130212 comfort - jpm

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Asia Pacific Equity Research13 February 2012

ComfortDelgroNeutralCMDG.SI, CD SP

FY11 results reviewPrice: S$1.48

Price Target: S$1.45

Singapore

Railroads

Ying-Jian Chan, CFAAC

(65) 6882-2378

[email protected]

J.P. Morgan Securities Singapore PrivateLimited

YTD 1m 3m 12mAbs 4.6% 2.4% 5.3% -5.1%Rel -7.9% -4.2% 0.1% -1.0%

ComfortDelgro Corp Ltd. (Reuters: CMDG.SI, Bloomberg: CD SP)

S$ in mn, year-end Dec FY09A FY10A FY11A FY12E FY13ERevenue (S$ mn) 3,052 3,207 3,411 3,557 3,722Net Profit (S$ mn) 219.5 228.5 235.6 230.5 239.2Net Profit (Recurring) (S$mn)

220 229 236 230 239

EPS (S$) 0.11 0.11 0.11 0.11 0.11EPS (Recurring) (S$) 0.10 0.11 0.11 0.11 0.11DPS (S$) 0.05 0.05 0.06 0.07 0.07Revenue growth (%) -2.2% 5.1% 6.4% 4.3% 4.6%EPS growth (%) 9.7% 4.1% 3.1% -2.2% 3.8%EPS (Recurring) Growth 26.4% 4.1% 3.0% (2.1%) 3.8%ROE 13.5% 13.1% 12.8% 11.9% 11.8%P/E (x) 14.1 13.5 13.1 13.4 12.9P/BV (x) 1.8 1.7 1.6 1.6 1.5Dividend Yield 3.6% 3.7% 4.1% 4.5% 4.6%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company Data52-week Range (S$) 1.58 - 1.2Mkt Cap (S$ mn) 3,094.7Mkt Cap ($ bn) 2.4Price (S$) 1.4Date Of Price 13 Feb 1Free float (%)3-mth trading volume 3.03-mth trading value (S$ mn) 4.13-mth trading value ($ mn) 3.2FTSTI 2,97Exchange Rate 1.2Fiscal Year End De

See page 6 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware ththe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singfactor in making their investment decision.

1.25

1.35

1.45

1.55

1.65

S$

Feb-11 May-11 Aug-11 Nov-11 Feb-12

Price Performance

CMDG.SI share price (S$

FTSTI (rebased)

In-line FY11 results, maintain N, Dec-12 PT of S$1.45 :ComfortDelgro announced FY11 net profit of S$235.6 million (+3.1%Y/Y) which was in line with consensus but ahead of our expectations by7%. We raise our FY12E/FY13E earnings estimates slightly by 3% eachbut maintain our rating and PT.

Australia bus remains the key profit driver: Australia bus remainedthe key profit driver for the company with revenue/EBIT growing19.5%/27.1% for FY11, as more services were operated and bus fleetgrew by 7% to c.1,570. Australia bus has now taken over Singapore taxias the largest operating profit contributor for the group at 21%.

Singapore taxis continue to see strong growth: Singapore taxiscontinued to perform well due to higher rental income from replacementtaxis and larger fleet, as well as higher volume of call bookings andcashless transactions. FY11 revenue/EBIT was up 7.6%/9.7%. Of thec.15,600 taxis in its Singapore fleet, there are c.2,000 remaining ToyotaCrowns.

Dividend payout remained low as expected: Final dividend of 3.3cents were proposed, resulting in full year dividend of 6 cents,representing a 53% dividend payout a slight increase from the 50%payout ratio in the last 3 years. This is in line with our earlierexpectations that the payout ratio would likely be only marginallyincreased, and unlikely serve as a positive share price driver.

Watch gradual ramp-up of DTL start-up costs: Hiring of certainpersonnel for Downtown Line is expected to begin soon. Managementbelieves there will be some gestation period for DTL. DTL 1 (open 2013)with 6 stations is unlikely to be profitable by itself although the wholeline will be profitable. The final stage (Stage 3) will be opened in 2017.

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Ying-Jian Chan, CFA(65) [email protected]

Company Description P&L sensitivity metrics EBITDA EPSimpact (%) impact (%)

ComfortDelgro is the world's second largestpublic listed passenger land transportcompany with a total fleet size of 45,000vehicles. The Group was formed in March2003 through the merger of Comfort Groupand Delgro Corporation. ComfortDelgro'sbusinesses include bus, taxi, rail, car rental& leasing, automotive engineering,maintenance services & diesel sales,vehicle inspection & testing and drivingcentre.

