: 1) cover glass, 2) touch sensor, 3) touch module, 4)
touch display, and 5) touch system. It is the largest touch panel maker in the world and
the key supplier to Apple.
Taiwan
Price: NT$415.50
Narci ChangAC
(886-2) 2725-9899
narci.h.chang@jpmorgan.com
Bloomberg JPMA CHANG <GO>
J.P. Morgan Securities (Taiwan) Limited.
Investment case
With the launches of all tablet PCs, coupled with Windows 8, we believe TPK stands
out as a beneficiary on both fronts. If Windows 8 is well-received by consumers, the
touch panel addressable market could expand meaningfully, as consumers buy larger
touchscreens. If Windows 8 fails, consumers might spend more dollars buying tablet or
hybrid products. In either case, TPK has secured dominant market share.
450
400
NT$ 350
300
250
Nov-11

Full-lamination has emerged as a dominant trend in tablet and NBs. Full-lamination
products enjoy higher profits per box than edge-lamination. Large size touch panels
driven by touchscreen NBs also enjoy better profits than smaller size panels.
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
45.3%
41.1%
1m
9.3%
14.2%
3m
16.1%
17.2%
12m
12.2%
16.9%
Source: Bloomberg.

The design-in options for next years 9.7" iPad would be One Glass Solution or filmbased. Either way we believe TPK could secure the orders. Profit contribution per unit
could also increase as compared with the previous structure. Touch panel bundle rate in
NBs is another swing factor; we see our estimate of 10% being the conservative case.
Our Dec-13 price target of NT$550 is based on 11x 2013E P/E (the tech upstream
average P/E). The key risks include: (1) Apple adopts in-cell for future iPads; (2)
lower-than-expected touch panel penetration into smartphones/tablets/PCs; (3) fasterthan-expected contraction in margins due to competition from Hon Hai/GIS.
Sales
Operating Profit
EBITDA
Net profit
EPS
BPS (NT$)
P/E (x)
P/BV (x)
ROE (%)
Net Debt

FY11 FY12E
143.4 158.5 214.9 253.3 Sales growth
140.6% 10.6%
16.3
16.7 22.6 24.5 OP growth
161.9% 2.5%
19.2
21.6 29.3 33.0 NP growth
139.2% 10.3%
11.3
12.5 16.6 18.1 Quarterly EPS (NT$)
1Q
2Q
37.2
40.7 50.6 55.4 EPS (11)
8.1 12.2
96.3 114.6 148.2 181.2 EPS (12) E
8.6
9.7
11.2
10.2
8.2
7.5 EPS (13) E
9.2 10.8
4.3
3.6
2.8
2.3 Difference (%)
36.1
51.4
37.4 38.5 33.6 Price Target
550
14.3
15.6
6.3 -1.5 Consensus PT
404
402
FY13E
35.5%
35.3%
32.3%
3Q
11.9
9.8
13.8
FY14E
17.9%
8.3%
9.4%
4Q
5.0
12.6
16.8
Date of Price
52-Week range
Market Cap
Market Cap
Share Out. (Com)
Free float
Avg daily val
Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Exchange Rate
08 Nov 12
NT$444.50 - 250.80
NT$128B
US$4,392MM
309MM
74.0%
NT$2.4B
79.40MM
6.1MM shares
3.6
29.25
Adrian Mowat
(852) 2800-8599

21 November 2012
TPK Holding Co., Ltd.: Summary of Financials

FY10
FY11
Revenues
59,599 143,372
Cost of goods sold
-49,582 -119,179
Gross Profit
10,017 24,193
R&D expenses
-1,574 -3,491
SG&A expenses
-2,210 -4,378
6,232 16,324
EBITDA
7,292 19,201
Interest income
16
161
Interest expense
-87
-428
-71
-267
-299 -1,943
Earnings before tax
5,933 14,381
Tax
1,185
3,153
4,742.6 11,344.3
4,749 11,227
EPS (reported)
17.64
37.21
EPS (adjusted)
17.67
36.83
BVPS
48.52
96.31
DPS
0.00
0.00
Shares outstanding
305
305
Balance sheet
FY10
FY11
5,564 10,383
Accounts receivable
11,999
7,853
Inventories
3,056 11,868
Others
1,668 12,308
Current assets
22,287 42,412
LT investments
0
4,120
Net fixed assets
17,973 43,760
Others
1,670
2,661
Total Assets
41,929 92,953
Liabilities
ST Loans
3,657
5,470
Payables
13,927 26,092
Others
5,858 12,752
23,441 44,314
Long-term debt
3,605 19,212
Other liabilities
91
65
Total Liabilities
27,136 63,591
14,793 29,363
Ratio Analysis
158,515 214,852 253,305 Gross margin
-132,030 181,348 216,414 EBITDA margin
-4,781 -5,281 -5,705 Net margin
-4,966 -5,573 -6,665 R&D/sales
16,739 22,650 24,520 SG&A/Sales
21,638 29,282 33,002
435
484
694 Sales growth
-694
-799
-259
-314
-306
-229
16,433 22,421 24,537
3,540
4,933
12,511.2 16,550.3 18,111.9 Net debt to total capital
40.74
50.61
41.99
50.61
114.59 148.24 181.18 ROE
15.11
16.97
22.45 ROIC
327
327
Cash flow statement
15,252 25,553 31,609 Net income
7,085 11,122 12,398 Other
3,639
3,725
3,826 Capex
2,576
2,575
115,453 156,467 174,126 Free cash flow
30,822 50,624 56,326 Other
16,208 25,444 28,363 Dividends paid
20,205 20,841 18,505
111
115
77,981 107,993 114,880 Beginning cash
37,472 48,474 59,246 Ending cash
FY10
16.8%
12.2%
10.5%
8.0%
2.6%
3.7%
FY11
16.9%
13.4%
11.4%
7.9%
2.4%
3.1%
FY12E
16.7%
13.7%
10.6%
7.9%
3.0%
3.1%
FY13E
15.6%
13.6%
10.5%
7.7%
2.5%
2.6%
FY14E
14.6%
13.0%
9.7%
7.2%
2.3%
2.6%
218.6%
138.6%
104.7%
46.9%
140.6%
161.9%
139.2%
110.9%
10.6%
2.5%
10.3%
9.5%
35.5%
35.3%
32.3%
24.2%
17.9%
8.3%
9.4%
9.4%
102.17
11.5%
11.5%
2.25
47.2%
31.5%
41.5%
71.88
37.6%
48.7%
2.13
51.4%
28.7%
36.2%
83.54
25.5%
41.6%
1.52
37.4%
19.1%
24.1%
93.11
8.4%
12.9%
1.58
38.5%
21.0%
28.9%
389.19
-1.8%
-2.6%
1.53
33.6%
20.1%
30.2%
FY10
4,742.6
1,059
2,268
3,793
8,076
-13,073
0
-13,981
-4,997
6,160
5,074
-1,436
0
9,799
3,893
1,671
5,564

11,344.3 12,511.2 16,550.3 18,111.9
2,877
4,899
6,632
8,482
3,753 -4,112
3,779
638
-3,746
8,679
5,198
1,643
17,858 13,681 27,899 28,258
-28,665 -10,798 -12,000 -12,000
0
0
0
0
-33,776 -10,232 -12,085 -12,103
-10,807
2,883 15,899 16,258
0
0
0
0
17,395
6,203
975 -1,733
3,342
-143
-938 -1,027
0 -4,641 -5,549 -7,340
20,737
1,420 -5,512 -10,100
4,819
5,564
10,383
4,869
10,383
15,252
10,302
15,252
25,553
6,055
25,553
31,609
403
Adrian Mowat
(852) 2800-8599

21 November 2012
Tractebel Energia
Overweight
www.tractebelenergia.com.br
Price: R$33.75
End Date: Dec 2013
Company overview
Tractebel Energia is a power generation company with 8.6GW of operating capacity
(6.9GW adjusted by ownership); the company also has projects under construction for
3.6GW (1.9GW adjusted by ownership). The largest proportion, 79.5%, of the
companys capacity, is hydroelectric, with thermoelectric plants representing 18.0%
and non-conventional renewable (biomass, wind, small-hydro) a marginal 2.5%.
Investment case
Tractebel Energia has one of the most stable cash flow outlooks in the Brazilian
utilities industry and a good track record of paying out available cash to shareholders.
The stability of its cash flow is underpinned by a combination of (1) insulation from the
concession renewal controversy due to its long-term concessions (expiring no earlier
than end of the 2020) and (2) contracts for at least over 85% of its available power
through 2015, and 62% of production via long-term contracts beyond 2020. We think
the company will likely use this stable and strong cash flow to fund a 100% dividend
payout, and we expect a stable 8-8.5% dividend yield between 2013 and 2015.
Brazil
Utilities
(1-212) 622-0289
gabriel.salas@jpmorgan.com
36
R$
32
28
24
Nov-11
Feb-12
May-12
Aug-12
Nov-12
TBLE3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Tractebel has been a solid performer in 2012, gaining 19.3% ytd compared to a utilities
industry that has lost 6.8% ytd and the wider Bovespa indexs 2.9% ytd loss.
Nevertheless, we note that TBLE3s sustainable long-term free cash flow yield and
dividend yield of ~9% are much more attractive than the sectors figures (7%), despite
Tractebel Energias lower regulatory risk and stronger earnings growth profile.
The key risk for Tractebel Energias 2013 earnings and long-term ROIC is a potentially
dilutive acquisition of the R$15.1bn, 3.75GW Jirau hydroelectric power plant. Jirau is
60% owned by Tractebel Energias parent, GDF Suez. Once GDF Suez completes the
construction of Jirautechnically, when Jirau starts commercial operationthe plant
will be sold to Tractebel Energia. This related-party transaction carries obvious
corporate governance risk as the transfer could be done at above market prices.
However, we think Tractebel Energia has designed protocols that provide protection to
minority shareholders, including a committee of independent board members.
Our price target of R$37 for Dec 2013 implies upside potential of 12%. In addition to a
dilutive acquisition of Jirau, we note that the stocks main risk is an increase in interest
rates, which would have a double-whammy effect of reducing the attractiveness of the
companys high dividend yield while increasing the financial cost of the company.
Tractebel Energia (TBLE3.SA;TBLE3 BZ)
FYE Dec
EPS Reported (R$)
FY
2012E
2013E
2.59
2.53
Source: Company data, Bloomberg, J.P. Morgan estimates. 'Bloomberg' above denotes Bloomberg consensus estimates..
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
33.75
14 Nov 12
38.01 - 27.55
22,030.04
Dec
653
37.00
31 Dec 13
Note: price target and end date as of 16 Nov 2012
404
Adrian Mowat
(852) 2800-8599

21 November 2012
Tractebel Energia: Summary of Financials

Income Statement
Net Revenues
Cost and Expenses
EBITDA
EBITDA margin (%)
Depreciation
EBIT
Net Financial Result
EBT
Taxes
Minority interest
Net income
Shares
EPS

4,327 4,980 4,965 4,985 5,015 Cash
782
1,326
1,426
1,854
2,662
542
577
577
578
579
2,887 3,242 3,333 3,425 3,609 Other current assets
289
293
297
301
304
66.7% 65.1% 67.1% 68.7% 72.0% Long Term assets
777
777
777
777
777
(493) (547)
(560)
(720) (720) Net PP&E
9,885 10,193 10,238
9,704
9,037
2,393 2,695 2,773 2,705 2,889 Other fixed assets
0
0
0
0
0
(264) (265)
(375)
(402) (370) Total assets
12,371 13,264 13,411 13,311 13,456
(109)
(89)
(47)
(47)
(43) Short-term debt
417
417
417
417
417
- Accounts payable
234
270
269
270
272
2,020 2,341 2,350 2,274 2,476 Other current liabilities
907
1,268
1,146
979
1,124
(587) (653)
(699)
(616) (676) Long-term debt
3,232
3,728
3,998
4,064
4,063
0
0
0
0
2 Other long-term liabilities
2,130
2,130
2,130
2,130
2,130
1,433 1,688 1,652 1,658 1,800 Total liabilities
6,921
7,813
7,961
7,860
8,006
653
653
653
653
653 Minority interest
0
0
0
0
0
2.20
2.59
2.53
2.54
5,450
5,450
5,450
5,450
5,450
12371.22 13263.73 13411.26 13310.65 13455.88
65
(5)
(4)
(4)
(4)
Capex
(320) (855)
(605)
(186)
(52) Net debt
3,425
3,688
3,787
3,257
2,593
FCFF
2044.8 1730.0 2025.1 2619.5 2877.8 Net debt to EBITDA
1.2
1.1
1.1
1.0
0.7
FCFE
887.70 1961.05 1919.86 2283.07 2506.52 Net Debt to Equity
62.8% 67.7% 69.5% 59.8% 47.6%
Dividends
(817) (1,327) (1,774) (1,826) (1,656) Current ratio
1.0
1.1
1.3
1.6
2.0
Dividend payout (%)
(57.0%) (78.6%) (107.4%) (110.1%) (92.0%) Interest Coverage
10.9
12.2
8.9
8.5
9.8
Nominal Capacity (avg MW)
6,904 7,318 7,963 8,508 8,558 FX rate (eop)
1.80
1.95
1.90
2.00
2.05
Distribution Customers ('000)
- Inflation (%)
6.5%
6.0%
5.0%
4.5%
4.5%
Distribution Demand (GWh)
- GDP growth (%)
2.8%
1.7%
4.1%
4.0%
4.0%
Avg.GenerationTariff ($/MWh)
138.7 152.9 152.7 159.5 168.4 Interest Rates (%,eop)
11.7%
8.5%
8.0% 10.0% 10.0%
Avg.Regulated Disco Tariff ($/MWh)
# employees
990
990
990
990
990 EV/EBITDA
8.4
7.6
7.4
Net RAB
- P/E
15.4
13.1
13.3
13.3
12.2
P/BV
3.8
3.8
3.8
3.8
3.8
Capex/depreciation
0.6
1.6
1.1
0.3
0.1 FCFE yield (%)
4.3%
9.4%
0.0%
0.0%
0.0%
Revenue/Employee ('000)
4,371 5,030 5,015 5,036 5,066 Dividend yield
(3.7%) (6.0%) (8.1%) (8.3%) (7.5%)
Net Margin (%)
33.1% 33.9% 33.3% 33.3% 35.9%
Revenues/Assets (%)
0.3
0.4
0.4
0.4
0.4 genco EV/kW capacity
3,510
3,348
2,613
2,446
2,432
Assets/Equity
2.3
2.4
2.5
2.4
2.5 disco EV/customer
ROE (%)
26.3% 31.0% 30.3% 30.4% 33.0% discoEV/Net RAB
405

21 November 2012
Adrian Mowat
(852) 2800-8599
TSMC
Overweight
www.tsmc.com
Company overview
TSMC is the worlds largest semiconductor foundry, providing wafer fabrication
services as well as semiconductor ecosystem to fabless and IDM customers. It is
further expanding its services into the backend 2.5D/3D IC packaging technologies.
Taiwan
Price: NT$90.30
Semiconductors
Rick HsuAC
Investment case
Weve been flagging our structural view about the foundry sector that the chip cycle
has become less relevant; its all about market share gains. We like companies which
are able to structurally gain market share under the mobile computing trend, and TSMC
appears to be well positioned to capitalize on this trend. We see three stories in 2013 to
support TSMCs outperformance: 1) Apples AP potential, acceleration of IDM
outsourcing from Japan, and TSMCs rising silicon value per box as the MCD gets
upgraded.
Structural market share gains have been TSMCs key attraction, and management
appears to have confirmed this view during its result that the chip cycle has become
irrelevant and TSMC will enjoy growth or strong growth in the next three years as its
capex/R&D cycle starts to pay off under the MCD cycle where TSMC is the biggest
beneficiary with its tech lead.
(886-2) 2725-9874
Rick.ic.hsu@jpmorgan.com
95
85
NT$
75
65
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
20.4%
17.0%
1m
-0.8%
5.8%
3m
13.2%
13.6%
12m
20.4%
26.1%
Source: Bloomberg.

Based on our current expectations, if TSMC fails to procure AP orders from Apple or
such orders become a low-margin business, or any demand weakness is observed in
smartphone/tablet PC sell-through (due to macro uncertainties), they will act as
downside risks to our earnings forecasts.
Our Dec-13 PT of NT$110 is based on a 3.5x ROE-adjusted P/BV, where we use our
ROE-adjusted P/BV method by comparing our normalized ROE projection of 22% pa
for TSMC in the next three to five years with its historical ROE average of 23% over
FY09-10. This works out to be a 5% discount and applying this discount to its
historical P/BV average of 3.7x yields our 3.5x target P/BV. Risks to our call are endmarket sell-through (macro) & 28/20nm execution (micro).
(Year-end Dec, NT$ B)
Revenue
Operating profit
EBITDA
Adjusted net profit
Profit growth (%)
EPS (NT$)*
BVPS (NT$, yr-end)
ROE(%)
Net debt/equity (%)

427.1 505.2 560.3 671.9 P/E (x)
141.6 178.6 189.6 238.6 P/B (x)
249.2 311.1 358.9 436.7 EV/EBITDA (x)
134.2 164.1 172.7 213.8 FCF/Mkt cap (%)
-17.0
22.3
5.2
23.8 Price target
5.18
6.33
6.66
8.25 PT (30 Dec 13)
24.39 27.96 31.46 36.57 Diff from consensus
3.3
3.3
3.3
3.3
22.2
24.2
22.4
24.3 Quarterly EPS (NT$)
24.9
24.0
22.4
24.8 FY11
-15.3
-5.8
-5.3
-9.0 FY12E
FY13E
406
FY11 FY12E FY13E

17.4 14.3 13.6
3.7
3.2
2.9
9.0
7.4
6.4
1.4
1.2
3.6
1Q
1.40
1.29
2Q
1.39
1.61
FY14E
10.9 52-Week range
NT$ 91.30 - 71.00
2.5 Share out'g
25,916M
35.7M
107.24M
Local Free float
3.3%
NT$ 110.00 Market cap (US$)
79.9B
10.0% Exchange rate
NT$ 29.29/US$1
Index (TWSE)
7,185
3Q
4Q FINI holding (%)
75.4%
1.17
1.22
1.90
1.53
1.26
1.60
1.94
1.86

21 November 2012
Adrian Mowat
(852) 2800-8599
TSMC: Summary of financials

Profit and loss statement
Ratio analysis
NT$ billion (yr-end Dec)
FY11
FY12E
FY13E
FY14E
Sales
Cost of goods sold
Gross profit
R&D expenses
SG&A expenses
EBITDA
Interest income
Interest expense
Investment income (loss)
Non-operating income (loss)
Earnings before tax
Income tax
Minority interest & extraordinaries
Net profit (reported)
Net profit (adjusted)
427.1
233.0
194.1
33.8
18.7
141.6
249.2
1.5
-0.6
0.9
1.8
145.1
-10.7
-0.3
134.2
134.2
505.2
263.2
242.0
40.7
22.7
178.6
311.1
1.3
-0.9
1.3
-0.9
179.4
-15.2
-0.1
164.1
164.1
560.3
301.5
258.9
45.2
24.1
189.6
358.9
1.1
-1.2
1.5
1.5
192.5
-19.3
-0.6
172.7
172.7
671.9
351.1
320.8
53.9
28.4
238.6
436.7
1.2
-1.0
1.6
1.2
241.5
-26.9
-0.7
213.8
213.8
5.18
24.4
3.0
25.9
6.33
28.0
3.0
25.9
6.66
31.5
3.0
25.9
8.25
36.6
3.0
25.9
FY11
FY12E
FY13E
FY14E

Accounts receivable
Inventories
150.6
40.9
24.8
8.8
225.3
141.4
56.9
35.8
8.9
243.1
137.8
51.9
33.8
8.9
232.5
162.6
76.9
46.8
8.9
295.3
34.5
1,249.8
876.3
141.0
774.3
34.5
1,494.5
1,002.1
145.8
915.7
34.5
1,758.4
1,151.1
126.5
1,000.7
34.5
2,010.7
1,339.3
121.5
1,122.7
Short-term debts
Accounts payable
Accrued expenses & other CL
Long term debt
Total liabilities
33.6
11.9
71.5
117.0
20.5
142.2
31.0
15.9
70.8
117.7
68.4
191.1
43.0
15.9
69.7
128.6
51.3
185.2
38.8
19.9
71.7
130.3
38.5
174.9
Share capital
Reserves
Retained earnings
Minority interest & adjustments
259.2
158.2
213.4
1.3
632.0
259.2
171.7
292.8
1.0
724.7
259.2
188.1
366.8
1.6
815.6
259.2
205.3
481.0
2.3
947.8
EPS (adjusted)
BVPS
DPS (cash only)
Adjusted O/S (M)
Balance sheet
LT investments
Gross PPE
Accumulated depreciation
Others
Total assets
% (yr-end Dec)
FY11
FY12E
FY13E
FY14E
45.4
33.1
58.4
31.4
7.9
47.9
35.4
61.6
32.5
8.1
46.2
33.8
64.1
30.8
8.1
47.7
35.5
65.0
31.8
8.0
1.8
(11.1)
(17.0)
(17.0)
-(15.3)
18.3
26.2
22.3
22.3
-(5.8)
10.9
6.2
5.2
5.2
-(5.3)
19.9
25.8
23.8
23.8
-(9.0)
36
42
19
58
35
42
19
58
35
42
19
58
35
42
19
58
55.2
21.2
27.0
55.2
22.6
26.7
56.0
21.2
23.6
59.9
22.6
26.0
FY11
FY12E
FY13E
FY14E
Net Income
Change in inventory
Change in payables
Other adjustments
134.2
107.7
2.0
3.6
-1.1
1.2
247.6
164.1
132.5
-16.0
-11.0
4.0
-1.1
272.5
172.7
169.3
5.0
2.0
0.0
-1.2
347.8
213.8
198.2
-25.0
-13.0
4.0
-1.4
376.6
Capex
Purchase (sale) of investments
Other adjustments
-214.0
28.2
3.2
-182.5
-244.8
-7.9
0.0
-252.6
-263.9
-15.0
0.0
-278.9
-252.3
-5.0
0.0
-257.3
Free cash flow
33.6
27.7
83.9
124.3
Equity raised (buyback)

Debt raised (repaid)
Dividends paid
Other adjustments
0.0
9.4
-77.7
-1.2
-69.5
0.0
45.4
-77.7
-4.6
-36.9
0.0
-5.1
-77.8
-4.6
-87.5
0.0
-17.1
-77.8
-4.6
-99.5
Net change in cash

Beginning cash
Ending cash
-4.4
147.9
143.5
-17.1
143.5
126.4
-18.6
126.4
107.8
19.9
107.8
127.6
Gross margin
Operating margin
EBITDA margin
Net margin
R&D/sales
Sales growth
Net profit growth
Net debt to equity
Days receivable
Days inventory
Days payable
Cash cycle
Asset turnover
ROE (single year)
ROIC (net of cash)
Cash flow statement
407
Adrian Mowat
(852) 2800-8599

21 November 2012
Turkcell
Overweight
www.turkcell.com.tr/site/en/
Price Target: TRY 14.0
Company overview
Turkcell is the leading GSM mobile network operator (MNO) in Turkey, with a market
share, based on total number of subscribers, of 53%. It also has mobile operations in the
Ukraine, Belarus, Azerbaijan, Kazakhstan, Georgia, Moldova and Northern Cyprus.
Turkey
Telecommunications
Price: TRY 10.90
Investment case
We are positive on Turkcell with the key structural attractions of the Turkish telecom
sector being: relatively low penetration of key products, strong GDP growth, attractive
demographics, little/no risk of incremental competition, and the likely reduction of the
heavy tax burden through revenue mix evolution. We believe TCELL is making the right
steps in the form of price increases which will aide in market repair - We assume in our
model an improvement of 320bps in Turkcells Turkish operations EBITDA margin
from 2012 to 2015E from 30.8% to 34% (with 32.1% estimated in 2013/33% in 2014).
This would result in a consolidated EBITDA CAGR of 13% from 2012-2015E.
Jean-Charles Lemardeley, CFA
AC
(44-20) 7134-5051
jean-charles.lemardeley@jpmorgan.com
Bloomberg JPMA LEMARDELEY <GO>
11.0
TL
10.0
9.0
8.0

The two potential catalysts for Turkcell are obviously market repair (particularly pricing
repair) in Turkish mobile and a resolution of the current shareholder dispute. Timing
these is difficult - the shareholder dispute has been running now for 6 years+ and the
intense competition for almost 4 - but we believe that on both fronts progress is likely
fairly soon. With PE multiples of 11.9/ 10.8x on 2012E/2013E on a completely
unlevered balance sheet and the likely resumption of cash returns, we find Turkcell
attractive.
Nov-11
Abs
Feb-12
YTD
23.3%
May-12
1m
-2.2%
Aug-12
Nov-12
3m
6.8%
Source: Bloomberg.

Key risks to our estimates include increased competition in the Turkish market delaying
market repair and any dilutive M&A activity pursued by Turkcell.
Our 2013 year end TP of TRY14 is derived by taking an average of two values: one
based on a discounted medium-term value analysis (8% terminal FCF yield/13.0% cost
of equity) and another by DCF analysis. Key risks include deterioration in the
competitive environment, any evidence that the current shareholder dispute will last
longer.
Turkcell (TCELL.IS;TCELL TI)
FYE Dec
EBITDA FY ($ mn)
Revenue FY ($ mn)
EBITDA margin FY
EBIT FY ($ mn)
EBIT margin FY
Adj. EPS FY ($)
DPS (Gross) FY (TL)
2011A
1,748
5,610
31.2%
695
12.4%
0.34
0.00
408
2012E
1,731
5,726
30.2%
972
17.0%
0.50
0.00
2013E
1,974
6,246
31.6%
1,206
19.3%
0.55
0.00
Company Data
Price (TL)
Date Of Price
Price Target (TL)
52-week Range (TL)
Mkt Cap (TL bn)
Shares O/S (mn)
10.90
02-Nov-12
14.00
31 Dec 13
11.40 - 8.04
24.0
2,200
12m
16.5%
Adrian Mowat
(852) 2800-8599

21 November 2012
Turkcell: Summary of Financials

Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Balance sheet
ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Cash flow statement

5,610 5,726 6,246 6,798 7,315 Cash EBITDA
-6.2%
2.1%
9.1%
8.8%
7.6% Interest
1,748 1,731 1,974 2,223 2,476 Tax
-10.7% -1.0% 14.0% 12.6% 11.4% Other
695
972 1,206 1,408 1,604
-39.6% 39.9% 24.0% 16.8% 13.9% Capex PPE
12.4% 17.0% 19.3% 20.7% 21.9% Net investments
41
243
241
299
327 CF from investments
1,017 1,391 1,588 1,863 2,101 Dividends
-29.7% 36.8% 14.1% 17.3% 12.8% Share (buybacks)/ issue
752 1,111 1,215 1,434 1,627
-35.8% 47.8%
9.4% 18.0% 13.5% CF to Shareholders
- FCF to debt
0.34
0.50
0.55
0.65
0.74
NM 47.8%
9.4% 18.0% 13.5% OpFCF (EBITDA - PPE)
0.00
0.00
0.00
0.00
Ratio Analysis
2,509 3,477 3,857 3,739 3,657 EBITDA margin
842 1,043 1,157 1,224 1,317 EBIT Margin
- Net profit margin
1,087
363
367
438
446 Capex/sales
4,464 4,917 5,418 5,441 5,463 Depreciation/Sales (%)
414
438
438
438
438
2,710 3,124 3,504 3,858 4,143 Revenue growth
9,099 10,230 11,188 11,475 11,706 EBITDA Growth
812 1,348 1,348 1,348 1,348 EPS Growth
929
695
771
816
878
1,134 1,817 1,836 1,898 1,904 Net debt/EBITDA
2,063 2,513 2,608 2,714 2,782 CF to Shareholders
1,057
- FCF to debt
247
260
260
260
260
3,367 2,972 2,833 1,803 1,958 OpFCF (EBITDA - PPE)
5,732 7,258 8,355 9,671 9,749 EFCF pre Div, PPE
FY11 FY12E
1,053
759
41
243
(292)
(287)
(51)
(680)
2,194 1,979
(895)
-895
-1,410
(4)
-
FY13E
768
241
(349)
(27)
3,044
FY14E
814
299
(391)
(35)
3,504
FY15E
871
327
(420)
(37)
3,950
(924) (1,225) (1,078) (1,080)

-924 -1,225 -1,078 -1,080
-948 -1,225 -1,078 -1,080
0
0
0 (1,434)
-
435
431
192
192
738
738
1,121
1,121
1,339
-95
810
435
753
192
690
738
1,074
1,121
1,313
1,339
FY11 FY12E
31.2% 30.2%
12.4% 17.0%
13.4% 19.4%
16.0% 16.1%
18.8
13.3
FY13E
31.6%
19.3%
19.5%
19.6%
12.3
FY14E
32.7%
20.7%
21.1%
15.9%
12.0
FY15E
33.8%
21.9%
22.2%
14.8%
11.9
-6.2%
-10.7%
NM
2.1%
-1.0%
47.8%
9.1%
14.0%
9.4%
8.8%
12.6%
18.0%
7.6%
11.4%
13.5%
(1.0)
435
431
(1.3)
192
192
(1.5)
738
738
(1.8)
1,121
1,121
(1.5)
1,339
-95
810
435
753
192
690
738
1,074
1,121
1,313
1,339
409
Adrian Mowat
(852) 2800-8599

21 November 2012
Overweight
www.unimicron.com
Company overview
Unimicron Technology Corp. manufactures and markets conventional single/double
layer, HDI, and IC substrate printed circuit boards. Key customers include Nokia,
nVidia, AMD, Intel, and Apple.
Taiwan
Investment case
We are positive on Unimicrons 2013 performance. We expect its substrate business to
become the key profit driver in 2013. Increasing substrate exposure is a good move for
Unimicron, either for the top line or margin, especially when HDI competition is
intensifying. We forecast Unimicrons substrate business to grow 20%Y/Y with GPM
of 20% (higher than company's average of 15-16%).
Bloomberg JPMA WCHEN <GO>
Price: NT$29.25
William Chen AC
(886-2) 2725-9871
william.chen@jpmorgan.com

40
NT$
36
32

We think strongly growing IC substrate sector could accommodate another player:
Unlike traditional PCB or HDI, IC substrate requires higher technologies (eg. 28nm
migration was a threshold) and thus there are only a few players in the market. We
believe strong growth in Smartphone/ Tablet should provide enough room for these
players (MediaTek's move from WBCSP (6575/6577) to FCCSP (6583/6589) should
see further upside to TW vendors). In addition to FCCSP, HDI PCB is another growth
driver with less ASP pressure.
28
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
-17.8%
-20.6%
1m
-9.2%
-6.9%
3m
-12.9%
-10.6%
12m
-23.4%
-20.0%
Source: Bloomberg.

The major downside risk we see is weaker-than-expected HDI sales due to prolonged
product transitions.
Our PT of NT$40 (Jun-13) is based on 1.2x 2013 P/BV. The stock is now trading at
around 1x P/BV and we see limited downside risk given the improving outlook.
Lower-than-expected expansion of HDI or substrate business could be risks to our PT.
Unimicron Technology Corp. (Reuters: 3037.TW, Bloomberg: 3037 TT)

NT$ in mn, year-end Dec
FY09A
FY10A
FY11A
FY12E
Revenue (NT$ mn)
43,697
65,048
66,146
68,097
Net Profit (NT$ mn)
3,639.0
7,116.4
5,010.6
3,839.9
EPS (NT$)
3.22
4.60
3.26
2.50
DPS (NT$)
0.67
1.39
2.60
1.04
Revenue growth (%)
-4.3%
48.9%
1.7%
2.9%
EPS growth (%)
42.5%
42.8%
-29.2%
-23.2%
ROCE
6.6%
11.0%
7.9%
6.3%
ROE
9.5%
15.5%
10.3%
7.6%
P/E (x)
9.1
6.4
9.0
11.7
P/BV (x)
1.1
1.0
1.0
1.0
EV/EBITDA (x)
0.7
0.4
0.6
0.5
Dividend Yield
2.3%
4.8%
8.9%
3.5%
410
FY13E
72,637
4,973.9
3.24
1.46
6.7%
29.7%
7.6%
9.4%
9.0
0.9
0.2
5.0%
Company Data
Shares O/S (mn)
Market cap (NT$ mn)
Market cap ($ mn)
Price (NT$)
Date Of Price
Free float (%)
3M - Avg daily Value (NT$ mn)
TSE
Exchange Rate
Fiscal Year End
1,539
45,004
1,551
29.25
12 Nov 12
70.0%
7.39
246.69
8.46
7,268
29.01
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Unimicron Technology Corp.: Summary of Financials

FY09 FY10
Revenues
43,697 65,048
Cost of goods sold
-36,672 -53,260
Gross Profit
7,025 11,788
R&D expenses
-686
-926
SG&A expenses
-2,057 -2,657
4,106 7,857
EBITDA
9,575 14,781
Interest income
56
86
Interest expense
-355
-308
-299
-221
72
-10
Earnings before tax
4,178 7,846
Tax
-373
-537
3,639.0 7,116.4
3,639 7,116
EPS (reported)
3.22
4.60
EPS (adjusted)
3.22
4.60
BVPS
25.83 28.22
DPS
0.67
1.39
Shares outstanding
1,547 1,547
Balance sheet
FY09 FY10
22,205 19,524
Accounts receivable
12,130 13,294
Inventories
4,300 5,349
Others
1,401 2,270
Current assets
40,036 40,437
LT investments
5,838 6,937
Net fixed assets
38,906 38,733
Others
2,712 2,758
Total Assets
87,492 88,866
Liabilities
ST Loans
9,275 9,218
Payables
9,767 9,830
Others
4,958 6,766
24,000 25,814
Long-term debt
18,149 14,450
Other liabilities
1,180 1,023
Total Liabilities
43,329 41,287
44,162 47,578
FY11
66,146
-55,704
10,442
-1,440
-3,017
5,985
13,274
180
-329
-149
-231
5,754
-763
5,010.6
5,011
3.26
3.26
29.41
2.60
1,539
FY11
23,458
15,620
5,781
2,320
47,178
6,325
41,445
2,865
97,814
7,914
10,498
6,759
25,171
21,732
1,086
47,989
49,825
Ratio Analysis
68,097 72,637 Gross margin
-57,805 -61,116 EBITDA margin
-1,804 -2,179 Net margin
-3,399 -3,123 R&D/sales
5,088
6,218 SG&A/Sales
12,563 13,829
98
53 Sales growth
-239
-141
-393
-366 EPS (reported) growth
4,696
5,852
-856
3,839.9 4,973.9 Net debt to total capital
3,840
2.50
3.24 Asset turnover
2.50
30.59
32.03 ROE
1.04
1.46 ROIC
1,538
Cash flow statement
25,091 28,238 Net income
15,460 15,915 Depr. & amortization
5,798
2,351
2,420 Other
6,319
6,484 Capex
41,170 38,360 Disposal/(purchase)
3,225
8,052
7,770 Debt raised/(repaid)
9,739 10,002 Other
7,069
24,860 25,048 Cash flow from financing
21,856 21,089
1,086
47,802 47,223 Beginning cash
51,613 53,791 Ending cash
FY09
16.1%
21.9%
9.4%
8.3%
1.6%
4.7%
FY10
18.1%
22.7%
12.1%
10.9%
1.4%
4.1%
FY11
15.8%
20.1%
9.0%
7.6%
2.2%
4.6%
(4.3%)
6.9%
50.0%
42.5%
48.9%
1.7%
2.9%
91.4% -23.8% -15.0%
95.6% -29.6% -23.4%
42.8% (29.2%) (23.2%)
6.7%
22.2%
29.5%
29.7%
32.06
8.4%
11.8%
0.58
8.26
9.5%
7.1%
-
66.75
5.8%
8.7%
0.74
8.59
15.5%
13.1%
-
47.07
0.8%
1.2%
0.72
6.82
9.4%
9.0%
-
89.25
8.2%
12.4%
0.71
6.77
10.3%
8.6%
-
FY12E FY13E
15.1% 15.9%
18.4% 19.0%
7.5%
8.6%
5.6%
6.8%
2.6%
3.0%
5.0%
4.3%
88.99
6.0%
9.3%
0.69
6.67
7.6%
6.9%
-
FY09 FY10
FY11 FY12E FY13E
3,639.0 7,116.4 5,010.6 3,839.9 4,973.9
5,469 6,925
7,289
7,475 7,611
-279 -1,212 -2,146
-338
-224
8,996 13,022 10,134 10,977 12,361
0
0
0
0
0
-12,636 -7,897 -9,497 -7,554 -5,369
8,996 13,022 10,134 10,977 12,361
4,553
-290
580
-11
-9
7,542 -3,756
5,978
262 -1,049
4,230 -1,414
719
-446
-540
-925 -2,347 -3,981 -1,595 -2,246
15,400 -7,806
3,296 -1,790 -3,845
11,759 -2,681
10,446 22,205
22,205 19,524
3,934
19,524
23,458
1,633 3,147
23,458 25,091
25,091 28,238
411
Adrian Mowat
(852) 2800-8599

21 November 2012
Vakifbank
Overweight
www.vakifbank.com.tr
Company overview
Vakifbank is the 7th largest bank (by total assets) in Turkey; the 2nd largest publicly
traded state bank (ownership c.59%) with over 740 branches, 13K employees and
c.TRY 64bn in loans & c. TRY64bn in customer deposits (c.9% mkt share). Vakifs
initiative to expand into retail & SME segment has resulted in the share of corporate
loans declining to 42% (from 51% Q311); retail & SME at 58% (vs.49%).
CEEMEA
Banks
Price: TL4.17
Paul FormankoAC
(44-20) 7134-4718
Paul.formanko@jpmorgan.com
Investment case
One of the cheapest retail franchises in CEEMEA, trading at 13E PNAV 0.9x (vs.
Turkish banks 1.4x); we expect re-rating towards sector levels as i) profitability gap vs.
peers narrows on back of management initiative to shift asset mix towards higher
margin business- loans/asset at 65% (vs.62% Q311) with retail/sme constituting c.58%
of total loans (vs. 49%). Vakif's TL loan yields (13.7%) are now at upper end of peer
group, which coupled with Vakifs low cost of funding results in high TL loan-deposit
spreads (6.3% vs. 5.2% Q311) ii) Capital/growth issue addressed with subordinated
loan issuance, bringing CAR to c.15% levels (in line with peers). Lastly, while not
imminent, we expect prospects of privatization should drive management to improve
profitability and achieve higher valuations (especially above book).

4.5
4.0
TL
3.5
3.0
2.5
2.0
Nov-11
Abs
Feb-12
YTD
75.5%
May-12
1m
3.4%
Aug-12
Nov-12
3m
11.1%
12m
42.4%
Source: Bloomberg.

We expect 2013E earnings growth of 16%, driven by i) 11% loan growth; 10%
deposits ii) NIM expansion of c.15bps, driven by continuing improvement in funding
costs (including wholesale) and positive impact of changing asset mix (mgt targets
SMEs to reach 30% of total loans in the medium term vs. c.20% currently) iii) gradual
asset quality progression, with c.60bps NPL increase and slight increase in specific cost
of risk (ex. collections 85bps vs. 82bps in 12E).
Slower than expected economic growth driving pickup in asset quality deterioration.
Also any pickup in deposit competition/ liquidity tightening would result in higher
funding costs/lower margins.
Our Dec-13 PT of TL 5.5 is based on Gordon growth model and incorporates a 4%
growth rate, 14% cost of equity and 14% normalized ROE. Key risks includeoverhang of secondary placement of government stake ii) lower economic growth.
Turkiye Vakiflar Bankasi (VAKBN.IS;VAKBN TI)
FYE Dec
2011A
2012E
Adj. EPS FY (TL)
0.49
0.52
Adj P/E FY
8.5
8.1
BV/Sh FY (TL)
4
4
P/NAV FY
1.1
1.0
ROA FY
1.5%
1.4%
ROE FY
13.7%
12.9%
Tier One Ratio FY
12.4%
12.1%
1,227
1,292
FY (TL mn)
Gross Yield FY
0.4%
0.0%
NPLs FY (TL mn)
2,157
2,632
412
2013E
0.60
7.0
5
0.9
1.5%
12.9%
12.1%
1,493
2014E
0.71
5.8
6
0.8
1.6%
13.7%
12.0%
1,782
0.0%
3,360
2.6%
3,858
Company Data
Price (TL)
Date Of Price
Price Target (TL)
52-week Range (TL)
Mkt Cap (TL bn)
Shares O/S (mn)
4.17
02-Nov-12
5.50
31 Dec 13
4.41 - 2.20
10.4
2,500

21 November 2012
Adrian Mowat
(852) 2800-8599
Vakifbank: Summary of Financials

FY10A FY11A FY12E
FY13E
Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
2,730
-11.3%
1,396
443
-4.8%
295
151.9%
636
4,126
2.4%
-1,007
10.3%
(683)
2,436
-2.4%
-973
1,463
-5.1%
(306)
20.9%
1,157
3,613
24.9%
1,188
403
-28.0%
55
-9.6%
650
4,801
8.6%
-1,141
3.0%
(1,042)
2,618
5.5%
-983
1,635
3.8%
(343)
21.0%
1,292
4,119
14.0%
1,125
475
18.0%
50
-9.1%
550
5,244
9.2%
-1,232
8.0%
(1,126)
2,886
10.2%
-1,020
1,866
14.1%
(373)
20.0%
1,493
FY10A FY11A FY12E
FY13E
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
2,894
6.0%
1,528
559
26.2%
61
-79.4%
930
4,422
7.2%
-1,107
10.0%
(834)
2,481
1.8%
-906
1,575
7.7%
(348)
22.1%
1,227
44,861
29.8%
2,241
18,991
68,734
2,090
73,962
57,309
27.7%
2,048
20,148
80,658
2,269
89,184
63,370 70,161
10.6% 10.7%
2,436
2,888
19,552 20,529
92,662 101,612
2,075
2,216
97,790 106,297
47,701
6.8%
14,456
58,659
3,246
8,559
0
73,962
60,939
27.8%
14,177
68,884
4,275
9,298
0
89,184
65,793 72,410
8.0% 10.1%
16,141 16,532
80,372 88,788
1,857
1,563
10,800 12,292
0
0
97,790 106,297
Ratio Analysis
FY14E TL in millions, year end Dec
Per Share Data
4,614 EPS Reported
12.0% EPSAdjusted
1,211
% Change Y/Y
561 DPS
18.0%
% Change Y/Y
50 Dividend yield
0.0% Payout ratio
550 BV per share
5,824 NAV per share
-1,330
8.0% Return ratios
(1,216) RoRWA
3,278 Pre-tax ROE
13.6% ROE
-1,051 RoNAV
2,228 Revenues
19.4% NIM (NII / RWA)
20.0% Total rev / average assets
- NII / Total revenues

Cost ratios
12.2% Cost / assets
3,353 Staff numbers
21,556
- Loan / deposit
- Loan / assets
10.9% NPLs / loans
- LLP / RWA
2,132 RWAs
% YoY change
13,807 Core Tier 1
0 Total Tier 1
116,715
FY10A FY11A
FY12E FY13E
FY14E
0.46
0.49
0.52
0.60
0.71
0.46
0.49
0.52
0.60
0.71
-5.9%
6.0%
5.3% 15.6% 19.4%
0.01
0.01
0.00
0.00
0.11
(71.1%)
7.9% (100.0%)
0.3%
0.4%
0.0%
0.0%
2.6%
3.0%
3.0%
- 15.0%
3
4
4
5
6
3.4
3.7
4.3
4.9
5.5
2,500.0 2,500.0 2,500.0 2,500.0 2,500.0
0.02
18.4%
14.5%
14.6%
0.02
17.6%
13.7%
13.8%
0.02
16.3%
12.9%
12.9%
0.02
16.2%
12.9%
13.0%
0.02
17.1%
13.7%
13.7%
3.97% 3.59%
2.01% 1.87%
5.95% 5.42%
66.17% 65.44%
10.74% 12.65%
7.15% 1.38%
3.90% 4.05% 4.14%

1.27% 1.10% 1.09%
5.14% 5.14% 5.22%
75.26% 78.54% 79.21%
8.39% 9.06% 9.63%
1.15% 0.95% 0.86%
FY10A FY11A
FY12E FY13E
FY14E
41.0% 43.9%
0.0
0.0
11,077 12,222
45.5% 45.0%
0.0
0.0
13,444 14,116
43.7%
0.0
14,822
98.7%
25.7%
63.7%
72.9%
0.0%
97.4%
22.6%
66.6%
76.3%
0.0%
100.0% 100.9% 102.2%

20.0% 19.3% 18.5%
67.3% 68.7% 70.3%
75.6% 77.0% 78.1%
0.0%
0.0%
0.0%
4.8%
3.5%
4.8%
3.6%
1.7%
1.3%
98.9% 95.0%
6.9% (4.8%)
56,186 71,862
26.7% 27.9%
13.2% 12.4%
13.2% 12.4%
3.7%
4.0%
4.1%
4.0%
4.6%
4.7%
1.2%
1.1%
1.0%
92.6% 85.9% 86.9%
22.0% 27.7% 14.8%
84,221 96,283 110,211
17.2% 14.3% 14.5%
12.1% 12.1% 12.0%
12.1% 12.1% 12.0%
413
Adrian Mowat
(852) 2800-8599

21 November 2012
Vodacom Group Limited
Overweight
www.vodacom.com
Company overview
Vodacom is the leading mobile network operator in South Africa with a subscriber
market share of 50%. It also has mobile operations in the Democratic Republic of
Congo, Lesotho, Mozambique and Tanzania.
South Africa
Media
Investment case
Secure/profitable, with quality management and high governance. With limited
industrial growth/valuation opportunities and a structurally low interest rate environment
in SA, high yield stocks will be priced at a premium, particularly those with a secure
earnings/yield outlook and defensive characteristics like Vodacom. SA growth trends to
slow, but foresee no collapse. Based on our view for manageable competition/pricing,
SA service revenue should accelerate moderately from the Q1 2013 trough of 1.8% yoy
on stronger pre-paid voice elasticity and higher data growth (base effects / bundle
adoption). Whilst FCF/dividend is protected by improving profitability/margins.
Gateways sale should result in 100bps/180bps margin kicker in FY13E/FY14E, SA
margins continue to benefit from network efficiency gains and marginally lower
commissions/subsidies, one-off removal of STC tax will support higher net margins.
ziyad.x.joosub@jpmorgan.com
Price: 11,200c
Ziyad JoosubAC
(27 11) 507-0456

(1) Margin expansion to off-set slower SA voice growth - Sale of loss-making Gateway,
SA operations network/distribution opex savings, once-off removal of STC tax,
International Mobile growth driven margin expansion. (2) Progressive ROE/ROCE
expansion - STC tax removal and Gateway sale will support immediate 6% ROE
expansion whilst slow growing equity-base (100% pay-out) is matched by a 9% 5 year
HEPS CAGR. (3) Gradual removal of competition/pricing overhangs in SA - MTN to be
rational and protect industry value, Cell C lacks balance sheet and network. (4) Data
growth re-acceleration.
Bloomberg JPMA JOOSUB<GO>

11,500
11,000
10,500
c 10,000
9,500
9,000
8,500
Nov-11
Abs
Feb-12
YTD
25.3%
May-12
1m
9.6%
Aug-12
Nov-12
3m
14.6%
Source: Bloomberg.

Data pricing, competition in voice market, SMS cannibalization, disappointment in
regulator spectrum allocation to Vodacom remain key operational risks. We view the
above concerns as slightly negative (particularly on competition and spectrum), although
they do not dramatically alter the fundamental outlook for Vodacom for the next 12
months in our view. We also expect a sensible solution to transpire on the BEE/spectrum
issue late in 2013 or 2014.
We derive our PT of R115 based on a discounted medium-term terminal value
calculation. Key risks include increased pricing/competitive threat and adverse
macro/political environment.
Vodacom (VODJ.J;VOD SJ)
FYE Mar
Adj. EPS FY (c)
DPS (Net) FY (c)
Revenue FY (R mn)
EBITDA FY (R mn)
EV/EBITDA FY
Adj P/E FY
ROE FY
Operating cashflow FY (R
mn)
2011A
655.72
455.00
61,197
19,051
8.5
17.1
58.3%
19,051

414
2012A
709.09
710.00
66,929
22,499
7.1
15.8
54.8%
22,499
2013E
842.03
842.03
68,481
24,868
6.5
13.3
62.6%
24,868
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
11,200
02-Nov-12
11,500
30 Sep 13
11,222 - 8,661
166.4
1,486
12m
26.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Vodacom Group: Summary of Financials

FY12
FY13E
FY14E
FY15E
66,929
9.4%
22,499
18.1%
33.6%
16,617
21.3%
24.8%
(639)
15,933
26.1%
10,156
23.2%
1463.0
709.09
8.1%
710.00
68,481
2.3%
24,868
10.5%
36.3%
18,716
12.6%
27.3%
(459)
18,257
14.6%
12,369
21.8%
1463.0
842.03
18.7%
842.03
69,498
1.5%
26,097
4.9%
37.6%
19,799
5.8%
28.5%
(927)
18,872
3.4%
12,777
3.3%
1463.0
869.76
3.3%
869.76
73,657
6.0%
28,133
7.8%
38.2%
21,471
8.4%
29.1%
(984)
20,487
8.6%
13,868
8.5%
1463.0
944.03
8.5%
944.03
Balance sheet
FY12
FY13E
FY14E
FY15E

ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
3,781
11,379
17,552
447
48,230
2,413
172
18,368
9,012
18,930
3,561
11,317
17,257
447
51,089
2,587
323
19,434
9,936
19,774
870
10,773
13,453
307
41,435
2,783
87
16,181
7,280
16,511
870
10,773
13,453
307
41,435
2,783
87
16,181
7,280
16,511
Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Cash flow statement

FY12
FY13E
FY14E
FY15E
Cash EBITDA
Interest
Tax
Other
20,559
5,192
(411)
22,499
22,698
5,751
24,868
24,921
5,945
26,097
26,115
6,453
28,133
Capex PPE
Net investments
CF from investments
Dividends
Share (buybacks)/ issue
(7,568)
(5,283)
(984)
(8,546)
(7,947)
(148)
(8,551)
(11,353)
0
(8,826)
(12,522)
0
CF to Shareholders
FCF to debt
(6,267)
-
(8,095)
-
(11,353)
-
(12,522)
-
OpFCF (EBITDA - PPE)

EFCF pre Div, PPE
14,011
9,822
15,130
11,308
16,375
9,975
17,564
10,684
FY12
FY13E
FY14E
FY15E
EBITDA margin
EBIT Margin
Net profit margin
Capex/sales
Depreciation/Sales
33.6%
24.8%
15.2%
12.5%
0.1
36.3%
27.3%
18.1%
12.5%
0.1
37.6%
28.5%
18.4%
12.3%
0.1
38.2%
29.1%
18.8%
12.0%
0.1
Revenue growth
EBITDA Growth
EPS Growth
9.4%
18.1%
8.1%
2.3%
10.5%
18.7%
1.5%
4.9%
3.3%
6.0%
7.8%
8.5%
0.4
0.4
0.4
0.4
Ratio Analysis
Net debt/EBITDA
415

21 November 2012
Adrian Mowat
(852) 2800-8599
Wipro
Overweight
www.wipro.com
Company overview
Wipro is a conglomerate with revenues of over US$6B in FY10, with interest in IT
services, consumer care and lighting. Wipros Global IT business contributes 75%+ of
the companys revenue and 90%+ of the EBIT. It has 75,000+ employees in IT services
and 20,000+ employees in its BPO arm. Wipro serves nearly 900 clients with a diverse
portfolio of service offerings. The company plans to demerge its consumer care,
lighting and other businesses from IT services business to better focus on both the
businesses.
Investment case
We keep the faith in Wipro's restructuring story and believe that the new management
has driven the right structural changes, results of which should be visible in
FY14/CY13. Some structural positives are already visible - (a) realization movement
has been better than peers in the last 4 quarters pointing to improved productivity in
execution, (b) top-10 accounts continue to deliver strong growth suggesting
improvement in client mining ability; also number of $100+ mn accounts increased
from 1 to 9 over seven quarters, (c) Wipro should benefit from the demand
environment to improve in CY13 as discretionary spending might pick-up, and (d) cash
flow metrics have improved
We believe expectations are running low for Wipro and very moderate growth is priced
in the current stock price. However, the structural changes in the company should start
delivering results in the next calendar year. The deals win in late-2QFY13/early3QFY13 should also help pick up revenue growth trajectory. We believe Wipro to
deliver decent sustainable growth in FY14 despite benign environment.
The key risk for Wipros earnings is a meaningful decline in IT spending due to macro
weakness/event. Developed markets in recession will impact IT budgets/spending.
Pricing decline and supply-side pressures are the other key risks for earnings.
Our Mar-13 PT of Rs405 is based on a one-year forward P/E multiple of 14.5x; this
implies a 20% discount to our target P/E multiple for TCS of 18x and on par with our
Infosys target multiple of 14.5x. We think the discount relative to TCS is reasonable
given Wipros lower expected growth trajectory and weaker margin profile. Downside
risks: weakness in spending environment, further rupee appreciation against the US$,
and continued supply side pressures (higher attrition or wage increases) bearing on
margins.
India
Price: Rs370.80
Bloomberg WPRO IN, Reuters WIPR.BO

(Year-end Mar, Rs mn)
Revenue
Operating Profit
EBITDA
EPS
P/E (x)
EV/EBITDA (x)
Cash
Equity
FY11
310,542
57,225
65,436
53,255.0
21.73
17.1
12.8
110,423
240,371
FY12 FY13E FY14E

371,971 428,655 461,189
60,735 74,237 78,567
70,864 84,809 90,080
55,731.0 65,490.1 68,759.6
22.69 26.64 27.94
16.3
13.9
13.3
11.8
9.4
8.4
119,627 164,170 198,957
286,163 344,854 392,835
416
FY11
ROE(%)
24.4
CORE ROIC(%)
29.0
Quarterly EPS (Rs)
1Q
EPS (13) E
6.43
EPS (14) E
6.74
Local
1M
Abs. Perf.(%)
1.0%
Rel. Perf.(%)
1.3%
FY12
21.2
23.8
2Q
6.55
6.57
3M
7.3%
0.5%
FY13E
20.8
25.4
3Q
6.66
7.10
12M
-1.5%
(10.4%)
Viju K GeorgeAC
(91-22) 6157 3597
440
Rs
400
360
320
Nov-11
Feb-12
May-12
Aug-12
Nov-12
W IPR.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
-7.0%
-30.0%
1m
1.0%
1.3%
3m
7.3%
0.5%
12m
-1.5%
-10.4%
Source: Bloomberg.
FY14E Date of Price

18.6 52-Week range
4Q Market Cap
6.99 Market Cap(US)
7.53 Free float
Avg daily val
Dividend Yield
Index
09 Nov 12
453.00 - 295.00
2,462
912.97BN
US$16,674MN
19.2%
132
1.9%
5,686
0.02
Adrian Mowat
(852) 2800-8599

21 November 2012
Wipro Ltd.: Summary of Financials

FY11
FY12
Revenues
310,542 371,971
Cost of goods sold
218,507 254,339
Gross Profit
97,692 108,797
R&D expenses
0
0
SG&A expenses
-40,467 -48,062
57,225
60,735
EBITDA
65,436
70,864
Interest income
6,651
8,895
Interest expense
-1,932
-3,491
4,719
5,404
5,163
8,805
Earnings before tax
62,388
69,540
Tax
-9,714 -13,762
53,255.0 55,731.0
53,322
55,987
EPS (reported)
21.73
22.69
EPS (adjusted)
21.76
22.79
BVPS
98.12
116.43
DPS
4.70
7.06
Shares outstanding
2,450
2,458
Balance sheet
FY11
FY12
110,423 119,627
Accounts receivable
61,627
80,328
Inventories
9,707
10,662
Others
50,557
62,871
Current assets
232,314 273,488
LT investments
Net fixed assets
55,094
58,988
Others
Total Assets
371,443 436,001
Liabilities
ST Loans
33,043
36,448
Payables
23,523
33,979
Others
67,575
81,237
100,618 117,685
Long-term debt
19,759
22,510
Other liabilities
10,695
9,643
Total Liabilities
131,072 149,838
240,371 286,163
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY11
31.5%
21.1%
18.4%
17.1%
0.0%
13.0%
FY12
29.2%
19.1%
16.3%
15.0%
0.0%
12.9%
FY13E
31.3%
19.8%
17.3%
15.3%
0.0%
14.0%
FY14E
31.0%
19.5%
17.0%
14.9%
0.0%
13.9%
Sales growth
Net profit growth
14.2%
9.6%
15.5%
15.2%
19.8%
6.1%
4.6%
4.4%
15.2%
22.2%
17.5%
17.4%
7.6%
5.8%
5.0%
4.9%

Net debt to equity
Asset turnover
ROE
ROIC
ROIC (net of cash)
Cash flow statement
Net income
Other
Capex
Disposal/(purchase)
Free cash flow
Other
Dividends paid
-20.9%
-24.0%
0.89
14.60
24.4%
29.0%
-
-19.0%
-21.2%
0.92
10.28
21.2%
23.8%
-
-27.6%
-30.0%
0.91
15.16
20.8%
25.4%
-
-32.2%
-35.2%
0.86
11.95
18.6%
25.1%
-
FY11
53,255.0
8,211
-7,066
0
54,400
0
0
-22,926
54,400
1,509
-9,709
3,374
-11,523
-16,349
FY12
55,731.0
10,129
-18,308
0
47,552
0
0
-33,513
47,552
7,448
6,156
-1,099
-17,340
-4,835
FY13E
65,490.1
10,572
-15,678
0
60,384
0
0
-10,377
60,384
10,827
1,637
-565
-17,363
-5,464
FY14E
68,759.6
11,513
-10,307
0
69,966
0
0
-14,400
69,966
-0
0
0
-20,778
-20,778
15,125
95,298
0
9,204
110,423
0
44,543
119,627
0
34,787
164,170
0
FY13E
428,655
294,287
134,368
0
-60,131
74,237
84,809
12,399
-3,419
8,980
10,812
85,049
-19,296
65,490.1
65,651
26.64
26.70
140.14
7.06
2,461
FY14E
461,189
318,320
142,870
0
-64,303
78,567
90,080
13,907
-3,333
10,574
10,574
89,141
-20,381
68,759.6
68,760
27.94
27.94
159.64
8.44
2,461
FY13E
164,170
86,580
12,529
81,060
344,338
58,539
506,656
FY14E
198,957
96,953
13,592
87,936
397,438
61,026
562,643
60,031
41,423
91,866
151,897
564
9,341
161,802
344,854
60,031
44,937
99,871
159,902
564
392,835 Ending cash
417
Adrian Mowat
(852) 2800-8599

21 November 2012
Yanbu National Petrochemical Company
Overweight
www.yansab.com.sa
Company overview
Yanbu National Petrochemical Company is a Saudi-based petrochemical company
which started trading in Feb 06. It started its commercial operations in Mar 10. It has
Yanbu-based facilities producing ethylene, propylene, HDPE, LDPE, polypropylene
and many other petrochemicals. It has total production capacity of around 4mmt per
annum. It has a well integrated petrochemical complex where ethylene and other basic
chemicals are processed to produce HDPE, LDPE and many other chemicals and
intermediates which are exported to Asia and Europe. SABIC is the majority
shareholder, holding 51% stake in the company.
Saudi Arabia
Chemicals
Price: SRls44.00
Neeraj KumarAC
(971) 4428-1740
56
Investment case
Key investment points are as follows: i) High free cash flow (FCF) yield and
deleveraging of balance sheet (BS) due to debt repayment. We forecast free cash flow
of 11.8%/12.1% for 2013e/14e as most of the capex is already invested. Apart from
that, the balance sheet is being strengthened with debt repayment of >SAR3bn in 2012e
and >SAR1bn in 1H12. We expect net debt/EBITDA to reduce to less than 1 by 2013e,
ii) Attractive valuation- Yansab trades on 8.7x 13E P/E vs a peer average of 10.7x.
We believe the likely introduction of a dividend for 2012e should be a positive catalyst
for Yansab. We forecast DPS of SAR0.5/2.0 for 2012e/13e, which implies dividend
yield of 1%/5%.
52
SRls 48
44
40
Oct-11
Abs
Jan-12
YTD
0.2%
Apr-12
1m
-4.6%
Jul-12
Oct-12
3m
-1.4%
Source: Bloomberg.

Lower than expected product prices, lower than expected demand environment in EM
especially China and India; lower than expected operating rates.
Valuation methodology: We have used the DCF approach to derive our Dec 2013
target price of SAR53/share. Our key DCF assumptions are a terminal growth rate of
2% and a WACC of 10.7%. Risks to our view- lower product prices on a fall in oil
prices, increase in ethane price/change in mix of feedstock from ethane to more
propane, change in policies in key markets like anti-dumping duties, slowdown in the
global economy.
Yanbu National Petrochemical Company (2290.SE;YANSAB AB)
FYE Dec
2011A
2012E
Adj. EPS FY (SRls)
5.64
4.42
9,659
9,179
EBIT FY (SRls mn)
3,618
2,937
3,174
2,484
mn)
EV/EBITDA FY
7.1
8.4
Adj P/E FY
7.8
10.0
EV/Revenue FY
3.4
3.6
FCF Yield FY
12.8%
11.1%
418
2013E
5.00
9,558
3,202
2,815
8.0
8.8
3.4
11.8%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
44.00
02-Nov-12
53.00
31 Dec 13
58.00 - 41.50
24.8
563
12m
-1.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
Yanbu National Petrochemical Company: Summary of

Financials
Revenues
% Change Y/Y
Gross Margin (%)
EBITDA
EBITDA Margin (%)
EBIT
EBIT Margin
Net Interest
% change Y/Y
Zakat
Reported Zakat rate (%)
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Inventories
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Total Liab & Shareholders' equity
Cash flow statement

FY10 FY11 FY12E FY13E FY14E SRls in millions, year end Dec
5,821 9,659 9,179 9,558 9,962 EBIT
- 65.9% -5.0% 4.1% 4.2% Depreciation & amortization
0.0% 39.3% 34.6% 36.1% 36.1%
44.5%
2,047
35.2%
(376)
1,713
-5964.7%
(40)
2.4%
1,673
-5826.8%
562.5
2.97
2.97
FY10
790
2,736
901
4,427
18,426
14,310
23,163
48.0% 42.8% 43.0% 42.5% Zakat

37.5% 32.0% 33.5% 33.5% Capex
(413) (360) (300) (260) Acquisitions/disposals
3,267 2,593 2,902 3,077 Net Interest
90.7% -20.6% 11.9% 6.0% Free cash flow
(92) (109)
(87)
(92) FCF (pre - exceptionals)
2.8% 4.2% 3.0% 3.0% Equity raised/repaid
3,174 2,484 2,815 2,985 Debt Raised/repaid
89.8% -21.7% 13.3% 6.0% Other
562.5 562.5 562.5 562.5 Dividends paid
5.64
4.42
5.00
5.31 Ending cash
5.64
4.42
5.00
5.31 DPS
Ratio Analysis
599 1,560 3,351 4,640 Market Cap
3,351 2,386 1,816 1,494 Net debt
1,170 1,101 1,147 1,195 EV
5,121 5,048 6,314 7,330
17,588 16,797 16,114 15,467 EV/Sales
12,734 11,779 10,021 8,349 EV/EBITDA
22,975 21,874 22,648 23,008 EV/EBIT
P/E (adjusted EPS)
947 2,077 1,200 1,000

800 FCF yield
657
270
270
275
- Dividend Yield
2,261 3,555 2,800 1,707 1,504 EPS growth
10,911 6,542 3,842 2,842 2,042
2,651 2,362 2,530 2,495 2,440 Net debt /EBITDA
23,163 22,975 21,874 22,648 23,008 ROIC
FY10
2,047
544

3,618 2,937 3,202 3,337
1,018
991
908
897
(878) (1,026)
(40)
1,712
(649)
(376)
1,048
1,048
0
-201
0
790
0.00
(643)
(669)
(747)
3,609 3,286
(140) (200)
(413) (360)
3,156 2,742
3,156 2,742
0
0
-3,238 -1,500
0
281
599 1,560
0.00
0.50
3,441
(225)
(300)
2,916
2,916
0
0
1,125
3,351
2.00
3,487
(250)
(260)
2,977
2,977
0
0
1,688
4,640
3.00
(92) (109)
(87)
(92)

22,613 24,694 24,694 24,694 24,694
11,068 8,020 5,883 2,852
503
33,878 32,941 32,941 32,941 32,941
5.8
13.1
16.6
14.8
3.4
7.1
9.1
7.8
3.6
8.4
11.2
10.0
3.4
8.0
10.3
8.8
3.3
7.8
9.9
8.3
4.6%
0.00
0.0%
NM
12.8% 11.1% 11.8% 12.1%

0.00
0.50
2.00
3.00
0.0% 1.1% 4.6% 6.8%
89.8%
NM 13.3% 6.0%
4.3
5.4
150.8%
9.1%
1.7
1.5
0.7
0.1
8.8
8.2
10.7
12.8
76.3% 46.3% 18.3% 3.0%
16.4% 13.9% 14.2% 14.5%
419
Adrian Mowat
(852) 2800-8599

21 November 2012
Yandex
Overweight
www.company.yandex.com
Company overview
Yandex is Russias largest internet company by revenue ($682 mn in 2011), accounting
for of all online advertising in the country in 2011. Yandex has the leading online
search engine in Russia, where it currently services over 49 mn monthly unique users
and generates most of its revenues.
Russia
Russian Media
Price: $22.77
Alexei GogolevAC
(7-495) 967 1029
Alexei.gogolev@jpmorgan.com
Bloomberg JPMA GOGOLEV<GO>
Investment case
Our positive view on Yandex is based on the favorable outlook for the Russian
contextual ad market prospects. We believe Yandex will be able to deliver 37% RUB
revenue growth CAGR during 2011-14E as it continues to expand the core contextual
ad businesses into the Russian regions, monetize newly developed properties and
focuses on partnerships with global and Russian majors (Apple and possibly Mail.ru).

28
26
24
$ 22
20
18

Yandex remains upbeat about the growth prospect of contextual advertising both in
4Q12 and 2013, but confirmed display growth deceleration in 3Q12/early 4Q12.
Yandex continues to put additional effort on expanding the rapidly growing mobile
segment of its business: mobile search still accounts for only 11% of total queries, but
the segment has seen a visible improvement of monetization. Despite healthy cash
position, at this stage however management has no intention to pay out dividends.
16
Nov-11
Abs
Feb-12
YTD
13.8%
May-12
Aug-12
1m
-7.2%
Nov-12
3m
9.7%
12m
-18.6%
Source: Bloomberg.

We see a number of risks for Yandex, including: 1) More intense competition from
Google may result in increased opex spending and put pressure on margins); 2) Yandex
is exposed to the FX risk as some of its expenses including rent, capex and cash on the
balance are USD denominated; 3) Yandex is considering expansion into new
competitive markets (however we will have to see successful operations in Turkey,
before this risk materializes).
Our end-2013 PT of $42/ADR is based on discounted terminal value calculation, which
at our PT implies 2013E EV/EBITDA and P/E of 22x and 35x, respectively. We note
however that given robust growth at our PT the stock trades on 1.1x 2013 PEG. We
also highlight that the multiple of 23x we are using for the terminal value at year end
2018E is reasonable in light of longer term growth prospects for Yandex. Risks as
outlined above.
Yandex N.V. (YNDX;YNDX US)
FYE Dec
Adj. EPS FY (R)
Revenue FY (R mn)
ROE FY
FCF Yield FY
Adj EBITDA FY (R mn)
ROA FY
Tax rate FY
2011A
17.75
20,033
29.6%
-0.2%
46.4%
9,302
15.8%
21.1%
420
2012E
26.97
29,674
25.6%
1.8%
47.0%
13,940
18.0%
21.2%
2013E
39.13
42,459
27.9%
2.4%
47.0%
19,944
19.9%
20.5%
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
22.77
02-Nov-12
42.00
31 Dec 13
29.34 - 16.60
7.4
326

21 November 2012
Adrian Mowat
(852) 2800-8599
Yandex: Summary of Financials

R in millions, year end Dec
Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Balance sheet
ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
FY11
20,033
60.3%
8,914
48.5%
44.5%
7,040
46.0%
35.1%
222
7,324
46.4%
5,391
47.4%
17.75
43.5%
-
FY12E
29,674
48.1%
13,275
48.9%
44.7%
10,396
47.7%
35.0%
822
11,148
52.2%
8,247
53.0%
26.97
52.0%
-
FY13E
42,459
43.1%
19,180
44.5%
45.2%
15,111
45.4%
35.6%
907
16,018
43.7%
11,974
45.2%
39.13
45.1%
-
FY14E
56,355
32.7%
25,678
33.9%
45.6%
20,398
35.0%
36.2%
900
21,298
33.0%
15,923
33.0%
52.03
33.0%
-
FY11
6,322
14,505
9,910
6,973
34,076
0
4,712
0
5,123
28,953
FY12E
10,284
21,502
9,910
13,448
45,921
0
7,329
0
7,773
38,148
FY13E
14,951
27,651
9,910
21,515
60,137
0
9,570
0
10,014
50,123
FY14E
22,415
37,309
9,910
31,659
79,939
0
13,450
0
13,894
66,045
Cash flow statement

FY15E R in millions, year end Dec
71,171 Cash EBITDA
26.3% Interest
32,184 Tax
25.3% Other
25,476
24.9% Capex PPE
1,131 CF from investments
26,607 Dividends
24.9% Share (buybacks)/ issue
19,881
24.9%
65.00
24.9%
Ratio Analysis
FY15E R in millions, year end Dec
- EBIT Margin
- Net profit margin
- Capex/sales
9,910
100,474 EBITDA Growth
0 EPS Growth
14,104
0
14,548
85,926
FY11 FY12E FY13E

(1,545) (2,366) (3,280)
12,325 17,993 25,506
FY14E
(4,361)
35,471
FY15E
(5,445)
41,818
5,617
-7,112
-7,112
0
-
5,935
-7,042
-7,042
0
-
8,067 10,144 12,099

-8,629 -10,729 -12,999
-8,629 -10,729 -12,999
0
0
0
-
FY11
44.5%
35.1%
26.9%
-
FY12E
44.7%
35.0%
27.8%
-
FY13E
45.2%
35.6%
28.2%
-
FY14E
45.6%
36.2%
28.3%
-
FY15E
45.2%
35.8%
27.9%
-
60.3%
48.5%
43.5%
48.1%
48.9%
52.0%
43.1%
44.5%
45.1%
32.7%
33.9%
33.0%
26.3%
25.3%
24.9%
421
Adrian Mowat
(852) 2800-8599

21 November 2012
Yapi Kredi
Overweight
www.yapikredi.com.tr
Company overview
Yapi Kredi is the 4th largest private bank in Turkey with c.10% market share in loans,
c.9% in customer deposits. The bank, whilst primarily a corporate/SME lender (67% of
book), enjoys a strong position within the credit cards (c.18% mkt share; top 3 player),
AUM (c.17%), leasing (c.18%) and factoring (c.15%) and is expanding its retail
franchise. Overall YKB has c.TRY124bn in assets (c. 56bn), c.TRY75bn in loans, c.
TRY69bn in deposits and serves c.6mn retail customers via 918 branches. YKB is
jointly owned by Koc Holding and Unicredit (c.41% each).
CEEMEA
Banks
Price: TL4.49
Paul FormankoAC
(44-20) 7134-4718
Investment case
Attractive and profitable retail franchise (2007-11 avg RoNAV 27%), with a favorable
balance sheet structure (Loan/Assets 59%; Securities 17%), resulting in sustainable and
less volatile income stream (NII + Fees constitute c.94% of total revenues), which is
suited towards a low inflation environment (lowest CPI linker exposure in the sector).
Currently trading at 13E PNAV 1.3x (vs. sector 1.4x) - sale of insurance subsidiary
offers a visible catalyst and could further improve the capital position.
We expect 13E EPS growth of 23%, driven by i) loan-deposit growth of 12% ii) NIM
expansion of 10bps- driven by continued improvement in loan-deposit spreads, helped
by declining funding costs iii) gradual asset quality progression, with 40bps NPL
increase and total cost of risk slightly above 2012E levels (154bps vs. 151bps) iv) Total
capital to improve to 14.6%, from 13.8% 12E driven by gains from sale of insurance
subsidiary.
5.0
4.5
TL
4.0
3.5
3.0
2.5
Nov-11
Abs
Feb-12
YTD
71.1%
May-12
1m
2.0%
Aug-12
Nov-12
3m
15.8%
12m
36.7%
Source: Bloomberg.

We have factored a 100bps increase capital relief from insurance sale. Higher than
expected proceeds would provide an additional boost to capital. On the negative sideam uptick in deposit competition, plus tightening by central bank could have a negative
impact on margins.
Our Dec-13 PT of TRY 5.7 is based on a Gordon growth model and incorporates 4%
long term growth rate, 17% normalized RoE and 14% cost of equity. Key risks include
significant pickup in NPLs and cost of risk; margin pressure on back of increasing
competition/liquidity squeeze; weaker than expected growth in Turkey.
Yapi ve Kredi Bankasi (YKBNK.IS;YKBNK TI)
FYE Dec
2011A
Adj. EPS FY (TL)
0.52
Adj P/E FY
8.7
BV/Sh FY (TL)
3
P/NAV FY
1.7
ROA FY
2.4%
ROE FY
19.3%
Tier One Ratio FY
11.3%
2,285
FY (TL mn)
422
2012E
0.44
10.1
3
1.5
1.7%
14.2%
10.9%
1,926
2013E
0.55
8.2
4
1.2
1.9%
14.8%
11.9%
3,175
2014E
0.69
6.5
5
1.0
2.2%
15.7%
12.3%
3,014
Company Data
Price (TL)
Date Of Price
Price Target (TL)
52-week Range (TL)
Mkt Cap (TL bn)
Shares O/S (mn)
4.49
02-Nov-12
5.70
31 Dec 13
4.76 - 2.48
19.5
4,347

21 November 2012
Adrian Mowat
(852) 2800-8599
Yapi Kredi: Summary of Financials

Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
FY10A
FY11A
FY12E
3,582
3,745
4,635
-8.1%
4.6% 23.8%
3,061
2,888
2,253
1,738
1,969
1,773
10.8% 13.3% -10.0%
-355
-499
-800
-172.8% 40.5% 60.3%
1,355
1,056
530
6,643
6,633
6,888
9.5% -0.1%
3.8%
-1,568 -1,630 -1,842
4.9%
4.0% 13.0%
(1,126) (1,281) (1,448)
3,950
3,722
3,599
11.0% -5.8% -3.3%
-1,162
-861 -1,131
-43
-120
-40
2,794
2,876
2,482
46.2%
3.0% -13.7%
(539)
(585)
(546)
19.3% 20.3% 22.0%
(7)
(7)
(10)
2,248
2,285
1,926
FY10A
FY11A
FY12E
Ratio Analysis
Per Share Data
5,205
5,839 EPS Reported
12.3% 12.2% EPSAdjusted
3,638
3,066
% Change Y/Y
2,038
2,366 DPS
14.9% 16.1%
% Change Y/Y
50
50 Dividend yield
-106.3%
0.0% Payout ratio
1,500
600 BV per share
8,843
8,905 NAV per share
28.4%
-2,007 -2,168
9.0%
8.0% Return ratios
(1,578) (1,704) RoRWA
5,258
5,033 Pre-tax ROE
46.1% -4.3% ROE
-1,289 -1,266 RoNAV
-50
-50
3,989
3,787 Revenues
60.7% -5.1% NIM (NII / RWA)
(798)
20.0% 20.0% Total rev / average assets
(16)
3,175
FY13E
FY13E
54,676 70,071 77,031 86,175

39.2% 28.2%
9.9% 11.9%
-1,475 -1,393 -1,784 -2,202
19,946 21,301 21,355 21,488
77,916 99,426 116,898 127,982
979
979
979
979
6,634
7,600
7,606
7,986
92,814 117,450 128,419 139,198
55,207 66,187 70,826 79,001
27.3% 19.9%
7.0% 11.5%
2,110
2,524
3,400
3,400
13,724 21,569 21,817 22,480
64,027 83,432 97,762 106,124
9,273 10,747
8,979
7,230
10,683 12,568 14,507 17,682
63
67
77
93
92,814 117,450 128,419 139,198

Cost ratios
14.2% Cost / assets
-2,581 Staff numbers
21,668
- Loan / deposit
979 Loan / assets
12.8% NPLs / loans
3,400 LLP / RWA
6,813 RWAs
% YoY change
20,696 Core Tier 1
109 Total Tier 1
153,184
FY10A
FY11A
FY12E
FY13E
FY14E
0.52
0.53
0.44
0.73
0.69
0.51
0.52
0.44
0.55
0.69
44.3%
0.9% -14.4% 23.3% 26.9%
0.00
0.00
0.00
0.00
0.00
0.0%
0.0%
0.0%
0.0%
0.0%
2
3
3
4
5
2.2
2.6
3.0
3.7
4.4
4,347.1 4,347.1 4,347.1 4,347.1 4,347.1
0.03
29.2%
23.3%
26.7%
0.03
24.7%
19.3%
21.7%
0.02
18.3%
14.2%
15.8%
0.02
24.8%
14.8%
16.1%
0.02
19.7%
15.7%
17.0%
4.60% 3.77% 3.96% 4.07% 4.16%

3.72% 2.75% 1.83% 2.72% 2.10%
8.07% 6.31% 5.60% 6.61% 6.09%
53.93% 56.46% 67.29% 58.86% 65.56%
26.17% 29.69% 25.74% 23.05% 26.57%
-5.35% -7.52% -11.61% 0.57% 0.56%
FY10A
FY11A
FY12E
FY13E
FY14E
40.5%
0.0
14,411
43.9%
0.0
14,859
47.8%
0.0
14,959
40.5%
0.0
15,259
43.5%
0.0
15,559
101.7% 108.0% 111.3% 111.9% 113.3%

21.5% 18.1% 16.6% 15.4% 14.1%
60.5% 60.8% 61.4% 63.5% 65.9%
84.0% 83.7% 81.4% 83.6% 84.8%
2.6%
2.4%
3.0%
2.8%
2.6%
2.6%
1.9%
2.3%
2.5%
2.6%
3.4%
3.0%
3.4%
3.8%
3.8%
1.5%
0.8%
0.9%
0.9%
0.8%
77.3% 65.2% 66.6% 65.6% 67.2%
(27.3%) 12.1% 25.3% 25.3% 14.3%
79,250 103,462 125,438 140,645 161,562
31.1% 30.6% 21.2% 12.1% 14.9%
11.7% 11.3% 10.9% 11.9% 12.3%
11.7% 11.3% 10.9% 11.9% 12.3%
423

21 November 2012
Adrian Mowat
(852) 2800-8599
Youku Tudou Inc.
Overweight
www.youku.com/
Company overview
Youku is the leading online video portal in China, launched in December 2006. It
offers a combination of licensed professional content, user-generated content (UGC)
and self-produced content. In April 12, Youku had 107MM unique visitors. As of Dec
11, its video content library contained more than 2,700 movie titles, 2,111 television
serial drama titles, and over 400,000 hours of other professionally produced content,
including 613 variety shows. Most of the revenue is derived from online advertising
services. The company went public on NASDAQ in December 2010.
China
Internet
Price: $19.6
Investment case
Against the backdrop of challenged brand ad spending, we see good leverage on
content, S&M, and bandwidth expenses. We expect significant margin expansion post
the merger with Tudou in 2013.
Dick WeiAC
(852) 2800 8535
Evan Zhou
(852) 2800 8505
Limited
35
30

Against the backdrop of a dimmer sales outlook, Youku is seeing more areas of
synergy with Tudou coming from both the revenue (agency rebate, pricing power) and
cost sides (BW, Content, S&M) than previously planned. We see our thesis of
sustained quarterly profitability in 2013 intact.
Downside risks to earnings and PT include: 1) further macroeconomic slowdown
leading to reduced ad spend and video allocation; 2) increased competition in content
purchases driving up content prices; and 3) merger execution risk.
25
20
15
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12
YOKU share price ($)

CCMP (rebased)
Abs
Rel
YTD
27.4%
11.8%
1m
1.2%
5.2%
3m
11.0%
10.3%
12m
-7.7%
-19.4%
Source: Bloomberg.

Dec-13 PT of US$30 is based on a P/E of 31x 14E diluted adjusted EPS, or a PEG
ratio of 0.9x (FY14E P/E vs. mid-term growth of 35%). We use 0.9x PEG as the
valuation reference point, as leading China companies with strong market power are
trading at this forward PEG ratio. 0.9x PEG is the average PEG ratio of leading China
internet companies such as Baidu, Sina, and Tencent.
Bloomberg YOKU US, Reuters YOKU
Net Sales
EBITDA
Pre Tax Profit
Reported Net profit
Reported EPS ($)
P/E (x)
Adj. EPS *
Adj. P/E (X)
EV/EBITDA (x)
P/B (x)
Y/E BPS ($)

140
323 625 974
-29
-98 -13 143
12
27 185 397
-27
-90
-6 150
-27
-90 -13 129
(0.24) (0.65) (0.08) 0.79
NM
NM NM 25.2
-0.18 -0.51 0.08 0.96
NM
NM 258.5 20.7
125.8
45.9
7.1
3.1
3.5
2.7
2.6
2.2
5.74
7.29
7.62

ROE(%)
-4.1% -7.8% 1.0% 11.6%
ROIC(%)
-4.5% -8.3% 0.5% 11.1%
Cash
575.2 857.8 774.1 849.9
Equity
654.9 1,180.1 1,234.3 1,444.2
Qtr GAAP EPS ($) 1Q
2Q
3Q
4Q
EPS (11)
-0.068 -0.040 -0.065 -0.069
EPS (12) E
-0.216 -0.086 -0.191 -0.154
EPS (13) E
-0.171 -0.030 0.036 0.087
1M
3M 12M
Abs. Perf.(%)
6.2% 7.8% -10.2%
Rel. Perf.(%)
8.4% 1.6% (27.0%)
8.91
Source: Company, J. P. Morgan estimates, Bloomberg. * Note: Excluding share-based compensation expense.
424
52-Week range
Shares Outstg
Market Cap(US)
Free float
Avg daily vol.
Avg daily val ($)
Dividend Yield
Index (NASD)
Price Target
Price Date
32.75 - 13.83
114.8MN
US$ 2,292MN
0.0%
1.3MM shares
25.24MN
0.0%
3,012
30.00
06 Nov 12

21 November 2012
Adrian Mowat
(852) 2800-8599
Youku Tudou Inc.: Summary of Financials

Revenues
Cost of goods sold
Gross Profit
R&D expenses
SG&A expenses
EBITDA
Other income (Exp.)
Earnings before tax
Tax
USD
FY10
58
52
5
-5
-24
0
-23
-10
-1
0
-7
-30
0
-30.4
-29
Ratio Analysis
FY11 FY12E FY13E FY14E %, year end Dec
140
323
625
974 Gross margin
108
282
429
569 EBITDA margin
32
41
196
-10
-18
-25
-34 Net margin
-44
-102
-159
-200 R&D/sales
7
19
25
27 SG&A/Sales
-29
-98
-13
143
11
27
185
388 Sales growth
3
6
8
0
0
1
2 Net profit growth
-1
1
0
0 Diluted EPS growth
-27
-90
-6
150
0
-0
-7
-22
-26.8 -90.5 -12.6 128.5 Net debt to total capital
-19
-72
13
Diluted EPS (GAAP)

(1.35) (0.24) (0.65) (0.08)
0.79 Asset turnover
Adj. Diluted EPS*
-1.28 -0.18 -0.51
0.08
BVPS
6.69
5.74
7.29
7.62
8.91 ROE
DPS
0.00
0.00
0.00
0.00
0.00 ROIC
25.86 110.68 138.49 161.87 161.97
Balance sheet
Cash flow statement
FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec
269
575
858
774
850 Net income
Accounts receivable
32
66
179
293
Inventories
0
0
0
0
Others
5
5
31
48
68 Other
Current assets
307
646 1,068 1,115 1,368 Cash flow from operations
LT investments
0
0
0
0
0 Capex / Inv. on Intangibles
Net fixed assets
10
15
63
85
108 Other investing cashflow
Others LT assets
9
67
288
401
Total Assets
326
728 1,418 1,601 1,991 Free cash flow
Liabilities
ST Loans
3
1
11
14
Payables
5
9
53
66
87 Other
Others
30
61
174
287
444 Dividends paid
39
72
238
367
Long-term debt
3
1
0
0
0
Other liabilities
0
0
0
0
Total Liabilities
41
73
238
367
547 Beginning cash
284
655 1,180 1,234 1,444 Ending cash
FY10
FY11 FY12E
9.4% 22.7% 12.6%
-17.3%
7.9%
8.3%
(39.8%) (20.4%) (30.2%)
-52.9% -19.2% -28.0%
8.1%
6.8%
5.4%
41.1% 31.6% 31.7%
FY13E
31.4%
29.5%
(2.1%)
-2.0%
4.1%
25.5%
FY14E
41.5%
39.9%
14.7%
13.2%
3.5%
20.6%
155.8% 142.8% 131.1% 93.5%

-10.7% 24.5% 242.1% -86.3%
14.0% -11.9% 237.6% -86.1%
308.2% (82.1%) 167.0% (88.0%)
55.8%
-1168.9%
-1123.7%
(1122.1%)
-90.7%
-92.6%
-87.1%
-87.4%
-71.0%
-71.7%
-60.9%
-61.6%
-57.1%
-57.8%
0.29
0.38
-17.5%
-16.4%
0.27
0.33
-4.1%
-4.5%
0.30
0.46
-7.8%
-8.3%
0.41
0.79
1.0%
0.5%
0.54
1.24
11.6%
11.1%
FY10
-30.4
13
-6
2
-22
-23
0
-23
-45
269
0
0
0
269
FY11
-26.8
33
2
7
16
-95
-0
-95
-80
377
-4
0
0
373
FY12E
-90.5
106
17
19
51
-373
0
-373
-323
844
9
-255
0
598
FY13E
-12.6
173
-4
25
181
-309
0
-309
-128
44
2
0
0
46
FY14E
128.5
218
1
27
375
-356
0
-356
20
54
2
0
0
56
225
44
269
306
269
575
283
575
858
-84
858
774
76
774
850
425
Adrian Mowat
(852) 2800-8599

21 November 2012
ZTE Corp
Overweight
www.zte.com.cn/
Company overview
ZTE Corp (HK: 0763) is a leading telecom equipment and wireless handset vendor in
China. Key customers are telecom companies such as Hutchison, China Mobile, China
Telecom, and Vodafone.
China
Communications Equipment
Price: HK$11.36
Investment case
We believe ZTE could become a beneficiary of China Mobiles accelerated TD-LTE
deployment in 2013. While it could take time to restore investor confidence in the
company, expectations are low enough to provide upside potential we believe. We
recommend accumulating on weakness given the TD-LTE acceleration in China.
Qin Zhang, CFA AC

(852) 2800-8532
qin.zhang@jpmorgan.com
Bloomberg JPMA ZHANG <GO>
Limited
30
25

We believe the visibility of China TD-LTE development became clearer when MIIT
announced the entire Dband, ranging from 2500-2690Hz, had been allocated for TDLTE. The allocation is highly positive for TD-LTE development in China: 1) the chances
for China to issue two TD-LTE licenses are now substantially higher; and 2) it supports
China Mobile's plan to deploy 200k/150k new TD-LTE base stations in 2013/14. We
think ZTE will likely enjoy 25% market share in TD-LTE core equipment market. In
2012, we estimate ZTE has secured 25% market share at China Mobile in the market.
Key downside risks include: 1) high and volatile carrier-capex-to-sales ratio in China;
and 2) poor expense control, more volatile currency movements (especially euro vs.
US$), 3) lower investment income, resulting in lower ROE, and 4) an escalation of the
US political issue, or the market waiting it out to see how the latest US ruling fully
transpires.
HK$
20
15
10
5
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
-54.4%
-59.0%
1m
-12.5%
-21.4%
3m
9.0%
-0.6%
12m
-48.5%
-53.6%
Source: Bloomberg.

Because of the companys high operating leverage and low visibility of earnings, we use
a P/B multiple to value the stock. We believe the stock will re-rate to 1.4x P/BV (2 std
below the historical mean), helped by accelerating TD-LTE deployment by China
Mobile. Our Dec-13 PT is HK$15. ZTE's ROE should expand to a low-to-mid-teen level
in the next two to three years, from a high-single-digit level in 2011-12. If its ROE can
recover to the mid-teen level it enjoyed in 2008-10, there could be a further re-rating of
the stock. We think any uncertainty of TD-LTE development the key risk to our PT.
(Year-end Dec, Rmb mn)

Sales
70,264 86,254 89,396 107,647 121,430
Gross Profit
21,665 24,168 22,137 28,968 33,292
Operating Profit
4,407 2,661 1,039 3,856 5,320
EBITDA
5,274 3,687 2,153 5,054 6,518
Pre-Tax Profit
4,360 2,635 552 3,292 4,602
Net profit
3,249.9 2,060.2 162.3 2,473.2 3,387.9
EPS (Rmb)
0.96 0.60 0.05 0.72
0.98
BPS (Rmb)
6.71 7.04 6.90 7.44
8.18
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
ROE (%)
ROIC (%)
WC Turns (x)
Net Debt/Equity

9.6 15.3 194.1
12.7
9.3
1.4
1.3
1.3
1.2
1.1
7.0 10.9
19.0
9.0
6.9
2.7
2.2
2.2
2.0
2.7
16.3
8.7
0.7
10.0
12.6
12.1
6.8
2.4
6.9
8.6
4.05 4.10
5.66
6.27
6.33
NM 5.1% 8.2% 25.0% 21.2%
Company data, Bloomberg, J. P. Morgan estimates. Note: In Net Debt/Equity, NM means company has net cash
426
52-Week range
Market Cap (HKD)
Market Cap (USD)
Share Out. (Com)
Free float
Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Hang Seng Index
HK$25.00 - 9.23
38,984MM
5030MM
3,440MM
68.0%
15.85MM
10.9MM
2.2
10,701

21 November 2012
Adrian Mowat
(852) 2800-8599
ZTE Corp: Summary of Financials

Revenues
Cost of goods sold
Gross Profit
R&D expenses
SG&A expenses
EBITDA
Interest income
Interest expense
Earnings before tax
Tax
EPS (reported)
EPS (adjusted)
BVPS
DPS
Shares outstanding
FY10
FY11 FY12E FY13E
70,264 86,254 89,396 107,647
48,599 62,086 67,259 78,678
21,665 24,168 22,137 28,968
-7,092 -8,493 -8,383 -10,643
-11,414 -13,718 -13,585 -16,406
4,407
2,661
1,039
3,856
5,274
3,687
2,153
5,054
101
284
284
317
-729 -1,374 -1,202 -1,265
581
1,065
432
384
4,360
2,635
552
3,292
-884
-392
-247
-659
3,249.9 2,060.2
162.3 2,473.2
3,250
2,060
162
2,473
0.96
0.96
6.71
0.25
3,440
0.60
0.60
7.04
0.20
3,440
0.05
0.05
6.90
0.20
3,440
0.72
0.72
7.44
0.18
3,440
FY14E
121,430
88,138
33,292
-12,005
-18,479
5,320
6,518
314
-1,409
377
4,602
-974
3,387.9
3,388
0.98
0.98
8.18
0.25
3,440
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY10
30.8%
7.5%
6.3%
4.6%
10.1%
16.2%
Sales growth
Net profit growth
16.6% 22.8%
3.6%
20.4%
11.8% -39.6% -61.0% 271.2%
32.2% -36.6% -92.1% 1423.9%
23.6% (37.3%) (92.1%) 1423.9%
12.8%
38.0%
37.0%
37.0%

Net debt to equity
8.40
-5.5%
NM
3.38
2.6%
5.1%
2.34
4.4%
8.2%
5.33
12.9%
25.0%
5.95
11.3%
21.2%
Asset turnover
ROE
ROIC
ROIC (net of cash)
Cash flow statement
Net income
Other
Capex
Disposal/(purchase)
Free cash flow
Other
Dividends paid
0.91
4.05
16.3%
12.1%
22.1%
0.89
4.10
8.7%
6.8%
13.6%
0.85
5.66
0.7%
2.4%
4.2%
0.98
6.27
10.0%
6.9%
11.9%
0.99
6.33
12.6%
8.6%
13.8%
Balance sheet
FY10
15,383 21,472 18,732 17,607 18,659
Accounts receivable
36,078 45,308 41,572 51,323 54,401
Inventories
12,104 14,988 13,609 16,801 17,809
Others
3,336
5,144
4,916
6,389
7,128
Current assets
66,901 86,912 78,829 92,119 97,997
LT investments
1,261
1,334
1,958
2,342
2,719
Net fixed assets
7,720
8,646 11,970 12,912 13,854
Others
9,627 10,892
9,358 11,322 11,837
Total Assets
85,509 107,784 102,115 118,696 126,407
Liabilities
ST Loans
7,901 11,876 12,060 14,200 14,382
Payables
28,270 35,761 33,522 38,080 39,137
Others
13,399 18,253 17,446 22,671 25,296
49,571 65,891 63,028 74,951 78,815
Long-term debt
5,475 10,825
8,618
9,806 10,253
Other liabilities
7,369
6,837
6,735
8,348
Total Liabilities
62,415 83,552 78,380 93,106 98,277 Beginning cash
23,094 24,232 23,735 25,590 28,131 Ending cash
FY11 FY12E
28.0% 24.8%
4.3%
2.4%
3.1%
1.2%
2.4%
0.2%
9.8%
9.4%
15.9% 15.2%
FY13E FY14E
26.9% 27.4%
4.7% 5.4%
3.6% 4.4%
2.3% 2.8%
9.9% 9.9%
15.2% 15.2%
FY10
FY11 FY12E
3,249.9 2,060.2 162.3
868 1,026 1,115
-2,989 -1,578 2,297
-0
-3
0
228 -3,655 3,885
-3,067 -4,065 -4,439
-3,649 -3,610 -4,069
-2,839 -7,720
-555
3,634
-236
27
501 15,359 -2,024
-841
-686
-686
4,288 13,435 -2,556
FY13E FY14E
2,473.2 3,387.9
1,198 1,198
-4,632 -1,145
1
-1
55 2,053
-2,140 -2,140
-3,353 -1,781
-2,085
-87
0
0
3,329
629
-1,304
0
2,174
779
886 6,089 -2,740

14,497 15,383 21,472
15,383 21,472 18,732
-1,125 1,052
18,732 17,607
17,607 18,659
427
Adrian Mowat
(852) 2800-8599

21 November 2012
428

21 November 2012
Stocks to Avoid
Adrian Mowat
(852) 2800-8599
429
Adrian Mowat
(852) 2800-8599

21 November 2012
ABB Ltd
Underweight
www.abb.co.in
Company overview
ABB is a leading player in the power and automation products and systems space.
Customers include power utilities, PGCIL, state transcos and industrial players.
India
Engineering & Capital Goods
Price: Rs725.90
Investment case
Over the past year, ABB has underperformed the Sensex by 7%. 9MCY11 performance
has disappointed on all fronts order inflows, topline growth and margins. In absolute
terms, our estimate of CY12 PAT is similar to CY05s, and our RoE estimate of 8.1%
(even lower over CY10-11) compares with 27% in CY05. MNC parentage and
technological edge over local peers has not manifested in margin performance. ABB's
stock price is still 2x CY05 levels.
Key issues in an anemic growth environment
Power sector margins continue to be impacted by excess competition, which shows no
signs of let up yet. Orders have been on the decline due to customer delays and lack of
new projects. Similarly, industrial capex across key sectors like cement and steel is not
expected to recover quickly. Managements focus is more on cost conservation and
recovering cash.
Sumit KishoreAC
(91-22) 6157 3581
sumit.x.kishore@jpmorgan.com
Bloomberg JPMA KISHORE <GO>
900
800
Rs 700
600
500
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ABB.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
24.8%
1.0%
1m
-5.6%
-6.7%
3m
-9.9%
-17.4%
Source: Bloomberg.

A sharper-than-expected pick-up in profitability is a key upside risk. Management
remains non-committal of the timeframe over which margins will reach high single
digits. In CY13, we factor in 6.6% OPM (vs. 4.4% in CY12), already building in
expectation of recovery. A 50bps improvement in margin increases PAT by ~5%.
Our Dec-13 PT of Rs540 is DCF based - WACC: 12.0%, terminal growth rate: 6.0%,
terminal year: CY17. We factor in optimism for margin recovery and growth in
intermediate year and terminal year EBIT margin to 9.5%. Our PT implies 29x FY13E
earnings and ~25% potential downside. A sharper-than-expected pick-up in
profitability and large orders wins are key upside risks to our UW and PT.
ABB Ltd (Reuters: ABB.BO, Bloomberg: ABB IN)
Rs in mn, year-end Dec
FY10A
FY11A
Revenue (Rs mn)
62,871
73,703
Net Profit (Rs mn)
632.3
1,845.3
EPS (Rs)
2.98
8.71
DPS (Rs)
2.00
3.00
Revenue growth (%)
0.8%
17.2%
EPS growth (%)
-82.2%
191.8%
ROCE
1.3%
8.2%
ROE
2.6%
7.4%
P/E (x)
243.3
83.4
P/BV (x)
6.4
6.1
EV/EBITDA (x)
176.5
53.4
Dividend Yield
0.3%
0.4%
430
FY12E
77,052
2,138.3
10.09
3.00
4.5%
15.9%
9.7%
8.1%
71.9
5.7
45.0
0.4%
FY13E
86,636
3,963.7
18.70
3.00
12.4%
85.4%
17.1%
13.8%
38.8
5.1
26.0
0.4%
FY14E
99,631
5,044.3
23.80
3.00
15.0%
27.3%
19.5%
15.5%
30.5
4.5
20.6
0.4%
Company Data
Shares O/S (mn)
Market cap (Rs mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
Free float (%)
3M - Avg daily Value (Rs mn)
3M - Avg daily Value (USD)
($ mn)
NIFTY
Exchange Rate
Fiscal Year End
212
153,824
2,837
725.90
08 Nov 12
25.0%
0.06
45.61
0.84
5,760
54.22
Dec
12m
2.2%
-6.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
ABB Ltd: Summary of Financials

Income Statement
Rs in millions, year end Dec
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Other income
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net Income
% change Y/Y
Shares outstanding
EPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Total Investments
Net fixed assets
Total Assets
Liabilities
Payables
Others
Total Debt
Other liabilities
Total Liabilities
BVPS
FY10
62,871
0.8%
838
-84.2%
1.3%
321
NM
0.5%
855
-174
1,002
-81.0%
-370
36.9%
632.3
-82.2%
212
2.98
(82.2%)
FY11
73,703
17.2%
2,831
238.0%
3.8%
2,035
534.1%
2.8%
949
-307
2,677
167.1%
-832
31.1%
1,845.3
191.8%
212
8.71
191.8%
FY12E
77,052
4.5%
3,365
18.9%
4.4%
2,555
25.5%
3.3%
990
-400
3,145
17.4%
-1,006
32.0%
2,138.3
15.9%
212
10.09
15.9%
FY13E
86,636
12.4%
5,754
71.0%
6.6%
4,929
92.9%
5.7%
1,200
-300
5,829
85.4%
-1,865
32.0%
3,963.7
85.4%
212
18.70
85.4%
FY10
5,871
29,260
6,979
7,153
49,262
FY11
2,644
30,825
9,255
6,876
49,600
FY12E
2,408
32,721
8,286
8,722
52,136
FY13E
4,174
36,791
9,219
9,747
59,930
214
8,238
57,714
731
12,523
62,855
424
14,213
66,773
21,461
12,016
33,477
0
0
33,477
24,237
113.71
22,461
15,049
37,509
0
0
37,509
25,345
119.60
27,443
12,166
39,609
0
0
39,609
27,164
128.19
Cash flow statement

EBIT
Taxes
Others
Capex
Free cash flow
FY10
321
517
1,017
-439
2,097
-599
1,498
FY11
2,035
795
-1,837
-934
702
-4,903
-4,201
FY12E
2,555
810
-672
-1086
2,197
-2,500
-303
FY13E
4,929
825
-1,301
-1945
3,408
-1,000
2,408

Other
Dividends paid
Change in cash
Beginning cash
Ending cash
DPS
0
0
1
-424
1,075
5,241
5,871
2.00
0
0
-339
-636
-5,175
5,871
2,644
3.00
0
0
307
-636
-632
2,644
2,408
3.00
0
0
0
-636
1,772
2,408
4,174
3.00
Ratio Analysis
EBITDA margin
EBIT margin
Net profit margin
FY10
1.3%
0.5%
1.0%
FY11
3.8%
2.8%
2.5%
FY12E
4.4%
3.3%
2.8%
FY13E
6.6%
5.7%
4.6%
0.8%
-82.2%
(82.2%)
17.2%
191.8%
191.8%
4.5%
15.9%
15.9%
12.4%
85.4%
85.4%
0.00
-24.2%
1.11
2.27
2.6%
1.3%
0.00
-10.4%
1.22
2.18
7.4%
8.2%
0.00
-8.9%
1.19
2.46
8.1%
9.7%
0.00
-13.7%
1.22
2.46
13.8%
17.1%
Sales growth
14,388 EPS growth
74,742
Debt to total capital
13,479 Sales/assets
0 ROE (%)
0 ROCE (%)
44,336
30,407
143.49
431
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
ALL
Price: R$8.60
www.all-logistica.com
End Date: Dec 2013
Company overview
ALL is Latin Americas largest independent rail-based logistics operator. ALL offers a
full range of logistics services, including domestic and international rail and trucking
transportation, distribution, warehousing, container customized transportation
combined with fractioned distribution and intermodal door-to-door transportation. Its
rail network serves seven of the most active ports in Brazil and Argentina through
which approximately 78% of all South Americas grain exports are shipped annually.
Brazil
Transportation
Investment case
Even assuming a recovery in the macroeconomic environment and in the companys
specific drivers (like a stronger harvest, for example), we believe that further
interventions by the government in the sector combined with the closing of the Cosan
deal could pressure the stock. If the deal is approved, we would not be surprised if
Cosan pushes ALL to increase capex in order to reduce its freight costs.

In our view, any further interference from the government in the sector (like forcing the
concessionaires to invest more or give back some of the non-used stretches) could hurt
the stock. We also believe that the current stock price does not factor in the possibility
of the Cosan deal being approved.
Fernando AbdallaAC
(55-11) 4950-3463
11.5
10.5
R$
9.5
8.5
7.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ALLL3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Wheres the earnings risk for 2013?

Earnings risk for the upside lie in a faster than expected recovery in corn volumes and a
stronger contribution on EBITDA from the Rondonpolis project.
Price target and key recovery risks
Our Dec 2013 PT of R$11.50 is based on a DCF methodology, using a WACC of
12.8% in R$ nominal and a LT growth rate of 5%. We assume perpetuity only for the
Malha Norte concession, Brado, and Ritmo operations. We model the remaining rail
concessions until their expirations. Risks to the upside could be (1) a faster than
expected recovery in corn volumes and (2) further developments of Vetria, the mining
project. Risks to the downside: (1) higher than expected capex could postpone cash
flow positive, (2) regulatory intervention.
America Latina Logistica SA (ALLL3.SA;ALLL3 BZ)
FYE Dec
2011A
EBITDA (R$ mn)
FY
1,494
2.07
Revenues FY (R$ mn)
3,204
0.36
245
2012E
2013E
1,623
3.39
3,564
0.42
289
1,839
0.59
4,029
0.59
409
estimates.
432
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
8.60
14 Nov 12
11.70 - 7.62
6,182.10
Dec
688
11.50
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
ALL: Summary of Financials

Income Statement
Revenues
Cost of goods sold
SG&A
EBITDA
EBITDA margin
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Net income
Net income margin
EPS

3,204 3,564 4,029 4,529 5,111 Cash
(125)
(120)
(198)
(242)
(274) Inventories
(465)
(473)
(497)
(516)
(550) Other current assets
1,494 1,623 1,839 2,065 2,321 Net PP&E
46.6% 45.6% 45.7% 45.6% 45.4% Other assets
233
143
105
88
76 Total assets
(1,148) (1,057) (1,023)
(962)
(965) Short-term debt
(19)
(27)
(0)
(0)
(1) Accounts payable
236
326
517
773
984 Other current liabilities
17
(34)
(103)
(155)
(197) Long-term debt
(8)
(4)
(5)
(7)
(9) Other liabilities
245
289
409
611
778 Total liabilities
7.6%
8.1% 10.1% 13.5% 15.2% Minority interest
0.36
0.42
0.59
0.89
Revenue growth
16.4% 11.2% 13.0% 12.4% 12.8%
EBITDA growth
11.6%
8.6% 13.3% 12.3% 12.4% Net debt
Net income growth
3.5% 17.8% 41.7% 49.6% 27.3% Net Debt/(Total Capital)
Total Debt/(Total Capital)
Net Debt/EBITDA
Operating Data
Capex
872
960 1,110 1,072
984 GDP Growth (%)
105
(64)
(75)
(43)
(45) FX rate(R$/US$, eop)
Free cash flow to firm
744
566
551
795 1,095 Inflation IGP-M (YoY, %)
Change in debt
1,038
(29)
(200)
10
(60) Inflation IPCA (YoY, %)
Free cash flow to equity
859
(382)
(572)
(76)
136 Selic rate (%, eop)
Dividends
56
72
102
153
195
EV/EBITDA
Agricultural commodities
31,412 34,290 37,383 40,747 44,414 P/E
Volume change
10.4%
9.2%
9.0%
9.0%
9.0% P/BV
Agricultural yield
65.4
65.0
67.1
68.6
70.1 FCF yield
Dividend yield
Industrial products
11,557 11,126 11,679 12,205 12,754 ROE(%)
Volume change
2.5% (3.7%)
5.0%
4.5%
4.5% ROIC(%)
Industrial yield
56.7
55.6
57.4
58.7
60.0
CAPEX/sales
27.2% 26.9% 27.6% 23.7% 19.3%
FY11A
2,100
272
124
466
7,262
3,918
14,142
937
463
541
5,963
2,151
10,055
67
4,020
14,142
FY12E
1,556
293
169
634
7,888
3,913
14,453
1,261
469
477
5,610
2,280
10,097
69
4,286
14,453
FY13E
975
413
169
815
8,501
3,913
14,785
1,221
519
473
5,450
2,461
10,123
69
4,593
14,785
FY14E
845
496
169
1,013
9,057
3,913
15,493
1,219
539
493
5,462
2,659
10,372
69
5,052
15,493
FY15E
889
602
169
1,214
9,492
3,913
16,278
1,204
582
511
5,417
2,860
10,574
69
5,635
16,278
4,800 5,315 5,695 5,836 5,732

44.0% 47.6% 50.6% 49.7% 46.8%
63.2% 61.6% 59.2% 56.9% 54.0%
3.2
3.3
3.1
2.8
2.5
2.8%
1.7%
4.1%
4.0%
4.0%
1.80
1.98
1.95
2.00
2.05
6.5%
6.0%
5.0%
4.5%
4.5%
6.5%
4.9%
5.3%
5.0%
5.0%
11.0%
7.5%
9.0%
9.0%
9.0%
7.3
7.0
6.4
5.8
25.2
21.4
15.1
10.1
1.5
1.4
1.3
1.2
14.2% (6.3%) (9.5%) (1.3%)
0.9%
1.2%
1.7%
2.5%
6.1%
6.7%
8.9% 12.1%
12.2% 11.8% 12.2% 13.0%
5.1
7.9
1.1
2.3%
3.1%
13.8%
14.0%
433
Adrian Mowat
(852) 2800-8599

21 November 2012
Alliance Oil
Underweight
www.allianceoilco.ru
Price Target: Skr59.00
Company overview
Alliance is the smallest integrated company in Russia. It currently produces 52 mbpd of
crude oil in Timan-Pechora, Volgo-Urals, Tomsk region (Russia) and in Kazakhstan.
The company refines 75-85 mbpd at the Khabarovsk refinery (Far East). 2P reserves
amounted to 648 mn bbl as of end-2011, though a major cut in the reserve base is
possible in the 2012 update due to problems in Timan-Pechora production (63% of 2P
reserves). The Bazhaev family owns a 44% stake in the company, Repsol 3.2%.
Russia
Oil and Gas
Investment case
Alliance Oil used to have highly ambitious growth targets in both the upstream and
downstream crude oil segments. However, facing a slump in Timan-Pechora crude oil
production and delays in refinery upgrade, it started to reconsider its aggressive growth
plans. In the meantime, net debt/EBITDA has reached 2.0x and keeps growing due to
significant remaining capex requirements.
Price: Skr51.70

The capex requirements to sustain crude oil output have become excessively expensive.
The company effectively spends $20/bbl on upstream maintenance capex, which is
comparable with its cash generation in a segment with no growth in sight. The recent
refinery upgrade mostly confirmed our concerns about launch being delayed to 2014
and about upgrade quality.
Andrey GromadinAC
(7-495) 967-1037
andrey.gromadin@jpmorgan.com
100
90
Skr
80
70
60
50
Nov-11
Abs
Feb-12 May-12
YTD
-40.2%
Aug-12
1m
-4.3%
Nov-12
3m
-19.6%
12m
-39.4%
Source: Bloomberg.

The market seems to continue believing in Alliance Oils earnings growth potential,
which we suppose is related to the refinery upgrade and its planned connection to
ESPO. We are more conservative, forecasting 11-19% lower than Bloomberg EBITDA
consensus in 2013-2014 under our current oil price assumptions.
We use a standard valuation approach for Russian oil and gas companies, which is
based 50% on our end-13 DCF-based fair value and 50% on our target (normalized)
EV/EBITDA (13E). Based on our methodology, our end-13 PT is SKr59 for Alliance
Oil. Key upside risks to our rating and target price include an improvement in upstream
segment performance, reduced risks relating to the refinery upgrade and government
support in pipeline construction.
Alliance Oil Company Ltd (AOILsdb.ST;AOIL SS)
FYE Dec
2011A
Adj. EPS FY ($)
2.15
Revenue FY ($ mn)
3,083
EBITDA FY ($ mn)
689
319
FY ($ mn)
Adj P/E FY
3.6
EV/EBITDA FY
4.8
EBITDA margin FY
22.4%
Dividend (Gross) FY (Skr)
0.00
434
2012E
1.76
3,321
685
259
2013E
1.77
3,450
669
297
4.4
4.8
20.6%
0.00
4.3
4.9
19.4%
0.00
Company Data
Price (Skr)
Date Of Price
Price Target (Skr)
52-week Range (Skr)
Mkt Cap (Skr bn)
Shares O/S (mn)
51.70
02-Nov-12
59.00
31 Dec 13
93.00 - 49.52
8.9
172

21 November 2012
Adrian Mowat
(852) 2800-8599
Alliance Oil Company: Summary of Financials

Revenues
% change Y/Y
Gross Margin (%)
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as a % of EBT
% change Y/Y
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
FY11 FY12E
3,083
3,321
40.4%
7.7%
34.7% 33.0%
689
685
57.2%
-0.7%
22.4% 20.6%
515
487
68.2%
-5.5%
16.7% 14.7%
(62)
(108)
423
359
48.3% -15.2%
(83)
(77)
19.7% 21.5%
319
259
43.5% -18.8%
171.53 171.53
1.86
1.51
43.5% (18.8%)
FY11
281
476
145
0
902
FY12E
170
499
219
0
888
0
3,224
4,225
0
3,904
4,897
Cash flow statement

FY13E FY14E FY15E $ in millions, year end Dec
3,450 3,103
2,873 EBIT
3.9% -10.1%
32.0% 41.1% 41.6% Change in working capital/Other
669
866
785 Taxes
-2.3% 29.4%
19.4% 27.9% 27.3%
471
650
569 Capex
-3.3% 38.1% -12.5% Disposal/(Purchase)/Other
13.6% 21.0% 19.8% Net Interest
(91) (220)
373
415
362
4.0% 11.2% -12.8% Equity raised/repaid
(76)
(86)
20.4% 20.8% 20.8% Other
297
329
287 Dividends paid
14.8% 10.7% -12.8% Beginning cash
171.53 171.53 171.53 Ending cash
1.73
1.92
1.67 DPS
14.8% 10.7% (12.8%)
Ratio Analysis
FY13E FY14E FY15E $ in millions, year end Dec
126
139
150 EBITDA margin
514
473
259
222
0
0
0 SG&A/Sales
899
833
798
- EPS growth
4,555 4,483
4,410
5,559 5,422
5,314 ROE
ROCE
Liabilities
ST loans
107
241
278
Payables
393
359
377
Others
0
5
5
500
605
660
Long term debt
1,514
1,748 2,045
Other liabilities
217
239
239
Total liabilities
5,957
6,884 7,843
1,955
2,264 2,575
BVPS
11
13
15
250
301
5
556
1,817
239
7,478
2,768
16
224 Production (mboe/day)

281 Production oil (mbpd)
5 Production gas (mboe/day)
509 Refining throughput (mbpd)
1,608
2,916 Net debt
FY11
515
174
(199)
(83)
408
FY12E FY13E
487
471
198
198
(130)
(37)
(77)
(76)
478
632
FY14E
650
215
2
(86)
868
FY15E
569
216
27
(75)
811
(1,179)
(16)
(62)
(917)
(817)
0
(108)
(524)
(836)
(91)
(371)
(278)
(220)
284
(282)
(193)
262
0
632
0
228
281
0.00
0
377
0
281
170
0.00
(7)
334
0
170
126
0.00
(16)
-256
0
126
139
0.00
(14)
-235
0
139
150
0.00
FY12E FY13E
20.6% 19.4%
14.7% 13.6%
7.8%
8.6%
-12.3% -12.6%
FY14E
27.9%
21.0%
10.6%
-13.2%
FY15E
27.3%
19.8%
10.0%
-14.3%
FY11
22.4%
16.7%
10.3%
-12.3%
40.4%
7.7%
43.5% (18.8%)
3.9% (10.1%) (7.4%)

14.8% 10.7% (12.8%)
17.1%
12.0%
12.3%
9.0%
12.3%
7.6%
12.3%
10.6%
10.1%
9.4%
49
49
74
55
55
76
51
51
76
50
50
64
50
50
64
11.1
67.2%
1,340
2.0
6.3
78.9%
1,819
2.7
7.4
84.0%
2,197
3.3
3.9
68.7%
1,929
2.2
4.1
56.9%
1,682
2.1
435
Adrian Mowat
(852) 2800-8599

21 November 2012
Anglo American (AGL SJ.J)
Underweight
www.angloamerican.com
Company overview
AGL is an international diversified mining company, with a large exposure to South
Africa (>50% EBIT). It has industry leading positions in copper, metallurgical and
thermal coal, diamonds and platinum, the last two which differentiate it from its peers.
Its South African assets consist of an 80% share in Amplats, the worlds largest Pt
miner, an 85% share in De Beers, the worlds largest diamond producer, a 69.7% share
in Kumba Iron Ore, 40% in Samancor, a manganese producer and 100% in Thermal
coal.
South African Metals and Mining

Metals and Mining
Price: 27,330c
James WellstedAC
(+27-11) 507 0397
James.r.wellsted@jpmorgan.com
.P. Morgan Equities Limited
Investment case
JPM has recently downgraded F12 and F13 EPS significantly (12% in F12 and 25% in
F13), largely due to operational cost overruns , underperformance of some of AGLs
key operating assets, the impact of the SA strike action on Amplats and Kumba and
delays and capital overruns on key growth projects. The operational issues are systemic
and will take some time before improvements will be evident in our view. AGL's CEO
recently resigned, but we do not expect a significant change in strategy at least until a
replacement CEO has been found and has had time to assess the current state of the
group, likely through FY13. AGL is geared to a recovery in global growth, and while
see some signs of a bottoming, we do not anticipate a recovery in FY13.
34,000
30,000
26,000
22,000
Nov-11
Abs
Feb-12
YTD
-9.0%
May-12
1m
6.0%
Aug-12
Nov-12
3m
9.6%
12m
-11.2%
Source: Bloomberg.

Weak operational performance, an uncertain strategy and probable capital overruns on
major projects are likely to cap AGLs performance in FY13. Its exposure to SA and
the current labour unrest in the industry, as well as regulatory uncertainty, is likely to
also drag on its performance.
JPM is currently 30% below consensus with regards to its F13 EPS forecasts, largely
due to adjustments to production and costs at AGLs operations. A recovery in global
growth and commodity prices is the key upside risk to our forecast, with a change in
strategy, possibly resulting in a breakup of the company (which we do not expect) also
likely to be well received by the market.
Our R248/sh Dec 13 PT for AGL on 1x our revised year end NPV forecast for the
company, in line with historical multiples. We believe P/NPV multiples more
accurately reflect the drivers of long term share price performance.
Anglo American (AGLJ.J) (AGLJ.J;AGL SJ)
FYE Dec
2011A
Adj. EPS FY ($)
5.14
Revenue FY ($ mn)
36,548
EBITDA FY ($ mn)
13,379
EBITDA margin FY
36.6%
EBIT FY ($ mn)
11,126
EBIT margin FY
30.4%
EV/EBITDA FY
3.0
EPS (ZARc) FY
3,723
DPS (ZARc) FY
334
436
2012E
1.97
32,106
8,340
26.0%
5,922
18.4%
4.9
1,604
440
2013E
2.06
36,228
9,456
26.1%
6,856
18.9%
4.9
1,753
481
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
27,330
02-Nov-12
24,832
31 Dec 13
35,005 - 23,076
329.6
1,206

21 November 2012
Adrian Mowat
(852) 2800-8599
Anglo American (AGLJ.J): Summary of Financials

Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin (%)
EBIT
% Change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares Outstanding
Minorities
EPS (Reported)
% Change Y/Y
EPS (ZARc)
Balance sheet
Accounts Receivable
Inventories
Current assets
FY11
36,548
11.0%
13,379
11.8%
36.6%
11,126
13.6%
30.4%
183
10,877
-0.7%
(2,860)
26.3%
6,264
-4.7%
1,258.0
FY12E
32,106
-12.2%
8,340
-37.7%
26.0%
5,922
-46.8%
18.4%
(331)
9,532
-12.4%
(1,683)
31.0%
6,581
5.1%
1,280.0
FY13E
36,228
12.8%
9,456
13.4%
26.1%
6,856
15.8%
18.9%
(454)
5,934
-37.7%
(1,840)
31.0%
2,519
-61.7%
1,280.0
5.18
(5.0%)
3,723
5.23
1.1%
1,604
1.97
(62.4%)
1,753
FY11
11,732
3,674
3,517
19,302
FY12E
6,623
3,227
3,607
13,837
FY13E
4,442
3,642
4,064
12,527
Fixed Assets
Total assets
40,549
72,442
58,345
82,173
61,915
84,849
ST loans
Payables
Long term debt
Total liabilities
BVPS
5,098
8,178
11,855
29,253
43,189
34
(1,753)
1,018
(1,268)
1,018
5,229
7,209
14,626
31,539
50,571
40
(1,576)
1,018
5,891
7,871
14,626
32,201
52,586
41
FY14E
39,324
8.5%
11,148
17.9%
28.3%
8,428
22.9%
21.4%
(484)
7,447
25.5%
(2,308)
31.0%
3,385
34.4%
1,280.0
Cash flow statement

EBIT
Taxes
FY11
11,126
2,253
(159)
(2,539)
11,593
FY12E
5,922
2,418
487
(2,783)
8,266
FY13E
6,856
2,599
(209)
(1,840)
8,361
FY14E
8,428
2,720
(215)
(2,308)
9,953
Capex
Disposals/(purchase)
Net Interest
Free cash flow
(6,203)
533
(457)
3,236
(5,509)
(4,303)
(331)
(193)
(6,169)
0
(454)
70
(6,324)
0
(484)
1,036
(347)
-297
(818)
6,460
11,732
334.27
0
2,771
(959)
11,732
6,623
439.89
0
0
(1,078)
6,623
4,442
481.27
0
0
(1,163)
4,442
2,859
534.25
FY11
6.0
17.1%
FY12E
6.0
20.5%
FY13E
15.9
7.0%
FY14E
11.8
8.6%
6.8%
11.0%
-4.7%
(5.0%)
-13.7%
-12.2%
5.1%
1.1%
12.8%
12.8%
-61.7%
(62.4%)
8.5%
8.5%
34.4%
34.4%
Equity raised/repaid
Debt Raised/repaid
Dividends paid
Beginning cash
Ending cash
(1,754) DPS
2.64 DPS (ZARc)
34.4%
2,418
Ratio Analysis
2,859 P/E
3,953 Net Profit margin
4,277
11,468 Sales per share growth
Sales growth
87,876 EPS growth
6,199
8,179
14,626
32,509
55,304
43
Dividend Yields
Net debt to equity
Assets/Equity
EV/EBITDA
P/BV
ROE
ROCE
334
60.8
1.2%
440
17.9
1.6%
481
15.1
1.8%
534
17.4
2.0%
2.9%
1.7
15.6%
1.6
18.2%
1.6
19.4%
1.6
15.3%
23.6%
5.3%
10.9%
5.1%
10.7%
6.5%
12.3%
3.0
0.9
4.9
0.8
4.9
0.8
4.3
0.7
437
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.arcelormittalsa.com
Company overview
ArcelorMittal South Africa Limited is the largest steel producer in Africa, with a
production capacity of 7.8 million tonnes of liquid steel per annum. It services the
construction and heavy engineering sectors, pipe and tube manufacturers, the
automotive market, as well as the furniture and appliance manufacturing industries
South Africa
Steel
Price: 3,589c
Alex Comer
Investment case
AMSA continues to face significant macro and stock specific headwinds and we see no
immediate reason to buy the stock. AMSA's share price has tended to bottom out when
it has reached book value (currently 0.6x). However, we see a number of its
international peers, including its parent company (at 0.4x), trading well below book
value, suggesting further downside risk.
Structurally the domestic steel industry remains under pressure as slow growth in key
consumption sectors (construction, manufacturing, and mining) undermines demand.
Margins have come under pressure as international raw material prices have grown
faster than steel prices. Globally, an overcapacity in the steel industry has resulted in
more imports coming into the domestic market creating further pressure on AMSAs
pricing power. In addition, AMSA faces a number of extraneous issues (aging plants,
environmental capex required, potential CO2 tax, iron ore supply dispute, Competition
Commission investigations).
AC
(44-20) 7134-5945
7,000
6,000
c 5,000
4,000
3,000
Nov-11
Abs
Feb-12
YTD
-48.8%
May-12
Aug-12
1m
-11.1%
Nov-12
3m
-22.3%
12m
-48.1%
Source: Bloomberg.

The Sishen Iron Ore Supply agreement may be concluded earlier than anticipated. A
more positive or negative result than we currently forecast should have a significant
effect on AMSA earnings, but remains difficult to call either way. A stronger than
expected recovery in the SA economy should drive earnings higher.
We use a DCF based valuation model to derive a 12M (Aug 2013) target price for R
48/share. Our DCF gives us a fair value of R43. In order to achieve a year forward
target price we inflate our DCF by AMSAs cost of capital to give us a one year
forward value of R48. Our target price acknowledges AMSAs gearing to a recovering
economy, but we would not be buying the stock until there is greater clarity on the
issues mentioned above. We expect AMSA to continue to underperform against a
benign global growth forecast. Key risks include: 1) Sishen Iron Ore Supply
Agreement. 2) Government intervention in the steel industry. 3) Further operational
problems.
ArcelorMittal South Africa Limited (ACLJ.J;ACL SJ)
FYE Dec
2011A
2012E
Adj. EPS FY (c)
(12.96)
6.05
Revenue FY (R mn)
31,453
34,746
EBITDA FY (R mn)
1,720
1,681
EV/EBITDA FY
13.2
11.1
Adj P/E FY
NM
593.2
P/BV FY
0.6
0.6
EBITDA margin FY
5.5%
4.8%
Div Yield FY
1.0%
0.0%
438
2013E
357.52
40,333
3,507
5.3
10.0
0.6
8.7%
2.0%
2014E
497.89
41,230
4,323
4.3
7.2
0.6
10.5%
2.8%
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
3,589
02-Nov-12
4,800
07 Aug 13
7,065 - 3,863
16.0
447

21 November 2012
Adrian Mowat
(852) 2800-8599
ArcelorMittal South Africa: Summary of Financials

Revenues
% Change Y/Y
EBITDA
EBITDA Margin (%)
EBIT
Associate
Financing
PBT
Net Profit
HEPS
Div
CF/Share
Balance sheet
Fixed assets
Current assets
Current liabilities
LT Liabilities
Net assets
Invested Capital
Net Cash (Debt)
Net Working Capital
FY11
31,453
4.1%
1,720
5.5%
297
-34
(261)
126
8
(12.96)
55.08
-247.51
FY12E
34,746
10.5%
1,681
4.8%
237
81
(284)
34
24
6.05
0.00
770.51
FY13E
40,333
16.1%
3,507
8.7%
2,011
101
(120)
1,992
1,434
357.52
89.38
874.85
FY14E
41,230
2.2%
4,323
10.5%
2,753
121
(100)
2,774
1,998
497.89
124.47
1,042.79
FY11
16,618
12,849
(5,279)
(4,474)
22,669
26,811
439
7,665
FY12E
16,227
13,274
(5,285)
(4,474)
22,687
25,214
2,054
6,254
FY13E
16,356
15,367
(6,419)
(4,474)
23,763
24,976
3,368
6,252
FY14E
16,859
16,640
(6,686)
-4,474
25,261
25,466
4,376
6,391
Cash flow statement

Operating cash flow
Financing
Tax
Capex
Net Cashflow
Net cashflow from operations
Acquisitions/disposals
Other items
Change in Net Debt
FY11
(993)
(73)
(243)
(1,190)
(3,153)
(1,309)
(180)
(253)
-3,103
FY12E
3,091
(284)
(9)
(1,042)
1,615
2,798
0
81
1,615
FY13E
3,510
(120)
(558)
(1,613)
1,314
2,832
0
101
1,314
FY14E
4,184
(100)
(777)
(2,061)
1,008
3,307
0
121
1,008
Ratio Analysis
EV/ Sales
EV/EBITDA
EV/EBIT
ROCE
EPS
P/E
Dividend Yield
FCF Yield
FY11
0.7
13.2
76.4
0.8
0.9%
-12.96
NM
1.0%
-10.0%
FY12E
0.5
11.1
78.6
0.7
0.8%
6.05
593.2
0.0%
8.8%
FY13E
0.5
5.3
9.3
0.7
6.4%
357.52
10.0
2.0%
6.1%
FY14E
0.5
4.3
6.8
0.7
8.5%
497.89
7.2
2.8%
6.3%
439
Adrian Mowat
(852) 2800-8599

21 November 2012
ASUSTek Computer
Neutral
www.asus.com
Company overview
Asus is the worlds largest motherboards maker. Starting with MB business, Asus has
grown quickly in the NB space, especially netbooks. The company's products include
MB, NB, Eee PC, tablet PC and PC peripherals. Its key customers are channels and
distributors in Europe and Asia.
Taiwan
Computer Hardware
Price: NT$320.50
Gokul Hariharan AC
(852) 2800-8564
Investment case
We are conservative on the NB market in 2013. In past two quarters, Asus growth in
Notebook (incl EeePC) has slowed considerably. Given that tablet cannibalization of
notebook market will only accelerate in 2013, we believe that Asuss Notebook growth
is likely to settle at only 10% in 2013 and 2014. Besides, fiercer competition from other
brands may impact negatively on Asuss top line as well as its margins.

Limited
340
300
NT$ 260
220

We think Asustek outperformed its peer in 2012 thanks to outstanding development in
tablets. However, the momentum is likely to be weaker in 2013 due to the threat from
Samsung. We are not as optimistic on Asus' tablet foray. Samsung appears to be very
aggressive and is already shipping 2x the volume of Asus the gap is likely to get even
wider with the launch of Nexus 10 (cobranded with Samsung). In addition, route to
meaningful profits in tablets is not clear for any PC vendor.
180
Nov-11
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
48.7%
45.6%
1m
6.8%
10.7%
3m
15.7%
17.6%
12m
52.3%
55.9%
Source: Bloomberg.

Key upside risk are touch notebooks creating a refresh cycle in NB and faster pickup
for Windows 8 products, while a key downside risk is Samsung becoming a credible
force in consumer PCs earlier than expected.
Our Jun-13 PT of NT$300 is based on 10x FY13E vs. a historical range of 8-14x. We
could turn more positive if we see touch-on-notebooks take off. In 2H13, with touch
panel prices falling, this could emerge as a trend. We could turn more negative if
Asuss core profit generator high-end notebooks (e.g. Zenbook) come under threat
from competitors such as Samsung or Apple (if Apple drops prices on Macbook Air).

Sales
350.26 411.56 445.66 478.11
Operating Profit
18.18 21.92 23.41 25.19
EBITDA
19.78 23.52 25.01 26.79
Pretax Profit
20.06 26.47 27.21 29.34
22.31 29.71 29.99 32.10
Net Debt / Equity
NM
NM
NM
NM
Y/E BPS (NT$)
152.70 172.89 186.84 202.74
New TW GAAP P/E

P/BV (x)
ROE(%)
Cash Div (NT$)
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E

14.4 10.8
10.7
10.0
2.1
1.9
1.7
1.6
15.3 18.3
16.7
16.5
11.8 12.1
16.0
16.2
1Q
2Q
3Q
4Q
4.41 4.78
6.22
6.48
6.65 6.40
8.92
7.74
6.61 6.26
8.52
8.61
440
Target Price (NT$)

52-Week range (NT$)
Share Outstanding
Free float
Avg daily volume
Avg daily val (USD)
QFII Holding (%)
Market Cap(USD)
300
327.00 - 178.00
753mn
95.0%
68mn
39.30mn
3.8%
39.7%
8,316mn
Adrian Mowat
(852) 2800-8599

21 November 2012
ASUSTek Computer: Summary of Financials

FY10
FY11
Revenues
321,298 350,257
Cost of goods sold
277,546 301,772
Gross Profit
43,752 48,485
R&D expenses
-8,130 -8,183
SG&A expenses
-21,981 -22,124
13,641 18,178
EBITDA
15,142 19,778
Interest income
726
538
Interest expense
-667
-340
59
198
5,105
1,885
Earnings before tax
18,746 20,063
Tax
-2,258 -3,137
16,488.0 16,926.1
16,488 16,926
EPS (reported)
21.22
22.31
EPS (adjusted)
21.22
22.31
BVPS
136.45 152.70
DPS
11.99
11.76
Shares outstanding
777
753
Balance sheet
FY10
FY11
41,395 40,542
Accounts receivable
39,861 49,285
Inventories
41,847 53,374
Others
17,308 20,483
Current assets
140,411 163,684
LT investments
44,426 49,969
Net fixed assets
4,499
4,166
Others
Total Assets
190,781 219,724
Liabilities
ST Loans
10,911 10,500
Payables
44,572 49,237
Others
26,523 40,364
82,006 100,101
Long-term debt
0
0
Other liabilities
0
0
Total Liabilities
84,738 104,776
106,043 114,948
FY12E
411,561
356,014
55,547
-9,080
-24,551
21,916
23,516
580
-234
346
4,555
26,471
-4,105
22,365.8
22,366
29.71
29.71
172.89
12.14
753
FY13E
445,658
385,193
60,465
-10,006
-27,052
23,408
25,008
636
-194
442
3,804
27,212
-4,636
22,576.0
22,576
29.99
29.99
186.84
16.04
753
FY14E
478,108
413,470
64,638
-10,650
-28,794
25,194
26,794
759
-196
562
4,143
29,337
-5,171
24,165.7
24,166
32.10
32.10
202.74
16.20
753
FY12E FY13E FY14E

44,748 54,216 64,014
55,460 59,167 64,382
56,720 60,512 65,845
23,003 24,541 26,704
179,931 198,437 220,945
49,166 47,402 45,726
4,532
4,532
4,532
235,789 252,531 273,363
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY10
13.6%
4.7%
4.2%
5.1%
2.5%
6.8%
FY11
13.8%
5.6%
5.2%
4.8%
2.3%
6.3%
FY12E
13.5%
5.7%
5.3%
5.4%
2.2%
6.0%
FY13E
13.6%
5.6%
5.3%
5.1%
2.2%
6.1%
FY14E
13.5%
5.6%
5.3%
5.1%
2.2%
6.0%
Sales growth
Net profit growth
29.5%
203.4%
32.2%
32.2%
9.0%
33.3%
2.7%
5.2%
17.5%
20.6%
32.1%
33.2%
8.3%
6.8%
0.9%
0.9%
7.3%
7.6%
7.0%
7.0%

Net debt to equity
Asset turnover
ROE
ROIC
ROIC (net of cash)
Cash flow statement
Net income
Other
Capex
Disposal/(purchase)
Free cash flow
Other
Dividends paid
-20.3%
NM
1.48
10.84
11.8%
6.6%
-
-24.8%
NM
1.71
0.00
15.3%
21.7%
-
-26.7%
NM
1.81
5.50
18.3%
-
-30.8%
NM
1.83
5.50
16.7%
-
-34.7%
NM
1.82
5.50
16.5%
-
9,430
9,538
9,767
63,022 67,236 73,161
28,754 30,676 33,380
101,207 107,450 116,307
0
0
0
0
0
105,644 111,887 120,744 Beginning cash
130,145 140,643 152,618 Ending cash
FY10
16,488.0 16,926.1 22,365.8 22,576.0 24,165.7
1,501
1,600
1,600
1,600
1,600
-6,816 -5,620 -9,866 -2,902 -4,081
-4,560 10,666 -14,130
384
541
11,173 12,906 14,100 21,274 21,685
-1,464 -1,267 -1,966 -1,600 -1,600
2,496
-460
-255
0
0
73,035 -7,270 -1,418
164
76
9,709 11,639 12,134 19,674 20,085
-62,197
1,157
0
0
0
0
-411 -1,070
108
229
-12,116
-260
1,971
0
0
-9,315 -8,918 -9,140 -12,078 -12,191
-83,629 -8,432 -8,239 -11,969 -11,963
579
39,759
41,395
-2,796
41,395
40,542
4,444
40,542
44,748
9,469
44,748
54,216
9,798
54,216
64,014
441
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
Price: $26.10
www.santander.cl
End Date: Dec 2013
Company overview
Santander Chile is the largest bank in Chile in terms of total assets, total deposits,
loans, and shareholders equity. As of September 30, 2012, the bank had total assets of
US$52.6 billion, gross loans of $39.0 billion, deposits of US$32.8 billion, and
shareholders equity of US$4.4 billion. Also, the bank has the largest private branch
network in Chile with 499 branches.
Chile
Financials
Saul Martinez
(1-212) 622-3602
saul.martinez@jpmorgan.com
Investment case
Key drivers of underperformance include (1) continued market share losses; (2) likely
low inflation, which adversely impacts the net interest margin; (3) regulatory pressure
that will likely lead to NIM pressure and still sluggish consumer loan growth; and (4)
reduced earnings estimates.
Though the stock has underperformed in 2012 (down 10.9% YTD), we think the
valuation is rich at 2.6x 12E BV and 12.1x 2013E given declining ROE versus recent
historical levels in the mid 20% range.
34
32
$
30
28
26
24
Nov-11
Feb-12
May-12
Aug-12
Nov-12
BSAC share price ($)

IPSA (rebased)
Source: Bloomberg.

We think risks are to the downside given the potential for continued share losses, low
inflation, and still elevated loan loss provisions. We think consensus earnings estimates
of US$2.24 per ADR in 2013 are too high (JPM: US$2.16 per ADR). We have a
downside bias to our estimates.
We use two methodologies to establish our Dec 2013 price target of US$28 per share:
(1) a residual income model and (2) a regression of risk-adjusted ROE (ROE estimates
for 2013 and 2014 divided by estimated cost of equity) to price to book value using a
cross-section of Latin American financial institutions. Our price target is based on
target multiples of 13.4x 2014E earnings and 2.7x 2013E BV. Key upside risks include
that it can often trade defensively in a recovery scenario; inflation could be higher than
forecast, helping the NIM; and market share losses could stop and be reverted.
Banco Santander Chile (BSAC;BSAC US)

2010A
EPS - Reported ($)
Q1 (Mar)
0.25
Q2 (Jun)
0.29
Q3 (Sep)
0.27
Q4 (Dec)
0.20
FY
1.01
442
2011A
2012E
2013E
0.25
0.30
0.16
0.22
0.92
0.25A
0.22A
0.20
0.24
0.91
1.06
Company Data
Price ($)
Date Of Price
52-week Range ($)
Market Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
26.10
14 Nov 12
33.96-23.90
12,632.51
Dec
471
28.00
31-Dec-13
Adrian Mowat
(852) 2800-8599

21 November 2012
Banco Santander Chile: Summary of Financials

Income Statement
Interest Income
Interest Expense
Net interest Income
LL Provision
Net Interest Income after Provision
Fee Income
Total Non Interest Income
Personnel Expenses
Total Non Interest Expenses
Pretax income
Subsidiary
Taxes
Minority Interests
Extraordinary
Net Income
Dividends
Per share analysis
EPS
BVPS
Dividend per Share
Growth
EPS growth
Fee income
Total Non Interest Expense
Loan
Deposits
Ratios
NIM
PDL/Loans
LL Reserves/Total Loans
LL Reserves/NPL
Cost/Income
Loans/Deposits
Loans/Assets
Equity/Assets
Dividend Payout
FY11A
1,769
(796)
972
(283)
521
305
399
(281)
(568)
(3)
519
FY12E
1,958
(881)
1,077
(351)
503
300
397
(290)
(619)
(2)
501
FY13E
2,242
(1,008)
1,234
(393)
596
323
428
(289)
(673)
(2)
594
FY14E
2,510
(1,122)
1,388
(448)
661
349
460
(318)
(740)
(2)
659
(83)
435
435
1.28
FY11A
(71)
430
430
1.13
FY12A
(95)
499
499
1.13
FY13E
1.91
4.32
1.28
1.82
4.81
1.13
2.16
5.32
1.13
(105)
553
553
1.27
FY14E Valuation, Macro
P/E
2.35 P/BV
5.86 Dividend yield
1.27 ROE
ROA
(8.1%)
2.3%
12.3%
9.7%
(4.8%)
9.1%
12.5%
15.6%
18.9%
8.6%
12.9%
14.3%
5.3%
2.8%
(3.0%)
104.1%
41.4%
110.3%
68.6%
8.3%
67.2%
5.1%
2.9%
(2.8%)
101.4%
42.0%
109.9%
68.2%
8.1%
62.1%
5.1%
2.7%
(2.6%)
99.2%
40.5%
108.2%
68.2%
8.0%
52.1%
Balance Sheet
Securities
Cash and Due from Banks
Interbank Investment
Loan and Leasing Operations
Other Receivables and Assets
Total assets
Total deposits
Demand deposits
Savings deposits
Interbank deposits
Time deposits
Interest bearing liabilities
Other Current Liabilities
Total Liabilities
Minority Interest
8.6% Shares
- ADRs
10.0%
12.0%
13.5%
FY11A
2,400
2,794
16,823
24,652
15,255
18,203
22,617
2,035
FY12E
3,655
2,265
19,225
28,177
17,486
21,354
25,911
2,266
FY13E
4,166
2,378
21,570
31,638
19,934
23,325
29,131
2,507
FY14E
4,708
2,497
24,183
35,316
22,525
26,239
32,555
2,761
FY11A FY12A FY13E FY14E

29.0
29.4
25.3
22.8
6.2
5.6
5.0
4.6
4.8%
4.2%
4.2%
4.7%
22.3% 20.0% 20.9% 21.0%
1.9%
1.6%
1.7%
1.7%
471
471
471
471
471
471
471
471
5.1%
2.6%
(2.5%)
98.0%
40.0%
107.4%
68.3%
7.9%
54.1%

443
Adrian Mowat
(852) 2800-8599

21 November 2012
Bank of Baroda
Underweight
www.bankofbaroda.com
Price Target: Rs600
Company overview
Bank of Baroda is the fourth-largest public sector bank in India, with a loan book of
cUS$55B. BOB is highly concentrated in west India with ~50% of its branches in
Gujarat, Maharashtra and Rajasthan. It is present across all loan segments but is
particularly focused on mid-corporate and SME lending, apart from a strong overseas
business with a substantial presence in Africa and the Middle East.
India
Banks
Price: Rs778.20
Seshadri K Sen, CFAAC

(91-22) 6157 3575
Investment case
BOB is one of our key Underweights in Indian financials, as we believe the NPL
situation is unlikely to improve in the coming quarters. While BOB is well into its
weak credit quality cycle, we think issues from its SME and mid-corporate portfolio
will continue for another 2-3 quarters at least.
An anemic growth environment would exacerbate BOBs asset quality issues, given its
exposure to SMEs and the industrial economy in general. Moreover, it faces revenue
growth issues as loan demand from key segments is likely to remain soft.
A key upside risk to earnings is quicker-than-expected recovery in GDP leading to an
improvement in asset quality. Improvement in asset quality could also be triggered by
policy support which helps in dealing with NPLs and restructured assets. A key
downside risk to earnings is margin compression due to loss in deposit market share.
900
800
Rs
700
600
Nov-11
Feb-12
May-12
Aug-12
Nov-12
BOB.BO share price (Rs)

BSE30 (rebased)
Abs
Rel
YTD
16.5%
-5.3%
1m
-2.0%
-1.8%
3m
18.2%
10.8%
Source: Bloomberg.

Our Mar-13 PT for BOB of Rs600 is based on our 2-stage Gordon growth model and
implies 0.9x FY13E book. Our valuation factors in a Cost of Equity of 14.9%,
normalised ROE of ~14%, and terminal growth of 5%. Apart from the earnings risks
stated above, a key upside risk to our UW rating and PT is a strong recovery in equity
markets, which could drive a rerating of the stock despite fundamentals.
Bank of Baroda (Reuters: BOB.BO, Bloomberg: BOB IN)
FY11A
FY12A
FY13E
65,381
80,229
95,151
Net Profit (Rs mn)
42,417
50,070
45,106
Cash EPS (Rs)
108.26
121.79
109.38
99.76
109.51
103.10
DPS (Rs)
16.50
17.00
15.31
EPS growth (%)
29.4%
12.5%
(10.2%)
ROE
23.3%
19.1%
14.8%
P/E (x)
7.2
6.4
7.1
BVPS (Rs)
504.55
668.34
729.29
P/BV (x)
1.5
1.2
1.1
Dividend Yield
2.1%
2.2%
2.0%
444
FY14E
115,570
49,966
121.16
112.68
16.96
10.8%
14.4%
6.4
830.61
0.9
2.2%
FY15E
137,857
55,708
135.09
132.66
18.91
11.5%
15.0%
5.8
943.57
0.8
2.4%
Company Data
52-week Range (Rs)
Market Cap (Rs mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Rs)
Date Of Price
BSE30
Exchange Rate
881.00-605.55
319,934
5,877
411
Mar
778.20
07 Nov 12
595.96
10.9
0.83
1,8902.41
54.44
12m
-5.0%
-12.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
Bank of Baroda: Summary of Financials

Income Statement
FY11
2.8%
98.0%
2.8%
FY12
2.6%
97.5%
2.6%
FY13E
2.6%
97.3%
2.6%
FY14E
2.7%
97.5%
2.7%
Net Interest Income

Fee Income
88,023
23,657
15,639
103,170
28,148
19,378
123,434
32,934
22,672
147,560
38,532
26,526
111,679
131,319
156,368
186,092
Operating costs
(46,298)
(51,090)
(61,216)
(70,522)
Pre-Prov. Profits
Provisions
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
65,381
(13,313)
4,435
56,503
(14,086)
0
42,417
80,229
(26,046)
6,075
60,258
(10,188)
0
50,070
95,151
(37,697)
3,500
60,954
(15,848)
0
45,106
115,570
(51,548)
3,500
67,522
(17,556)
0
49,966
Per Share Data

EPS
DPS
Payout
Book value
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY11
108.26
16.50
15.2%
504.55
392
FY11
2,286,764
(23,616)
2,310,380
31,525
114,354
62,254
3,107,779
3,571,722
FY12
121.79
17.00
14.0%
668.34
411
FY12
2,873,773
(29,211)
2,902,984
44,647
133,529
107,146
3,923,131
4,473,215
FY13E
109.38
15.31
14.0%
729.29
412
FY13E
3,304,839
(56,615)
3,361,454
83,257
143,019
116,845
4,660,616
5,103,124
FY14E
121.16
16.96
14.0%
830.61
412
FY14E
3,866,661
(96,478)
3,963,139
128,637
148,806
136,106
5,383,244
5,942,431
FY15E
135.09
18.91
14.0%
943.57
412
FY15E
4,485,327
(148,197)
4,633,524
197,595
155,178
157,195
6,243,026
6,864,879
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
3,054,395
115,591
0
2,814,279
3,170,838
197,682
2,098,901
1,829,906
3,848,711
126,473
0
3,572,585
4,022,469
274,769
2,537,338
2,318,119
4,410,794
146,196
0
4,266,087
4,788,169
300,749
2,917,938
2,727,638
5,151,385
176,520
0
4,942,448
5,522,777
342,529
3,413,988
3,165,963
5,962,234
212,874
0
5,751,506
6,403,655
389,112
3,960,226
3,687,107
Growth Rates
FY15E
2.8% Loans
97.5% Deposits
2.7% Assets
Equity
175,361 RWA
of which Fee Grth
220,444 Revenues
Costs
137,857 Pre-Tax
- EPS
- DPS
1,000
75,282 Loan/deposit
0 Loan/Assets
LT debt/liabilities
NPLs/loans
Growth in NPLs
Tier 1 Ratio
Total CAR
Du-Pont Analysis
Non IR/Avg. Assets
Revenue/Assets
Cost/Income
Cost/Assets
Pre-Provision ROA
LLP/Loans
Loan/Assets
Operating ROA
Pre-Tax ROA
Tax rate
ROA
RORWA
Equity/Assets
ROE
FY11
30.7%
26.7%
28.9%
43.4%
34.5%
48.2%
13.6%
19.1%
39.2%
21.5%
55.2%
90.9%
33.3%
38.7%
29.4%
65.0%
FY12
25.6%
26.0%
25.2%
39.0%
20.9%
17.2%
19.0%
23.9%
17.6%
10.3%
22.7%
95.6%
6.6%
18.0%
12.5%
3.0%
FY13E
15.8%
14.6%
14.1%
9.5%
15.0%
19.6%
17.0%
17.0%
19.1%
19.8%
18.6%
44.7%
1.2%
(9.9%)
(10.2%)
(9.9%)
FY14E
17.9%
16.8%
16.4%
13.9%
17.0%
19.5%
17.0%
17.0%
19.0%
15.2%
21.5%
36.7%
10.8%
10.8%
10.8%
10.8%
FY15E
16.9%
15.7%
15.5%
13.6%
16.0%
18.8%
17.0%
17.0%
18.5%
17.1%
19.3%
23.3%
11.5%
11.5%
11.5%
11.5%
FY11
74.9%
3.4%
64.3%
90.5%
2.7%
FY12
74.7%
3.1%
64.8%
91.7%
3.2%
FY13E
74.9%
2.9%
65.4%
91.8%
3.0%
FY14E
75.1%
2.6%
66.3%
92.0%
3.1%
FY15E
75.2%
2.4%
67.1%
92.1%
3.2%
FY11
(1.0%)
1.4%
74.9%
31.3%
10.0%
14.5%
FY11
2.8%
98.0%
2.8%
21.2%
0.7%
3.5%
41.5%
1.5%
2.1%
(0.7%)
64.3%
0.1%
1.6%
1.8%
24.9%
0.0%
1.2%
2.1%
5.3%
23.3%
FY12
(1.0%)
1.5%
69.4%
41.6%
10.8%
14.7%
FY12
2.6%
97.5%
2.6%
21.4%
0.7%
3.3%
38.9%
1.3%
2.0%
(1.0%)
64.8%
0.2%
1.3%
1.5%
16.9%
0.0%
1.1%
1.9%
5.9%
19.1%
FY13E
(1.7%)
2.0%
67.1%
86.5%
10.7%
14.2%
FY13E
2.6%
97.3%
2.6%
21.1%
0.7%
3.3%
39.1%
1.3%
2.0%
(1.2%)
65.4%
0.1%
1.2%
1.3%
26.0%
0.0%
0.9%
1.6%
6.0%
14.8%
FY14E
(2.4%)
2.9%
72.2%
54.5%
10.4%
13.5%
FY14E
2.7%
97.5%
2.7%
20.7%
0.7%
3.4%
37.9%
1.3%
2.1%
(1.4%)
66.3%
0.1%
1.2%
1.2%
26.0%
0.0%
0.8%
1.5%
5.8%
14.4%
FY15E
(3.2%)
3.8%
75.0%
53.6%
10.1%
13.0%
FY15E
2.8%
97.5%
2.7%
20.5%
0.7%
3.4%
37.5%
1.3%
2.2%
(1.5%)
67.1%
0.0%
1.2%
1.2%
26.0%
0.0%
0.9%
1.5%
5.7%
15.0%
445
Adrian Mowat
(852) 2800-8599

21 November 2012
Bank Pekao SA
Neutral
www.pekao.com.pl
Company overview
Pekao is the second largest bank group in Poland and first privately owned (59% by
Unicredit), with PLN148bn in total assets, PLN102bn loans (11% mkt share), PLN
107bn deposits (13% mkt share) and operates via >1000 branches, serving >4mn
clients. Though concentrated in Poland, Pekao has small operations in Ukraine (c.2%
of loan book). Primarily a corporate bank (c.58% loan book), Pekao is gradually
expanding into the more profitable retail sector.
CEEMEA
Banks
Price: zl154.70
Paul FormankoAC
(44-20) 7134-4718
Investment case
Pekao offers a strong balance sheet (L/D <100%), high quality revenue stream (c.90%
from NII and fees) and one of the highest capital ratios within CEEMEA banking space
(c.19% core tier 1- 12E dividend yield of 6.4%; 13E 8%). However, these qualities in
our view are reflected in the current valuations- 13E PNAV 1.9x, PE 11x and P/Preprovision profits of 8x. Given the deteriorating macro & asset quality outlook (in
particular for the construction sector- Pekao has c.8% loan exposure to construction &
timber industry), we expect Pekao to relatively underperform its CEEMEA
counterparts.
Key issues: i) slowdown in Polish economy (JPM recently revised down 2013E GDP
growth from 2% to 1.6%) ii) low rate environment negatively impacting margins- JPM
expects 100bps rate cuts by mid-2013 iii) deterioration in asset quality (in particular for
the construction sector).
160
zl
150
140
130
Nov-11
Abs
Feb-12
YTD
8.2%
May-12
1m
-0.7%
Aug-12
Nov-12
3m
-1.4%
Source: Bloomberg.

Our Dec-13 price target of PLN179 is based on a Gordon growth model and
incorporates 4% long-term growth rate, 11% cost of equity and 18% normalized
RoNAV (we add 2013 DPS of PLN12.5 to arrive at our PT). Key risks include i)
Volatility within European banking sector, given Unicredit is the key shareholder ii)
Currency volatility, given c.21% of loan book is in FX iii) Acceleration in asset quality
deterioration iv) Upside risk from pick up in corporate loan growth
Bank Pekao SA (BAPE.WA;PEO PW)
FYE Dec
2011A
Adj. EPS FY (zl)
11.07
BV/Sh FY (zl)
82
Headline P/E FY
14.0
P/NAV FY
2.0
Tier One Ratio FY
17.0%
2,899
FY (zl mn)
ROE FY
13.9%
Gross Yield FY
3.6%
Dividend (Gross) FY (zl)
5.54
446
2012E
11.53
83
13.4
1.9
16.0%
3,020
2013E
13.91
85
11.1
1.9
14.9%
3,643
2014E
15.90
86
9.7
1.9
13.8%
4,164
14.0%
6.3%
9.80
16.6%
8.1%
12.52
18.6%
9.3%
14.31
Company Data
Price (zl)
Date Of Price
Price Target (zl)
52-week Range (zl)
Mkt Cap (zl bn)
Shares O/S (mn)
154.70
02-Nov-12
179.00
31 Dec 13
165.00 - 128.10
40.5
262
12m
7.8%

21 November 2012
Adrian Mowat
(852) 2800-8599
Bank Pekao SA: Summary of Financials

Net interest income

% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
Ratio Analysis
FY10A FY11A FY12E FY13E FY14E zl in millions, year end Dec
Per Share Data
4,104 4,558 4,929 5,393 5,874 EPS Reported
7.9% 11.1%
8.1%
9.4%
8.9% EPSAdjusted
3,114 3,173 3,225 3,477 3,815
% Change Y/Y
2,368 2,449 2,465 2,642 2,893 DPS
3.5%
3.4%
0.6%
7.2%
9.5%
% Change Y/Y
680
658
691
760
836 Dividend yield
-23.2% -3.3%
5.0% 10.0% 10.0% Payout ratio
66
67
69
75
86 BV per share
7,218 7,731 8,153 8,871 9,689 NAV per share
2.3%
7.1%
5.5%
8.8%
-3,649 -3,672 -3,764 -3,851 -3,974
-0.6%
0.6%
2.5%
2.3%
3.2% Return ratios
- RoRWA
3,569 4,060 4,390 5,020 5,715 Pre-tax ROE
5.6% 13.8%
8.1% 14.4% 13.8% ROE
-589
-544
-600
-450
-500 RoNAV
3,102 3,593 3,882 4,681 5,348 Revenues
3.5% 15.8%
8.1% 20.6% 14.3% NIM (NII / RWA)
(571) (684) (854) (1,030) (1,177) Non-IR / average assets
18.4% 19.0% 22.0% 22.0% 22.0% Total rev / average assets
(5)
(10)
(8)
(8)
FY10A FY11A FY12E FY13E FY14E zl in millions, year end Dec

Cost ratios
80,843 95,679 103,643 114,440 128,807 Cost / income
1.7% 18.4%
8.3% 10.4% 12.6% Cost / assets
-4,052 -4,423 -4,823 -5,073 -5,373 Staff numbers
31,381 29,969 30,252 31,524 33,373
12,228 10,472 10,577 11,106 11,661 Balance Sheet Gearing
-27.3% -14.4%
1.0%
5.0%
5.0% Loan / deposit
55
55
55
55
55 Loan / assets
4,242 4,668 4,792 4,922 5,058 Customer deposits / liabilities
2.6%
8.6%
6.0%
7.0%
7.1% NPLs / loans
1,177 3,044 3,653 4,383 5,260 LLP / RWA
110,913 116,115 124,882 133,750 144,100 Growth in NPLs
5,207 7,852 7,463 10,818 17,380 RWAs
% YoY change
20,257 21,271 21,723 22,086 22,500 Core Tier 1
83
85
87
89
90 Total Tier 1
134,090 146,590 154,041 166,890 183,923

9.64 11.07
9.64 11.07
4.7% 14.8%
6.80
5.54
130.7% (18.6%)
4.1%
3.6%
70.5% 50.0%
75
82
77.4
78.9
261.9 261.9
0.03
16.1%
13.1%
13.6%
0.03
17.3%
13.9%
14.4%
11.53
11.53
4.2%
9.80
77.1%
6.4%
85.0%
83
80.5
261.9
13.91
13.91
20.6%
12.52
27.7%
8.1%
90.0%
85
81.7
261.9
15.90
15.90
14.3%
14.31
14.3%
9.3%
90.0%
86
83.2
261.9
0.03
18.0%
14.0%
14.5%
0.03
21.3%
16.6%
17.2%
0.03
23.9%
18.6%
19.3%
3.20% 3.39% 3.40% 3.46% 3.44%

2.35% 2.26% 2.26% 2.26% 2.26%
5.45% 5.51% 5.51% 5.51% 5.51%
56.85% 58.95% 60.45% 60.80% 60.62%
32.81% 31.67% 30.23% 29.79% 29.86%
9.42% 8.51% 8.47% 8.57% 8.63%
50.6% 47.5% 46.2% 43.4% 41.0%
0.0
0.0
0.0
0.0
0.0
20,783 20,357 20,357 20,459 20,561
85.1%
23.4%
60.3%
74.4%
0.9%
92.3%
20.4%
68.3%
74.0%
2.1%
94.3%
19.6%
70.4%
74.6%
2.4%
97.1% 101.8%
18.9% 18.1%
71.6% 73.0%
73.7% 71.7%
2.6%
2.9%
4.8%
4.4%
4.4%
4.2%
4.0%
7.0%
6.7%
6.8%
6.5%
6.2%
4.2%
4.3%
4.0%
3.9%
3.7%
65.9% 66.0% 65.6% 65.0% 64.6%
(3.4%)
9.0%
9.8%
6.0%
6.6%
95,513 103,456 119,181 131,099 144,209
3.1%
8.3% 15.2% 10.0% 10.0%
17.6% 17.0% 16.0% 14.9% 13.8%
17.6% 17.0% 16.0% 14.9% 13.8%
447

21 November 2012
Adrian Mowat
(852) 2800-8599
Catcher Technology
Underweight
www.catcher.com.tw/
Company overview
Catcher is the leading aluminum and magnesium casing maker in Taiwan. It is
principally engaged in manufacturing and sales of a wide spectrum of light metal
casing products in 3C area. Its customers include Dell, Apple, Acer, and most tier-one
NB brands.
Taiwan
Electronics
Price: NT$134.00
Gokul Hariharan AC
(852) 2800-8564
Investment case
We think Catcher is in a downcycle (compared to Ju Teng) and will experience decline
either in revenue or margins in 2013. First, we remain cautious on Catchers
expectation of strong growth in composite casings since PC brands have typically
chosen price over premium quality. Besides, we forecast CNC machine tightness
will ease out in 2013, and could kill pricing dynamics in the industry. Third, we think
Catchers iPad casing business is likely to be unsustainable due to heavy competition.

Limited
220
180
NT$
140
100

Catcher expects strong growth in non-Apple notebook casings, especially due to the
take-off of composite casings for ultrabooks in 2013. However, we believe Ju Teng is
likely to provide much better solutions at the lower end of the cost spectrum due to
difference in technology. Even if Catcher takes these orders, they are likely to be
margin dilutive. Second, Apples strategy of ramping up casing technology at EMS
partners is likely to make Catchers stand-alone casing business unsustainable in the
long term for high-volume Apple products.
Nov-11
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
-4.6%
-7.7%
1m
3.5%
7.4%
3m
-10.1%
-8.2%
12m
-18.8%
-15.2%
Source: Bloomberg.

Key upside risks are: (1) Improvement in sustainability in iPad casing business, (2)
execution issues at competitors like Foxconn Tech.
Our Jun-13 PT of NT$110 is based on 9x FY13E earnings. We use a lower multiple of
9x (vs. the historical range of 7-25x) as we expect limited potential for earnings growth
in FY13. We see Catchers success in maintaining its competitiveness the biggest
upside risk in 2013.
Sales
Operating Profit
EBITDA
Pretax Profit
Adj. Net Profit (New TW GAAP)
Net Debt / Equity
Y/E BPS (NT$)
FY11 FY12E FY13E

35.91 37.62 35.84
13.21 12.43 11.64
15.78 16.73 16.69
13.71 12.56 11.92
10.68 9.11 8.91
15.11 12.13 11.87
NM
NM
NM
74.61 87.10 93.97
FY14E
36.30
11.63
17.29
11.99
9.18
12.23
NM
101.20
New TW GAAP P/E

P/BV (x)
ROE(%)
Cash Div (NT$)
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E

8.9 11.0
11.3 11.0
1.8
1.5
1.4
1.3
24.0 15.0
13.1 12.5
2.4
4.0
5.0
1Q
2Q
3Q
4Q
2.88 3.52
5.01 3.60
3.72 2.03
2.64 3.75
2.62 2.91
3.10 3.24
448
Target Price (NT$)

52-Week range (NT$)
Share Outstanding
Avg daily volume
Avg daily val (USD)
QFII Holding (%)
Market Cap (NT$)
Market Cap(USD)
110
237.00 - 117.50
751mn
8mn
73.36mn
3.0%
54.0%
100.59mn
3,468mn
Adrian Mowat
(852) 2800-8599

21 November 2012
Catcher Technology: Summary of Financials

Ratio Analysis
FY10
FY11 FY12E FY13E FY14E NT$ in millions, year end Dec
Revenues
21,845 35,914 37,616 35,841 36,298 Gross margin
Cost of goods sold
14,092 19,023 21,401 20,626 21,079 EBITDA margin
Gross Profit
R&D expenses
-701
-781
-884
-753
-762 Net margin
SG&A expenses
-1,797
-2,651 -2,711 -2,645 -2,641 R&D/sales
5,087 13,213 12,431 11,638 11,634 SG&A/Sales
EBITDA
7,122 15,778 16,729 16,693 17,290
Interest income
226
380
608
506
559 Sales growth
Interest expense
-206
-254
-298
-357
20
126
310
149
-167
-246
-189
-179
Earnings before tax
5,187 13,705 12,565 11,919 11,989
Tax
-740
-3,040 -3,446 -2,977 -2,782 Interest coverage (x)
4,429.8 10,677.2 9,106.5 8,914.0 9,179.4 Net debt to total capital
4,430 10,677
9,107
8,914
EPS (reported)
6.66
15.11
12.13
11.87
EPS (adjusted)
6.66
15.11
12.13
11.87
BVPS
49.41
74.61
87.10
93.97 101.20 ROE
DPS
2.00
2.35
4.00
5.00 ROIC
Shares outstanding
665
751
751
751
Balance sheet
Cash flow statement
FY10
17,896 41,659 47,799 53,294 58,449 Net income
Accounts receivable
Inventories
2,136
2,538
2,714
2,546
Others
4,868
1,308
4,666
4,378
4,744 Other
Current assets
LT investments
- Capex
Net fixed assets
20,931 28,408 27,763 27,708 27,053 Disposal/(purchase)
Others
Total Assets
58,094 89,278 100,005 104,297 110,806 Free cash flow
Liabilities
ST Loans
Payables
3,199
3,258
5,182
4,988
5,445 Other
Others
2,386
4,500
2,800
2,627
Long-term debt
6,018
7,413
8,845
8,678
8,813
Other liabilities
74
110
105
105
Total Liabilities
25,240 33,273 34,622 33,753 34,836 Beginning cash
32,854 56,005 65,383 70,544 75,970 Ending cash
FY10
35.5%
32.6%
23.3%
20.3%
3.2%
8.2%

47.0% 43.1% 42.5% 41.9%
43.9% 44.5% 46.6% 47.6%
36.8% 33.0% 32.5% 32.1%
29.7% 24.2% 24.9% 25.3%
2.2%
2.4% 2.1% 2.1%
7.4%
7.2% 7.4% 7.3%
28.6%
42.9%
33.4%
32.6%
64.4%
4.7% (4.7%)
159.7% -5.9% -6.4%
141.0% -14.7% -2.1%
126.8% (19.7%) (2.1%)
1.3%
-0.0%
3.0%
3.0%
3.3%
5.1%
0.39
1.81
13.6%
12.2%
12.2%
-24.3% -24.5% -28.9% -32.2%

NM
NM
NM
NM
0.49
0.40
0.35
0.34
3.46
2.32
2.37
2.24
24.0% 15.0% 13.1% 12.5%
24.6% 19.5% 19.3% 19.4%
24.6% 19.5% 19.3% 19.4%
FY10
4,429.8 10,677.2 9,106.5 8,914.0 9,179.4
2,035
2,564 4,299 5,055 5,655
584
2,401 -5,777 1,014 -1,079
827
2,113 -1,700
-173
220
7,065 15,630 7,641 15,011 13,783
-4,668 -10,042 -3,654 -5,000 -5,000
0
0
0
0
0
-3,863 -10,215 -2,884 -5,234 -5,253
2,397
5,588 3,987 10,011 8,783
0
857
1
0
0
1,444
5,826 1,129
-501
406
-2,348 13,304 3,249
-56
-56
-1,312
-1,675 -2,990 -3,725 -3,726
-2,217 18,348 1,384 -4,283 -3,375
986
17,896
23,763 6,140 5,495 5,155

41,659 47,799 53,294 58,449
449

21 November 2012
Adrian Mowat
(852) 2800-8599
Underweight
www.chimei-innolux.com
Company overview
Chimei Innolux (TWSE: 3481) was established in March 2010 with the merger of
CMO, Innolux and TPO, and has the business of both LCD panels and OEM. It is
currently ranked No. 1 in terms of LCD TV panel shipments in China.
Taiwan
Price: NT$11.45
Investment case
Ongoing equity dilution, lack of capex, and threat from the Chinese panel makers keep
us from taking a more constructive view on the stock from a long-term point of view.
The company may continue to see financial pressure to raise equity in order to compete
with its global peers, and it has the lowest capex among the major global panel makers
in 2012, on our estimates.
CMIs current share price implies a seemingly inexpensive valuation on a P/BV basis.
Nevertheless, if we consider the potential GDR issuance to be completed by the yearend and the potential equity issuance to take place in 2013-2014, we estimate the
trailing BPS would fall by at least 40%. Chimei Innoluxs capex is only a fraction of its
major peers in Taiwan and Korea in 2012.
Narci Chang AC
(886-2) 2725-9899
Bloomberg JPMA NCHANG<GO>
18
16
NT$
14
12
10
8
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
-6.1%
-10.3%
1m
11.2%
16.1%
3m
24.6%
25.7%
12m
-17.6%
-12.9%
Source: Bloomberg.