Singapore bus ridership growth assumption 4.0%Impact of each 5% 0.1 0.2

Singapore fare assumption 1.0%Impact of each 5% 0.1 0.2

Fuel cost growth assumption -12.2%Impact of each 5% -0.8 -2.2

Source: J.P. Morgan estimates

Price target and valuation analysisOur price target of S$1.45 is based on Dividend Discount Model. We apply acost of equity of 6.8% and a long-term growth rate of 2%.

Revenue breakdown chart (FY11)

Risk free rate: 4.0%Market risk premium: 4.0%Beta: 0.70Cost of equity 6.8%Terminal g: 2.0%

We are Neutral on ComfortDelgro with a Dec-2012 DDM price target of S$1.45.Our PT implies 13.2x/12.8x FY12E/FY13E P/E. Key downside risks include (1)inability to obtain approval for fare hike from PTC to offset operating expensesincrease; (2) cost overruns from operating the Downtown Line leading to longerthan expected breakeven; while upside risks could come from (1) earlier-than-expected breakeven for Downtown Line; (2) synergistic and accretive M&As.

Source: Company reports

Net income: J.P. Morgan vs consensusJ. P. Morgan Consensus

FY12E 230 247FY13E 239 254FY14E 259 NASource: J.P. Morgan estimates, Bloomberg

Peer valuation comparison

Last Mkt Cap P/E (x) P/B (x) EPS Growth Div YieldCompany Ticker Ccy Price (US$ MM) 2012E 2013E 2012E 2013E 2012E 2013E 2012E 2013E ROTAMTR Corp 66 HK HKD 26.40 19,694 18.7 16.0 1.2 1.1 -17.7% 16.7% 2.6% 2.7% 4.9Stagecoach Group SGC LN GBP 2.69 2,445 10.4 10.0 21.4 9.1 14.5% 4.3 3.0% 3.3% 8.2FirstGroup PLC FGP LN GBP 3.04 2,316 7.8 7.3 1.5 1.5 -5.1% 6.8 8.2% 8.7% 3.1ComfortDelgro CD SP SGD 1.48 2,468 13.4 12.9 1.6 1.5 -2.1% 3.8 4.5% 4.6% 5.0SMRT MRT SP SGD 1.74 2,104 16.3 14.3 3.2 3.0 11.2% 14.3% 5.1% 5.4% 8.8

Average 13.3 12.1 5.8 3.2 0.2% 9.2% 4.7% 4.9% 6.0%

Source: J.P. Morgan estimates, Bloomberg. Prices as at 13 Feb 2012 market close.

57.8%20.2%

8.1%

13.7%0.2% 0.1%

Singapore UK / Ireland China

Australia Vietnam Malaysia

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Table 1: FY11 results overview

S$ in millions

4Q10 1Q11 2Q11 3Q11 4Q11 Y/Y Q/Q FY10 FY11 Y/YRevenue 827.3 803.0 843.2 877.0 887.9 7.3% 1.2% 3,206.9 3,411.1 6.4%Bus 412.8 392.0 419.0 433.4 439.7 6.5% 1.5% 1,612.2 1,684.1 4.5%Bus station 5.1 6.4 5.7 6.6 5.2 2.0% -21.2% 22.7 23.9 5.3%Rail 35.2 35.4 36.8 37.7 37.1 5.4% -1.6% 134.4 147.0 9.4%Taxi 257.0 248.3 255.8 264.4 270.7 5.3% 2.4% 981.9 1,039.2 5.8%Automotive engineering 78.7 80.0 85.2 93.2 93.2 18.4% 0.0% 300.1 351.6 17.2%Vehicle inspection &testing

20.9 22.3 22.3 23.0 23.3 11.5% 1.3% 83.7 90.9 8.6%

Car rental & leasing 8.0 8.9 8.7 9.1 8.7 8.7% -4.4% 33.6 35.4 5.4%Driving centre 9.6 9.7 9.7 9.6 10.0 4.2% 4.2% 38.3 39.0 1.8%