We believe the current share price is overlooking potential headwinds such as (1)
meaningful potential ROE dilution (2) lack of capex that could limit the growth
potential (3) deceleration of LCD TV growth in China and (4) market share loss to the
Chinese panel makers.
Our Dec-13 price target of NT$9 is based on 0.5x 2013E P/B (down-cycle valuation).
Key upside risks to our investment view include (1) higher than expected panel prices
due to strong end-demand outlook; (2) better cost reduction due to introduction of 29,
39, 50, 58 TV panels; (3) order gains through the help of Hon Hai group.
(YE Dec, NT$ bn)
FY11 FY12E
Sales
510
481
Operating Profit
-63
-20
EBITDA
31
63
Net profit
-64
-26
EPS (inc. pref.)
-9
-3
BPS (NT$)
27
22
P/E (x)
NM
NM
P/BV (x)
0.4
0.5
ROE (%)
-27.9
-13.7
Net Debt
276
250
FY13E
483
11
97
5
1
23
18.0
0.5
2.8
172
450
FY14E
469 Sales growth
15 OP growth
101 NP growth
11 Quarterly EPS (NT$)
1 EPS (11)
24 EPS (12) E
8.0 EPS (13) E
0.5 Price Target
6.1 Consensus PT
90 Difference (%)
FY11
3.4%
1264.1%
334.4%
1Q
-2
-2
-0
9
12
-24.0
FY12E FY13E FY14E Date of Price

(5.6%)
0.3% (2.9%) 52-Week range
-67.7% -155.2% 36.5% Market Cap
-60.1% -119.6% 126.2% Market Cap
2Q
3Q
4Q Share Out. (Com)
-2
-2
-3 Free float
-1
-0
0 Avg daily val
0
0
0 Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Exchange Rate
08 Nov 12
NT$17.43 - 8.45
NT$91B
US$3,097MM
7,913MM
70.0%
NT$0.6B
18.98MM
60.1MM shares
0.0
29.26
Adrian Mowat
(852) 2800-8599

21 November 2012
Chimei Innolux Corporation: Summary of Financials

FY10
FY11
Revenues
493,085 510,081
Cost of goods sold
-471,463 -545,290
Gross Profit
21,622 -35,209
R&D expenses
-9,078 -10,361
SG&A expenses
-17,140 -17,131
-4,596 -62,700
EBITDA
68,604 30,709
Interest income
396
673
Interest expense
-4,670
-5,884
-4,274
-5,212
(Exp.)
-8,816
-7,030
Earnings before tax
-13,413 -69,730
Tax
0
0
-14,835.4 -64,439.8
-14,214 -64,761
EPS (reported)
(2.30)
(8.81)
EPS (adjusted)
-2.21
-8.86
BVPS
35.96
27.17
DPS
0.00
0.00
Shares outstanding
7,312
7,313
Balance sheet
FY10
FY11
62,561 54,378
Accounts receivable
65,103 74,629
Inventories
64,240 59,301
Others
0
0
Current assets
198,959 212,583
LT investments
13,419 22,060
Net fixed assets
458,793 403,808
Others
40,225 45,215
Total Assets
711,396 683,665
Liabilities
ST Loans
109,967 275,820
Payables
109,954 119,355
Others
142,479 143,352
252,446 419,172
Long-term debt
183,365 54,966
Other liabilities
12,667 10,859
Total Liabilities
448,478 484,997
262,918 198,668
FY12E
481,305
-477,551
3,754
-11,645
-12,371
-20,262
63,271
1,451
-8,324
-6,873
FY13E
482,957
-447,589
35,368
-11,967
-12,225
11,175
97,476
1,955
-7,907
-5,952
FY14E
468,760
-430,021
38,739
-11,644
-11,838
15,257
100,510
4,024
-7,442
-3,418
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
Sales growth
Net profit growth
FY10
FY11
4.4%
-6.9%
13.9%
6.0%
(0.9%) (12.3%)
-3.0% -12.6%
1.8%
2.0%
3.5%
3.4%
199.3%
3.4%
33.1% 1264.1%
518.9% 334.4%
FY12E
0.8%
13.1%
(4.2%)
-5.3%
2.4%
2.6%
FY13E
7.3%
20.2%
2.3%
1.0%
2.5%
2.5%
FY14E
8.3%
21.4%
3.3%
2.4%
2.5%
2.5%
(5.6%)
0.3% (2.9%)
-67.7% -155.2% 36.5%
-60.1% -119.6% 126.2%
-6,261 -5,938 -3,408 EPS (reported) growth

210.5% 282.4% (61.1%) (118.6%) 126.2%
-26,523
5,238 11,848
0
0
16.05
5.89
9.21
16.38 29.41
-25,710.6 5,037.1 11,394.7 Net debt to total capital
66.2%
50.9%
50.4% 37.1% 19.9%
-25,977
87.8% 139.1% 142.7% 95.4% 47.0%
(3.43)
0.64
1.44 Asset turnover
1.11
0.73
0.75
0.81
0.81
-3.46
0.64
1.11
0.73
0.75
0.81
0.81
22.18
22.81
24.25 ROE
(8.3%) (27.9%) (13.7%)
2.8%
6.1%
0.00
0.00
0.00 ROIC
-3.2% -11.0%
-3.9%
2.2%
3.2%
7,913
7,913
-3.6% -12.0%
-4.2%
2.6%
4.4%
Cash flow statement
FY10
38,198 110,275 160,518 Net income
-14,835.4 -64,439.8 -25,710.6 5,037.1 11,394.7
73,200 93,409 83,533 86,300 85,253
16,577 -20,935
78
4,976 3,337
0
0
0 Other
20,161 -25,748
6,919
2,409
360
75,563
7,714 57,633 96,314 99,984
22,772 22,780 22,787 Capex
0
0
0
0
0
0
0
0
0
0
44,315 44,288 44,287 Cash flow from investing
-491,404 -52,054 -33,027 -17,981 -18,005
598,641 591,266 566,324 Free cash flow
75,563
7,714 57,633 96,314 99,984
0
0
0
0
0
259,450 35,646 -43,572 -6,256 -31,736
99,632 93,740 89,715 Other
182,442
511
2,786
-0
0
125,091 118,934 114,334 Dividends paid
0
0
0
0
0
441,892 36,157 -40,786 -6,256 -31,736
195,908 188,269 174,883
9,384
9,414
26,051
-8,183 -16,180 72,077 50,243
423,165 410,752 374,416 Beginning cash
36,510 62,561 54,378 38,198 110,275
175,476 180,513 191,908 Ending cash
62,561 54,378 38,198 110,275 160,518
451
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.cmbc.com.cn/
Price Target: HKS6.75
Company overview
Founded in Beijing by primarily non-state-owned private enterprises in 1996,
Minsheng is the newest bank among major banks in China. Currently its the ninthlargest bank in China in terms of total assets and the only truly private one among top
10 largest commercial banks in China. The private ownership fuels a relatively strong
commercial culture and tradition for changes, which is a key positive. Since 2006,
Minsheng has achieved soft-landing in its balance sheet growth, without major asset
quality deteriorations. It is well-positioned in SME market and retail banking.
Investment case
1) Deteriorating asset quality: NPLs +8% Q/Q & 28% YTD. 90+ day overdue
formation stands at 48bps in 1H12, highest in the sector. This masks a 51% YTD jump
in overdue to 1.29%, which is up +89bps on a Y/Y basis. Deterioration reflects the
banks SME focus, but weakness was seen across its corporate book. 2) NIMs
continued to fall, -15bps Q/Q in 3Q and almost -50bps YTD. This is despite
accelerating growth in MSE (+12% Q/Q), where pricing power is supposed to be
superior. 3) Despite rising NPL, Minsheng lowered provisions in 3Q to just 47bps,
down from 61bps in 2Q. This supported a 26% ROE, which helps a precarious capital
position, but is unlikely to sustain. Low core capital (<8.5%) & growth in higher RWA
(MSEs) means the bank may be forced to raise more equity.
Key issues in a anemic growth environment
Rapid growth (+12% Q/Q in 3Q) in high risk-weighted Shangdaitong assets pressures
down capital position (est. 8.1% as of end-Sep). Stretched liquidity (LDR 73%) +
deposit competition heightens risk in funding pressure and dependence on interbank,
either way compressing margins further.
Key risks include unexpected sharp deterioration in the asset quality of its Shandaitong
business as well as more severe NIM compression from further rate cuts. Key upside
risk is stronger-than-expected NIM, stronger fee income growth and lower operating
expenses.
Our PT (Dec-13, DDM-derived) of HK$6.75 implies a forward P/BV of 0.9x and P/E
of 5.6x (FY13E). Besides the earnings risks above, upside risks to our PT are better
loan pricing and deposit growth, as well as strong economic recovery in manufacturing
and export sector helping to sharply improve asset quality for Minsheng.
China
Banks
China Minsheng Banking - H (Reuters: 1988.HK, Bloomberg: 1988 HK)

FY09A
FY10A
FY11A
FY12E
Operating Profit (Rmb mn)
15,546
28,279
45,551
48,416
Net Profit (Rmb mn)
12,104
17,581
27,920
28,314
Cash EPS (Rmb)
0.51
0.66
1.05
1.03
Fully Diluted EPS (Rmb)
0.51
0.66
1.05
1.03
DPS (Rmb)
0.04
0.10
0.30
0.28
EPS growth (%)
51.4%
28.3%
58.8%
(1.6%)
ROE
17.1%
18.3%
23.9%
19.6%
P/E (x)
11.2
8.7
5.5
5.6
BVPS (Rmb)
3.30
3.90
4.85
5.60
P/BV (x)
1.7
1.5
1.2
1.0
Dividend Yield
0.7%
1.7%
5.2%
4.9%
452
Price: HK$7.16
FY13E
51,152
27,379
0.97
0.97
0.28
(6.1%)
16.3%
6.0
6.28
0.9
4.9%
Josh KlaczekAC
(852) 2800-8534
josh.klaczek@jpmorgan.com
Bloomberg JPMA KLACZEK <GO>
Limited
8.5
7.5
HK$
6.5
5.5
Nov-11
Feb-12
May-12
Aug-12
Nov-12

H-SHARE (rebased)
Abs
Rel
YTD
6.4%
1.8%
1m
7.2%
8.8%
3m
-0.3%
-3.1%
12m
7.8%
10.0%
Source: Bloomberg
Cost of equity assumptions

Risk free rate:
Market risk premium:
Cost of equity
Terminal g:
Fair P/B
PV of Terminal Value
PV of Dividends to 12E
Equity/assets
Normalised ROE
4.5%
7.2%
14.1%
3.5%
0.86x
4.46
0.65
7%
13%
Company Data
52-week Range (HK$)
Market Cap (Rmb mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (HK$)
Date Of Price
H-SHARE
Exchange Rate
8.23-5.35
153,730
24,678
26,714
Dec
7.16
13 Nov 12
284.02
29.5
43.43
1,3783.10
9.64

21 November 2012
Adrian Mowat
(852) 2800-8599
China Minsheng Banking - H: Summary of Financials

Income Statement
Growth Rates
FY14E
2.9% Loans
19.8% 14.0% 13.8% 13.0% 12.0%
100.3% Deposits
25.6% 16.1% 13.0% 11.5% 12.0%
2.9% Assets
27.9% 22.2% 15.1% 13.5% 14.0%
Equity
18.3% 24.5% 22.6% 12.2% 11.0%
Net Interest Income
45,873 64,821 71,803 78,445 85,441 RWA
28.9% 25.1% 14.5% 11.9% 13.1%
42.3% 41.3% 10.8% 9.3% 8.9%
Fee Income
8,289 15,101 17,517 19,970 22,366 Non-Interest Income
96.2% 102.2% 14.3% 15.2% 13.5%
Dealing Income
83
484
100
100
100
of which Fee Grth
77.7% 82.2% 16.0% 14.0% 12.0%
Revenues
48.7% 50.9% 11.5% 10.5% 10.0%
54,466 82,196 91,658 101,311 111,403 Costs
24.3% 39.9% 18.0% 16.0% 15.0%
81.9% 61.1% 6.3% 5.6% 5.0%
Operating costs
(26,187) (36,645) (43,241) (50,160) (57,684) Loan Loss Provisions
10.7% 57.9% 21.1% 39.4% 17.0%
Pre-Prov. Profits
28,279 45,551 48,416 51,152 53,720 Pre-Tax
46.8% 61.8% 3.0% (3.3%) 0.4%
Provisions
(5,303) (8,376) (10,141) (14,140) (16,543) Attributable Income
45.2% 58.8% 1.4% (3.3%) 0.4%
Other Inc
0
0
0
0
0 EPS
28.3% 58.8% (1.6%) (6.1%) 0.4%
Other Exp.
- DPS
140.1% 199.9% (5.1%) (1.6%) (1.3%)
Exceptionals
0
0
0
0
0
Associate
0
0
0
0
Pre-tax
22,976 37,175 38,276 37,012 37,177 Loan/deposit
73.2% 71.6% 71.8% 72.5% 72.1%
Tax
(5,288) (8,732) (9,952) (9,623) (9,666) Investment/assets
10.4% 9.7% 10.8% 11.9% 11.9%
Minorities
(107)
(523)
(10)
(10)
(10) Loan/Assets
59.7% 55.8% 53.7% 53.3% 52.7%
Attributable Income
17,581 27,920 28,314 27,379 27,501 Customer deposits/liab.
82.5% 78.5% 77.4% 75.9% 74.5%
LT debt/liabilities
1.5% 1.4% 1.5% 1.5% 1.6%
Per Share Data CNY
FY10
FY11 FY12E FY13E FY14E Asset Quality/Capital
EPS
0.66
1.05
1.03
0.97
(1.9%) (2.2%) (2.6%) (3.1%) (3.6%)
DPS
0.10
0.30
0.28
0.28
0.28 NPLs/loans
0.8% 0.7% 0.8% 1.1% 1.4%
Payout
15.2%
28.7% 27.7%
29.0%
238.1% 314.5% 307.7% 259.9% 231.0%
Book value
3.90
4.85
5.60
6.28
6.97 Growth in NPLs
(0.8%) 2.7% 71.1% 49.3% 46.8%
26,714 26,714 27,539 28,364 28,364 Tier 1 Ratio
8.1% 7.9% 8.5% 8.5% 8.4%
PPOP per share
1.06
1.71
1.76
1.80
1.89 Total CAR
10.5% 10.9% 11.3% 11.4% 11.3%
Key Balance sheet Rmb in millions
FY10
FY11 FY12E FY13E FY14E Du-Pont Analysis
Net Loans
1,037,723 1,178,285 1,335,589 1,502,237 1,673,683 NIM (as % of avg. assets)
2.9% 3.3% 3.1% 3.0% 2.9%
LLR
(19,848) (26,936) (35,952) (47,605) (62,140) Earning assets/assets
95.9% 101.8% 99.8% 100.0% 100.3%
Gross Loans
1,057,571 1,205,221 1,371,541 1,549,842 1,735,823 Margins (as % of Avg. Assets) 2.8% 3.4% 3.1% 3.0% 2.9%
NPLs
7,339
7,539 12,898 19,253 28,263 Non-Int. Rev./ Revenues
15.8% 21.1% 21.7% 22.6% 23.3%
Investments
181,419 212,072 305,847 344,170 395,070 Non IR/Avg. Assets
0.5% 0.9% 0.8% 0.8% 0.8%
54,104 84,828 93,311 102,642 112,906 Revenue/Assets
3.4% 4.1% 3.8% 3.7% 3.6%
Avg. IEA
1,558,093 2,062,831 2,391,507 2,738,974 3,124,358 Cost/Income
48.1% 44.6% 47.2% 49.5% 51.8%
Goodwill
0
0
0
0
0 Cost/Assets
1.6% 1.8% 1.8% 1.8% 1.9%
Assets
1,823,737 2,229,064 2,565,153 2,911,649 3,317,944 Pre-Provision ROA
1.7% 2.2% 2.0% 1.9% 1.7%
LLP/Loans
(0.5%) (0.7%) (0.8%) (1.0%) (1.0%)
Deposits
1,416,939 1,644,738 1,859,027 2,072,608 2,321,321 Loan/Assets
59.7% 55.8% 53.7% 53.3% 52.7%
0.0% 0.0% 0.0% 0.0% 0.0%
Other Borrowings
5,911 15,753
0
0
0 Operating ROA
1.4% 1.8% 1.6% 1.4% 1.2%
Avg. IBL
1,503,350 1,869,506 2,196,772 2,502,136 2,847,971 Pre-Tax ROA
1.4% 1.8% 1.6% 1.4% 1.2%
Avg. Assets
1,625,065 2,026,401 2,397,108 2,738,401 3,114,797 Tax rate
23.0% 23.5% 26.0% 26.0% 26.0%
Common Equity
0.1% 0.1% 0.2% 0.2% 0.1%
RWA
1,280,847 1,602,301 1,834,084 2,052,713 2,322,561 ROA
1.1% 1.4% 1.2% 1.0% 0.9%
Avg. RWA
1,137,310 1,441,574 1,718,193 1,943,398 2,187,637 RORWA
1.5% 1.9% 1.6% 1.4% 1.3%
Equity/Assets
5.9% 5.8% 6.0% 6.2% 6.0%
ROE
18.3% 23.9% 19.6% 16.3% 14.6%
FY10
2.9%
95.9%
2.8%
FY11
3.3%
101.8%
3.4%
FY12E
3.1%
99.8%
3.1%
FY13E
3.0%
100.0%
3.0%
453
Adrian Mowat
(852) 2800-8599

21 November 2012
China Shineway Pharmaceutical Group

Limited
Underweight
Price: HK$11.76
www.shineway.com.hk/eng/global/home.php
Company overview
Shineway is the largest Chinese medicine manufacturer of injection-based and soft
capsule medicines in China, in terms of volume. Shineway focuses on prescription
medicines in three major formsinjection, soft capsule, and granule. All of the
products are sold under the Shineway brand and developed mainly in-house.
China
Healthcare
Investment case
As the largest producer of TCM injections, Shineway has benefited from government
support of this unique class of drugs in China. The company operates the best regarded
manufacturing facilities for TCM injections and it is aggressively diversifying into
OTC markets to stay away from government price cutting pressure. However, the
companys soft capsule drugs have attained their desired market share and sales
channel restructuring has taken much longer than expected.

Although Qing Kai Ling use may benefit from the restriction on use of antibiotics,
Shineway is still facing pressure from competitors competing on prices for QKL and
substitutes for QKL from Re Du Ning by Jiangsu Kanion and others.
We see substantial risks to consensus earnings estimates as all appear to have baked in
a pretty decent recovery of the companys businesses, especially TCM injections sales.
On the upside, OTC products sales may turn around and show much-better-thanexpected sales growth, especially for granule products targeting children.
Our DCF-based Dec-12 PT of HK$12 implies 2013E P/E of 10.0x. Valuation-wise,
Shineway may appear cheap but it may present a valuation trap unless the company can
reboot growth substantially. In our view, margin pressure for Shineway is greater than
that of its peers due to its portfolio of cheaper products and its above-average margins.
Key upside risks are a higher-than-expected sales volume increase after EDL
implementation and earlier-than-expected implementation of unified pricing for EDL
providing unexpected relief for Shineway.
China Shineway Pharmaceutical Group Limited (Reuters: 2877.HK, Bloomberg: 2877 HK)
FY09A
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
1,633
2,038
1,985
1,997
2,252
Net Profit (Rmb mn)
767.2
821.7
755.6
724.7
801.9
EPS (Rmb)
0.93
0.99
0.91
0.88
0.97
DPS (Rmb)
0.37
0.40
0.27
0.26
0.29
Revenue growth (%)
28.1%
24.8%
-2.6%
0.6%
12.8%
EPS growth (%)
92.6%
7.1%
-8.0%
-4.1%
10.7%
ROCE
29.3%
31.7%
25.3%
20.7%
20.3%
ROE
31.6%
27.6%
21.6%
18.1%
17.6%
P/E (x)
10.2
9.5
10.4
10.8
9.8
P/BV (x)
2.9
2.4
2.1
1.8
1.6
EV/EBITDA (x)
8.4
6.2
6.1
6.0
5.3
Dividend Yield
3.9%
4.2%
2.9%
2.8%
3.1%
454
Sean WuAC
(852) 2800 8538

Limited
14
HK$
12
10
8
Nov-11
Feb-12
May-12
Aug-12
Nov-12

Abs
Rel
YTD
4.6%
-27.4%
1m
5.9%
6.4%
3m
2.3%
-11.2%
Source: Bloomberg.
China Shineway DCF
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3-mth trading value (HK$ mn)
MSCICNX-HLTH
Exchange Rate
Fiscal Year End
827
7,833
1,255
11.76
09 Nov 12
27.4%
2
18
2
130
7.75
Dec
12m
13.1%
-8.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
China Shineway Pharmaceutical Group Limited: Summary of

Financials
Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
2,038
24.8%
1,435
21.8%
1,031
36.1%
944
32.5%
46.3%
46
992
12.2%
-170
17.1%
821.7
7.1%
827
0.99
7.1%
FY11
1,985
(2.6%)
1,302
-9.3%
1,013
-1.7%
884
NM
44.5%
69
950
-4.3%
-194
20.4%
755.6
-8.0%
827
0.91
(8.0%)
FY12E
1,997
0.6%
1,258
-3.4%
1,004
-0.9%
831
NM
41.6%
72
899
-5.3%
-175
19.4%
724.7
-4.1%
827
0.88
(4.1%)
FY13E
2,252
12.8%
1,412
12.3%
1,128
12.3%
921
10.9%
40.9%
77
995
10.7%
-193
19.4%
801.9
10.7%
827
0.97
10.7%
FY14E
2,551
13.3%
1,593
12.8%
1,264
12.1%
1,029
11.7%
40.3%
79
1,105
11.0%
-188
17.0%
917.1
14.4%
827
1.11
14.4%
FY10
2,349
271
192
130
2,941

2,515 2,706 2,767 3,157
264
265
299
339
187
188
212
240
87
116
398
399
3,052 3,276 3,676 4,135
162
777
3,972
166
1,127
4,427
169
1,423
4,942
172
1,617
5,532
0
168
499
667
0
76
743
3,230
3.91
0
163
506
669
0
0
669
3,758
4.54
0
164
512
677
0
0
677
4,266
5.16
0
185
519
704
0
0
704
4,827
5.84
Cash flow statement

EBIT
Taxes
Capex
Net Interest
Other
Free cash flow
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin

176 Sales growth
6,205 EPS growth
0
526 Working Capital to Sales
736 Sales/assets
0 Assets/equity
0 ROE
736 ROCE
5,469
6.61
FY10
944
87
-181
-117
779

884
831
921 1,029
130
174
207
235
23
-67
-415
-124
-170
-194
-175
-193
935
815
616 1,026
-459
46
46
320
-480
69
69
455
-470
72
72
345
-400
77
77
216
-453
79
79
572
76
-318
2,319
2,349
0.40
-76
-279
2,349
2,515
0.27
0
-222
2,515
2,706
0.26
0
-229
2,706
2,767
0.29
0
-258
2,767
3,157
0.33
FY10
70.4%
50.6%
46.3%
40.3%

65.6% 63.0% 62.7% 62.5%
51.1% 50.3% 50.1% 49.6%
44.5% 41.6% 40.9% 40.3%
38.1% 36.3% 35.6% 35.9%
24.8% (2.6%)
0.6%
24.8% (2.6%)
0.6%
7.1% -8.0% -4.1%
7.1% (8.0%) (4.1%)
-
12.8%
12.8%
10.7%
10.7%
-
13.3%
13.3%
14.4%
14.4%
-
-72.7% -66.9% -63.4% -57.3% -57.7%

14.5% 14.5% 14.5% 14.5% 14.5%
0.56
0.47
0.43
0.43
0.43
1.20
1.18
1.16
1.15
1.13
27.6% 21.6% 18.1% 17.6% 17.8%
31.7% 25.3% 20.7% 20.3% 20.0%
455
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
CSN
Price: $4.91
www.csn.com.br
Price Target: $5.00
End Date: Dec 2013
Company overview
CSN is an integrated flat steel producer (third largest) and an iron ore miner (largest in
Brazil after Vale) in Brazil with crude and rolled steel capacity of 5.6Mt and 5.1Mt,
respectively, and iron ore capacity of ~28Mtpy. The company is investing to increase
iron ore capacity to 83Mtpy by 2016 and is also investing in railroad, cement, and long
steel in Brazil.
Brazil
Metals & Mining
Investment case
Among industry-specific drivers, continued overcapacity in steel and intensifying
competition in Brazil should keep pricing power weak, while the iron ore outlook is
less bullish given overall weaker demand. Among company-specific drivers, continued
investment in non-core assets, lack of investment in core assets, delays in execution, as
well as potential acquisition of CSA could be negative catalysts.

Shares seem to be pricing in a somewhat improving scenario for the company both on
steel (prices) as well as iron ore (prices and volumes). However, we believe the current
state of steel overcapacity and intensifying competition in Brazil is unlikely to allow
any room for price increases. On iron ore, we believe the ramp-up of the iron ore
expansion is too optimistic.

(55-11) 4950-3888
rodolfo.r.angele@jpmorgan.com
12
10
$
8
6
4
Nov-11
Feb-12
May-12
Aug-12
Nov-12
SID share price ($)

IBOV (rebased)
Source: Bloomberg.

We see downside risks to sell-side consensus estimates as we believe the expectations
for iron ore prices and volumes ramp-up as well as for steel prices in Brazil are too
optimistic and have to be adjusted downwards.
We base our UW rating and Dec 2013 PT of $5.0 on a combination of DCF (80%) and
multiple analysis (20%). In our DCF we use a 10.4% discount rate composed of a cost
of equity of 12.8% and an after-tax cost of debt of 5.9%. For multiples analysis we use
a target EV/EBITDA of 6.0x, a premium to the fair industry multiple of 5.0x given the
companys growing iron ore exposure, on 2013E EBITDA. Our WACC calculation
assumes an additional 75-bp equity risk premium to account for CSNs appetite for
new and unrelated businesses. Key upside risks are better than expected demand from
China, weaker than expected BRL, benign competition in the domestic market, and
further import tariff hikes for steel products into Brazil, among others.
Companhia Siderrgica Nacional - ADR (SID;SID US)
FYE Dec
2011A
EPS - Recurring (R$)
FY
2.38
Revenues FY (R$ mn)
16,520
EBITDA FY (R$ mn)
6,468
EV/EBITDA FY
3.9
P/E (USD) FY
3.7
2012E
2013E
2014E
(0.60)
16,362
4,174
4,209
8.0
NM
0.43
17,780
4,814
5,239
8.3
24.0
0.69
20,450
5,922
5,943
7.5
15.2
estimates.
456
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
4.91
14 Nov 12
10.99 - 4.43
7,712.66
Dec
1,458
5.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
CSN: Summary of Financials

Income Statement
Revenues
COGS ex D&A
SG&A
Depreciation
EBITDA
EBITDA margin
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net income
Net Income Recurring
Net income margin (recurring)
EPS
EPS Recurring
Revenue growth
EBITDA growth
Net income growth
FCF growth

Capex
Free cash flow
Dividends
Capex/depreciation
CAPEX/sales
Working capital
Shipments
Avg price/t
Cash COGS/t
EBITDA/t
Shipments chg
Avg price/t chg
Cash COGS/t chg
EBITDA/t chg
Capex
Maintenance
Expansion
FY11A
FY12E
16,520
16,362
(8,909) (10,922)
(1,143)
(1,266)
(929)
(1,158)
6,468
4,174
39.2%
25.5%
702
295
(2,832)
(2,445)
124
216
0
0
0
0
3,751
(1,564)
(288)
687
0
0
0
0
3,464
(877)
3,464
(877)
21.0%
(5.4%)
2.38
(0.60)
2.38
(0.60)
14.3%
(1.0%)
1.8% (35.5%)
37.4% (125.3%)
(177.8%) (213.0%)
FY11A
FY12E
FY13E
FY14E
FY15E
17,780
20,450
21,543
(11,580) (12,985) (13,856)
(1,387) (1,543)
(1,646)
(1,399) (1,694)
(2,007)
4,814
5,922
6,041
27.1%
29.0%
28.0%
257
151
71
(2,249) (2,277)
(2,412)
68
(161)
(213)
0
0
0
0
0
0
951
1,347
882
(323)
(345)
(179)
0
0
0
0
0
0
628
1,002
703
628
1,002
703
3.5%
4.9%
3.3%
0.43
0.69
0.48
0.43
0.69
0.48
8.7%
15.0%
5.3%
15.3%
23.0%
2.0%
(171.5%)
59.7%
(29.9%)
94.3% (19.7%) (119.8%)
4,391
412
1,480
1,856
53.6%
4.7
26.6%
3,232
19.6%
4,187
819
(1,672)
1,200
(136.7%)
3.6
25.6%
4,052
24.8%
FY13E
6,218
248
(3,248)
800
127.5%
4.4
35.0%
4,299
24.2%
FY14E
6,480
523
(2,608)
600
59.9%
3.8
31.7%
4,823
23.6%
FY15E
3,950
242
516
958
136.3%
2.0
18.3%
5,064
23.5%
4,895
1,935
1,820
1,321
5,632
1,842
1,939
741
5,781
1,822
2,003
833
5,802
1,824
2,238
1,021
5,826
1,842
2,378
1,037
2.0%
(6.5%)
26.2%
(0.3%)
4,391
4,391
15.1%
(4.8%)
6.6%
(43.9%)
4,187
4,187
2.6%
(1.1%)
3.3%
12.4%
6,218
6,218
0.4%
0.1%
11.7%
22.6%
6,480
6,480
0.4%
1.0%
6.3%
1.6%
3,950
3,950
Balance Sheet
FY11A
FY12E
FY13E
FY14E FY15E
Accounts payable
Total Current Liabilities
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority Interests
15,417
1,615
3,735
1,177
21,944
17,377
7,548
46,870
2,702
1,232
2,563
6,497
25,187
38
6,731
38,453
431
7,986
46,870
3,697
2,308
4,697
1,358
12,061
30,661
9,197
51,919
2,646
1,929
2,122
6,697
29,230
162
7,650
43,740
417
7,762
51,919
3,801
2,432
5,012
1,431
12,675
32,604
9,689
54,968
2,866
2,059
2,236
7,160
31,662
162
8,059
47,044
417
7,507
54,968
Net debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
12,471
34.8%
77.7%
1.9
17,418
47.2%
79.6%
4.2
23,091
61.3%
80.5%
4.8
28,178
71.1%
80.4%
4.8
30,727
73.1%
82.1%
5.1
Valuation, Macro
FY11A
FY12E
FY13E
FY14E FY15E
Cash
Accounts receivable
Inventories
Total Current Assets
Net PP&E
Other assets
Total assets
Short-term debt
EV/EBITDA
P/E
P/BV
EV/tonne
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
ROIC
Shares
ADRs
11,955
1,847
3,950
1,087
18,839
21,056
7,359
47,253
2,438
1,623
1,698
5,759
26,935
162
6,448
39,304
417
7,532
47,253
7,215
2,007
4,188
1,181
14,591
25,875
7,997
48,462
2,515
1,721
1,845
6,081
27,791
162
6,652
40,686
417
7,360
48,462
3.9
8.0
8.3
7.5
3.7
NM
24.0
15.2
1.0
1.1
1.1
1.1
4,337
4,645
5,507
6,364
17.8% (20.1%) (39.0%) (31.3%)
11.8%
7.6%
5.1%
3.8%
43.4% (11.6%)
8.5% 12.9%
21.0% (5.4%)
3.5%
4.9%
35.2% 34.6% 36.7% 39.4%
5.9
6.3
6.6
6.7
12.9%
6.1%
5.9%
7.2%
1,458
1,458
1,458
1,458
1,458
1,458
1,458
1,458
7.9
22.2
1.1
6,774
6.2%
6.1%
9.4%
3.3%
39.2%
7.3
6.5%
1,458
1,458
WACC
Perpetual Growth
Cost of equity
Cost of debt

Note: R$ in millions (except per-share data). Fiscal year ends Dec
457
Adrian Mowat
(852) 2800-8599

21 November 2012
Discovery
Underweight
www.discovery.co.za
Company overview
DSY is predominantly a health administrator and niche life insurer in SA. It is
investing heavily into new ventures overseas, new life business in SA and into Insure
(short-term insurance). In our view, its cash flows are stretched thin and its attention
divided by the many simultaneous growth ventures. We do not like the aggressive
earnings (e.g. profit taken at point-of-sale on uncertain distant prospects in UK) and EV
accounting that we believe leave little scope for upside surprises and expose DSY to
anticipated IFRS and EV reporting changes.
South Africa
Life Insurance
Price: 5,546c
Francois Du Toit
AC
(27-11) 507 0378

Investment case
DSY's complex interdependent products sold to the affluent SA client base through
brokers expose it to regulatory changes (like Treating Customers Fairly), brand risk and
economic conditions. Its aggressive accounting and discounting of distant future profits
expose it to interest rate increases and IFRS changes. We do not believe the UK Health
and Life ventures will generate excess returns on the large investments made. We
expect ongoing CMA (regulatory/competition body) and public pressure for lower
medical aid administration fees to reduce the high margins here.
While the defensive health administration business should see resilient revenues, the
lower growth in membership and in Life premiums could lead to cost overruns or
further margin reduction. We expect an intensification of competition for pure risk
business, DSY's mainstay, as we saw in FY12 when APE volumes reduced 4% at DSY.
6,000
5,500
c 5,000
4,500
4,000
Nov-11
Abs
Feb-12
YTD
24.9%
May-12
Aug-12
1m
-0.0%
Nov-12
3m
-2.6%
12m
31.9%
Source: Bloomberg.

We see downside risk to consensus expectations from DSYs aggressive Life earnings
accounting, especially in the UK business. DSY was 6% below consensus for 1H12
and 12% below for 2H12. Our expectations are again well below consensus.
Valuation:
We value each separate part of DSY on a SOTP CAPM-DCF basis. For our target
price, we unwind our valuation to the target price date at the discount rate.
Upside Risks to our Underweight recommendation come from lower interest rates
and its China venture.
Discovery Holdings Limited (DSYJ.J;DSY SJ)
FYE Jun
2011A
Adj. EPS FY (c)
410.97
Adj P/E FY
13.5
Headline EPS FY (c)
365.46
90.00
NAV FY (R mn)
3,993
Embedded value FY (R
28,295
mn)
Operating profit FY (R mn)
2,838
371.30
458
2012A
423.20
13.1
416.90
103.50
4,876
31,793
2013E
479.92
11.6
462.21
115.00
5,563
35,437
2014E
521.40
10.6
509.58
125.00
6,321
39,052
3,443
444.70
3,742
495.90
4,117
560.60
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
Free Float
5,546
02-Nov-12
5,100
01 Sep 13
6,095 - 4,050
32.8
591
60.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Discovery Holdings Limited: Summary of Financials

R in millions, year end Jun
FY11
FY12 FY13E FY14E
1,608
18.9%
0
(96)
585.7%
(17)
13.3%
2,838
29.2%
335
6.7%
3,156
26.4%
(875)
0
2,281
32.9%
2,179 2,335 2,521

35.5%
7.1%
8.0%
0
0
0
(239)
(239) (239)
149.0%
0.0%
0.0%
(70)
(60)
(60)
311.8% (14.3%)
0.0%
3,443 3,742 4,117
21.3%
8.7% 10.0%
110
168
125
(67.2%) 53.2% (26.0%)
3,483 3,850 4,182
10.4% 10.5%
8.6%
(1,132) (1,182) (1,273)
0
0
0
2,351 2,668 2,909
3.1% 13.5%
9.0%
Balance sheet
FY11
FY12 FY13E FY14E
Shareholder Funds
Cash
Fixed Interest
Equities and Property
Asset Management Companies
Listed Subsidiaries
Debt
Other
3,993
1,097
856
635
0
0
0
-
4,876
1,564
1,320
696
0
0
0
-
Gross Life
% change Y/Y
Gross Asset Management
% change Y/Y
Gross Debt costs
% change Y/Y
Gross Other
% change Y/Y
Gross Operating profit
% change Y/Y
Shareholder investment income
% change Y/Y
Basic Earnings before tax
% change Y/Y
Tax
Minorities
Net basic earnings
% change Y/Y
Value of In Force Business

Value of New Business
Policyholder Assets
5,563
1,681
1,816
773
0
0
0
-
6,321
1,760
2,547
860
0
0
0
-
24,302 27,727 31,241 35,044

993.0
0
934.0
0
984.5 1,118.1
0
0
Cash flow statement

FY11
FY12 FY13E FY14E
Shares Outstanding
591.2
591.2
Basic EPS
% change Y/Y
DPS
% change Y/Y
90.00 103.50 115.00 125.00

30.4% 15.0% 11.1% 8.7%
Payout Ratio
NAV/Share
EV/Share
ROE
RONAV
ROEV
591.2
591.2
675.4 824.7 941.0 1,069.2

4,785.7 5,377.7 5,994.0 6,605.6
61.6% 62.7% 58.2% 55.4%
61.6% 62.7% 58.2% 55.4%
16.6% 10.7% 12.2% 11.2%
Ratio Analysis
FY11
FY12 FY13E FY14E
Key Ratios
Debt to NAV ratio
Value of New Business to EV
Life Op'g margin on Assets
AM Cost income ratio
0.0%
3.5%
-
0.0%
2.9%
-
Life as % of Embedded Value

Non Life as % of Embedded Value
Banking as % of Embedded Value
Asset Management as % of Embedded Value
Debt as % of Embedded Value
Other as % of Embedded Value
0.0%
2.8%
-
0.0%
2.9%
-
41.6% 42.9% 44.5% 51.8%

40.4% 36.2% 34.1% 31.9%
0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 0.0% 0.0%
18.0% 21.0% 21.5% 16.3%
459
Adrian Mowat
(852) 2800-8599

21 November 2012
Dongbu Insurance
Underweight
www.idongbu.com
Company overview
Dongbu Insurance is the third-largest non-life insurer in Korea, with market share of
15.4% (as of 1Q12). Its business consists of LT (66.3%), auto (25.3%) and general
(8.4%) insurance products.
South Korea
Insurance
Investment case
Dongbu has aggressively increased its market share in the auto line for the past two
years, and sold the most single lump-sum savings-type products during FY11, which
pushed up the long-term loss ratio due to high competition. Its business is largely
dependent on private health insurance in the long-term line, and we are concerned
about possible volume/margin contraction in the long-term line after the mandatory
cheap private health insurance offering starts in Jan-13.
Bloomberg JPMA MKIM <GO>
Price: W49,500
MW KimAC
(822) 758 5724
mw.kim@jpmorgan.com

Seoul Branch
54,000
50,000
W 46,000
42,000

Due to faster-than-expected loss ratio increase in the long-term line and competitors
improved expense ratio backed by their economies of scale, Dongbus competitive
edge seems to have blurred. We are concerned about its risky asset allocation and
investment income structure being less dependent on interest-bearing assets.
38,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12

KOSPI (rebased)
Abs
Rel
YTD
-7.3%
-12.4%
1m
3.4%
7.3%
3m
22.7%
20.1%
12m
3.9%
2.8%
Source: Bloomberg.

Due to wider-than-expected underwriting loss and unsustainable investments marked
by the higher investment return from the AFS bond sales, we believe that Dongbus
FY12/13 earnings growth will be much lower than consensus estimates.
Our Dec-13 PT of W41,000 is at a 20% discount to the implied FY13E P/BV of 1.0x
based on our SOTP targets of -0.4x FY13E P/BV for the non-life business and 1.0x
FY13E P/EV for the life business. We apply a 20% discount to reflect its high
NBV/earnings pressure. Key risks: (1) better-than-expected equity market
performance; (2) alleviated regulatory control in private health insurance; and (3)
milder-than-expected auto loss ratio worsening from 2013 onwards.
Dongbu Insurance (Reuters: 005830.KS, Bloomberg: 005830 KS)
W in bn, year-end Mar
FY11A
FY12E
Direct Premium Written (W bn)
8,368
9,610
DPW growth (%)
30.3%
14.8%
Net Profit (W bn)
403
453
EPS (W)
5,694
6,391
EPS growth
41.7%
12.2%
BVPS (W)
31,139
36,399
DPS (W)
1,200
1,250
P/E (x)
8.7
7.7
P/BV (x)
1.6
1.4
ROE (%)
20.4%
18.9%
Dividend Yield
2.4%
2.5%
460
FY13E
10,757
11.9%
446
6,299
-1.4%
42,369
1,400
7.9
1.2
16.0%
2.8%
FY14E
12,124
12.7%
524
7,404
17.5%
49,362
1,500
6.7
1.0
16.1%
3.0%
Company Data
52-week Range (W)
Market cap (W bn)
Market cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily vol
KOSPI
Exchange Rate
54,000 - 38,550
3,505
3,211
71
Mar
49,500
02 Nov 12
62.0%
6.60
5.89
0
1,919
1,091.50

21 November 2012
Adrian Mowat
(852) 2800-8599
Dongbu Insurance: Summary of Financials

W in billions, year end Mar
Income statement
Net premium earned
% change Y/Y
Direct premium written
% change Y/Y
General
% change Y/Y
LT
% change Y/Y
Auto
% change Y/Y
Total incurred losses
General
LT
Auto
Underwriting expense
Underwriting profit
Investment profit
Net profit before tax
Income tax
Net profit
% change Y/Y
Ratio analysis
Claim Loss ratio
General
LT
Auto
Expense ratio
Combined ratio
Investment yield
Per share data
EPS (W)
% change Y/Y
BVPS (W)
DPS (W)
Payout ratio
FY11
8,368
30.3%
8,368
30.3%
740
23.6%
6,305
33.7%
2,024
12.5%
6,979
184
5,321
1,474
1,412
-23
585
545
142
403
41.7%
FY12E
9,610
14.8%
9,610
14.8%
824
11.3%
7,485
18.7%
2,106
4.1%
8,067
225
6,289
1,553
1,620
-77
688
608
152
453
12.2%
FY13E
10,757
11.9%
10,757
11.9%
891
8.1%
8,634
15.4%
2,212
5.0%
9,171
232
7,284
1,656
1,824
-238
827
589
143
446
-1.4%
FY11
83.4%
64.5%
85.2%
80.2%
16.9%
100.3%
4.7%
FY11
5,694
41.7%
31,139
1,200
21.1%
FY12E
83.9%
66.4%
85.6%
80.6%
16.9%
100.8%
4.3%
FY12E
6,391
12.2%
36,399
1,250
19.6%
FY13E
85.3%
65.0%
86.6%
83.2%
17.0%
102.2%
4.2%
FY13E
6,299
(1.4%)
42,369
1,400
22.2%
FY14E
12,124
12.7%
12,124
12.7%
964
8.1%
9,906
14.7%
2,322
5.0%
10,370
251
8,372
1,747
2,072
-252
1,009
692
167
524
17.5%
Balance sheet
Loan
Stock
Bond
Overseas Securities
Real Estate
Invested asset
Total Assets
Policy reserve
Outstanding loss reserve
LT savings reserve
Unearned premium reserve
Policyholder dividend reserve
Total Liabilities
Paid In Capital
Capital Surplus
Retained Earnings
Catastrophe reserve
Capital Adjustments
ROE decomposition
FY14E ROA
85.5% Equity multiplier
65.0% ROE
86.8%
83.6%
17.1%
102.6%
4.1%
FY14E
7,404
17.5%
49,362
1,500
20.3%
FY11
860
3,418
1,138
7,188
717
979
14,300
17,528
7,885
815
9,870
1,239
46
15,324
35
38
1,741
500
211
2,205
FY12E
1,045
4,154
1,383
8,737
872
1,190
17,381
22,869
8,324
954
11,548
1,450
54
20,292
35
38
2,105
552
211
2,577
FY13E
545
5,214
2,400
10,965
1,331
1,462
21,815
28,331
8,802
1,116
13,512
1,696
64
25,331
35
38
2,452
611
211
3,000
FY14E
676
6,459
2,973
13,584
1,649
1,811
27,025
35,097
9,318
1,305
15,809
1,985
74
31,602
35
38
2,870
674
211
3,495
FY11
2.7%
6.2
20.4%
FY12E
2.2%
6.9
18.9%
FY13E
1.7%
7.6
16.0%
FY14E
1.7%
8.2
16.1%
461
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.dfmh.com.cn
Company overview
DongFeng Motor Co Ltd (DFM) is one of the top three auto producers in China. It
operates a comprehensive auto-related business comprising passenger vehicles (PV),
commercial vehicles, auto engines and other auto parts. It produces PVs mainly
through its three major JVs, i.e. DongFeng Nissan, DongFeng Honda, and DongFeng
PSA, and its own-brand vehicle business.
China
Price: HK$9.73
Investment case
We are projecting net income of Rmb8.7B/Rmb8.9B for 2012/2013. DFMs declining
ROE, in our view, will be the main driver of the stocks de-rating. Fundamentally,
weak Japanese car sales volume in China is no longer news, but we believe the real
challenges facing Japanese brands have just begun: 1) regaining customer confidence;
and 2) the threat from entry-level models of luxury brands. We maintain our nonconsensus UW on DFM.
(1) Regain customers confidence if their purchase behavior has not fundamentally
changed to favor non-Japanese brands, i.e. substitution effect. (2) Competition from
entry-level models of luxury brands (e.g. Benz, Audi, BMW) when price differential is
insignificant despite demographics of target customers being initially different. (3)
Chinese own brands must strive to upgrade quality but at a competitive price.
Nick LaiAC
(886-2) 2725-9864
Limited
16
14
HK$ 12
10
8
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSCEI (rebased)
Abs
Rel
YTD
-27.0%
-32.9%
1m
9.3%
2.3%
3m
-16.8%
-23.5%
12m
-22.0%
-20.5%
Source: Bloomberg.

Our current 2012/13 estimates are 10-15% below the Street. Potential upside earnings
risk includes earlier-than-expected sale of its two Sino-Japan JVs.
Our Dec-13 PT of HK$7.5 is based on a forward P/E of 6x, which is the middle of
DFMs historical trough valuation of 5-7x forward P/E. Given that the stock has been
undergoing a de-rating trend, we believe that applying an average trough valuation is
reasonable. Key risks include: (a) a better-than-expected sell-through of Japanese cars
in China, including DFMs Nissan and Honda vehicles; and (b) stronger-than-expected
margin improvement for its passenger and commercial vehicle businesses.
DongFeng Motor Co., Ltd. (Reuters: 0489.HK, Bloomberg: 489 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
122,395
131,441
132,905
EBIT (Rmb mn)
14,216
14,284
12,071
Net Profit (Rmb mn)
10,981
10,481
8,740
EPS (Rmb)
1.27
1.22
1.01
DPS (Rmb)
0.09
0.18
0.18
Revenue growth (%)
33.4%
7.4%
1.1%
EPS growth (%)
75.7%
-4.6%
-16.6%
ROE
33.9%
25.0%
17.5%
P/E (x)
6.2
6.4
7.7
P/BV (x)
1.8
1.5
1.3
Dividend Yield
1.1%
2.3%
2.3%
462
FY13E
141,343
12,301
8,942
1.04
0.18
6.3%
2.3%
15.6%
7.6
1.1
2.3%
FY14E
148,032
13,106
9,484
1.10
0.16
4.7%
6.1%
14.6%
7.1
1.0
2.0%
Company Data
52-week Range (HK$)
15.80 - 8.54
Shares O/S (mn)
8,616
Market Cap (HK$ mn)
76,941
9,927
Price (HK$)
9.73
Date Of Price
08 Nov 12
Free float (%)
33.0%
28
33.30
HSCEI
10,813
7.75

21 November 2012
Adrian Mowat
(852) 2800-8599
DongFeng Motor Co., Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross Margin (%)
Operating Profit
% change Y/Y
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Net Margin
Wt. Avg. Shares (MM)
Wt. Avg. EPS (Rmb)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Other LT assets
Total Assets
ST loans
Payables
Others
Long term debt
Total Liabilities
Minority Interest
Cash flow statement

FY10
122,395 131,441 132,905 141,343 148,032 Profit before tax
33.4%
7.4%
1.1%
6.3%
50.8%
0.1%
-2.6%
5.2%
4.7% Others
14,516 14,384 12,094 12,422 13,297
71.6%
-0.9% -15.9%
2.7%
7.0% Purchase of fixed assets
11.9% 10.9%
9.1%
8.8%
9.0% Others
-229
-402
-453
-416
-328 Cash flow from investment
14,583 14,361 11,996 12,261 13,174
73.4%
-1.5% -16.5%
2.2%
7.4%
3,006
3,401
2,879
2,943
3,294 Equity raised/(repaid)
10,981 10,481
8,740
8,942
9,484 Other
75.7%
-4.6% -16.6%
2.3%
6.1% Dividends paid
9.0%
8.0%
6.6%
6.3%
8,616
8,616
8,616
8,616
1.27
1.22
1.01
1.04
1.10 Ending cash
75.7% (4.6%) (16.6%)
2.3%
6.1%
Ratio Analysis
FY10
FY11 FY12E FY13E FY14E year end Dec
42,950 44,747 53,115 56,791 61,527 Gross margin
13,935 12,511 13,216 14,093 14,761 Net margin
4,660
5,706 10,454 11,502 13,530
82,337 84,016 97,283 104,184 112,649
1,394
1,832
1,832
1,842
1,852 Sales growth
4,319
5,421
5,421
5,421
5,421 Gross profit growth
110,622 117,533 134,671 145,350 156,677 Operating profit growth
3,271
5,993 11,337 10,207
9,077 ROE
35,787 34,584 36,610 38,877 41,040
23,598 24,138 27,131 29,124 31,117
62,656 64,715 75,078 78,208 81,234
6,289
2,820
2,256
2,256
2,256
341
414
414
422
430
6,630
3,234
2,670
2,678
2,686
69,286 67,949 77,748 80,886 83,920
37,494 46,394 53,583 60,974 69,117
3,842
3,190
3,340
3,490
3,640

14,583 14,361 11,996 12,261
3,985 3,114 1,129 1,232
3,980 -710
679
610
-4,645 -7,549 -2,636 -2,690
17,903 9,216 11,168 11,413
FY14E
13,174
1,148
-50
-2,997
11,276
-3,927 -6,072 -5,000 -5,000 -4,000

-2,151 5,537
0
0
0
-6,078 -535 -5,000 -5,000 -4,000
0
-2,500
93
-898
-3,305
17,369
25,889
0
-701
156
-2,644
-3,189
25,889
31,381
0
-564
500
-1,733
-1,797
31,381
35,752
0
0
-1,000
-1,737
-2,737
35,752
39,428
0
0
-1,000
-1,539
-2,539
39,428
44,164

21.5% 20.1% 19.3% 19.1% 19.1%
11.9% 10.9% 9.1% 8.8% 9.0%
9.0% 8.0% 6.6% 6.3% 6.4%
33.4% 7.4% 1.1% 6.3% 4.7%
75.7% -4.6% -16.6% 2.3% 6.1%
50.8% 0.1% -2.6% 5.2% 4.7%
71.6% -0.9% -15.9% 2.7% 7.0%
33.9% 25.0% 17.5% 15.6% 14.6%
463

21 November 2012
Adrian Mowat
(852) 2800-8599
E Ink Holdings Inc.
Underweight
www.eink.com
Company overview
E Ink Holdings Inc. (previously known as Prime View) (TWSE: 8069), established in
1994, is one of Taiwans first TFT producers. It used to be a sole small and medium
panel maker, delivering <10" products for consumer electronics. The company started
its e-paper business and acquired E Ink in 2009 to become a dominant player in the epaper market. It now has over 90% market share in the E-paper market.
Taiwan
Price: NT$22.15
Narci Chang AC
(886-2) 2725-9899
Bloomberg JPMA NCHANG <GO>
Investment case
Single-functional E-reader market may continue to face cannibalization threat from
multi-functional low-priced tablet device. Customer concentration risk would add to E
Inks ongoing margin pressure when E-reader demand enters into a decelerating phase.
Lack of diversification in customer base and product offering remain the biggest
challenge for the company in 2013, in our view.
70
60
NT$
50
40
30
20
Nov-11

Due to the volatility in seasonal demand, allocating appropriate labor capacities ahead
of the holiday season has become increasingly difficult. The declining margins on Ereader display are likely to continue given the need to lower the end-device selling
price in order to spur replacement demand.
Feb-12
May-12
Aug-12
Nov-12
8069.TW O share price (NT$)

TSE (rebased)
Abs
Rel
YTD
-40.9%
-45.1%
1m
-33.9%
-29.0%
3m
-31.0%
-29.9%
12m
-65.8%
-61.1%
Source: Bloomberg.

We expect royalty income to be even larger than its core business operating profit in
2013/2014 since we believe E Inks core business may struggle to make profits. We
think the de-rating risk will persist until the company finds a new product segment.
Our Dec-13 PT of NT$20 is based on 0.9x 2013E P/BV (slightly above the industry
average due to its differentiation in display technology). Key upside risks to our
investment thesis include: (1) robust E-reader demand; (2) lower-than-expected
negative impact from tablet launches; and (3) higher-than-expected cost reduction.
Bloomberg 8069 TT, Reuters 8069.TWO
Sales
Operating Profit
EBITDA
Net profit
EPS
BPS (NT$)
P/E (x)
P/BV (x)
ROE (%)
Net Debt

38.4
25.1 33.4 34.6
7.0
-2.6 -0.4 -0.5
9.3
-0.6
1.8
1.9
6.5
-1.7
0.3
0.1
6.1
-1.6
0.3
0.1
26.1
21.2 21.5 21.5
3.7
NM 86.0 215.4
0.8
1.0
1.0
1.0
24.8
-6.7
1.2
0.5
4.6
8.8
9.6 10.2
464
Sales growth
OP growth
NP growth
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E
Difference (%)
Price Target
Consensus PT
FY11 FY12E FY13E

52.6% (34.7%)
33.0%
61.7% -137.0% -85.5%
62.0% -126.1% -116.3%
1Q
2Q
3Q
1.6
1.2
2.1
-0.7
-0.8
-0.2
0.1
-0.0
0.0
-37.5
20
32
FY14E
3.7%
44.0%
-60.1%
4Q
1.2
0.1
0.2
Date of Price
52-Week range
Market Cap
Market Cap
Share Out. (Com)
Free float
Avg daily val
Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Exchange Rate
08 Nov 12
NT$67.50 - 23.30
NT$24B
US$819MM
1,080MM
65.0%
NT$0.2B
8.38MM
7.9MM shares
0.0
29.21
Adrian Mowat
(852) 2800-8599

21 November 2012
E Ink Holdings Inc.: Summary of Financials

Ratio Analysis
FY10 FY11 FY12E FY13E FY14E NT$ in millions, year end Dec
Revenues
25,179 38,428 25,090 33,378 34,628 Gross margin
Cost of goods sold
-17,000 -26,401 -23,642 -29,736 -31,007 EBITDA margin
Gross Profit
8,179 12,028
R&D expenses
-1,571 -1,762 -1,662 -1,669 -1,731 Net margin
SG&A expenses
-2,276 -3,260 -2,375 -2,336 -2,424 R&D/sales
4,332 7,005 -2,595
-375
-540 SG&A/Sales
EBITDA
6,726 9,268
-575 1,776 1,915
Interest income
16
44
181
153
147 Sales growth
Interest expense
-295
-201
-190
-254
-279
-156
-9
-101
510
-114
738
668
Earnings before tax
4,843 6,891 -1,856
293
117
Tax
929
560
101
15
4,028.0 6,526.8 -1,701.9 278.3 111.1 Net debt to total capital
4,028 6,527 -1,702
278
EPS (reported)
3.81
6.05 (1.58)
0.26
0.10 Asset turnover
EPS (adjusted)
3.81
6.05
-1.58
0.26
BVPS
22.64 26.10
21.24 21.50 21.49 ROE
DPS
0.00
2.66
0.00
0.00
0.11 ROIC
Shares outstanding
1,078 1,080
1,081 1,081 1,081 ROIC (net of cash)
Balance sheet
Cash flow statement
FY10 FY11 FY12E FY13E FY14E NT$ in millions, year end Dec
5,767 4,374
4,234 3,323 2,623 Net income
Accounts receivable
3,487 9,483
Inventories
6,565 5,773
Others
1,853 1,449
1,869 2,118 2,199 Other
Current assets
LT investments
3,889 5,576
5,874 5,885 5,895 Capex
Net fixed assets
Others
10,155 10,241
9,615 9,615 9,615 Cash flow from investing
Total Assets
40,762 46,184 46,192 47,072 47,283 Free cash flow
Liabilities
ST Loans
6,115
939
Payables
5,056 5,563
5,298 5,277 5,404 Other
Others
2,731 2,470
3,721 4,447 4,647 Dividends paid
Long-term debt
1,585 8,027
9,776 9,527 9,344
Other liabilities
880
995
1,147 1,185 1,205 Net change in cash
Total Liabilities
16,367 17,995 23,236 23,838 24,061 Beginning cash
24,395 28,189 22,956 23,234 23,222 Ending cash
FY10
32.5%
26.7%
17.2%
16.0%
6.2%
9.0%
56.7%
-406.1%
-457.2%
(367.7%)
24.11
6.1%
7.9%
0.66
19.91
17.8%
11.9%
13.4%
FY10
4,028.0
2,394
318
450
6,625
-1,325
-1,276
5,300
0
-1,908
-493
0
-2,401
FY11
31.3%
24.1%
18.2%
17.0%
4.6%
8.5%
FY12E
5.8%
-2.3%
(10.3%)
-6.8%
6.6%
9.5%
FY13E FY14E
10.9% 10.5%
5.3%
5.5%
(1.1%) (1.6%)
0.8%
0.3%
5.0%
5.0%
7.0%
7.0%
52.6% (34.7%)
33.0%
3.7%
61.7% -137.0% -85.5% 44.0%
62.0% -126.1% -116.3% -60.1%
58.7% (126.0%) (116.3%) (60.1%)
59.22
13.3%
16.3%
0.88
4.84
24.8%
18.2%
20.7%
66.69
24.1%
38.5%
0.54
2.31
(6.7%)
-5.6%
-6.1%
FY11 FY12E
6,526.8 -1,701.9
2,263
2,020
-4,554
5
143
831
4,039
67
-2,661
-1,345
-4,278
-1,186
1,378
-1,278
0
0
1,382
4,255
331
-3,277
-2,868
0
-1,155
978
2,948 -1,393
2,819 5,767
5,767 4,374
-140
4,374
4,234
17.57
26.6%
41.3%
0.72
3.58
1.2%
-0.3%
-0.3%
11.40
28.2%
43.8%
0.73
3.95
0.5%
-0.9%
-0.9%
FY13E FY14E
278.3 111.1
2,151 2,455
-478
-174
477
120
1,952 2,392
-2,000 -2,000
-2,760 -2,865
-48
392
0
0
-103
-104
-0
-0
0
-123
-103
-227
-911
4,234
3,323
-700
3,323
2,623
465
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
Ecopetrol
Price: $56.46
www.ecopetrol.com.co
End Date: Dec 2013
Company overview
Ecopetrol is Colombias national oil company, producing ~762kboed (in 3Q12) with
proved reserves of 1.9bn boe (YE12). The company has a market cap of $119bn with
shares listed in both Colombia and the NYSE. In 2007 the company listed 10.1% of its
shares in the first round of share issuance, while in 2011 it proceeded with an
additional local share listing of 1.67% of outstanding shares. The company intends to
promote another two supplementary share offer rounds that could result in additional
dilution to current shareholders, but the timing for the offerings is uncertain.
Colombia
Caio CarvalhalAC
55-11) 4950 3946
caio.m.carvalhal@jpmorgan.com
Investment case
We believe the combination of deterioration in the security environment and the
persistent delays in environmental concession processes are likely to impair the
companys capacity to deliver significant production growth in the short to mid term.
In this sense, we estimate consolidated production of 781kboed in 2013, up 3% y/y and
close to the companys 2012 output target of 780kboed. Moreover, Ecopetrol trades at
non-compelling multiples of 10.5x P/E and 9.5x EV/DACF for 2013E compared to
Petrobras trading at 6.5x P/E and 5.8x EV/DACF for the same year.
65
$
55
45
35
Nov-11
Feb-12
May-12
Aug-12
Nov-12
EC share price ($)

IGBC (rebased)
Source: Bloomberg.

In our view, substantial production growth and solid results over the last few years
resulted in Ecopetrol shares outperforming and a premium vs. its peers. However, with
a production slowdown we believe the appeal of EC shares has decreased, and the
company should no longer trade at a premium.
ECs main earnings risks are (1) oil prices decrease below JPMs Global Commodities
Research estimate of $113/bbl for 2013; (2) disappointing production numbers
impacted by delays in environmental licensing process and/or pipeline securities issues.
Our Dec 2013 price target of $52 is based on a sum of-the-parts NAV model, valuing
the largest portion of the portfolio, the E&P assets, with a reserve depletion model
based on the existing proved reserves. We assume a production schedule that is lower
than the companys target of 1.3mn boed by 2020.
Ecopetrol ADR (EC;EC US)
FYE Dec
EBITDA ($ mn)
FY
EV/EBITDA FY
P/E FY
ROE FY
ROCE FY
FV/EBITDA FY
EPS Reported FY ($)
Bloomberg EBITDA FY ($ mn)
2010A
2011A
2012E
2013E
8,955
0.0
24.8
24.4%
21.6%
2.27
8,468
2.05
16,267
0.0
13.7
31.4%
30.8%
4.10
14,685
3.71
17,667
0.0
13.3
35.3%
32.0%
4.24
16,641
4.14
19,907
10.5
54.7%
45.7%
5.37
17,272
4.42
estimates.
466
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Price Target ($)
56.46
14 Nov 12
67.92 - 39.46
115,536.00
Dec
2,056
52.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
Ecopetrol ADR: Summary of Financials

Revenues
% change YoY
Upstream, %
Downstream, %
Gas & Energy, %
International,%
EBITDA
% change YoY
EBITDA margin, %
EBIT
% change YoY
EBIT margin, %
Net Interest Expense
EBT
% change YoY
Tax
Net Income
% change YoY
Shares outstanding, mn
EPS, $/share
Fully Diluted EPS
Balance Sheet
Accounts receivable
Inventories
Others
Current Assets
Taxes
Others
LT ASSETS
Net PP&E
Total Assets
ST Loans
Payables
Dividends
Others
Current Liabilities
LT Debt
LT Liabilities
Total Liabilities
Minority Interests
Shareholders Equity
Enterprise Value
FY11A
FY12E
FY13E FY14E Cash Flow Statement
35,570
37,926
40,827
- EBIT
60.4%
6.6%
7.6%
- Depreciation
- Working Capital changes
- Taxes
- CFO
- Capex
16,267
17,667
19,907
- FCFF
93.7%
1.3%
10.8%
- Net Interest Expense
48.0%
49.0%
50.8%
- FCFE
12,792
13,669
16,177
- Equity raised/ (repaid)
96.0%
7.0%
15.4%
- Debt raised/ (repaid)
41.0%
41.0%
43.4%
- Dividends
(496)
(188)
(176)
- Other
12,792
13,669
16,177
101.2%
6.9%
18.3%
- Change in cash
(4,303)
(4,727)
(4,853)
- Beginning cash
8,365
8,708
11,046
- Ending cash
82.2%
4.1%
26.9%
2,056
2,056
2,056
- DACF
4.10
4.24
5.37
- DPS,$/share
FY11A
FY12E
FY13E FY14E Operating Data & Ratio Analysis
3,397
3,212
2,780
2,391
2,884
3,217
- Reserves (SEC), mn boe
- Production,kboed
3,242
4,738
5,285
% change YoY
9,821
11,182
11,630
Liquids, kbd
Gas, mcmd
22,494
24,431
33,098
- Prices
37,987
26,497
35,901
- Brent, US$/bbl - as per JPM
15,493
2,066
2,803
Dom. Realization price,US$/bbl
47,602
35,989
39,111
Discount to brent
- Ratios
2,257
6,656
4,865
- SG&A/revenues, %
- Interest Coverage
5,869
1,786
1,786
- Net Debt (incl.pension liab)
8,126
8,442
6,651
- Net Debt to Total Capital, %
4,111
5,585
5,585
- Net Debt to Equity, %
5,991
5,585
5,585
- Net debt to EBITDA, (x)
10,102
11,170
11,170
- Capex/Depreciation, (x)
18,228
19,612
17,821
- Net Margin
0
0
0
- Revenues/Assets, (x)
31,612
17,755
22,667
- Assets/Equity, (x)
47602.47 35988.92 39110.67
- ROE (%)
ROCE (%)
- Div. Yield (%)
FCF Yield (%)

Note: $ in billions (except per-share data).Fiscal year ends Dec

12,792 13,669 16,177
2,494
3,040
3,032
1,091 (3,344) (2,671)
2,678 (4,423) (4,853)
12,625
9,513 12,484
(10,005) (6,354) (7,152)
2,620
3,159
5,332
(496.42) (188.47) (175.86)
2123.51 2970.71 5155.95
1,177
0
0
(53)
1,293
0
(3,212) (4,941) (5,764)
1,443
1,954
3,397
(184)
3,397
3,212
(432)
3,212
2,780
13,288
2
9,767
2
12,713
3
FY11A
FY12E
FY13E FY14E
2,310
722
17.2%
613.98
605
2,372
756
4.7%
636.45
669
2,390
781
3.4%
657.94
693
110.98
92.53
(16.62%)
110.59
101.69
(8.05%)
113.00
104.23
(7.76%)
3.3%
32.8
3.4%
2.3%
0.3
4.0
23.5%
0.7
1.5
31.4%
30.8%
2.8%
-
3.2%
93.7
13.1%
13.4%
0.3
2.1
23.0%
1.1
2.0
35.3%
32.0%
4.3%
-
3.4%
113.2
12.1%
12.4%
0.3
2.4
27.1%
1.0
1.7
54.7%
45.7%
5.0%
-
467
Adrian Mowat
(852) 2800-8599

21 November 2012
ELET3
Rating
Underweight
Eletrobras
Price: xx
Price: R$9.48
Price Target:
Price
Target: R$10
xxxxxx
End Date: Dec
End Date: Dec 2013
www.eletrobras.com
Company overview
Eletrobras is the largest power generation and transmission company in Brazil, with
39.4GW of installed generation capacity representing ~40% of the countrys energy
production and 37.4 miles of transmission lines representing 56% of Brazils high
voltage lines. The company has its capital split between voting (80% of total capital) and
non-voting preferred shares (20%). The federal government owns ~80% of Eletrobras
voting shares and 17% of its non-voting shares and effectively exercises full control over
the companys business plans and execution.
Key drivers of performance in this equity market recovery
Eletrobras is significantly affected by the recently announce MP579. MP579 proposes
that companies accelerate the termination of their current concession contracts to Jan
2013 from 2015-2017 and receive a new 20-year concession with tariffs ~70% lower
than the original concession contracts. We think that MP579, which affects ~65% of
Eletrobras EBITDA, has a net negative effect on the value of the companies affected,
and thus we expect companies to reject the proposal and carry on with the original
concession contract until their expiration date. However, we think that Eletrobras role as
a government-owned and controlled enterprise will prevail, and the company will likely
accept the amendments proposed by MP579.
Eletrobras two share classes, ELET3 (common) and ELET6 (preferred) have lost 43.8%
and 44.0% ytd compared to the -6.8% performance for the utilities index. Nevertheless,
we think that as the company moves into negative fcf as a result of MP579, this
underperformance will continue well into 2013.
We think that the companys earnings erosion from MP579 will become evident as soon
as 1Q13 when the government will announce the allocation of energy produced by the
expired concessions.
Our R$10 and R$13 Dec 2013 target prices for ELET3 and ELET6 are based on 7.8%
discount rates (WACC) and the assumption that the company (1) does not cut into its
bloated cost structure and (2) accepts MP579 as is.
ELETROBRAS (ON) (ELET3.SA;ELET3 BZ)
FYE Dec
EPS Reported (R$)
FY
ELET6
Rating
Underweight
2012E
2013E
4.27
0.26
Price: xx
Price: R$13.11
Price Target:
Price
Target: R$13
xxxxxx
End
End Date:
Date: Dec
Dec 2013
Brazil
Utilities
(1-212) 622-0289
gabriel.salas@jpmorgan.com
ELTROBRAS (ON)
20
16
R$
12
8
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ELET3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
ELTROBRAS (PN)
28
24
R$ 20
16
12
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ELET6.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
9.48
14 Nov 12
19.52 - 9.21
12,821.58
Dec
1,352
10.00
31 Dec 13
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
13.11
14 Nov 12
27.59 - 12.77
17,731.10
Dec
1,352
13.00
31 Dec 13
ELETROBRAS (PN) (ELET6.SA;ELET6 BZ)

FYE Dec
2009A
EPS Reported (R$)
FY
0.80
2010A
2011A
2012E
1.99
3.30
4.27
468
Adrian Mowat
(852) 2800-8599

21 November 2012
ELETROBRAS (ON): Summary of Financials

Income Statement and Cash Flow
"Banking" Margin(R$)
Net Interest Margin (NIM)
Expenses on ON Dividend Payable
Equity Income
Monetary Gains
Net income
EPS
Net Revenues - Sum of Subsidiaries
EBITDA - Sum of Subsidiaries
Furnas
CHESF
Eletronorte
CGTEE
Eletrosul
Eletronuclear
Manaus Energia
EBITDA Margin (Subs)
Total EBITDA (for multiple)
Nominal Capacity (MW, ex-Itaipu)
Nominal Capacity (MW, total)
Avg.GenerationTariff (R$/MWh)
Transmission Lines, km
Employees
Capex
Depreciation
Dividends
DPS
FCFF
FCFE
FY11A FY12E FY13E FY14E Balance Sheet and Debt Ratios

2,279.0 2,433.6 1,855.9 1,689.7 Cash and Cash Equivalents
- ST Loan Receivables
(991) (680) (640)
0 Clients
2,049 4,186
287 (179) Current assets
1,801
941
32
199 LT Assets
3,733 4,837
297
216 Net fixed assets
1,132 1,132 1,132 1,132 Total Assets
3.30
4.27
0.26
0.19 ST Debt
Payables
2,607 3,843 3,225 3,370 Current liabilities
- LT Debt
- Total liabilities
- Shareholders' equity
- Liabilities and Equity
- Special ON dividend payable
- Net Debt (for multiple)
- Net debt to EBITDA (x)
- Net Debt to Equity (x)
(1,235) (1,343) (1,226) (1,285) Current ratio (x)
FY11A FY12E FY13E FY14E Macro, Valuation
24,546 24,694 24,694 24,694 FX rate (eop)
31,546 31,694 31,694 31,694 Inflation (%)
- GDP growth (%)
- Interest Rates (%,eop)
23,522 23,522 23,522 23,522
EV/EBITDA
(52)
(54)
(57)
(59) P/E
(6)
(6)
(6)
(7) P/BV
742 1,209
74
54 FCFE yield (%)
0.00
- Dividend yield (%)
(1054.9) (1867.5) (1289.5) (1542.0) ROA (%)
2051.20 (338.19) (73.57) 143.66 ROE (%)
FY11A
1,397
3,848
579
21,383
35,424
54,883
111,691
504
385
9,636
18,018
34,847
76,844
111690.51
-
FY12E
500
3,848
2,352
20,589
34,504
59,118
114,211
504
1,048
11,319
18,064
33,739
80,471
114210.62
-
FY13E FY14E
1,858
3,305
3,848
3,848
2,282
2,403
21,877 23,447
33,229 32,281
43,455 43,329
98,561 99,057
504
504
896
936
11,167 11,208
18,085 18,105
33,867 34,202
64,694 64,856
98560.92 99057.44
-
17,125
(13.9)
22.3%
2.2
FY11A
1.80
6.5%
2.8%
11.7%
18,068
(13.5)
22.5%
1.8
FY12E
1.95
6.0%
1.7%
8.5%
16,731
(13.6)
25.9%
2.0
FY13E
1.90
5.0%
4.1%
8.0%
15,304
(11.9)
23.6%
2.1
FY14E
2.00
4.5%
4.0%
10.0%
5.6
2.9
0.2
16.0%
0.0%
3.3%
4.9%
7.8
2.2
0.2
(2.6%)
4.2%
6.0%
6.0
36.2
0.2
(0.6%)
0.3%
0.5%
14.1
49.6
1.1%
0.2%
0.3%

469
Adrian Mowat
(852) 2800-8599

21 November 2012
ELETROBRAS (PN): Summary of Financials

Income Statement and Cash Flow
"Banking" Margin(R$)
Net Interest Margin (NIM)
Expenses on ON Dividend Payable
Equity Income
Monetary Gains
Net income
EPS
Net Revenues - Sum of Subsidiaries
EBITDA - Sum of Subsidiaries
Furnas
CHESF
Eletronorte
CGTEE
Eletrosul
Eletronuclear
Manaus Energia
EBITDA Margin (Subs)
Total EBITDA (for multiple)
Nominal Capacity (MW, ex-Itaipu)
Nominal Capacity (MW, total)
Avg.GenerationTariff (R$/MWh)
Transmission Lines, km
Employees
Capex
Depreciation
Dividends
DPS
FCFF
FCFE
FY11A FY12E FY13E FY14E Balance Sheet and Debt Ratios

2,279.0 2,433.6 1,855.9 1,689.7 Cash and Cash Equivalents
- ST Loan Receivables
(991) (680) (640)
0 Clients
2,049 4,186
287 (179) Current assets
1,801
941
32
199 LT Assets
3,733 4,837
297
216 Net fixed assets
1,132 1,132 1,132 1,132 Total Assets
3.30
4.27
0.26
0.19 ST Debt
Payables
2,607 3,843 3,225 3,370 Current liabilities
- LT Debt
- Total liabilities
- Shareholders' equity
- Liabilities and Equity
- Special ON dividend payable
- Net Debt (for multiple)
- Net debt to EBITDA (x)
- Net Debt to Equity (x)
(1,235) (1,343) (1,226) (1,285) Current ratio (x)
FY11A FY12E FY13E FY14E Macro, Valuation
24,546 24,694 24,694 24,694 FX rate (eop)
31,546 31,694 31,694 31,694 Inflation (%)
- GDP growth (%)
- Interest Rates (%,eop)
23,522 23,522 23,522 23,522
EV/EBITDA
(52)
(54)
(57)
(59) P/E
(6)
(6)
(6)
(7) P/BV
742 1,209
74
54 FCFE yield (%)
- Dividend yield (%)
(1054.9) (1867.5) (1289.5) (1542.0) ROA (%)
2051.20 (338.19) (73.57) 143.66 ROE (%)

470
FY11A
FY12E
1,397
500
3,848
3,848
579
2,352
21,383
20,589
35,424
34,504
54,883
59,118
111,691
114,211
504
504
385
1,048
9,636
11,319
18,018
18,064
34,847
33,739
76,844
80,471
111690.51 114210.62
-
FY13E FY14E
1,858
3,305
3,848
3,848
2,282
2,403
21,877 23,447
33,229 32,281
43,455 43,329
98,561 99,057
504
504
896
936
11,167 11,208
18,085 18,105
33,867 34,202
64,694 64,856
98560.92 99057.44
-
17,125
(13.9)
22.3%
2.2
FY11A
1.80
6.5%
2.8%
11.7%
18,068
(13.5)
22.5%
1.8
FY12E
1.95
6.0%
1.7%
8.5%
16,731
(13.6)
25.9%
2.0
FY13E
1.90
5.0%
4.1%
8.0%
15,304
(11.9)
23.6%
2.1
FY14E
2.00
4.5%
4.0%
10.0%
5.6
4.0
0.2
11.5%
3.3%
4.9%
7.8
3.1
0.2
0.0%
4.2%
6.0%
6.0
50.0
0.3
0.0%
0.3%
0.5%
14.1
68.6
0.3
0.0%
0.2%
0.3%
Adrian Mowat
(852) 2800-8599

21 November 2012
471
Adrian Mowat
(852) 2800-8599

21 November 2012
Genting Plantations
Underweight
www.gentingplantations.com
Company overview
Genting Plantations (GENP) is a 54%-owned listed plantation entity of Genting Bhd.
GENP has 65,647ha of plantation land-bank in Malaysia, of which 70% is located in
Sabah and 30% in Peninsula Malaysia. Its JVs in Indonesia since 2005/06 have a total
land-bank of close to 100,000ha, of which 36,000ha has been planted as at end-1H12.
Malaysia
Plantations
Price: M$8.78
Investment case
We are expecting Y/Y CPO prices to soften to M$2,900/t for 2013E (from M$3,170/t
for 2012E). GENPs Indonesian estates are expected to start contributing strongly to
volume growth from FY13, but will only start to contribute to bottom-line profitability
by FY14. Hence, we expect growth to remain lackluster in FY13, while stronger
growth by FY14 is already priced-in given its premium valuations to the sector.
Of a total land-bank of about 100,000ha in Indonesia (1.5x the size of its Malaysian
land-bank), over 36,000ha has been planted as at end-1H12. With the Indonesian
estates coming into maturity, we expect FFB output growth to recover strongly from 1% in FY12E to 16% in FY13E and 14% in FY14E. But Indonesia is still loss-making
with profitability expected to improve upon commissioning of its own mills by late2012, although meaningful contribution to group profits and growth we estimate is
mainly by FY14. Earnings could also disappoint short term as consensus estimates
remain high in our view (our FY13E forecast is 15% below consensus).
Stronger- or lower-than-expected CPO prices are a key risk to earnings. Every 10%
change in the CPO price vs our forecast would impact our FY13E earnings by 19%.
Simone YeohAC
(60-3) 2270 4710
(18146-X)
10.0
M$
9.0
8.0
7.0
Nov-11
Feb-12 May-12
Aug-12
Nov-12
GENP.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
2.0%
-5.5%
1m
-2.1%
-1.2%
3m
-6.2%
-7.1%
12m
13.9%
2.8%
Source: Bloomberg.

Our Jun-13E PT of M$8.30 is based on an FY13E P/E of 16x, in line with the sector's
historical average. A key risk is stronger-than-expected CPO prices; every 10% rise
would lift our FY13E EPS by 19%. We also expect CPO prices to be stronger by 1Q13
before it gets weaker from 2Q13 and hence we would look to sell on strength.
Genting Plantations (Reuters: GENP.KL, Bloomberg: GENP MK)
FY10A
FY11A
FY12E
Revenue (M$ mn)
989
1,336
1,259
Net Profit (M$ mn)
324.3
442.0
375.0
EPS (M$)
0.43
0.58
0.50
DPS (M$)
0.09
0.12
0.10
Revenue growth (%)
30.8%
35.2%
-5.8%
EPS growth (%)
38.1%
35.7%
-14.8%
ROCE
15.3%
17.8%
13.3%
ROE
12.0%
14.5%
11.1%
P/E (x)
20.5
15.1
17.7
P/BV (x)
2.3
2.1
1.9
EV/EBITDA (x)
13.9
10.0
11.5
Dividend Yield
1.1%
1.4%
1.2%
472
FY13E
1,334
389.5
0.52
0.11
6.0%
3.9%
12.7%
10.6%
17.0
1.7
10.8
1.2%
FY14E
1,462
456.1
0.60
0.13
9.6%
17.1%
13.6%
11.3%
14.5
1.6
9.2
1.4%
Company Data
Shares O/S (mn)
Market cap (M$ mn)
Market cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
3M - Avg daily Value (M$ mn)
FBMKLCI
Exchange Rate
Fiscal Year End
759
6,663
2,179
8.78
07 Nov 12
29.0%
0.50
4.61
1.68
1,646
3.06
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Genting Plantations: Summary of Financials

w
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
989
30.8%
473
43.9%
440
45.7%
44.5%
-0
440
45.6%
-115
26.2%
324.3
37.6%
756
0.43
38.1%
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
756
132
154
68
1,109
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
1,612
772
3,522
0
179
23
202
254
87
653
2,869
3.80
Cash flow statement

1,336
1,259 1,334 1,462 EBIT
35.2% (5.8%) 6.0% 9.6% Depr. & amortization
648
563
595
37.1% -13.1% 5.7% 15.8% Taxes
603
507
524
37.2%
NM 3.3% 15.1%
45.1% 40.3% 39.3% 41.3% Capex
-2
-2
-2
601
505
522
601 Net Interest
36.7% -15.9% 3.3% 15.1% Other
-159
-127
-130
-141 Free cash flow
26.4% 25.2% 24.8% 23.5%
442.0
375.0 389.5 456.1 Equity raised/(repaid)
36.3% -15.2% 3.9% 17.1% Debt raised/(repaid)
759
756
756
756 Other
0.58
0.50
0.52
0.60 Dividends paid
35.7% (14.8%) 3.9% 17.1% Beginning cash
Ending cash
DPS
Ratio Analysis
1,017
1,012 1,029 1,110 EBITDA margin
114
108
114
129
121
129
141 Net margin
147
147
147
147
1,407
1,388 1,419 1,523
1,777
1,777 1,777 1,777 Sales growth
882
4,106
4,393 4,715 5,099 EPS growth
0
0
0
0
203
191
203
28
27
27
27 Sales/assets
231
218
230
249 Assets/equity
427
427
427
427 ROE
96
96
96
96 ROCE
872
862
877
900
3,234
3,531 3,839 4,199
4.26
4.67
5.08
5.56
FY10
440
33
370
-115
722
FY11
603
44
-7
-159
473
FY12E FY13E FY14E

507
524
603
55
71
85
2
-2
-4
-127
-130
-141
420
444
521
-311
0
-0
77
260
-154
0
-2
15
149
-350
0
-2
0
74
-350
0
-2
0
98
-350
0
-2
-0
176
67
188
77
-71
234
756
0.09
16
173
15
-92
756
1,017
0.12
0
0
0
-78
1,017
1,012
0.10
0
0
0
-81
1,012
1,029
0.11
-0
0
-0
-95
1,029
1,110
0.13
FY10
47.8%
44.0%
32.8%
FY11
48.5%
44.7%
33.1%
FY12E FY13E FY14E

44.7% 44.6% 47.1%
39.2% 38.1% 39.9%
29.8% 29.2% 31.2%
31.2% 34.6% (5.4%) 6.0% 9.6%

30.8% 35.2% (5.8%) 6.0% 9.6%
37.6% 36.3% -15.2% 3.9% 17.1%
38.1% 35.7% (14.8%) 3.9% 17.1%
3,970.65 321.71 279.46 295.43 341.96
-17.5% -18.2%
0.31
0.35
1.07
1.07
12.0% 14.5%
15.3% 17.8%
-16.6% -15.7% -16.3%

0.30
0.29
0.30
1.24
1.23
1.21
11.1% 10.6% 11.3%
13.3% 12.7% 13.6%
473
Adrian Mowat
(852) 2800-8599

21 November 2012
Globe Telecom
Underweight
www.globe.com.ph
Price Target: Php1,000.00
Company overview
Globe is the #2 mobile operator in the Philippines with almost 80% of revenues coming
from its mobile division in 2011. The company has a c.30% share of the mobile
subscriber market, where more than half of the population owns a mobile phone.
Philippines
Wireless Services
Price: Php1,143.00
Investment case
We think the investment case for Globe remains weak as we see limited opportunities
to monetize its new network rollout given pricing pressures and market share defense.
The potential synergies from the recently proposed acquisition of Banyan Telecoms
debt remain too early to be seen. Globe is also trading at a premium against PLDT (14x
consensus P/E versus 15x P/E) despite weaker EBITDA margin expectations for 2013
(flat for Globe versus margin recovery for PLDT).

(65) 6882-2374
james.r.sullivan@jpmorgan.com
Limited
1,200
Php

While there is likely to be limited top-line impact for the sector in an anemic
environment, competition is unlikely to ease, with market share defense as a key focus
this year. We also expect the Philippines to see peak capex investment in 2012 which
has historically led to price competition as operators push to fill empty networks.
However, from a yield perspective, we note that Globe is trading at a 180bp yield
spread above Philippine 10 year government bonds.
1,100
1,000
900
GLO.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
1.2%
-23.2%
1m
1.2%
-0.2%
3m
2.1%
-1.9%
12m
20.3%
-5.5%
Source: Bloomberg.

Market share defense for Globe remains a primary risk in our view given PLDTs
expanded market share post Digitel consolidation. Should price competition further
intensify in 2013, we expect earnings downside to be higher for Globe given weaker
JPM/Street EBITDA margin expectations vis-a-vis PLDT.
Our Dec-13 PT of Php1,000 is based on the sum of 1) potential upside/(downside) to
consensus EPS vs. JPM EPS estimates, and 2) our estimated multiple expansion/
(contraction) based on peak P/E multiple. Earlier-than-expected decline in competition
is the key upside risk to our price target. An aggressive market share gain by Globe is
another upside risk to our UW recommendation.
Globe Telecom (Reuters: GLO.PS, Bloomberg: GLO PM)
FY09A
FY10A
FY11A
Revenue (Php mn)
74,319
75,734
81,519
EBITDA (Php mn)
36,462
33,539
35,105
EBITDA growth (%)
-2.5%
-8.0%
4.7%
Recurring profit (Php mn)
12,401
9,442
10,286
Recurring EPS (Php)
93.33
70.93
77.44
EPS growth (%)
5.6%
(24.0%)
9.2%
DPS (Php)
79.68
62.00
65.00
EV/EBITDA (x)
1.1
1.3
1.2
P/E
12.2
16.1
14.8
Dividend Yield
7.0%
5.4%
5.7%
FCF to mkt cap (%)
6.2%
4.5%
7.8%
474
FY12E
86,572
36,693
4.5%
11,620
87.48
13.0%
78.73
1.4
13.1
6.9%
-2.2%
FY13E
91,551
39,175
6.8%
12,454
93.76
7.2%
84.38
1.2
12.2
7.4%
9.6%
Company Data
52-wk range (Php)
1,270.00 - 889.50
Mkt cap (Php mn)
151,328
Mkt cap ($ mn)
3,685
Shares O/S (mn)
132
Free float (%)
21.6%
3-mth avg trading volume:
58,368
1.61
PSE
5,469
Exchange Rate
41.07
Price (Php)
1,143.00
Date Of Price
09 Nov 12

21 November 2012
Adrian Mowat
(852) 2800-8599
Globe Telecom: Summary of Financials

Revenue
EBITDA
EBIT
Interest income
Interest Expense
Other Income
Profit before tax
Tax
Minorities
EPS (Php) (Reported)
EPS (Adjusted)
DPS (Php)
DPS payout ratio
Revenue growth
EBITDA growth
Adj Net profit growth
Adj EPS growth
DPS growth
Ratio Analysis
%, year end Dec
EBITDA margin
FCF margin
ROE
ROC
ROA
Tax rate
Capex to sales
Debt/Capital
Interest cover (x)

FY10
75,734 81,519 86,572 91,551 96,749 Cash and equivalents
33,539 35,105 36,693 39,175 41,467 Accounts receivable
(18,086) (18,941) (22,364) (23,120) (22,145) Others
15,453 16,164 14,330 16,055 19,322 Total Current assets
219
297
465
379
815
(1,982) (2,059) (2,122) (2,505) (2,768) ST loans
348
-304
35
0
0 Others
14,038 14,098 12,708 13,929 17,368 Total current liabilities
(4,293) (4,266) (3,795) (4,318) (5,384)
0
0
0
0
0 Net working capital
9,745
9,831 8,913
9,611 11,984
9,442 10,286 11,620 12,454 14,154 Net fixed assets
133
133
133
133
133 Total non-current assets
73.21
74.01 67.10
72.36
90.22
70.93
77.44 87.48
93.76 106.56 Total Assets
62.00
65.00 78.73
84.38
95.90
85%
88% 117% 117% 106% Long-term debt
Other liabilities
1.9%
7.6%
6.2%
5.8%
(8.0%)
4.7%
4.5%
6.8%
5.9%
(23.9%)
8.9% 13.0%
7.2% 13.7% Shareholders' equity
(24.0%)
9.2% 13.0%
7.2% 13.7%
(22.2%)
4.8% 21.1%
7.2% 13.7% Total liabilities and equity
Net debt/(cash)
Cash flow statement
FY10
9.1% 14.4% (3.9%) 15.9% 19.0% Capex
Cash flow from other investing
20.0% 21.6% 24.0% 25.9% 29.4% Cash flow from financing
16.1% 16.3% 13.6% 14.2% 16.6%
7.3%
7.7%
8.2%
8.2%
9.0% Change in cash for year
30.6% 30.3% 29.9% 31.0% 31.0% Beginning cash
(23.2%) (21.4%) (40.4%) (20.0%) (16.1%) Closing cash
51.8% 52.0% 56.0% 58.9% 58.5%
95.0% 84.2% 107.7% 100.5% 82.7%
19.0
19.9
22.1
18.4
21.2
FY10
5,869
8,374
5,483
21,585
FY11
11,628
9,014
6,031
28,716
FY12E
9,484
9,572
6,482
27,732
FY13E
20,369
10,123
6,806
39,601
FY14E
28,285
10,698
7,184
48,595
8,677
2,115
35,309
18,677
2,115
47,704
42,677
2,115
73,680
57,677
2,115
90,147
57,677
2,115
91,835
(13,724) (18,988) (45,949) (50,546) (43,240)

101,837 100,637 113,286 108,488 101,906
3,958
3,958
3,958
3,958
3,958
109,043 107,843 120,492 115,694 109,112
130,628 136,558 148,224 155,294 157,708
41,694
2,135
83,759
33,701
2,135
88,161
19,162 10,663 10,663

2,135
2,135
2,135
99,598 107,566 109,254
46,869
48,397
48,625
47,728
48,453
130,628 136,557 148,223 155,293 157,707

44,502 40,751 52,356 47,971 40,056
FY10
24,414 29,175 31,628 32,835 33,923
(17,552) (17,417) (35,013) (18,321) (15,564)
429
0
0
0
0
(7,438) (6,296)
777 (4,008) (11,259)
48
5,940
5,869
5,759 (2,144)
5,869 11,628
11,628
9,484
10,885
9,484
20,369
7,915
20,369
28,285
475
Adrian Mowat
(852) 2800-8599

21 November 2012
Group 5
Underweight
www.g5.co.za
Company overview
Group 5 is a mid-size SA construction company. It has one of the highest exposures to
the SA construction sector (62% of current order book) of its peers.
South Africa
Construction
Price: 2,485c
Necessity NgorimaAC
Investment case
Group 5's primary driver is public sector South African infrastructure spend, which
traditionally offers low margins as projects are placed on public tender. We expect its
earnings to come under pressure as the government continues to delay the roll-out of
projects while it deals with a growing public sector wage bill and social grant demands.
Business confidence, which in our view, is a leading indicator of Private Sector GDFI
is below 50, a level which we do not expect to result in growth of private sector spend.
(27-11) 507 0723

necessity.x.ngorima@jpmorgan.com
3,200
3,000
c
2,800
2,600
2,400

In our view, the market has not sufficiently priced in Group 5s poor near-term
earnings outlook given that its competitors are likely to compete aggressively in South
Africa as growth in commodity-related projects declines.
2,200
Nov-11
Abs
Feb-12
YTD
10.3%
May-12
Aug-12
1m
-0.0%
Nov-12
3m
12.7%
12m
11.7%
Source: Bloomberg.

The key earnings risk is continued delays in public sector spend; we expect in the
national budget to occur in infrastructure spend. In addition, poor execution on projects
remains a risk to Group 5s earnings.
We use a through-the-cycle normalised earnings valuation as our key valuation
methodology to establish our 12m price target. Key assumptions for this normalised
earnings calculation are: Sustainable Return on Investec Capital (ROIC 15%),
sustainable operating margins (EBIT 4.5%) and long-term growth in revenue (5%).
The key risks are :
If Group 5 manages to maintain operations in its construction division, earnings are
likely to beat our projections.
A quicker and stronger recovery in the construction materials division will enhance
overall operating margins and lead to better than expected earnings.
The main risk to our thesis is a swift and strong recovery of private sector GFCF.
Group Five Limited (GRFJ.J;GRF SJ)

FYE Jun
2011A
Adj. EPS FY (c)
359.86
DPS (Gross) FY (c)
138.0
Adj P/E FY
6.9
EBIT FY (R mn)
567
EBIT margin FY
6.5%
EV/EBITDA FY
4.3
ROE FY
15.7%
ROA FY
-2.2%
476
2012A
115.09
139.0
21.6
264
3.0%
7.5
5.6%
-3.7%
2013E
250.12
140.0
9.9
419
4.6%
5.7
13.0%
3.3%
2014E
276.76
141.0
9.0
494
5.0%
4.5
12.9%
3.4%
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
2,485
02-Nov-12
2,941
01 Oct 13
3,179 - 2,090
2.4
96

21 November 2012
Adrian Mowat
(852) 2800-8599
Group 5: Summary of Financials

Sales
% change Y/Y
EBITDA
Depreciation
Total EBIT
% change Y/Y
Associate/Other income
Net interest
Earnings before tax
Tax
Minorities
NPAT after excep.
Shares Outstanding
Headline EPS
% change Y/Y
Balance sheet
Cash & Cash Equivalents
Goodwill
Property, plant and equipment
Total non current assets
Total assets
Short-term debt
Trade Payables
Long term debt
Total non current liab.
Total liabilities
Ordinary S/H funds
Minorities

8,773 8,783
9,193 9,802 9,775
-22.6%
0.1%
4.7% 6.6% -0.3%
786
429
628
747
785
167
165
168
210
223
567
264
419
494
518
-35.3% -53.5% 58.8% 17.8% 4.9%
1
1
1
1
1
46
(4)
41
24
46
632
266
461
518
564
209
106
143
161
175
(59)
(48)
(71)
(84)
(88)
-173
-278
247
273
301
96.0 110.6
110.6 110.6 110.6
359.86 115.09 250.12 276.76 304.76
-35.9% -68.0% 117.3% 10.7% 10.1%
FY11
2,241
5,625
0
857
2,146
7,771
FY12
2,268
5,766
0
884
1,823
7,589
727
4,005
5,272
156
233
5,505
2,266
118
2,266
102
4,607
4,986
613
727
5,712
1,877
68
1,877
Cash flow statement

Operating profit
Finance charges
Tax paid
Capex
Cash Flow From Investing
Dividends paid
Cash Flow from Financing
Free cash flow
Dec/(inc) in net debt
Net debt at year-end
Cash flow per share
Ratio analysis
FY13E FY14E FY15E R in millions, year end Jun
1,842 2,129 2,435 Valuation
5,382 5,903 6,198 Adj P/E multiple
0
0
0 EV/EBITDA
1,103 1,176 1,173 EV/EBIT
2,042 2,115 2,112 Price to cash flow
7,424 8,018 8,310 P/NAV
FCF yield
102
102
4,321 4,607 4,594 Leverage
613
613
613 Net debt /EBITDA (x)
732
740
739 EBIT/Interest
5,286 5,586 5,572 Margins
2,138 2,432 2,738 EBITDA margin
132
207
287 EBIT margin
2,138 2,432 2,738 Net margin

567
264
419
494
518
46
(4)
41
24
46
167
165
168
210
223
(191)
(106)
(131)
(154)
(162)
(795)
257
(435)
(15)
1
(9)
686
193
732
786
(135)
(339)
(387)
(283)
(220)
1,206
-200
-382
-275
-221
(121)
(41)
(49)
(55)
(75)
-294
-232
-9
-31
-30
843
419
(361)
259
359
714
(195)
426
(287)
(306)
(1,358) (1,553) (1,127) (1,414) (1,720)
-9.35 619.89 174.77 661.61 710.24
FY11
6.9
4.3
6.0
4.3
1.1
23.2%
12.4

21.6
7.5
12.2
8.7
1.5
11.5%
69.4
9.9
5.7
8.6
10.1
1.4
-9.9%
10.3
9.0
4.5
6.9
14.0
1.2
7.1%
20.9
8.2
3.9
6.0
10.1
1.1
9.9%
11.3
-57.0% -79.9% -49.7% -53.6% -56.9%

(1.7)
(3.6)
(1.8)
(1.9)
(2.2)
9.3
3.3
8.4
9.9
10.3
9.0%
6.5%
NM
4.9%
3.0%
NM
6.8%
4.6%
2.7%
7.6%
5.0%
2.8%
8.0%
5.3%
3.1%
477
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
www.hanjin.com
Company overview
Hanjin Shipping provides mainly container shipping, dry bulk, tanker shipping and
terminal services. 9M12 revenue breakdown: container transport and logistics: 82%,
bulk: 14% and others: 4%.
South Korea
Transportation
Investment case
Hanjin Shippings earnings outlook remains challenging near term given its high
financial leverage and it is facing increasing competition from operators with larger
and more fuel efficient vessels. We prefer Evergreen Marine and NOL among liners
with substantial Transpacific trade exposure given their better risk-reward profile.
JPMA PNG <GO>
Price: W11,400

Hanjin Shipping is currently trading at 0.9x P/BV, in line with sector average but with
much higher leverage which raises the risk of potential equity raising.
Corrine PngAC
(65) 6882-1514

Limited
20,000
16,000
W
12,000
8,000
Nov-11

Global shipping demand growth weakens, industry newbuild vessel orderbook remains
substantial and potential equity-raising due to high financial leverage.
Feb-12 May-12
Aug-12 Nov-12

KOSPI (rebased)
Abs
Rel
YTD
-5.8%
-10.7%
1m
-13.6%
-10.2%
3m
-20.0%
-20.6%
Source: Bloomberg.

Our Dec-13 price target of W13,000 is based on 1.0x P/BV, similar to HJSs historical
average valuation since listing. HJS losses have reduced significantly and we expect it
to turn around with a small profit next year. Key upside risks: better-than-expected
volumes and freight rates, lower-than-expected capacity growth, falling fuel prices, exit
of weaker industry players. Key downside risks: freight rates decline, rising fuel
prices and limited pass-through, prolonged industry oversupply.
Hanjin Shipping Co Ltd (Reuters: 117930.KS, Bloomberg: 117930 KS)

W in bn, year-end Dec
FY10A
FY11A
FY12E
FY13E
Revenue (W bn)
9,625
9,523
10,301
10,846
Net Profit (W bn)
954
-835
-425
55
EPS (W)
11,986.57
(8,481.62)
(3,399.69)
440.95
DPS (W)
0.00
0.00
0.00
0.00
Revenue Growth (%)
1340.8%
-1.1%
8.2%
5.3%
EPS Growth (%)
NM
NM
NM
NM
ROCE
8.9%
-5.3%
0.8%
4.4%
ROE
41.5%
-35.6%
-23.9%
3.5%
P/E
1.0
-1.3
-3.4
25.9
P/BV
0.3
0.7
0.9
0.8
EV/EBITDA
10.9
-71.8
20.7
11.0
Div Yield (%)
0.0%
0.0%
0.0%
0.0%
478
FY14E
13,121
163
1,307.04
0.00
21.0%
196.4%
5.4%
9.6%
8.7
0.8
8.7
0.0%
Company Data
Shares O/S (mn)
Market Cap (W mn)
Market Cap ($ mn)
Price (W)
Date Of Price
Free float (%)
Avg daily value (W mn)
KOSPI
Exchange Rate
Fiscal Year End
125
1,425,000
1,306
11,400
08 Nov 12
2.08
42,527.52
38.99
1,914
1,091
Dec
12m
6.0%
5.4%

21 November 2012
Adrian Mowat
(852) 2800-8599
Hanjin Shipping Co Ltd: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
FY11
FY12E
9,625
9,523
10,301
1340.8%
(1.1%)
8.2%
668
-124
504
NM
NM
NM
668
-514
82
NM
NM
NM
6.9%
-5.4%
0.8%
-299
-317
-402
1,043
-815
-376
NM
NM
NM
-85
-9
-38
8.2%
1.0%
10.0%
954
-835
-425
NM
NM
NM
80
99
125
11,986.57 (8,481.62) (3,399.69)
NM
NM
NM
FY10
1,044
867,046
274
189
2,572
FY11
684
598,092
369
458
2,144
FY12E
826
646,951
399
458
2,365
LT investments
878
951
951
Net fixed assets
6,701
7,920
9,950
Total Assets
10,651
11,197
12,496
Liabilities
Short-term loans
1,176
1,551
1,551
Payables
844,507 695,527 708,142
Others
51
155
155
2,071
2,401
2,413
Long-term debt
5,625
6,539
8,239
Other liabilities
226
231
231
Total Liabilities
7,922
9,172
10,884
2,702
1,988
1,563
BVPS
34,273.85 16,200.54 12,893.50
Cash flow statement

FY13E
FY14E W in billions, year end Dec
10,846
13,121 EBIT
5.3%
950
88.4%
25.1% Taxes
506
513.6%
28.7%
4.7%
5.0% Capex
-450
78
206 Net Interest
NM 162.3% Free cash flow
-12
-31
15.0%
55
NM 196.4% Other
125
125 Dividends paid
440.95 1,307.04 Beginning cash
NM 196.4% Ending cash
DPS
Ratio Analysis
FY13E
FY14E W in billions, year end Dec
1,189
1,718 EBITDA margin
420
508 Net margin
458
458
2,783
3,543
951
951 Sales growth
10,005
12,970
13,692 EPS growth
1,551
1,551
155
155 Sales/assets
2,420
2,568 Assets/equity
8,639
9,039 ROE
231
231 ROCE
11,291
11,839
1,618
1,781
13,427.08 14,826.76
FY10
668
0
-155
459

-514
82
506
651
390
422
444
537
25
-66
-48
-84
-406
-58
463
629
-1,107
89
-299
-648
-1,078
309
-317
-1,484
-1,500
0
-402
-1,558
-500
0
-450
-37
-500
0
-468
129
260
-84
735
-4
1,044
0.00
0
0
0
-45
684
0.00
0
0
0
0
826
0.00
0
0
0
0
361
1,189
0.00
0
0
0
0
1,718
0.00

6.9% -1.3% 4.9% 8.8% 9.1%
6.9% (5.4%) 0.8% 4.7% 5.0%
9.9% -8.8% -4.1% 0.5% 1.2%
1241.2% (20.0%) (14.8%)
1340.8% (1.1%) 8.2%
NM
NM
NM
NM
NM
NM
2.23
0.39
1.25
5.3%
5.3%
NM
NM
2.11
21.0%
21.0%
196.4%
196.4%
2.54
213.1% 372.6% 573.5% 556.3% 498.1%

1.04
0.87
0.87
0.85
0.98
2.34
5.63
8.00
8.02
7.69
41.5% (35.6%) (23.9%) 3.5% 9.6%
8.9% -5.3% 0.8% 4.4% 5.4%
479
Adrian Mowat
(852) 2800-8599

21 November 2012
Hero Motocorp Ltd.
Underweight
www.heromotocorp.com
Price Target: Rs1,600.00
Company overview
Hero Motocorp is the worlds largest two-wheeler company (by volume) with annual
sales in excess of 6m units. The OEM is the market leader in India with a share of
~38% in the two wheeler segment. The OEM has split with its technology partner
Honda, Japan in 2010 and is transitioning its products under the 'Hero' brand.
India
Autos
Price: Rs1,949.15
Aditya MakhariaAC
(91-22) 6157-3596
aditya.s.makharia@jpmorgan.com
Bloomberg JPMA MAKHARIA<GO>
Investment case
Hero has witnessed a decline in market share, as competition intensifies (post the split
with HMSI in 2010). Consequently, its market share has fallen to 38% currently (from
~44% in FY10) as: i) scooters now account for over 20% of the domestic two-wheeler
market where HMSI has a dominant market share of 51% while Hero has a modest
share of 17%; ii) Within motorbikes, HMSI has been ramping up capacities, as it
launched the 100cc bike Dream Yuga, earlier in the year. Further, Bajaj Auto has
largely held on to its market share driven by new product launches. Thus, Heros share
has come off to ~53% in the domestic motorbike market (vs. 58% in FY10).
With moderating industry growth and rising competitive intensity, we expect Heros
earnings to decline -4% in FY13E. Further, we believe that OEM will have to invest in
product technology and in developing export markets, which will likely restrict
profitability over the near term.

2,300
Rs
2,100
1,900
1,700
Nov-11
Feb-12 May-12
Aug-12 Nov-12
HROM.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
6.0%
-17.0%
1m
7.7%
8.4%
3m
-1.5%
-9.5%
12m
-8.0%
-15.8%
Source: Bloomberg.

A sooner-than-expected recovery in the Indian economy/any incremental subsidies
offered by the government to the rural segment. Further, the ability of Hero to launch
new products that will enable it to sustain market share as well as any early success in
its export initiatives.
We have a Mar'13 Price Target of Rs1,600 based on a forward P/E multiple of 13x
(inline with its average historic trading multiple). Key upside risks: a recovery in sales
in 2H, robust growth in exports.
Hero Motocorp Ltd. (Reuters: HROM.BO, Bloomberg: HMCL IN)

FY09A
FY10A
FY11A
FY12A
Net sales (Rs mn)
123,566
158,560
193,978
235,790
EBITDA (Rs mn)
17,472
27,598
24,430
27,958
Net Profit (Rs mn)
12,817
22,317
19,277
23,781
ROE
33.7%
64.4%
65.2%
55.4%
ROCE
43.4%
76.1%
52.8%
64.1%
EPS (Rs)
64.18
111.76
96.53
119.09
DPS (Rs)
25.38
109.99
104.49
44.50
P/E (x)
30.4
17.4
20.2
16.4
EV/EBITDA (x)
18.7
11.0
12.7
11.5
480
FY13E
236,476
27,024
22,816
40.7%
47.6%
114.25
41.77
17.1
11.5
FY14E
261,061
30,653
24,555
34.8%
43.6%
122.96
43.76
15.9
9.8
Company Data
52-week Range (Rs)
2,279.00 - 1,662.00
Shares O/S (mn)
200
Market cap ($ mn)
7,278
Price (Rs)
1,949.15
Date Of Price
05 Nov 12
0.41
13.93
NIFTY
5,698

21 November 2012
Adrian Mowat
(852) 2800-8599
Hero Motocorp Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA margin
Depreciation
Other Income
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income (Adjusted)
% change Y/Y
EPS (pre exceptional)
% change Y/Y
Dividend Per Share
Dividend Payout
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Net fixed assets
Total Assets
Liabilities
Payables
Others
Total debt
Other liabilities
Total Liabilities
Share Capital
Networth
BVPS
Cash flow statement

FY10
FY11
FY12 FY13E FY14E Rs in millions, year end Mar
158,560 193,978 235,790 236,476 261,061 EBIT
28.3% 22.3% 21.6%
Dec/(Inc) in Working Capital
27,598 24,430 27,958 27,024 30,653 Taxes
58.0% -11.5% 14.4%
-3.3% 13.4% Cash flow from operations
17.4% 12.6% 11.9% 11.4% 11.7%
-1,915 -2,324 -2,743 -3,320 -3,575 Net Capex
2,427
2,720
3,646
3,999
4,616
206
19
-213
-213
-213 Net Interest (Paid)/ Recd
28,316 24,046 28,647 27,490 31,480 Free cash flow
59.0% -15.1% 19.1%
-4.0% 14.5%
5,999
4,769
4,866
4,673
6,926 Income from Investments
21.2% 19.8% 17.0% 17.0% 22.0%
22,317 19,277 23,781 22,816 24,555 Inc / (Dec) in Networth
74.1% -13.6% 23.4%
-4.1%
111.76
96.53 119.09 114.25 122.96
74.1% -13.6% 23.4%
-4.1%
7.6% Dividends paid
109.99 104.49
44.50
41.77
43.76 Cash generated
98.4% 108.2% 37.4% 36.6% 35.6% Beginning cash
Ending cash
Ratio Analysis
FY10
FY11
FY12 FY13E FY14E %, year end Mar
58,329 52,003 40,411 50,238 60,659 EBITDA margin
1,084
1,306
2,723
1,283
4,364
5,249
6,756
6,415
8,499
4,306
7,775 10,756 10,597 11,657 Sales growth
EPS growth
17,069 42,054 38,244 42,423 46,848
85,152 108,387 98,889 110,957 130,498 PE (x)
Cash PE (x)
EV/EBITDA (x)
EV/Sales (x)
11,114 14,239 22,932 17,321 19,123 Price to Book Value (x)
37,200 47,208 30,977 35,462 38,722
48,314 61,448 53,908 52,783 57,845 Dividend Yield
660
327
0
0
0 Debt to equity
1,528 17,052
2,083
2,083
2,083 Sales/assets
50,502 78,827 55,991 54,866 59,928
399
399
399
399
399 ROE
34,650 29,561 42,898 56,091 70,568 ROCE
173.51 148.03 214.81 280.87 353.37
FY10
25,683
1,915
6,182
-5924
27,856

22,106 25,214 23,704 27,077
2,324 2,743 3,320 3,575
9,883
476 1,634
-85
10737 -19830 -4673 -6926
45,050 8,604 23,985 23,642
-2,041 -27,309
1,067
-7,500 -8,000
206
26,021
19
17,760
-213
-213
-213
9,458 16,272 15,429
2,427
2,720
3,646
3,999
4,616
1
-125
2
-333
-0
-327
-0
0
0
0
-5,878 -25,676 -24,369 -10,444 -9,624

22,446 -6,326 -11,592 9,827 10,421
35,883 58,329 52,003 40,411 50,238
58,329 52,003 40,411 50,238 60,659
FY10
17.4%
14.1%
FY11
12.6%
9.9%
FY12 FY13E FY14E

11.9% 11.4% 11.7%
10.1%
9.6% 9.4%
28.3% 22.3%
74.1% -13.6%
74.1% (13.6%)
21.6%
23.4%
23.4%
0.3% 10.4%
-4.1% 7.6%
(4.1%) 7.6%
17.4
16.06
11.0
1.92
11.2
20.2
18.02
12.7
1.60
13.2
16.4
14.67
11.5
1.37
9.1
17.1
14.89
11.5
1.32
6.9
15.9
13.84
9.8
1.16
5.5
5.6%
0.02
1.86
5.4%
0.01
1.79
2.3%
0.00
2.38
2.1%
0.00
2.13
2.2%
0.00
2.00
64.4%
76.1%
65.2%
52.8%
55.4%
64.1%
40.7% 34.8%
47.6% 43.6%
481
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
english.hpc.co.kr
Company overview
Honam Petrochemical is the core company of the Lotte Groups chemical division,
with the other major company being KP Chem (52% owned by Honam). Honam is a
wholly-integrated PE/PP/MEG producer with one cracker in Yeosu and Daesan.
Honam purchased Titan Chemicals of Malaysia in 3Q 2010, which has similar
downstream products as Honam.
South Korea
Petrochemicals
Investment case
We are UW on Honam as we are bearish on the petrochemical cycle and Honam is the
company with the biggest exposure to commodity petchems within our coverage.
Without capacity expansion in 2013, Honam will need to rely on higher margins which
we think is unlikely because capacity additions are likely to increase faster than
demand growth during 2013-14.

Limited
Price: W228,500

In an anemic growth environment, we believe demand growth for petrochemicals will
only go back to historical trend levels as China is likely to import less, especially with
more domestic capacity starting up, which will be negative for traditional exporting
countries such as Korea and Taiwan.
Our 2013 EPS is 22% below consensus estimates as the latter is looking for 28% Y/Y
earnings growth in 2013. We believe this is too optimistic as 1Q12 was a strong quarter
and we forecast average PX spreads to fall 20% next year. We believe a weaker 4Q
Q/Q and further 2013 consensus earnings cuts will be negative share price drivers.
Samuel SW LeeAC
(852) 2800 8536
samuel.sw.lee@jpmorgan.com
Bloomberg JPMA SLEE ID<GO>
400,000
350,000
W 300,000
250,000
200,000

KOSPI (rebased)
Abs
Rel
YTD
-23.5%
-28.6%
1m
-13.0%
-9.1%
3m
-3.2%
-5.8%
12m
-26.5%
-27.6%
Source: Bloomberg.

Dec-13 PT of W180,000 is based on 1x 2013E BV, the mid-point between Honams
historical P/BV average and -1 SD, as we forecast Honams ROE to drop from 20% in
2011 to 9-10% during 2012-14. Upside risks to our PT include higher commodity
prices due to global quantitative easing and the potential for a Chinese stimulus
package similar in size to the one launched in 2009.
Honam Petrochemical Corp (Reuters: 011170.KS, Bloomberg: 011170 KS)
W in mn, year-end Dec
FY10A
FY11A
FY12E
FY13E
Revenue (W mn)
12,403,158
15,700,042
14,962,741
14,720,829
EBITDA (W mn)
1,553,137
1,869,678
1,176,850
1,222,094
Net Profit (W bn)
786
978
572
586
EPS (W)
24,667.94
30,701.40
17,965.75
18,393.88
DPS (W)
1,750.00
1,751.00
1,751.00
1,751.00
Revenue growth
44.3%
26.6%
-4.7%
-1.6%
EPS growth
-1.5%
24.5%
-41.5%
2.4%
ROCE
23.8%
22.3%
10.3%
10.2%
ROE
19.2%
19.7%
9.9%
9.3%
P/E (x)
9.3
7.4
12.7
12.4
P/BV (x)
1.9
1.5
1.4
1.3
EV/EBITDA (x)
2.4
1.8
2.6
2.3
Dividend Yield
0.8%
0.8%
0.8%
0.8%
482
FY14E
14,671,702
1,276,364
614
19,273.00
1,751.00
-0.3%
4.8%
10.1%
9.0%
11.9
1.2
2.0
0.8%
Company Data
52-week Range (W)
Market Cap (W bn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily Value (W mn)
3M Avg daily vol
KOSPI
Exchange Rate
398,000 - 218,000
7,280
6,551
32
Dec
228,500
02 Nov 12
42.7%
54,073.96
53.65
0.22
1,919
1,111.30
Adrian Mowat
(852) 2800-8599

21 November 2012
Honam Petrochemical Corp: Summary of Financials
Income Statement
Cash flow statement
W in millions, year end Dec
FY10
FY11
FY12E
FY13E
FY14E W in millions, year end Dec
FY10
FY11
FY12E
FY13E
FY14E
Revenues
12,403,158 15,700,042 14,962,741 14,720,829 14,671,702 EBIT
1,263,218 1,491,062 770,974 788,959 815,969
% change Y/Y
44.3%
26.6%
(4.7%)
(1.6%)
(0.3%) Depr. & amortization
289,920 378,616 405,876 433,135 460,395
EBITDA
1,553,137 1,869,678 1,176,850 1,222,094 1,276,364 Change in working capital
-103,222
-3,286 133,170
8,082
-1,796
% change Y/Y
19.3%
20.4%
-37.1%
3.8%
4.4% Taxes
-292008 -393878 -203660 -208411 -215546
EBIT
1,263,218 1,491,062
770,974
788,959
1,088,239 1,618,343 1,145,005 1,062,217 1,109,709
% change Y/Y
27.7%
18.0%
NM
2.3%
3.4%
EBIT Margin
10.2%
9.5%
5.2%
5.4%
5.6% Capex
-338,364 -913,129 -600,000 -600,000 -600,000
Net Interest
-18,077
-31,029
-14,250
-12,443
30,889
19,869
Earnings before tax
1,285,191 1,526,432
836,049
855,839
893,085 Net Interest
-18,077 -31,029 -14,250 -12,443
-2,208
% change Y/Y
22.7%
18.8%
-45.2%
2.4%
4.4% Other
Tax
-292,008 -393,878 -203,660 -208,411 -215,546 Free cash flow
749,874 705,214 545,005 462,217 509,709
as % of EBT
22.7%
25.8%
24.4%
24.4%
24.1%
786
978
572
586
614 Equity raised/(repaid)
% change Y/Y
-1.5%
24.5%
-41.5%
2.4%
533,184 214,974 -310,843 -248,674 -198,939
Shares outstanding
32
32
32
32
32 Other
EPS (reported)
24,667.94 30,701.40 17,965.75 18,393.88 19,273.00 Dividends paid
-72,755 -65,410 -65,410 -65,410 -65,410
% change Y/Y
(1.5%)
24.5%
(41.5%)
2.4%
4.8% Beginning cash
651,579 530,358 1,251,251 1,213,968 1,156,064
Ending cash
450,408 1,251,251 1,213,968 1,156,064 1,195,388
DPS
1,750.00 1,751.00 1,751.00 1,751.00 1,751.00
Balance sheet
Ratio Analysis
W in millions, year end Dec
FY10
FY11
FY12E
FY13E
FY14E W in millions, year end Dec
FY10
FY11
FY12E
FY13E
FY14E
490,233 1,251,252 1,213,968 1,156,064 1,195,388 EBITDA margin
12.5%
11.9%
7.9%
8.3%
8.7%
Accounts receivable
1,190,690 1,675,637 1,596,946 1,571,128 1,565,884 Operating margin
10.2%
9.5%
5.2%
5.4%
5.6%
Inventories
1,066,762 1,266,628 1,207,145 1,187,629 1,183,665 Net margin
6.3%
6.2%
3.8%
4.0%
4.2%
Others
143,192
136,652
136,652
136,652
136,652
Current assets
3,531,611 4,888,630 4,790,482 4,687,243 4,717,360
44.3%
26.6%
(4.7%)
(1.6%)
(0.3%)
LT investments
1,051,405 1,085,143 1,317,608 1,550,073 1,782,537 Sales growth
44.3%
26.6%
(4.7%)
(1.6%)
(0.3%)
Net fixed assets
3,700,938 4,307,765 4,501,889 4,668,754 4,808,359 Net profit growth
-1.5%
24.5% -41.5%
2.4%
4.8%
Total Assets
8,612,872 10,746,608 11,075,050 11,371,141 11,773,328 EPS growth
(1.5%)
24.5% (41.5%)
2.4%
4.8%
Liabilities
85.92
60.26
82.59
98.21
578.17
Short-term loans
508,295
303,059
303,059
303,059
303,059
Payables
1,325,996 2,032,023 2,027,019 1,989,766 1,978,762 Net debt to equity
10.9%
0.9%
-5.0%
-7.5% -10.3%
Others
332,498
393,398
393,398
393,398
393,398 Sales/assets
1.63
1.62
1.37
1.31
1.27
2,166,788 2,728,480 2,723,476 2,686,222 2,675,219 Assets/equity
1.26
1.29
1.83
1.73
1.65
Long-term debt
1,107,305 1,554,214 1,243,371
994,697
795,757 ROE
19.2%
19.7%
9.9%
9.3%
9.0%
Other liabilities
352,178
306,139
306,139
306,139
306,139 ROCE
23.8%
22.3%
10.3%
10.2%
10.1%
Total Liabilities
3,626,271 4,588,833 4,272,986 3,987,058 3,777,116
4,454,320 5,462,573 6,046,862 6,567,481 7,124,100
BVPS
123,102.31 149,635.01 166,091.04 180,504.69 195,982.33
483
Adrian Mowat
(852) 2800-8599

21 November 2012
Hong Leong Bank
Underweight
www.hlb.com.my
Company overview
Hong Leong Bank (HL Bank) is a 61% owned commercial banking subsidiary of Hong
Leong Financial Group with total asset of M$156B. The Bank owns 20% stake in
Chengdu City Commercial Bank (CCCB). The major transformational deal for HLB
was acquisition of EON Capital in 2011. Currently, the bank has 329 branches across
Malaysia.
Malaysia
Banks
Investment case
We expect Hong Leong Banks 26% relative outperformance since Jan 2012 to reverse
due to three factors: 1) Y/Y decline in FY13E RoE (June end), 2) negative earnings
revisions and 3) broad gap in RoE and PB (14% FY13E RoE vs.2.2x book). We expect
a potential 306 bps y/y decline in RoE in FY13 due to a delayed impact of the M$2.6B
rights last year. The lower FY13 returns will highlight the RoE/PB gap, leading to the
reversal of outperformance.

Limited
Price: M$14.42

Revenue synergy target from the EON merger of M$180MM in FY12-14 appears
ambitious, in our view. Although cost control has been Hong Leong Bank's forte, on
which it has delivered, but achieving revenue synergies requires different skill sets, and
management did indicate the challenges in measuring the realization of revenue
synergies. We believe Street forecasts for the stock will come down over the next few
quarters, given the potential disappointment to earnings.
Hong Leong Bank has been able to deliver on the cost synergies post EON merger.
Earnings could continue to improve if the bank i) is able to extract further cost savings,
and ii) has the ability to realize and exceed the targeted revenue synergies.
Harsh Wardhan ModiAC

(65)6882-2450
Harsh.w.modi@jpmorgan.com
Bloomberg JPMA MODI<GO>
Hoy Kit Mak

(60-3) 2270-4728
Bloomberg JPMA MAK <GO>
(18146-X)
15
14
M$
13
12
11
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12
HLBB.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
34.0%
25.3%
1m
3.4%
4.3%
3m
6.8%
6.4%
Source: Bloomberg.

Our Dec-13 PT of M$11.70 is based upon 2-stage DDM. We use a fair P/B based
multiple of 1.6x, with a normalised RoE of 13.7%. Key risks to our view include
significant increase in LDR (we expect 74% in FY13) and lower credit costs in case
asset quality in erstwhile EON book holds up better than we expect.
Hong Leong Bank Bhd (Reuters: HLBB.KL, Bloomberg: HLBK MK)
FY10A
FY11A
FY12A
Operating Profit (M$ mn)
1,832
1,340
2,082
Net Profit (M$ mn)
1,328
1,137
1,648
Cash EPS (M$)
0.91
0.78
0.99
DPS (M$)
0.24
0.24
0.38
EPS growth (%)
5.1%
(14.4%)
26.7%
ROE
21.9%
16.4%
17.5%
P/E (x)
15.8
18.4
14.5
BVPS (M$)
4.07
4.73
6.07
P/BV (x)
3.55
3.05
2.37
Dividend Yield
1.7%
1.7%
2.6%
Fully Diluted EPS (M$)
0.91
0.78
0.99
484
FY13E
2,279
1,725
0.92
0.31
(7.5%)
14.4%
15.7
6.68
2.16
2.1%
0.92
FY14E
2,463
1,803
0.96
0.38
4.5%
13.8%
15.0
7.26
1.99
2.7%
0.96
Company Data
52-week Range (M$)
Market Cap (M$ mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (M$)
Date Of Price
3M - Avg daily value (M$ mn)
FBMKLCI
Exchange Rate
14.98-10.02
27,108
8,855
1,880
Jun
14.42
06 Nov 12
9.89
3.2
0.72
1641.07
3.06
12m
36.8%
25.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
Hong Leong Bank: Summary of Financials

Income Statement
FY11
1.2%
96.1%
1.2%
FY12
1.8%
96.0%
1.7%
FY13E
1.8%
96.2%
1.7%
FY14E
1.8%
96.3%
1.7%
Net Interest Income

Fee Income
Dealing Income
1,656
896
391
257
2,602
1,292
590
221
2,753
1,421
629
257
2,963
1,492
661
269
2,552
3,894
4,174
4,455
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
(1,212) (1,811) (1,895) (1,992)

1,340 2,082 2,279 2,463
(137)
(111)
(308)
(416)
33
2
0
0
210
219
240
264
1,415 2,223 2,211 2,311
(278)
(485)
(486)
(508)
0
0
0
0
1,137 1,648 1,725 1,803
Per Share Data MYR

EPS
DPS
Payout
Book value
PPOP per share
Key Balance sheet M$ in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY11
FY12 FY13E FY14E
0.78
0.99
0.92
0.96
0.24
0.38
0.31
0.38
30.6% 38.3% 33.5% 40.1%
4.73
6.07
6.68
7.26
1,452 1,661 1,880 1,880
0.92
1.25
1.21
1.31
FY11
FY12 FY13E FY14E
81,455 88,193 96,933 106,772
(2,583) (2,423) (2,533) (2,730)
84,039 90,616 99,466 109,502
1,915 1,532 2,076 2,573
19,818 35,942 38,098 40,003
3,223 3,114 3,270 3,433
134,026 145,518 156,680 166,968
2,211 2,278 2,278 2,278
145,499 157,787 168,003 178,757
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
125,554 133,520 142,377 151,648

5,815 4,964 5,020 5,020
0
0
0
0
124,016 134,927 142,941 152,032
139,455 151,643 162,895 173,380
7,468 11,419 12,566 13,645
86,806 96,720 104,162 110,829
43,403 91,763 100,441 107,496
Growth Rates
FY15E
1.8% Loans
96.4% Deposits
1.7% Assets
Equity
3,191 RWA
681 Non-Interest Income
277
of which Fee Grth
Revenues
4,739 Costs
2,627 Pre-Tax
- EPS
0 DPS
2,399 Loan/deposit
(528) Investment/assets
0 Loan/Assets
LT debt/liabilities
0.41 NPLs/loans
7.84 Growth in NPLs
1,880 Tier 1 Ratio
1.40 Total CAR
177,780 Cost/Income
2,278 Cost/Assets
LLP/Loans
161,410 Loan/Assets
0 Operating ROA
161,549 Pre-Tax ROA
184,399 Tax rate
117,825 ROA
114,327 RORWA
Equity/Assets
ROE

13.5%
7.8%
9.8% 10.1% 10.1%
9.4%
6.3%
6.6% 6.5% 6.4%
9.1%
8.4%
6.5% 6.4% 6.3%
16.2% 52.9% 10.0% 8.6% 8.1%
- 11.4%
7.7% 6.4% 6.3%
(29.8%) 57.1%
5.8% 7.6% 7.7%
(28.5%) 44.2% 10.0% 5.0% 3.8%
(31.1%) 51.0%
6.7% 5.0% 3.0%
(29.3%) 52.6%
7.2% 6.7% 6.4%
(31.9%) 49.5%
4.6% 5.2% 6.0%
(26.8%) 55.4%
9.5% 8.0% 6.7%
(49.9%) (19.0%) 177.3% 34.9% 24.6%
(15.2%) 57.0% (0.5%) 4.5% 3.8%
(14.4%) 44.9%
4.7% 4.5% 3.8%
(14.4%) 26.7% (7.5%) 4.5% 3.8%
0.0% 58.3% (19.0%) 25.0% 6.7%
FY11
64.9%
15.4%
56.7%
91.0%
2.9%
FY11
(3.1%)
2.5%
116.4%
(6.1%)
8.5%
17.5%
FY11
1.2%
96.1%
1.2%
35.1%
0.6%
1.8%
47.5%
0.9%
1.0%
(0.2%)
56.7%
0.2%
0.9%
1.0%
19.6%
1.3%
0.8%
2.6%
5.0%
16.4%
FY12
66.1%
18.4%
57.6%
91.2%
3.8%
FY12
(2.7%)
2.0%
145.2%
(20.0%)
11.7%
19.2%
FY12
1.8%
96.0%
1.7%
33.2%
0.9%
2.6%
46.5%
1.2%
1.4%
(0.1%)
57.6%
0.2%
1.3%
1.5%
21.8%
0.0%
1.1%
1.8%
6.2%
17.5%
FY13E
68.1%
22.7%
58.3%
91.6%
3.3%
FY13E
(2.5%)
1.9%
137.4%
35.5%
12.1%
19.1%
FY13E
1.8%
96.2%
1.7%
34.0%
0.9%
2.6%
45.4%
1.2%
1.4%
(0.3%)
58.3%
0.1%
1.2%
1.4%
22.0%
0.0%
1.1%
1.7%
7.4%
14.4%
FY14E
70.4%
22.5%
60.3%
91.8%
3.1%
FY14E
(2.5%)
2.2%
113.2%
24.0%
12.5%
19.0%
FY14E
1.8%
96.3%
1.7%
33.5%
0.9%
2.6%
44.7%
1.1%
1.4%
(0.4%)
60.3%
0.2%
1.2%
1.3%
22.0%
0.0%
1.0%
1.7%
7.6%
13.8%
FY15E
72.8%
22.2%
62.4%
92.1%
2.9%
FY15E
(2.5%)
2.5%
100.8%
21.3%
12.8%
19.0%
FY15E
1.8%
96.4%
1.7%
32.7%
0.8%
2.6%
44.6%
1.1%
1.4%
(0.5%)
62.4%
0.2%
1.1%
1.3%
22.0%
0.0%
1.0%
1.6%
7.7%
13.2%
485
Adrian Mowat
(852) 2800-8599

21 November 2012
HTC Corp
Underweight
www.htc.com/tw/
Company overview
HTC is a leading manufacturer of Windows Mobile and Google Android smartphones.
The company began transforming from ODM to own-brand in early 2006. Its main
markets are Europe, North America, and Asia. Its key customers include Vodafone,
Verizon, T-Mobile, Sprint, AT&T, Telefonica, Orange, and Google.
Taiwan
Technology
Price: NT$241.50
Alvin Kwock AC
(852) 2800-8533
alvin.yl.kwock@jpmorgan.com
Bloomberg JPMA KWOCK <GO>
Investment case
We believe HTC will underperform the market due to: 1) falling revenue leading to
shrinking scale; 2) rising marketing expense to gamble on MWC 2013; 3) fierce
competition due to shortening product life cycle, especially in China
According to its 4Q12 guidance, HTC spends a lot on marketing now. We suspect HTC
is trying to keep their brand awareness high, ahead of high hopes in product launch for
MWC 2013. We estimate the new product needs to sell a lot to justify such
investments. Second, we think HTC needs to have a radical change since scale is the
single most important factor in profitability, as seen in feature phone era. HTC also
faces increasing challenge due to shortening product life cycle Samsung achieved the
same camera features as One-series within three months, and their aggressive pricing
also hurts other brands margin.

Limited
700
NT$
500
300
100
Nov-11
Feb-12 May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
-51.4%
-54.2%
1m
-4.2%
-1.9%
3m
-2.6%
-0.3%
12m
-64.9%
-61.5%
Source: Bloomberg.

Key upside risks include: (1) HTCs success in MWC 2013 with powerful product
show, and (2) significant breakthrough in China development, maybe through a merger
possibility.
Our Dec-13 PT is NT$100, based on 1x FY13E P/B. We believe that there is simply no
way to get earnings forecasts correct. We use 1x as a similar situation at LG/ Nokia derated their valuations down to ~1x. Any revolutionary improvement or breakthrough
would become upside risks to our PT in 2013.

Sales
465.79 291.55 274.26 290.69
Operating Profit
68.79 18.92 5.75
4.23
EBITDA
70.35 21.45 9.95 10.00
Pretax Profit
71.42 19.45 7.23
5.55
Adj. Net Profit (New TW GAAP) 61.98 16.67 6.14
4.72
71.94 19.63 7.21
5.54
Net Debt / Equity
NM
NM
NM
NM
Y/E BPS (NT$)
117.73 114.17 99.76 96.16
New TW GAAP P/E

P/BV (x)
ROE(%)
Cash Div (NT$)
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E
FY11 FY12E
3.4
12.3
2.1
2.1
70.4
16.8
35.1
40.1
1Q
2Q
17.29 20.42
5.31
8.69
3.77
1.88
486
FY13E FY14E
33.5
43.6
2.4
2.5
06.8
05.7
15.7
5.8
3Q
4Q
21.27 12.84
4.55
1.08
0.82
0.74
Target Price (NT$)

52-Week range (NT$)
Share Outstanding
Free float
Avg daily volume
Avg daily val (USD)
QFII Holding (%)
Market Cap(USD)
100
705.00 - 191.00
852mn
77.9%
12mn
162.97mn
16.6%
50.7%
7,093mn
Adrian Mowat
(852) 2800-8599

21 November 2012
HTC Corp: Summary of Financials

FY10
FY11
Revenues
278,512 465,795
Cost of goods sold
194,804 333,997
Gross Profit
83,708 131,798
R&D expenses
-5,917 -4,633
SG&A expenses
-26,696 -47,049
43,980 68,788
EBITDA
44,823 70,352
Interest income
310
702
Interest expense
-3
-31
306
671
946
2,636
Earnings before tax
44,925 71,424
Tax
5,404
9,125
39,533.6 61,975.8
39,534 61,976
EPS (reported)
45.79
71.94
EPS (adjusted)
45.79
71.94
BVPS
86.55 117.73
DPS
23.31
35.11
Shares outstanding
858
852
Balance sheet
FY10
FY11
75,355 88,494
Accounts receivable
62,374 65,872
Inventories
26,414 28,431
Others
4,497 10,630
Current assets
168,640 193,428
LT investments
1,232
3,685
Net fixed assets
14,024 21,512
Others
6,486 35,967
Total Assets
190,382 254,592
Liabilities
ST Loans
12
0
Payables
63,917 77,268
Others
115,629 152,130
115,641 152,130
Long-term debt
12
0
Other liabilities
14
1,036
Total Liabilities
115,667 153,166
74,714 101,427
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
R&D/sales
SG&A/Sales
FY10
30.1%
16.1%
15.8%
14.2%
2.1%
9.6%
FY11
28.3%
15.1%
14.8%
13.3%
1.0%
10.1%
Sales growth
Net profit growth
92.2%
81.9%
74.9%
75.9%
67.2% (37.4%) (5.9%) 6.0%

56.4% -72.5% -69.6% -26.5%
56.8% -73.1% -63.2% -23.2%
57.1% (72.7%) (63.3%) (23.2%)
FY12E
291,551
218,037
73,513
-9,536
-40,364
18,916
21,449
480
-0
479
539
19,454
2,176
16,672.5
16,673
19.63
19.63
114.17
40.12
852
FY13E
274,262
218,648
55,613
-6,857
-40,426
5,748
9,952
278
0
278
1,478
7,226
1,084
6,142.5
6,143
7.21
7.21
99.76
15.65
852
FY14E
290,692
236,064
54,629
-7,267
-40,697
4,227
9,995
127
0
127
1,327
5,553
833
4,720.2
4,720
5.54
5.54
96.16
5.77
852
FY12E
55,430
46,278
26,740
13,260
141,708
14,203
30,841
35,451
222,203
FY13E
25,457
49,941
28,857
13,260
117,515
29,203
41,048
35,451
223,217
FY14E
2,317
53,353
30,828
13,260
99,759
44,203
49,689
35,451
229,102
0
56,350
123,917
123,917
0
1,294
125,211
96,992
0
64,003
136,918
136,918
0
1,294
138,213
85,004
0
67,976
145,873
145,873
0
81,935 Ending cash

Net debt to equity
Asset turnover
ROE
ROIC
ROIC (net of cash)
Cash flow statement
Net income
Other
Capex
Disposal/(purchase)
Free cash flow
Other
Dividends paid
-107.3% -100.5%
NM
NM
1.80
2.09
5.54
9.88
56.3% 70.4%
350.1% 235.6%
9097.2% 891.8%
FY10
39,533.6
843
5,676
46,064
-6,553
2,086
-4,467
39,511
-5,425
0
-4,887
-20,122
-30,434
11,163
64,192
75,355
FY11
61,975.8
1,564
24,852
88,069
-9,052
-31,934
-40,987
79,017
3,246
-24
-7,558
-30,253
-34,590
FY12E FY13E FY14E

25.2% 20.3% 18.8%
7.4%
3.6%
3.4%
6.5%
2.1%
1.5%
5.7%
2.2%
1.6%
3.3%
2.5%
2.5%
13.8% 14.7% 14.0%
-55.9% -28.0%
NM
NM
1.22
1.23
9.87 -340.24
16.8%
6.8%
35.3%
7.0%
58.7%
8.9%
FY12E
16,672.5
2,533
-9,558
9,042
-11,862
-10,002
-21,864
-2,820
1,968
0
10,660
-34,082
-21,454
FY13E
6,142.5
4,203
7,221
17,567
-14,410
-15,000
-29,410
3,157
0
0
-4,792
-13,338
-18,130
-2.8%
NM
1.29
-8.87
5.7%
4.3%
4.8%
FY14E
4,720.2
5,769
3,571
14,060
-14,410
-15,000
-29,410
-350
0
0
-2,876
-4,914
-7,790
12,493 -34,276 -29,973 -23,140

75,355 88,494 55,430 25,457
88,494 55,430 25,457 2,317
487
Adrian Mowat
(852) 2800-8599

21 November 2012
Infosys
Neutral
www.infosys.com
Company overview
Infosys is one of Asias largest IT services companies with significant experience
across vertical domains (BFSI, manufacturing, and telecom) and technology platforms.
Infosys serves 700+ clients and has wide portfolio of service offerings and its skill-set
straddles the entire IT services value chain from pure IT outsourcing to traditional
application development and maintenance to package implementation to consulting
assignments to complex turnkey projects to BPO.
India
Price: Rs2,348
Investment case
Infosys was not prepared for greater competitiveness in the market place after Lehman
because of which the company lost meaningful market share particularly in multivendor accounts, in our view. We expect Infosys to continue losing market share in
CY13 as the company is hesitant to go back on its Infosys 3.0 strategy, which focuses
on high-end work at the price of traditional outsourcing, which generally has high
volume growth potential. Also, we expect CY13 to be a better year than CY12 and
Infosys decision to not give wage hike for two quarters might impact the companys
ability to attract/retain quality talent to benefit from improved demand environment.
The 'bread and butter' services which make up about 70% of total IT services spending
got ignored in an effort to grow consulting and system integration business. In a
difficult market environment, 'bread and butter' services help drive revenue growth,
where other large players such as TCS have better positioning. Moreover, competitors
such as TCS have established formidable execution capabilities driven by tools,
solutions, accelerators etc to fight pricing pressure, while Infosys might find it hard to
maintain margins due to pricing pressures.
Viju K GeorgeAC
(91-22) 6157 3597
3,200
2,800
Rs
2,400
2,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12
INFY.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
-15.1%
-38.1%
1m
-7.4%
-7.1%
3m
2.9%
-3.9%
12m
-17.2%
-26.1%
Source: Bloomberg.

Further weakness in demand environment, supply side pressure due to higher attrition
and wage hikes, meaningful rupee appreciation and further market share loss in current
accounts.
Our Mar-13 price target of Rs2,400 is based on a one-year forward P/E multiple of
14.5x, about a 20% discount to TCS target multiple of 18x. We believe the discount is
justified as Infosys continues to face structural issues. Infosys revenue/volume growth
and operating margins remain under pressure due to these issues. Negative risks:
Further weakness in demand environment, rupee appreciation against the US$, and
supply side pressures (higher attrition or wage increases). Positive risks: Better pricing
& volume growth relative to expectations, rupee depreciation and a better-thanexpected demand environment
Bloomberg INFO IN, Reuters INFY.BO
(Year-end Mar, Rs mn)

FY11
FY12 FY13E FY14E
Revenue
274,989 336,921 398,125 434,570
Operating Profit
80,984
97,312 104,275 113,442
EBITDA
89,588 106,672 115,288 125,906
68,233.3 82,883.8 90,300.7 95,048.7
EPS
119.42
145.05 158.03 166.34
P/E (x)
19.7
16.2
14.9
14.1
EV/EBITDA (x)
13.5
10.9
9.9
8.7
Cash
168,097 209,676 234,245 279,378
Equity
273,041 334,587 395,250 449,919
488
ROE(%)
CORE ROIC(%)
Quarterly EPS (Rs)
EPS (13) E
EPS (14) E
Local
Abs. Perf.(%)
Rel. Perf.(%)
FY11
26.6
48.9
1Q
39.92
38.41
1M
-7.4%
(7.1%)
FY12 FY13E FY14E Date of Price

27.3
24.7
22.5 52-Week range
47.0
40.5
2Q
3Q
4Q Market Cap
41.37 37.45 39.29 Market Cap(US)
40.48 42.85 44.60 Free float
3M
12M
Avg daily val
2.9% -17.2%
Dividend Yield
(3.9%) (26.1%)
Index
09 Nov 12
2,981.25 - 2,060.55
574
1,348.70BN
US$24,632MN
78.3%
341
2.4%
5,686
0.02
Adrian Mowat
(852) 2800-8599

21 November 2012
Infosys: Summary of Financials

Ratio Analysis
FY11
FY12
FY13E
FY14E Rs in millions, year end Mar
Revenues
274,989 336,921 398,125 434,570 Gross margin
Cost of goods sold
159,496 188,441 246,484 269,395 EBITDA margin
Gross Profit
R&D expenses
0
0
0
0 Net margin
SG&A expenses
-34,824 -41,466 -47,366 -51,732 R&D/sales
80,984
97,312 104,275 113,442 SG&A/Sales
EBITDA
89,588 106,672 115,288 125,906
Interest income
11,612
18,375
19,793
19,493 Sales growth
Interest expense
0
0
0
11,612
18,375
19,793
12,143
19,126
21,602
Earnings before tax
93,127 116,438 125,877 132,935
Tax
-24,894 -33,554 -35,576 -37,887 Interest coverage (x)
68,233.3 82,883.8 90,300.7 95,048.7 Net debt to total capital
68,233
82,884
90,301
EPS (reported)
119.42
145.05
158.03
EPS (adjusted)
119.42
145.05
158.03
BVPS
477.85
585.56
691.72
787.40 ROE
DPS
59.31
46.39
55.44
50.00 ROIC
Shares outstanding
571
571
571
Balance sheet
Cash flow statement
FY11
FY12
FY13E
FY14E Rs in millions, year end Mar
168,097 209,676 234,245 279,378 Net income
Accounts receivable
46,518
58,817
73,798
79,917 Depr. & amortization
Inventories
6,199
0
0
Others
9,857
15,264
18,189
19,697 Other
Current assets
LT investments
- Capex
Net fixed assets
48,436
54,085
79,158
Others
Total Assets
312,646 383,483 453,355 507,893 Free cash flow
Liabilities
ST Loans
0
0
0
0 - Debt raised/(repaid)
Payables
455
241
354
369 - Other
Others
36,394
47,675
56,886
56,778 - Dividends paid
36,394
47,675
56,886
56,778 - Cash flow from financing
Long-term debt
0
0
0
0Other liabilities
3,211
1,221
1,219
1,196 - Net change in cash
Total Liabilities
39,605
48,896
58,105
57,974 - Beginning cash
273,041 334,587 395,250 449,919 - Ending cash
FY11
42.1%
32.6%
29.5%
24.8%
0.0%
12.7%
FY12
41.2%
31.7%
28.9%
24.6%
0.0%
12.3%
FY13E
38.1%
29.0%
26.2%
22.7%
0.0%
11.9%
FY14E
38.0%
29.0%
26.1%
21.9%
0.0%
11.9%
20.8%
17.1%
9.7%
9.6%
22.5%
20.2%
21.5%
21.5%
18.2%
7.2%
8.9%
8.9%
9.2%
8.8%
5.3%
5.3%
-65.4%
-61.6%
0.93
6.98
26.6%
48.9%
-
-69.0%
-62.7%
0.97
7.89
27.3%
47.0%
-
-64.2%
-59.3%
0.95
7.17
24.7%
40.5%
-
-66.1%
-62.1%
0.90
7.01
22.5%
39.9%
-
FY11
FY12
FY13E
FY14E
68,233.3 82,883.8 90,300.7 95,048.7
8,604
9,360
11,013
12,464
-15,763
-227
-8,694
-7,735
0
0
0
0
61,074
92,017
92,619
-7,735 -12,633 -15,010 -36,085
-2,682 0
0
0
0-11,279 -20,830 -37,631
-2,145 48,440
77,007
56,534 -10,418 -2,023
5,210
2,020
83,239 0
0
0
0-336
-1,990
-2
-23 -33,878 -26,548 -31,657 -28,570 -36,237 -23,328 -29,639
54,646 13,558
158,587
172,145
47,860
168,097
215,957
25,349
209,676
235,025
44,765 234,245 279,010 -
489
Adrian Mowat
(852) 2800-8599

21 November 2012
IOI Corp.
Underweight
www.ioigroup.com
Company overview
IOI Corp is the second largest plantations company by market cap in Malaysia, with
157,045ha of planted land-bank, 95% of which is in Malaysia with 5% in Indonesia.
IOI is also involved in downstream manufacturing operations (i.e. refining,
oleochemicals, specialty fats), and property development in Malaysia and Singapore. In
FY12, plantations contributed 63% to operating profits, followed by property
development and investment at 27% and downstream manufacturing at 10%.
Malaysia
Plantations
Price: M$5.05
Investment case
Growth for IOIs domestic plantation operations have peaked, while exposure to its
stronger growth Indonesian estates can be obtained via 30%-owned Singapore listed,
Bumitama. The environment remains competitive for downstream, while its overseas
property forays are not without risk, with high capital commitments involved.
Average CPO output growth of 3% pa domestically over FY12-14E lags behind
ASEAN peers, while contributions from its Indonesian estates acquired in 2007 are
expected to remain small over FY13-14E despite their aggressive expansion mode. The
recent US$600MM bond issue will largely be utilized for its overseas property projects
(Singapore, China) where earnings contributions are unlikely to be material before
FY14/15. Prospects remain challenging for the downstream unit though its exposure to
specialty fats, where demand is more resilient, should mitigate risk here.
Simone YeohAC
(60-3) 2270 4710
(18146-X)
5.6
M$
5.2
4.8
Nov-11
Feb-12
May-12
Aug-12
Nov-12
IOIB.KL share price (M$)

FBMKLCI (rebased)
Abs
Rel
YTD
-5.4%
-12.9%
1m
-0.4%
0.5%
3m
-1.6%
-2.5%
12m
-2.3%
-13.4%
Source: Bloomberg.

Our CPO forecast is M$2,900/t for 2013E (M$3,170/t for 2012E). Stronger- or lowerthan-expected CPO prices are thus a key risk to earnings. Every 10% change in the
CPO price versus our forecast would impact our FY13E earnings by 9%.
Our Jun-13E PT of M$4.60 is based on SOTP, which implies a 2013E P/E of 15x
(historical mean: 17.7x). Key upside risk to PT is potential value accretion or special
dividends from plans to re-list its property arm though this is a longer-term plan.
IOI Corporation Berhad (Reuters: IOIB.KL, Bloomberg: IOI MK)
M$ in mn, year-end Jun
FY11A
FY12A
FY13E
Revenue (M$ mn)
16,154
15,640
16,455
Reported Net Profit (M$ mn)
2,223
1,789
1,941
Core Net profit (M$ mn)
2,043
1,761
1,941
Reported EPS (M$)
0.35
0.28
0.30
Adj. EPS (M$)
0.32
0.27
0.30
Net DPS (M$)
0.17
0.16
0.18
Revenue growth (%)
28.8%
-3.2%
5.2%
Adj. EPS growth (%)
21.3%
-13.9%
10.2%
ROE (%)
19.5%
14.5%
14.9%
ROCE (%)
18.1%
13.2%
13.0%
Adj P/E (x)
15.9
18.4
16.7
P/B (x)
2.6
2.5
2.4
EV/EBITDA (x)
11.0
13.3
12.5
Net Div yield (%)
3.4%
3.1%
3.5%
490
FY14E
17,306
1,982
1,982
0.31
0.31
0.19
5.2%
2.2%
14.3%
12.9%
16.4
2.2
12.5
3.8%
FY15E
18,266
2,175
2,175
0.34
0.34
0.20
5.5%
9.7%
14.8%
13.5%
14.9
2.1
11.8
4.0%
Company Data
Shares O/S (mn)
Market cap (M$ mn)
Market cap ($ mn)
Price (M$)
Date Of Price
Free float (%)
FBMKLCI
Exchange Rate
Fiscal Year End
6,430
32,466
10618
5.05
07 Nov 12
43.2%
2.78
14.06
5.11
1,646
3.06
Jun

21 November 2012
Adrian Mowat
(852) 2800-8599
IOI Corp.: Summary of Financials

Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
Shares outstanding
Core EPS
% change Y/Y
DPS
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
Cash flow statement

15,640 16,455 17,306 18,266 Operating profit
(3.2%)
5.2%
5.2%
NM
7.8%
0.8%
7.9% Taxes paid
-141
-166
-166
-168
2,379 2,551 2,573 2,787 Capex
-16.9%
7.3%
0.9%
8.3% Net Interest
-550
-561
-540
-557 Free cash flow
23.1% 22.0% 21.0% 20.0%
1,789 1,941 1,982 2,175 Equity raised/(repaid)
-19.5%
8.4%
2.2%
1,761 1,941 1,982 2,175 Other
-13.8% 10.2%
2.2%
9.7% Dividends paid
6,428 6,428 6,428 6,428 Beginning cash
0.27
0.30
0.31
0.34 Ending cash
-13.9% 10.2%
2.2%
9.7% DPS
0.16
0.18
0.19
0.20
-8.8% 13.1%
8.1%
5.6%
Ratio Analysis
FY11
2,786
4,361 3,568 2,831 2,184 EBIT Margin
1,756
2,652
2,511 2,642 2,779 2,933 Net margin
510
610
456
476
498 SG&A/Sales
7,703
9,186 8,459 7,972 7,606
LT investments
1,995
3,353 3,420 3,489 3,562 Sales growth
Net fixed assets
5,677
Total Assets
19,655 23,065 23,463 24,099 24,858 EPS growth
Liabilities
ST Loans
791
830
603
645
Payables
1,192
Others
116
55
55
55
55 Sales/assets
2,288
2,332 2,166 2,288 2,402 Assets/equity
Long-term debt
4,606
7,292 6,992 6,692 6,392 ROE
Other liabilities
499
525
525
525
525 ROCE
Total Liabilities
7,394 10,149 9,683 9,504 9,319
Minorities
262
288
338
388
443
11,999 12,628 13,442 14,207 15,096
BVPS
1.92
2.02
2.15
2.27
2.41
FY11
16,154
28.8%
2,986
9.6%
18.5%
-123
2,864
12.3%
-573
20.0%
2,223
9.2%
2,043
22.0%
6,422
0.32
21.3%
0.17
0.0%
FY11
2,816
246
-1,162
-539
2,694

2,366 2,533 2,554 2,771
251
256
261
267
98
-5
-170
-210
-515
-521
-502
-521
1,855 2,513 3,222 3,222
-1,320
-123
693
-287
-141
-347
-1,200
-166
1,111
-1,200
-166
1,817
-1,200
-168
1,811
88
640
-88
-1,092
3,877
2,786
0.17
-164
2,724
12
-996
2,786
4,361
0.16
0
-527
0
-1,127
4,361
3,568
0.18
0
-257
-0
-1,217
3,568
2,831
0.19
0
-256
0
-1,286
2,831
2,184
0.20
FY11
18.5%
17.4%
13.8%
-

16.1% 16.5% 15.8% 16.2%
15.1% 15.4% 14.8% 15.2%
11.4% 11.8% 11.5% 11.9%
-
28.0%
28.8%
22.0%
21.3%
26.33
15.9%
21.8%
0.87
1.74
19.5%
18.1%
(3.3%)
(3.2%)
-13.8%
-13.9%
19.61
19.7%
29.8%
0.73
1.83
14.5%
13.2%
5.2%
5.2%
10.2%
10.2%
17.91
19.3%
30.0%
0.71
1.75
14.9%
13.0%
5.2%
5.2%
2.2%
2.2%
18.10
21.2%
31.7%
0.73
1.70
14.3%
12.9%
5.5%
5.5%
9.7%
9.7%
19.15
22.4%
32.4%
0.75
1.65
14.8%
13.5%
491
Adrian Mowat
(852) 2800-8599

21 November 2012
JSW
Underweight
www.jsw.pl
Price Target: zl 90
Company overview
JSW is the biggest producer of high- quality coking coal in the EU. In 2011 the
company sold 8.7mn tones of coking coal and 3.8 mn tones of thermal coal from five
deep coal mines in Poland, which places it among the top ten quoted coking coal
producers in the world. It is also the largest coke merchant in the EU with 3mn tones of
coke sold in 2011.
Poland
Metals & Mining
Price: zl 86.20
Michal KuzawinskiAC
(48-22) 44 19534
Bloomberg JPMA KUZAWINKSI <GO>
Investment case
We rate JSW Underweight on weak fundamentals for coking coal. On our price deck
which assumes an 18% recovery in hard coking coal prices from Q412 benchmark of
$170/t the company is trading at 2.9x P/NPV. At a time of depressed coking coal and
coke prices, JSWs trade unions continue to exert wage pressures, which raise
challenges for the managements efforts to increase efficiency.
We see a risk that coking coal prices will take longer than one quarter to stabilize at
US$ 200/t, as it needs demand spark from China, which accounts for 40% of global
coking coal consumption.
110
zl
100
90
80
Nov-11
Abs
Feb-12
YTD
0.7%
May-12
1m
-7.8%
Aug-12
Nov-12
3m
-6.0%
Source: Bloomberg.

High operating leverage translates to high bottom line sensitivity to revised prices and
volumes. If hard coking coal prices fail to recover as we estimate and stay at
$170/175/t, our 13E EPS estimate would fall by approx 20%. A more dynamic
rebound in coking coal prices would improve 13E earnings outlook. Our 13E EPS
would also be significantly impacted if coal sales volumes stay flat in 13E vs. assumed
5% growth.
We use a target 2013E multiple of 4.7x EV/EBITDA, which is broadly in line with the
current global mining peer group median. We then subtract net debt, provisions and
employee benefit obligations to derive our Sep13 PT of zl90. The key upside risk is
hard coking coal price recovery beyond $200/t, as well as productivity gains through
the introduction of the sixth working day.
Jastrzbska Spka Wglowa S.A. (JSW.WA;JSW PW)
FYE Dec
2011A
2012E
Adj. EPS FY (zl)
16.94
9.52
DPS (Net) FY (zl)
5.38
4.76
Adj EBITDA FY (zl mn)
3,510
2,575
Adj P/E FY
5.1
9.1
EV/Adj EBITDA FY (zl)
3.1
4.2
Div Yield FY
5.6%
5.0%
Revenue FY (zl mn)
9,377
9,141
Net Att. Income FY (zl mn)
2,087
1,118
492
2013E
8.18
2.45
2,358
10.5
4.5
2.6%
8,855
960
2014E
7.18
2.15
2,246
12.0
4.6
2.3%
8,854
843
Company Data
Price (zl)
Date Of Price
Price Target (zl)
52-week Range (zl)
Mkt Cap (zl bn)
Shares O/S (mn)
86.20
02 Nov 12
90.00
30 Sep 13
112.50 - 82.60
10.1
117
12m
-6.1%

21 November 2012
Adrian Mowat
(852) 2800-8599
JSW: Summary of Financials

Revenues
% Change Y/Y
Gross Margin (%)
EBITDA
% Change Y/Y
EBITDA Margin (%)
EBIT
% Change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
Tax as a % of BT
% change Y/Y
EPS (Reported) - $
% Change Y/Y
Balance sheet
Accounts Receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
BVPS - $
FY10
7,289
63.1%
2,840
8326.1%
39.0%
2,016
-381.4%
27.7%
(81)
1,936
-341.4%
(365)
18.8%
1,523
-335.7%
108.8
13.99
(335.7%)
FY11
9,377
28.6%
3,510
23.6%
37.4%
2,666
32.2%
28.4%
(35)
2,699
39.5%
(594)
22.6%
2,087
37.0%
119.2
17.50
25.1%
FY10
1,856
955
517
74
3,401
FY11
2,615
1,363
740
26
4,743
FY12E FY13E
2,789 2,952
1,329 1,287
828
819
26
26
4,971 5,084
4,923 6,214
10,611 13,617
6,495 6,776
14,156 14,576
102
1,508
714
2,222
8
2,279
4,509
6,103
54
FY12E
9,141
-2.5%
2,575
-26.6%
28.2%
1,517
-43.1%
16.6%
(27)
1,490
-44.8%
(358)
24.1%
1,118
-46.4%
117.4
9.52
(45.6%)
188
1,836
677
2,514
241
2,419
5,174
8,443
69
188
1,846
677
2,523
241
2,449
5,213
8,943
74
FY13E
8,855
-3.1%
2,358
-8.4%
26.6%
1,308
-13.7%
14.8%
(28)
1,280
-14.1%
(308)
24.1%
960
-14.1%
117.4
8.18
(14.1%)
188
1,826
677
2,504
241
2,475
5,220
9,356
78
Cash flow statement

FY14E zl in millions, year end Dec
8,854 EBIT
-0.0% Depreciation & amortization
- Change in working capital & Other
2,246 Taxes
25.4%
1,146 Capex
-12.4% Disposals/(purchase)
12.9% Net Interest
(23) Free cash flow
1,124
-12.2% Equity raised/repaid
24.1% Dividends paid
843 Other
-12.2%
7.18 Ending cash
(12.2%) DPS
Ratio Analysis
FY14E zl in millions, year end Dec
3,309 EBITDA margin (%)
1,287 Operating margin (%)
833 Net margin (%)
26 SG&A/Sales
5,455
- Sales growth (%)
7,001 Attributable net profit growth (%)
15,205 EPS growth (%)
2,507 ROE
5,284 ROCE
9,922
82
FY10
2,016
(824)
(20)
(325)
2,820

2,666 1,517 1,308 1,146
(844) (1,059) (1,050) (1,100)
(108)
(14)
57
50
(487)
(358)
(308)
(270)
3,403 2,561 2,416 2,296
(782) (1,277) (1,370) (1,358) (1,358)

(40) (470)
0
0
0
(203)
(77)
(27)
(28)
(23)
1,414 1,089
806
722
646
-228
(131)
-
64
(300)
-
(632)
-
(559)
-
(288)
-
788
1,856
1.63
1,856
2,615
5.38
2,615
2,789
4.76
2,789
2,952
2.45
2,952
3,309
2.15
FY12E FY13E
28.2% 26.6%
12.2% 10.8%
-
FY14E
25.4%
9.5%
-
FY10 FY11
39.0% 37.4%
20.9% 22.3%
63.1%
63.1%
-335.7%
(335.7%)
17.5% -1.0% -3.1% -0.0%

28.6% -2.5% -3.1% -0.0%
37.0% -46.4% -14.1% -12.2%
25.1% (45.6%) (14.1%) (12.2%)
24.9
77.0
56.2
46.0
50.6
-27.5% -25.3% -25.8% -26.3% -28.3%
1.7
1.6
1.6
1.6
1.5
29.2% 28.7% 13.2% 10.8%
9.0%
28.5% 29.8% 16.3% 13.6% 11.7%
493
Adrian Mowat
(852) 2800-8599

21 November 2012
JSW Energy Ltd.
Underweight
www.jsw.in
Company overview
JSW Energy has an operating capacity of 2.6GW including 860MW at Vijayanagar,
540MW at Barmer I and 1200MW at Ratnagiri I. In addition, the company has 780MW
under construction and 8.4GW under development stages. JSWE has also entered
power transmission and owns a coal mine in South Africa.
India
Electric Utilities
Investment case
In FY14, we expect a PAT growth of 4% with the completion of the companys
Barmer plant and also assuming an improved PLF of 75% but still factoring some
under-recovery of fixed costs. For operating projects Vijaynagar I, II and Ratnagiri, we
assume a 3% decline in merchant tariff rates and a 7-11% increase in coal costs, with
no pass through in tariff.
Bloomberg JPMA KISHORE<GO>
Price: Rs62.85
Sumit KishoreAC
(91-22) 6157 3581
sumit.kishore@jpmorgan.com

75
65
Rs 55
45

JSW trades at 1.5x FY14E P/B with a 10% RoE and flat to declining EBITDA over the
next couple of years. While the company has the benefit of being underlevered
compared to peers as well as having done no capex which runs the risk of being idle,
progress on the 8.4GW development pipeline is largely stalled providing limited
growth opportunities. Also, all earnings drivers for the current operating portfolio are
market linked translating to earnings volatility.
35
Nov-11
Feb-12
May-12
Aug-12
Nov-12
JSW E.BO share price (Rs)

NIFTY (rebased)
Abs
Rel
YTD
64.7%
41.7%
1m
1.9%
2.6%
3m
21.4%
13.4%
12m
20.1%
12.3%
Source: Bloomberg.

A decline in international coal prices, improvement in short term power rates (we are
conservative in our assumptions here) and USD INR appreciation provide key risks to
our estimate. Also, increase in PLF for its operating portfolio is an upside risk.
Our SOTP-based Dec-13 PT of Rs54 includes Rs49/share for generation projects, Rs3
for coal mines, Rs1 for cash and Rs2 for the transmission line. Earnings are vulnerable
to imported coal prices, FX rates and short-term power prices. Higher-than-expected
merchant prices, long-term fuel security, contraction in imported coal prices, approval
of project cost of their Barmer project and hence a higher tariff are upside risks.
JSW Energy Ltd. (Reuters: JSWE.BO, Bloomberg: JSW IN)
FY10A
FY11A
FY12A
Revenue (Rs mn)
23,551
42,944
61,188
7,455
8,707
3,313
Adjusted EPS (Rs)
5.16
5.31
2.02
Revenue growth (%)
28.3%
82.3%
42.5%
Adjusted profit growth (%)
169.4%
16.8%
-61.9%
ROCE
10.7%
9.4%
6.3%
ROE
23.8%
16.1%
3.0%
Adjusted P/E (x)
12.18
11.84
31.11
P/BV (x)
2.2
1.8
1.8
EV/EBITDA (x)
15.4
12.7
13.9
494
FY13E
77,967
6,626
4.04
27.4%
100.0%
11.8%
9.5%
15.56
1.7
8.6
FY14E
87,705
6,778
4.13
12.5%
2.3%
12.1%
10.5%
15.21
1.5
7.5
Company Data
Shares O/S (mn)
Market cap (Rs mn)
Market cap ($ mn)
Price (Rs)
Date Of Price
Free float (%)
NIFTY
Exchange Rate
Fiscal Year End
1,640
103,078
1,915
62.85
05 Nov 12
23.3%
1.86
104.57
5,697.70
53.81
Mar

21 November 2012
Adrian Mowat
(852) 2800-8599
JSW Energy Ltd.: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBITDA Margin
EBIT
% change Y/Y
EBIT Margin
Other income
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
Net income
% change Y/Y
Adjusted profit
% change Y/Y
Shares outstanding
EPS
% change Y/Y
Adjusted EPS
% change Y/Y
Balance sheet
Net fixed assets
CWIP
Investments
Cash and bank balances
Net current assets ex-cash
Miscellaneous
Total Assets
Total Debt
Paid-up common stock
Reserves and surplus
Shareholders' fund
Deferred tax liability
Minority interests
Total Liabilities
BVPS (Rs)
Cash flow statement

FY11
42,944 61,188 77,967 87,705 87,249 EBIT
82.3% 42.5% 27.4% 12.5% (0.5%) Depreciation & Amortization
15,641 14,478 25,011 27,330 26,837 Tax
28.9%
-7.4% 72.8%
9.3%
-1.8% Other income
36.4% 23.7% 32.1% 31.2% 30.8% Decrease in WC
12,973
9,444 18,528 19,859 19,152 Operating CF
20.4%
NM 96.2%
7.2%
NM
30.2% 15.4% 23.8% 22.6% 22.0% Capex
1,332
1,466
1,242
644
812 Change in investments
-4,325 -7,172 -9,253 -11,177 -10,413 Investing CF
9,979
3,738 10,516
9,326
15.0% -62.5% 181.3% -11.3%
2.4%
-1,563
-419 -3,448 -2,095 -2,116 Change in equity
15.7% 11.2% 32.8% 22.5% 22.2% Change in debt
8,416
1,701
5,637
6,778
6,986 Other financing activities
12.9% -79.8% 231.5% 20.2%
3.1% Financing CF
8,707
3,313
6,626
6,778
6,986 Change in cash
16.8% -61.9% 100.0%
2.3%
3.1% Opening cash
1,640
1,640
1,640
1,640
1,640 Closing cash
5.13
1.04
3.44
4.13
4.26
(0.6%) (79.8%) 231.5% 20.2%
3.1%
5.31
2.02
4.04
4.13
4.26
2.9% -61.9% 100.0%
2.3%
3.1%
Ratio Analysis
FY11
64,214 109,450 135,082 136,193 128,508 Revenue growth
70,518 36,702 16,006 11,638 17,958 EBITDA growth
4,842
4,971
6,088
6,088
6,088
9,779
6,686
2,951
6,336
8,540 PAT growth
3,077 -18,653 -7,130 -8,021 -7,979 EPS growth
0
0
0
0
0
152,600 151,975 167,260 167,196 168,811 EBITDA margin
93,227 92,897 102,889 96,551 91,686
16,401 16,401 16,401 16,401 16,401
40,364 40,600 45,281 51,103 57,133 Sales/GFA (x)
56,765 57,001 61,682 67,504 73,533 GFA/Equity (x)
1,562
1,292
1,465
1,465
1,465 Debt/Equity (x)
724
500
943
1,396
95,112 94,475 104,636 98,297 93,433 ROE (%)
ROCE (%)
34.61
34.76
37.61
41.16
44.84
FY11
12,973
2,668
-1563
1,332
-11,802
3,317
FY12
9,444
5,033
-419
1,466
21,730
35,642
FY13E FY14E FY15E

18,528 19,859 19,152
6,483 7,471 7,685
-3448 -2095 -2116
1,242
644
812
-11,522
891
-42
10,293 26,770 25,491
-21,806 -16,471 -11,420 -4,213 -6,320

-12,303 -16,600 -12,536 -4,213 -6,320
-18,489 19,171 -1,126 22,556 19,171
4,423 -13,675
0
0
0
14,526
-330 9,993 -6,339 -4,864
-6,232 -8,129 -11,485 -12,832 -12,103
12,717 -22,134 -1,492 -19,171 -16,967
3,730 -3,093 -3,735 3,385 2,204
6,048 9,779 6,686 2,951 6,336
9,779 6,686 2,951 6,336 8,540
FY11
82.3%
28.9%

42.5% 27.4% 12.5% (0.5%)
-7.4% 72.8%
9.3% -1.8%
12.9% -79.8% 231.5%

(0.6%) (79.8%) 231.5%
20.2%
20.2%
3.1%
3.1%
36.4%
19.5%
31.2%
12.1%
30.8%
11.7%
23.7%
48.2%
32.1%
14.5%
0.31
0.40
0.49
0.52
0.52
2.69
2.67
2.71
2.48
2.30
1.64
1.63
1.67
1.43
1.25
147.0% 151.2% 162.0% 133.6% 113.1%
16.1%
3.0%
9.5% 10.5%
9.9%
9.4%
6.3% 11.8% 12.1% 11.6%
495
Adrian Mowat
(852) 2800-8599

21 November 2012
Liberty Holdings
Underweight
www.liberty.co.za
Company overview
Liberty is a specialist life insurance company servicing the affluent and the middle
class in a mature industry. Its in-force policies are predominantly unit linked regular
premium savings products. Its sales are mostly intermediated.
South Africa
Life Insurance
Investment case
LBH is focused on the retail affluent market and sells almost exclusively through
brokers. This market segment is exposed to relentless competitive forces, regulatory
risk and economic conditions. This market segment is over-penetrated and has led the
decline in volumes in SA life insurance (SA Life insurance penetration has reduced
from 16% to 9% the past decade). LBHs tight capital position and low margins on
asset-geared liabilities pose Solvency II risks in our view. The non-life businesses EV
carrying values are demanding in our view, also reducing upside potential in the priceto-EV rating. LBHs new life business does not generate excess returns given its IRR
of 11%. The ROEV is low despite debt, insurance and operational gearing.
Price: 10,000c

Aggressive accounting, low levels of tangible capital, debt gearing and low-margin
asset-geared business expose LBH to market weakness. Its cost overruns of c.R300m
relative to EV assumptions could deteriorate if growth and markets disappoint.
Francois Du Toit
AC
(27-11) 507 0378

J.P. Morgan Equities Ltd

10,500
10,000
9,500
c 9,000
8,500
8,000
7,500
Nov-11
Abs
Feb-12
YTD
20.9%
May-12
1m
-2.5%
Aug-12
Nov-12
3m
4.3%
12m
22.8%
Source: Bloomberg.

The earnings are geared to market performance through low-margin life savings
products, 90:10 profit share products, high beta asset management businesses, negative
reserves, debt and corporate costs.
Our target price is based on our SOTP valuation and the risk discount rate to the target
price date. Our fair value is our current CAPM-based SOTP value.
Risks to our view: Changes in the mix of products sold, intermediary remuneration,
increased pricing and improved persistency could improve new business profitability
although we already allow for margins to improve towards LBH's targets. 2. Strong
markets 3. Improving lapse rates.
Liberty Holdings Ltd (LBHJ.J;LBH SJ)
FYE Dec
Adj. EPS FY (c)
Headline EPS FY (c)
Gross Yield FY
NAV FY (R mn)
Headline P/E FY
P/NAV FY
Embedded value FY (R mn)
2011A
930.80
930.80
480.00
4.8%
13,636
10.7
2.1
28,639
496
2012E
1,104.47
1,104.47
500.00
5.0%
14,898
9.1
1.9
31,108
2013E
950.27
950.27
500.00
5.0%
16,084
10.5
1.8
33,354
Company Data
Price (c)
Date Of Price
Price Target (c)
52-week Range (c)
Mkt Cap (R bn)
Shares O/S (mn)
Free Float
10,000
02-Nov-12
8,400
01 Aug 13
10,363 - 7,649
28.4
284
45.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Liberty Holdings Ltd: Summary of Financials

FY10
Gross Life
1,059
% change Y/Y
(203.0%)
Gross Asset Management
380
% change Y/Y
(6.4%)
Gross Debt costs
(129)
% change Y/Y
0.0%
Gross Other
290
% change Y/Y
52.6%
Gross Operating profit
1,439
% change Y/Y
-331.0%
Shareholder investment income
995
% change Y/Y
42.8%
Basic Earnings before tax
2,596
% change Y/Y
1823.5%
Tax
Minorities
Net basic earnings
% change Y/Y
Balance sheet
FY10
Shareholder Funds
14,481
Cash
4,060
Fixed Interest
2,384
Equities and Property
3,500
Asset Management Companies 5,153
Listed Subsidiaries
0
Debt
-2,000
Other
-616
Value of In Force Business
Value of New Business
Policyholder Assets
Cash flow statement

FY12E FY13E FY14E R in millions, year end Dec
1,181
885
911 Shares Outstanding
286.0 286.0 283.5 283.9 284.3
11.5% (25.0%) 2.9%
397
501
560 Basic EPS
907.67 930.80 1104.47 950.27 986.42
(5.3%) 26.2% 11.8%
% change Y/Y
1823.7% 2.5% 18.7% (14.0%) 3.8%
(129) (129) (129) DPS
455.00 480.00 500.00 500.00 500.00
0.0% 0.0% 0.0%
% change Y/Y
0.0% 5.5% 4.2% 0.0% 0.0%
392
412
433
17.1% 5.0% 5.0% Payout Ratio
50.1% 51.6% 45.3% 52.6% 50.7%
1,578 1,386 1,471 NAV/Share
4,363.7 4,768.5 5,254.5 5,664.8 6,092.5
6.7% -12.1% 6.1% EV/Share
9,100.7 10,015.0 10,971.6 11,747.0 12,553.6
1,314 1,050 1,053
34.3% (20.1%) 0.3% ROE
19.1% 18.4% 20.2% 16.1% 15.6%
3,155 2,719 2,828 RONAV
22.4% 21.3% 23.1% 18.3% 17.6%
18.5% -13.8% 4.0% ROEV
10.8% 10.2% 11.0% 8.7% 8.5%
Ratio Analysis
FY11 FY12E FY13E FY14E R in millions, year end Dec
15,636 16,898 18,084 19,323 Key Ratios
4,562 1,592 1,683 1,794 Debt to NAV ratio
(16.0%) (14.7%) (13.4%) (12.4%) (11.5%)
3,292 6,313 6,646 7,082 Value of New Business to EV
1.1% 1.6% 1.8% 1.9% 1.9%
2,397 3,525 3,798 4,124 Life Op'g margin on Assets
0.6% 0.5% 0.6% 0.4% 0.4%
5,853 6,029 6,619 7,098 AM Cost income ratio
56.1% 55.6% 55.2% 54.6% 54.7%
0
0
0
0
-2,000 -2,000 -2,000 -2,000 Life as % of Embedded Value
86.0% 84.4% 85.5% 85.0% 85.0%
-467 -561 -662 -775 Non Life as % of Embedded Value
0.0% 0.0% 0.0% 0.0% 0.0%
Banking as % of Embedded Value
0.0% 0.0% 0.0% 0.0% 0.0%
13,549 15,003 16,210 17,269 18,371 Asset Management as % of Embedded Value 19.8% 20.4% 19.4% 19.8% 19.9%
Debt as % of Embedded Value
(7.7%) (7.0%) (6.4%) (6.0%) (5.6%)
261.0 410.0 516.1 589.5 636.6 Other as % of Embedded Value
3.6% 2.6% 2.1% 1.6% 1.2%
197,031 208,565 236,627 256,955 279,290
FY11
1,059
(0.0%)
419
10.3%
(129)
0.0%
335
15.5%
1,478
2.7%
979
(1.7%)
2,663
2.6%
-
497
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
www.longfor.com
Company overview
Longfor Properties (960.HK) is a property developer primarily focused on residential.
Longfor is particularly good at developing low-density products, and the quality of its
products is also well-recognized. The company is primarily based in Chongqing and
Beijing, and has exposure in other wealthy cities such as Shanghai, Hangzhou and
Chengdu. Longfor is controlled by its largest shareholder Ms. Wu Yajun, who is also
the Chairlady of the company. She is active in Longfors daily management.
China
Property
Price: HK$14.08
Investment case
Due to the aggressive landbanking exercise in 2012, we think Longfor should see
decent growth in sales in 2013. However, as for other developers, we expect its margin
to continue its downtrend as prices are still lower than trough in 4Q2011. Overall we
expect Longfors operation to grow in line with its peers in 2013.
Longfor has invested in some highly competitive areas over the past few years which
harmed its returns. Longfor is good at developing low-density, high-end product.
However, in the current market, home buyers are highly price-sensitive and not so
willing to pay a premium for better quality products. If the market remains flat in 2013,
we think Longfor will remain at a disadvantage due to its higher development costs,
without being able to make up the higher cost through higher sales price.
Ryan Li, CFAAC

(852) 2800 8529
ryan.lh.li@jpmorgan.com
Bloomberg JPMA RLI <GO>
Limited
15
13
HK$ 11
9
7
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
60.4%
40.5%
1m
17.3%
11.2%
3m
26.6%
14.3%
12m
42.8%
30.8%
Source: Bloomberg.