EBIT 92.3 86.9 103.0 113.6 95.7 3.7% -15.8% 388.4 399.2 2.8%Bus 37.7 28.6 36.6 44.9 34.9 -7.4% -22.3% 149.2 145.0 -2.8%Bus station 2.0 3.1 2.6 3.3 1.8 -10.0% -45.5% 10.6 10.8 1.9%Rail 5.9 7.6 7.6 7.1 5.4 -8.5% -23.9% 25.6 27.7 8.2%Taxi 27.4 29.9 36.4 36.5 26.8 -2.2% -26.6% 119.3 129.6 8.6%Automotive engineering 8.7 5.6 8.3 10.1 13.5 55.2% 33.7% 39.1 37.5 -4.1%

Vehicle inspection &testing

6.9 7.3 7.4 7.6 8.4 21.7% 10.5% 27.3 30.7 12.5%

Car rental & leasing 1.0 2.0 1.7 1.7 1.9 90.0% 11.8% 5.9 7.3 23.7%Driving centre 2.7 2.8 2.4 2.4 3.0 11.1% 25.0% 11.4 10.6 -7.0%

EBIT margin 11.2% 10.8% 12.2% 13.0% 10.8% -0.38 ppt -2.18 ppt 12.1% 11.7% -0.41 ppt

Bus 9.1% 7.3% 8.7% 10.4% 7.9% -1.20 ppt -2.42 ppt 9.3% 8.6 -0.64 pptBus station 39.2% 48.4% 45.6% 50.0% 34.6% -4.60 ppt -15.38 ppt 46.7% 45.2 -1.51 pptRail 16.8% 21.5% 20.7% 18.8% 14.6% -2.21 ppt -4.28 ppt 19.0% 18.8 -0.20 pptTaxi 10.7% 12.0% 14.2% 13.8% 9.9% -0.76 ppt -3.90 ppt 12.1% 12.5 0.32 pptAutomotive engineering 11.1% 7.0% 9.7% 10.8% 14.5% 3.43 ppt 3.65 ppt 16.7% 16.7 0.00 pptVehicle inspection &testing

33.0% 32.7% 33.2% 33.0% 36.1% 3.04 ppt 3.01 ppt 32.0% 32.0 0.00 ppt

Car rental & leasing 12.5% 22.5% 19.5% 18.7% 21.8% 9.34 ppt 3.16 ppt 17.6% 20.6 3.06 pptDriving centre 28.1% 28.9% 24.7% 25.0% 30.0% 1.87 ppt 5.00 ppt 29.8% 27.2 -2.59 ppt

Source: J.P. Morgan, Company data.

Figure 1: 12-month forward P/E(x)

Source: J.P. Morgan estimates, Company data, Bloomberg.

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Mean: 14.8x

+1 SD: 18.0x

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-1 SD: 11.6x

-2 SD: 8.5x

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JPM Q-ProfileComfortDelGro Corp. Ltd. (SINGAPORE / Industrials)As Of: 10-Feb-2012 [email protected]

Local Share Price Current: 1.46 12 Mth Forward EPS Current: 0.12

Earnings Yield (& local bond Yield) Current: 8% Implied Value Of Growth* Current: - 24 .66%

PE (1Yr Forward) Current: 12.3x Price/Book Value Current: 1.6x

ROE (Trailing) Current: 12.98 Dividend Yield (Trailing) Current: 3.70

Summary

ComfortDelGro Corp. Ltd. 2443.16 As Of:

SINGAPORE 3.240382 SEDOL 6603737 Local Price: 1.46

Industrials Road & Rail EPS: 0.12

Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg

12mth Forward PE 12.30x 9.97 20.09 13.56 13.69 17.34 10.03 -19% 63% 10% 11%

P/BV (Trailing) 1.64x 1.10 3.16 1.95 2.03 2.95 1.10 -33% 93% 19% 23%

Dividend Yield (Trailing) 3.70 2.56 7.13 3.70 4.21 6.55 1.86 -31% 93% 0% 14%

ROE (Trailing) 12.98 10.96 18.98 13.84 14.18 17.91 10.44 -16% 46% 7% 9%

Implied Value of Growth -24.7% -0.46 0.35 0.06 0.04 0.34 -0.27 -85% 243% 126% 115%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

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ComfortDelgro: Summary of FinancialsIncome Statement Cash flow statementS$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E S$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E