Sales volume and price are the key variables, and policy risk is the key factor that could
impact them. Other earnings risks include potential slippage due to construction delay,
and potential cost hike due to increase in materials or labour costs.
Our Jun-13 PT of HK$11.70 is based on 9x 2012/13E average P/E, at the high end of
the range we use for mid-cap developers due to Longfors well balanced business
model which yields high returns, and its diversified landbank. We are Neutral as we
think the valuation looks full. A key downside risk is potential roll-out of austerity
measures. A key upside risk is stronger-than-expected growth in tier 1/2 cities.
Longfor Properties Co. Ltd. (Reuters: 0960.HK, Bloomberg: 960 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
15,093
24,093
30,078
Net Profit (Rmb mn)
4,130
6,328
5,597
Core Profit (Rmb mn)
2,047
4,396
5,139
EPS (Rmb)
0.80
1.22
1.06
Core EPS (Rmb)
0.396
0.849
0.975
Core EPS growth (%)
21.7%
114.6%
14.9%
DPS (Rmb)
0.10
0.17
0.20
ROE
14.6%
23.2%
20.1%
P/E (Core)
28.8
13.4
11.7
P/BV (x)
3.7
2.7
2.1
BVPS (Rmb)
3.10
4.26
5.37
RNAV/Share (HK$)
18.88
Dividend Yield
0.9%
1.5%
1.7%
498
FY13E
42,992
6,189
6,189
1.14
1.136
16.4%
0.23
19.5%
10.0
1.8
6.32
2.0%
FY14E
51,789
7,205
7,205
1.32
1.322
16.4%
0.26
19.3%
8.6
1.5
7.42
2.3%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
3M - Average daily volume
HSI
Exchange Rate (HK$/US$)
Fiscal Year End
5,427
61,770
9,858
14.08
02 Nov 12
24.0%
14.90
178.15
20.89
21,822
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Longfor Properties Co. Ltd.: Summary of Financials

Revenues
% change Y/Y
EBIT
% change Y/Y
EBIT margin (%)
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Core net profit
% change Y/Y
EPS (reported) (Rmb)
% change Y/Y
Core EPS (Rmb)
% change Y/Y
Balance Sheet
Accounts receivable
Inventories
Others
Current assets
FY11
24,093
59.6%
8,444
93.7%
35.0%
-62
8,706
92.0%
-3,866
44.4%
6,328
53.2%
4,396
114.8%
5,155
1.22
53.1%
0.85
114.6%
FY12E
30,078
24.8%
9,572
13.4%
31.8%
63
9,834
12.9%
-4,101
41.7%
5,597
-11.5%
5,139
16.9%
5,427
1.06
(13.1%)
0.98
14.9%
FY13E
42,992
42.9%
12,711
32.8%
29.6%
80
13,419
36.5%
-6,583
49.1%
6,189
10.6%
6,189
20.4%
5,427
1.14
6.9%
1.14
16.4%
FY14E
51,789
20.5%
15,849
24.7%
30.6%
160
16,589
23.6%
-8,638
52.1%
7,205
16.4%
7,205
16.4%
5,427
1.32
16.4%
1.32
16.4%
FY11
14,121
3,344
594
50,717
68,776
FY12E
16,530
3,568
794
63,203
84,095
FY13E
22,755
3,746
953
60,426
87,880
FY14E
30,438
3,934
1,144
52,517
88,032
LT investments
8,389
9,302
Net fixed assets
20,095
20,914
Total Assets
97,260 114,311
Liabilities
ST Loans
3,580
7,221
Payables
Others
47,002
49,163
50,582
56,384
Long-term debt
15,646
18,425
Other liabilities
6,937
7,604
Total Liabilities
73,165
82,413
21,941
29,150
BVPS
4.26
5.37
9,308
24,577
121,766
12,707
50,064
62,771
12,718
8,571
84,060
34,311
6.32
Cash Flow Statement

EBIT
Others
FY11
8,444
27
4,486
-2,370
8,349
FY12E
9,572
33
5,085
-1,810
9,554
FY13E
12,711
75
9,668
-3,491
14,055
FY14E
15,849
145
11,431
-3,316
17,520
Capex
Disposal/(purchase)
Net Interest
Free cash flow
-32
-11,014
-2,424
-188
-15,393
-5,624
-234
-7,210
7,474
-234
-3,548
0
Other
Dividends paid
Beginning cash
Ending cash
DPS (Rmb)
0
6,822
566
-706
9,863
14,121
0.18
2,515
6,420
0
-902
14,121
16,530
0.20
0
-221
0
-1,028
16,530
22,755
0.23
0
-5,707
0
-1,238
22,755
30,438
0.27
Ratio Analysis
%, year end Dec
EBIT Margin
Operating margin
Net margin
SG&A/Sales
FY11
35.0%
26.3%
-
FY12E
31.8%
18.6%
-
FY13E
29.6%
14.4%
-
FY14E
30.6%
13.9%
-
59.5%
59.6%
53.2%
53.1%
137.63
12.4%
23.3%
0.29
4.43
23.2%
22.7%
22.7%
24.8%
-11.5%
(13.1%)
16.6%
31.3%
0.28
3.92
20.1%
20.0%
38.2%
42.9%
10.6%
6.9%
4.5%
7.8%
0.36
3.55
19.5%
22.2%
20.5%
20.5%
16.4%
16.4%
-17.9%
-26.6%
0.42
3.12
19.3%
26.5%

9,309 Sales growth
125,842 EPS growth
51,824 Sales/assets
12,718 ROE
9,881 ROCE
81,424
40,278
7.42
499
Adrian Mowat
(852) 2800-8599

21 November 2012
LSR
Underweight
lsrgroup.ru
Price Target: $5.30
Company overview
LSR is one of the leading developers and building materials producers in Russia. Its
operations are concentrated in St. Petersburg, Moscow, Moscow regions and the Urals.
A distinct feature of the business model is vertical integration the company produces
construction materials (cement, concrete, bricks) for its own needs and for third parties,
acts as a construction company and develops high end and mass market properties.
Russia
Property
Price: $4.85
AC
(7-495) 967-3888
Investment case
LSR outperformed the Russian market in 2012 (+45% ytd vs. +4% for MSCI Russia)
on the ongoing recovery of the real estate market. Notably, the shares remain a source
of beta, outperforming during market rise and underperforming in the downturns. We
do not see company-specific catalysts that would justify further outperformance. On
our more conservative estimates LSR trades on premium multiples, leaving
fundamentals-oriented investors little upside. We thus recommend taking profits ahead
of possible earnings downgrades by the sell-side (our forecasts are c.30% below Bberg
consensus).
6.0
5.5
5.0
$ 4.5
4.0
3.5
3.0
Nov-11
Abs

In 2013 we expect real estate market growth rates to slow as property prices have
reached pre-crisis highs and affordability may suffer, meaning more competition
among developers in the most lucrative geographies (Moscow region, St. Petersburg).
Feb-12
YTD
44.6%
May-12
Aug-12
1m
-3.5%
Nov-12
3m
16.1%
Source: Bloomberg.

LSR plans to make up for lost market share in 2013, which may require margin
sacrifices, in our view. Besides, the increasing share in the mix of projects at early
stages of completion will likely mean lower profitability, we expect.
We use an SOTP valuation to arrive at a PT for LSR: the companys business segments
are valued using 10-year DCF models (16% COE, 13.3% WACC, 3% terminal growth
rate) and the result is adjusted for the present value of inter-segment eliminations and
unallocated expenses, net debt and minority interest. We derive a Dec-13 PT of
$5.30/GDR for LSR. Key upside risks to our rating and target price are higher than
expected sales volumes, prices and margins in LSRs business segments (real estate
and building materials/aggregates), and a lower effective tax rate (we assume 30% in
the model).
LSR Group (LSRGq.L;LSRG LI)
FYE Dec
2011A
Adj. EPS FY ($)
0.15
EBITDA FY ($ mn)
345
EBITDA margin FY
19.5%
84
FY ($ mn)
Adj P/E FY
31.5
EV/EBITDA FY
10.8
ROE FY
4.8%
FCF Yield FY
-0.1%
2012E
0.23
415
21.3%
119
2013E
0.35
462
20.9%
181
2014E
0.43
510
18.2%
223
2015E
0.51
554
18.6%
267
21.3
9.0
6.4%
-3.6%
14.0
8.1
8.2%
4.8%
11.3
7.3
9.2%
13.2%
9.5
6.7
9.9%
11.8%
500
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
4.85
02-Nov-12
5.30
31 Dec 13
6.00 - 2.99
2.5
515
12m
8.3%

21 November 2012
Adrian Mowat
(852) 2800-8599
LSR: Summary of Financials

in $mn
Revenue
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares Outstanding
EPS (reported)
% change Y/Y
Balance sheet
in $mn
Accounts receivable
Inventories
Other
Current assets
LT investments
Net fixed assets
Total assets
FY11A
FY12E
FY13E
FY14E
1,766
1,945
2,210
2,804
7.4% 10.1% 13.6% 26.9%
499
580
686
805
15.9% 16.2% 18.4% 17.3%
345
415
462
510
20.6% 20.3% 11.5% 10.3%
267
295
374
417
29.5% 10.4% 26.8% 11.4%
(140)
(128)
(120)
(103)
127
168
254
315
54.6% 32.0% 51.7% 23.6%
(44)
(50)
(76)
(94)
(34.9%) (30.0%) (30.0%) (30.0%)
84
119
181
223
44.0% 41.9% 51.7% 23.6%
515.2
515.2
515.2
515.2
0.16
0.23
0.35
0.43
44.0% 41.9% 51.7% 23.6%
161
505
1,758
5
2,429
92
1,511
3,940
21
581
1,874
5
2,482
92
1,666
4,148
43
676
2,140
5
2,864
92
1,670
4,534
126
612
2,085
5
2,828
92
1,674
4,502
ST loans
87
250
Payables
987
977
Others
10
10
1,084
1,237
Long term debt
1,122
1,000
Other liabilities
58
58
Total liabilities
2,265
2,296
1,676
1,852
250
1,136
10
1,396
900
58
2,354
2,180
200
1,133
10
1,343
700
58
2,102
2,400

in $mn
2,985 Net Income
887 Revaluation gain
554 Other
456
9.2% Capex
(80) Disposals/ (purchase)
376 Free cash flow
19.4%
(113) Equity raised/(repaid)
(30.0%) Debt raised/(repaid)
267 Other
0.52 Ending cash
19.4% DPS
in $mn
224 Gross Margin
635 EBITDA Margin
2,123 EBIT margin
5 Adjusted net profit margin
2,987 SG&A/Sales
92 Sales growth
1,676 EBITDA growth
Adjusted EPS growth
200
1,442 Net debt to Equity
500 Sales/assets
58 Assets/equity
2,000 ROE
2,663 ROCE

84
83
-5
104
-2
263
119
83
0
(53)
-2
148
181
88
(52)
-3
214
223
93
117
-3
430
267
99
38
-4
399
(266)
0
(3)
(238)
(90)
(92)
121
(96)
333
(101)
298
0
0
0
0
0
191
-50
-100
-250
-200
(70)
0
0
0
0
0
0
1
2
3
45
163
23
47
134
163
23
47
134
238
28.2% 29.8% 31.1% 28.7% 29.7%
19.5% 21.3% 20.9% 18.2% 18.6%
15.1% 15.2% 16.9% 14.9% 15.3%
4.5%
6.0%
8.1%
7.9%
8.8%
-13.4% -14.6% -14.1% -13.8% -14.4%
7.4% 10.1% 13.6% 26.9%
6.4%
20.6% 20.3% 11.5% 10.3%
8.6%
36.4% 47.9% 51.7% 23.6% 19.4%
36.4% 47.9% 51.7% 23.6% 19.4%
1.9
26.6%
62.5%
0.4
2.4
4.8%
9.2%
2.3
29.6%
66.3%
0.5
2.2
6.4%
10.1%
3.1
24.4%
50.8%
0.5
2.1
8.2%
11.9%
4.1
17.2%
32.2%
0.6
1.9
9.2%
13.2%
5.7
10.2%
17.9%
0.6
1.8
9.9%
14.1%
501
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.meralco.com.ph
Price Target: PhP225.00
Company overview
Manila Electric Company (Meralco) is the Philippines largest electricity distribution
utility, with a customer base of over 5 million that covers the franchise area of Metro
Manila and some of the surrounding provinces. It is also planning to go into power
generation, with an initial 1,500 MW of capacity.
Philippines
Property
Price: PhP268
Gilbert Y LopezAC
(632) 878 1188
Investment case
As a distribution utility having a stable to declining distribution tariff set for the next
three years under the current regulatory period, we forecast Meralco to have relatively
slow earnings growth. We believe that the strong volumes thus far this year are
unlikely to be sustained, as part of this was due to the base effect (2011 volumes were
unusually low due to weather). We forecast a 3% growth in volumes in 2013E, in line
with historical average, leading to an unspectacular net profit growth of 7%.
J.P. Morgan Securities Philippines Inc.

320
300
Php
280
260
240
220
Nov-11

Meralco is a well managed company, but we believe structurally is not equipped for
strong growth for 2013E. This is an industry issue, and investors have a lot of other
alternatives for exposure in the relatively good growth story that the Philippines offers.
Feb-12
May-12
Aug-12
Nov-12
MER.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
5.1%
-19.3%
1m
-3.2%
-3.2%
3m
0.7%
-1.7%
12m
8.9%
-17.1%
Source: Bloomberg.

The key upside risk for 2013E is an acceleration of robust volume growth. This can be
possible with a very strong economic expansion where the country sets new highs in
terms of its recent normal growth trajectory of between 4-6% for GDP. However we
assign a low risk to GDP surprising above 6%, as our forecast in fact is below the low
end of this range.
Our Dec-13 PT of PhP225 is based on DCF, which uses a WACC of 10%, discounting
its FCF until 2015 after which we have incorporated a terminal value. We have
incorporated the tariff rates approved by the ERC relevant until 2015. Keys risks are: 1)
much stronger sales volume growth; and 2) an improvement in the regulatory
environment.
Manila Electric Company (Reuters: MER.PS, Bloomberg: MER PM)
FY09A
FY10A
FY11A
FY12E
Revenue (Php mn)
178,686
239,077
253,989
255,983
Net Profit (Php mn)
6,005.0
9,685.0
13,283.6
17,270.1
EPS (Php)
5.39
8.69
11.92
15.50
DPS (Php)
2.53
5.55
8.85
5.96
Revenue growth (%)
-3.6%
32.8%
4.6%
0.8%
EPS growth (%)
112.8%
61.3%
37.2%
30.0%
ROCE
13.5%
20.4%
31.8%
31.2%
ROE
10.3%
15.6%
21.8%
26.9%
P/E (x)
49.7
30.8
22.5
17.3
P/BV (x)
4.9
4.7
5.1
4.3
EV/EBITDA (x)
0.2
-0.1
-0.6
-0.9
Dividend Yield
0.9%
2.1%
3.3%
2.2%
502
FY13E
273,156
18,388.3
16.50
7.75
6.7%
6.5%
30.0%
24.6%
16.2
3.7
-1.2
2.9%
FY14E
291,612
18,352.3
16.47
8.25
6.7%
-0.2%
27.3%
21.6%
16.3
3.3
-1.6
3.1%
Company Data
Shares O/S (mn)
Market cap (Php mn)
Market cap ($ mn)
Price (Php)
Date Of Price
Free float (%)
PSE
Exchange Rate
Fiscal Year End
1,127
302,063
7,314
268.00
07 Nov 12
10.0%
0.41
108.98
2.43
5,437
41.30
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Manila Electric Company: Summary of Financials

Profit & Loss statement
Revenues
Balance sheet
Share capital
Reserves & Surplus
Minorities
Long-term debt
- Customer deposits
- Other Non-current liabilities
- Total Non-current liabilities
-7,367 Property, plant and equipment
Investments & advances to associates
34,618 Goodwill
35,110
27,744 Current assets
Cash and Bank balances
-3,179 Accounts receivable
2,208 Other current assets
27,106 Current liabilities
0 Accounts Payables
-8,196 Current portion of debt
18,352.3 Others
-558 Total Assets
Ratio Analysis
FY14E Php in millions, year end Dec
11.9% EBITDA (excl. Associates)
9.4% Associate earnings
6.7% Less: Net Interest
-0.2% Less: Tax
Less: Change in working capital
8.25 Capital Expenditure
50.1% Investments
80.43 Free cash flow
0.18
-61.9% Repayment of debt
21.6% Dividends paid to shareholders
27.3% Equity raised / write-offs / others
36.17 Cash flow from financing
Exchange rate
Movement in Net debt/Net cash
FY10
239,077 253,989 255,983 273,156 291,612
Purchased Power
Admin & O&M costs
Cost of Generated Power
Cost of services
Depreciation
-6,219
-5,504
-6,775
-7,079
EBITDA (excl. Associates)
21,251
31,415
33,036
34,587
Total EBITDA
EBIT
22,999
16,780
32,059
26,555
33,639
26,864
35,140
28,061
Interest expenses
Interest income
Earnings before tax
Non-recurring income
Tax
Profit after tax
Less: Minority Interest
Balance sheet
EBITDA margin
Operating margin
Sales growth
Net profit growth
-493 -1,445 -3,616 -3,312

1,719 2,264 1,835 2,003
14,437 19,642 25,416 27,085
0
0
0
0
-4,320 -5,939 -7,685 -8,190
9,685.0 13,283.6 17,270.1 18,388.3
-432
-419
-461
-507
FY10
9.4%
6.8%
32.8%
61.3%
FY11
12.5%
10.3%
4.6%
37.2%
FY12E
13.0%
10.4%
0.8%
30.0%
FY13E
12.7%
10.2%
6.7%
6.5%
No of shares - year end

Recurring EPS
DPS
1,115
5.55
63.9%
1,115
8.85
74.3%
1,115
5.96
38.5%
1,115
7.75
47.0%
BVPS
Debt / Equity
Net debt to equity
ROE
ROCE
EBITDA/Net Interest
56.70 52.57 62.51 71.72

0.33
0.42
0.28
0.22
-5.2% -33.7% -44.6% -54.0%
15.6% 21.8% 26.9% 24.6%
20.4% 31.8% 31.2% 30.0%
- 18.89 26.84
FY10
11,273
25,079
63,196
15,498
49,132
61,066
FY11
11,273
19,771
58,591
19,816
48,482
80,406
FY12E
11,273
30,399
69,668
17,816
42,084
78,595
FY13E
11,273
40,153
79,928
15,816
45,168
78,223
FY14E
11,273
49,311
89,644
13,816
48,494
77,973
111,608 107,996 101,340 102,115 102,315

55,757
24,370
25,609
3,735
54,706
49,132
178,968
77,424
44,141
29,108
2,500
53,042
48,482
192,039
84,388
50,862
29,337
2,500
44,084
42,084
192,347
96,585
60,978
31,305
2,500
47,168
45,168
205,319
109,177
71,333
33,420
2,500
50,494
48,494
218,111

21,251 31,415 33,036 34,587 34,618
169 1,365
-391 1,003 1,090
20,358 31,167 32,280 26,910 27,299
-8,510 -8,343 -7,796 -7,287 -7,000
-110
-251
-500
-500
-500
-6,292 -6,816 -8,296 -7,787 -7,500
11,848 22,824 24,484 19,623 20,299
-2,407 3,304 -4,560 -2,000 -2,000
-6,187 -9,866 -6,642 -8,635 -9,194
0
0
0
0
0
-6,764 -4,580 -17,263 -9,007 -9,444
7,302 19,771 6,721 10,116 10,355
503
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
Marfrig
Price: R$10.55
www.marfrig.com.br
End Date: Dec 2013
Company overview
Marfrig (MRFG3) has moved from being a Brazilian beef player with $5bn annual
revenues in 2009 to becoming a $12bn revenue company in just three years solely via
acquisitions. It is today the second largest beef player after JBS in Brazil and is also the
countrys largest poultry and pork player after Brasil Foods. It is also the largest
poultry producer in the UK.
Brazil
Key drivers of underperformance going forward

The asset swap with Brasil Foods seemed positive for Marfrig as well as cattle/beef
price trends in YTD2012. Yet, high working capital needs plus interest expenses have
not led to any FCF so far. In 2013, we believe its unlikely that a major trend reversal
of this situation would take place. This plus the fact that Marfrig is highly leveraged at
~5x net debt/EBITDA (including the R$2.5bn convertibles) should continue to hinder
its earnings growth. Also, although new equity issuance may lead to a reduction in
debt, it would likely be earnings dilutive in the near term. Net net, we see limited
positive catalysts for MRFG3 to outperform the sector.
How much of the bad news is already been priced in?

MRFG3 is up +15% year to date despite negative earnings so far, and it is currently
trading at 6.7x EV/EBITDA for 2013E. If commodity prices continue to surge, cattle
prices rise faster than beef, and working capital further deteriorates, then Marfrig may
continue to face speed bumps in its deleveraging process. Another year of negative
FCF might trigger another round of underperformance for the stock, in our view.
Food, Beverage and Tobacco

Alan Alanis AC
(1-212) 622-3697
alan.alanis@jpmorgan.com
12
R$
10
8
6
Nov-11
Feb-12
May-12
Aug-12
Nov-12
MRFG3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Where could earnings surprise come from in 2013?

Upside could come from the sustainment of the current high level of beef margins;
reduction in working capital leading to consistent quarters of FCF generations. Other
risks would be from positive tax rates, further weakening of the real, and lower
commodity prices. Also lifting tariffs would be a key upside risk.
We use a DCF-derived PT for Marfrig, which shows no upside
Using 3% perpetuity growth and WACC of 12.6%, our DCF model indicates a Dec 13
PT of R$10 for MRFG3, implying ~10% downside. Some risks to our relative
skepticism would be as mentioned above, fluctuations in commodity prices, improving
export demand, or a rise in its interest rates, which impacts its financial expenses.
Marfrig Frigorificos e Comercio de Alimentos SA (MRFG3.SA;MRFG3 BZ)
2011A
2012E
EBITDA (R$ mn)
FY
1,774
2,143
Revenue FY (R$ mn)
21,885
23,752
EV/EBITDA (x) FY
8.8
7.3
P/E (x) FY
NM
77.3
ROCE FY
7.3%
16.9%
1,504
1,947
mn)
504
2013E
2,231
26,344
7.0
56.8
5.2%
2,273
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Market Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
10.55
14 Nov 12
12.65-6.30
3,816.82
Dec
347
10.00
31-Dec-13
Adrian Mowat
(852) 2800-8599

21 November 2012
Marfrig: Summary of Financials

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
EBITDA
Other income/(expense)
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
Accounts receivable
Inventories
Current assets
PP&E
Total assets
Total debt
Total liabilities
D&A
Other
Capex
Free cash flow
Dividends
FY11A FY12E FY13E FY14E Income Statement - Quarterly

21,885 23,752 26,344 28,895 Revenues
(17,794) (19,488) (21,577) (23,732) Cost of goods sold
3,143
3,458
3,882
4,192 Gross profit
(2,317) (2,122) (2,535) (2,630) SG&A
(948)
(806)
(885)
(970) D&A
826
1,337
1,346
1,562 Operating income
1,774
2,143
2,231
2,533 EBITDA
(2,103) (1,635) (1,244) (1,388) Other income / (expense)
(1,277)
(298)
102
174 Pretax income
530
336
(35)
(61) Income taxes
(743)
49
67
112 Net income - GAAP
(743)
49
67
112 Net income - recurring
347
347
347
347 Diluted shares outstanding
(2.14)
0.14
0.19
0.32 EPS - GAAP
(2.14)
0.14
0.19
0.32 EPS - recurring
FY11A FY12E FY13E FY14E Ratio Analysis
3,477
3,891
3,669
3,778 Sales growth
1,303
1,473
1,562
1,713 EBITDA growth
3,238
3,661
3,957
4,424 EPS growth
1,341
1,516
1,608
1,763
9,359 10,541 10,795 11,678 Gross margin
7,095
7,344
7,289
7,272 EBIT margin
23,824 25,244 25,567 26,526 EBITDA margin
Tax rate
10,603 11,663 11,530 11,753 Net margin
17,925 19,502 19,809 20,714
5,734
5,620
5,636
5,690 Net debt / EBITDA
Net debt / capital (book)
(747)
49
67
112
948
806
885
970 Return on assets (ROA)
(78)
(102)
(266)
(271) Return on equity (ROE)
(4)
(12)
1
1 Return on invested capital (ROIC)
(270)
(203)
795
898
(938)
(823)
(830)
(954)
954
1,731
867
845
(1,488)
(308)
(870)
(994)
1,359
925
(146)
204
0.00
0.00
0.04
0.06
1Q12A 2Q12A 3Q12E 4Q12E

5,233A 5,818A 6,159 6,542
(4,429)A (4,965)A (5,289) (5,610)
803A
853A
870
932
(579)A
(286)A
(590)
(667)
224A
568A
280
265
224A
568A
280
265
(250)A
(846)A
(316)
(145)
(25)A
(279)A
(35)
120
54A
288A
0
(6)
34A
16A
(35)
114
34A
16A
(35)
114
347A
347A
347
347
0.10A
0.04A (0.10)
0.33
0.10A
0.04A (0.10)
0.33
FY11A
FY12E FY13E FY14E
37.8%
8.5% 10.9%
9.7%
20.9%
20.8%
4.1% 13.5%
(608.6%) (106.6%) 36.1% 66.1%
14.4%
14.6%
3.8%
5.6%
8.1%
9.0%
(41.5%) (112.7%)
(3.4%)
0.2%
401.7%
44.7%
(3.2%)
(12.3%)
7.3%
14.7%
5.1%
8.5%
33.7%
0.3%
14.5%
5.4%
8.8%
35.2%
0.4%
362.7% 352.3% 314.9%

46.2% 45.6% 46.1%
0.2%
0.9%
16.9%
0.3%
1.2%
5.2%
0.4%
2.0%
5.9%

505
Adrian Mowat
(852) 2800-8599

21 November 2012
Mobile Telesystems
Underweight
www.mtsgsm.com
Company overview
MTS is Russias leading mobile operator (both by revenue and number of subs). While
the operator has telecom exposure in Ukraine and a few other CIS countries, a lions
share of revenues is still generated in Russia. In mid-2012 MTS received FDD
nationwide LTE licenses in Russia and already launched LTE in Moscow via TDD
technology. The operator rapidly expanding a fixed-line business across the country
and has the third-largest handset distribution chain in Russia.
Russia
Russian Media
Investment case
We like MTS's operating performance and FCF generation, but we are UW on the
stock as we think the operator may face regulatory and competitive headwinds in early
2013. With the upcoming IPO of Megafon we think many current MTS shareholders
may choose to divide their Russian exposure, which is likely to weigh on MTS shares
in the coming months.
Price: $17.04
Alexei GogolevAC
(7-495) 967 1029
alexei.gogolev@jpmorgan.com
Bloomberg JPMA GOGOLEV<GO>
21
19
$ 17
15
13

We forecast MTS to offer defensive characteristics of c6% dividend yield and steady
growth prospects of 5% top-line CAGR in RUB terms during 2011-14E. Our estimates
for 2012 are broadly inline with both management guidance and Bloomberg consensus.
Additionally we think that the operator's ability to drastically reduce capex as a share of
sales remains questionable as MTS enters a new stage of an LTE network roll-out.
Nov-11
Abs
Feb-12
YTD
11.8%
May-12
Aug-12
1m
-1.1%
Nov-12
3m
-11.2%
12m
14.5%
Source: Bloomberg.

Key upside risk for MTS shares include better macro conditions, beneficial regulatory
changes, and improving dividend payout. Additionally we think that continued benign
competition and further market repair may result in re-rating of MTS shares. Key shortterm catalyst would also include resumption of Uzbek operations and
delay/cancellation of the Megafon IPO.
Our end-13 (recurring FCF-yield based) PT (ex-div) is $20.5/ADR. Our price target is
derived using a 2013E recurring FCF yield of 11% since this is approximately the
average multiple that mature peers in Western Europe trade on.
Mobile Telesystems (MBT;MBT US)
FYE Dec
Adj. EPS FY ($)
EV/EBITDA FY
EV/Revenue FY
Revenue FY ($ mn)
EBITDA FY ($ mn)
EBITDA margin FY
EBIT FY ($ mn)
DPS (Net) FY ($)
2011A
1.40
5.3
2.2
12,319
5,144
41.8%
2,809
1.20
506
2012E
1.57
5.3
2.3
12,123
5,131
42.3%
2,811
1.01
2013E
1.66
5.2
2.2
12,391
5,169
41.7%
2,795
1.40
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
Free Float
17.04
02-Nov-12
20.50
31 Dec 13
20.11 - 13.27
17.6
1,033
35.0%

21 November 2012
Adrian Mowat
(852) 2800-8599
Mobile Telesystems: Summary of Financials

Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Balance sheet
ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
FY11
12,319
9.1%
5,144
8.6%
41.8%
2,809
2.7%
22.8%
719
2,099
1.6%
1,444
4.6%
1033.0
1.40
4.6%
1.20
FY11
1,851
868
86
1,032
3,838
3,319
8,205
15,362
1,156
856
1,553
3,565
7,554
548
11,667
3,695
Cash flow statement

FY12E FY13E FY14E FY15E $ in millions, year end Dec
12,123 12,391 13,130 13,935 Cash EBITDA
-1.6%
2.2%
6.0%
6.1% Interest
5,131 5,169 5,496 5,870 Tax
-0.3%
0.7%
6.3%
6.8% Other
2,811 2,795 3,061 3,428
0.1% -0.6%
9.5% 12.0% Capex PPE
23.2% 22.6% 23.3% 24.6% Net investments
731
749
721
733 CF from investments
2,184 2,292 2,591 2,961 Dividends
4.0%
4.9% 13.1% 14.3% Share (buybacks)/ issue
1,623 1,713 1,938 2,215
12.4%
5.5% 13.2% 14.3% CF to Shareholders
1033.0 1033.0 1033.0 1033.0 FCF to debt
1.57
1.66
1.88
2.14
12.4%
5.5% 13.2% 14.3% OpFCF (EBITDA - PPE)
1.01
1.40
1.57
Ratio Analysis
FY12E FY13E FY14E FY15E $ in millions, year end Dec
824
842
892
947 EBITDA margin
822
852
916
986 EBIT Margin
783
801
848
971 1,017 1,091 1,254 Capex/sales
3,399 3,511 3,747 4,087 Depreciation/Sales
3,276 2,585 2,337 2,146
8,548 9,139 9,565 9,884 Revenue growth
15,223 15,236 15,650 16,118 EBITDA Growth
1,105 1,105 1,105 1,105 EPS Growth
815
833
691
719
1,401 1,859 1,970 2,090 Net debt/EBITDA
3,320 3,796 3,765 3,914 CF to Shareholders
7,576 7,154 7,214 6,957 FCF to debt
547
559
592
629
11,443 11,509 11,571 11,499 OpFCF (EBITDA - PPE)
3,780 3,726 4,079 4,619 EFCF pre Div, PPE
FY11
5,144
(594)
(532)
9
9,171
FY12E
5,131
(495)
(491)
(132)
9,145
FY13E
5,169
(503)
(550)
399
9,683
FY14E
5,496
(470)
(622)
(169)
9,730
FY15E
5,870
(467)
(711)
(84)
10,479
(2,807)
128
(2,679)
(1,240)
297
(2,737)
250
(2,487)
(1,040)
0
(2,614) (2,573)
250
250
(2,364) (2,323)
(1,444) (1,623)
0
0
(2,532)
250
(2,282)
(1,713)
0
(943)
405
(1,040)
486
(1,444) (1,623)
707
289
(1,713)
614
2,337
1,348
2,394
1,526
2,555
2,151
2,922
1,911
3,338
2,326
FY11
41.8%
22.8%
11.7%
22.8%
0.2
FY12E
42.3%
23.2%
13.4%
22.6%
0.2
FY13E
41.7%
22.6%
13.8%
21.1%
0.2
FY14E
41.9%
23.3%
14.8%
19.6%
0.2
FY15E
42.1%
24.6%
15.9%
18.2%
0.2
9.1%
8.6%
4.6%
-1.6%
-0.3%
12.4%
2.2%
0.7%
5.5%
6.0%
6.3%
13.2%
6.1%
6.8%
14.3%
1.3
(943)
405
1.4
(1,040)
486
1.3
1.2
(1,444) (1,623)
707
289
1.1
(1,713)
614
2,337
1,348
2,394
1,526
2,555
2,151
2,922
1,911
3,338
2,326
507
Adrian Mowat
(852) 2800-8599

21 November 2012
New World Resources
Underweight
www.newworldresources.eu
Price Target: 260p
Company overview
NWR owns and operates underground coal mines in the Czech Republic, with
production roughly 50/50 split between coking coal and thermal coal. NWR produced
11.2Mt in 2011 and is targeting 11-11.1Mt of production in 2012. NWR also owns a
coke plant with a capacity of ~850ktpa, with coke sales guidance in 2012 of ~600kt.
UK &European
Mining & Metals
Price: 267p
Investment case
On our base case coking and thermal coal price assumptions, we forecast only a small
uplift in NWRs EBITDA margins in FY13E to 21% versus our estimate of 19% for
FY12E. However, based on current spot hard coking and thermal coal prices, we
estimate NWRs FY13E EBITDA margins would fall to just 6% in FY13 and the
company would be loss-making at the net earnings level. Long-term valuation metrics
also weigh against in the stock we calculate an end 12E P/NPV of 2.16x.
Even in a benign growth environment, we doubt that coking coal prices will retrace to
the historically high levels of 2011 and early 2012. We still see the company as
relatively uncompetitive in the context of the global coking coal industry due to (i) the
poorer quality of its product mix, with only 53% of output falling into the coking
category in 2013E, and within that only 50% of its coking coal product ranking in-line
with seaborne hard-coking coal specifications (according to our estimates); (ii) a lack
of near-term production growth to offset rising costs; (iii) lower growth in NWRs
stranded Central European end-markets, which in our view has resulted in the ~1020/t discount to equivalent sea-borne coking coal prices in recent quarterly settlements.
Roger BellAC
(44-20) 7134-5932
roger.m.bell@jpmorgan.com
Bloomberg JPMA BELL<GO>
J.P. Morgan securities plc
550
500
450
p 400
350
300
250
Nov-11
Abs
Feb-12
YTD
-45.2%
May-12
Aug-12
1m
-1.3%
Nov-12
3m
-9.7%
12m
-47.0%
Source: Bloomberg.

Upside earnings risks for NWR include a stronger than expected recovery in global
and/or regional economic growth, coking coal supply disruptions, or curtailments in
thermal coal supply. Downside risks are the inverse of the above.
We value NWR using near-term multiples v. global coal peers. We use a target 2014E
multiple of 4.1x EV/EBITDA, c. 20% below the global coal peer group median, as
NWRs higher cash cost structure and absence of near-term growth are only partially
offset by a higher dividend yield, in our opinion. We then remove net debt, provisions
and employee benefit obligations to derive our end Dec-13E price target of 2.60.
Risks to our UW call include further migration of steel capacity from western to
eastern Europe, further consolidation of the regional coal industry, and more regular
repricing of thermal coal volumes (currently struck annually).
New World Resources (NWRS.L;NWR LN)
FYE Dec
2011A
Adj. EPS FY ()
0.47
Adj P/E FY
7.1
Revenue FY ( mn)
1,632
EBITDA FY ( mn)
454
EBITDA margin FY
27.8%
Adj EBITDA FY ( mn)
454
27.8%
Bloomberg EPS FY ()
0.59
508
2012E
0.07
49.2
1,364
256
18.8%
256
18.8%
0.01
2013E
0.15
22.1
1,454
307
21.1%
307
21.1%
0.11
Company Data
Price (p)
Date Of Price
Price Target (p)
52-week Range (p)
Mkt Cap ( bn)
Shares O/S (mn)
267
02 Nov 12
260
31 Dec 13
571 - 247
0.7
274

21 November 2012
Adrian Mowat
(852) 2800-8599
New World Resources: Summary of Financials

Revenues
% Change Y/Y
Gross Margin (%)
EBITDA
% Change Y/Y
EBITDA Margin (%)
EBIT
% Change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
Tax as a % of BT
% change Y/Y
EPS (Reported) - $
% Change Y/Y
Balance sheet
Accounts Receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
BVPS - $
FY10
FY11 FY12E FY13E
1,590 1,632 1,364 1,454
42.4%
2.7% -16.5% 6.6%
29.4% 27.8% 18.8% 21.1%
468
454
256
307
161.5% -3.0% -43.5% 19.9%
29.4% 27.8% 18.8% 21.1%
298
278
80
131
4810.5% -6.7% -71.3% 64.0%
18.7% 17.0%
5.8%
9.0%
(115)
(89)
(53)
(72)
255
187
26
59
-542.2% -26.7% -85.8% 122.8%
(31)
(57)
(8)
(17)
16.9% 30.3% 29.0% 29.0%
236
129
19
42
-485.1% -45.6% -85.5% 122.8%
276.5 275.7 274.4 274.4
0.59
0.47
0.07
0.15
(330.7%) (20.7%) (85.6%) 122.8%
FY10
529
198
56
0
783
FY11 FY12E FY13E

537
415
463
203
176
187
93
112
76
7
7
7
839
709
733
0
296
2,258
0
320
2,374
0
399
2,286
0
413
2,310
24
205
41
270
835
20
1,449
809
3
122
219
65
406
815
27
1,621
753
3
122
185
65
372
808
27
1,550
736
3
122
192
65
379
794
27
1,543
768
3
Cash flow statement

1,551 EBIT
23.9% Change in working capital & Other
371 Taxes
23.9%
194 Capex
48.5% Disposals/(purchase)
12.5% Net Interest
(68) Free cash flow
126
89 Other
113.6%
0.32 Ending cash
113.6% DPS
Ratio Analysis
493 EBITDA margin (%)
200 Operating margin (%)
79 Net margin (%)
7 SG&A/Sales
778
0 Sales growth (%)
431 Attributable net profit growth (%)
2,359 EPS growth (%)
384 Sales/assets (x)
27 ROE
1,534 ROCE
825
3
FY10
298
170
(48)
9
420

278
80
131
194
176
177
177
177
(72)
(35)
21
(18)
(56)
(38)
(17)
(37)
382
222
329
353
(219)
125
(51)
159
(194)
1
(57)
75
(210)
0
(53)
(79)
(168)
0
(72)
72
(172)
0
(68)
76
0
-200
(56)
0
0
77
(141)
0
0
-7
(35)
0
0
-14
(10)
0
0
-14
(33)
0
548
529
0.00
529
537
0.00
537
415
-
415
463
-
463
493
-
FY10
29.4%
23.3%
14.9%
-

27.8% 18.8% 21.1% 23.9%
16.9%
5.8%
9.0% 12.5%
7.9%
1.4%
2.9%
5.7%
-
36.2%
2.9% -16.1% 6.6%
6.7%
42.4%
2.7% -16.5% 6.6%
6.7%
-485.1% -45.6% -85.5% 122.8% 113.6%
(330.7%) (20.7%) (85.6%) 122.8% 113.6%
2.6
3.1
1.5
1.8
2.9
29.0% 34.7% 41.2% 37.1% 33.2%
-40.8% -53.2% -69.9% -59.0% -49.7%
0.7
0.7
0.6
0.6
0.7
2.8
3.2
3.1
3.0
2.9
23.9% 16.6%
2.5%
5.5% 11.2%
22.1% 19.6%
5.3%
8.8% 12.9%
509
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
NII Holdings
Price: $4.94
www.nii.com
Company overview
NII Holdings (NIHD) provides wireless push-to-talk services in Latin America using
an iDen network, and recently it started to implement and ramp-up a new infrastructure
based on 3G. NIHDs largest operations are in Brazil and Mexico, and the company is
also present in Argentina, Peru, and Chile. The company has a niche approach focusing
on high-end postpaid users.
Brazil
LatAm TMT
(55-11) 4950-3427

Deterioration in the client base, margin pressure, and leverage should be the key drivers
of performance in 2013, in our view, as NIHD is facing a tough competitive
environment coupled with high expenses related to its 3G launch. We expect 2013 to
be a tough year for the shares as the first positive results from new 3G network should
appear in 2014.
30
25
$
20
15
10
5
Nov-11
Despite a 70% decline in share price, NIHD still trades in line with its five-year
historical EV/EBITDA multiples (1yr fwd) given contraction in reported and expected
EBITDA as competitive intensity is driving prices down and increasing disconnection
rates, while implementation of the 3G network is generating expenses that still have no
associated revenues.
Feb-12
May-12
Aug-12
Nov-12
NIHD share price ($)

RTY (rebased)
Source: Bloomberg.

There is significant earnings volatility in NIHDs earnings projections for 2013 given
declining revenue trends and difficulties to reduce costs as the company struggles to
maintain its current iDen operations in a very competitive environment, especially in
Brazil, while at the same time ramping up its 3G operations.
Key recovery risks
NIHD might surprise to the upside if a successful implementation of 3G takes place
and the company is able to regain traction in mobile net adds. Also, lower competitive
intensity in the high-end postpaid segment in Brazil might help to halt revenue erosion
t th
NII Holdings Inc. (NIHD;NIHD US)
FYE Dec
2011A
EPS FY ($)
1.15
1.52
Revenues FY ($ mn)
6,719
EBITDA FY ($ mn)
1,558
EBITDA Margin FY ($)
23%
P/E FY
5.0
2012E
(1.74)
(1.17)
6,104
942
15%
NM
510
2013E
(1.54)
(0.87)
5,990
978
16%
NM
2014E
(1.48)
(0.46)
6,095
1,118
18%
NM
2015E
(2.03)
6,166
1,134
18%
NM
Company Data
Price ($)
Date Of Price
52-week Range ($)
Mkt Cap ($ mn)
Fiscal Year End
Shares O/S (mn)
Div. Yield
Debt/Total Capital
4.94
12 Nov 12
24.49 - 5.65
988.60
Dec
172
0.0%
50.4%
Adrian Mowat
(852) 2800-8599

21 November 2012
NII Holdings: Summary of Financials

Income Statement
Net Revenue
Cash Costs
EBITDA
EBITDA margin
Depreciation and Amortisation
EBIT
Net interest expense
Other nonoperating income
EBT
Taxes
Minority interest
Extraordinary
Net Income
Adj. Net Income
Shares Outstanding
EPS
Adj. EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth
Capex
Free Cash Flow Equity
Dividends/Share
Consolidated Dividends
Share buybacks
Capex/Depreciation
Capex/Sales
Working capital
Net income margin
FY11A
FY12E FY13E FY14E FY15E
6,719
6,104
5,990
6,095
6,166
(5,161)
(5,162) (5,012) (4,977) (5,032)
1,558
942
978
1,118
1,134
23%
15%
16%
18%
18%
(653)
(713)
(806)
(951) (1,048)
905
229
172
166
87
(288)
(318)
(303)
(309)
(322)
(37)
(29)
(24)
(24)
(24)
542
(159)
(159)
(148)
(242)
(343)
(141)
(106)
(106)
(106)
0
0
0
0
0
199
(300)
(264)
(254)
(348)
199
(299)
(264)
(254)
(348)
173
172
172
172
172
1.15
(1.74)
(1.54)
(1.48)
(2.03)
1.15
(1.74)
(1.54)
(1.48)
(2.03)
20.0%
(9.2%) (1.9%)
1.8%
1.2%
8.9% (39.5%)
3.7% 14.3%
1.5%
(41.7%) (251.0%) (11.9%) (4.0%) 37.2%
578.1%
19.5% (52.3%) (22.8%) (63.5%)
Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other Assets
Total assets
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority interest
Net Debt
Adj. Net Debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
Valuation, Macro
EV/EBITDA
Adj. P/E
P/BV
FY11A
(1,454)
(1,450) (1,200) (1,214)
(925)
200
(198)
(0)
(0)
(0)
(1050.56) (1254.95) (598.54) (462.13) (168.76)
0.00
0.00
0.00
0.00
0.00
0.0%
0.0%
0.0%
0.0%
0.0% FCF yield
0
0
0
0
0 Dividend yield
0
0
0
0
0 ROE
2.2
2.0
1.5
1.3
0.9
Net revenue/Assets
21.6%
23.8% 20.0% 19.9% 15.0%
Assets/Equity
109
307
307
307
307
1.6%
5.0%
5.1%
5.0%
5.0% ROIC
3.0%
(4.9%) (4.4%) (4.2%) (5.6%) Shares
ADRs
Lines in Service
0
0
0
0
0
Broadband Subs
0.0
0.0
0.0
0.0
0.0
Broadband Net Adds
0
0
0
0
0 WACC
Mobile Subs
10,712
11,404 12,386 13,325 14,409 Perpetual Growth
Mobile Net Adds
1,684
692
982
940
1,084 Cost of equity
Mobile ARPU
48
39
35
33
31 Cost of debt
Mobile MOU
0
0
0
0
0 Subsidiary Share
PayTV subs
0.0
0.0
0.0
0.0
0.0
Fx, Avg
1.00
1.00
1.00
1.00
1.00
Quarterly Data
1Q12A
2Q12A 3Q12A 4Q12E
Quarterly Data
Revenue
Revenue
Net Income
Net Income
EPS
EPS
FY11A
2,666
858
0
780
3,482
2,020
9,807
573
378
1,152
4,253
320
6,676
0
3,131
9806.89
2,160
2,160
22.0%
49.2%
1.4
FY11A
2.1
5.0
0.4

1,273
614
98
(128)
0
0
0
0
0
0
0
0
1,651
1,702
1,732
1,752
4,173
4,567
4,830
4,707
2,116
2,116
2,116
2,116
9,213
9,000
8,776
8,448
211
211
211
211
0
0
0
0
1,344
1,395
1,425
1,445
4,429
4,429
4,429
4,429
421
421
421
421
6,405
6,456
6,486
6,506
0
0
0
0
2,808
2,544
2,290
1,942
9212.98 9000.02 8776.04 8448.18
3,367
4,026
4,542
4,767
3,367
4,026
4,542
4,767
36.5% 44.7% 51.8% 56.4%
50.4% 51.6% 52.9% 54.9%
3.6
4.1
4.1
4.2
4.8
5.3
5.1
5.2
(3.3)
(3.7)
(3.9)
(2.8)
0.4
0.5
0.5
0.6
(89.9%) (108.2%) (51.6%) (39.8%) (14.5%)

0.0%
0.0%
0.0%
0.0%
0.0%
6.3% (10.7%) (10.4%) (11.1%) (17.9%)
0.7
0.7
0.7
0.7
0.7
3.1
3.3
3.5
3.8
4.4
7.1%
173
173
1.2%
172
172
0.9%
172
172
0.9%
172
172
1Q13E
-
2Q13E
-
3Q13E
-
4Q13E
-
(0.3%)
172
172
511
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
OdontoPrev
Price: R$10.85
odontoprev.riweb.com.br/en/
End Date: Dec 2013
Company overview
OdontoPrev is Brazils leading dental care organization. The company has the largest
dentist network in the country and is the result of the merger of Bradesco Dental and
OdontoPrevs existing network.
We are cautious on OdontoPrev in light of the market share losses in 2012 as well as
main fundamental risks that put its business model at risk, including (1) pressure from
dentists to raise prices of services rendered; (2) protests from unions that are
complaining that the overuse of X-rays can lead to cancer. X-rays are one of the ways
OdontoPrev audits claims and one of its main competitive advantages to reduce costs.
ODPV is still trading at 29.3x 2013E P/E, 20% premium to healthcare peers in Brazil,
despite the deceleration in EPS growth. We forecast a 2012-15 EPS CAGR of 16% for
the company against 26% average for peers, which is unattractive.
Brazil
Latin American Retail and
Healthcare
Andrea Teixeira, CFA
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
Bloomberg JPMA TEIXEIRA <GO>
12
11
R$
10
9
8
7
Nov-11
Feb-12
May-12
Aug-12
Nov-12
ODPV3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

There is significant volatility in ODPV costs as well as the rate of sales growth.
We rate OdontoPrev Underweight and have a R$12 PT for Dec 2013. Our PT is based
on a 10- year discounted free cash flow to equity at an 11.3% discount rate (nominal
reais) and perpetuity growth of 6.0%. Key upside risks: 1) if ODPV is able to reaccelerate growth in 2013, (2) control the hike in costs, and (3) seal an accretive deal
with Banco do Brasil, initially announced in August 2011.
OdontoPrev (ODPV3.SA;ODPV3 BZ)

FYE Dec
Adj. EPS (R$)
FY
2011A
2012E
2013E
0.30
0.30
0.32
0.33
0.37
0.41
Source: Company data, Bloomberg, J.P. Morgan estimates. * Adj. P/E includes goodwill tax shield
512
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
10.85
14 Nov 12
12.38 - 7.70
5,908.00
Dec
531
12.00
31 Dec 13

21 November 2012
Adrian Mowat
(852) 2800-8599
OdontoPrev: Summary of Financials

Income Statement
Revenues
Cost of Services
SG&A
EBIT Margin
Depreciation
EBITDA
EBITDA margin
Financial income
Financial expense
Equity income
Taxes
Minority interest
Extraordinary
Adjusted Net Income
Net income margin
Technical Reserve Provisions
Goodwill Amortisation
Adj.EPS
Revenue growth
EBITDA growth
Net income growth
FCF growth
FY11A
835
(416)
(216)
180
21.6%
6
208
24.9%
26
(8)
0
(1)
(51)
40
13
158
18.9%
14
0.30
19.7%
35.5%
(33.3%)
-
FY12E
958
(456)
(235)
240
25.0%
6
243
25.4%
20
(9)
0
(0)
(73)
(7)
1
172
17.9%
0
29
0.32
14.6%
16.9%
8.8%
-
FY13E
1,093
(510)
(271)
282
25.8%
7
287
26.2%
16
(9)
0
0
(86)
(8)
195
17.8%
0
28
0.37
14.1%
17.8%
13.6%
-
FY14E
1,266
(584)
(314)
334
26.4%
10
340
26.8%
20
(9)
0
0
(105)
(9)
231
18.2%
0
28
0.43
15.8%
18.5%
18.2%
-
FY15E
1,452
(667)
(358)
388
26.7%
12
394
27.2%
22
(9)
0
0
(124)
(10)
266
18.3%
0
14
0.50
14.7%
16.0%
15.5%
-

Capex
Free cash flow
Dividends
Capex/depreciation
CAPEX/sales
Working capital

7
11
12
12
13
0
11
0
(0)
(1)
157
176
214
256
280
62
186
195
231
266
39.4% 108.3% 100.0% 100.0% 100.0%
1.1
2.0
1.6
1.2
1.1
0.8%
1.2%
1.1%
1.0%
0.9%
(24)
(12)
(12)
(12)
(14)
(2.9%) (1.3%) (1.1%) (1.0%) (0.9%)
Adjusted MLR
Dental Plan Members ('000)
Total Membership ('000)
% of Individual Plans/Total
Market Share
Average Ticket (R$/month)
Capex
48.2%
5,533
5,533
32.5%
7
47.3%
5,948
5,948
31.7%
11
46.4%
6,648
6,648
31.7%
12

45.9%
7,348
7,348
31.4%
12
45.7%
8,048
8,049
31.3%
13
Balance Sheet
Cash
Accounts receivable
Inventories
Net PP&E
Other assets
Total assets
Technical Reserves
Short-term debt
Accounts payable
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
Minority Interests
Net debt
Net Debt/Capital
Debt/Capital
Net Debt/EBITDA
Valuation, Macro
Adj.P/E
EV/EBITDA
P/BV
P/S
FCF yield
Dividend yield
ROE
Net income margin
Net revenue/Assets
Assets/Equity
ROIC
Shares
FY11A
208
76
-
FY12E
183
86
-
FY13E
200
98
-
FY14E
220
113
-
FY15E
227
130
-
1
11
181
993
51
0
60
31
0
78
229
764
993
1
10
184
986
58
0
61
28
0
100
257
728
986
1
14
210
1,046
66
0
69
32
0
112
289
757
1,046
2
17
243
1,117
76
0
79
36
0
129
332
785
1,117
2
18
279
1,179
87
0
90
41
0
147
380
799
1,179
(208)
(183)
(200)
(220)
(227)
(27.2%) (25.1%) (26.4%) (28.0%) (28.4%)
0.0%
0.0%
0.0%
0.0%
0.0%
(1.0)
(0.7)
(0.7)
(0.6)
(0.6)
37.4
34.4
30.3
25.6
22.2
27.8
23.6
20.1
17.0
14.6
7.9
8.2
7.9
7.6
7.5
7.2
6.3
5.5
4.7
4.1
2.7%
3.0%
3.7%
4.4%
4.9%
1.1%
3.1%
3.3%
3.9%
4.5%
19.6% 22.9% 26.3% 29.9% 33.6%
18.9% 17.9% 17.8% 18.2% 18.3%
84.1% 97.1% 104.5% 113.4% 123.2%
1.3
1.4
1.4
1.4
1.5
17.4% 22.1% 24.9% 28.2% 31.4%
531
531
531
531
531
513
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
www.palmhillsdevelopments.com
Price Target: E2.10
Company overview
Palm Hills is among the leading listed property developers in Egypt with a market cap
of US$458Mn and 3Mnth ADTV of US$5.4Mn. PHDC is an integrated community
developer focusing on Egypts upper-middle and the high income segment, which
accounts for 14% of the countrys total population base. The company also has a
portfolio of secondary homes. PHDC focuses on lower tenure (4-5yrs); small integrated
community projects, allowing it to carry out multiple projects at the same time.
Egypt
Price: E2.67
Investment case
We remain Neutral on PHDC despite attractive valuations as we believe that the
potential risk of refinancing still remains high with the companys focus on Egypts
upper middle and high income segment. With delay in collections and customer
cancellations, PHDC closed 1H12 with a cash balance of EGP45Mn. During 1H12
although new sales (contracts & reservations) came in at EGP672Mn, cancelations
continued at EGP797Mn, more than offsetting the jump in new unit sales. Given this,
we see continued refinancing risk with a potential funding gap of EGP400-500Mn with
expected capex of EGP1Bn and any possible delays in collections from sold units if the
rate of cancellations remains at the current pace.
We believe that the risk-reward balance is now unfavorable for PHDC with the stock
up 140% YTD and potential refinancing risks still on the horizon.
Muneeza Hasan
AC
(971) 4428-1766
JPMorgan Chase Bank N.A. Dubai Branch
3.5
3.0
E
2.5
2.0
1.5
1.0
Nov-11
Abs
Feb-12
YTD
145.0%
May-12
1m
-2.6%
Aug-12
Nov-12
3m
32.8%
12m
96.3%
Source: Bloomberg.

Continued sales returns in the absence of any significant macro economic recovery in
Egypt leading to companys inability to refinance debt.
We calculate PHDCs Dec 2013 SOTP based PT of EGP2.1 using 1) DCF for PHDCs
ongoing projects only with clarity on construction details and 2) DCF for the
companys relatively small investment property portfolio. Additionally, we include
EGP1Bn of land bank which sits in the companys investment portfolio at book - 29%
of our SOTP. We exclude the companys un-developed landbank in Egypt and Saudi
Arabia from the companys SOTP and apply a 10% discount to arrive at our Dec 2013.
Upside risks:1) earlier than expected pickup in demand, 2) better than expected
revenue recognition and 3) favorable decision on ongoing land disputes. Downside
risks to PT: 1) further sales returns and 2) PHDCs inability to bridge the funding gap.
Palm Hills Developments SAE (PHDC.CA;PHDC EY)
FYE Dec
2011A
2012E
Adj. EPS FY (E)
(0.32)
0.18
Sales FY (E mn)
572
1,449
Sales growth (%) FY
-68.8%
153.3%
EBITDA FY (E mn)
(400)
484
Net profit FY (E mn)
(331)
191
Net profit growth(%) FY
-162.9%
-157.7%
P/E FY
NM
14.6
P/BV FY
0.8
0.7
Net D/E FY
22.4%
6.0%
2013E
0.30
2,000
38.0%
608
310
62.2%
9.0
0.7
0.3%
Source: Company data, Bloomberg, J.P. Morgan estimates. PHDC freefloat is 35%.
514
2014E
0.59
3,165
58.2%
965
614
97.9%
4.6
0.6
-5.7%
Company Data
Price (E)
Date Of Price
Price Target (E)
52-week Range (E)
Mkt Cap (E bn)
Mkt Cap (US) ($ bn)
Shares O/S (mn)
3Mnth Avg daily value
(US$ MM)
2.67
01 Nov 12
2.10
31 Dec 13
3.42 - 1.04
2.8
0.5
1,048
3.28
Adrian Mowat
(852) 2800-8599

21 November 2012
Palm Hills Developments: Summary of Financials

Sales
% change Y/Y
Gross Profit
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
Net Interest
FY11A
FY12E
FY13E
572
-68.8%
-47
-104.6%
(400)
-153.4%
(420)
-159.5%
73
1,449
153.3%
676
NM
484
-220.9%
435
NM
(131)
2,000
38.0%
838
23.9%
608
25.8%
558
28.3%
(95)
Earning before tax

% change Y/Y
% change Y/Y
-347
-154.5%
(331)
-162.9%
304
-187.7%
191
-157.7%
463
52.2%
310
62.2%
Shares Outstanding
1,048.3
1,048.3 1,048.3
EPS (reported)
-0.32
0.18
% change Y/Y
(162.9%) (157.7%)
Balance sheet
FY11A
FY12E
Bank balance and cash
72
62
Accounts receivable
2,949
3,343
Work in progress
3,514
2,820
Other
53
53
Current assets
6,588
6,279
Property plant and equipment
421
393
investment property
2,393
2,443
Others
2,512
2,467
Total assets
11,914
11,582
ST loans
585
106
Payables
1,478
1,268
Customer Advances
2,271
2,763
Others
859
280
4,399
4,202
Long term debt
1,301
1,037
Total liabilities
7,984
7,423
Minorities
288
288
3,931
4,159
11,914
11,582
0.30
62.2%
FY13E
122
3,341
2,288
53
5,805
364
2,493
2,522
11,183
56
809
3,040
230
3,970
774
6,678
288
4,506
11,183

3,165 Earning before tax
51.6% Other
58.7%
913 Purchase of PE and PUC
63.7% Investment property
(45) Other
868
87.5% Equity raised
97.9% Others
Cashflow from Financing
1,048.3
Change in Cash
0.59 Beginning cash
97.9% Ending cash
245 Gross Margin
2,484 EBITDA Margin
1,365 EBIT margin
4,147 SG&A/Sales
332
2,543 Sales growth
2,912 EBITDA growth
6 Adjusted EPS growth
438
2,075 Interest coverage
2,584 Net debt to Equity
510 Sales/assets
4,778 Assets/equity
288 ROE
5,157 ROCE
9,935
FY11A
FY12E FY13E FY14E
-347
85
111
(42)
(193)
304
49
528
(118)
763
463
51
47
(157)
403
868
52
(195)
(280)
446
(21)
(41)
300
238
(21)
(50)
41
-30
(21)
(50)
41
-30
(21)
(50)
62
-9
0
-92
(2)
-94
0
-743
0
-743
0
-313
0
-313
0
-313
0
-313
-49
2
-47
FY11A
-9
59
123
-47
-56
3
-56
3
126
FY12E FY13E FY14E
-8.2%
-69.9%
-73.4%
NM
40.5%
46.7%
33.4%
30.0%
13.2%
14.0%
41.9%
30.4%
27.9%
15.5%
12.0%
40.1%
30.5%
28.8%
19.4%
10.0%
-68.8%
153.3% 38.0% 58.2%
-153.4% -220.9% 25.8% 58.7%
(162.9%) (157.7%) 62.2% 97.9%
5.8
17.6
109.3%
0.0
3.3
-9.1%
-5.6%
3.3
5.9 20.3
5.5
0.3
-5.6
78.7% 57.5% 34.7%
0.1
0.2
0.3
3.0
2.7
2.0
4.9% 7.4% 12.6%
5.9% 7.7% 12.4%
515
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.parksongroup.com.cn
Company overview
Parkson Retail is one of the few foreign-owned department stores operating in China
since 1994. It targets the middle- to upper-middle-income consumers and focuses on
four segments (% of revenue): Fashion & Apparel (48%); Cosmetics & Accessories
(42%); Household & Electrical (4%); and Groceries & Perishables (7%). Parkson had
48 stores as of June-12 covering 35 cities in China. 90% of gross sales proceeds come
from concessionaire sales.
China
Broadlines/Department Stores
Price: HK$6.90
Investment case
We believe department stores in China are close to the ceiling in terms of their share of
total retail sales and are likely to start losing share to other formats such as malls,
outlets, hypermarkets and e-commerce. We expect department store operators with
differentiated and more high-end positioning to be able to survive the competition, and
we expect the competitive landscape for the likes of Parkson to worsen. We believe
Parkson is entering a second de-rating stage with earnings growth settling around a
low-teen rate. Maintain UW.
We dont expect a major recovery in SSSG but expect it to bottom out in late 2013 and
stay at 6% throughout 2013. In an anemic growth environment we expect
concessionaire rates to be flat in FY13. However we expect the new store openings and
costs related to those to put some pressure on operating margins. We are looking for
13% earnings growth in FY13.
Upside risks to earnings risks for 2013 include 1) lower-than-expected concessionaire
rates, 2) higher new store opening costs, and 3) a slowdown in GDP leading to slowerthan-expected SSSG.
Ebru Sener KurumluAC

(852) 2800-8521
ebru.sener@jpmorgan.com
Bloomberg JPMA KURUMLU <GO>
Limited
11
10
HK$
9
8
7
6
Nov-11
Feb-12
May-12
Aug-12
Nov-12

MSCI-Cnx (rebased)
Abs
Rel
YTD
-27.5%
-41.7%
1m
6.6%
-0.8%
3m
-3.9%
-13.7%
12m
-29.0%
-36.3%
Source: Bloomberg.

Our Jun-13 PT of HK$5.6 is based on 1x PEG and an 11% two-year earnings CAGR
post 2013. Key upside risks include better-than-expected cost control, and better-thanexpected margins and performance at the new stores.
Parkson Retail Group Ltd (Reuters: 3368.HK, Bloomberg: 3368 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
4,400
4,938
5,287
EPS (Rmb)
0.35
0.40
0.38
Recurring EPS (Rmb)
0.35
0.40
0.38
DPS (Rmb)
0.16
0.18
0.19
Revenue growth (%)
12.6%
12.2%
7.1%
8.9%
13.2%
-4.0%
Recurring profit growth (%)
8.9%
13.2%
-4.0%
EPS growth (%)
8.7%
13.2%
-4.0%
ROCE
18.2%
18.3%
16.9%
ROE
23.5%
23.0%
19.5%
ROA
8.4%
9.1%
8.6%
P/E (x)
15.8
13.9
14.5
P/BV (x)
3.5
3.0
2.7
EV/EBITDA (x)
94.7
88.5
94.5
Dividend Yield
2.9%
3.2%
3.4%
516
FY13E
6,002
0.42
0.42
0.21
13.5%
8.5%
8.5%
8.5%
17.2%
19.2%
8.6%
13.4
2.5
85.7
3.7%
FY14E
6,800
0.47
0.47
0.23
13.3%
12.1%
12.1%
12.1%
17.8%
19.5%
8.8%
11.9
2.2
76.8
4.2%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
MSCI-Cnx
Exchange Rate
Fiscal Year End
2,810
15,676
2,502
6.90
08 Nov 12
48.4%
3.90
25.84
3.21
6,154
7.75
Dec
Adrian Mowat
(852) 2800-8599

21 November 2012
Parkson Retail Group Ltd: Summary of Financials

Income Statement
FY10 FY11
Gross Sales
14,106 16,426
Revenues
4,400 4,938
% change Y/Y
12.6% 12.2%
Gross Profit
3,301 3,699
% change Y/Y
15.2% 12.0%
Gross margin
23.4% 22.5%
EBITDA
1,648 1,745
% change Y/Y
10.1% 5.9%
EBITDA Margin
11.7% 10.6%
EBIT
1,468 1,509
% change Y/Y
10.4% 2.8%
EBIT Margin
10.4% 9.2%
Net Interest
-140
9
Share of JVs
0
0
Earnings before tax
1,328 1,519
% change Y/Y
8.5% 14.4%
Minorities
-32
-30
Other income/(exp)
Tax
-304 -366
as % of EBT
22.9% 24.1%
992 1,123
% change Y/Y
8.9% 13.2%
992 1,123
% change Y/Y
8.9% 13.2%
EPS (reported)
0.35
0.40
% change Y/Y
8.7% 13.2%
Recurring EPS
0.35
0.40
% change Y/Y
8.7% 13.2%
Balance sheet
FY10 FY11
5,238 5,103
Accounts receivable
20
14
Inventories
234
278
Others
1,777
725
Current assets
7,269 6,120
Intangible assets
2,172 2,172
Long term investments
53
52
Net fixed assets
2,494 2,683
Other assets
603 1,035
Total Assets
12,591 12,063
Liabilities
Short-term loans
2,620
0
Trade & other payables
1,721 1,982
Others
1,646 1,900
5,987 3,882
Long-term debt
1,615 2,467
Others
400
373
Total Liabilities
8,002 6,722
Minorities
77
73
4,512 5,268
BVPS
1.61
1.88
FY12E
17,691
5,287
7.1%
3,938
6.5%
22.3%
1,633
-6.4%
9.2%
1,349
NM
7.6%
114
0
1,462
-3.7%
-34
-351
24.0%
1,078
-4.0%
1,078
-4.0%
0.38
(4.0%)
0.38
(4.0%)
FY13E
20,033
6,002
13.5%
4,476
13.6%
22.3%
1,794
9.8%
9.0%
1,469
8.9%
7.3%
121
0
1,590
8.7%
-39
-382
24.0%
1,170
8.5%
1,170
8.5%
0.42
8.5%
0.42
8.5%
FY14E
22,906
6,800
13.3%
5,052
12.9%
22.1%
1,990
11.0%
8.7%
1,631
11.0%
7.1%
153
0
1,784
12.2%
-45
-428
24.0%
1,311
12.1%
1,311
12.1%
0.47
12.1%
0.47
12.1%
FY12E FY13E FY14E

5,279 5,912 6,753
14
16
19
233
263
302
630
714
816
6,156 6,905 7,889
2,172 2,172 2,172
51
50
49
3,614 4,054 4,458
1,009
991
973
13,003 14,172 15,542
0
2,181
2,075
4,256
2,467
373
7,096
106
5,801
2.07
0
2,470
2,332
4,802
2,467
373
7,642
145
6,386
2.27
0
2,824
2,647
5,471
2,467
373
8,311
190
7,041
2.51
Cash flow statement

PBT
Tax
Other
FY10
1,328
180
360
-301
112
1,679
Capex
Sale of assets
Acquisition of subsidiaries/intangibles
Other
-435
-389 -1,200
60
5
5
-32
0
0
-1,563
-678
225
-1,970 -1,062
-970
-750
5
0
232
-513
-750
5
0
264
-481
Dividends paid
Other
22
0
1,612
150
-451
-506
-1,306
-816
-145 -1,172
0
0
-539
-111
-650
0
0
-585
-111
-696
0
0
-656
-111
-767
Net change in cash

Ending cash flow
DPS
-436
2,323
0.16
-633
1,690
0.18
176
2,568
0.19
633
3,201
0.21
841
4,042
0.23
FY10
23.4%
11.7%
10.4%
7.0%
7.0%
14.1%
12.6%
8.9%
8.9%
8.7%
-22.2%
0.37
2.40
23.5%
18.2%
FY11
22.5%
10.6%
9.2%
6.8%
6.9%
16.5%
12.2%
13.2%
13.2%
13.2%
-50.0%
0.40
2.29
23.0%
18.3%
FY12E
22.3%
9.2%
7.6%
6.1%
6.8%
7.7%
7.1%
-4.0%
-4.0%
(4.0%)
-48.5%
0.42
2.24
19.5%
16.9%
FY13E
22.3%
9.0%
7.3%
5.8%
6.9%
13.2%
13.5%
8.5%
8.5%
8.5%
-53.9%
0.44
2.22
19.2%
17.2%
FY14E
22.1%
8.7%
7.1%
5.7%
6.9%
14.3%
13.3%
12.1%
12.1%
12.1%
-60.9%
0.46
2.21
19.5%
17.8%
Ratio Analysis
Gross margin
EBITDA margin
Operating margin
Net margin
Recurring net profit margin
Gross Sales growth
Sales growth
Net profit growth
Recurring net profit growth
EPS growth
Net debt to equity
Sales/assets
Assets/equity
ROE
ROCE

1,519 1,462 1,590 1,784
236
284
325
360
226
514
429
526
-366
-351
-382
-428
-14
-114
-121
-153
1,601 1,796 1,841 2,088
517
Adrian Mowat
(852) 2800-8599

21 November 2012
Petkim
Underweight
www.petkim.com.tr
Company overview
Petkim is the sole petrochemicals producer in Turkey, controlling c.25% of domestic
market share. Petkim has a long history and was established in 1965 under state
ownership. The company was under state ownership until 2008 when under
privatization Socar (State Oil Company of Azerbijan) & Turcas acquired a 51% stake
for $2.04bn. More recently, Socar won the state stake sale in an auction for $169m,
ending state ownership in Petkim. The company has a total gross capacity of more than
3mmt.
Turkey
Chemicals
Price: TL2.08
Neeraj KumarAC
(971) 4428-1740
Investment case
Key points are as follows: i) Petkim is a cost disadvantaged producer- The company
uses naphtha/LPG as the primary feedstock which puts the company on the upper half
of the cost curve. Raw material contributes more than c.80% of the total cost for
Petkim, ii) Benefit from additional volumes - we expect Petkim to benefit from
debottlenecking/ongoing efficiency programs and capacity additions which will
increase volumes by c.12% from 2012e-15e. We expect Turkish petrochemicals to
grow by c.7%-8% from 2013e-15e, equivalent to 1.5x the long-term GDP growth rate
of 5%. iii) Premium valuation-trades on 15.7x 2013e P/E vs its peer average of 10.7x.
2.4
TL
2.2
2.0
1.8
Oct-11
Abs
Jan-12
YTD
5.1%
Apr-12
1m
1.5%
Jul-12
Oct-12
3m
2.0%
12m
-14.5%
Source: Bloomberg.

In a soft demand environment, we expect lower product prices which imply relatively
weak spreads and hence lower margins. With a high cost structure it would potentially
translate into a net loss.
Higher than expected product prices which translates into higher spreads, soft end
market demand, higher than expected operating rates.
Valuation Methodology: We use a DCF-based valuation approach to derive our Dec13
PT TRY1.71. Our key assumptions of DCF are as follows: i) terminal growth rate of
3%, ii) weighted average cost of capital of 12.5%.
Risks to Our Price Target and Rating: i) higher than expected product prices; ii) faster
than expected economic recovery especially in Europe; iii) better than expected
contribution from upcoming projects; iv) decrease in cheap imports from ME
PETKIM PETROKIMYA HOLDING AS (PETKM.IS;PETKM TI)
FYE Dec
2011A
2012E
Adj. EPS FY (TL)
0.10
(0.03)
Revenue FY (TL mn)
3,891
4,619
EBIT FY (TL mn)
163
(23)
Net Att. Income FY (TL
102
(30)
mn)
EV/EBITDA FY
11.1
50.6
Adj P/E FY
20.4
NM
EV/Revenue FY
0.6
0.5
FCF Yield FY
-16.6%
-1.8%
518
2013E
0.13
4,817
178
132
9.1
15.7
0.5
-1.2%
Company Data
Price (TL)
Date Of Price
Price Target (TL)
52-week Range (TL)
Mkt Cap (TL bn)
Shares O/S (mn)
2.08
02-Nov-12
1.71
31 Dec 13
2.33 - 1.80
2.1
1,000
Adrian Mowat
(852) 2800-8599

21 November 2012
Petkim: Summary of Financials

Revenues
% Change Y/Y
Gross Margin (%)
% Change Y/Y
EBITDA Margin (%)
% Change Y/Y
EBIT Margin
Net Interest
% change Y/Y
Tax
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Inventories
Others
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Cash flow statement

FY10 FY11
FY12E
FY13E FY14E TL in millions, year end Dec
2,909 3,891
4,619
4,817 4,995 EBIT
- 33.8%
18.7%
4.3% 3.7% Depreciation & amortization
7.9%
4.5%
2.8%
7.1% 7.5%
186
225
47
260
- 20.5% -79.2% 457.6% 15.2% Taxes
6.4%
5.8%
1.0%
5.4% 6.0% Cash flow from operations
127
163
-23
178
210 Capex
- 28.2% -114.2%
NM 17.7% Acquisitions/disposals
4.4%
4.2%
-0.5%
13
(45)
(14)
(13)
(8) Free cash flow
140
118
-37
165
202 FCF (pre - exceptionals)
- -15.8% -131.5% -545.4% 22.1% Equity raised/repaid
(10)
(15)
7
(33)
(7.0%) 13.1%
20.0%
20.0% 20.0% Other
130
102
(30)
132
161 Dividends paid
- -21.7% -129.1%
NM 22.1% Beginning cash
1000.0 1000.0
1000.0
1000.0 1000.0 Ending cash
0.13
0.10
-0.03
0.13
0.16 DPS
0.13
0.10
(0.03)
0.13
0.16
Ratio Analysis
FY10 FY11
FY12E
FY13E FY14E TL in millions, year end Dec
202
145
148
108
127 Market Cap
415
584
554
554
500 Net debt
414
463
462
458
450 EV
75
142
142
160
170
1,106 1,334
1,306
1,279 1,247 EV/Sales
1
1
1
1
1 EV/EBITDA
- EV/EBIT
2,376 2,671
2,731
2,738 2,710 P/E (adjusted EPS)
FCF yield
0
9
8
8
524
516
554
482
500 Dividend Yield
- EPS growth
681
841
867
751
686
7
41
183
176
6
6
6
6
774
968
1,137
1,014
1,600 1,703
1,594
ROIC
FY10
127
(59)

163
(23)
178
210
(62)
(70)
(82)
(90)
(76)
110
(79)
13
(17)
-4
7
0
175
202
-
(228)
(4)
(160)
(45)
(310)
-355
154
0
202
145
-
FY10
2,110
-106
2,004
100
147
(158)
(14)
(11)
-25
50
(60)
145
148
0.06
(145)
116
(115)
(13)
1
-12
0
(65)
148
108
0.07
(140)
160
(95)
(8)
65
57
0
(75)
108
127
0.08

2,350 1,980 1,980 1,980
154
273
261
148
2,504 2,359 2,359 2,359
0.7
0.6
10.7
11.1
15.8
15.4
16.0
20.4
0.3% -16.6%
0.0%
2.4%
NM
0.5
50.6
-102.2
NM
-1.8%
0.06
3.0%
NM
0.5
9.1
13.2
15.7
-1.2%
0.07
3.3%
NM
0.5
7.9
11.2
12.9
2.5%
0.08
3.8%
22.1%
(0.6)
9.9
-6.6%
8.0%
5.9
1.6
17.2%
-1.0%
1.0
13.7
15.1%
7.2%
0.5
26.2
8.4%
8.3%
0.7
3.6
9.1%
7.7%
519
Adrian Mowat
(852) 2800-8599

21 November 2012
PetroChina
Underweight
www.petrochina.com.cn
Company overview
PetroChina is the largest oil company in China and one of the largest globally.
PetroChina is integrated with E&P, R&C, Marketing and pipelines (NGP). In 2011,
crude production was 2.42 mn BOPD and natural gas 1.09 mn BOEPD, refining
throughout was 2.69 mn BOPD, olefin production 7.2 mn tonnes and operated over
40,000 km of pipelines (crude, products and natural gas). PetroChina has SEC proven
reserves of 22.2bn BOE. PetroChina controls around 40% of the petroleum retail
market with 20,000 retail stations, and presence primarily in north and west of China.
China
Integrated Oils
Investment case
PetroChina has had good recent share price performance on expectations of refining
turnaround and gas price hike. While we believe refining turnaround is well under-way
(which should benefit Sinopec more), we do not expect natural gas price de-control to
materialize in 2013. In the absence of price decontrol, the stock trading at 12x 2013PE
(at 30-40% premium to peers) is more than pricing in a one-off price hike.
Price: HK$ 10.54

An anemic growth environment should weigh in on the global crude demand and hence
oil prices, which would impact upstream profit (in 2013 we expect almost 100% of
profits from upstream while the other segments are expected to post losses), only to be
partially offset by improving refining if NDRC actively follows-up on product prices.
Policy driven (and contracted) gas imports volumes should continue to increase
(piped+LNG) and further widen losses in 2013.
Brynjar Eirik BustnesAC

(852) 2800 8578
Limited
11.5
HK$
10.5
9.5
8.5
Nov-11
Feb-12 May-12
Aug-12 Nov-12

HSCEI (rebased)
Abs
Rel
YTD
4.4%
-0.8%
1m
4.2%
-3.9%
3m
11.8%
2.1%
Source: Bloomberg.

Higher-than-expected crude and gas prices pose upside risk to earnings. On the other
hand higher-than-expected upstream cost inflation poses a downside risk.
Dec-13 PT of HK$8.25 is based on 1.1x 2013E BV, which is a 10% discount to
Sinopecs (SNP) valuations at our SNP PT which we believe is justified given Sinopec
is expected to generate higher ROE than PetroChina. Risks are higher oil price, GRMs
in China and upstream operational aspects in China.
PetroChina (Reuters: 0857.HK, Bloomberg: 857 HK)
FY10A
FY11A
Revenue (Rmb mn)
1,465,415
2,003,843
Net Profit (Rmb mn)
139,992
132,961
EPS (Rmb)
0.76
0.73
DPS (Rmb)
0.29
0.35
Revenue Growth (%)
44%
37%
EPS Growth (%)
35%
(5%)
ROCE
17%
15%
ROE
16%
14%
P/E
11.1
11.7
P/BV
1.7
1.5
EV/EBITDA
5.8
5.7
Dividend Yield
3.4%
4.1%
520
FY12E
1,620,582
128,952
0.70
0.32
(19%)
(3%)
13%
12%
12.1
1.4
5.7
3.7%
FY13E
1,582,152
132,805
0.73
0.33
(2%)
3%
12%
12%
11.7
1.4
5.4
3.8%
FY14E
1,608,413
133,520
0.73
0.33
2%
1%
12%
11%
11.6
1.3
5.2
3.9%
Company Data
Market Cap (Rmb mn)
Market Cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
Avg Daily Value (HK$ mn)
HSCEI
Exchange Rate
Fiscal Year End
183,021
1,976,627
316,585
10.54
05 Nov 12
13.3%
126
1,411
182
10,834
7.75
Dec
12m
4.6%
3.5%
Adrian Mowat
(852) 2800-8599

21 November 2012
PetroChina: Summary of Financials
Income Statement
Cash flow statement
FY10
Revenues
1,465,415 2,003,843 1,620,582 1,582,152 1,608,413 EBIT
% change Y/Y
44%
37%
(19%)
(2%)
2% Depr. & amortization
EBITDA
% change Y/Y
28%
6%
3%
4%
2% Taxes
EBIT
% change Y/Y
31%
(3%)
(2%)
(1%)
(0%)
EBIT Margin
13%
9%
11%
11%
11% Capex
Net Interest
-4,338
-8,212
-9,696
-6,767
Earnings before tax
189,305 184,215 178,909 181,030 180,876 Net Interest
% change Y/Y
35%
(3%)
(3%)
1%
(0%) Other
Tax
-38,513 -38,256 -37,154 -37,595 -37,562 Free cash flow
as % of EBT
20.3%
20.8%
20.8%
20.8%
20.8%
% change Y/Y
35%
(5%)
(3%)
3%
1% Debt raised/(repaid)
Shares outstanding
183,021 183,021 183,021 183,021 183,021 Other
EPS (reported)
0.76
0.73
0.70
0.73
0.73 Dividends paid
% change Y/Y
35%
(5%)
(3%)
3%
1% Beginning cash
Ending cash
DPS
Balance sheet
Ratio Analysis
FY10
45,709 61,172 40,226 29,303 73,831 EBITDA margin
Accounts receivable
Inventories
134,888 182,253 147,395 143,900 146,288 Net margin
Others
54,835 72,776 58,937 57,549 58,497
Current assets
286,392 382,711 300,347 283,265 332,002
LT investments
- Sales growth
Net fixed assets
1,238,599 1,372,007 1,520,222 1,595,173 1,653,631 Net profit growth
Total Assets
1,656,487 1,917,586 1,983,437 2,041,307 2,148,501 EPS growth
Liabilities
Short-term loans
102,268 137,698 137,698 117,698 137,698
Payables
Others
57,277 119,740 119,740 119,740 119,740 Sales/assets
429,736 560,038 502,162 476,359 500,324 Assets/equity
Long-term debt
131,352 180,675 220,675 220,675 220,675 ROE
Other liabilities
85,270 94,327 94,327 94,327 94,327 ROCE
Total Liabilities
646,358 835,040 817,164 791,361 815,326
938,926 1,002,745 1,073,668 1,146,711 1,220,147
BVPS
5.13
5.48
5.87
6.27
6.67
FY10
187,777
113,209
31,741
-26169
320,779
FY11
182,461
138,073
1,377
-46379
292,829
FY12E
178,094
151,785
3,542
-37154
306,779
FY13E
176,714
167,193
355
-37595
317,751
FY14E
176,359
175,042
-243
-37562
325,280
-273,681 -291,452 -300,000 -242,145 -233,500

-4,338 -8,212 -9,696 -6,767 -7,167
47,098 1,377 6,779 75,606 91,780
0
52,656
-35,320
-53,198
86,925
45,709
0.29
0
90,619
2,077
-63,300
45,709
61,172
0.35
0
40,000
0
-58,028
61,172
40,226
0.32
0
0
-20,000
-59,762
40,226
29,303
0.33
0
0
20,000
-60,084
29,303
73,831
0.33
FY10
21%
13%
10%

16%
20%
22%
22%
9%
11%
11%
11%
7%
8%
8%
8%
44%
44%
35%
35%
69.38
37%
37%
(5%)
(5%)
39.03
(19%)
(19%)
(3%)
(3%)
34.02
(2%)
(2%)
3%
3%
50.82
2%
2%
1%
1%
49.03
20%
0.94
1.66
16%
17%
26%
1.12
1.72
14%
15%
30%
0.83
1.85
12%
13%
27%
0.79
1.78
12%
12%
23%
0.77
1.76
11%
12%
521
Adrian Mowat
(852) 2800-8599

21 November 2012
PT Indosat Tbk
Underweight
www.indosat.com
Price Target: Rp5,400.00
Company overview
PT Indosat Tbk is a telecommunications and information service provider of cellular
services, fixed data services or MIDI (Multimedia, Internet and Data Communications)
and fixed voice services. It is the second-largest provider of wireless services in
Indonesia, accounting for 18% of the mobile market.
Indonesia
Wireless Services
Price: Rp6,500.00
Investment case
Our analysis shows that ISATs data unit price fell 33% YoY, in line with the 35% fall
implied by EXCLs numbers. We also highlight insufficient incremental revenue to
offset the aggressive network build (+15% YoY) with management guiding for
network utilization over monetization. In addition, this rapid, un-monetized usage ramp
is triggering capex upside. We also note that the stocks recent outperformance has
been driven by multiples re-rating rather than earnings revision.
The recent 3Q12 prints highlight the dual risks to the Indonesian telecom sector caused
by data mis-pricing, namely margin compression and capex upside. Together with
additional margin compression from rising opex (tower leasing fees as well as SMS
interconnect), we see downside risks for the sector for the year ahead, in our view.
Margin compression from escalating opex trends, together with limited pricing power
mark the key risk to the stock in our view. Further inability to monetize incremental
network capacity would also provide further top-line pressure as well. There also lies
upside risk to initial capex guidance. Key upside risk would be through subscriber
additions without price cuts, which would benefit margins given high its operating
leverage.

(65) 6882-2374
james.r.sullivan@jpmorgan.com
Limited
6,500
Rp
5,500
4,500
3,500
Nov-11
Feb-12 May-12
Aug-12 Nov-12
ISAT.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
16.1%
2.3%
1m
9.2%
8.0%
3m
32.0%
27.1%
12m
26.2%
13.9%
Source: Bloomberg.

Our Dec-13 PT of Rp5,400 is based on the sum of 1) potential upside/(downside) to
consensus EPS vs. JPM EPS estimates, and 2) our estimated multiple expansion/
(contraction) based on peak P/E multiple. Potential positive risks would be better then
expected cost savings by leveraging QTel relationships, and an ability to aggressively
ramp subscriber additions without cutting pricing.
PT Indosat Tbk (Reuters: ISAT.JK, Bloomberg: ISAT IJ)
FY10A
FY11A
Revenue (Rp bn)
19,797
20,577
EBITDA (Rp bn)
9,626
9,411
EBITDA growth (%)
9.7%
-2.2%
Recurring profit (Rp bn)
597
1,306
Recurring EPS (Rp)
110
240
EPS growth (%)
(15.3%)
118.5%
DPS (Rp)
59.55
76.98
EV/EBITDA (x)
5.3
5.3
P/E
59.1
27.0
Dividend Yield
0.9%
1.2%
FCF to mkt cap (%)
1.0%
3.6%
522
FY12E
22,698
10,433
10.9%
670
123
(48.7%)
128.19
4.6
52.7
2.0%
2.9%
FY13E
25,382
11,337
8.7%
1,337
246
99.4%
122.96
4.1
26.4
1.9%
6.8%
FY14E
27,145
11,990
5.8%
2,012
370
50.5%
185.10
3.5
17.6
2.8%
14.8%
Company Data
52-wk range (Rp)
Mkt cap (Rp bn)
Mkt cap ($ mn)
Shares O/S (mn)
Free float (%)
3-mth avg trading volume:
JCI
Exchange Rate
Price (Rp)
Date Of Price
7,000 - 3,425
35,321
3,666
5,434
29.9%
3,316,573
1.96
4,334
9,634.00
6,500
09 Nov 12

21 November 2012
Adrian Mowat
(852) 2800-8599
PT Indosat Tbk: Summary of Financials

Revenue
EBITDA
Depreciation
Amortization
EBIT
Interest income
Finance Costs
Other Income/Expenses
Profit before tax
Tax
FY10
19,797
9,626
(6,152)
(226)
3,248
143
(2,272)
(2,166)
1,082
(358)
647
597
FY11
20,577
9,411
(6,581)
0
2,830
82
(1,790)
(1,648)
1,182
(249)
837
1,306
FY12E
22,698
10,433
(8,515)
0
1,919
95
(1,814)
(2,603)
-685
(14)
1,385
670
FY13E
25,382
11,337
(7,921)
0
3,417
84
(1,483)
(1,399)
2,017
(565)
1,337
1,337
5,433
119
110
60
50%
5,435
154
240
77
50%
5,434
255
123
128
50%
5,434
246
246
123
50%
Revenue growth
EBITDA growth
Adj Net profit growth
Adj EPS growth
DPS growth
7.6%
3.9% 10.3%
9.7% (2.2%) 10.9%
(15.3%) 118.6% (48.7%)
(15.3%) 118.5% (48.7%)
(56.8%) 29.3% 66.5%
11.8%
8.7%
99.4%
99.4%
(4.1%)
Ratio Analysis
%, year end Dec
EBITDA margin
FCF margin
ROE
ROC
ROA
Tax rate
Capex to sales
Debt/Capital
Interest cover (x)
FY10
FY11 FY12E FY13E
48.6% 45.7% 46.0% 44.7%
1.7%
6.2%
4.5%
9.5%
3.3%
7.2%
3.6%
6.8%
7.6%
6.8%
4.7%
8.7%
1.1%
2.5%
1.3%
2.8%
33.1% 21.1%
2.1% 28.0%
(32.8%) (29.4%) (31.0%) (29.1%)
57.4% 56.0% 52.3% 46.3%
123.2% 115.3% 98.7% 84.7%
4.5
5.5
6.1
8.1

EPS (Rp) (Reported)
EPS (Adjusted)
DPS (Rp)
DPS payout ratio

27,145 Cash and equivalents
11,990 Accounts receivable
(7,816) Others
0 Total Current assets
4,175
4 ST loans
(1,223) Others
(1,219) Total current liabilities
2,956
(828) Net working capital
2,012
2,012 Net fixed assets
5,434 Total non-current assets
370
370 Total Assets
185
50% Long-term debt
Other liabilities
5.8%
50.5% Shareholders' equity
50.5%
50.5% Total liabilities and equity
Net debt/(cash)
Book value per share
Cash flow statement
19.3% Capex
9.6% Cash flow from other investing
4.1%
28.0% Change in cash for year
(18.3%)
57.6% Closing cash
9.8
FY10
2,075
1,561
2,523
6,159

2,224 2,101
315 4,976
1,446 1,595 1,783 1,907
2,910 3,078 3,317 3,484
6,579 6,773 5,415 10,367
4,282 4,840 6,340 6,340 6,340

7,665 7,112 7,667 8,459 9,010
11,947 11,952 14,007 14,799 15,350
(5,788) (5,373) (7,234) (9,384) (4,983)
43,571 42,573 39,603 39,078 36,231
3,088 3,020 3,020 3,020 3,020
46,659 45,593 42,622 42,098 39,251
52,818 52,172 49,395 47,513 49,618
19,780 18,563 14,848 11,133 11,133
2,855 2,841 2,841 2,841 2,841
34,968 33,810 32,253 29,446 30,113
17,851 18,362 19,329 20,254 21,692
52,818 52,172 51,582 49,700 51,805
21,987 21,179 19,087 17,158 12,497
3,285 3,379 3,557 3,727 3,992
6,839 7,320 8,054 9,811 10,211
(6,495) (6,048) (7,030) (7,396) (4,969)
524
10 1,486
0
0
(1,630) (1,135) (2,633) (4,412) (668)
(761)
150
2,836
2,075
2,075
2,224
(123) (1,996)
4,574
2,224
2,101
105
4,678
2,101
105
PLDT: Price target and valuation analysis

Current consensus P/E (a)
2012E
28.6
2013E
23.8
Peak P/E (b)

Upside/ (Downside) to peak multiple (b/a-1=e)
JPM vs. consensus EPS (d)
17.0
-40.6%
-46.5%
20.0
-16.1%
-11.2%
Sum of EPS and multiple upside/(downside) (e+d)

JPM Dec 2013 price target (Rp/sh)
-87.2%
-27.3%
5,400
523
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.ril.com
Company overview
RIL is a conglomerate with interests in refining, petrochemical, E&P, retail and
infrastructure development. RIL is one of Indias largest companies by market cap, and
is a dominant player in the domestic petrochemical market. It has refining capacity of
1.2mbpd, and is one of the largest integrated producers of polyester.
India
Price: Rs806.15
Brynjar Eirik Bustnes, CFAAC

(852) 2800 8578
Investment case
RIL is likely to see constrained earnings growth over FY13-14, with downward
pressure on cyclical business margins. Large capacity additions globally, against a
backdrop of tepid demand growth are likely to see GRMs compressed from levels seen
in 2012. Polyester margins are likely to be soft given low cotton prices.

Limited
950
Rs

Refined product demand growth is likely to be in the range of ~0.8-0.9mn bopd as
against net capacity additions of ~1.8mn bopd in our view this will exert downward
pressure on GRMs. With a good cotton harvest, cotton prices are expected to stay flat exerting a cap on polyester margins. Polymer spreads remain muted in a high supply
environment.
850
750
650
Nov-11
Feb-12
May-12
Aug-12
Nov-12
RELI.BO share price (Rs)

BSE30 (rebased)
Abs
Rel
YTD
14.1%
-6.8%
1m
-6.0%
-5.1%
3m
2.6%
-5.2%
Source: Bloomberg.

A large number of unplanned refinery outages (as seen in 2011/12) would boost GRMs
and are an upside risk to earnings. A quicker-, and larger-than-expected gas price hike
would also be a positive trigger for the stock.
Our Mar-13 PT is Rs675. Our PT is based on a SOTP. We value the refining and
petchem businesses at 6x/6.5x EV/EBITDA (in-line with regional peers). We value the
KG-D6 gas business on NPV, and build in a peak output of 60mmscmd from FY16.
Upside risks are higher-than-expected prices/production from D6, and better margins in
the refining and petrochemicals segments.
Reliance Industries Ltd (Reuters: RELI.BO, Bloomberg: RIL IN)
FY11A
FY12A
FY13E
Revenue (Rs mn)
2,658,106
3,585,010
3,811,414
Net Profit (Rs mn)
192,715.20
197,170.00
195,749.38
EPS (Rs)
64.65
60.22
60.51
DPS (Rs)
8.00
10.00
10.00
Revenue growth (%)
30.5%
34.9%
6.3%
EPS growth (%)
21.7%
-6.8%
0.5%
ROCE
12.9%
10.2%
9.7%
ROE
17.3%
15.4%
13.8%
P/E
12.5
13.4
13.3
P/BV
2.0
1.9
1.7
EV/EBITDA
7.2
8.0
7.5
Dividend Yield
1.0%
1.2%
1.2%
524
FY14E
3,570,885
187,067.58
57.83
10.00
-6.3%
-4.4%
8.9%
12.0%
13.9
1.6
7.4
1.2%
FY15E
3,598,065
233,560.58
72.20
11.00
0.8%
24.9%
10.4%
13.5%
11.2
5.8
1.4%
Company Data
Shares O/S (mn)
Market Cap ($ mn)
Price (Rs)
Date Of Price
Free float (%)
3-mth trading value (Rs mn)
3,275
49,978
806.15
05 Nov 12
50.2%
2,307.97
43.70
1.38
12m
-8.8%
-15.6%
Adrian Mowat
(852) 2800-8599

21 November 2012
Reliance Industries Ltd: Summary of Financials

Income Statement
FY11
FY12
FY13E
FY14E
FY15E
Revenues
2,658,106 3,585,010 3,811,414 3,570,885 3,598,065
% change Y/Y
30.5%
34.9%
6.3%
(6.3%)
0.8%
Gross Margin
23.1%
16.8%
13.0%
13.5%
15.5%
EBITDA
380,436 345,080 344,565 337,682 406,315
% change Y/Y
23.1%
-9.3%
-0.1%
-2.0%
20.3%
EBITDA Margin
14.3%
9.6%
9.0%
9.5%
11.3%
EBIT
239,228 221,070 229,384 219,906 270,715
% change Y/Y
19.9%
NM
3.8%
NM
23.1%
EBIT Margin
9.0%
6.2%
6.0%
6.2%
7.5%
Net Interest
1,321
33,010
28,724
33,233
39,070
Earnings before tax
240,550 254,080 258,108 253,139 309,786
% change Y/Y
-35.5%
5.6%
1.6%
-1.9%
22.4%
Tax
-47,834
-56,910
-62,359
-66,071
-76,225
as % of EBT
19.9%
22.4%
24.2%
26.1%
24.6%
192,715.20 197,170.00 195,749.38 187,067.58 233,560.58
% change Y/Y
21.8%
2.3%
-0.7%
-4.4%
24.9%
Shares outstanding
2,981
3,274
3,235
3,235
3,235
EPS (reported)
64.65
60.22
60.51
57.83
72.20
% change Y/Y
21.7%
(6.8%)
0.5%
(4.4%)
24.9%
Balance sheet
FY11
FY12
FY13E
FY14E
FY15E
301,390 407,310 468,262 483,516 548,312
Accounts receivable
156,960 169,390 148,367 137,715 147,883
Inventories
385,200 466,920 433,226 412,410 409,592
Others
84,540 133,140 103,214
98,069
94,623
Current assets
1,144,050 1,562,720 1,658,712 1,650,856 1,733,062
LT investments
Net fixed assets
1,530,444 1,305,794
Total Assets
2,742,894 2,935,934
Liabilities
Short-term loans
Payables
Others
571,820 525,220
571,820 525,220
Long-term debt
841,480 924,370
Other liabilities
113,750 119,880
Total Liabilities
1,527,050 1,569,470
1,207,824 1,358,474
BVPS
407.86
417.37
Cash flow statement

EBIT
Taxes
Others
FY11 FY12
239,228 221,070
141,208 124,010
-35,546 -189,350
-44124 -52260
298,377 131,830
Capex
Disposal/(purchase)
Free cash flow
-295,891 -244,240 -200,100 -201,050 -195,000

2,486 211,590 205,312 113,186 168,657
Other
Dividends paid
Beginning cash
Ending cash
DPS
30,869 -28,260 -28,000

0
0
300,425 11,609 -20,534 -49,709 -46,188
-34,729 -38,142 -37,688 -37,688 -41,457
8.00 10.00 10.00 10.00 11.00
Ratio Analysis
EBITDA margin
Operating margin
Net margin

- Sales growth
1,390,714 1,473,988 1,533,388 Net profit growth
3,099,991 3,180,465 3,327,633 EPS growth
- Net debt to total capital
535,059 507,837 506,239 Sales/assets
535,059 507,837 506,239 Assets/equity
937,555 887,846 841,658 ROE
130,851 138,876 141,726 ROCE
1,603,465 1,534,559 1,489,624
1,488,536 1,637,916 1,830,020
462.60
508.78
565.69
FY11
14.3%
9.0%
7.3%
30.3%
30.5%
21.8%
21.7%
17.5%
26.8%
1.08
1.53
17.3%
12.9%
FY13E
229,384
115,180
94,482
-51387
405,412
FY14E
219,906
117,776
9,392
-58046
314,236
FY15E
270,715
135,599
-5,503
-73375
363,657

9.6%
9.0%
9.5% 11.3%
6.2%
6.0%
6.2%
7.5%
5.5%
5.1%
5.2%
6.5%
22.8%
34.9%
2.3%
(6.8%)
6.1%
9.7%
1.26
1.43
15.4%
10.2%
7.6%
6.3%
-0.7%
0.5%
-1.5%
-2.4%
1.26
2.08
13.8%
9.7%
(6.3%)
0.8%
(6.3%)
0.8%
-4.4% 24.9%
(4.4%) 24.9%
-4.6% -9.2%
-7.0% -13.1%
1.14
1.11
1.94
1.82
12.0% 13.5%
8.9% 10.4%
525

21 November 2012
Adrian Mowat
(852) 2800-8599
Riyad Bank
Neutral
www.riyadbank.com.sa
Price Target: SAR26.00
Company overview
Riyad Bank is #4 bank by assets in Saudi Arabia commanding a loans & deposits
market share of around 11%-12%. It has a domestic network of over 250 branches,
>2,600 ATMs and over 12,700 POS.
Saudi Arabia
Banks
Investment case
We see the risk-reward in Riyad Bank shares as relatively less attractive vs. peer Saudi
and CEEMEA bank stocks and the current forecast P/E (10.1x12E, 8.8x13E) is higher
vs. peer average while potential tangible ROE through FY14E (12%12E to 14% 14E)
is relatively lower vs. peers (e.g. Samba and BSFR to book like Riyad but lower on
earning while offering higher ROEs). We are hence Neutral on the stock. That said, div
yield in Riyad Bank shares is attractive at >6% 12E, 13E.
Price: SAR23.05
Naresh BilandaniAC
(971-44) 281 763
JPMorgan Chase Bank N.A. Dubai branch

27
26
SRls
25
24
23

From our investor interaction, we deduce that investor concerns on Riyad Bank remain
mainly on the following key points: i) Increase in European exposure of Riyad Bank
over FY11 from c.4% of assets to 8% - mainly underlying increase in the European
exposure of its investments book (which grew from 2% of assets to 5% in this period);
and ii) high C/I ratio which though improving from 40% 11A to 34% 14E still remains
4-5pp higher vs. peers.
22
Nov-11
Abs
Feb-12
YTD
-1.7%
May-12
Aug-12
1m
0.4%
Nov-12
3m
0.0%
Source: Bloomberg.

Upside risks to earnings for Riyad in 13E could come primarily from better than
expected improvement in cost efficiency (the bank seems to be steadily improving on
that stance) and faster than expected lending growth (Riyad's loan growth at c.8%yoy
avg. 12E-14E is about half of current lending growth rate of the system overall).
Beyond 13E, mortgages could be an earnings growth driver and these are not fully built
into our estimates.
We value Riyad Bank shares at SAR26.0 through Dec-13E on a Gordon Growth model
(using c.13% ROE, 5% growth rate and c.12% COE). Key downside risks could come
from higher than expected margin pressure, lower economic expansion and higher than
expected asset quality deterioration. Upside risk to our rating could come from strategic
moves e.g. higher lending book growth leading to a faster than expected ROE
expansion.
Riyad Bank (1010.SE;RIBL AB)
FYE Dec
Adj. EPS FY (SRls)
Adj P/E FY
P/NAV FY
RoNAV FY
ROA FY
Gross Yield FY
Tier One Ratio FY
FY (SRls mn)
2011A
2.10
11.0
1.2
11.1%
1.8%
6.1%
14.8%
3,149
526
2012E
2.27
10.2
1.2
11.6%
1.8%
6.3%
14.5%
3,400
2013E
2.60
8.9
1.1
12.7%
2.0%
6.5%
14.2%
3,906
2014E
2.94
7.8
1.0
13.6%
2.1%
6.7%
14.0%
4,414
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
Mkt Cap ($ bn)
23.05
02-Nov-12
26.00
31 Dec 13
27.20 - 22.55
34.6
1,500
9.2
12m
-3.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
Riyad Bank: Summary of Financials

Net interest income
% Change Y/Y
Non-interest income
Fees & commissions
% change Y/Y
Trading revenues
% change Y/Y
Other Income
% change Y/Y
Admin expenses
% change Y/Y
Other expenses
% change Y/Y
Other provisions
Earnings before tax
% change Y/Y
Tax (charge)
% Tax rate
Minorities
Balance sheet
ASSETS
Net customer loans
% change Y/Y
Loan loss reserves
Investments
% change Y/Y
Goodwill
Other assets
Total assets
LIABILITIES
Customer deposits
% change Y/Y
Long term funding
Interbank funding
Other liabilities
Minorities
Ratio Analysis
Per Share Data
4,142 4,197 4,251 4,445 4,705 EPS Reported
-4.7%
1.3%
1.3%
4.6%
5.8% EPSAdjusted
1,839 2,124 2,606 2,875 3,129
% Change Y/Y
1,418 1,589 1,932 2,157 2,365 DPS
16.0% 12.1% 21.6% 11.7%
9.6%
% Change Y/Y
355
423
478
502
528 Dividend yield
151.6% 19.2% 13.0%
5.0%
5.0% Payout ratio
65
112
195
215
236 BV per share
5,980 6,321 6,856 7,320 7,833 NAV per share
0.3%
5.7%
8.5%
6.8%
-2,297 -2,490 -2,466 -2,555 -2,660
5.1%
8.4% -1.0%
3.6%
4.1% Return ratios
(8)
(20)
(22)
(24)
(27) RoRWA
3,675 3,811 4,369 4,741 5,147 Pre-tax ROE
-2.4%
3.7% 14.6%
8.5%
8.6% ROE
-850
-662
-968
-835
-733 RoNAV
2,825 3,149 3,400 3,906 4,414 Revenues
-6.8% 11.5%
8.0% 14.9% 13.0% NIM (NII / RWA)
0
0
0
0
0 Non-IR / average assets
- Total rev / average assets
0
0
0
0
Cost ratios
106,035 112,973 120,308 130,124 141,917 Cost / income
-0.5%
6.5%
6.5%
8.2%
9.1% Cost / assets
- Staff numbers
33,822 36,616 39,623 42,079 44,697
- Loan / deposit
- Loan / assets
- Customer deposits / liabilities
1.3% 10.1%
2.7%
8.9% 11.0% NPLs / loans
1,874
0
0
0
0 LLP / RWA
- Growth in NPLs
- RWAs
% YoY change
29,233 30,158 31,196 32,818 34,871 Core Tier 1
0
0
0
0
1 Total Tier 1
173,556 180,887 190,356 203,524 218,864

1.88
2.10
2.27
2.60
2.94
1.88
2.10
2.27
2.60
2.94
-6.9% 11.7%
8.0% 14.9% 13.0%
1.35
1.40
1.45
1.50
1.55
(0.7%) 3.9%
3.6%
3.4%
3.3%
5.9%
6.2%
6.4%
6.6%
6.8%
71.7% 66.7% 64.0% 57.6% 52.7%
19
20
21
22
23
18.7
19.3
20.0
21.0
22.3
1,500.0 1,500.0 1,500.0 1,500.0 1,500.0
0.02
9.8%
9.8%
10.2%
0.02
10.6%
10.6%
11.1%
0.02
11.1%
11.1%
11.6%
0.02
12.2%
12.2%
12.7%
0.02
13.0%
13.0%
13.6%
2.83% 2.80% 2.66% 2.60% 2.55%

1.05% 1.20% 1.40% 1.46% 1.48%
3.42% 3.57% 3.69% 3.72% 3.71%
69.26% 66.40% 62.00% 60.73% 60.06%
23.71% 25.14% 28.18% 29.47% 30.19%
5.94% 6.70% 6.98% 6.86% 6.74%
38.6%
0.0
-
39.7%
0.0
-
36.3%
0.0
-
35.2%
0.0
-
34.3%
0.0
-
83.5%
19.5%
61.1%
88.0%
1.3%
80.8%
20.2%
62.5%
92.8%
0.0%
83.8%
20.8%
63.2%
90.2%
0.0%
83.2%
20.7%
63.9%
91.6%
0.0%
81.8%
20.4%
64.8%
94.3%
0.0%
2.1%
1.8%
1.9%
2.0%
2.0%
1.7%
1.6%
1.5%
1.3%
1.2%
0.5%
0.4%
0.5%
0.4%
0.3%
126.2% 106.3% 128.7% 148.0% 152.9%
44.7%
3.6% (5.0%) (4.8%)
4.1%
163,785 181,052 192,340 207,569 225,289
2.5% 10.5%
6.2%
7.9%
8.5%
16.0% 14.8% 14.5% 14.2% 14.0%
16.0% 14.8% 14.5% 14.2% 14.0%
527
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
Rossi
Price: R$4.02
www.rossiresidencial.com.br
Company overview
Rossi has over 30 years of experience in the sector and is controlled by the Rossi family,
which holds a 37% stake in the company. Over the last four years Rossi traded at a
discount to peers given earnings disappointments. The company is present in all income
segments and has its land bank concentrated in the South, Southeast, Mid-West,
specially Brasilia, as well as the Northeast with the acquisition of Norcon.
Despite its discounted valuation, trading at 0.5x current P/BV and its high beta, we
believe that Rossi will underperform next year given many uncertainties regarding its
accounting practices. YTD the stock is down 47% vs -41% for PDG and +3% for the
IBOV, and we believe there are other attractive names for investors looking for high
beta and discounted names, but which dont have the same problems that Rossi has now
regarding uncertainties on future profitability.
Brazil
Homebuilders
Adrian HuertaAC
(52 81) 8152-8720
Bloomberg JPMA HUERTA<GO>
J.P. Morgan Casa de Bolsa, S.A. de C.V.
14
10
R$
6
2
Nov-11
The company is up only 14% from its 52-weeks low reached in July 2012, and we dont
see positive catalysts in the near term that could lead to a re-rating. Also, we believe that
it will take a long time for the company to regain investors confidence.
Feb-12
May-12
Aug-12
Nov-12
RSID3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.

The company had a R$715mn write-off on equity (26% cut on equity) mainly explained
by overstated profits in the prior two years due to aggressive accounting practices with
regards to revenue and margin recognition. We see the main risk to next years earnings
expectations on higher than expected profitability and margins given the large write-off
already recognized.
Currently Rossi is trading at 4.8x 2013E P/E and 0.5x P/BV, which compares with the
sector average of 8.5x (Ex-Gafisa) and 1.0x respectively, including Cyrela and MRV. In
our view the discount on P/BV is justified by low visibility on earnings and recent
revisions to accounting practices. The main upside risk for sentiment relies on better
than expected results. In addition, better than expected margins and higher than expected
cash generation are also upside risks to our estimates and thesis.
Rossi Residencial S.A. (RSID3.SA;RSID3 BZ)
FYE Dec
2011A
EPS Reported (R$)
FY
1.27
EBITDA FY (R$ mn)
570
P/E FY
3.3
Revenues FY (R$ mn)
3,072
1.26
528
2012E
2013E
2014E
0.63
722
6.7
3,237
0.90
0.61
643
6.9
2,982
1.19
0.69
647
6.1
2,967
1.26
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
4.02
14 Nov 12
11.89 - 3.66
1,589.90
Dec
379

21 November 2012
Adrian Mowat
(852) 2800-8599
Rossi Residencial: Summary of Financials

Net Revenues
Cost of goods sold
Gross profit
Gross margin
SG&A
Selling expenses
G&A
Depreciation
EBITDA
EBITDA margin, %
Financial income
Financial expense
Equity income
EBT
Taxes
Minority interest
Extraordinary
Net income
Net income margin
EPS
Net Revenue growth
EBITDA growth
Net income growth
FCF growth
FCFF-firm
Dividends
a
Working capital
Launches (Co's share)
Pre-sales (Co's share)
Units
a
Launches chg
Pre-sales chg
a
FY11A
3,072
(1,964)
921
30.0%
(526)
(265)
(261)
(6)
570
18.5%
141
(89)
0
428
(88)
0
0
340
11.1%
1.27
23.1%
10.3%
(2.9%)
0.0%
FY11A
(1,059)
(662)
87
25.7%
FY12E
3,237
(2,007)
955
29.5%
(498)
(253)
(245)
(28)
722
22.3%
112
(187)
0
344
(106)
0
0
238
7.4%
0.63
5.4%
26.7%
(30.0%)
0.0%
FY12E
21
629
85
35.7%
FY13E
2,982
(1,849)
909
30.5%
(480)
(260)
(220)
(25)
643
21.6%
162
(232)
0
324
(92)
0
0
231
7.8%
0.61
(7.9%)
(10.9%)
(2.7%)
0.0%
FY13E
389
883
59
25.7%
FY14E
2,967
(1,839)
905
30.5%
(470)
(251)
(219)
(25)
647
21.8%
186
(233)
0
353
(92)
0
0
261
8.8%
0.69
(0.5%)
0.6%
12.6%
0.0%
FY14E
69
568
58
22.2%
Balance Sheet
Cash
Accounts receivable
Inventories
Land bank
Net PP&E
Other assets
Total Assets
ST Loans
Accounts Payables
Suppliers
Land Payables
LT Debt
Deferred taxes
Other liabilities
Total Liabilities
Minority Interests
Shareholders Equity
Net debt
Net Debt/Equity
Debt/Equity
NetDebt/EBITDA
Valuation, Macro
EV/EBITDA
P/E
P/BV
FY11A
1,239
3,408
2,011
1,115
896
621
88
1,914
7,450
909
542
94
448
728
2,335
80.3
728
4,666
0
2,784
7450.24
2,004
72.0%
116.5%
3.5
FY11A
7.2
3.3
0.5
FY12E
1,797
3,459
2,071
1,170
900
741
122
1,940
8,279
1,575
674
89
585
457
2,569
133.9
457
5,664
0
2,614
8278.64
2,347
89.8%
158.5%
3.3
FY12E
6.2
6.7
0.8
FY13E
2,327
3,104
2,058
1,229
829
741
154
1,795
8,473
1,575
696
82
614
457
2,569
133.9
457
5,687
0
2,786
8472.84
1,817
65.2%
148.7%
2.8
FY13E
6.1
6.9
0.8
FY14E
2,567
2,926
2,198
1,290
908
741
186
1,737
8,706
1,575
726
81
645
457
2,569
133.9
457
5,717
0
2,989
8705.90
1,577
52.8%
138.6%
2.4
FY14E
5.7
6.1
0.7
4,877
158.8%
4,214
3,481
18,680
4,856
150.0%
2,500
2,814
9,679
4,466
149.8%
3,000
3,057
11,168
4,398
148.2%
3,150
2,954
11,275
0%
0%
0%
0%
0%
0%
FCF yield
Dividend yield
Capex/Revenues
Inventory/Revenues
Assets/Equity
Coverage (EBIT/Interest)
(44.3%)
7.8%
(1.9%)
65.5%
2.7
-
29.7%
5.3%
(1.9%)
64.0%
3.2
-
41.8%
3.7%
(1.9%)
69.0%
3.0
-
26.9%
3.6%
(1.9%)
74.1%
2.9
-
12.8%
7.4%
268
8.8%
9.3%
379
8.6%
7.4%
379
9.0%
7.3%
379
Days receivable
405
390
380
Days inventory
374
377
406
Days payable
64
76
85
0%
0% ROE
ROIC
360 Shares
436
89
529
Adrian Mowat
(852) 2800-8599

21 November 2012
Saudi Kayan Petrochemical Company
Neutral
www.saudikayan.com
Company overview
Saudi Kayan is a Saudi based petrochemical company which started trading in June 07.
It started its commercial operations in 4Q11. It has Al Jubail based facilities producing
ethylene, propylene, HDPE, LDPE, polypropylene, polycarbonates, amines and many
other petrochemicals. It has total production capacity of more than 5mmt per annum. It
has a well integrated petrochemical complex. Asia especially China and India are the
key export destinations. The company's vision is to be a leading producer of basic and
value added petchems products. SABIC is biggest shareholder holding a 35% stake.
Saudi Arabia
Chemicals
Price: SRls12.25
Neeraj KumarAC
(971) 4428-1740
22
Investment case
Key investment points are as follows: i) although, the company benefits from
improvement in sales production, the company has been unable to translate that into
positive net income so far. The company started its commercial operations in 4Q11, ii)
benefit from SABIC's technical know-how as SABIC holds a stake of 35%, iii) export
orientation- primarily to Asia where demand growth is moderating right now.
20
SRls
18
16
14
12
Nov-11

Operational performance: the company is in commercial operations from the last four
quarters but still unable to report net profit despite increase in production volumes.
Abs
Feb-12
YTD
-27.5%
May-12
1m
-2.3%
Aug-12
Nov-12
3m
-12.5%
12m
-30.7%
Source: Bloomberg.

Better than expected operational performance would translate into higher margins and
hence net profit.
Valuation Methodology: We have used a DCF approach to derive the target price. Our
Dec 2013 target price is SAR13.0/share. Key assumptions for DCF are terminal growth
rate of 2% and WACC of 10.7%. Risks to Price Target and Rating: i) Higher/lower oil
price than expected- Petrochemical prices are driven by oil prices. The higher the oil
price, the higher the petrochemical prices, in general, ii)Better/lower than expected
operational performance, iii) Increase in gas price from Saudi Aramco- we view an
increase in gas price from $0.75/mmbtu to $1.25/mmbtu, iv) Change in policies in key
markets such as anti dumping duty, v) Soft macro situation.
Saudi Kayan Petrochemical Company (2350.SE;KAYAN AB)
FYE Dec
2011A
2012E
Adj. EPS FY (SRls)
(0.17)
(0.47)
2,403
8,814
EBIT FY (SRls mn)
(56)
(88)
(250)
(708)
mn)
EV/Revenue FY
23.3
5.4
EV/EBITDA FY
120.3
27.2
Adj P/E FY
NM
NM
FCF Yield FY
-14.6%
-4.6%
530
2013E
1.07
11,533
2,191
1,607
4.1
12.5
11.4
10.0%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
12.25
02-Nov-12
13.00
31 Dec 13
21.60 - 11.95
18.4
1,500

21 November 2012
Adrian Mowat
(852) 2800-8599
Saudi Kayan Petrochemical Company: Summary of

Financials
Revenues
% Change Y/Y
Gross Margin (%)
EBITDA
EBITDA Margin (%)
EBIT
EBIT Margin
Net Interest
% change Y/Y
Zakat
Reported Zakat rate (%)
Net Income Rep
% change Y/Y
Shares Outstanding
Reported EPS
Adjusted EPS
Balance sheet
Inventories
Current assets
LT investments
Net fixed assets
Total assets
Liabilities
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Total Liab & Shareholders' equity
Cash flow statement

FY10
0
2,403 8,814 11,533 12,823 EBIT
- 266.7% 30.8% 11.2% Depreciation & amortization
1.3%
2.0% 22.0% 29.0%
0
465 1,745
19.3% 19.8% 33.0% 37.0% Zakat
(14)
(56)
(88)
-2.3% -1.0% 19.0% 26.0% Capex
0
(113)
(520)
(500) (500) Acquisitions/disposals
-14
-176
-608
1,691 2,834 Net Interest
NM
NM
NM
NM Free cash flow
(0)
(74)
(100)
(85)
(71) FCF (pre - exceptionals)
2.5% (42.1%) (16.4%)
5.0% 2.5% Equity raised/repaid
(15)
(250)
(708)
1,607 2,763 Debt Raised/repaid
- 1594.0% 183.7% -326.9% 72.0% Other
1500.0 1500.0 1500.0 1500.0 1500.0 Dividends paid
-0.01
-0.17
-0.47
1.07
1.84 Ending cash
(0.01)
(0.17) (0.47)
1.07
1.84 DPS
Ratio Analysis
FY10
967
469
342
1,479 2,377 Market Cap
1,321
2,987 2,556
1,442 1,218 Net debt
498
1,545 1,586
1,234 1,154 EV
2,883
5,001 4,484
4,154 4,749
40,557 41,522 40,889 39,874 39,014 EV/Sales
37,709 36,686 36,576 35,920 34,510 EV/EBITDA
43,474 46,689 45,545 44,228 44,008 EV/EBIT
P/E (adjusted EPS)
580
600
1,179
2,359
25,535
89
28,012
15,463
43,474
530
782
1,065
2,377
28,981
119
31,476
15,212
46,689
1,200
806
1,065
3,070
27,981
123
31,174
14,371
45,545
1,500
862
1,065
3,427
25,281
127
28,834
15,394
44,228
1,300 FCF yield

1,065 Dividend Yield
3,287 EPS growth
22,281
44,008 ROIC
FY10
(14)
14

(56)
(88) 2,191 3,334
521 1,833 1,615 1,411
(2,744) (1,131)
(353)
(0)
(74)
(100)
(2,744)
(666) 1,393
(5,736) (3,051) (1,200)
0
(113)
(520)
(8,494) (3,913)
(327)
-8,494 -3,913
-327
7,002 3,421
200
0
0
0
967
469
342
0.00
0.00
0.00
(369)
(85)
3,437
(600)
(500)
2,337
2,337
-1,200
0
1,479
0.00
(71)
4,745
(550)
(500)
3,348
3,348
-1,700
(750)
2,377
0.50

27,705 26,775 18,450 18,450
25,149 29,041 28,839 25,302
52,942 55,935 47,412 47,412
FY14E
18,450
21,204
47,412
-3,717.8
NM
23.3
120.3
-996.0
NM
5.4
27.2
-537.9
NM
4.1
12.5
21.6
11.4
3.7
10.0
14.2
6.7
-30.7% -14.6%
0.00
0.00
0.0%
0.0%
NM
-4.6%
0.00
0.0%
NM
10.0%
0.00
0.0%
NM
15.4%
0.50
4.1%
72.0%
0.0
62.5
16.5
6.6
4.5
0.5
0.2
4.4
6.7
162.6% 190.9% 200.7% 164.4% 115.8%
-0.0% -0.1% -0.2%
4.9%
7.7%
531

21 November 2012
Adrian Mowat
(852) 2800-8599
Shanda Games
Neutral
www.shandagames.com/
Price Target: $4.00
Company overview
Shanda Games is one of the leading game operators in China. The company has one of
the largest gaming communities in China with ~3.8MM active paying accounts as of
the end of 2Q12. Mir 2, WOOOL, and Dragon Nest are its three most popular games.
China
Internet
Price: $3.47
Investment case
We believe Mir2 and Woools are still building up new content to attract and retain
gamers (or to maintain healthy lifecycle of the game), after recent revenues decline. In
addition, we do not expect Dragon Nest drivers to come by end-2012. We are cautious
about whether these games can reach the previous revenue level. We dont expect any
of the new games to be blockbusters that could offset the weakness in older games.
Without new hit games as the share price driver, we expect stock to trade sideways.
Dick WeiAC
(852) 2800 8535
Evan Zhou
(852) 2800 8505
Limited
Price Perfo rman ce

6.0

While game market is not closely correlated with macro outlook, Shanda Games see its
own issues. Key game for 2012 as Rift. Final Fantasy XIV, Age of Wushu, and World
Zero are delayed to 2013. Other games in 2013 include Eyedentitys Dungeon Striker,
Ghosts'n Goblins Online.
Upside risks to our earnings and PT include: (1) positive re-rating of the game sector,
and (2) privatization or acquisition target. Downside risks include: (1) slower-thanexpected revenue growth due to an aging game portfolio and Shanda Games failing to
launch successful new games or new upgrade packs, (2) increased competition in the
game industry, and (3) disruption in the distribution contract with Shanda Interactive.
5.0
$
4.0
3.0
Nov-11
Feb-12
May-12
Aug-12
Nov-12
GAME share price ($)

CCMP (rebased)
Abs
Rel
YTD
-11.3%
-22.8%
1m
-5.4%
-0.2%
3m
1.8%
5.6%
12m
-24.4%
-35.2%
Source: Bloomberg.

Our Dec-13 PT of US$4 is based on the industry average forward P/E of 5.5x and
implies 5.8x FY12E, 5.9x FY13E, and 5.5x FY14E diluted adjusted EPS. Excluding
net cash of US$288MM (or US$1/sh), our PT implies 4.8x FY12E, 5.0x FY13E, and
4.7x FY14E diluted adjusted EPS.
Bloomberg GAME US, Reuters GAME
Net Sales
EBITDA
Pre Tax Profit
Reported Net profit
Reported EPS ($)
P/E (x)
Adj. EPS ($)*
Adj. P/E (X)
EV/EBITDA (x)
P/B (x)
Y/E BPS ($)
FY11
822.6
229.5
298.6
277.4
197.0
0.69
5.0
0.74
4.7
2.5
1.9
FY12E
743.9
225.9
278.9
259.3
192.4
0.66
5.3
0.68
5.1
2.7
0.9
FY13E
755.3
220.9
269.8
263.8
197.6
0.65
5.4
0.68
5.1
2.8
0.8
FY14E
836.6
243.9
300.8
288.4
216.2
0.70
4.9
0.73
4.7
2.5
0.7
1.81
3.70
4.38
5.13
ROE(%)
ROIC(%)
Cash
Equity
Qtr GAAP EPS ($)
EPS (11)
EPS (12) E
EPS (13) E
Abs. Perf.(%)
Rel. Perf.(%)
FY11 FY12E
37
25
31
18
433.0 1,141.7
521.1 1,066.6
1Q
2Q
0.168 0.166
0.191 0.174
0.153 0.158
1M
3M
-5.5%
1.8%
(0.2%) 5.5%
FY13E FY14E
18
16
13
12
1,315.0 1,511.5
1,262.9 1,479.2
3Q
4Q
0.189 0.172
0.143 0.152
0.166 0.168
12M
-24.4%
(35.2%)
Source: Company, J. P. Morgan estimates, Bloomberg. *Note: Excluding share-base compensation, amortization from acquisition and one-time items.
532
52-Week range
Shares Outstg
Market Cap(US)
Free float
Avg daily vol.
Avg daily val ($)
Dividend Yield
Index (NASD)
Price Target
Price Date
5.92 - 2.95
280.2MN
US$ 972MN
30.0%
0.5MM shares
1.79MN
0.0%
2,905
4.00
09 Nov 12
Adrian Mowat
(852) 2800-8599

21 November 2012
Shanda Games: Summary of Financials

Revenues
Cost of goods sold
Gross Profit
R&D expenses
SG&A expenses
EBITDA
Other income (Exp.)
Earnings before tax
Tax
USD
FY10
687
280
407
-71
-133
-16
203
266
9
0
33
246
-46
196.6
213
Ratio Analysis
823
744
755
837 Gross margin
320
280
288
320 EBITDA margin
502
464
467
-108
-96
-98
-109 Net margin
-165
-141
-148
-164 R&D/sales
-14
-8
-9
-9 SG&A/Sales
230
226
221
244
299
279
270
301 Sales growth
21
16
24
0
0
- Net profit growth
27
17
19
17 Diluted EPS growth
277
259
264
288
-76
-60
-60
-66
197.0 192.4 197.6 216.2 Net debt to total capital
211
200
207
Diluted EPS (GAAP)

0.69
0.69
0.66
0.65
0.70 Asset turnover
Adj. Diluted EPS*
0.75
0.74
0.68
0.68
BVPS
2.13
1.81
3.70
4.38
5.13 ROE
DPS
0.00
0.00
0.00
0.00
0.00 ROIC
285.41 283.60 292.62 306.06 307.73
Balance sheet
Cash flow statement
FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec
331
433 1,142 1,315 1,511 Net income
Accounts receivable
67
75
56
62
Inventories
0
0
0
0
Others
120
389
350
391
428 Other
Current assets
518
896 1,547 1,769 2,008 Cash flow from operations
LT investments
5
6
4
4
4 Capex
Net fixed assets
30
36
56
78
98 Other investing cashflow
Others LT assets
482
301
240
239
Total Assets
1,034 1,239 1,846 2,089 2,349 Free cash flow
Liabilities
ST Loans
0
134
363
363
Payables
20
18
14
15
17 Other
Others
307
466
350
391
428 Dividends paid
327
617
727
770
Long-term debt
0
0
0
0
0
Other liabilities
58
59
5
5
Total Liabilities
384
676
731
774
812 Beginning cash
Total shareholder equity
613
521 1,067 1,263 1,479 Ending cash
Minority interests
36
42
49
52
58
Total Liabilities and shareholder equity
1,034 1,239 1,846 2,089 2,349
FY10
59.2%
38.7%
29.6%
28.6%
10.3%
19.3%
FY11
61.1%
36.3%
27.9%
23.9%
13.1%
20.0%
FY12E
62.3%
37.5%
30.4%
25.9%
12.9%
19.0%
FY13E
61.9%
35.7%
29.2%
26.2%
13.0%
19.6%
FY14E
61.8%
36.0%
29.2%
25.8%
13.0%
19.6%
(2.4%) 19.7% (9.6%) 1.5% 10.8%

-20.0% 12.9% -1.6% -2.2% 10.5%
-7.6% 0.2% -2.4% 2.7% 9.4%
(8.8%) 0.9% (5.4%) (1.8%) 8.8%
-54.0% -45.7% -54.5% -58.6% -62.4%
-54.0% -57.4% -73.0% -75.4% -77.7%
0.82
0.72
0.48
0.38
0.38
2.74
3.47
1.35
0.83
0.76
40.8% 36.8% 25.1% 17.8% 16.5%
39.9% 31.1% 18.5% 12.7% 12.1%
FY10
196.6
46
63
-39
266
-561
-3
-565
-295
18
-2
224
0
240
-44
374
331

197.0 192.4 197.6 216.2
55
45
39
47
-122
-62
-5
-5
88
15
16
16
218
190
247
275
-404
2
-61
-68
-1
2
0
0
-405
4
-61
-68
-186
192
186
207
4
-37
-9
-9
134
227
0
0
148
317
-2
-1
0
0
0
0
286
508
-12
-11
102
331
433
709
433
1,142
173
1,142
1,315
197
1,315
1,511
533
Adrian Mowat
(852) 2800-8599

21 November 2012
S-Oil Corp
Underweight
www.s-oil.com/siteEng/index.asp
Company overview
S-Oil is one of the largest oil refiners in Korea, with three divisions: Refining,
Petrochemicals and Lubricants. S-Oil exports around 50% of their products and has
around 15% of the petroleum retail market share in South Korea with 1,800 retail
stations under its brand. S-Oil is owned by Saudi Aramco and a Hanjin consortium, and
sources most of its crude from Saudi Arabia. S-Oil has the highest complexity in South
Korea, primarily due to large scale desulphurization equipment.
South Korea
Refiners
Price: W99,500
Investment case
We are UW on S-Oil as we are negative on the outlook for all three of its division
while the stock still trades at mid-cycle valuations. We believe refining margins are not
sustainable at this years high levels due to abnormal amount of unexpected outages in
2012 and capacity additions will accelerate in 2013. Similarly we are forecasting PX
spreads to fall by 20% in 2013 due to new capacity additions.
In a benign but anemic growth environment, we believe demand growth for refined
products petrochemicals will only go back to historical trend. This is particularly true
for China as they could export more refined products in 2013 after being out of the
export market for quite some time, which would be negative for regional GRMs.
Samuel SW LeeAC
(852) 2800 8536
samuel.sw.lee@jpmorgan.com
Bloomberg JPMA SLEE <GO>
Limited
140,000
W
120,000
100,000
80,000

KOSPI (rebased)
Abs
Rel
YTD
-1.0%
-6.1%
1m
-5.2%
-1.3%
3m
2.2%
-0.4%
12m
-16.4%
-17.5%
Source: Bloomberg.

Our 2013 EPS is 27% below consensus estimates as the latter is looking for 42% Y/Y
earnings growth in 2013. We believe this is too optimistic even though we are also
forecasting Refining division earnings growth as we do not include the negative
inventory impact of falling oil in 2013.
Dec-13 PT of W78,000 is based on 1.4x 2013E BV, which is 10% below -1SD to
historical valuations. We believe 1.4x BV is fair as we estimate S-Oil 2013 ROE to be
around 15%. At current valuation of 1.8x, we prefer SKI (cheaper with similar risks) or
LGC (cheaper with lower earnings volatility). Upside risk to our call is continued
strength in PX spreads in 2013 and less volatility to S-Oils quarterly earnings.
S-Oil Corp (Reuters: 010950.KS, Bloomberg: 010950 KS)
W in bn, year-end Dec
FY10A
FY11A
FY12E
Revenue (W bn)
20,530
31,914
34,666
EBITDA (W bn)
1,058
1,973
1,453
Net Profit (W bn)
695
1,172
841
EPS (W)
6,176
10,413
7,472
DPS (W)
2,500.00
4,800.00
4,000.00
Revenue growth
18%
55%
9%
EPS growth
210%
69%
(28%)
ROCE
13%
20%
13%
ROE
16%
24%
15%
P/E (x)
16.1
9.6
13.3
P/BV (x)
2.5
2.2
2.0
EV/EBITDA (x)
12.2
7.0
9.3
Dividend Yield
2.5%
4.8%
4.0%
534
FY13E
31,781
1,536
918
8,156
4,050.00
(8%)
9%
14%
16%
12.2
1.8
8.2
4.1%
FY14E
30,135
1,449
877
7,784
4,100.00
(5%)
(5%)
12%
14%
12.8
1.7
8.2
4.1%
Company Data
52-week Range (W)
Market Cap (W bn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (W)
Date Of Price
Free float (%)
3M Avg daily vol
KOSPI
Exchange Rate
145,000 - 86,400
11,202
10,270
113
Dec
99,500
02 Nov 12
37.0%
38
35
364
1,919
1,091

21 November 2012
Adrian Mowat
(852) 2800-8599
S-Oil Corp: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
FY10
20,530
18%
1,058
116%
869
178%
4%
0
869
220%
-164
18.9%
695
210%
113
6,176
210%
FY11
31,914
55%
1,973
87%
1,601
84%
5%
-18
1,584
82%
-393
24.8%
1,172
69%
113
10,413
69%
FY12E
34,666
9%
1,453
(26%)
1,165
(27%)
3%
-25
1,139
(28%)
-283
24.8%
841
(28%)
113
7,472
(28%)
FY13E
31,781
(8%)
1,536
6%
1,251
7%
4%
-9
1,242
9%
-308
24.8%
918
9%
113
8,156
9%
FY14E
30,135
(5%)
1,449
(6%)
1,171
(6%)
4%
16
1,187
(4%)
-294
24.8%
877
(5%)
113
7,784
(5%)
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
853
2,150
2,947
0
6,005
FY11
877
3,039
4,617
0
8,824
FY12E
659
3,630
4,976
0
9,556
FY13E
1,606
3,328
4,562
0
9,787
FY14E
2,294
3,156
4,326
0
10,067
3,630
10,002
3,882
13,203
3,682
13,734
3,597
13,880
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
1,937
3,055
2,555
2,555
2,542
3,528
4,292
3,934
0
0
0
0
4,592
7,236
7,500
7,142
684
488
488
488
0
0
0
0
0
0
0
0
4,523
5,225
5,632
6,110
40,167.48 46,406.07 50,015.52 54,260.07
Cash flow statement

EBIT
Taxes
Capex
Disposal/(purchase)
Net Interest
Other
Free cash flow
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net margin

- Sales growth
14,081 EPS growth
2,555
0 Sales/assets
6,939 Assets/equity
488 ROE
0 ROCE
0
6,540
58,084.97
FY10
869
189
-221
-164
732
FY11
1,601
371
-1,270
-393
440
FY12E
1,165
288
-186
-283
934
FY13E
1,251
285
359
-308
1,603
FY14E
1,171
278
205
-294
1,350
0
5
0
0
732
0
0
-18
0
440
0
0
-25
0
934
0
0
-9
0
1,603
0
0
16
0
1,350
0
0
0
0
0
-83
1,007
-500
0
0
0
0
0
0
0
-291
-559
-466
-472
-477
895
919
701
1,648
2,336
2,500.00 4,800.00 4,000.00 4,050.00 4,100.00
FY10
5%
4%
3%
FY11
6%
5%
4%
FY12E
4%
3%
2%
FY13E
5%
4%
3%
FY14E
5%
3%
3%
18%
18%
210%
210%
-
55%
55%
69%
69%
111.98
9%
9%
(28%)
(28%)
57.50
(8%)
(8%)
9%
9%
164.16
(5%)
(5%)
(5%)
(5%)
-
38%
2.16
2.62
16%
13%
50%
2.75
2.95
24%
20%
42%
2.57
2.44
15%
13%
23%
2.30
2.27
16%
14%
11%
2.16
2.15
14%
12%
535
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.thaioilgroup.com
Price Target: Bt53
Company overview
TOP, owned 49% by PTT, is one of the most complex refinery in the region, with a
nameplate capacity of 275,000bpd. TOP is vertically integrated into aromatics, lube
base production, power generation and marine & pipeline transportation for petroleum
products and petrochemicals. TOP currently produces 0.9m tons of aromatics per year
and is Thailand's second-largest aromatics producer after its sister company, PTTGC.
Thailand
Integrated refiners
Price: Bt67.50
Avin SonyAC
(66-2) 684-2683
avin.sony@jpmorgan.com
Bloomberg JPMA SONY <GO>
Investment case
Weakness in refining margins, PX margins, oil prices amidst no capacity growth means
TOP will see earnings decline in 2013-2014, in our view. Any upside remains at the
mercy of global demand which we construe to expect to remain lackluster. In addition,
TOP also trades at valuations which we see as expensive at an FY13E P/BV of 1.6x.
With TOP having no material capacity expansion it remains at the mercy of movements
in global crude prices and refining margins. In addition, upside risks also depend on
major stimuli rather than demand supply, as supply growth for reining will exceed
demand for the next three years with supply growing by nearly 6mbps vs demand
growth of slightly less than 3mbpd.
80
70
Bt
60
50
Nov-11
Feb-12
May-12
Aug-12
Nov-12
TOP.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
15.4%
-12.0%
1m
7.6%
8.0%
3m
13.9%
4.8%
Source: Bloomberg.

Upside risks to our earnings estimates come from higher oil prices and refining margins
which could happen in an environment of strong economic recovery. In addition any
unplanned shutdown at refineries would also result in refining margins being stronger
than expected which would result in our earnings being too conservative.
Our Dec13 PT of Bt53 is based on FY13E P/BV of 1.3x based on estimated LT
ROE/COE ratio (we estimate TOP's ROE to average 11% in FY12-FY16E). Upside
risks include a stronger-than-expected rise in refinery and PX margins that would
significantly boost TOPs earnings and higher-than-expected dividend payment.
Thai Oil Public Company (Reuters: TOP.BK, Bloomberg: TOP TB)
FY10A
FY11A
FY12E
Revenue (Bt mn)
318,390
446,241
447,326
Net Profit (Bt bn)
9.0
14.9
9.5
EPS (Bt)
4.41
7.28
4.66
DPS (Bt)
2.00
3.30
3.35
Revenue Growth (%)
12.1%
40.2%
0.2%
EPS growth (%)
-25.4%
65.1%
-36.0%
ROCE
7.2%
17.1%
9.9%
ROE
13.0%
19.7%
11.8%
P/E
15.3
9.3
14.5
P/BV
1.9
1.7
1.7
EV/EBITDA
11.4
6.1
8.7
Dividend Yield
3.0%
4.9%
5.0%
Core EPS (Bt)
3.45
7.31
4.53
Adjusted P/E
19.6
9.2
14.9
536
FY13E
412,446
9.4
4.60
3.40
-7.8%
-1.3%
9.6%
11.2%
14.7
1.6
8.4
5.0%
4.60
14.7
FY14E
400,225
8.6
4.20
3.45
-3.0%
-8.7%
8.8%
10.0%
16.1
1.6
8.6
5.1%
4.20
16.1
Company Data
Shares O/S (mn)
Market Cap (Bt mn)
Market Cap ($ mn)
Price (Bt)
Date Of Price
Free float (%)
3-mth trading value (Bt bn)
SET
Exchange Rate
Fiscal Year End
2,040
137,702
4,490
67.50
05 Nov 12
50.0%
1.0
32.2
6.9
1,307
30.67
Dec
12m
22.7%
-14.0%
Adrian Mowat
(852) 2800-8599

21 November 2012
Thai Oil Public Company: Summary of Financials

Income Statement
Cash flow statement
FY10
Revenues
318,390 446,241 447,326 412,446 400,225 EBIT
% change Y/Y
12.1% 40.2%
0.2% (7.8%) (3.0%) Depr. & amortization
Gross Margin (%)
5.2%
6.6%
4.9%
5.3%
EBITDA
14,749 27,115 19,418 19,175 18,395 Taxes
% change Y/Y
-27.1% 83.8% -28.4%
-1.3%
EBITDA Margin (%)
4.6%
6.1%
4.3%
4.6%
4.6%
EBIT
8,087 20,511 12,242 11,661 10,438 Capex
% change Y/Y
NM 153.6%
NM
NM
NM Disposal/(purchase)
EBIT Margin (%)
2.5%
4.6%
2.7%
2.8%
2.6% Net Interest
Net Interest
838
406
39
347
525 Free cash flow
Earnings before tax
9,453 20,565 12,281 12,007 10,963
% change Y/Y
-26.6% 117.5% -40.3%
-2.2%
-8.7% Equity raised/(repaid)
Tax
-2,202 -5,299 -2,825 -2,401 -2,193 Debt raised/(repaid)
as % of EBT
156.0% 131.9% 158.1% 159.7% 167.8% Other
7,040 14,911
9,239
9,385
% change Y/Y
-35.3% 111.8% -38.0%
1.6%
-8.7% Beginning cash
Shares outstanding
2,040
2,040
2,040
2,040
2,040 Ending cash
3.45
7.31
4.53
4.60
4.20 DPS - (Bt)
% change Y/Y
-35.3% 111.8% -38.0%
1.6%
-8.7%
Balance sheet
Ratio Analysis
FY10
14,035 19,292
9,286 12,186
9,847 EBITDA margin
Accounts receivable
Inventories
Others
8,564
4,714
5,100
5,100
5,100
Current assets
74,724 84,147 86,000 83,161 78,877
LT investments
1,131
2,331
2,500
2,500
2,500 Sales growth
Net fixed assets
Total Assets
146,607 155,085 157,668 154,128 150,835 EPS growth
Liabilities
ST loans
2,962
5,717
6,028
5,353
Payables
Others
5,428
3,911
5,000
5,000
27,374 26,899 32,297 29,886 28,649 Assets/equity (x)
Long-term debt
41,061 39,970 34,159 30,334 26,509 ROE
Other liabilities
1,334
3,183
3,291
3,325
3,362 ROCE
Total Liabilities
69,769 70,052 69,747 63,546 58,519
71,417 79,469 82,248 84,799 86,431
BVPS - (Bt)
35.01
38.96
40.32
41.57
42.37
FY10
8,087
6,662
-1,896
-2,202
11,326
FY11
20,511
6,604
-7,396
-5,299
14,462
FY12E
12,242
7,176
-6,772
-2,825
9,744
FY13E
11,661
7,515
4,003
-2,401
21,123
FY14E
10,438
7,958
1,383
-2,193
18,111
-5,801 -4,797
0
0
838
406
5,525 9,665
-7,350 -6,860 -8,964

0
0
0
39
347
525
2,394 14,263 9,147
0
0
588 1,664
2,286 1,766
-4,284 -5,508
9,238 14,035
14,035 19,292
2.00
3.30
0
0
0
-5,500 -4,500 -4,500
496
35
36
-6,732 -6,834 -6,936
19,292 9,286 12,186
9,286 12,186 9,847
3.35
3.40
3.45
FY10
4.6%
2.5%
2.8%
FY11
6.1%
4.6%
3.3%
FY12E FY13E FY14E

4.3% 4.6% 4.6%
2.7% 2.8% 2.6%
2.1% 2.3% 2.1%
12.1% 40.2%
0.2% (7.8%) (3.0%)
-25.4% 65.1% -36.0% -1.3% -8.7%
(25.4%) 65.1% (36.0%) (1.3%) (8.7%)
42.0% 33.2%
2.24
2.96
1.87
1.71
13.0% 19.7%
7.2% 17.1%
37.6% 27.7% 24.7%

2.86
2.65
2.62
1.92
1.82
1.75
11.8% 11.2% 10.0%
9.9% 9.6% 8.8%
537
Adrian Mowat
(852) 2800-8599

21 November 2012
Neutral
www.tisco.co.th
Company overview
TISCO is a small bank but has been in Thailand for a long time and has a very strong
auto hire purchase business (c.70% of the banks loans). Although it is small in both
assets and ATM/branch network, the banks ROE is one of the highest in the sector, in
our view due to Tiscos management, quality, and strong expertise in business.
Thailand
Banks
Price: Bt45.50
Investment case
We like TISCOs quality & profitability but expect growth to moderate after strong
share gains in the past 8 years (loan share doubled from 1.4% in FY04 to 2.7% at
3Q12). We also see risk of lower dividend payout. Tier 1 capital ratio is 9% (we think
optimal). We see TISCO at an inflection point, where growth will either slow (balanced
with high ROE) or continue to be strong (risk of capital increase). We think growth
will moderate. We estimate TISCOs ROE can adequately fund 10-15% loan growth.
(66-2) 684 2684
anne.x.jirajariyavech@jpmorgan.com
<GO>
50
45
Bt 40
35
30

With tax rebate on first-time car purchase now to an end, growth in auto loans (c.70%
of TISCOs business) is likely to slow. TISCO will, however, expand into new areas
e.g. used car lending and corporate/SME lending.
Nov-11
Feb-12
May-12
Aug-12
Nov-12
TISCO.BK share price (Bt)

SET (rebased)
Abs
Rel
YTD
19.7%
-7.7%
1m
-1.1%
-1.2%
3m
15.2%
6.1%
Source: Bloomberg.

Low interest rate with better liquidity and less deposit competition from Specialized
Financial Institutions bode well for banks including TISCO. Hence, the risk is that
NIM could surprise on the upside. However, we also foresee risk of more stringent
lending and provisioning requirement from the Bank of Thailand as part of macro
prudential measures to prevent risk of excessive lending.
Our Dec-13 PT is Bt49 based on DDM with 13.2% ROE, 11.6% COE, 7.5% growth.
Key downside risks are credit quality deterioration and fiercer than expected market
competition. Upside risks are continuing strong loan growth, but this could further
threaten the bank's capital position.
Tisco Financial Group Pcl. (Reuters: TISCO.BK, Bloomberg: TISCO TB)
FY10A
FY11A
FY12E
FY13E
Operating Profit (Bt mn)
5,905
5,864
6,668
7,554
Net Profit (Bt mn)
2,888
3,267
3,771
4,192
Cash EPS (Bt)
3.97
4.49
5.18
5.76
Fully Diluted EPS (Bt)
3.97
4.49
5.18
5.76
DPS (Bt)
2.25
2.35
2.25
2.50
EPS growth (%)
48.5%
13.0%
15.4%
11.2%
ROE
21.2%
21.1%
21.8%
21.5%
P/E (x)
11.5
10.1
8.8
7.9
BVPS (Bt)
20.30
22.25
25.18
28.44
P/BV (x)
2.2
2.0
1.8
1.6
Dividend Yield
4.9%
5.2%
4.9%
5.5%
538
FY14E
8,679
4,707
6.47
6.47
3.00
12.3%
21.4%
7.0
31.91
1.4
6.6%
Company Data
52-week Range (Bt)
Market Cap (Bt mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Bt)
Date Of Price
3M - Avg daily value (Bt mn)
SET
Exchange Rate
49.25-32.25
33,120
1,078
728
Dec
45.50
02 Nov 12
112.65
3.7
2.55
1306.60
30.72
12m
37.9%
2.6%

21 November 2012
Adrian Mowat
(852) 2800-8599
Tisco Financial Group Pcl.: Summary of Financials

Income Statement
FY10
4.5%
98.5%
4.4%
FY11
3.5%
99.1%
3.5%
Net Interest Income

Fee Income
Dealing Income
6,861
3,561
2,708
853
6,916
3,883
2,854
1,029
10,423
10,799
Operating costs
Pre-Prov. Profits
Provisions
Other Inc
Other Exp.
Exceptionals
Associate
Pre-tax
Tax
Minorities
Attributable Income
(4,518) (4,935)
5,905 5,864
(1,947) (1,291)
201
282
4,159 4,856
(1,256) (1,563)
(14)
(26)
2,888 3,267
Per Share Data THB

EPS
DPS
Payout
Book value
PPOP per share
Key Balance sheet Bt in millions
Net Loans
LLR
Gross Loans
NPLs
Investments
Avg. IEA
Goodwill
Assets
FY10
3.97
2.25
56.7%
20.30
727
8.12
FY10
145,570
(4,162)
149,732
2,359
6,481
4,384
152,702
0
171,408
FY11
4.49
2.35
52.4%
22.25
728
8.06
FY11
180,585
(4,428)
185,014
2,214
3,706
3,075
194,300
0
220,709
Deposits
Other Borrowings
Avg. IBL
Avg. Assets
Common Equity
RWA
Avg. RWA
48,533
101,619
0
136,235
155,106
14,777
111,550
96,329
37,979
159,875
0
174,003
196,058
16,199
135,557
123,553
Growth Rates
FY12E FY13E FY14E
3.2%
3.1%
3.2% Loans
99.9% 100.4% 101.1% Deposits
3.2%
3.2%
3.2% Assets
Equity
7,707 8,643
9,817 RWA
4,729 5,255
3,597 4,011
1,131 1,245
1,369
of which Fee Grth
Revenues
12,436 13,899 15,658 Costs
(5,768) (6,345) (6,980) Loan Loss Provisions
6,668 7,554
8,679 Pre-Tax
(1,737) (2,281) (2,762) Attributable Income
0
0
0 EPS
- DPS
4,931 5,272
5,917 Loan/deposit
(1,134) (1,054) (1,183) Investment/assets
(26)
(26)
(26) Loan/Assets
3,771 4,192
LT debt/liabilities
FY12E FY13E FY14E Asset Quality/Capital
5.18
5.76
2.25
2.50
3.00 NPLs/loans
43.4% 43.4% 46.4% Loan loss reserves/NPLs
25.18 28.44
728
728
728 Tier 1 Ratio
9.16 10.38
11.92 Total CAR
FY12E FY13E FY14E Du-Pont Analysis
216,902 248,081 283,798 NIM (as % of avg. assets)
(6,165) (8,447) (11,208) Earning assets/assets
223,068 256,528 295,007 Margins (as % of Avg. Assets)
3,009 4,019
3,706 3,706
3,402 3,715
238,764 274,575 310,597 Cost/Income
0
0
0 Cost/Assets
257,528 289,194 325,450 Pre-Provision ROA
LLP/Loans
41,777 45,955 50,550 Loan/Assets
190,238 214,787 243,312 Other Prov, Income/ Assets
0
0
0 Operating ROA
214,934 246,378 277,302 Pre-Tax ROA
239,118 273,361 307,322 Tax rate
18,332 20,704 23,227 Minorities & Outside Distbn.
154,692 174,798 197,919 ROA
145,125 164,745 186,358 RORWA
Equity/Assets
ROE
FY10 FY11 FY12E

31.1% 23.6% 20.6%
(14.6%) (21.7%) 10.0%
23.5% 28.8% 16.7%
18.9%
9.6% 13.2%
37.5% 21.5% 14.1%
20.9%
0.8% 11.4%
39.3%
9.0% 21.8%
44.4%
5.4% 26.0%
26.7%
3.6% 15.2%
27.7%
9.2% 16.9%
25.9% (0.7%) 13.7%
25.4% (33.7%) 34.5%
48.7% 16.8% 1.6%
48.9% 13.1% 15.4%
48.5% 13.0% 15.4%
29.3%
4.4% (4.3%)
FY13E
15.0%
10.0%
12.3%
12.9%
13.0%
12.1%
11.1%
11.5%
11.8%
10.0%
13.3%
31.4%
6.9%
11.2%
11.2%
11.1%
FY14E
15.0%
10.0%
12.5%
12.2%
13.2%
13.6%
11.1%
11.5%
12.7%
10.0%
14.9%
21.1%
12.2%
12.3%
12.3%
20.0%

299.9% 475.5% 519.2% 539.8% 561.4%
5.1%
2.6% 1.5% 1.4% 1.2%
85.1% 85.4% 85.3% 87.7% 89.7%
31.0% 18.6% 17.5% 17.1% 16.7%
59.1% 72.4% 78.9% 79.8% 80.3%
(2.8%) (2.4%) (2.8%) (3.3%) (3.8%)
1.8%
1.4% 1.3% 1.5% 1.7%
136.7% 187.8% 202.8% 207.9% 211.7%
(4.1%) (6.1%) 35.9% 33.6% 31.0%
9.2%
9.0% 8.9% 9.1% 9.3%
14.5% 13.6% 13.2% 12.9% 12.6%
4.5%
3.5% 3.2% 3.1% 3.2%
98.5% 99.1% 99.9% 100.4% 101.1%
4.4%
3.5% 3.2% 3.2% 3.2%
34.2% 36.0% 38.0% 37.8% 37.3%
2.3%
2.0% 2.0% 1.9% 1.9%
6.7%
5.5% 5.2% 5.1% 5.1%
43.3% 45.7% 46.4% 45.7% 44.6%
2.9%
2.5% 2.4% 2.3% 2.3%
3.8%
3.0% 2.8% 2.8% 2.8%
(1.5%) (0.8%) (0.9%) (1.0%) (1.0%)
85.1% 85.4% 85.3% 87.7% 89.7%
0.1%
0.1% 0.0% 0.0% 0.0%
2.6%
2.3% 2.1% 1.9% 1.9%
2.7%
2.5% 2.1% 1.9% 1.9%
30.2% 32.2% 23.0% 20.0% 20.0%
0.1%
0.0% 0.0% 0.0% 0.0%
1.9%
1.7% 1.6% 1.5% 1.5%
3.0%
2.6% 2.6% 2.5% 2.5%
8.8%
7.9% 7.2% 7.1% 7.1%
21.2% 21.1% 21.8% 21.5% 21.4%
539
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.unionbankph.com
Price Target:PhP97.00
Company overview
Union Bank of the Philippines (UBP) is the 9th largest bank in the Philippines, with an
asset base of PhP270B. It is controlled by the listed conglomerate Aboitiz Equity
Ventures, whose other large businesses are concentrated primarily in the power
generation and distribution industry. The bank has one of the lowest loan-to-deposit
ratios, as it relies heavily on treasury operations to drive its earnings.
Philippines
Banks
Price: PhP112.80
Gilbert Y LopezAC
(632) 878 1188
Investment case
We forecast UBP to see a 2.4% net profit decline in 2013E, on the back of a 1.1%
contraction in non interest income. The weaker non-interest income is driven by a
forecast decline in trading gains, which had been the driver of earnings in 2012. We
believe it will be tough sustaining such a high level of trading gains.
UBPs biggest issue is its inability to exhibit any consistency in terms of loan growth.
In 3Q12, net loans contracted by 9% Y/Y and 13% YTD, a sharp contrast to nearly all
other banks in the sector. Furthermore, deposits have also fallen in 3Q12, by 17% Y/Y
and 24% YTD. This led to the loan to deposit ratio actually rising from 51% as of end
2011 to 58% in 3Q12.
140
120
Php 100
80
60
Nov-11
Feb-12
May-12
Aug-12
Nov-12
UBP.PS share price (Php)

PSE (rebased)
Abs
Rel
YTD
70.9%
46.5%
1m
6.5%
6.5%
3m
11.7%
9.3%
12m
83.4%
57.4%
Source: Bloomberg.

The main upside risk to earnings for UBP would come by way of higher loans growth
without sacrificing asset quality. However this seems unlikely given the recent
historical experience.
We have a Dec-13 PT of PhP97, which is based on a DDM and implies a 1.2x P/B for
2013E. Key upside risks are 1) achievement of consistently strong loans growth
without affecting asset quality adversely; 2) involvement in sector consolidation,
possibly resulting in an inflated valuation.
Union Bank of the Philippines (Reuters: UBP.PS, Bloomberg: UBP PM)
FY10A
FY11A
FY12E
FY13E
Operating Profit (Php mn)
6,711
8,359
8,345
8,352
Net Profit (Php mn)
5,353
6,595
7,385
7,211
Cash EPS (Php)
8.35
10.29
11.52
11.24
DPS (Php)
2.20
2.50
2.57
2.88
EPS growth (%)
23.8%
23.2%
12.0%
(2.4%)
ROE
15.9%
16.7%
16.2%
14.1%
P/E (x)
13.5
11.0
9.8
10.0
BVPS (Php)
56.12
66.81
75.75
84.12
P/BV (x)
2.0
1.7
1.5
1.3
Dividend Yield
2.0%
2.2%
2.3%
2.6%
Fully Diluted EPS (Php)
8.35
10.29
11.52
11.24
540
FY14E
8,627
7,254
11.31
2.81
0.6%
12.8%
10.0
92.62
1.2
2.5%
11.31
Company Data
52-week Range (Php)
Market Cap (Php mn)
Market Cap ($ mn)
Shares O/S (mn)
Fiscal Year End
Price (Php)
Date Of Price
3M - Avg daily value (Php mn)
PSE
Exchange Rate
140.00-60.50
72,333
1,761
641
Dec
112.80
07 Nov 12
21.51
0.5
0.20
5470.70
41.07

21 November 2012
Adrian Mowat
(852) 2800-8599
Union Bank of the Philippines: Summary of Financials

Income Statement
Growth Rates
3.0%
2.9%
3.0%
3.0% Loans
89.9% 94.0% 98.6% 100.4% Deposits
2.7%
2.7%
3.0%
3.0% Assets
Equity
Net Interest Income
7,074 6,983 7,142 7,796 8,460 RWA
Fee Income
682
847
847
847
847 Non-Interest Income
Dealing Income
of which Fee Grth
Revenues
13,209 16,541 17,136 17,680 18,527 Costs
Operating costs
(6,498) (8,182) (8,791) (9,328) (9,900) Loan Loss Provisions
Pre-Prov. Profits
6,711 8,359 8,345 8,352 8,627 Pre-Tax
Provisions
(524) (1,550)
(571)
(599)
Other Inc
- EPS
Other Exp.
- DPS
Exceptionals
Associate
Pre-tax
6,186 6,810 7,774 7,753 7,972 Loan/deposit
Tax
(833)
(215)
(389)
(543)
(717) Investment/assets
Minorities
0
0
0
0
0 Loan/Assets
Attributable Income
5,353 6,595 7,385 7,211 7,254 Customer deposits/liab.
LT debt/liabilities
Per Share Data PHP
FY10
FY11 FY12E FY13E FY14E Asset Quality/Capital
EPS
8.35 10.29 11.52 11.24 11.31 Loan loss reserves/loans
DPS
2.20
2.50
2.57
2.88
2.81 NPLs/loans
Payout
26.4% 24.3% 22.3% 25.6% 24.8% Loan loss reserves/NPLs
Book value
56.12 66.81 75.75 84.12 92.62 Growth in NPLs
641
641
641
641
641 Tier 1 Ratio
PPOP per share
10.47 13.04 13.01 13.02 13.45 Total CAR
Key Balance sheet Php in millions
FY10
FY11 FY12E FY13E FY14E Du-Pont Analysis
Net Loans
95,032 105,011 105,011 115,512 127,064 NIM (as % of avg. assets)
LLR
(8,150) (9,149) (9,378) (9,601) (9,845) Earning assets/assets
Gross Loans
103,182 114,161 114,389 125,113 136,909 Margins (as % of Avg. Assets)
NPLs
8,704 8,974 8,631 8,806 8,738 Non-Int. Rev./ Revenues
Investments
82,946 103,004 111,244 120,143 129,755 Non IR/Avg. Assets
23,698 23,729 26,102 28,712 31,583 Revenue/Assets
Avg. IEA
221,794 235,063 257,110 285,581 317,515 Cost/Income
Goodwill
- Cost/Assets
Assets
253,000 270,186 276,955 302,425 330,265 Pre-Provision ROA
LLP/Loans
Deposits
192,536 204,210 183,789 202,168 222,385 Loan/Assets
Other Borrowings
5,774 4,776 4,776 4,776 4,776 Operating ROA
Avg. IBL
202,785 209,274 221,982 239,453 258,306 Pre-Tax ROA
Avg. Assets
248,681 261,593 273,570 289,690 316,345 Tax rate
Common Equity
RWA
152,073 165,126 181,639 199,802 219,783 ROA
Avg. RWA
147,438 158,600 173,382 190,721 209,793 RORWA
Equity/Assets
ROE
FY10
3.2%
89.2%
2.8%
FY10
(4.6%)
(1.0%)
3.5%
15.0%
6.5%
9.5%
4.4%
0.3%
7.0%
9.3%
5.0%
(73.4%)
40.0%
23.8%
23.8%
96.5%
FY11
10.6%
6.1%
6.8%
19.0%
8.6%
(1.3%)
55.8%
24.1%
25.2%
25.9%
24.6%
195.5%
10.1%
23.2%
23.2%
13.7%
FY12E
0.2%
(10.0%)
2.5%
13.4%
10.0%
2.3%
4.6%
0.0%
3.6%
7.4%
(0.2%)
(63.1%)
14.2%
12.0%
12.0%
2.8%
FY13E
9.4%
10.0%
9.2%
11.0%
10.0%
9.2%
(1.1%)
0.0%
3.2%
6.1%
0.1%
4.8%
(0.3%)
(2.4%)
(2.4%)
12.0%
FY14E
9.4%
10.0%
9.2%
10.1%
10.0%
8.5%
1.8%
0.0%
4.8%
6.1%
3.3%
9.4%
2.8%
0.6%
0.6%
(2.4%)
FY10
49.4%
34.5%
42.5%
88.7%
4.3%
FY10
(7.9%)
7.5%
98.3%
22.1%
13.3%
17.0%
FY10
3.2%
89.2%
2.8%
46.4%
2.5%
5.3%
49.2%
2.6%
2.7%
(0.5%)
42.5%
2.5%
2.5%
13.5%
0.0%
2.2%
3.6%
15.9%
FY11
51.4%
35.5%
41.5%
89.8%
4.9%
FY11
(8.0%)
8.1%
97.9%
3.1%
15.3%
18.2%
FY11
3.0%
89.9%
2.7%
57.8%
3.7%
6.3%
49.5%
3.1%
3.2%
(1.4%)
41.5%
2.6%
2.6%
3.1%
0.0%
2.5%
4.2%
16.7%
FY12E
57.1%
39.2%
41.8%
80.5%
4.2%
FY12E
(8.2%)
7.7%
105.2%
(3.8%)
15.8%
18.4%
FY12E
2.9%
94.0%
2.7%
58.3%
3.7%
6.3%
51.3%
3.2%
3.1%
(0.5%)
41.8%
2.8%
2.8%
5.0%
0.0%
2.7%
4.3%
16.2%
FY13E
57.1%
39.9%
41.3%
81.4%
4.2%
FY13E
(7.7%)
7.3%
108.8%
2.0%
15.9%
18.3%
FY13E
3.0%
98.6%
3.0%
55.9%
3.4%
6.1%
52.8%
3.2%
2.9%
(0.5%)
41.3%
2.7%
2.7%
7.0%
0.0%
2.5%
3.8%
14.1%
FY14E
57.1%
39.5%
41.4%
82.1%
4.1%
FY14E
(7.2%)
6.7%
110.8%
(0.8%)
16.0%
18.1%
FY14E
3.0%
100.4%
3.0%
54.3%
3.2%
5.9%
53.4%
3.1%
2.7%
(0.5%)
41.4%
2.5%
2.5%
9.0%
0.0%
2.3%
3.5%
12.8%
541
Adrian Mowat
(852) 2800-8599

21 November 2012
United Tractors
Underweight
www.unitedtractors.com
Company overview
UNTR is a 59.5% subsidiary of Astra International. UNTR is the exclusive distributor
of Komatsu in Indonesia, and also provides service and spares, along with certain other
brands of heavy equipment. 100% subsidiary PAMA is the largest mining contractor in
Indonesia and produces close to a quarter of all the coal that is mined in Indonesia. The
company has been acquiring coal concessions over the last couple of years, but they are
still a small contributor to overall operations.
Indonesia
Heavy Trucks
Price: Rp19,800
Investment case
9MFY12 Komatsu volumes are down 15% y/y. UNTRs mining contracting clients are
looking to pare down costs by cutting strip ratios, potentially pressuring margins. Even
in this environment, consensus estimates still imply 10% y/y growth in FY13E, which
we see as untenable. Though we see UNTR as a high-quality company, we think
expectations need to be reassessed lower and hence we rate it an UW.
1) Komatsu volume outlook remains uncertain, especially among mining clients; 2)
declining stripping ratios at mining contracting clients could impact margins as well as
equipment future demand; 3) we forecast EPS to decline 4% y/y for 2013, while street
estimates still project growth; and 4) capex uncertainty among miners.
Aditya SrinathAC
(62-21) 5291-8573
aditya.s.srinath@jpmorgan.com
Bloomberg JPMA SRINATH <GO>
34,000
30,000
Rp 26,000
22,000
18,000
UNTR.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
-21.8%
-35.0%
1m
4.3%
2.9%
3m
-5.3%
-11.1%
12m
-18.1%
-31.8%
Source: Bloomberg.

UNTR's business is highly leveraged to the coal cycle a reversal in coal prices could
be followed by a demand reversal. Weaker currency could be a source of upside risk.
We apply the current consensus 12M Fwd P/E (11.5x) to our below-consensus EPS
estimate to arrive at our Rp17,000 Dec-13 PT. Beyond coal prices, one of the risks to
our view is that our DCF valuation of UNTR is above the current stock price, but we
think this requires growth to return to be credible as a valuation lodestone.
PT United Tractors tbk (Reuters: UNTR.JK, Bloomberg: UNTR IJ)
FY10A
FY11A
FY12E
Revenue (Rp bn)
37,324
55,053
56,527
Net Profit (Rp bn)
3,831.5
5,900.9
5,787.1
EPS (Rp)
1,151.67
1,656.57
1,551.45
DPS (Rp)
465.67
662.63
620.58
Revenue growth (%)
27.6%
47.5%
2.7%
EPS growth (%)
0.4%
43.8%
-6.3%
ROCE
26.2%
28.8%
23.3%
ROE
25.6%
27.8%
20.6%
P/E (x)
17.2
12.0
12.8
P/BV (x)
4.1
2.7
2.5
EV/EBITDA (x)
0.6
-0.2
-0.0
Dividend Yield
2.4%
3.3%
3.1%
542
FY13E
60,672
5,557.1
1,489.77
595.91
7.3%
-4.0%
19.2%
17.7%
13.3
2.2
-0.4
3.0%
FY14E
70,703
7,058.8
1,892.37
756.95
16.5%
27.0%
22.2%
20.0%
10.5
2.0
-0.5
3.8%
Company Data
Shares O/S (mn)
Market cap (Rp mn)
Market cap ($ mn)
Price (Rp)
Date Of Price
Free float (%)
JCI
Exchange Rate
Fiscal Year End
3,730
73,856,670
7,670
19,800
09 Nov 12
40.5%
6.68
138,795.10
14.41
4,334
9,629.00
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
United Tractors: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
FY11 FY12E FY13E
37,324 55,053 56,527 60,672
27.6%
47.5%
2.7%
7.3%
8,019 11,041 11,644 11,551
9.0%
37.7%
5.5%
-0.8%
5,163
7,615
7,622
6,934
0.3%
47.5%
0.1%
NM
13.8%
13.8%
13.5%
11.4%
-140
-39
-31
-100
5,009
7,785
7,516
7,217
-8.0%
55.4%
-3.5%
-4.0%
-1,176
-1,885
-1,729
-1,660
23.5%
24.2%
23.0%
23.0%
3,831.5 5,900.9 5,787.1 5,557.1
0.4%
54.0%
-1.9%
-4.0%
3
4
4
4
1,151.67 1,656.57 1,551.45 1,489.77
0.4%
43.8%
(6.3%) (4.0%)
FY10
1,385
5,215
6,932
1,998
15,529
FY11
7,172
9,833
7,129
1,528
25,662
FY12E
5,868
9,292
6,969
1,549
23,678
FY13E
9,481
9,974
7,480
1,662
28,597
443
13,261
29,701
616
13,670
46,440
2,616
15,415
48,201
2,616
14,703
52,407
2,982
2,587
4,203
4,203
5,531 10,303
6,969
7,480
1,324
2,039
3,562
3,823
9,837 14,930 14,735 15,507
2,730
2,116
500
500
483
1,304
1,404
1,504
13,536 18,936 17,225 18,097
16,136 26,320 29,793 33,127
4,850.29 7,389.00 7,987.03 8,880.90
FY14E
70,703
16.5%
13,987
21.1%
8,880
28.1%
12.6%
-15
9,167
27.0%
-2,108
23.0%
7,058.8
27.0%
4
1,892.37
27.0%
FY14E
12,723
11,622
8,717
1,937
34,999
Cash flow statement

EBIT
Taxes

5,163 7,615 7,622 6,934 8,880
2,857 3,426 4,022 4,617 5,107
-3,894 1,141 -1,131
-534 -1,292
-1176 -1885 -1729 -1660 -2108
2,974 10,569 8,775 9,738 10,972
Capex
Disposal/(purchase)
Net Interest
Other
Free cash flow
-4,282 -3,835 -5,764 -3,902 -4,907

222 1,127
264
902
907
-140
-39
-31
-100
-15
-318 -6,197 -2,000
0
0
-1,308 6,734 3,011 5,835 6,065
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net margin
0 6,023
0
0
0
1,942 -1,008
0
0
0
-159 2,595
0
0
0
-1,549 -2,360 -2,315 -2,223 -2,824
2,776 1,385 7,172 5,868 9,481
1,385 7,172 5,868 9,481 12,723
465.67 662.63 620.58 595.91 756.95

2,616 Sales growth
58,611 EPS growth
4,203
4,455 Sales/assets
500 ROE
1,604 ROCE
20,065
37,362
10,016.32

21.5% 20.1% 20.6% 19.0% 19.8%
13.8% 13.8% 13.5% 11.4% 12.6%
10.3% 10.7% 10.2% 9.2% 10.0%
27.6%
27.6%
0.4%
0.4%
57.20
37.8%
47.5%
54.0%
43.8%
284.54
(1.9%) 7.3% 16.5%

2.7% 7.3% 16.5%
-1.9% -4.0% 27.0%
(6.3%) (4.0%) 27.0%
370.90 115.12 954.06
29.8% -7.2% -1.9% -12.7% -19.9%

1.38
1.45
1.19
1.21
1.27
1.67
1.55
1.51
1.58
1.57
25.6% 27.8% 20.6% 17.7% 20.0%
26.2% 28.8% 23.3% 19.2% 22.2%
543
Adrian Mowat
(852) 2800-8599

21 November 2012
Vale Indonesia
Neutral
www.pt-inco.co.id
Company overview
Vale Indonesia (INCO) is the largest nickel producer in Indonesia. It is controlled by
Vale Inco (59%) and Sumitomo Metal Mining (20%) and owns nickel ore deposit in
three major provinces in Sulawesi with a total area of 218,529ha and 2p reserves of
153MM tons (1.77% grade). INCO sells its annual nickel production to its parent, Vale
Inco, under a must-take contract. It is one of the lowest-cost producers in the world as
it uses hydro power (275MW). Its new hydro plant (Karebbe project) will add about
90MW of capacity pa, but INCO will need to debottleneck its processing plant. It is
also embarking on pulverized coal to replace oil in its dryers.
Indonesia
Metals
Price: Rp2,650
Investment case
Positives drivers: (1) Volume ramp-up from 70,800 tons in FY12E to 80,000 tons in
FY13E. (2) Cost decline from US$12,365/ton to US$11,598/ton. (3) Nickel price rose
from US$17,884/ton in FY12 to US$19,250/ton in FY13E. Negative drivers: (1)
Current low spot price at US$16,000/ton. (2) Support from dividend is diminishing.
If the current spot price of US$16,000 persists, 1H13 EPS could fall by 67.5%. The
expected 1.5% yield in FY13E is unattractive compared to the 2.6% of our universe.
Stevanus JuandaAC
(62-21) 5291 8574
stevanus.x.juanda@jpmorgan.com
Bloomberg JPMA JUANDA<GO>
4,500
4,000
Rp
3,500
3,000
2,500
2,000
Nov-11
Feb-12 May-12
Aug-12 Nov-12
INCO.JK share price (Rp)

JCI (rebased)
Abs
Rel
YTD
-17.2%
-31.4%
1m
-7.0%
-7.9%
3m
9.3%
2.8%
12m
-24.3%
-39.4%
Source: Bloomberg.