Revenues 3,207 3,411 3,557 3,722 - Profit before tax 366 379 353 366 -

change Y/Y 5.1% 6.4% 4.3% 4.6% - Depreciation & amortization 291 317 363 397 -Gross Margin 32.1% 30.4% 34.5% 34.0% - Change in working capital -61 99 12 20 -

EBITDA 679 716 739 786 - Other non-cash items 40 27 -61 -63 -

% change Y/Y 7.9% 5.4% 3.3% 6.3% - Cash flow from operations 593 778 606 656 -EBITDA Margin 21.2% 21.0% 20.8% 21.1% - Capex -537 -601 -450 -450 -

EBIT 388 399 376 389 - Disposal/(purchase) 96 71 0 0 -

% change Y/Y 11.0% 2.8% NM 3.4% - Cash flow from investing -400 -487 -450 -450 -

EBIT Margin 12.1% 11.7% 10.6% 10.4% - Equity raised/(repaid) 0 0 0 0 -

Net Interest -36 -35 -38 -38 - Debt raised/(repaid) 70 -199 0 0 -

Earnings before tax 366 379 353 366 - Other -62 24 0 0 -% change Y/Y 9.6% 3.5% -7.0% 3.8% - Dividends paid -112 -115 -138 -144 -

Tax -78 -82 -62 -64 - Cash flow from financing -105 -290 -138 -144 -

as % of EBT 21.3% 21.6% 17.5% 17.5% - Net change in cash 88 2 18 63 -Minority Interest -60 -62 -61 -63 - Beginning cash 486 567 577 594 -

Net income (reported) 228.5 235.6 230.5 239.2 - Ending cash 567 568 594 657 -% change Y/Y 4.1% 3.1% -2.2% 3.8% -

Net Profit (Recurring) 229 236 230 239 -

Shares outstanding 2,091 2,091 2,091 2,091 - Free cash flow 56 177 156 206 -EPS (reported) 0.11 0.11 0.11 0.11 - DPS 0.05 0.06 0.07 0.07 -

Balance sheet Ratio AnalysisS$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E S$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E

Cash 567 577 594 657 - EBITDA margin 21.2% 21.0% 20.8% 21.1% -

Accounts receivable 103 133 115 120 - EBIT margin 12.1% 11.7% 10.6% 10.4% -Inventories 59 57 65 68 - Net profit margin 7.1% 6.9% 6.5% 6.4% -

Others 272 213 213 213 - SG&A/Sales 30.9% 30.5% 31.5% 31.5% -

Current assets 1,001 979 987 1,058 -

LT investments 19 86 86 86 - Sales growth 5.1% 6.4% 4.3% 4.6% -

Net fixed assets 2,381 2,604 2,600 2,653 - EBIT growth 11.0% 2.8% NM 3.4% -

Total Assets 4,381 4,589 4,593 4,717 - Net profit growth 4.1% 3.1% -2.2% 3.8% -

EPS growth 4.1% 3.1% (2.2%) 3.8% -Short- erm loans 188 198 198 198 -

Payables 544 601 603 631 - Interest coverage (x) 19.03 20.28 19.50 20.73 -

Others 139 146 146 146 - Net debt to equity 7.7% 2.9% 1.9% -1.2% -

Total current liabilities 898 1,002 1,004 1,032 -Long- erm debt 523 434 434 434 - Sales/assets 0.76 0.76 0.77 0.80 -

Other liabilities 593 660 660 660 - Assets/equity 1.66 1.64 2.32 2.27 -

Total Liabilities 2,034 2,115 2,117 2,145 - ROCE 16.2% 15.9% 14.6% 14.6% -

Shareholders' equity 1,801 1,892 1,984 2,079 - ROE 13.1% 12.8% 11.9% 11.8% -

Total Liabilities & equity 4,381 4,589 4,683 4,807 -BVPS 0.86 0.90 0.95 0.99 -

Source: Company reports and J.P. Morgan estimates.

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Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple researchanalysts 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 viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.

Important Disclosures

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: ComfortDelgro.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the followingcompany(ies) as clients, and the services provided were non-investment-banking, securities-related: ComfortDelgro.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or servicesother than investment banking from ComfortDelgro.

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 [email protected] with your request.