Our operating profit estimate of US$262MM is 12.1% below consensus, implying that
consensus is estimating a lower cost. In 9M12, one of the reasons the result was below
consensus is that consensus forecasted a much lower cost, which did not materialize.
Our DCF-based Dec-13 PT of Rp2,600 implies 48.4x FY12E P/E and 15.5x FY13E
P/E. Upside risks: (1) a higher-than-expected recovery in nickel prices; (2) costs come
in lower than US$11,637/ton. Downside risks: (1) earnings estimate revisions by
consensus cause underperformance; (2) concession losses.
Vale Indonesia (Reuters: INCO.JK, Bloomberg: INCO IJ)
FY09A
FY10A
FY11A
Revenue ($ mn)
761
1,276
1,243
Net Profit ($ mn)
170
437
334
EPS ($)
0.02
0.04
0.03
DPS ($)
0.01
0.03
0.02
Revenue growth (%)
-42.0%
67.7%
-2.6%
EPS growth (%)
-52.6%
156.6%
-23.7%
ROCE
14.3%
33.5%
24.9%
ROE
11.0%
26.8%
19.4%
P/E (x)
16.1
6.3
8.2
P/BV (x)
1.7
1.6
1.5
EV/EBITDA (x)
8.3
3.6
4.5
Dividend Yield
3.9%
12.4%
8.9%
544
FY12E
982
56
0.01
0.01
-20.9%
-83.3%
5.3%
3.2%
49.2
1.6
13.0
3.1%
FY13E
1,190
174
0.02
0.00
21.1%
212.2%
12.8%
9.6%
15.8
1.5
7.3
1.5%
FY14E
1,311
231
0.02
0.01
10.2%
33.3%
15.4%
11.9%
11.8
5.9
3.1%
Company Data
Shares O/S (mn)
Market cap ($ bn)
Market cap ($ mn)
Price (Rp)
Date Of Price
Free float (%)
JCI
Exchange Rate
Fiscal Year End
9,936
3
2,735
2,650
07 Nov 12
21.0%
6,983,976.00
18,597.57
1.93
4,350
9,626.00
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Vale Indonesia: Summary of Financials

Income Statement
Revenues
% change Y/Y
EBITDA
% change Y/Y
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
LT investments
Net fixed assets
Total Assets
Liabilities
Short-term loans
Payables
Others
Long-term debt
Other liabilities
Total Liabilities
BVPS
FY10
FY11 FY12E
1,276
1,243
982
67.7% (2.6%) (20.9%)
685
583
206
116.7% -14.9% -64.6%
596
485
106
157.2% (18.7%) (78.1%)
46.7% 39.0% 10.8%
-0
0
-16
581
452
76
145.6% -22.2% -83.3%
-144
-119
-20
24.8% 26.2% 26.5%
437
334
56
156.6% -23.7% -83.3%
9,936
9,936
9,936
0.04
0.03
0.01
156.6% (23.7%) (83.3%)
FY13E
1,190
21.1%
371
80.0%
262
145.9%
22.0%
-16
236
212.3%
-63
26.5%
174
212.2%
9,936
0.02
212.2%
FY10
404
199
102
7
712
FY11
399
75
163
143
781
14
1,465
2,190
61
1,579
2,421
13
1,647
2,333
75
1,716
2,544
9
41
107
158
141
212
510
1,680
0.17
38
84
57
179
255
219
652
1,769
0.18
0
80
62
142
218
234
594
1,739
0.18
0
84
81
166
255
250
671
1,873
0.19
FY14E
1,311
10.2%
453
22.1%
339
29.6%
25.9%
-16
315
33.3%
-83
26.5%
231
33.3%
9,936
0.02
33.3%
FY12E FY13E FY14E

267
283
337
135
163
180
137
144
151
135
163
180
673
754
846
Cash flow statement

EBIT
Taxes
FY10
596
88
315
-144
641
FY11
485
98
-81
-119
304
Capex
Disposal/(purchase)
Net Interest
Other
Free cash flow
-133
-0
508
-209
0
96
-167
-16
-21
-179
-16
40
-199
-16
119
Other
Dividends paid
Beginning cash
Ending cash
DPS
Ratio Analysis
EBITDA margin
Operating margin
Net margin
0
-0
0
-339
261
404
0.03
0
150
0
-243
404
399
0.02
0
-38
0
-85
399
267
0.01
0
0
0
-40
267
283
0.00
0
0
0
-83
283
337
0.01
FY10
53.6%
46.7%
34.3%
FY11
46.9%
39.0%
26.9%

75 Sales growth
2,722 EPS growth
0
90 Sales/assets
178 Assets/equity
255 ROE
268 ROCE
701
2,021
0.20
FY12E FY13E FY14E

106
262
339
100
110
114
-24
-40
-28
-20
-63
-83
147
218
318
FY12E FY13E FY14E

21.0% 31.2% 34.6%
10.8% 22.0% 25.9%
5.7% 14.6% 17.6%
67.7% (2.6%) (20.9%) 21.1% 10.2%

67.7% (2.6%) (20.9%) 21.1% 10.2%
156.6% -23.7% -83.3% 212.2% 33.3%
156.6% (23.7%) (83.3%) 212.2% 33.3%
171,140.77
13.23 23.25 28.37
-15.1%
0.60
1.29
26.8%
33.5%
-6.0%
0.54
1.33
19.4%
24.9%
-2.8%
0.41
1.36
3.2%
5.3%
-1.5% -4.0%
0.49
0.50
1.38
1.35
9.6% 11.9%
12.8% 15.4%
545
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
Weg
Price: R$23.50
www.weg.net.br
End Date: Dec 2013
Company overview
Weg is a leader in the electric-electronic motors industry, with a 75% share of Brazils
market and a 4% share of the global market. The company can be divided into four
business divisions broadly defined as (1) industrial electro-electronic equipment, (2)
heavy-duty transformer and sub-station systems, (3) home appliances, and (4) paints
and varnishes. Global clients for the company include OEMs and capital goods
manufacturers as well as clients in steel, mining, pulp and paper, and oil and gas.
Brazil
Capital Goods and Agribusiness
Wegs business will grow alongside levels of investments in fixed capital and
Brazilian GDP growth.
Given its market position, we believe the company will be able to achieve top-line
growth of approximately R$17 bln by 2020 (vs R$6 bln in 2012) assuming normal
growth rates in Brazil. A recovery in capital goods investment would be less dynamic
than in trucks, leading us to believe that there will be few surprises to the upside.
We see downside to current estimates

Even if Weg grows its business in line with Brazil growth expectations, we see little
room for margin expansion as we expect competitors to be drawn to the market, which
has few barriers to entry. Compared to international peers, WEGE3 trades at a 40%
premium on EV/EBITDA, which we do not view as justified given the companys
lower pricing power and lack of diversified products compared to major foreign
players.
Cassio LucinAC
(55-11) 4950 3893
cassio.lucin@jpmorgan.com
Thomas McElwee
(55-11) 4950 6719
thomas.mcelwee@jpmorgan.com
Bloomberg JPMA LUCIN <GO>

24
22
R$ 20
18
16
Nov-11
Feb-12
May-12
Aug-12
Nov-12
W EGE3.SA share price (R$)

IBOV (rebased)
Source: Bloomberg.
Acquisitions can have a significant effect on earnings

A major driver of growth for WEGE3 continues to be acquisitions, which could have a
significant positive or negative effect on the companys earnings.
We are UW on WEGE3 with a Dec 2013 PT of R$18.00
We estimate the equity value of Weg using a finite FCF to firm calculation (DCF) with
explicit forecasts to 2020 and a perpetual value calculation thereafter. Upside risks to
our rating include accretive acquisitions and the reduction of raw material and labor
t
Weg SA (WEGE3.SA;WEGE3 BZ)
FYE Dec
EPS Reported (R$)
FY
Revenues FY (R$ mn)
EBITDA FY (R$ mn)
P/E FY
2011A
2012E
2013E
0.95
5,189
882
24.8
1.05
6,253
1,063
22.5
1.27
7,011
1,243
18.5
546
Company Data
Price (R$)
Date Of Price
52-week Range (R$)
Mkt Cap (R$ mn)
Fiscal Year End
Shares O/S (mn)
Price Target (R$)
23.50
14 Nov 12
24.43 - 16.96
14,591.27
Dec
621
18.00
31 Dec 13
Adrian Mowat
(852) 2800-8599

21 November 2012
Weg: Summary of Financials

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
EBITDA
Accounts receivable
Inventories
Current assets
PP&E
Total assets

5,189 6,253 7,011 7,948
3,633 4,460 5,048 5,723
1,561 1,793 1,963 2,226
768
894
947 1,073
188
210
226
244
685
899 1,017 1,153
103
32
48
89
(22)
(62)
0
0
766
869 1,064 1,242
159
210
263
307
587
649
790
922
587
649
790
922
0.95
1.05
1.27
1.49
0.95
1.05
1.27
1.49
882 1,063 1,243 1,396
620
620
620
620
2,932 2,738 3,011 3,127
1,308 1,555 1,713 1,943
1,362 1,698 1,879 2,131
265
332
332
332
5,867 6,322 6,934 7,532
2,446 2,539 2,559 2,712
9,106 9,438 10,069 10,821
Total debt
Total liabilities
3,458
5,306
3,800
3,261
5,338
4,100
3,261
5,377
4,693
3,261
5,436
5,384
Net debt
D&A
Other
526
587
188
(560)
523
649
210
(475)
250
790
226
(300)
134
922
244
(422)
108
357
680
668
Capex
Free cash flow
(188)
(80)
(248)
109
(245)
434
(397)
271

Dividends
(188)
83
0.26
(248)
22
0.26
(245)
36
0.32
(397)
76
0.37

Revenues
Cost of goods sold
Gross profit
SG&A
D&A
Operating income
Pretax income
Income taxes
Net income - GAAP
EPS - GAAP
EPS - recurring
EBITDA
Ratio Analysis
Sales growth (total)
Sales growth (organic)
EBITDA growth
EPS growth
1Q12E 2Q12E 3Q12E 4Q12E

1,370 1,529 1,630 1,724
978 1,067 1,174 1,242
392
462
456
483
210
231
220
233
50
52
54
55
182
231
236
250
46
(13)
(13)
13
(33)
(29)
0
0
195
188
223
263
43
46
55
65
148
140
165
196
148
140
165
196
0.24
0.23
0.27
0.32
0.24
0.23
0.27
0.32
209
260
290
305
620
620
620
620
18.2% 20.5% 12.1% 13.4%
18.2% 20.5% 12.1% 13.4%
11.8% 20.5% 16.9% 12.4%
13.3% 10.6% 21.7% 16.7%
Gross margin
EBIT margin
EBITDA margin
Tax rate
Net margin
30.1%
13.2%
17.0%
20.8%
11.3%
28.7%
14.4%
17.0%
24.1%
10.4%
28.0%
14.5%
17.7%
24.7%
11.3%
28.0%
14.5%
17.6%
24.7%
11.6%
SG&A (% of revenue)
D&A (% of revenue)
Net debt / EBITDA
Interest coverage ratio
14.8%
3.8%
(0.3)
2.2
14.3%
2.6%
(0.1)
2.2
13.5%
3.2%
(0.3)
2.4
13.5%
3.1%
(0.3)
2.8

6.4%
15.4%
13.5%
6.9%
15.8%
12.2%
7.8%
16.8%
14.3%
8.5%
17.1%
15.2%
FCF / share
P/E
Enterprise value / EBITDA
(0.13)
24.8
14.7
0.18
22.5
12.2
0.70
18.5
10.2
0.44
15.8
9.0

547
Adrian Mowat
(852) 2800-8599

21 November 2012
Wintek Corporation
Underweight
www.wintek.com.tw
Company overview
Wintek (TWSE: 2384) was founded in 1990 and is one of the leading manufacturers of
handset display modules and touch panels in Taiwan. Its major products can be divided
into: (1) touch panel; and (2) display, including small- and medium-sized TFT-LCD
panels, MSTN and CSTN.
Taiwan
Price: NT$11.70
Narci Chang AC
(886-2) 2725-9899
JPMA NCHANG <GO>
Investment case
Despite rising touch panel demand, we believe Wintek could continue to suffer from
low technology investment and yield rate challenge in tablet/NB touch panels. Rapid
technology change in iPad touch panels would be another challenge for Wintek since
Apple remains Winteks biggest customer. We believe earnings visibility remains weak
for Wintek going forward and equity value could come down further.
The companys ROE would continue to stay in the red for the rest of 2012 as well as in
2013/2014, in our view. Continuous declines in equity value would also lead to an
increasing net-gearing ratio, hence the need to raise equity capital again if the earnings
visibility continues to show limited improvement.

26
22
NT$ 18
14
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12

TSE (rebased)
Abs
Rel
YTD
-46.0%
-50.2%
1m
-19.9%
-15.0%
3m
-18.5%
-17.4%
12m
-47.2%
-42.5%
Source: Bloomberg.

Given there are dual design-in options for next years 9.7 iPad, there is a risk that
Wintek might not receive the order if the new model switches to film-based solution.
Under the worst-case scenario, there will be a reduction in Wintek's 2013/2014 revenue
by 20%/40% assuming Apple adopts film-based solution for its new model.
Our Dec-13 PT of NT$10 is based on 0.5x 2013E P/BV, the historical trough. We
expect limited upside catalysts for the share price given low earnings visibility. Key
upside risks include: (1) new order wins from tablets; (2) earlier-than-expected take-off
of Win 8 touch NBs; and (3) significant yield rate improvement.
Sales
Operating Profit
EBITDA
Net profit
EPS
BPS (NT$)
P/E (x)
P/BV (x)
ROE (%)
Net Debt

93.0 103.5
88.1 110.4
-1.6
-0.8
-1.2
-2.4
6.0
7.6
7.1
5.5
-1.9
-1.7
-1.7
-2.8
-1.2
-0.9
-0.9
-1.5
21.8
19.6
18.7
17.1
NM
NM
NM
NM
0.5
0.6
0.6
0.7
-5.9
-4.6
-4.9
-8.6
24.9
31.7
37.6
41.5
548
Sales growth
OP growth
NP growth
Quarterly EPS (NT$)
EPS (11)
EPS (12) E
EPS (13) E
Difference (%)
Price Target
Consensus PT
FY11 FY12E FY13E

45.6% 11.2% (14.9%)
-158.0% -49.5% 53.0%
-192.5% -12.2% 4.0%
1Q
2Q
3Q
0.2
-0.2
0.2
0.1
-0.5
-0.4
-0.2
-0.2
-0.2
-17.5
10
12
FY14E
25.3%
97.0%
62.6%
4Q
-1.3
-0.2
-0.3
Date of Price
52-Week range
Market Cap
Market Cap
Share Out. (Com)
Free float
Avg daily val
Avg daily val (US$)
Avg daily vol.
Dividend yield (%)
Exchange Rate
08 Nov 12
NT$28.30 - 11.40
NT$22B
US$739MM
1,848MM
0.0%
NT$0.4B
13.59MM
26.1MM shares
0.0
29.26
Adrian Mowat
(852) 2800-8599

21 November 2012
Wintek Corporation: Summary of Financials

Ratio Analysis
FY10
Revenues
63,886 93,032 103,498 88,118 110,394 Gross margin
Cost of goods sold
57,984 90,644 100,495 86,073 108,719 EBITDA margin
Gross Profit
5,903 2,388
3,003 2,045
R&D expenses
-908 -1,460 -1,421 -1,168 -1,464 Net margin
SG&A expenses
-2,235 -2,529 -2,391 -2,115 -2,649 R&D/sales
2,759 -1,601
-809 -1,238 -2,438 SG&A/Sales
EBITDA
9,070 5,993
7,610 7,071
5,485
Interest income
61
111
59
31
28 Sales growth
Interest expense
-516
-659
-913
-947 -1,061 Operating profit growth
-455
-549
-854
-916 -1,034 Net profit growth
-156
-162
-721
-847
Earnings before tax
2,603 -1,762 -1,530 -2,085 -3,386
Tax
533
109
104
-345
2,058.7 -1,904.9 -1,672.8 -1,740.1 -2,830.1 Net debt to total capital
2,047 -1,939 -1,712 -1,740 -2,830 Net debt to equity
EPS (reported)
1.70 (1.23) (0.95) (0.94) (1.53) Asset turnover
EPS (adjusted)
1.69
-1.25
-0.97
-0.94
-1.53 Working capital turns (x)
BVPS
22.07 21.78
19.60 18.66
17.13 ROE
DPS
0.00
0.00
0.00
0.00
0.00 ROIC
Shares outstanding
1,297 1,648
1,848 1,848
Balance sheet
Cash flow statement
FY10
6,224 8,095
8,031 6,378
8,258 Net income
Accounts receivable
Inventories
Others
3,010 3,651
2,651 3,557
3,953 Other
Current assets
LT investments
471
252
231
231
231 Capex
Net fixed assets
Others
1,791 2,117
1,960 1,960
Total Assets
69,499 89,012 94,174 103,298 109,000 Free cash flow
Liabilities
ST Loans
Payables
10,738 13,729 12,364 16,906 18,809 Other
Others
5,656 6,434
5,848 7,951
Long-term debt
12,300 14,565 13,926 15,133 21,932
Other liabilities
0
1
0
0
Total Liabilities
40,877 53,117 57,951 68,816 77,347 Beginning cash
28,622 35,894 36,223 34,483 31,652 Ending cash
FY10
9.2%
14.2%
4.3%
3.2%
1.4%
3.5%
FY13E
2.3%
8.0%
(1.4%)
-2.0%
1.3%
2.4%
FY14E
1.5%
5.0%
(2.2%)
-2.6%
1.3%
2.4%
133.2%
45.6% 11.2% (14.9%)
-234.2% -158.0% -49.5% 53.0%
-178.5% -192.5% -12.2%
4.0%
(173.7%) (172.3%) (22.7%) (0.9%)
25.3%
97.0%
62.6%
62.6%
19.94
36.0%
63.8%
1.03
6.73
7.9%
3.1%
3.5%
FY11
2.6%
6.4%
(1.7%)
-2.0%
1.6%
2.7%
10.92
40.8%
69.3%
1.17
7.12
(5.9%)
-4.2%
-4.7%
FY12E
2.9%
7.4%
(0.8%)
-1.6%
1.4%
2.3%
8.92
7.72
5.30
43.8% 48.7% 51.9%
87.5% 109.0% 131.0%
1.13
0.89
1.04
8.15
5.41
6.18
(4.6%) (4.9%) (8.6%)
-3.4% -3.3% -4.7%
-3.9% -3.6% -5.1%
FY10
2,058.7 -1,904.9 -1,672.8 -1,740.1 -2,830.1
6,310
7,594
8,419 8,308 7,923
-814
-2,708
778 -2,438
-968
1,221
138
413 1,198
478
7,567
3,015
7,563 4,130 4,124
-9,619 -18,652 -16,553 -10,000 -8,000
0
0
0
0
0
-10,270 -18,758 -16,375 -10,000 -8,000
-2,052 -15,637 -8,990 -5,870 -3,876
0
9,786
3,000
0
0
-541
8,471
6,786 4,217 5,755
3,315
-643 -1,038
0
0
0
0
0
0
0
2,774 17,614
8,748 4,217 5,755
71
6,153
6,224
1,870
6,224
8,095
-64
8,095
8,031
-1,652
8,031
6,378
1,880
6,378
8,258
549
Adrian Mowat
(852) 2800-8599

21 November 2012
X5 Retail Group
Neutral
x5.ru
Company overview
X5 is Russia's largest retailer by revenue: with 3,475 stores under operation, the group
holds a 5.7% market share. X5 is a multi-format retailer present in discounter,
supermarket and hypermarket segments. Geographically, X5 focuses on Russias most
prosperous cities; in particular, X5 holds a >25% market share in St. Petersburg and is
the largest player in Moscow.
Russia
Retail
Price: $19.15
AC
(7-495) 967-3888
Investment case
X5 underperformed in 2012 as growth lagged expectations and significant reshuffling
was taking place in the management team. We see no reason for long-term
fundamentals-oriented investors to build positions in X5 despite attractive valuations
(28% discount to Magnit on 2013E P/E) as sales growth trends remain disappointing
and the companys efforts to address the problem are not bearing fruit yet. Bruised
sentiment is not an easy fix and certain events could send the stock to lower levels
(management resignations or earnings downgrades). That said, the appointment of a
permanent CEO or pick up in expansion and LFL sales growth in 2013 (low base
effect) may create positive momentum that value-hunters could be eager to play.
Operationally X5 is a less efficient retailer compared to Magnit (lower margins and
ROE), and it is also more leveraged. Finally, the company has yet to develop its
organic expansion capabilities, all this amidst changing its management and
restructuring logistics functions, assortment and supply. Hence we expect X5 to lag
Magnit in terms of growth and profitability during times of sluggish global growth.
30
28
26
$ 24
22
20
18
Nov-11
Abs
Feb-12
YTD
-15.6%
May-12
Aug-12
1m
-10.4%
Nov-12
3m
-2.3%
12m
-25.8%
Source: Bloomberg.

Further erosion of LFL traffic, deterioration of hypermarkets' sales densities,
cannibalization and competition, operating cost inflation could affect X5's earnings in
2013.
Our DCF-based Dec-13 PT is $22.50/GDR. We use (1) a 6.4% after-tax cost of debt,
(2) COE of 15% (13% base COE + 100bp liquidity premium + 150bp premium for low
earnings visibility), (3) target leverage of 30% to derive a WACC of 12.8%. Terminal
growth rate is assumed at a conservative 3% beyond the 10-year forecasting period. A
turnaround in X5s operating performance is the key upside risk to our view.
X5 Retail Group N.V. (PJPq.L;FIVE LI)
FYE Dec
2011A
Adj. EPS FY ($)
1.11
Revenue FY ($ mn)
15,455
EBITDA FY ($ mn)
1,130
EBITDA margin FY
7.3%
EBIT FY ($ mn)
702
302
FCF FY ($ mn)
32
Adj P/E FY
17.2
EV/EBITDA FY
8.0
2012E
0.83
15,737
1,070
6.8%
629
226
(346)
23.0
8.4
550
2013E
1.22
18,614
1,331
7.1%
810
330
(473)
15.7
6.8
2014E
1.45
21,553
1,541
7.1%
938
394
(451)
13.2
5.9
2015E
1.74
24,616
1,760
7.1%
1,071
472
(188)
11.0
5.1
Company Data
Price ($)
Date Of Price
Price Target ($)
52-week Range ($)
Mkt Cap ($ bn)
Shares O/S (mn)
19.15
02-Nov-12
22.50
31 Dec 13
31.00 - 18.43
5.2
272

21 November 2012
Adrian Mowat
(852) 2800-8599
X5 Retail Group: Summary of Financials

Revenues
Cost of goods sold
Gross profit
Operating costs
EBITDA
EBIT
Net Interest
Other
Earnings before tax
Tax
as % of EBT
Net Income (reported)
EPS (adjusted)
Balance sheet
Cash & cash equivalents
Accounts receivables
Inventories
Other
PP&E
Total assets
Short term debt
Payables
Other
Long term debt
Other
Total equity & liabilities
Cash flow statement

15,455 15,737 18,614 21,553 24,616 EBT
-11,776 -12,039 -14,240 -16,488 -18,831 Depreciation & amortisation
3,679
3,698
4,374
5,065
5,785 Change In working capital
-2,977 -3,069 -3,565 -4,127 -4,714 Other
1,130
1,070
1,331
1,541
702
629
810
938
1,071
(298)
(328)
(369)
(412)
(442) Capex
1
0
0
0
0 Other
405
302
440
526
629 Free cash flow
(103)
(75)
(110)
(131)
(157)
(25.4%) (25.0%) (25.0%) (25.0%) (25.0%) Financing cash flow
302
226
330
394
472 Dividends paid
302
226
330
394
472 Forex effect
1.11
0.83
1.22
1.45
1.74 Net change in cash
Ratio Analysis
385
529
557
605
618 Gross margin
362
388
459
531
607 EBITDA margin
895
989
1,170
1,355
409
501
572
645
2,051
2,408
2,758
3,137
3,493 SG&A/sales
3,825
4,337
5,378
6,448
7,342
2,934
2,934
2,934
2,934
2,934 Sales growth
EBITDA growth
8,810
9,679 11,071 12,519 13,769 EBIT growth
Net profit growth
915
1,102
1,102
1,102
1,102
1,906
1,979
2,341
2,710
3,096 Gross Debt
882
989
1,170
1,355
1,548 Net Debt
3,704
4,071
4,613
5,168
5,746 Net Debt/EBITDA
2,698
3,001
3,501
4,001
212
212
212
212
212 Net Debt to Equity
2,910
3,213
3,713
4,213
4,413 Sales/assets
Assets/equity
2,196
2,395
2,744
3,138
3,610 ROE
8,810
9,679 11,071 12,519 13,769 ROA
ROIC
FY11
405
428
174
-81
926
(792)
(102)
32
111
0
-29
114
FY11
23.8%
7.3%
4.5%
2.0%
-20.5%
FY12E
302
441
(61)
-75
607
FY13E
440
521
239
-110
1,090
FY14E
526
603
225
-131
1,222
FY15E
629
689
234
-157
1,395
(952) (1,563) (1,674) (1,583)

0
0
0
0
(346)
(473)
(451)
(188)
486
0
0
141
500
0
0
27
500
1
0
49
200
2
0
12

23.5% 23.5% 23.5% 23.5%
6.8%
7.1%
7.1%
7.1%
4.0%
4.4%
4.4%
4.4%
1.4%
1.8%
1.8%
1.9%
-20.6% -20.2% -20.2% -20.2%
37.0%
1.8% 18.3% 15.8% 14.2%
34.0% -5.3%
24.4% 15.8% 14.2%
28.8% -10.3% 28.6% 15.8% 14.2%
7.6% (24.9%) 45.8% 19.4% 19.7%
3,614
4,104
4,604
5,104
5,304
3,229
3,574
4,047
4,498
4,686
2.9
3.3
3.0
2.9
2.7
2.4
1.9
2.2
2.3
2.4
147.0% 149.2% 147.5% 143.3% 129.8%
1.8
1.6
1.7
1.7
1.8
4.0
4.0
4.0
4.0
3.8
14.2%
9.9% 12.9% 13.4% 14.0%
3.4%
2.4%
3.2%
3.3%
3.6%
9.1%
7.7%
8.8%
9.0%
9.4%
551
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.yanzhoucoal.com.cn
Company overview
Yanzhou Coal (YZC) is a major thermal and metallurgical Chinese coal producer, with
54Mt of self-produced commercial coal output in 2011. The company is unique in that
it has key coal mine operations in both China and Australia (via its 2009 acquisition of
Felix and its recent June 2012 GCL merger). Yanzhous operations provide exposure to
both domestic and regional coal markets and to thermal and metallurgical coal.
China
Mining
Investment case
We see three key areas of underperformance:- Leverage to spot coal markets, poor
sales mix and high costs. First, spot coal sales account for c90% of total coal sales
making YZC more strongly tied to movements in spot coal prices than its listed
domestic peers. Second, the companys product mix has worsened recently. Weaker
demand for lower rank metallurgical coal has seen the company direct a higher
proportion of coal sales to lower-priced thermal coal markets. Third, YZC has suffered
from higher cost inflation than industry peers. Its domestic operations have seen higher
policy-related costs while its Australian division has seen unit costs rise due to lower
sales volumes and the acquisition of higher cost mines (Gloucester Coal).
Lun Zhang
Price: HK$12.30

In the absence of a strong rebound in spot coal prices, we believe YZC is most
vulnerable to earnings downside risk as a result of its leverage to spot coal markets. We
estimate a 5% change in spot thermal coal prices impacts YZC earnings by 10%.
We view downside risk to 2013 earnings primarily from lower spot coal prices,
operational cost pressures and 1H13 coal market oversupply.
Daniel KangAC
(852) 2800 8570
daniel.kang@jpmorgan.com
Bloomberg JPMA KANG<GO>
(852) 2800 8561

lun.zhang@jpmorgan.com
Bloomberg JPMA ZHANG<GO>
Limited
22
HK$
18
14
10
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
-27.7%
-44.3%
1m
1.3%
-3.4%
3m
-4.2%
-14.2%
12m
-40.1%
-51.9%
Source: Bloomberg.

Our Jun-13 PT for YZC-H is HK$9 assumes a 10x P/E based on a blended average: 1)
PB-ROE valuation of HK$8.67 assuming 0.7x PBV; 2) HK$4.51 using an
EV/EBITDA of 4.7x; 3) HK$7.54 using a P/E of 9.2x; and 4) NPV HK$11.46. Key
upside risks include a colder winter season or greater supply discipline that could push
coal prices higher than forecast.
Yanzhou Coal Mining - H (Reuters: 1171.HK, Bloomberg: 1171 HK)
FY10A
FY11A
FY12E
Revenue (Rmb mn)
33,944
47,066
55,174
Net Profit (Rmb mn)
9,281.4
8,928.1
5,644.6
Core Profit (Rmb mn)
7,293
8,556
2,917
EPS (Rmb)
1.89
1.82
1.15
Core EPS (Rmb)
1.48
1.74
0.59
Revenue growth (%)
64.2%
38.7%
17.2%
EPS growth (%)
125.4%
-3.8%
-36.8%
Core EPS growth (%)
78.6%
17.3%
-65.9%
P/E (x)
5.3
5.5
8.6
P/BV (x)
1.3
1.1
1.1
EV/EBITDA (x)
8.1
7.4
10.9
Dividend Yield
5.9%
5.7%
3.5%
552
FY13E
61,017
3,570.6
3,571
0.73
0.73
10.6%
-36.7%
22.4%
13.7
1.0
10.3
2.2%
FY14E
64,600
5,191.7
5,192
1.06
1.06
5.9%
45.4%
45.4%
9.4
0.9
8.0
3.2%
Company Data
Shares O/S (mn)
Market cap (Rmb mn)
Market cap ($ mn)
Price (HK$)
Date Of Price
Free float (%)
HSI
Exchange Rate
Fiscal Year End
1,958
19,423
3,108
12.30
05 Nov 12
47.0%
27.91
334.68
39.20
22,111
7.75
Dec

21 November 2012
Adrian Mowat
(852) 2800-8599
Yanzhou Coal Mining - H: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Margin
EBITDA
% change Y/Y
EBITDA margin
EBIT
% change Y/Y
EBIT Margin
Net Interest
Earnings before tax
% change Y/Y
Tax
as % of EBT
% change Y/Y
Shares outstanding
EPS (reported)
% change Y/Y
Balance sheet
Accounts receivable
Inventories
Others
Current assets
FY10
33,944
64.2%
44.4%
13,004
77.3%
38.3%
10,228
86.1%
30.1%
-416
12,477
119.4%
-3,171
25.4%
9,281.4
125.4%
1.89
125.4%
FY10
6,771
10,017
1,646
5,847
24,281
Cash flow statement

47,066 55,174 61,017 64,600 EBIT
38.7% 17.2% 10.6%
19.0% -31.4%
6.1% 24.3%
32.9% 19.2% 18.4% 21.6% Capex
12,484
6,474
6,106
22.1%
NM
NM 34.6% Net Interest
26.5% 11.7% 10.0% 12.7% Free cash flow
-482
-684
-854
-480
12,521
5,971
5,252
7,737 Equity raised/(repaid)
0.3% -52.3% -12.0% 47.3% Debt raised/(repaid)
-3,545
-247 -1,313 -1,934 Other
28.3%
4.1% 25.0% 25.0% Dividends paid
8,928.1 5,644.6 3,570.6 5,191.7 Beginning cash
-3.8% -36.8% -36.7% 45.4% Ending cash
- DPS
1.82
1.15
0.73
1.06
(3.8%) (36.8%) (36.7%) 45.4%
Ratio Analysis
8,145 11,488 11,293 15,659 Gross margin
7,312
8,572
1,391
1,631
1,804
13,582
8,443
8,942
9,247 SG&A/Sales
30,431 30,133 31,518 36,852
Sales growth
31,274 39,729 42,618 42,407
66,720 79,265 81,617 80,849 Current ratio
97,152 109,398 113,134 117,701 Quick ratio
LT investments
Net fixed assets
Long term asset
Total Assets
7,770
19,875
48,475
72,756
Liabilities
Short-term loans
Payables
Others
Long-term debt
Total Liabilities
621
1,554
7,958
10,134
22,401
35,317
19,592
2,241
12,889
34,721
14,869
53,827
14,370
3,380
17,037
34,787
24,209
63,232
14,370
3,709
18,567
36,647
24,209
65,091
Net Debt
BVPS
37,332 42,634
16,251 26,316
7.59
8.67
45,476
27,091
9.25
47,353
27,286
9.63
14,370
3,788
18,934
37,093
24,209
65,537
Total debt to total asset

Net debt to equity
Sales/assets
Assets/equity
ROE
51,473 ROA
22,920
10.47

10,228 12,484 6,474 6,106 8,217
2,776 2,986 4,132 5,148 5,767
-5,333 3,923 3,894
280 -522
5,400 17,977 9,728 9,367 11,048
-3,406 -8,614 -11,274 -7,500 -5,000
205
58
0
0
0
-416 -482
-684
-854 -480
1,993 9,363 -1,546 1,867 6,048
455 12,345 4,118
0
0
-2
-2
-79
-369 -611
-1,230 -2,902 -2,804 -1,693 -1,071
8,522 6,771 8,145 11,488 11,293
6,771 8,145 11,488 11,293 15,659
0.59
0.57
0.34
0.22
0.32
FY10
44.4%
38.3%
27.3%
15.0%

39.9% 22.7% 23.3% 26.0%
32.9% 19.2% 18.4% 21.6%
19.0% 10.2% 5.9% 8.0%
14.0% 13.7% 13.7% 13.7%
64.2% 38.7% 17.2% 10.6% 5.9%

125.4% -3.8% -36.8% -36.7% 45.4%
2.40
31.25
0.88
32.12
48.5% 55.4%
43.5% 61.7%
0.50
1.95
0.87
15.50
0.86
13.18
0.99
29.15
57.8% 57.5% 55.7%

59.6% 57.6% 44.5%
0.55
2.28
0.53
2.41
27.9% 22.3%
13.7% 10.5%
12.8%
5.5%
0.55
2.39
0.56
2.29
7.7% 10.5%
3.2% 4.5%
553
Adrian Mowat
(852) 2800-8599

21 November 2012
Zain KSA
Neutral
www.sa.zain.com
Company overview
Zain KSA, 37% owned associate of Zain Group, is Saudi Arabias 3rd mobile operator
providing mobile voice, data and internet services. As a single-country operator, Zain
KSA has c.15% customer market share and covers over 90% of the populated area with
its mobile network.
Saudi Arabia
Telecommunications
Price: SRls8.75
Investment case
Following Zain KSA's balance sheet restructuring, we believe Zain KSA is likely to refocus on the growth opportunities in the Saudi telecom market. The telco is currently in
the process of adopting a new operational and financial strategy. This, in our view, is
most likely to result in Zain KSA refocusing on its marketing effort and network
investment.
Christian KernAC
(971-4) 428-1789
Bloomberg JPMA Kern <GO>
JPMorganChase Bank, N.A. Dubai Branch
16
14
12
SRls 10
8

Zain KSA has secured an additional 2-mth extension of its existing SR9.75bn
Murabaha credit facility up to 28 Nov-12. While this extension should allow the
planned implementation of a new ~SR9bn refinancing facility, it still carries some
refinancing risk, in our view. After 7-8 quarters of weaker-than-expected financial
performance, we believe the stock is unlikely to outperform over the next 12 months
while the market evaluates the details of its upcoming new operational and financial
strategy as well as the deliverance on key objectives.
6
4
Oct-11
Abs
Jan-12
YTD
59.6%
Apr-12
1m
-25.3%
Jul-12
Oct-12
3m
-29.0%
12m
54.0%
Source: Bloomberg.

Based on our f/c of healthy rev growth and margin improvements from 2013E
onwards, we expect Zain KSA to still break-even only in 2016E. We believe there
could be downside risk to our f/c as Zain KSA is still in the process of adopting a new
operational and financial strategy.
Our Dec 2013 PT of SR10.0 is derived from our DCF-based valuation analysis (riskadj WACC 11.1%, terminal growth 2%). Key regulatory risks include licensing,
termination fees and access to infrastructure. Any potential change to the economic
environment is likely to have an impact on our f/c. Our f/c already factor in reasonable
levels of competition. However, less or irrational competition could impact our growth
and margin forecasts more than expected. Zain is in advanced refinancing negotiations
on a new ~SR9bn refinancing facility this carries some refinancing risk in our view.
Mobile Telecommunications Company Saudi Arabia (7030.SE;ZAINKSA AB)
FYE Dec
2011A
2012E
6,699
6,391
EBITDA FY (SRls mn)
899
959
EBITDA margin FY
13.4%
15.0%
EBIT FY (SRls mn)
(811)
(804)
Adj. EPS FY (SRls)
(1.38)
(1.35)
DPS (Gross) FY (SRls)
0.00
0.00
EV/EBITDA FY
32.3
23.2
Dividend Yield FY
0.0%
0.0%
554
2013E
7,005
1,401
20.0%
(428)
(1.07)
0.00
14.9
0.0%
Company Data
Price (SRls)
Date Of Price
Price Target (SRls)
Mkt Cap (SRls bn)
Shares O/S (mn)
Mkt Cap ($ bn)
3M Avg Daily Trading
Val (USD mn)
8.75
02-Nov-12
10.00
31 Dec 13
24.30 - 8.80
9.5
1,080
2.5
61.00
Adrian Mowat
(852) 2800-8599

21 November 2012
Zain KSA: Summary of Financials

Revenues
% Change Y/Y
EBITDA
% Change Y/Y
EBITDA Margin
EBIT
% Change Y/Y
EBIT Margin
Net Interest
PBT
% change Y/Y
Net Income (clean)
% change Y/Y
Average Shares
Clean EPS
% change Y/Y
DPS
Balance sheet
ST financial assets
Others
Current assets
LT investments
Net fixed assets
Total assets
ST loans
Payables
Others
Long term debt
Other liabilities
Total liabilities
Total Liabilities & Shareholders' Equity
Cash flow statement

FY11 FY12E FY13E FY14E FY15E SRls in millions, year end Dec
6,699
6,391
7,005
7,624
8,208 Cash EBITDA
12.9%
-4.6%
9.6%
8.8%
7.7% Interest
899
959
1,401
1,830
2,298 Tax
171.9%
6.7% 46.1% 30.6% 25.6% Other
(811)
(804)
(428)
(132)
203
-30.3%
-0.9% -46.7% -69.2% -254.3% Capex PPE
-12.1% -12.6%
-6.1%
-1.7%
(1,114)
(868)
(728)
(650)
(643) CF from investments
-1,925 -1,672 -1,157
-781
-440 Dividends
-18.4% -13.2% -30.8% -32.4% -43.7% Share (buybacks)/ issue
-1,925 -1,672 -1,157
-781
-440
(18.4%) (13.2%) (30.8%) (32.4%) (43.7%) CF to Shareholders
1,400.00 1,240.02 1,080.03 1,080.03 1,080.03 FCF to debt
(1.38)
(1.35)
(1.07)
(0.72)
(0.41)
NM
NM
NM
NM
NM OpFCF (EBITDA - PPE)
0.00
0.00
0.00
0.00
Ratio Analysis
FY11 FY12E FY13E FY14E FY15E SRls in millions, year end Dec
780
4,454
4,358
4,756
5,613 EBITDA margin
1,007
959
1,051
1,144
1,231 EBIT Margin
- Net profit margin
645
536
587
639
688 Capex/sales
2,432
5,948
5,996
6,539
20,253 19,318 18,384 17,450 16,515
4,059
3,870
4,026
4,066
26,744 29,136 28,405 28,054 28,020 EBITDA Growth
10,664 13,185 13,185 13,185 13,185 EPS Growth
1,609
1,176
1,289
1,403
1,511
3,238
3,217
3,529
3,846
4,143 Net debt/EBITDA
15,511 17,578 18,004 18,434 18,840 CF to Shareholders
2,224
506
506
506
506 FCF to debt
4,716
2,385
2,385
2,385
2,385
22,451 20,469 20,895 21,325 21,731 OpFCF (EBITDA - PPE)
26,744 29,136 28,405 28,054 28,020 EFCF pre Div, PPE

1,710 1,763 1,829 1,962 2,095
(184) (868) (728) (650) (643)
0
0
0
0
0
(803) (167)
282
285
269
(899) (880)
527 1,334 2,127
(721) (639) (1,051) (1,067) (1,067)
2
0
0
0
0
-720 -639 -1,051 -1,067 -1,067
0
0
0
0
0
0 6,000
0
0
0
0 6,000
-807 5,285
0
-96
0
398
0
857
177
-807
320
-715
350
-96
762
398
1,231
857
FY11
13.4%
-12.1%
NM
10.8%
0.1
FY12E
15.0%
-12.6%
NM
10.0%
0.1
FY13E
20.0%
-6.1%
NM
15.0%
0.1
FY14E FY15E
24.0% 28.0%
-1.7% 2.5%
NM
NM
14.0% 13.0%
0.1
0.1
12.9% -4.6% 9.6% 8.8% 7.7%

171.9% 6.7% 46.1% 30.6% 25.6%
NM
NM
NM
NM
NM
18.1 11.5
0 6,000
-807 5,285
7.9
0
-96
5.8
0
398
4.3
0
857
177
-807
350
-96
762
398
1,231
857
320
-715
555
Adrian Mowat
(852) 2800-8599

21 November 2012
Underweight
www.zs-group.com.cn
Company overview
Zhongsheng was listed in March 2010 and is one of the top 5 auto dealers in China.
The company runs 153dealerships as of 1H12 and is expected to add around 20 p.a. in
the next few years. Unlike its peers, Zhengtong or Baoxin that focus more on European
luxury brands, Zhongsheng carries mainly Japanese brands- including Toyota, Honda,
Nissan, Lexus and Infiniti which collectively account for around 75% of its new car
sales volume. Other than this, Zhongsheng also carries luxury brands such as Benz,
Audi and Porsche.
China
Auto and Auto Parts
Price: HK$10.08
Nick LaiAC
(886-2) 2725 9864
Limited
Investment case
(1) Strong sales of luxury cars on China's luxury boom; (2) aggressive expansion of
dealership; and (3) increasing contribution from after service business.
18
14
HK$
10
6

(1) Japanese brands collectively losing momentum in China; (2) short-term impact on
Japanese car sales in China due to current tension between two countries; (3) price
discount generally higher among Japanese brands; and (4) overcapacity and
competition in auto market.
Nov-11
Feb-12
May-12
Aug-12
Nov-12

HSI (rebased)
Abs
Rel
YTD
-22.1%
-39.1%
1m
5.2%
1.6%
3m
10.9%
3.4%
12m
-28.7%
-38.3%
Source: Bloomberg.

One possible negative share price driver is downside revisions to consensus earnings
forecasts. Our 2012/13E estimates are 23%/29% below the Street. We see further
downside to the companys consensus earnings estimates and hence our cautious stance
on its share price performance.
Our Jun-13 price target of HK$7.5 is based on 9x 2013E and DCF analysis, which
suggests Zhongsheng will face a de-rating vs. its historical trading range of ~12-18x
P/E since listing. Key risks: a) better-than-expected recovery of Japanese brands in
China; b) Benz reverses its sales momentum and catches up with its peers- BMW and
Audi in Chinal and c) higher-than-anticipated support from automakers in the form of
rebate or subsidy to dealers.
Zhongsheng Group Holdings (Reuters: 0881.HK, Bloomberg: 881 HK)
FY10A
FY11A
FY12E
FY13E
Revenue (Rmb mn)
24,043
41,903
51,221
60,752
EBIT (Rmb mn)
1,560
2,517
1,945
2,495
Net Profit (Rmb mn)
1,031
1,417
962
1,312
Diluted EPS (Rmb)
0.56
0.74
0.50
0.69
DPS (Rmb)
0.00
0.10
0.13
0.09
Revenue growth (%)
76.7%
73.6%
22.1%
18.6%
Diluted EPS growth (%)
86.9%
31.7%
-32.1%
36.4%
ROE
23.3%
18.9%
10.9%
12.9%
P/E (x)
14.4
10.9
16.1
11.8
P/BV (x)
2.5
2.2
1.9
1.7
Dividend Yield
0.0%
1.2%
1.6%
1.1%
556
FY14E
67,868
2,990
1,655
0.87
0.12
11.7%
26.1%
13.9%
9.4
1.4
1.5%
Company Data
52-week Range (HK$)
Shares O/S (mn)
Market Cap (HK$ mn)
Price (HK$)
Date Of Price
Free float (%)
HSI
17.18 - 7.95
1,908
18,226
2,352
10.08
08 Nov 12
29.6%
2.94
3.80
22,100
7.75

21 November 2012
Adrian Mowat
(852) 2800-8599
Zhongsheng Group Holdings: Summary of Financials

Income Statement
Revenues
% change Y/Y
Gross Profit
% change Y/Y
Gross Margin (%)
Operating Profit
% change Y/Y
Net Interest
Earnings before tax
% change Y/Y
Tax
% change Y/Y
Net Margin
FY10
24,043
76.7%
2,293
94.4%
9.4%
1,603
116.5%
6.6%
-227
1,384
107.6%
302
1,031
119.0%
4.2%
Balance sheet
Accounts receivable
Inventories
Others
Current assets

4,244 6,389 7,032 7,919 8,263
984 1,958 2,178 2,392 2,579
3,453 6,380 6,410 7,578 8,436
1,918 3,145 3,720 4,306 4,949
10,599 17,872 19,340 22,194 24,227
LT investments
Net fixed assets
Other LT assets
Total Assets
ST loans
Payables
Others
Total Liabilities
Minority Interest
FY11
41,903
73.6%
4,308
87.9%
10.2%
2,734
70.6%
6.5%
-549
2,194
58.5%
551
1,417
37.4%
3.4%
FY12E
51,221
22.1%
4,429
2.8%
8.6%
2,278
-16.7%
4.4%
-591
1,507
-31.3%
392
962
-32.1%
1.9%
FY13E
60,752
18.6%
5,435
22.7%
8.9%
2,884
26.6%
4.7%
-648
2,056
36.4%
535
1,312
36.4%
2.1%
FY14E
67,868
11.7%
6,283
15.6%
9.2%
3,433
19.0%
5.0%
-660
2,593
26.1%
674
1,655
26.1%
2.4%
Cash flow statement

Profit before tax
Others

1,384 2,194 1,507 2,056 2,593
153
361
322
353
383
-
Purchase of fixed assets

Others
Cash flow from investment
Other
Dividends paid
Beginning cash
Ending cash
Ratio Analysis
Gross margin
Operating margin
Net margin
Sales growth
225
177
277
377
1,789 3,887 5,494 6,142 6,759 Gross profit growth
- Operating profit growth
16,200 27,860 31,306 35,177 38,197
ROE
4,924 9,992 10,242 10,492 10,742
2,995 5,682 6,333 7,497 8,413
1,143 1,939 2,268 2,603 2,938
9,062 17,613 18,843 20,593 22,094
423 1,969 3,069 3,669 3,269
9,485 19,583 21,913 24,262 25,363
6,715 8,278 9,393 10,915 12,834
-

9.4% 10.2% 8.6% 8.9% 9.2%
6.6% 6.5% 4.4% 4.7% 5.0%
4.2% 3.4% 1.9% 2.1% 2.4%
76.7%
119.0%
94.4%
116.5%
73.6% 22.1% 18.6% 11.7%

37.4% -32.1% 36.4% 26.1%
87.9% 2.8% 22.7% 15.6%
70.6% -16.7% 26.6% 19.0%
23.3% 18.9%
10.9% 12.9% 13.9%
557
Adrian Mowat
(852) 2800-8599

21 November 2012
558

21 November 2012
Emerging Markets Strategy Dashboards
Adrian Mowat
(852) 2800-8599
559
Adrian Mowat
(852) 2800-8599

21 November 2012
Emerging Markets Strategy Dashboards

Summary: Regional and Country Valuations
Global*
USA
Europe*
Japan*
Emerging Markets*
EMF Asia
EMF LatAm*
EMF EMEA*
China
Brazil*
Korea
Taiwan
South Africa*
India
Russia*
Mexico*
Malaysia
Chile*
Indonesia
Turkey*
Thailand
Poland*
Czech Republic*
Egypt*
Philippines
Hungary*
P/E (x)
Hist.^ P/ EPS Current 12m
14-Nov-12 Trough (Trend) Trailing Fwd 2011
337
9.4
12.4
13.1
11.8 13.6
1,293
11.6
13.1
13.5
12.3 14.3
1,098
9.7
9.9
11.9
10.9 11.6
443
11.5
17.6
19.0
14.2 14.4
43,958
7.9
10.0
11.4
10.2 11.5
624
8.5
12.8
12.3
10.9 12.9
7,042,022
8.6
9.4
13.9
12.0 13.0
430
6.2
6.8
8.2
7.8 7.9
59
7.2
7.4
10.4
9.6 10.2
201,959
6.5
6.9
11.9
10.4 10.3
542
7.7
9.2
9.9
8.4 11.7
257
10.9
12.4
17.3
14.0 17.6
961
9.1
11.3
13.5
11.6 14.9
730
9.6
14.5
16.3
14.3 17.9
710
3.7
3.0
4.8
4.9 4.3
38,470
9.0
11.3
19.2
16.3 25.4
582
9.7
16.6
14.9
13.9 15.6
4,819
11.4
16.8
17.8
15.5 16.9
5,262
4.8
14.8
16.1
14.0 16.3
1,020,880
5.1
6.6
11.7
10.4 12.7
470
7.7
8.7
12.8
11.3 13.7
1,634
6.5
9.8
10.0
10.8 9.0
301
7.3
5.8
10.1
10.2 10.1
1,232
5.7
5.1
8.2
7.4 10.7
898
8.8
24.8
18.3
16.0 20.3
1,059
3.6
5.3
9.7
8.4 8.2
Prospective
2012E 2013E
13.0
11.7
13.4
12.2
11.9
10.8
20.0
13.6
11.4
10.0
12.3
10.7
14.0
11.8
8.3
7.8
10.4
9.5
12.2
10.2
9.6
8.2
17.3
13.6
13.4
11.4
16.1
14.1
4.9
4.8
18.6
16.0
14.8
13.8
17.9
15.2
16.1
13.8
11.5
10.3
12.7
11.1
10.2
10.9
10.1
10.2
7.9
7.3
18.0
15.7
10.0
8.2
Hist.^
Peak
4.1
4.0
6.1
3.0
3.6
3.4
5.1
4.9
5.7
7.6
2.9
7.8
4.7
2.6
3.9
4.1
5.1
8.9
5.9
4.0
5.9
7.1
10.0
8.4
4.9
5.3
Div. Yield (%)

Current
Prospective
Trailing 2012E 2013E
2.9
2.9
3.1
2.3
2.3
2.5
3.9
3.9
4.2
2.7
2.7
2.9
2.9
2.9
3.1
2.5
2.4
2.7
3.2
3.1
3.3
3.8
3.9
4.1
3.1
3.1
3.4
3.7
3.6
4.0
0.9
0.9
1.0
3.5
3.5
3.6
3.5
3.5
4.0
1.6
1.6
1.7
4.0
4.2
4.1
2.1
1.9
2.0
3.0
3.0
3.3
3.2
3.1
3.1
2.4
2.4
2.7
2.8
2.8
3.1
3.4
3.4
3.9
5.1
5.2
4.8
7.2
7.2
7.2
3.8
3.8
4.5
2.4
2.4
2.7
3.4
3.6
4.4
P/BV (x)
Hist.^ Current Prospective
Trough Trailing 2012E 2013E
1.3
1.6
1.6
1.5
1.4
2.0
1.9
1.8
1.1
1.4
1.4
1.3
0.9
0.9
0.9
0.9
1.0
1.5
1.5
1.3
1.0
1.6
1.6
1.4
0.6
1.6
1.7
1.5
1.1
1.1
1.1
1.0
0.5
0.0
0.0
0.0
0.4
1.4
1.4
1.3
0.5
1.3
1.3
1.1
1.2
1.7
1.7
1.6
1.4
2.3
2.3
2.0
1.4
2.5
2.4
2.1
0.2
0.6
0.6
0.6
0.7
2.8
2.8
2.5
0.6
2.1
2.1
1.9
0.9
2.0
2.0
1.8
0.9
3.6
3.5
3.0
1.4
1.8
1.7
1.6
0.6
2.2
2.1
1.9
1.0
1.2
1.2
1.2
0.5
1.6
1.6
1.5
1.0
1.0
1.0
0.9
0.9
2.8
2.8
2.5
0.6
0.9
0.9
0.9
Earnings growth (%)

2010
33.9
47.7
38.9
NM
33.0
37.3
23.9
31.5
34.3
29.1
41.6
55.8
25.2
23.0
42.7
-7.9
26.4
28.4
15.5
18.0
28.5
34.4
-1.3
-2.3
48.5
7.4
2011
3.5
15.3
-0.8
51.1
2.9
-4.3
-1.2
27.5
10.3
-2.9
-16.0
-29.0
20.6
7.9
38.7
-1.8
7.8
-9.8
18.9
-6.7
13.2
26.1
-12.4
23.4
4.5
13.9
2012E
4.5
6.8
-2.9
-27.7
1.1
5.2
-7.0
-5.1
-1.9
-15.3
21.5
2.0
11.7
11.3
-12.9
36.6
4.9
-5.9
1.0
10.3
8.3
-11.2
0.5
35.8
12.7
-17.9
2013E
11.7
9.9
10.3
46.5
13.3
14.6
18.8
6.3
9.5
20.2
17.6
27.0
17.1
14.4
1.5
15.8
7.4
17.7
16.9
12.0
13.9
-7.1
-1.2
7.5
14.9
21.4
Source: I/B/E/S, MSCI, J.P. Morgan. Updated 14 Nov 2012

* Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. IBES Estimates are not available for Morocco, Jordan, Peru and Colombia.
For all other markets, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest.
Hist.^ refers to the historically lowest valuation of the MSCI indices since Jan 1991. Trough PE represents the lowest 12 month trailing PE. For dividend yield the highest values are taken to represent the best multiple.
USA, Europe and Japan PE are I/B/E/S aggregate estimates. Japan Valuation estimates are for the financial year ending March
P / EPS (Trend) uses the trend EPS for the indices calculated by the linear regression on the natural log of trailing EPS. For more, please refer to 'Welcoming the Weakness - Perspectives and Portfolios', 5 May 2009, Mowat et al.
P / EPE (Trend)' is NM for indices where the modeled relationship is weak with a less than 0.50 R-square. The start dates China and Singapore models are modified to make them more relevant. Sector indices inputs have not been altered.
560
ROE (%)
2011 2012E 2013E
12.6 12.5 13.1
15.4 15.3 15.2
12.6 12.0 12.8
6.3
4.5
6.4
14.4 13.3 14.0
14.3 13.6 14.2
13.1 11.6 13.5
18.0 14.5 13.7
0.9
0.4
0.5
13.0 10.9 13.2
12.8 14.0 14.5
10.0
9.9
11.9
17.7 17.8 18.8
16.7 16.1 16.1
18.9 13.7 12.0
13.8 15.5 16.5
15.0 14.4 14.5
12.7 11.3 12.4
27.0 23.2 23.5
15.9 16.0 16.0
18.7 18.0 18.1
15.2 12.4 10.9
16.9 16.4 15.5
12.3 13.3 12.6
15.9 16.0 16.6
12.9
9.8
11.0

21 November 2012
Adrian Mowat
(852) 2800-8599
Consumer Staples
Energy
Financials
Healthcare
Industrials
Materials
Telecoms
Utilities
Region / Country
Benchmark
Change vs dollar
-3.1%
14.6%
-16.1%
-2.8%
0.0%
18.8%
15.0%
-2.8%
-2.2%
-17.1%
-2.0%
17.1%
21.9%
-12.6%
-1.3%
0.0%
28.1%
27.3%
-3.5%
-8.4%
-17.9%
-0.3%
-20.0%
16.2%
20.4%
-12.2%
46.9%
-6.8%
56.5%
-6.6%
20.9%
-2.1%
10.4%
-5.0%
2.8%
-5.3%
-5.0%
-9.7%
5.3%
7.2%
-62.0%
-17.0%
20.5%
32.5%
22.1%
3.8%
-7.2%
26.5%
-47.7%
2.3%
-12.4%
12.6%
-10.2%
3.5%
6.5%
-41.0%
25.3%
42.7%
-1.6%
26.2%
28.4%
51.9%
-11.5%
9.2%
-2.3%
-17.8%
7.7%
52.3%
16.5%
-6.5%
23.2%
56.4%
17.7%
0.3%
8.6%
25.5%
4.2%
1.1%
-3.3%
3.4%
2.8%
-5.8%
6.6%
38.2%
32.1%
10.5%
52.9%
45.3%
7.2%
29.5%
18.8%
0.0%
0.0%
4.7%
14.6%
-32.9%
15.5%
0.0%
-20.2%
74.6%
0.0%
30.5%
68.8%
0.0%
-18.0%
58.9%
-14.1%
-1.1%
-1.3%
-20.8%
14.6%
-15.5%
41.3%
-29.7%
-14.7%
9.6%
14.2%
-6.1%
-10.9%
-4.3%
-9.2%
1.3%
4.7%
5.3%
8.6%
-1.1%
41.3%
31.5%
0.0%
0.0%
-6.9%
13.7%
18.3%
11.7%
0.0%
39.3%
16.9%
37.8%
Morocco
Egypt
Czech Republic
Hungary
Poland
-7.5%
-10.1%
24.3%
14.3%
-4.5%
-4.0%
-3.2%
0.0%
-3.1%
-13.0%
17.7%
Philippines
Thailand
23.2%
33.0%
44.1%
10.6%
6.2%
57.4%
-5.1%
3.2%
Indonesia
Malaysia
1.9%
34.5%
25.4%
15.6%
-8.9%
5.8%
-13.5%
1.0%
India
7.6%
19.9%
18.2%
4.0%
11.1%
10.8%
-14.6%
-1.9%
China
24.4%
30.1%
-4.4%
30.2%
Taiwan
39.3%
45.7%
12.2%
38.7%
25.8%
26.3%
-3.8%
17.6%
-11.5%
10.4%
22.1%
-8.8%
-9.4%
21.1%
6.5%
1.2%
1.1%
5.8%
5.6%
12.8%
30.5%
6.7%
47.6%
3.4%
4.3%
24.0%
10.6%
-4.7%
11.7%
12.0%
-3.5%
0.0%
-7.5%
23.3%
-13.0%
8.6%
18.0%
4.4%
Turkey
Chile
-4.0%
Mexico
YTD 2012
1.7%
4.6%
15.1%
4.1%
13.6%
24.6%
2.8%
19.1%
-2.2%
8.3%
20.9%
10.6%
Korea
37.0%
20.6%
-3.9%
20.7%
38.8%
20.6%
-11.5%
-11.4%
4.2%
-17.8%
6.6%
Russia
EMEA
-3.1%
14.6%
-16.1%
-2.8%
0.0%
18.8%
15.0%
-2.8%
-2.2%
-17.1%
-2.0%
EMF Asia
EMF Latin
America
4.6%
15.1%
4.1%
13.6%
24.6%
2.8%
19.1%
-2.2%
8.3%
20.9%
10.6%
South Africa
EMF Asia
7.9%
15.5%
-3.8%
11.4%
26.4%
6.7%
19.0%
-4.4%
4.7%
-2.3%
7.0%
EM Europe
& ME
EMF
-0.4%
8.6%
-12.2%
14.4%
8.0%
-3.7%
-12.4%
-10.9%
2.8%
-23.9%
-0.8%
Colombia
Japan
17.8%
11.0%
-6.3%
17.1%
9.3%
9.5%
11.7%
3.5%
-11.4%
-5.8%
6.8%
Peru
Europe
15.3%
5.4%
-3.0%
13.9%
12.0%
5.7%
7.5%
1.0%
11.0%
-5.1%
7.2%
EMF Latin
America
Consumer Staples
Energy
Financials
Healthcare
Industrials
Materials
Telecoms
Utilities
Region / Country
Benchmark
Change vs dollar
Argentina
North America
11.8%
8.1%
-4.4%
14.7%
11.0%
4.8%
7.3%
-1.1%
0.7%
-5.7%
6.4%
YTD 2012
Brazil
Global
Market Performance: MSCI AC Performance by Region, Country and Sector
Source: Bloomberg, MSCI. 14 Nov 2012.

Notes: Regional headings first sorted by regional weights in the MSCI EMF and then country headings from left to right by relative weights within the MSCI EMF
Indices: Regions in US$ and countries in local currency. Local currency movements against the dollar: appreciation / (depreciation).
Country and sector cross sections in italic blue have outperformed their indices by more than 2%; numbers in red have underperformed their indices by more than 2%.
561

21 November 2012
Adrian Mowat
(852) 2800-8599
Equity Markets Liquidity Monitor

Country
Developed Markets
US
UK
Japan
Australia
HK
Singapore
EM Asia
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
EMEA
Russia
South Africa
Turkey
Poland
Egypt
LatAm
Brazil
Mexico
Chile
Colombia
Peru
Argentina
Stock
Exchange
NYSE + NASDAQ + AMEX
London Stk Exchange
Tokyo Stk Exchange
ASX
HKSE
SSE
Shanghai & Shenzhen A
BSE & NSE
JSE
KSE
Bursa Malaysia
PSE
TWSE & OTC
TSE
FF
Daily Trading Value
Daily Velocity Ratio (%)
Mkt Cap
(US$ bn)
(US$ Bn) 1 Wk Avg 3 MMA 11 Avg 1 Wk Avg 3M Avg 11 Avg
15,328
3,026
2,615
1,261
2,026
339
35
6.3
13
3.9
6.2
0.6
34
6.3
13
4.1
5.0
1.1
44
7.2
16
4.9
6.3
1.2
0.22
0.21
0.49
0.31
0.30
0.17
0.21
0.21
0.48
0.33
0.26
0.33
0.30
0.23
0.56
0.40
0.30
0.36
1,354
390
173
700
185
63
532
120
12
2.3
0.4
4.2
0.5
0.2
2.7
1.2
12
2.6
0.5
4.2
0.5
0.2
2.9
1.1
21
3.0
0.6
6.1
0.6
0.1
4.3
0.9
0.85
0.58
0.22
0.59
0.29
0.29
0.48
1.00
0.89
0.68
0.27
0.61
0.28
0.27
0.54
0.92
1.30
0.69
0.37
0.87
0.34
0.30
0.74
1.01
RTS + MICEX + DR
Johannesburg Stk Exchange
Istanbul Stk Exchange
Warsaw Stk Exchange
Egyptian Exchange
355
536
97
78
33
1.8
1.6
1.7
0.7
0.06
1.7
1.7
1.2
0.7
0.07
3.1
1.7
1.6
0.7
0.29
0.49
0.30
1.76
0.87
0.20
0.47
0.33
1.27
0.87
0.23
0.65
0.36
1.79
0.74
0.92
Bovespa + DR
Mexico Stk Exchange + DR
Santiago Stk Exchange
Bogota Stk Exchange
Lima Stk Exchange
Argentina Stk Exchange
639
279
117
59
48
10
4.3
1.5
0.16
0.07
0.02
0.14
5.1
1.5
0.16
0.10
0.02
0.12
6.0
1.0
0.22
0.09
0.03
0.10
0.67
0.54
0.14
0.11
0.04
1.45
0.79
0.53
0.14
0.18
0.05
1.20
0.76
0.41
0.19
0.18
0.07
0.54
Source: Bloomberg, J.P. Morgan. Notes: Market cap uses all exchanges covered by Bloomberg for a specific country and primary security of
company only.
The latest one week average is red (gray box in B&W, dark blue in blue scale) if less than 90% of the three month average or blue (solid black box in
B&W, light blue in blue scale) if greater than 110% of the three month average.
To calculate the free float we use the MSCI free float factor for all markets except for Hong Kong, Russia and South Africa where we calculate the
free float for the Hong Kong Composite Index, MICEX, and JSE.
BRIC Trading Value (US$ bn, 3MMA)

40
China (LHS)
35
Russia
7
6
25
20
15
10
00
02
06
04
08
10
12
Korea, Taiwan, HK & Singapore Trading Value (US$ bn, 3MMA)

13
Korea
Taiwan
HK
Singapore
10
8
5
3
0
04
05
06
07
08
09
10
11
12
Emerging ASEAN Trading Value (US$ bn, 3MMA)

1.4
Malaysia
1.2
Indonesia
Philippines
Thailand
1.0
0.8
0.6
0.4
0.2
South Africa and Australia market capitalization and trading value includes only local listed portion of dual listed stocks. Velocity Ratio = (Trading
Value / Free float market cap) * 100
0.0
562
Brazil
30
Trading value calculation for Russia, Mexico and Brazil, includes value of depository receipts traded (DR) along with local stock exchange turnover.
Updated 14 Nov 2012
India
04
05
06
07
08
09
10
11
12
Adrian Mowat
(852) 2800-8599

21 November 2012
Monitoring Inflation: The real threat to EM equities

Central bank
Inflation
Country
Inflation Rate
Developed Markets
United States
Chained CPI
US core PPI
Core PPI SA
US Unit Labor Cost LC Nonfarm
Euro Area
CPI
Japan
CPI
Australia
CPI
Hong Kong
CPI
Singapore
CPI
EM Asia
China
CPI
Korea
CPI
Indonesia
CPI
India
WPI
India (CPI)
CPI Ind. Workers
Malaysia
CPI
Philippines
CPI
Thailand
CPI
Taiwan
CPI
Latin America
Argentina
CPI
Brazil
CPI IPCA
Colombia
CPI
Mexico
CPI
Peru
CPI
Chile
CPI NSA
Europe, Middle East and Africa
Czech Republic
CPI
Hungary
CPI
Poland
CPI
Russia
CPI
South Africa
CPI
Turkey
CPI
JPM f'cast CPI (YoY)
CPI (YoY)
FOOD CPI
(YOY)
3M ann Previou Latest
sss
CPI (%)
Policy
Rate
Policy Rate
Policy Rate
3M ann Current
Last Change
Next Change
On hold
On hold
On hold
4 Dec 12 (-25bp)
On hold
-
CORE CPI (%)
Target/Est (%)
CY2012
Date
Previous
Latest
Mom
YoY
na
na
na
Under 2%
na
2-3
na
2-3%
2.1
na
na
2.5
0.0
1.4
4.0
4.7
Sep-12
Oct-12
Sep-12
Oct-12
Sep-12
Sep-12
Sep-12
Sep-12
1.7
2.3
1.0
2.6
(0.5)
1.2
3.8
3.9
2.2
2.1
1.1
2.5
(0.3)
2.0
3.8
4.7
0.6
(0.2)
NA
0.2
0.2
NA
0.4
0.5
5.0
0.0
0.0
5.6
0.0
5.7
(6.7)
5.8
1.9
2.6
(0.6)
(3.2)
5.2
2.3
1.5
2.7
(0.9)
(1.1)
4.4
2.1
2.0
1.5
(0.6)
na
3.6
5.4
1.2
0.7
(0.4)
na
3.7
3.2
0.13
0.75
0.05
3.25
0.50
-
16 Dec 08 (-87.5bp)
5 Jul 12 (-25bp)
5 Oct 10 (-5bp)
2 Oct 12 (-25bp)
17 Dec 08 (-100bp)
-
4.0%
3.0 (1)
4 - 6%
7.0%
na
na
3-5%
3.5 - 5.5
1.85
2.7
2.2
4.1
9.6
12.0
1.7
3.0
2.5
1.8
Oct-12
Oct-12
Oct-12
Oct-12
Sep-12
Sep-12
Oct-12
Oct-12
Oct-12
1.8
2.0
4.3
6.9
10.3
1.4
3.6
3.4
3.0
1.7
2.1
4.6
7.5
9.1
1.3
3.1
3.3
2.4
1.4
(0.1)
(0.2)
0.2
0.5
0.2
(0.1)
0.0
(0.0)
8.3
3.8
4.6
7.2
14.2
1.5
2.5
3.5
2.4
2.5
4.0
6.6
7.9
na
2.8
4.6
3.7
6.5
1.8
5.0
6.5
6.6
na
2.4
4.0
3.4
4.2
1.7
1.5
4.2
6.0
1.0
2.5
2.9
1.1
2.3
1.1
4.5
9.1
0.7
1.2
1.7
2.6
6.00
2.75
5.75
8.00
3.00
3.50
2.75
1.88
7 Jul 12 (-31bp)
On hold
11 Oct 12 (-25bp)
On hold
9 Feb 12 (-25bp)
On hold
17 Apr 12 (-50bp)
Jan 13 (-25bp)
5 May 11 (+25bp)
On hold
25 Oct 12 (-25bp) 13 Dec 12 (-25bp)
17 Oct 12 (-25bp)
On hold
30 Jun 11 (+12.5bp)
On hold
na
4.5 (2)
3.0 (1)
3.0 (1)
2.0 (1)
3.0 (1)
9.5
5.4
3.3
4.2
3.7
3.1
Oct-12
Oct-12
Oct-12
Oct-12
Oct-12
Oct-12
10.0
5.3
3.1
4.8
3.7
2.8
10.2
5.5
3.1
4.6
3.3
2.9
0.8
0.6
0.2
0.5
(0.2)
0.6
11.0
6.5
2.0
5.1
3.6
6.4
10.8
9.5
3.6
10.1
6.2
8.3
11.0
10.4
3.5
9.8
5.2
9.1
na
5.3
na
3.6
2.1
2.1
na
7.4
na
2.5
1.5
2.2
7.25
4.75
4.50
4.25
5.00
10 Oct 12 (-25bp)
24 Aug 12 (-25bp)
17 Jul 09 (-25bp)
12 May 11 (+25bp)
12 Jan 12 (-25bp)
4Q 13 (+25bp)
On hold
On hold
On hold
On hold
2.0 (1)
3%
1.5 - 3.5%
6-7%
3-6%
6.5 (2)
2.9
5.8
3.8
5.1
5.6
9.0
Oct-12
Oct-12
Oct-12
Oct-12
Sep-12
Oct-12
3.3
5.8
4.3
5.9
5.0
9.2
3.4
6.0
3.4
6.5
5.5
7.8
1.5
0.9
(0.2)
1.2
0.9
2.0
5.7
4.0
(2.0)
5.3
6.0
15.1
7.3
7.7
4.8
7.3
5.1
10.4
7.2
7.9
4.3
7.3
6.1
7.9
1.6
5.1
1.9
5.8
4.7
6.1
(0.7)
2.6
0.8
6.7
4.9
4.5
0.05
6.25
4.50
5.50
5.00
5.79
1 Nov 12 (-20bp)
30 Oct 12 (-25bp)
7 Nov 12 (-25bp)
13 Sep 12 (+25bp)
19 Jul 12 (-50bp)
-
On hold
4Q 12 (-25bp)
5 Dec 12 (-25bp)
On hold
On hold
-
Source: J.P. Morgan Economics, Bloomberg. Note: Current inflation data for countries which outside/above target range is highlighted.
# Countries where central banks target is not available. We have given J.P. Morgan Economic estimates.
No target is available for China, but general expectation is that the Central Bank would continue raising rates when the headline CPI rises above 3.0 %
Updated as of 14 Nov 2012
In case of Taiwan, Estimate by DGBAS,CB targets M2 growth (2.5-6.5% for 2011)

Russia's CBR is not yet in a full-fledged inflation targeting, so they can change the target during the year.
563
Adrian Mowat
(852) 2800-8599

21 November 2012
Outlook: Market Drivers

Global and developed market drivers
Country
Global
US
Europe
UK
Japan
Australia
Hong Kong
Singapore
Positive
Record-low interest rates, QE3 and healthy corporate balance sheets
Interest rates low for long, strong corporate profits, low corporate bond yields, attractive relative valuation of
equities vs. bonds, Housing recovering
Cheap valuation, consensus UW, ECB turning more accomodative
Negative
European stress, high fiscal deficits and sovereign debt of Developed Markets
Fiscal drag
Defensive market composition, BoE conducting QE, stronger-than-expected consumer

Leveraged to global industrial production cycle, post earthquake rebuild spending, low valuations relative to
history, extension of asset purchase program
Low sovereign debt, monetary policy flexibility, capex cycle underpinning growth and currency
Fiscal tightening, high consumer leverage

Earthquake cost adding to fiscal deficit
Recovery of property transaction, slower land sales, falling inflation rate. Closer integration to Pearl River Delta is
positive in the long run.
Strong hub for intra-Asia growth, significant flexibility around monetary policy, stable macroeconomic outlook to
underpin growth in higher-value added sectors in the long-term
Economy in recession, political risk, fiscal tightening, banks deleveraging
Fiscal retrenchment, high debt levels, house price risk, exposure to bulk commodity price correction, continued
dependence on wholesale funding of banks
Lower GDP growth. Financial sector slowing down, putting pressure on office demand. Retail sales to start from a
high base. Casino visitation continued to fall
Slowing growth, increasing volatility of EPS given greater dominance of global price-takers in market composition,
persistent core inflationary environment to add further cost pressures
Source: J.P Morgan

Emerging Market Drivers
Country
China
Positive
More rate cuts and RRR cuts, selective easing on the property front, more pro-active fiscal policy such as
budgeting more fiscal deficit to boost growth
Monetary easing going on, growth on the verge of a strong rebound, resilient consumption, reasonable level
valuations, large and liquid market offering many bottom up options
Solid global shipment for large-cap exporters (IT and auto), gradual recovery in the property market, stabilizing
inflation
Companies with China exposure to benefit from further monetary easing and selective fiscal stimulus in 2H12,
fundamentals of upstream tech sector largely remain solid compared with downstream which shall see the
bottom in 3Q12. Cross-strait negotiations on RMB/TWD settlement and Investment Protection Agreement will
also provide a positive backdrop to market sentiment.
Solid earnings growth outlook; benign SA rate outlook; SA equities underowned by foreign and domestic
investors
Start of monetary easing cycle, Initiation of policy reforms and attractive valuations
Cheap multiples, positive secular outlook, low debt/output, potential acceleration of reforms, potential to improve
dividend payout
Defensive market, undervalued FX, underpenetrated credit sector, internal demand is driver for 2012, new
presidential regime could spur reform optimism.
Resurgence in private investments suggests ETP is gaining traction, domestic infrastructure and oil and gas
spending, M&A, GLC listings, earnings momentum turns from negative to positive
Recovery in manufacturing competitiveness, strong consumption, land acquisition law and investment grade
rating to boost long term growth, healthy transmission of nominal GDP growth to EPS growth, BIs bias moving
away from tightening
Low foreign holdings, improving trade and CAD data.
Post-flood rebuilding and recovery, positive domestic earnings momentum, accelerating durables consumption,
sustained FDI and rising local capex
Cheap on a forward PE basis.
Low rates
Negative
Growth concerns and Policy risks
Philippines
Rising investment spending, improving consumption driven by steady remittances flow, greatly improved fiscal
position, corporate earnings acceleration
Global economic slowdown, government execution especially related to infrastructure
Hungary
Hard to find with an IMF deal likely delayed until the autumn
Ongoing governance risks, delays to potential IMF/EU package.
Brazil
Korea
Taiwan
South Africa
India
Russia
Mexico
Malaysia
Indonesia
Turkey
Thailand
Poland
Czech Republic
Source: J.P Morgan

564
Commodity stocks comprise half of the market, no upside on the FX, widespread use of macroprudential
measures, regulatory risk
Slowdown in global demand, slowing Chinas growth, regulatory pressure ahead of the presidential election
EU recession to remain a concern on external demand, inflation pressure in domestic market is on the rise while
CBC is expected to tighten liquidity to defend inflation and housing price hike
High beta currency; policy paralysis
Twin deficits and high inflation
Exposure to global macroeconomic risk, political risk, elevated dependency on commodity prices
Further anti-trust regulations (good for Mexico; negative for corporate ROEs), high valuations. MXNs liquidity
makes it subject to risk-off trades on global uncertainty.
Political uncertainties, 3-year peak in foreign ownership
Major names well owned and discovered, bureaucratic and legislative reform momentum patchy, wide ranging
policy uncertainty, infrastructure bottlenecks, CA flipping to a deficit, risks to ex-java demand from weaker
commodity complex
Rebound in oil prices
Weaker than anticipated external demand, weakening momentum on external cyclicals (Energy/Petrochems)
Euro-zone recession; key stocks ex-div
Euro-zone recession, dividends at risk

21 November 2012
Adrian Mowat
(852) 2800-8599
Profit Outlook: Earnings Forecasts Matrix for Countries and Sectors

Emerging Markets
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Indonesia
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Philippines
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
South Africa
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Russia
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Weight
(%)
100.0
8.0
8.7
12.8
25.7
1.3
6.4
14.1
11.6
7.9
3.5
Weight
(%)
100.0
16.4
12.5
6.1
32.3
2.3
4.7
0.0
8.7
11.8
5.2
Weight
(%)
100.0
3.2
4.7
0.0
35.2
0.0
34.7
0.0
0.0
11.0
11.2
Weight
(%)
100.0
18.3
7.1
9.2
25.9
3.8
4.2
0.0
17.8
13.6
0.0
Weight
(%)
100.0
0.0
4.4
59.1
15.0
0.0
0.0
0.0
10.3
7.6
3.6
JPMorgan
Median
2012
2013
Median
10.3
2.3
6.8
-7.6
12.0
13.1
12.7
NA
17.9
13.6
5.1
JPMorgan
2012
1.0
2.3
6.6
-47.3
10.5
13.1
-1.5
NA
-0.1
15.2
5.1
2013
16.9
16.9
13.5
41.3
18.0
17.1
-2.8
NA
24.4
6.3
20.8
Median
14.2
14.2
35.9
NA
19.3
NA
5.7
NA
NA
-2.9
30.0
JPMorgan
2012
12.7
14.2
35.9
NA
16.4
NA
10.2
NA
NA
0.4
20.3
2013
14.9
21.1
17.1
NA
20.0
NA
12.4
NA
NA
9.9
14.9
Median
-
JPMorgan
2012
-
2013
-
Median
-
JPMorgan
2012
-
2013
-
EPS Growth
Consensus
Median
2012
6.4
1.1
11.2
15.9
12.3
9.6
-6.0
-13.1
10.0
6.1
19.8
13.1
4.9
2.8
5.6
37.6
-8.8
-25.2
1.7
8.5
7.6
17.4
EPS Growth
Consensus
Median
2012
11.6
6.2
7.7
7.7
11.6
7.9
-10.6
-25.3
10.1
10.6
13.1
13.1
9.0
-1.8
NA
NA
18.4
6.2
18.6
19.4
18.2
18.2
EPS Growth
Consensus
Median
2012
15.3
12.2
10.4
10.4
35.9
35.9
NA
NA
18.9
19.2
NA
NA
9.7
12.2
NA
NA
NA
NA
-6.5
-10.4
27.5
20.9
EPS Growth
Consensus
Median
2012
14.2
11.7
19.5
17.4
10.9
9.5
5.1
11.7
12.4
11.7
19.5
18.2
15.2
18.9
NA
NA
6.4
7.7
14.1
13.4
NA
NA
EPS Growth
Consensus
Median
2012
-5.2
-12.9
NA
NA
55.7
55.7
-5.2
-15.6
11.0
3.7
NA
NA
NA
NA
NA
NA
-31.0
-20.9
1.7
16.8
-35
-34.8
China
2013
13.3
14.4
19.9
7.8
7.6
16.8
17.0
26.9
24.9
7.2
12.2
2013
13.4
15.9
16.5
6.8
14.0
17.1
4.9
NA
20.2
9.4
14.7
2013
11.7
14.0
17.1
NA
14.2
NA
13.2
NA
NA
4.0
7.8
2013
17.1
17.1
17.7
4.3
14.6
16.8
20.5
NA
32.3
11.3
NA
2013
1.5
NA
17.1
0.1
1.5
NA
NA
NA
9.5
6.5
14.4
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Korea
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Taiwan
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Brazil
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Poland
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Weight
(%)
100.0
5.1
5.6
17.4
37.3
1.0
6.7
6.9
4.7
12.6
2.6
Weight
(%)
100.0
16.4
5.6
3.0
13.0
0.7
12.4
35.9
10.6
0.7
1.5
Weight
(%)
100.0
4.1
2.9
0.8
14.7
0.0
3.5
55.8
12.6
5.6
0.0
Weight
(%)
100.0
4.3
14.2
18.8
25.7
1.1
4.7
2.3
19.4
3.4
6.2
Weight
(%)
100.0
2.3
3.6
14.3
44.3
0.0
0.0
1.7
17.2
5.2
11.5
Median
2.1
5.3
23.0
-3.0
5.4
23.1
-5.1
-12.5
-15.7
-0.3
26.3
J.P. Morgan
2012
-1.9
-9.4
6.0
-8.9
5.3
22.3
-14.2
-15.6
-36.0
0.9
44.2
Median
3.7
15.1
19.7
-28.2
1.7
3.8
-3.5
43.1
-28.4
-35.1
69.6
JPMorgan
2012
21.5
20.3
10.6
-45.1
-3.0
7.5
-2.0
80.2
-30.7
-43.9
-46.4
Median
1.3
7.1
11.8
-55.0
7.1
NA
6.7
5.5
-44.1
11.8
NA
JPMorgan
2012
2.0
39.6
17.6
-55.0
4.5
NA
273.6
11.3
-51.8
-2.4
NA
EPS Growth
Consensus
Median
2012
2013
4.8
1.6
9.4
6.6
-7.5
21.2
7.5
5.8
17.8
-1.4
-4.9
7.1
10.6
9.0
5.5
20.5
21.7
20.7
-4.1
-9.4
20.0
17.5
-2.0
30.0
-12.8
-33.9
34.4
0.2
2.1
4.7
25.8
46.1
19.0
EPS Growth
Consensus
2013
Median
2012
2013
17.6
0.8
16.3
18.2
11.3
14.3
26.4
10.6
13.8
14.6
13.0
14.4
4.7
-23.4
-44.6
37.9
-10.4
-2.2
-4.1
-2.6
42.8
3.8
7.5
42.8
6.5
-0.4
-10.4
15.9
29.9
59.2
78.3
24.2
20.7
-28.4
-29.2
30.6
105.3
-27.1
-37.7
102.4
-136.3
82.4
-64.0
-200.8
EPS Growth
Consensus
2013
Median
2012
2013
27.0
1.3
3.1
25.3
10.5
11.9
42.8
6.1
11.2
5.3
18.2
6.2
187.8
-55.0
-55.0
187.8
-2.2
1.7
3.6
1.4
NA
NA
NA
NA
42.5
4.6
336.8
29.8
36.9
2.9
12.2
34.5
49.6
-38.1
-49.3
44.8
8.8
18.8
-0.8
8.3
NA
NA
NA
NA
Median
-
JPMorgan
2012
-
2013
-
Median
-
JPMorgan
2012
-
2013
-
2013
9.5
10.1
22.6
-1.5
8.0
18.1
22.0
53.3
39.4
3.7
19.0
EPS Growth
Consensus
Median
2012
3.9
-15.3
10.6
-26.8
15.1
4.3
-20.8
-21.5
-1.5
0.6
0.1
-4.3
8.3
41.6
23.1
1.2
-10.3
-40.1
-0.4
-14.8
2.3
14.2
EPS Growth
Consensus
Median
2012
-1.1
-11.2
28.7
76.6
35.4
8.9
-17.1
45.9
0.4
6.8
NA
NA
NA
NA
-11.7
-11.7
-33.2
-41.0
-47.1
-47.1
0.7
2.1
2013
20.2
59.2
30.1
34.5
11.9
35.2
23.3
11.4
25.3
5.2
-8.6
2013
-7.1
8.3
14.0
10.7
-0.5
NA
NA
0.1
-18.2
-15.0
-25.7
India
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Malaysia
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Thailand
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Mexico
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Turkey
Total Market
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Weight
(%)
100
8.5
10.1
11.6
29.6
5.4
5.7
14.6
8.5
1.9
4.3
Weight
(%)
100.0
10.0
11.3
4.0
31.1
1.6
13.7
0.0
5.3
12.6
10.3
Weight
(%)
100.0
2.3
11.9
24.7
39.5
0.0
0.0
0.0
13.2
6.9
1.5
Weight
(%)
100.0
7.4
30.6
0.0
11.7
0.0
5.1
0.0
19.5
25.7
0.0
Weight
(%)
100.0
3.3
13.3
4.7
56.0
0.0
9.8
0.0
3.0
9.9
0.0
Median
14.3
5.9
19.0
-0.6
14.3
28.4
9.9
26.7
9.7
22.5
3.1
JPMorgan
2012
11.3
7.3
18.1
1.7
15.1
30.6
17.1
17.3
1.4
27.1
4.9
2013
14.4
20.2
22.1
0.3
21.0
9.2
5.4
8.8
21.7
40.7
11.5
Median
8.1
10.7
-10.9
4.4
6.6
NA
16.7
NA
29.2
-0.6
5.7
JPMorgan
2012
4.9
12.1
-8.5
7.5
-7.8
NA
44.3
NA
37.0
3.0
10.9
2013
7.4
-12.1
11.1
21.8
28.3
16.0
1.3
NA
13.0
13.4
-16.7
Median
13.9
23.2
2.9
-11.3
19.5
NA
NA
NA
-4.0
60.4
59.0
JPMorgan
2012
8.3
23.2
-7.3
-4.3
25.3
NA
NM
NA
-9.3
60.4
59.0
2013
13.9
13.8
40.5
10.4
11.9
NA
NM
NA
15.5
11.0
53.9
Median
-
JPMorgan
2012
-
2013
-
Median
-
JPMorgan
2012
-
2013
-
EPS Growth
Consensus
Median
2012
13.4
10.3
4.5
3.0
22.7
22.1
18.0
2.8
14.8
16.8
26.5
22.7
4.2
6.3
18.5
17.1
7.9
3.2
-13.3
-8.8
11.6
10.1
EPS Growth
Consensus
Median
2012
8.6
7.1
9.7
0.9
-11.7
-8.6
4.4
7.5
8.9
7.6
NA
NA
14.2
6.6
NA
NA
18.2
77.8
-0.4
1.1
5.7
37.6
EPS Growth
Consensus
Median
2012
20.1
17.3
33.2
33.2
2.5
-7.6
-6.5
5.1
43.2
29.4
NA
NA
NA
NM
NA
NA
-6.5
15.0
60.8
60.8
64.2
64.2
EPS Growth
Consensus
Median
2012
17.7
36.6
17.7
17.7
12.1
10.3
NA
NA
22.7
29.3
NA
NA
25.9
49.0
NA
NA
58.8
461.8
24.9
24.9
NA
NA
EPS Growth
Consensus
Median
2012
11.5
10.3
9.7
11.5
54.4
41.5
-11.9
-11.9
4.2
5.1
NA
NA
16.1
23.5
NA
NA
-0.4
-18.9
54.6
57.4
NA
NA
2013
13.2
9.9
20.0
5.6
18.7
7.5
12.7
10.4
14.6
35.9
10.9
2013
8.5
8.7
14.2
21.8
9.9
16.0
9.4
NA
9.0
13.9
-3.3
2013
16.3
17.0
39.4
12.4
14.4
NA
NM
NA
24.7
9.0
45.3
2013
15.8
24.4
18.5
NA
20.2
NA
2.7
NA
41.3
5.8
NA
2013
12.0
13.2
20.1
5.8
12.7
NA
12.1
NA
22.8
2.6
NA
Source: I/B/E/S, MSCI, J.P. Morgan estimates. Note: Average earnings growth calculated based on earnings aggregate of MSCI constituents. Consensus numbers are used for stocks not covered by J.P. Morgan under J.P. Morgan forecasts calculation. Median
numbers are for the year 2012. Updated as of 14 Nov 2012.
565

21 November 2012
Adrian Mowat
(852) 2800-8599
Monitoring the Trend in Country EPS Forecasts (2012 and 2013)

World
Emerging Markets (EM)
115
115
2013
105
2012
120
Jan-12
Jun-12
Nov-12
75
Feb-11
Aug-11
Jun-12
80
Feb-11
Nov-12
2013
Aug-11
90
Jun-12
Nov-12
Aug-11
2013
105
2012
2012
95
60
Aug-11
Jan-12
Jun-12
Nov-12
80
Feb-11
Aug-11
Brazil
Jan-12
Jun-12
Nov-12
Aug-11
2013
120
100
Nov-12
Aug-11
Jan-12
Jun-12
Nov-12
2012
Jan-12
Jun-12
Nov-12
Jun-12
Nov-12
170
130
2012
2013
110
95
85
Feb-11
Jan-12
150
100
Aug-11
Aug-11
Mexico
90
90
90
Feb-11
85
Feb-11
2013
105
110
75
Jun-12
110
2013
2012
Jan-12
South Africa
120
115
95
85
50
Feb-11
Russia
130
105
Aug-11
Jan-12
Jun-12
Nov-12
70
Feb-11
2012
Aug-11
Jan-12
Jun-12
Source: I/B/E/S. Notes: The dashboard aims to show changes in earnings expectations. All year ends are for December. EPS figures are normalized, starting at 100 on base date Feb 2011 for ease of comparison. These numbers are directly from IBES aggregate and
may differ from those in the growth expectations pages where adjustments are made for exceptional items. Countries earnings revisions are in local currencies term whereas APxJ regions earnings revisions is in US $ term.
Updated as of 14Nov 2012
566
Nov-12
115
70
90
Jun-12
China
80
2012
Jan-12
2013
90
2012
80
Feb-11
110
100
2013
100
70
Jan-12
Taiwan
2
110
2012
90
Korea
100
65
Feb-11
Jan-12
120
80
100
2013
2012
90
EM Latin America
110
60
Feb-11
100
2012
85
Aug-11
110
2013
2013
95
85
EM Europe
120
2
110
1052
95
75
Feb-11
EM Asia
120
Nov-12

21 November 2012
Adrian Mowat
(852) 2800-8599
Monitoring the Trend in Country EPS Forecasts (2012 and 2013)

India
Malaysia
140
Thailand
120
2013
105
2013
110
105
2013
115
100
110
2012
2012
95
2012
Jan-12
Jun-12
Nov-12
85
Feb-11
Aug-11
Chile
Jan-12
Jun-12
Nov-12
95
Feb-11
85
Aug-11
Turkey
Jan-12
Nov-12
2012
95
100
2012
Aug-11
Jan-12
Jun-12
Nov-12
85
Feb-11
Jun-12
Nov-12
2013
105
2012
2012
95
80
70
Feb-11
Jan-12
115
2013
105
2013
Aug-11
Indonesia
2013
100
80
Feb-11
125
110
110
90
Jun-12
Philippines
115
120
2013
90
100
Aug-11
2012
95
105
90
80
Feb-11
110
120
130
100
Poland
125
115
Aug-11
Hungary
Jan-12
Jun-12
Nov-12
Jun-12
Nov-12
90
Feb-11
Aug-11
Jan-12
Jun-12
Nov-12
85
Feb-11
Aug-11
Jan-12
Jun-12
Nov-12
Czech. Republic
105
120
110
100
2013
100
95
2
90
80
2013
2012
90
2012
70
60
Feb-11
Aug-11
Jan-12
Jun-12
Nov-12
85
Feb-11
Aug-11
Jan-12
Source:I/B/E/S Notes: The dashboard aims to show changes in earnings expectations. All year ends are for December. EPS figures are normalized, starting at 100 on base date Feb 2011 for ease of comparison. These numbers are directly from IBES aggregate and
may differ from those in the growth expectations pages where adjustments are made for exceptional items. Countries earnings revisions are in local currencies term whereas APxJ regions earnings revisions is in US $ term.
567

21 November 2012
Adrian Mowat
(852) 2800-8599
Monitoring the Trend in Sector EPS Forecasts (2012 and 2013)

Emerging Markets
115
95
Apr 12
Nov 12
85
Feb 11
Sep 11
2013
2012
Apr 12
Nov 12
70
Feb 11
Sep 11
Materials
Apr 12
Nov 12
90
2012
60
85
Sep 11
Apr 12
Nov 12
75
Feb 11
Nov 12
90
2013
2012
2013
80
2012
70
Sep 11
Apr 12
Nov 12
60
Feb 11
Sep 11
Apr 12
Nov 12
85
2012
Sep 11
75
Apr 12
2013
95
2013
105
95
Apr 12
100
105
115
70
Sep 11
115
125
2013
85
Feb 11
Utilities
135
100
60
Feb 11
Telecom
110
50
Feb 11
75
80
Sep 11
Nov 12
110
90
90
90
Apr 12
105
2013
100
2012
Sep 11
120
110
110
70
Feb 11
Industrials
120
120
80
Nov 12
Health Care
130
80
Feb 11
Apr 12
2012
95
80
Sep 11
2013
2012
90
100
Financials
100
115
105
100
2012
85
2013
110
115
2012
Energy
125
120
2013
2013
105
75
Feb 11
Consumer Staples
130
130
Nov 12
65
Feb 11
2012
Sep 11
Apr 12
Nov 12
Source:I/B/E/S Notes: The dashboard aims to show changes in earnings expectations. All year ends are for December. EPS figures are normalized, starting at 100 on base date Feb 2011 for ease of comparison. These numbers are directly from IBES aggregate and
may differ from those in the growth expectations pages where adjustments are made for exceptional items. Sector earnings revisions are in US$. Updated as of 14 Nov 2012
568

21 November 2012
Adrian Mowat
(852) 2800-8599
India
Malaysia
Indonesia
Thailand
Philippines
10.8
16.7
19.5
12.8
38.6
13.6
NA
13.1
20.0
15.9
13.9
14.1
15.4
18.8
12.1
11.9
24.4
14.1
NA
17.2
14.6
14.9
14.0
13.6
24.4
19.5
9.3
10.9
NA
NA
NA
11.0
14.3
13.8
11.3
12.2
23.9
18.5
NA
19.0
NA
14.5
NA
NA
13.7
12.8
16.0
13.2
16.4
19.7
4.7
9.2
16.9
10.3
8.7
9.5
10.6
8.9
7.8
9.0
NA
22.0
4.1
5.6
NA
NA
NA
9.8
8.5
8.4
4.9
7.6
17.0
19.3
8.4
11.1
17.8
11.1
NA
9.7
12.5
NA
11.6
11.4
12.1
8.9
10.1
12.1
NA
NA
8.7
8.3
18.3
9.5
10.8
10.6
9.8
24.1
9.5
9.7
NA
9.4
NA
9.1
10.6
NA
10.4
10.6
NA
NA
7.8
7.0
14.2
NA
NA
NA
7.7
NA
8.4
9.3
NM
NA
NA
10.9
NA
NA
NA
NA
15.2
9.2
10.2
11.0
Chile*
China
21.8
29.7
12.1
13.2
20.9
12.2
15.3
9.4
9.8
12.9
14.3
13.3
Mexico*
Taiwan
12.9
21.9
9.9
7.5
19.9
10.9
21.8
10.5
12.1
11.5
9.6
11.0
Brazil*
Korea
13.2
18.6
35.7
11.8
NA
13.2
13.1
19.8
16.7
NA
14.0
15.2
EMF LATAM*
EMF Asia*
6.4
15.6
10.6
7.7
17.2
9.8
8.4
11.1
10.5
NA
8.4
9.4
Czech Republic*
EMF LATAM*
9.4
20.0
10.5
9.0
20.9
11.5
11.6
12.4
13.3
15.0
10.9
11.1
Hungary*
EMF EMEA*
16.7
22.2
9.7
10.5
25.4
17.3
15.6
11.3
11.7
10.9
12.0
12.5
Turkey*
Emerging
Markets*
16.4
19.7
4.7
9.2
16.9
10.3
8.7
9.5
10.6
8.9
7.8
9.0
Poland*
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Market Aggregate
Sector Neutral**
10.5
20.9
7.1
9.2
20.1
11.7
11.8
11.2
12.3
11.6
10.2
10.4
South Africa*
12-month forward PE
14.1
15.2
11.8
11.3
12.8
12.9
12.0
12.5
16.0
15.0
12.3
12.6
Russia*
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Utilities
Market Aggregate
Sector Neutral**
EMF EMEA*
12-month forward PE
USA*
Value: P/E Matrix for Countries and Sectors
16.7
22.2
9.7
10.5
25.4
17.3
15.6
11.3
11.7
10.9
12.0
12.5
15.6
22.2
9.1
9.5
25.4
18.0
15.6
8.2
12.8
9.3
10.4
11.4
17.3
22.9
NA
14.9
NA
15.9
NA
21.6
11.4
NA
16.3
13.2
21.6
17.4
23.3
12.1
NA
NA
NA
17.8
11.6
14.5
15.5
14.5
Source: IBES, MSCI, J.P. Morgan. Note: Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. IBES Estimates are not available for Morocco, Jordan, Peru and Colombia.
**Sector neutral PE are calculated by using sector weights of MSCI EM and sector PE of respective markets (MSCI EM sector PE used where country sector does not exist)
Updated as of 14 Nov. 2012
569

21 November 2012
Adrian Mowat
(852) 2800-8599
Value: Distribution Tables for P/E, P/BV, DY and RoE

2012E: Price to Earnings Ratio (x)
Global*
USA*
Europe*
Japan*
Emerging Markets*
China
Brazil*
Korea
Taiwan
South Africa*
India
Russia*
Mexico*
Malaysia
Chile*
Indonesia
Turkey*
Thailand
Poland*
Czech Republic*
Egypt*
Philippines
Hungary*
Weighted
Average
13.0
13.4
11.9
20.0
11.4
10.4
12.2
9.6
17.3
13.4
16.1
4.9
18.6
14.8
17.9
16.1
11.5
12.7
10.2
10.1
7.9
18.0
10.0
Global*
USA*
Europe*
Japan*
Emerging Markets*
China
Brazil*
Korea
Taiwan
South Africa*
India
Russia*
Mexico*
Malaysia
Chile*
Indonesia
Turkey*
Thailand
Poland*
Czech Republic*
Egypt*
Philippines
Hungary*
Weighted
Average
2.9
2.3
3.9
2.7
2.9
3.1
3.6
0.9
3.5
3.5
1.6
4.2
1.9
3.0
3.1
2.4
2.8
3.4
5.2
7.2
3.8
2.4
3.6
Min
0.0
3.1
0.0
4.2
2.5
4.2
4.7
3.7
5.0
3.9
5.8
2.7
9.9
9.7
11.9
9.4
8.1
8.4
6.1
8.8
2.5
11.4
9.0
Lower
10.7
11.5
10.2
10.8
10.0
8.5
9.9
9.2
11.9
11.0
10.2
5.3
15.3
13.4
13.7
14.1
9.3
10.3
8.7
9.7
9.2
14.0
9.1
2012E: Dividend Yield (%)

Min
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.9
0.0
6.1
0.3
0.7
1.8
Lower
1.4
0.3
2.1
1.7
1.2
1.3
1.1
0.5
1.5
2.5
0.8
1.1
1.1
2.1
1.6
1.8
1.3
2.7
0.7
6.3
2.0
1.2
2.8
Quartiles
Median
14.2
14.9
13.4
14.4
13.5
11.5
15.1
11.5
14.6
13.5
15.5
7.5
22.9
15.9
18.1
16.5
10.9
12.3
10.7
10.6
11.7
17.2
9.2
Quartiles
Median
2.4
1.8
3.3
2.4
2.3
2.1
3.0
1.1
3.4
3.4
1.5
2.3
1.6
2.9
3.4
2.3
2.0
3.2
4.0
6.5
3.0
2.1
3.3
Higher
18.8
19.8
17.3
18.5
19.3
17.3
25.2
16.3
19.6
20.8
22.6
10.3
27.7
21.9
23.4
19.7
12.4
17.7
14.1
12.8
12.6
22.1
10.7
Higher
3.8
3.1
4.9
3.0
3.9
3.5
4.8
2.1
4.9
4.8
2.1
3.6
2.8
3.6
4.5
3.7
3.1
4.0
6.0
8.7
4.8
2.4
5.6
Max
494.6
494.6
463.1
81.7
470.6
198.8
55.0
49.5
470.6
167.6
78.3
25.1
58.4
60.4
91.5
47.8
34.0
34.6
25.5
15.1
14.6
33.5
14.8
Max
17.7
16.1
17.0
5.6
17.7
7.4
16.0
7.3
17.7
7.4
4.1
9.8
5.0
6.2
6.1
9.2
9.9
6.4
10.7
11.0
10.5
6.9
12.2
Weighted
Global*
USA*
Europe*
Japan*
Emerging Markets*
China
Brazil*
Korea
Taiwan
South Africa*
India
Russia*
Mexico*
Malaysia
Chile*
Indonesia
Turkey*
Thailand
Poland*
Czech Republic*
Egypt*
Philippines
Hungary*
Global*
USA*
Europe*
Japan*
Emerging Markets*
China
Brazil*
Korea
Taiwan
South Africa*
India
Russia*
Mexico*
Malaysia
Chile*
Indonesia
Turkey*
Thailand
Poland*
Czech Republic*
Egypt*
Philippines
Hungary*
2012E: Price to Book Value Ratio (x)
Average
1.6
1.9
1.4
0.9
1.5
0.0
1.4
1.3
1.7
2.3
2.4
0.6
2.8
2.1
2.0
3.5
1.7
2.1
1.2
1.6
1.0
2.8
0.9
Weighted
Average
12.5
15.3
12.0
4.5
13.3
0.4
10.9
14.0
9.9
17.8
16.1
13.7
15.5
14.4
11.3
23.2
16.0
18.0
12.4
16.4
13.3
16.0
9.8
Source: Datastream, IBES, MSCI, J.P. Morgan estimates. Updated as of 14 Nov 2012
Note: Weighted average numbers based on aggregate of MSCI constituents. Consensus numbers area used for stocks not covered by J.P. Morgan. * only consensus numbers are used
570
Min
0.0
0.2
0.1
0.3
0.0
0.0
0.2
0.3
0.5
0.5
0.4
0.1
0.8
0.9
1.0
1.4
0.7
1.1
0.5
1.5
0.3
1.1
0.8
Lower
1.0
1.3
0.9
0.6
1.0
1.0
1.0
0.8
1.0
1.5
1.3
0.5
2.6
1.6
1.8
2.4
1.3
1.5
0.8
1.6
0.5
2.6
0.9
Median
1.6
2.1
1.6
0.9
1.6
1.3
1.5
1.1
1.4
2.0
2.0
1.0
2.9
2.0
2.2
3.7
1.7
2.3
1.2
1.6
0.8
3.1
0.9
Quartiles
Higher
2.8
3.4
2.9
1.3
2.9
2.0
3.8
1.8
2.5
4.0
4.4
1.3
4.2
2.8
3.0
4.5
2.7
2.8
1.8
1.8
2.3
3.7
1.1
Max
92.1
92.1
24.4
5.7
63.3
11.9
36.4
7.9
9.0
10.2
26.7
5.2
13.2
63.3
3.7
35.8
15.4
20.8
7.6
1.9
2.4
5.3
1.5
2012E: Return on Equity (%)

Min
-13.2
0.1
0.1
0.5
-13.2
0.0
-13.2
2.4
0.2
0.3
2.4
2.4
-4.8
1.5
5.2
3.2
7.9
3.3
5.4
12.5
3.7
8.8
8.4
Lower
7.2
8.7
8.0
4.2
8.3
8.9
6.7
6.3
5.4
13.1
11.5
8.3
12.5
10.8
10.2
16.4
11.2
13.4
7.3
14.0
6.9
11.7
9.3
Quartiles
Median
Higher
12.1
18.6
14.3
21.7
13.7
19.9
6.8
9.4
13.3
19.1
12.7
18.3
11.7
20.6
10.4
15.0
10.4
17.4
19.6
27.3
16.6
21.5
13.9
17.1
16.2
22.9
13.4
16.6
15.2
19.4
22.8
27.4
14.9
19.3
16.3
19.3
12.3
17.2
15.4
16.4
12.8
18.5
16.2
21.8
9.7
10.1
Max
633.8
633.8
140.0
47.3
172.1
36.5
121.3
33.9
38.2
79.5
72.3
52.7
55.4
223.6
24.3
88.7
45.4
132.8
30.5
17.4
20.5
27.3
10.7
Adrian Mowat
(852) 2800-8599

21 November 2012
Value: Demand Classification: MSCI Emerging Markets Index Composition by Country

MSCI Emerging
Markets Free Index
China
India
Indonesia
Korea
Malaysia
Philippines
Taiwan
Thailand
Asia
Czech Republic
Egypt
Hungary
Morocco
Poland
Russia
South Africa
Turkey
EMEA
Brazil
Chile
Colombia
Mexico
Peru
LatAm
Total
Domestic
Demand
14.4
4.3
2.5
5.5
2.8
0.9
3.4
1.6
35.4
0.3
0.4
0.1
0.1
1.1
1.7
5.5
1.7
10.9
7.9
1.8
0.8
4.1
0.2
14.8
61.1
Global Capex
0.4
1.0
0.0
3.1
0.1
0.0
2.9
0.0
7.5
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.1
0.0
0.0
0.1
0.3
0.0
0.3
8.0
Global
Consumer
0.2
0.0
0.1
4.8
0.1
0.0
2.9
0.0
8.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0
0.0
0.0
8.3
Global Price
Takers
3.7
1.5
0.2
1.8
0.8
0.1
1.3
0.6
9.8
0.0
0.0
0.2
0.0
0.3
3.9
2.2
0.1
6.7
4.7
0.1
0.4
0.6
0.4
6.1
22.7
Total
EM Domestic Demand Sector Absolute and relative (vs EMF) Index

400
18.7
6.8
2.8
15.3
3.7
0.9
10.6
2.2
61.0
0.3
0.4
0.3
0.1
1.4
5.7
7.7
1.8
17.8
12.5
1.8
1.2
5.0
0.6
21.2
100.0
100
350
90
Absolute (lhs)
300
80
250
Relative to EM (rhs)
200
70
150
60
100
50
50
0
Jan 90
Oct 96
Jul 03
Apr 10
EM Global Capex Sector Absolute and relative (vs EMF) Index
1200
Absolute (lhs)
1000
500
420
340
800
260
600
180
400
100
200
20
0
Jan-90
840
40
Oct-96
Jul-03
Apr-10
EM Global Consumer Sector Absolute and relative (vs EMF) Index

Absolute (lhs)
720
-60
300
250
600
200
480
360
150
240
100
50
120
0
Jan-90
Oct-96
Jul-03
Apr-10
EM Global Price Taker Sector Absolute and relative (vs EMF) Index
450
115
Absolute (lhs)
380
100
310
240
170
85
70
55
100
40
30
-40
Jan-90
25
Oct-96
Jul-03
Apr-10
10
Source: Datastream, MSCI. J.P. Morgan. MSCI emerging markets companies have been classified in five categories. Of the five categories, Global Consumer/Capex (Tech-Hardware) weighting equally divided between Global consumer and Global Capex. The above
table contains MSCI free float market capitalization as a percentage of MSCI emerging markets. Charts show the relative absolute and relative performance of emerging markets sectors by demand classification. Updated 14 Nov. 2012
571

21 November 2012
Adrian Mowat
(852) 2800-8599
Value: Equities Relative to Bonds

Relative Outperformance of Equities versus Bonds by Country (%)
Country
Brazil
Chile
China
Colombia
Czech
Hungary
India
Indonesia
Malaysia
Mexico
Peru
Poland
Russia
South Africa
Thailand
Turkey
1-month
3-month
6-month
12-month
36-month
-0.2
-1.3
7.3
-2.8
-5.9
-1.4
-0.8
-2.5
-0.7
-2.4
-1.8
-6.0
-5.7
4.2
-2.5
3.2
-2.9
1.2
10.7
1.4
-1.8
2.8
6.0
2.9
0.7
-0.7
5.2
-0.7
-6.5
5.3
3.6
6.5
-11.7
-8.9
6.3
-10.7
-0.3
-0.9
7.1
-0.6
1.4
-4.5
-10.8
3.0
-2.3
3.4
-4.3
15.7
-19.5
-8.1
6.7
-0.8
-5.9
4.3
-4.2
-0.3
7.3
0.5
-12.8
-7.0
-14.3
4.6
24.3
14.2
-19.2
22.4
-0.7
47.2
-3.9
-13.2
11.4
46.8
33.8
32.8
21.6
9.9
6.1
48.2
80.4
47.8
36-month
annualized
-6.9
7.0
-0.2
13.8
-1.3
-4.6
3.7
13.7
10.2
9.9
6.7
3.2
2.0
14.0
21.7
13.9
Bond Yield To
Maturity
6.4
5.2
3.5
4.0
1.5
6.4
8.3
5.8
3.4
5.7
4.7
3.8
7.0
7.2
3.3
6.9
Earnings
Yield
9.3
6.3
10.1
5.3
9.6
12.2
7.1
7.1
7.0
6.1
7.9
9.4
19.8
8.5
8.8
9.5
Dividend
Yield
3.8
3.1
3.2
3.8
7.0
4.4
1.7
2.8
3.3
1.9
4.0
4.9
4.0
3.9
3.8
3.1
DDM Implied
Growth
10.1
7.6
5.4
6.6
-0.6
7.6
11.0
8.2
5.3
7.9
NA
3.2
8.3
9.0
5.4
9.3
Relative value of equities versus bonds by country

Country
Brazil
Chile
China
Colombia
Czech
Hungary
India
Indonesia
Malaysia
Mexico
Peru
Poland
Russia
South Africa
Thailand
Turkey
Generic 10
years
9.5
5.4
3.5
6.4
2.0
6.8
8.2
5.4
3.5
5.4
NA
4.2
5.0
7.2
3.5
7.8
Bond Maturity
(years)
10.5
5.5
6.8
8.8
6.7
4.5
8.6
12.6
6.1
9.9
13.4
4.8
4.8
9.6
5.7
3.5
Source: Bloomberg, J.P. Morgan, DataStream, MSCI, IBES Note: GBI-EM Bond Maturity and Yield to Maturity are used for each country. Updated as of 14 Nov. 2012.
572

21 November 2012
Adrian Mowat
(852) 2800-8599
Economic Forecasts: Changes in Real GDP Forecasts
US
Euro
Japan
China
Brazil
S Korea
Taiwan
South Africa
India
Russia
Mexico
Malaysia
Chile
Indonesia
Turkey
Thailand
Poland
Czech Republic
Peru
Colombia
Philippines
Hungary
Real GDP Growth (% Y/Y)

JPM
Consensus
2012E
2013E
2012E
2013E
2.2
1.7
2.1
2.0
-0.4
0.1
-0.5
0.3
1.7
0.1
2.1
1.0
7.6
8.0
7.7
8.1
1.4
4.1
1.5
4.0
2.3
3.2
2.5
3.3
1.2
3.4
1.4
3.8
2.2
2.7
2.5
3.0
5.6
6.0
5.6
6.0
3.6
3.0
3.7
3.6
3.9
3.6
3.8
3.6
5.0
3.7
4.7
4.9
5.4
4.5
5.0
4.6
5.7
3.5
6.0
6.3
2.8
3.7
3.0
4.0
5.8
2.7
5.3
4.5
2.3
1.6
2.4
2.0
-1.1
0.9
-0.9
0.9
6.0
7.0
6.0
6.0
4.3
4.5
4.5
4.5
5.3
3.5
5.4
5.2
-1.2
0.5
-1.1
0.7
Change in Forecasts Past 3 months (%)

JPM
Consensus
2012E
2013E
2012E
2013E
0.0
-0.2
-0.1
-0.1
0.0
-0.1
-0.1
-0.4
-0.8
-0.9
-0.4
-0.3
-0.1
-0.4
-0.3
-0.3
0.0
0.0
-0.4
-0.1
-0.2
-0.1
-0.3
-0.6
0.1
-0.5
-0.4
0.0
-0.3
-0.8
0.0
-0.3
0.0
0.0
-0.6
-0.3
0.0
-0.4
-0.1
-0.1
0.3
0.1
0.0
0.1
0.2
0.8
0.2
0.0
0.4
0.0
0.5
0.1
0.7
-0.2
0.0
0.0
0.0
-0.4
0.0
0.0
0.0
0.0
0.0
-0.1
-0.1
-0.5
-0.3
-0.5
0.0
0.0
-0.3
-0.3
0.0
0.0
0.1
0.0
0.8
0.0
0.0
-0.4
0.0
0.0
0.1
0.0
0.0
-0.3
-0.3
-0.3
2012E GDP Growth in EM: J.P. Morgan and Consensus Forecasts

6.6
5.8
5.4
5.0
J.P. Morgan EM growth forecast
4.6
4.2
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Inflation
(% Y/Y)
2012E
2013E
2.1
1.5
2.5
1.8
0.0
-0.1
2.7
3.4
5.4
5.5
2.2
3.1
1.8
1.8
5.6
5.5
9.7
8.7
5.1
6.8
4.2
3.8
1.7
1.9
3.1
3.1
4.1
3.0
9.0
7.2
2.5
2.4
3.8
2.7
2.9
2.2
3.7
2.7
3.3
3.2
3.0
2.8
5.8
4.9
2Q13E
1.5
0.8
1.6
8.2
4.0
4.0
3.5
3.3
6.0
3.0
3.2
3.0
5.0
4.0
4.1
2.0
2.3
1.0
8.0
5.5
4.5
1.5
Consensus Forecasts for 2012E GDP growth in EM and DM
Consensus EM growth forecast
6.2
3Q12E
2.0
0.0
-3.5
7.7
4.8
0.6
3.5
1.6
5.2
1.0
2.1
2.5
3.0
4.9
1.6
2.0
0.5
-1.2
5.5
2.8
1.2
-1.0
Economic Momentum
GDP SAAR
4Q12E
1Q13E
2.0
1.0
-1.5
0.0
-2.0
1.0
8.2
8.0
4.6
3.8
3.5
3.0
3.8
3.5
-1.3
5.4
5.0
5.8
3.0
3.5
3.5
4.0
3.5
3.5
4.0
4.0
3.0
3.0
3.2
3.2
1.5
1.5
0.5
1.3
-1.3
2.1
6.0
8.0
3.8
4.2
1.2
4.5
-1.0
1.0
Sep-12
6.4
6.2
6.0
5.8
DM consensus growth forecast (RHS)
5.6
5.4
5.2
5.0
4.8
4.6
Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11
EM consensus growth forecast (LHS)
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
2.80
2.60
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
Source: Bloomberg, J.P. Morgan estimates. Updated 14 Nov 2012

Note: Consensus estimates for Jordan, Egypt, and Pakistan sourced from WES and Morocco from EIU.
573

21 November 2012
Adrian Mowat
(852) 2800-8599
Economic Forecasts: Policy Rate Trend and Forecasts

Country
Official interest rate
Developed Markets
United States
Federal funds rate
Euro Area
Refi Rate
Japan
Overnight Call Rate
Latin America
Brazil
SELIC overnight rate
Mexico
Repo rate
Chile
Discount rate
Europe, Middle East and Africa
Czech Republic
2-week repo rate
Hungary
2-week deposit rate
Poland
7-day intervention rate
Russia
Rep Rate
South Africa
Repo rate
Turkey
Top of IRC
EM Asia
China
1-year working capital
Korea
Overnight call rate
Indonesia
BI rate
India
Repo rate
Malaysia
Overnight policy rate
Philippines
Reverse repo rate
Thailand
1-day repo rate
Taiwan
Official discount rate
1Q'12
2Q'12
3Q'12
Current
4Q'12F
1Q'12F
2Q'13F
3Q'13F
Last Change
0.125
1.00
0.05
0.125
1.00
0.05
0.125
1.00
0.05
0.125
0.75
0.05
0.125
0.75
0.05
0.125
0.75
0.05
0.125
0.75
0.05
0.125
0.75
0.05
0.125
0.75
0.05
16 Dec 08 (-87.5bp)
5 Jul 12 (-25bp)
5 Oct 10 (-5bp)
On hold
On hold
On hold
11.00
4.50
5.25
9.75
4.50
5.00
8.50
4.50
5.00
7.50
4.50
5.00
7.25
4.50
5.00
7.25
4.50
5.00
7.25
4.50
5.00
7.25
4.50
5.00
8.00
4.50
5.00
10 Oct 12 (-25bp)
17 Jul 09 (-25bp)
12 Jan 12 (-25bp)
4Q 13 (+25bp)
On hold
On hold
0.75
7.00
4.50
5.25
5.50
NA
0.75
7.00
4.50
5.25
5.50
11.50
0.50
7.00
4.75
5.25
5.50
11.50
0.25
6.50
4.75
5.50
5.00
6.50
6.31
3.25
5.75
8.00
3.00
4.00
3.00
1.88
6.00
3.00
5.75
8.00
3.00
3.75
3.00
1.88
0.05
5.50
3.50
5.50
5.00
6.25
5.50
6.00
2.75
5.75
7.75
3.00
3.00
2.75
1.88
0.05
5.50
3.50
5.50
5.00
6.25
5.50
6.00
2.75
5.75
7.75
3.00
3.00
2.75
1.88
0.05
5.50
3.50
5.50
5.00
6.25
5.50
6.00
2.75
5.75
7.75
3.00
3.00
2.75
1.88
On hold
4Q 12 (-25bp)
5 Dec 12 (-25bp)
On hold
On hold
-
6.56
3.25
5.75
8.50
3.00
4.00
3.00
1.88
0.05
6.00
3.75
5.50
5.00
6.00
5.50
6.00
2.75
5.75
7.75
3.00
3.00
2.75
1.88
1 Nov 12 (-20bp)
30 Oct 12 (-25bp)
7 Nov 12 (-25bp)
13 Sep 12 (+25bp)
19 Jul 12 (-50bp)
-
6.56
3.25
6.00
8.50
3.00
4.50
3.25
1.88
0.05
6.25
4.50
5.50
5.00
5.79
5.54
6.00
2.75
5.75
8.00
3.00
3.50
2.75
1.88
7 Jul 12 (-31bp)
11 Oct 12 (-25bp)
9 Feb 12 (-25bp)
17 Apr 12 (-50bp)
5 May 11 (+25bp)
25 Oct 12 (-25bp)
17 Oct 12 (-25bp)
30 Jun 11 (+12.5bp)
On hold
On hold
Jan 13 (-25bp)
On hold
13 Dec 12 (-25bp)
On hold
On hold
Change in policy rates

India
Chile
China
Japan
Malaysia
Poland
Taiwan
Thailand
Korea
Hungary
EU
Czech
S Africa
Mexico
Philippines
Indonesia
USA
Brazil
-950
Next Change
Emerging Markets policy rate

28
Change from 05 - 07 avg
24
Forecast change from now to Q4 12
20
16
Nominal Policy Rates
12
8
Real Rates
4
-1
-5
-750
-550
-350
-150
50
Source: J.P. Morgan Economics, Bloomberg. Bold figures on next column indicate tightening. Updated 14 Nov. 2012.
574
Policy Rate
4Q'11
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12

21 November 2012
Adrian Mowat
(852) 2800-8599
Economic Forecasts: Currency Movements and Forecasts

Japanese Yen (JPY)
J.P. Morgan
Consensus
May 09
Jul 11
Sep 13
5.0
Jan 05
Polish Zloty (PLN)
4.1 J.P.Morgan forecast:

3.9 end Dec 12: 3.15
3.7 end Mar 13: 3.23
3.5 end Jun 13: 3.18
3.3
3.1
2.9
2.7
2.5
2.3
2.1
1.9
Jan 05
Mar 07
May 09
J.P. Morgan
52
Consensus
2.0
1.8
1.7
J.P. Morgan
44
Jul 11
Sep 13
J.P. Morgan
Consensus
36
Jan 05
Mar 07
May 09
Jul 11
Sep 13

end Dec 12: 2.57
end Mar 13: 2.56
end Jun 13: 2.56
3.5
3.3
19
Consensus
3.0
J.P. Morgan
2.8
May 09
Jul 11
Consensus
1.5
1.3
1.2
1.1
Jan 05
Mar 07
May 09
Sep 13
2.5
Jan 05
May 09
Jul 11
Sep 13
May 09
Jul 11
12,500
J.P.Morgan forecast:
end Dec 12: 30.5
end Mar 13: 30.3
end Jun 13: 30.1
11,500
end Dec 12: 3.04
end Mar 13: 3.00
end Jun 13: 2.98
Mar 07
Consensus
May 09
Jul 11
Sep 13
Indonesian Rupiah (IDR)
Mar 07
May 09
Jul 11
J.P. Morgan
8,500
Sep 13
Sep 13

end Dec 12: 1775
end Mar 13: 1775
end Jun 13: 1775
2,300
2,100
J.P. Morgan
Consensus
Mar 07
May 09
Jul 11
Consensus
1,700
1,500
Jan 05
Mar 07
May 09
Jul 11
Sep 13
Hungarian Forint (HUF)

end Dec 12: 9750
end Mar 13: 9900
end Jun 13: 9900
7,500
Jan 05
Jul 11
1,900
9,500
Consensus
May 09
Colombian Peso (COP)
J.P. Morgan
10,500
J.P. Morgan
Mar 07
2,500
2.6
Jan 05
Sep 13
Consensus
1.4
Jan 05
Sep 13
260 J.P. Morgan forecast:

end Dec 12: 215
247
end Mar 13: 215
234 end Jun 13: 201
221
208
195
182
169
156
143
130
Jan 05
Mar 07
May 09
J.P. Morgan
Consensus
Jul 11
Expected % Gain vs USD till December 2012 (J.P. Morgan)

6
4
2
0
-2
-4
Consensus
Mar 07
Jul 11
Mar 07
Thai Baht (THB)
44
42
40
38
36
34
32
30
28
26
Jan 05
J.P. Morgan
1.6
Peruvian Nuevo Sol (PEN)
21
end Dec 12: 19.23
end Mar 13: 19.38
end Jun 13: 19.47
Turkish Lira (TRL)

end Dec 12: 1.80
end Mar 13: 1.75
end Jun 13: 1.75
1.4
40
23
Mar 07
Sep 13
1.9
48
3.8
13
Jan 05
Jul 11

end Dec 12: 41.20
end Mar 13: 41.15
end Jun 13: 40.50
56
Czech Koruna (CZK)
15
May 09
Philippine Peso (PHP)

60
25
17
Mar 07
2.8
35.0
Jan 05
Sep 13
Sep 13
3.2
3.0
1.8
2,700
3.4
Consensus
39.0
Jul 11
Jul 11
3.6
43.0
Consensus
May 09
3.8
47.0
J.P. Morgan
2.0
Malaysian Ringgit (MYR)
Sep 13
-6
HUF
6.0
Mar 07
51.0
2.4
MXN
20
Jan 05
7.0
55.0
Mar 07
PLN
24
8.0
J.P. Morgan
4.0
J.P. Morgan
end Dec 12: 54.0
end Mar 13: 55.0
end Jun 13: 55.5
CZK
Consensus
Sep 13
JPY
28
Jul 11
end Dec 12: 2.02
end Mar 13: 2.02
end Jun 13: 2.00
2.6
1.6
J.P. Morgan
5.8
Jan 05
Indian Rupee (INR)

59.0
Consensus
6.2
RUB
9.0
May 09
BRL
10.0
32
Mar 07
Brazilian Real (BRL)

2.8
2.2
6.6
Consensus
Mexican Peso (MXN)

15.5
14.9
end Dec 12: 12.5
end Mar 13: 12.2
14.3
end Jun 13: 12.0
13.7
13.1
12.5
11.9
11.3
10.7
10.1
9.5
Jan 05
Mar 07
May 09
7.4
7.0
INR
11.0
end Dec 12: 8.85
end Mar 13: 8.80
end Jun 13: 8.65
7.8
COP
J.P. Morgan
South African Rand (ZAR)
Sep 13
end Dec 12: 6.32
end Mar 13: 6.32
end Jun 13: 6.30
8.2
J.P. Morgan
MYR
12.0
Sep 13
Jul 11
Chinese Yuan Renminbi (CNY)
8.6

end Dec 12: 29.60
end Mar 13 : 29.50
end Jun 13: 29.40
THB
13.0
Jul 11
May 09
TRL
14.0
May 09
Mar 07
ILS
Russian Rouble (RUB)

end Dec 12: 30.66
end Mar 13: 30.84
end Jun 13: 30.81
Mar 07
800
Jan 05
PHP
Sep 13
900
IDR
Jul 11
Consensus
1,000
Consensus
CNY
May 09
J.P. Morgan
1,200
EUR
Mar 07
60
Jan 05
Taiwan Dollar (TWD)

37
36
35
34
33
32
31
30
29
28
27
Jan 05
1,100

end Dec 12: 78
end Mar 13: 79
end Jun 13: 79
70
1,300
KRW
1.12
Jan 05
36
J.P. Morgan
90
80
Consensus
40
1,400
100
1.32

end Dec 12: 1125
end Mar 13: 1125
end Jun 13: 1110
1,500
110
J.P. Morgan
South Korean Won (KRW)
1,600
ARS
1.52
120
TWD
end Dec 12: 1.30
end Mar 13: 1.30
end Jun 13: 1.32
ZAR
Euro (EUR)
1.72
Source: Bloomberg, Datastream, J.P. Morgan estimates. Updated 14 Nov 2012.
575
Sep 13

21 November 2012
Adrian Mowat
(852) 2800-8599
Economic Forecasts: Credit Risk

Foreign
Reserves
(US$bil)
China
Brazil
3285
378
External (2011E)
Current Account
External Debt
2012F**
2013F**
2012F**
2013F**
% GDP
% GDP
(US$bil)
%GDP
3.6
-2.4
3.3
-2.6
661
530
8
24
Fiscal Position
Fiscal Deficit
Public Sector Debt
2012F**
2013F**
2012F
2013F
% GDP
% GDP
% GDP
% GDP
Sovereign Ratings (Long Term Foreign Debt)

Rating
-2.0
-2.7
-1.7
-3.1
18.6
54.5
15.9
52.5
Aa3 (+)
Baa2 (+)
Moodys
Action
Affirmed, O/L (+)

Affirmed, O/L (+)
Upgrade, O/L chngd to
stable
Affirmed, O/L stable
Date
Rating
Aug-27-12
Aug-25-11
Apr-15-12
Apr-30-12
AABBB
S&P
Action
Date
Upgrade, O/L stable

Upgrade, O/L chngd to stable
Dec-16-10
Nov-17-11
A+
AABBB+ ()
BBB- (-)
BBB
BBB
AA+ (+)
BB+ (+)
ABB
BBB+
Upgrade, O/L stable

Sep-13-12
Aug-08-12
O/L chngd to (-), Affirmed

Upgrade, O/L stable
O/L chngd to (+), Affirmed
Affirmed, O/L (+)
O/L chngd to stable, Affirmed
O/L chngd to stable, Affirmed
Mar-28-12
Apr-25-12
Jun-27-12
Dec-17-10
Jul-27-11
Dec-16-10
Apr-23-12
Aug-07-12
May-01-12
Dec-09-10

Aug-24-12
Aug-28-12
Aug-23-12

Upgrade, O/L chngd to stable
Downgrade, O/L (-)
Upgrade, O/L stable
Aug-15-12
Jul-04-12
Dec-21-11
Mar-23-10
Korea
Taiwan
322
398
3.0
7.8
2.0
7.5
422
94
37
20
1.0
-2.0
1.9
-1.3
33.9
na
31.8
na
Aa3
Aa3
South Africa
India
Russia
Mexico
Malaysia
Chile
Indonesia
Poland
Turkey
Thailand
Czech
Republic
Peru
Egypt*
41
295
529
161
138
40
110
71
99
182
-5.7
-3.2
4.2
-0.4
3.9
-4.6
-2.4
-4.4
-7.4
-0.2
-5.0
-2.9
2.5
-0.7
4.2
-7.0
0.4
-4.2
-6.6
1.2
80
376
584
219
60
95
207
381
322
90
20
19
30
19
20
34
23
77
40
25
-4.7
-5.5
-0.2
-2.4
-4.7
1.0
-2.1
-3.2
-2.2
-3.5
-4.6
-5.4
-1.0
-2.2
-5.2
1.1
-1.9
-3.3
-1.7
-4.1
40.1
46.1
4.8
34.6
54.1
5.2
28.1
58.0
25.7
37.4
40.9
45.3
4.3
34.7
55.0
5.0
25.9
57.5
24.2
39.3
Baa1 (-)
Baa3
Baa1
Baa1
A3
Aa3
Baa3
A2
Ba1 (+)
Baa1
Downgrade, O/L (-)

Upgrade, O/L (+)
Sep-27-12
Jun-25-12
May-10-12
Aug-18-11
Jun-07-12
Apr-24-12
Jul-16-12
Jan-05-10
Jun-20-12
Apr-16-12
41
62
15
-3.3
-4.7
na
-3.7
-4.1
na
108
43
na
49
21
na
-3.5
0.5
na
-3.4
0.4
na
41.4
18.6
na
42.9
17.7
na
A1
Baa2 (+)
B2 (-)

Upgrade, O/L (+)
Jul-17-12
Aug-16-12
Sep-12-12
Colombia
Philippines
Hungary
Morocco*
Emerging
Asia
Emerging
Europe
Latin America
34
82
31
na
-2.9
3.1
3.1
na
-3.0
2.6
3.5
na
63
67
162
na
17
27
123
na
-0.8
-2.5
-2.8
na
-2.2
-1.8
-3.6
na
45.1
45.6
60.7
na
45.1
44.1
60.4
na
Baa3
Ba2 (+)
Ba1 (-)
Ba1

Downgrade, O/L (-)
Feb-14-12
May-29-12
Nov-24-11
Mar-15-12
AABBB (+)
B (-)
BBB(+)
BB+
BB+ (-)
BBB-
4813
2.5
2.3
1976
14
-2.0
-1.7
29.0
27.1
828
746
-0.5
-1.2
-1.2
-1.3
1743
1224
46
24
-1.9
-2.7
-2.2
-2.5
27.5
41.2
27.0
40.7
EMBI Global Spreads and Yields

550
9.0
500
450
8.0
400
350
7.0
300
250
6.0
200
150
5.0
100
50
0
4.0
Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12
Spread (L)
Yield
EMBI Asia Spreads and Yields

400
EMBI Europe Spreads and Yields

5.2
350
8.0
500
7.0
450
4.7
300
400
6.0
350
250
4.2
300
5.0
250
200
3.7
150
100
Nov-10
550
200
4.0
150
Mar-11
Jul-11
Nov-11
Spread (L)
Mar-12
Jul-12
Yield
3.2
Nov-12
100
Nov-10
EMBI Latin America Spreads and Yields
Mar-11
Jul-11
Spread (L)
Nov-11
Mar-12
Jul-12
Yield
3.0
Nov-12
1000
7.5
900
7.0
800
700
6.5
600
500
6.0
400
300
5.5
200
100
Nov-10 Mar-11
Jul-11
Nov-11 Mar-12
Spread (L)
Source: CEIC, JP Morgan estimates, Moody's, Standard & Poor's, Bloomberg * Data from World Economic Outlook for April 2012 for Current Account data, ** F denotes forecast Note: Forex reserves as of October 2012 or latest available data. Updated 14 Nov. 2012
576
Jul-12
Yield
5.0
Nov-12

21 November 2012
Adrian Mowat
(852) 2800-8599
Perspective: Emerging Markets Balance Sheets

No. of Companies
128
67
73
86
34
54
23
18
31
15
18
16
11
14
2
3
5
5
14
3
2
China
Brazil
Korea
Taiwan
South Africa
India
Russia
Mexico
Malaysia
Chile
Indonesia
Turkey
Thailand
Poland
Czech Republic
Peru
Egypt
Colombia
Philippines
Hungary
Morocco
Debt/Equity
Debt/Assets
0.56
0.52
0.26
0.27
0.40
0.74
0.30
0.64
0.56
0.57
0.42
0.67
0.72
0.25
0.54
0.19
0.50
0.34
0.86
0.48
0.46
Debt/Market. Cap
0.25
0.26
0.15
0.16
0.21
0.31
0.20
0.30
0.29
0.28
0.24
0.25
0.34
0.15
0.26
0.13
0.21
0.25
0.37
0.25
0.19
0.68
0.59
0.21
0.14
0.14
0.29
0.39
0.35
0.27
0.14
0.08
0.32
0.28
0.23
0.31
0.04
0.32
0.19
0.29
0.46
0.12
Asset Turnover
Current Ratio
0.82
0.44
0.96
1.10
0.89
0.69
0.44
0.65
0.50
0.59
0.91
0.85
1.16
0.91
0.40
0.47
0.33
0.43
0.45
0.79
0.46
1.09
1.67
1.22
1.32
1.35
1.46
1.61
1.51
1.78
1.08
1.57
1.13
1.41
1.32
0.97
3.17
1.28
0.94
1.67
1.35
1.48
Interest Coverage
Altman Z Score
12.8
4.6
11.5
26.8
6.3
7.5
18.3
5.9
6.5
4.9
14.2
6.3
7.9
11.9
11.1
22.2
4.6
4.7
4.7
6.2
52.5
4.1
3.7
4.5
4.4
5.1
5.2
4.2
4.5
4.8
3.0
8.1
4.4
5.4
3.4
3.3
8.6
2.2
3.6
2.8
3.2
3.3
Debt to Equity Ratios Quartile Distribution Chart (x)

8
Colombia
Morocco
Egypt
Philippines
Peru
Czech
Republic
Hungary
Poland
Indonesia
Turkey
Chile
Thailand
Malaysia
India
Russia
Mexico
China
Brazil
Taiwan
South Africa
Korea
Source: Datastream, Bloomberg, J.P. Morgan. Data as of February 2012

Note: 1. All ratios are calculated from latest financial reports available ex Financial sector and calculations are based on weighted average of companies in the MSCI EMF universe. For Altman z-score, its application on company level is such that a score of less than
1.8 indicates bankruptcy likely, between 1.8-2.7 bankruptcy likely within 2 years and more than 3 most likely safe from bankruptcy. For market as a whole, the ratio is a weighted average of companies' z-score, thereby giving a general quality of companies in the
market.2. For the debt to equity distribution chart, each box indicates quartile levels and markets with values exceeding the scale are indicated by the open-ended top box. The diamond indicates weighted average for each market. 3. Quartile Distribution Charts: each
quartile is separated by a line, with the exception of the top quartile which is subdivided in order to show the top decile of companies, shaded in blue. Markets with values exceeding the scale are indicated by the open-ended top box. The diamond indicates the
weighted mean for each market.
577

21 November 2012
Adrian Mowat
(852) 2800-8599
Perspective: Demographic and Key Economic Statistics

Population and demographics
Population
Age
2012
Growth
Dependency Ratio*
million
%YoY
Young
Old
USA
China
Brazil
India
Russia
Mexico
Korea
Indonesia
Turkey
Poland
Taiwan
South Africa
Argentina
Thailand
Colombia
Malaysia
Egypt
Czech Rep.
Philippines
Chile
Israel
Peru
Hungary
Morocco
MSCI EM
Gross
Enrollment Ratio
Secondary**
US$
billion
2012
Nominal GDP
Per capita
(US$)
Real GDP
10 year CAGR***
Total
Per capita
(%)
(%)
315
0.9
na
na
98
15,689
49,854
4.0
3.0
1.6
0.7
1356
197
1249
142
115
49
238
75
38
41
23
51
47
69
29
18
81
97
8
11
30
10
33
4,011
0.6
0.8
1.4
-0.3
1.0
0.1
1.2
1.3
-0.8
0.9
0.3
1.2
1.2
0.6
2.0
1.2
2.0
1.8
2.2
0.2
1.5
-0.2
1.0
0.3
0.4
0.5
0.2
0.5
0.3
0.4
0.4
0.2
0.4
0.3
0.5
0.5
0.3
0.5
0.4
0.5
0.6
0.4
0.2
0.5
0.2
0.5
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.1
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.2
0.2
0.1
0.2
0.1
73
102
54
93
80
91
64
79
97
86
na
90
75
77
76
89
87
86
93
96
92
97
48
8366
2232
1979
1937
1176
1144
880
805
495
487
471
392
362
359
304
277
273
248
238
219
199
131
107
21,754
6171
11357
1584
13646
10240
23360
3696
10756
13146
11806
20188
7651
7773
5210
10456
15742
3377
2556
30627
20705
6535
13161
3298
5,761
19.1
16.0
14.6
18.8
5.2
7.1
16.2
13.2
9.6
17.0
4.5
13.4
14.6
11.1
12.3
15.2
12.1
12.4
7.8
11.2
13.4
7.0
10.3
16.3
18.5
14.8
12.9
19.1
3.8
6.8
14.8
11.8
9.7
15.9
4.2
12.1
13.2
10.2
10.3
13.8
9.8
10.4
5.7
10.9
11.6
7.2
9.1
14.5
10.4
3.8
8.1
4.7
2.4
3.7
5.6
4.9
4.3
7.4
4.0
3.5
4.7
4.2
5.0
4.6
4.6
5.0
3.9
3.0
6.4
1.3
4.7
9.8
2.7
6.5
4.9
1.1
3.4
4.3
3.6
4.5
6.3
3.7
2.2
3.5
3.3
3.1
3.3
2.5
3.1
1.8
2.7
4.7
1.5
3.5
Source: CEIC, Datastream, Bloomberg, US Consensus Bureau, World Bank, UNESCO, J.P. Morgan estimates
* Age dependency ratio defined as dependents to working-age population.
** Gross Enrollment Ratio is defined as pupils enrolled in a secondary level, regardless of age expressed as a percentage of the population in the relevant official age group
*** 10-year CAGR for period 2002-2012, in local currency. Population data based on IMF estimate as on October 2009.
Data for Gross enrollment data for 2004 except for Malaysia, Brazil and Argentina which is for 2003. Updated Oct 2012.
578
10 year CAGR***
Total
Per capita
(%)
(%)

21 November 2012
Adrian Mowat
(852) 2800-8599
Perspective: Global Emerging Capital Markets

MSCI EMF Index
China
Korea
Brazil
Taiwan
South Africa
Russia
India
Mexico
Malaysia
Indonesia
Thailand
Chile
Poland
Turkey
Colombia
Philippines
Peru
Egypt
Czech Republic
Hungary
Morocco
Total
Total
Market
Cap
Estimated
Free Float
Companies
Average
Daily
Turnover
US$ Bn
1319
851
770
537
387
747
548
317
324
245
227
187
173
102
180
114
50
26
19
32
21
7174
(%)
50
64
56
71
70
32
36
56
41
41
34
35
38
51
25
29
47
49
58
33
15
49
Number
141
105
77
114
50
73
26
22
44
25
21
24
20
21
14
19
4
8
4
3
3
818
US $ Mn
2948
2735
2596
1711
815
1339
1186
442
315
198
393
782
106
180
65
73
135
35
39
38
4
16134
AC World Index Market Capitalization
% of
Emerging
Market
Trading
Volume
%
18.3
17.0
16.1
10.6
5.1
8.3
7.4
2.7
2.0
1.2
2.4
4.8
0.7
1.1
0.4
0.5
0.8
0.2
0.2
0.2
0.0
100
Developed
Europe
24%
Weighting in
MSCI EMF
(%)
18.6
15.4
12.3
10.7
7.6
6.8
5.6
5.0
3.7
2.8
2.2
1.8
1.8
1.5
1.3
0.9
0.7
0.4
0.3
0.3
0.1
100
Stocks constituting
75% of Country
Market Cap
Number
33
30
23
34
21
26
9
9
19
11
11
10
11
8
6
12
3
4
3
2
3
(%)
23
29
30
30
42
36
35
43
43
44
52
42
55
38
43
63
75
50
75
67
100
EM Asia
61%
Market Cap
Issues
US$ Bn
10.0
na
44.9
na
13.8
na
59.9
69.1
8.2
40.1
na
46.4
11.4
14.0
17
34.4
13.2
2.2
na
na
na
385
Number
10
na
19
na
9
na
22
29
6
25
na
20
14
6
8
19
6
3
4
na
na
200
Top 8 versus Rest of Emerging Markets
EM Latin
America
21%
North America
51%
JPM EMBI Global
Stocks
constituting
75% of Country
Market Cap
MSCI Regional Market Capitalization
Emerging
Markets
13%
Japan
7%
Developed Asia
5%
Markets Concentration
EM Europe and
Middle East
18%
India
7%
Mexico
5%
China
18%
Russia
6%
Rest of EM
18%
Korea
15%
Taiwan
11%
Brazil South Africa
12%
8%
Source: MSCI, J.P. Morgan. Updated 14 Nov. 2012
579

21 November 2012
Adrian Mowat
(852) 2800-8599
Perspective: MSCI Emerging Market Index Composition by Country and Sector
4.4
2.3
1.0
8.0
3.6
8.7
2.9
12.8
0.2
0.4
1.3
5.6
6.0
1.0
0.4
0.1
0.1
0.8
0.3
0.3
4.8
0.3
0.2
0.1
0.9
1.6
1.3
0.6
0.2
0.2
0.3
13.8
5.1
1.4
0.6
0.1
0.3
0.0
0.1
0.4
0.1
0.1
1.3
0.6
0.6
0.3
0.2
0.0
0.3
1.0
6.4
0.3
14.1
2.3
2.4
1.0
0.3
0.2
0.4
4.3
11.6
Telecom Services
1.2
1.9
0.4
0.4
0.5
0.1
Materials
0.2
0.1
Total
1.1
1.7
1.5
0.2
0.1
7.0
2.0
1.6
2.0
1.2
0.9
0.9
0.3
15.9
2.0
0.8
1.0
0.7
0.2
0.1
0.1
0.1
5.0
3.1
0.6
0.3
0.5
0.3
4.8
25.7
Utilities
1.5
0.5
0.4
0.1
Information
Technology
Energy
5.5
0.7
3.3
0.1
0.2
0.1
Source: MSCI, J.P. Morgan. Updated 14 Nov. 2012
580
3.3
0.5
0.1
0.8
0.2
0.2
0.5
Industrials
0.1
0.0
1.0
0.9
0.3
0.7
0.4
0.3
0.3
0.0
4.0
0.5
0.2
0.2
0.1
Estimated Free float : 50%
Health care
1.0
2.6
0.4
0.6
0.4
0.5
0.1
0.0
5.5
1.4
Total Market Capitalization (US$ in billions): 7145

Financials
China
Korea
Taiwan
India
Malaysia
Indonesia
Thailand
Philippines
Asia
South Africa
Russia
Turkey
Poland
Egypt
Czech Republic
Hungary
Morocco
EMEA
Brazil
Mexico
Chile
Colombia
Peru
LatAm
Total
818
Consumer Staples
MSCI Emerging
Markets Free Index
Consumer
Discretionary
Number of Companies:
2.3
0.1
0.6
0.1
0.5
0.3
0.2
0.1
4.3
1.0
0.4
0.2
0.1
0.1
0.1
0.0
0.0
1.9
0.4
1.3
0.1
0.5
0.2
1.8
7.9
1.3
3.5
18.6
15.4
10.7
6.8
3.7
2.8
2.2
0.9
61.3
7.6
5.6
1.8
1.5
0.4
0.3
0.3
0.1
17.7
12.3
5.0
1.8
1.3
0.7
21.1
100.0
0.3
0.4
0.1
0.0
0.1
1.7
0.2
0.2
0.2
0.5
0.8
0.4
0.1
Adrian Mowat
(852) 2800-8599

21 November 2012
Top Picks
Adani Ports and Special Economic Zone .................................................................192
Advanced Petrochemical .........................................................................................194
Air China .................................................................................................................196
AirAsia BHD ...........................................................................................................198
AmBev .....................................................................................................................200
Anhanguera ..............................................................................................................202
ASE ..........................................................................................................................204
Aspen .......................................................................................................................206
Axis Bank ................................................................................................................208
Ayala Corporation....................................................................................................210
Ayala Land, Inc........................................................................................................212
Baidu.com ................................................................................................................214
Bank Central Asia ....................................................................................................216
Baoxin Auto Group Limited ....................................................................................218
Beijing Capital International Airport .......................................................................220
Brilliance China Automotive ...................................................................................222
CCR .........................................................................................................................224
Cebu Air, Inc............................................................................................................226
Charoen Pokphand Foods ........................................................................................228
China Foods .............................................................................................................230
China Shenhua Energy .............................................................................................232
China Shipping Container Lines ..............................................................................234
CIMB Group Holdings ............................................................................................236
Coronation Fund Managers Limited ........................................................................238
Credicorp .................................................................................................................240
CSR Corp Ltd. .........................................................................................................242
Cyrela .......................................................................................................................244
Dialog Group Bhd ....................................................................................................246
Duratex ....................................................................................................................248
Electricity Generating Company (EGCO) ...............................................................250
Emaar Properties ......................................................................................................252
Emlak Konut ............................................................................................................254
Erajaya Swasembada Tbk PT ..................................................................................256
Erste Bank ................................................................................................................258
Far EasTone Telecommunications ...........................................................................260
Fibria ........................................................................................................................262
First Gulf Bank ........................................................................................................264
Fleury .......................................................................................................................266
Federal Grid Company (FSK) ..................................................................................268
Fubon Financial Holdings ........................................................................................270
Geely Automobile Holdings Ltd. .............................................................................272
HCL Technologies ...................................................................................................274
HOMEX ...................................................................................................................276
Hyundai Mipo Dockyard .........................................................................................278
581
Adrian Mowat
(852) 2800-8599

21 November 2012
Hyundai Motor Company ........................................................................................280

ICICI Bank ...............................................................................................................282
IJM Land ..................................................................................................................284
Industrial and Commercial Bank of China...............................................................286
Industries Qatar ........................................................................................................288
Iochpe Maxion .........................................................................................................290
ITC Limited .............................................................................................................292
Jollibee Foods Corp. ................................................................................................294
Ju Teng International Holdings Limited ..................................................................296
KEPCO ....................................................................................................................298
KPJ Healthcare Berhad ............................................................................................300
Kroton ......................................................................................................................302
Kunlun Energy Company Limited ...........................................................................304
Lenovo Group Limited ............................................................................................306
LG Display...............................................................................................................308
LG Electronics .........................................................................................................310
Localiza....................................................................................................................312
LW Bogdanka ..........................................................................................................314
Magnit ......................................................................................................................316
Mahindra and Mahindra ...........................................................................................318
MediaTek Inc. ..........................................................................................................320
Mega Holdings .........................................................................................................322
Metalrgica Gerdau .................................................................................................324
Metro Pacific Investments Corp. .............................................................................326
Mindray Medical......................................................................................................328
Mobily......................................................................................................................330
Naspers Limited .......................................................................................................332
Natura ......................................................................................................................334
Novatek ....................................................................................................................336
Novatek Microelectronics Corp. ..............................................................................338
Oberoi Realty ...........................................................................................................340
Orion ........................................................................................................................342
Pacific Basin Shipping .............................................................................................344
Pacific Rubiales Energy ...........................................................................................346
Ping An Insurance Group .........................................................................................348
Pruksa Real Estate Pcl .............................................................................................350
PTT Exploration and Production (PTTEP) ..............................................................352
PZU ..........................................................................................................................354
Quanta Computer Inc. ..............................................................................................356
Rosneft .....................................................................................................................358
Samba Financial Group............................................................................................360
Samsung Electronics ................................................................................................362
Samsung Engineering ..............................................................................................364
Samsung Life Insurance ...........................................................................................366
SASOL .....................................................................................................................368
Saudi Arabian Fertilizer Company ..........................................................................370
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Saudi Industrial Investment Group ..........................................................................372

Sberbank ..................................................................................................................374
Semen Gresik ...........................................................................................................376
Sesa Goa ..................................................................................................................378
Siam Commercial Bank ...........................................................................................380
Sino Biopharmaceutical ...........................................................................................382
Sinopec Corp.- H .....................................................................................................384
Skyworth Digital ......................................................................................................386
Summarecon Agung.................................................................................................388
Tata Consultancy Services .......................................................................................390
Televisa ....................................................................................................................392
Tencent ....................................................................................................................394
Thai Union Frozen Products ....................................................................................396
Tim Participaes ....................................................................................................398
TMK ........................................................................................................................400
TPK Holding Co., Ltd. .............................................................................................402
Tractebel Energia .....................................................................................................404
TSMC ......................................................................................................................406
Turkcell ....................................................................................................................408
Unimicron Technology Corp. ..................................................................................410
Vakifbank ................................................................................................................412
Vodacom Group Limited .........................................................................................414
Wipro .......................................................................................................................416
Yanbu National Petrochemical Company ................................................................418
Yandex .....................................................................................................................420
Yapi Kredi ...............................................................................................................422
Youku Tudou Inc. ....................................................................................................424
ZTE Corp .................................................................................................................426
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Stocks to Avoid
ABB Ltd...................................................................................................................430
ALL..........................................................................................................................432
Alliance Oil ..............................................................................................................434
Anglo American (AGL SJ.J)....................................................................................436
ArcelorMittal South Africa ......................................................................................438
ASUSTek Computer ................................................................................................440
Banco Santander Chile .............................................................................................442
Bank of Baroda ........................................................................................................444
Bank Pekao SA ........................................................................................................446
Catcher Technology .................................................................................................448
Chimei Innolux Corporation ....................................................................................450
China Minsheng Banking - H ..................................................................................452
China Shineway Pharmaceutical Group Limited .....................................................454
CSN..........................................................................................................................456
Discovery .................................................................................................................458
Dongbu Insurance ....................................................................................................460
DongFeng Motor Co., Ltd. ......................................................................................462
E Ink Holdings Inc. ..................................................................................................464
Ecopetrol ..................................................................................................................466
Eletrobras .................................................................................................................468
Genting Plantations ..................................................................................................472
Globe Telecom.........................................................................................................474
Group 5 ....................................................................................................................476
Hanjin Shipping Co Ltd ...........................................................................................478
Hero Motocorp Ltd. .................................................................................................480
Honam Petrochemical Corp .....................................................................................482
Hong Leong Bank ....................................................................................................484
HTC Corp ................................................................................................................486
Infosys......................................................................................................................488
IOI Corp. ..................................................................................................................490
JSW ..........................................................................................................................492
JSW Energy Ltd. ......................................................................................................494
Liberty Holdings ......................................................................................................496
Longfor Properties Co. Ltd. .....................................................................................498
LSR ..........................................................................................................................500
Manila Electric Company ........................................................................................502
Marfrig .....................................................................................................................504
Mobile Telesystems .................................................................................................506
New World Resources .............................................................................................508
NII Holdings ............................................................................................................510
OdontoPrev ..............................................................................................................512
Palm Hills Developments ........................................................................................514
Parkson Retail Group Ltd ........................................................................................516
Petkim ......................................................................................................................518
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PetroChina ...............................................................................................................520
PT Indosat Tbk.........................................................................................................522
Reliance Industries Ltd ............................................................................................524
Riyad Bank ..............................................................................................................526
Rossi ........................................................................................................................528
Saudi Kayan Petrochemical Company .....................................................................530
Shanda Games..........................................................................................................532
S-Oil Corp ................................................................................................................534
Thai Oil Public Company ........................................................................................536
Tisco Financial Group Pcl. ......................................................................................538
Union Bank of the Philippines .................................................................................540
United Tractors ........................................................................................................542
Vale Indonesia .........................................................................................................544
Weg ..........................................................................................................................546
Wintek Corporation .................................................................................................548
X5 Retail Group .......................................................................................................550
Yanzhou Coal Mining - H........................................................................................552
Zain KSA .................................................................................................................554
Zhongsheng Group Holdings ...................................................................................556
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Companies Recommended in This Report (all prices in this report as of market close on 20 November 2012, unless
otherwise indicated)
Advanced Petrochemical (2330.SE/SRls23.35/Overweight), Alliance Oil Company (AOILsdb.ST/Skr51.90/Underweight),
Anglo American (AGLJ.J) (AGLJ.J/23750c/Underweight), Antofagasta (ANTO.L/1254p/Overweight), ArcelorMittal South
Africa (ACLJ.J/2530c/Underweight), Aspen (APNJ.J/15446c/Overweight), Bank Pekao SA (BAPE.WA/zl157.30/Neutral),
Commercial International Bank (Egypt) (COMI.CA/E36.92[19 November 2012]/Overweight), Coronation Fund Managers
Ltd (CMLJ.J/3692c/Overweight), DASA (DASA3.SA/R$12.80[19 November 2012]/Neutral), Discovery Holdings Limited
(DSYJ.J/5751c/Underweight), Dongbu Insurance (005830.KS/W45500/Underweight), E.ON Russia JSC
(EONR.RTS/$0.08100[24 October 2012]/Overweight), Ecopetrol S.A. (ECO.CN/Col$5330.0[19 November
2012]/Underweight), Emaar Properties (EMAR.DU/Dh3.65/Overweight), Emlak Konut (EKGYO.IS/TL2.77/Overweight),
Erste Bank (ERST.VI/20.59/Overweight), FSK (FEES.RTS/$0.00580[28 June 2012]/Overweight), Fibria
(FIBR3.SA/R$19.72[19 November 2012]/Neutral), First Gulf Bank (FGB.AD/Dh10.30/Overweight), Garanti
(GARAN.IS/TL8.16/Neutral), Gazprom (GAZP.RTS/$4.40[14 November 2012]/Neutral), Globaltrans
(GLTRq.L/$16.32/Overweight), Group 5 (GRFJ.J/2443c/Underweight), Hanjin Shipping Co Ltd
(117930.KS/W10350/Neutral), Honam Petrochemical Corp (011170.KS/W199000/Underweight), Hyundai Mipo Dockyard
(010620.KS/W107000/Overweight), Hyundai Motor Company (005380.KS/W212500/Overweight), Industries Qatar
(IQCD.QA/QR150.20/Overweight), JSW (JSW.WA/zl84.20/Underweight), KB Financial Group
(105560.KS/W34900/Overweight), KEPCO (015760.KS/W27300/Overweight), Koc Holding
(KCHOL.IS/TL8.42/Overweight), LG Display (034220.KS/W36050/Overweight), LG Electronics
(066570.KS/W79300/Overweight), LSR (LSRGq.L/$4.13/Underweight), LW Bogdanka
(LWBP.WA/zl131.30/Overweight), Liberty Holdings Ltd (LBHJ.J/10197c/Underweight), MTN Group Limited
(MTNJ.J/16970c/Overweight), Magnit (MGNTq.L/$35.89/Overweight), Magnit (MGNT.MM/R4574.60/Overweight),
Mechel (Preference) (MTL_P/$2.08[19 November 2012]/Underweight), Metalurgica Gerdau (GOAU4.SA/R$22.57[19
November 2012]/Overweight), Mobile Telesystems (MBT/$17.78[19 November 2012]/Underweight), Mobily
(7020.SE/SRls73.75/Overweight), Naspers Ltd (NPNJn.J/53850c/Overweight), New World Resources
(NWRS.L/235p/Underweight), Novatek (NVTKq.L/$106.80/Overweight), Orion (001800.KS/W1060000/Overweight),
PGE (PGEP.WA/zl18.25[19 November 2012]/Neutral), PZU (PZU.WA/zl389.00/Overweight), Palm Hills Developments
(PHDC.CA/E2.46/Neutral), Petkim (PETKM.IS/TL2.14/Underweight), Riyad Bank (1010.SE/SRls22.80/Neutral), Rosneft
(ROSNq.L/$8.00/Overweight), S-Oil Corp (010950.KS/W97200/Underweight), Safaricom Ltd (SCOM.NR/K
Sh4.70/Overweight), Samba Financial Group (1090.SE/SRls44.10/Overweight), Samsung Electronics
(005930.KS/W1364000/Overweight), Samsung Engineering (028050.KS/W145000/Overweight), Samsung Life Insurance
(032830.KS/W93300/Overweight), Sasol (SOLJ.J/37862c/Overweight), Saudi Arabian Fertilizer Co.
(2020.SE/SRls195.00/Overweight), Saudi Industrial Investment Group (2250.SE/SRls21.60/Overweight), Saudi Kayan
Petrochemical Company (2350.SE/SRls12.05/Neutral), Sberbank (SBER.MM/R87.00/Overweight), TMK
(TRMKq.L/$14.43/Overweight), Totvs (TOTS3.SA/R$39.95[19 November 2012]/Overweight), Turk Telekom
(TTKOM.IS/TL6.46/Overweight), Turkcell (TCELL.IS/TL10.80/Overweight), Vakifbank
(VAKBN.IS/TL4.30/Overweight), Vodacom Group (VODJ.J/11815c/Overweight), X5 Retail Group
(PJPq.L/$17.17/Neutral), Yanbu National Petrochemical Company (2290.SE/SRls42.40/Overweight), Yandex
(YNDX/$22.17[19 November 2012]/Overweight), Yapi Kredi (YKBNK.IS/TL4.51/Overweight), Zain KSA
(7030.SE/SRls8.40/Neutral)
Disclosures
Conflict of Interest
This research contains the views, opinions and recommendations of J.P. Morgan research analysts. J.P. Morgan has adopted
research conflict of interest policies, including prohibitions on non-research personnel influencing the content of research.
Research analysts still may speak to J.P. Morgan trading desk personnel in formulating views, opinions and recommendations.
Trading desks may trade, or have traded, as principal on the basis of the research analysts views and research. Therefore, this
research may not be independent from the proprietary interests of J.P. Morgan trading desks which may conflict with your
interests. As a general matter, J.P. Morgan and/or its affiliates trade as principal in connection with making markets in fixed
income securities discussed in research reports.
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
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expressed in this report accurately reflect his or her 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.
In compliance with Instruction 483 issued by Comissao de Valores Mobiliarios (the Brazilian securities commission) on July 6, 2010, the
Brazilian primary analyst signing this report declares: (1) that all the views expressed herein accurately reflect his or her personal views
about the securities and issuers; (2) that all recommendations issued by him or her were independently produced, including from the entity
in which he or she is an employee; and (3) that he or she will set forth any situation or conflict of interest believed to impact the
impartiality of the recommendations herein, as per article 17, II of Instruction 483.
Important Disclosures
Market Maker: JPMS makes a market in the stock of Yandex.
Market Maker/ Liquidity Provider: J.P. Morgan Securities plc and/or an affiliate is a market maker and/or liquidity provider in Zain
KSA, Yapi Kredi, Yanbu National Petrochemical Company, Yandex, X5 Retail Group, Vodacom Group, Vakifbank, Turkcell, Turk
Telekom, TMK, Saudi Industrial Investment Group, Sberbank, Saudi Kayan Petrochemical Company, Saudi Arabian Fertilizer Co., Sasol,
Samba Financial Group, Safaricom Ltd, Rosneft, Riyad Bank, PZU, Petkim, Palm Hills Developments, Novatek, New World Resources,
Naspers Ltd, Mobily, Mobile Telesystems, Magnit, Magnit, LW Bogdanka, LSR, Liberty Holdings Ltd, Koc Holding, JSW, Industries
Qatar, Group 5, Globaltrans, Garanti, FSK, First Gulf Bank, Erste Bank, Emlak Konut, Emaar Properties, E.ON Russia JSC, Discovery
Holdings Limited, Coronation Fund Managers Ltd, Bank Pekao SA, Aspen, ArcelorMittal South Africa, Antofagasta, Anglo American
(AGLJ.J), Alliance Oil Company, Advanced Petrochemical, Commercial International Bank (Egypt), Gazprom, PGE, Mechel
(Preference), MTN Group Limited.
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Yapi Kredi,
Vakifbank, Turk Telekom, Sberbank, Saudi Kayan Petrochemical Company, Sasol, Samsung Electronics, Rosneft, KEPCO, Hyundai
Motor Company, Globaltrans, Garanti, Erste Bank, ArcelorMittal South Africa, Cheung Kong Infrastructure, China Shanshui Cement,
Country Garden Holdings, Gazprom, Hutchison Whampoa Limited, KB Financial Group, Tencent within the past 12 months.
Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Country
Garden Holdings: Soo Lim. The following analysts (and/or their associates or household members) own a long position in the shares of
Gazprom: David Aserkoff.
Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of
Metalurgica Gerdau, Hyundai Motor Company, DASA, Alliance Oil Company.
Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Zain KSA, Yapi Kredi,
Yandex, X5 Retail Group, Vodacom Group, Vakifbank, Turkcell, Turk Telekom, Totvs, TMK, Sberbank, Saudi Kayan Petrochemical
Company, Saudi Arabian Fertilizer Co., Sasol, Samsung Life Insurance, Samsung Engineering, Samsung Electronics, Samba Financial
Group, Rosneft, Riyad Bank, PZU, Petkim, Orion, Novatek, New World Resources, Naspers Ltd, Mobily, Mobile Telesystems,
Metalurgica Gerdau, Magnit, Magnit, LSR, LG Electronics, LG Display, Koc Holding, KEPCO, JSW, Industries Qatar, Hyundai Motor
Company, Hyundai Mipo Dockyard, Honam Petrochemical Corp, Hanjin Shipping Co Ltd, Globaltrans, Garanti, FSK, First Gulf Bank,
Fibria, Erste Bank, Emaar Properties, Ecopetrol S.A., Dongbu Insurance, Discovery Holdings Limited, DASA, Coronation Fund
Managers Ltd, Aspen, ArcelorMittal South Africa, Antofagasta, Anglo American (AGLJ.J), Alliance Oil Company, Advanced
Petrochemical, Commercial International Bank (Egypt), Gazprom, KB Financial Group, PGE, Mechel (Preference), MTN Group Limited.
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment
banking clients: Yapi Kredi, Vakifbank, Turk Telekom, Sberbank, Saudi Kayan Petrochemical Company, Sasol, Samsung Electronics,
Rosneft, PZU, LG Electronics, Koc Holding, KEPCO, JSW, Hyundai Motor Company, Hanjin Shipping Co Ltd, Globaltrans, Garanti,
Erste Bank, Emaar Properties, ArcelorMittal South Africa, Gazprom, KB Financial Group.
Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Yapi Kredi, Vakifbank, Turkcell,
Turk Telekom, TMK, Sberbank, Saudi Kayan Petrochemical Company, Sasol, Samsung Life Insurance, Samsung Engineering, Samsung
Electronics, Samba Financial Group, Rosneft, Riyad Bank, PZU, Orion, Novatek, New World Resources, Naspers Ltd, Mobile
Telesystems, Metalurgica Gerdau, Magnit, Magnit, LG Electronics, LG Display, Koc Holding, KEPCO, Hyundai Motor Company,
Hyundai Mipo Dockyard, Hanjin Shipping Co Ltd, Garanti, First Gulf Bank, Fibria, Erste Bank, Ecopetrol S.A., Dongbu Insurance,
DASA, Coronation Fund Managers Ltd, ArcelorMittal South Africa, Antofagasta, Anglo American (AGLJ.J), Commercial International
Bank (Egypt), Gazprom, KB Financial Group, Mechel (Preference).
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,
and the services provided were non-securities-related: Turk Telekom, TMK, Sberbank, Samsung Life Insurance, Samsung Electronics,
Rosneft, Riyad Bank, Novatek, Naspers Ltd, Metalurgica Gerdau, LG Electronics, Koc Holding, KEPCO, Hyundai Motor Company, First
Gulf Bank, Fibria, ArcelorMittal South Africa, Gazprom, KB Financial Group.
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Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Yapi
Kredi, Vakifbank, Turk Telekom, Sberbank, Saudi Kayan Petrochemical Company, Sasol, Samsung Electronics, Rosneft, PZU, LG
Electronics, Koc Holding, KEPCO, JSW, Hyundai Motor Company, Hanjin Shipping Co Ltd, Globaltrans, Garanti, Erste Bank, Emaar
Properties, ArcelorMittal South Africa, Gazprom, KB Financial Group.
Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from Yapi Kredi, Vakifbank, Turk Telekom, Totvs, TMK, Sberbank, Saudi Kayan Petrochemical
Company, Sasol, Samsung Electronics, Rosneft, PZU, Naspers Ltd, Metalurgica Gerdau, LG Electronics, Koc Holding, KEPCO, JSW,
Industries Qatar, Hyundai Motor Company, Hanjin Shipping Co Ltd, Globaltrans, Garanti, Erste Bank, Emaar Properties, Ecopetrol S.A.,
ArcelorMittal South Africa, Antofagasta, Gazprom, KB Financial Group, PGE, Mechel (Preference), MTN Group Limited.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Yapi Kredi, Vakifbank, Turkcell, Turk Telekom, TMK, Sberbank, Saudi Kayan Petrochemical
Company, Sasol, Samsung Life Insurance, Samsung Engineering, Samsung Electronics, Samba Financial Group, Rosneft, Riyad Bank,
PZU, Orion, Novatek, New World Resources, Naspers Ltd, Mobile Telesystems, Metalurgica Gerdau, Magnit, Magnit, LG Electronics,
LG Display, Koc Holding, KEPCO, Hyundai Motor Company, Hyundai Mipo Dockyard, Hanjin Shipping Co Ltd, Garanti, First Gulf
Bank, Fibria, Erste Bank, Ecopetrol S.A., Dongbu Insurance, DASA, Coronation Fund Managers Ltd, ArcelorMittal South Africa,
Antofagasta, Anglo American (AGLJ.J), Commercial International Bank (Egypt), Gazprom, KB Financial Group, Mechel (Preference).
Broker: J.P. Morgan Securities plc acts as Corporate Broker to New World Resources, Antofagasta.
J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants
of S-Oil Corp and owns 10,503,760 as of 20-Nov-12.
of Samsung Life Insurance and owns 3,599,990 as of 20-Nov-12.
of Samsung Engineering and owns 13,836,440 as of 20-Nov-12.
of Samsung Electronics and owns 55,939,770 as of 20-Nov-12.
of LG Electronics and owns 36,778,510 as of 20-Nov-12.
of LG Display and owns 42,564,830 as of 20-Nov-12.
of KEPCO and owns 36,060,300 as of 20-Nov-12.
of Hyundai Motor Company and owns 55,026,340 as of 20-Nov-12.
of Honam Petrochemical Corp and owns 16,037,970 as of 20-Nov-12.
of KB Financial Group and owns 3,599,990 as of 20-Nov-12.
MSCI: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior
written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to
create any financial products, including any indices. This information is provided on an 'as is' basis. The user assumes the entire risk of
any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the
information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular
purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any
third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI,
Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.
"J.P. Morgan Securities plc and/or its affiliates (J.P. Morgan) is acting as Joint International Coordinators, Bookrunners and Lead
Manager to PTT Exploration and Production Public Company Limited (PTTEP) for its proposed preferential public offering as announced
on 27 September 2012. J.P. Morgan will be receiving fees for so acting. J.P. Morgan may perform, or may seek to perform, other financial
or advisory services for PTTEP or its associates and may have other interests in or relationships with PTTEP or its affiliates, and receive
fees, commissions or other compensation in such capacities. This research report and the information herein is not intended to serve as an
endorsement of the proposed transaction or result in procurement, withholding or revocation of a proxy or any other action by a security
holder. This report is based solely on publicly available information. No representation is made that it is accurate or complete.
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Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan
covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing
research.disclosure.inquiries@jpmorgan.com with your request.
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 analysts (or the analysts teams) 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 analysts (or the analysts teams)
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 analysts (or the analysts teams) 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 U.K. small- and mid-cap equity research, each stocks 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 analysts coverage universe can be found on J.P. Morgans research
website, www.morganmarkets.com.
J.P. Morgan Equity Research Ratings Distribution, as of September 28, 2012
J.P. Morgan Global Equity Research Coverage

IB clients*
JPMS Equity Research Coverage
IB clients*
Overweight
(buy)
44%
52%
42%
69%
Neutral
(hold)
44%
46%
48%
61%
Underweight
(sell)
12%
34%
10%
53%
*Percentage of investment banking clients in each rating category.

For purposes only of FINRA/NYSE 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.
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.morganmarkets.com , contact the primary analyst
or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com.
Explanation of Credit Research Ratings:
Ratings System: J.P. Morgan uses the following sector/issuer portfolio weightings: Overweight (over the next three months, the
recommended risk position is expected to outperform the relevant index, sector, or benchmark), Neutral (over the next three months, the
recommended risk position is expected to perform in line with the relevant index, sector, or benchmark), and Underweight (over the next
three months, the recommended risk position is expected to underperform the relevant index, sector, or benchmark). J.P. Morgan's
Emerging Market research uses a rating of Marketweight, which is equivalent to a Neutral rating.
Valuation & Methodology: In J.P. Morgan's credit research, we assign a rating to each issuer (Overweight, Underweight or Neutral)
based on our credit view of the issuer and the relative value of its securities, taking into account the ratings assigned to the issuer by credit
rating agencies and the market prices for the issuer's securities. Our credit view of an issuer is based upon our opinion as to whether the
issuer will be able service its debt obligations when they become due and payable. We assess this by analyzing, among other things, the
issuer's credit position using standard credit ratios such as cash flow to debt and fixed charge coverage (including and excluding capital
investment). We also analyze the issuer's ability to generate cash flow by reviewing standard operational measures for comparable
companies in the sector, such as revenue and earnings growth rates, margins, and the composition of the issuer's balance sheet relative to
the operational leverage in its business.
Equity Analysts' Compensation: The equity 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 JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,
and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public
appearances, and trading securities held by a research analyst account.
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.
Other Disclosures
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21 November 2012
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595

21 November 2012
Adrian Mowat
(852) 2800-8599
Corrections in MSCI Emerging Markets US dollar index

16 Feb 94, 563
24 Aug 94, 454
Decline 19%
Duration 59 days
Fed tightening
10 Jul 97, 571

5 Oct 98, 241
Decline 58%
Duration 323 days
Asian Crisis
1 Aug 90, 257

16 Jan 91, 175
Decline 32%
Duration 121 days
Iraq invades
Kuwait
19 Feb 90, 239

9 Apr 90, 198
Decline 17%
Duration 36 days
22 Apr 92, 353

24 Aug 92, 286
Decline 19%
Duration 89 days
Brazilian Fall
22 Sep 94, 586

9 Mar 95, 396
Decline 33%
Duration 121 days
Mexican Tequila Crisis
10 May 06, 879

10 Feb 00, 531.0
13 Jun 06, 665
3 Oct 01, 247
Decline 24%
Decline 54%
Duration 25 days
Duration 430 days
Fear of Fed overtightening
2000 Global Correction 12-April-04, 497
17-May-04, 396
Decline 20%
Duration 26 days
Start of Fed tightening
26 Feb 07, 940

5 Mar 07, 844
Decline 10%
Duration 8 days
A-shares fall, US
profit fears
25% rally
18-Apr-02, 364
10-Oct-02, 254
Decline 30%
23 July 07, 1163

16 August 07, 957
Decline 18%
Duration 19 days
US sub-prime and
global credit market
concerns
4July 2011, 1169

4 October 2011, 824
Decline 29%
Duration 91 days
S&P downgrade of US
credit outlook, heightened
Euro sovereign stress
and China hardlanding
fears
31 October 2007, 1338
27 October 2008, 454
Decline 66%
Duration 268 days
Credit Crisis and EM
Inflation
4.4
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Source: Datastream, MSCI, J.P. Morgan
J.P. Morgan Emerging Market Strategy Team

Chief Equity Strategists
Adrian Mowat
Pedro Martins Junior
David Aserkoff
Frontier Markets
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Jahangir Aziz
Vladimir Werning
Fabio Akira
Gabriel Casillas
Michael Marrese
Sonja Keller
Yarkin Cebeci
Anatoliy A Shal
Nora Szentivanyi
Asia and Emerging Markets

LatAm
CEEMEA
(852) 2800 8599

(55-11) 4950 4121
(44-20) 7325-1775
pedro.x.martins@jpmorgan.com
ASEAN and Frontier Markets

Southern cone and Andean
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(66-2) 684 2670

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(971) 4428 1789
sriyan.pietersz@jpmorgan.com
US
Europe
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(1) 212 622 6505

(44-20) 7325 5242
(81-3) 5545 8655
thomas.lee@jpmorgan.com
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Global Head, Emerging Markets Research

Emerging Asia
Taiwan
China
Korea
India
Argentina
Brazil
Mexico
Regional Head, Emerging Europe
South Africa
Turkey
Russia
Hungary, Poland & Czech Republic
(1-212) 834 4203

(65) 6882 2461
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(44-20) 7777 4627
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(90-212) 326 5890
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(44-20) 7777 3981
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Emerging Markets Equity

Emerging Equity Markets Year Ahead

Chief Asian and Emerging Market

CEEMEA Equity Strategist

Chief LatAm Equity Strategist

Bloomberg JPMA MOWAT <GO>

Bloomberg JPMA ASERKOFF <GO>

Bloomberg JPMA MARTINS <GO>

J.P. Morgan Securities (Asia Pacific) Limited

J.P. Morgan Securities plc

Banco J.P. Morgan S.A.

* Registered/qualified as a research analyst under NYSE/FINRA rules.

Emerging Markets Equity Research

Emerging Markets Year AheadStocks for 2013

Banks: China, India, CEEMEA

Focus on sectors within countries rather than country

133 top picks

The resultant country allocation

(See pages 191 to 427)

(See pages 429 to 557)

Examples of top picks

Banks: Indonesia*, Thailand*

Examples of stocks to avoid

Stocks to avoid examples

The year-ahead process

The goal of this document is to present our key strategy

Investment strategy ............................................................ 4

Both J.P. Morgan equity research analysts and our

Economic forecasts .......................................................... 87

Potential Surprises for 2013............................................. 48

Emerging Markets Equity Research

Growth-scare snakes and QE ladders

1. Demographic dividends and headwinds

MSCI EM end-2013 target 1150 (+15%)

2. QE3/infinity = P/E multiple inflation

(See page 10 for range of potential returns)

1. Dividend aristocrats (JPGIEMDA <Index>):

(See page 26 for thematic baskets)

Key issues for Snake briefing notes

Figure 1: MSCI EM and MSCI World performance

China leadership change

Technical analysis forecasts:

Source: Bloomberg, 14 November 2012.

Emerging Markets Equity Research

Equity Strategy: Growth-scare snakes and QE ladders

The long term

Emerging Markets Equity Research

Country asset allocation

switching into domestic sectors, including low growth

Near term Korean investors face political and

Emerging Markets Equity Research

Demographics are the most powerful long term force.

Figure 2: 15-39 year olds without a university degree in China

Do not ignore demographics

Source: PRC, NBS, Ministry of education, US census, J.P. Morgan calculation

Figure 3: Growth in working age population (forecast for China)

Table 1: Change in working age population 2005-2025

Emerging Markets Equity Research

Figure 4: QE: Relative value in equities

10 Year treasury yield

Figure 5: Risk return trade-off line

Figure 6: Slope of risk return trade-off line

Emerging Markets Equity Research

Banks: Indonesia, Thailand