Date Rating Share Price(S$)

Price Target(S$)

01-Nov-06 OW 1.63 2.00

15-Jan-07 OW 1.73 2.05

14-Feb-07 OW 1.91 2.40

11-Sep-07 OW 1.93 2.25

17-Jan-08 N 1.66 1.65

09-Jan-09 OW 1.49 2.0014-May-11 OW 1.49 1.80

09-Jul-11 OW 1.44 1.80

04-Oct-11 N 1.33 1.45

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight

Explanation of Equity Research Ratings 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 theaverage total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months,we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverageuniverse.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocksin the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, eachstocks expected total return is compared to the expected total return of a benchmark country market index, not to those analystscoverage 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.

Coverage Universe: Chan, Ying-Jian: BreadTalk Group Limited (BRET.SI), China Agri-Industries (0606.HK), China Minzhong FoodCorporation Limited (CMFC.SI), ComfortDelgro (CMDG.SI), First Resources Limited (FRLD.SI), Golden Agri-Resources Ltd(GAGR.SI), Hyflux Limited (HYFL.SI), Indofood Agri Resources Ltd (IFAR.SI), Mewah International Inc (MEWI.SI), SMRT(SMRT.SI), ST Engineering (STEG.SI), SingPost (SPOS.SI), Wilmar International Limited (WLIL.SI)

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ComfortDelgro (CMDG.SI, CD SP) Price Chart

OW S$2.4 N S$1.45

OW S$2.05 OW S$1.8

S$2 OW S$2.25N S$1.65 OW S$2 OW S$1.8

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Initiated coverage Nov 01, 2006.
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companymailto:[email protected]://mm.jpmorgan.com/disclosures/companymailto:[email protected]

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J.P. Morgan Equity Research Ratings Distribution, as of January 6, 2012

Overweight

(buy)Neutral

(hold)Underweight

(sell)

J.P. Morgan Global Equity Research Coverage 47% 42% 12%IB clients* 52% 45% 36%

JPMS Equity Research Coverage 45% 47% 8%IB clients* 72% 62% 58%

*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 holdrating category; and our Underweight rating falls into a sell rating category.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report athttp://www.morganmarkets.com , contact the primary analystor your J.P. Morgan representative, or [email protected] .

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues,

which include revenues from, among other business units, Institutional Equities and Investment Banking.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates 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, publicappearances, and trading securities held by a research analyst account.

Other Disclosures

J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketingname for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.

Options related research: If the information contained herein regards options related research, such information is available only to persons who havereceived the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,

please contact your J.P. Morgan Representative or visit the OCC's website athttp://www.optionsclearing.com/publications/risks/riskstoc.pdf

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U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in theUK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is a member of the London Stock Exchange and is authorized andregulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 125 London Wall, London EC2Y 5AJ.

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by the National Banking and Securities Exchange Commission. Singapore: This material is issued and distributed in Singapore by J.P. Morgan SecuritiesSingapore Private Limited (JPMSS) [MICA (P) 032/01/2012 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange SecuritiesTrading Limited and is regulated by the Monetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCBSingapore) which is regulated by the MAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd

(18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the SecuritiesCommission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securitiesand Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom of

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International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific DisclosuresU.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMSL.Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arising as a result of
http://www.morganmarkets.com/http://www.morganmarkets.com/http://www.morganmarkets.com/mailto:[email protected]:[email protected]:[email protected]://www.optionsclearing.com/publications/risks/riskstoc.pdfhttp://www.optionsclearing.com/publications/risks/riskstoc.pdfhttp://www.morganmarkets.com/mailto:[email protected]://www.optionsclearing.com/publications/risks/riskstoc.pdf

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publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. Thisreport has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000

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the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan ChaseBank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as ofthe previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered withthe Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end datafrom two months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivative warrants, callable bull bearcontracts and stock options listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website: http://www.hkex.com.hk.

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Securities Japan Co., Ltd., and the customer in advance. Financial Instruments Firms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau(kinsho) No. 82 Participating Association / Japan Securities Dealers Association, The Financial Futures Association of Japan, Type II FinancialInstruments Firms Association and Japan Securities Investment Advisers Association. Korea: This report may have been edited or contributed to from

time to time by affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of thesecurities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures sectionabove. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued and

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or the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded

as professional clients as defined under the DFSA rules.General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co.or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to

JPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for thesecurities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to changewithout notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any

financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are notintended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its ownindependent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S.

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"Other Disclosures" last revised January 6, 2012.

Copyright 2012 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold orredistributed without the written consent of J.P. Morgan. #$J&098$#*P

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