top stories send me your feedback! inside this report

Global Equity Research

8 August 2014

Top Stories

Industrial Automation (Andreas Willi) , Global How the Internet of Things and Digitalization change the market and drive growth The Internet of Things (IoT), Industrial Software and Digitalization feature increasingly prominently in the investor communications of Automation companies and investments could increase, also through acquisitions.

Andritz (ANDR.VI, OW – €41.22) (Andreas Willi) , Europe With 25% potential upside, Andritz is one of our top picks We believe that Andritz can re-rate over time with execution issues now largely behind it and with the Q2 earnings beat marking a turnaround on the difficult past 12 months.

AFL Rio Tinto plc (RIO.L, OW – 3,373p) (Dominic O'Kane) , Europe Strong H1'14 results re-accelerate cash returns timeframe; remains top pick Rio Tinto’s H1'14 results demonstrated the company’s ability to generate FCF as strong cost performances in Aluminium & Copper in particular more than offset negative commodity price momentum (FCF $2.0bn vs JPMe $0.7bn).

AstraZeneca (AZN.L, UW – 4,189p) (James D Gordon) , Europe Post Q2 update, ESMO next fundamental catalyst, stock continues to trade above our £37 PT Next key fundamental catalyst is ESMO conference Sep 26-30th, where we remain cautious.

Novo Nordisk (NOVOb.CO, OW – Dkr247.80) (Richard Vosser) , Europe Tresiba CV event rate analysis reassures. Upcoming pipeline data offers significant optionality Now that the difficult 1H’14 results are behind us, where Novo still managed to grow operating profit at 13% in LC (local currency), we believe investors can now focus on the upcoming pipeline datapoints over the next 6-12 months.

MTN Group Limited (MTNJ.J, OW – 22,415c) (Ziyad Joosub) , CEEMEA 1H14 results: Solid operational beat, FCF/yield dynamics attractive whilst Nigeria margins to be fluid The results were a solid operational beat on the EBITDA line whilst greater than expected FX translation losses diluted growth at the HEPS level.

China Unicom (Hong Kong) Limited (0762.HK, OW – HK$12.80) (Michelle Wei, CFA) , Asia Pacific Organic growth decent; still room for multiple expansion China Unicom (CU)’s 2Q14 earnings were hurt by a few one-offs, but organic growth remained strong at >30% yoy, or >50% if we strip out VAT impact.

Cheung Kong Infrastructure & Power Assets (Elaine Wu) , Asia Pacific Envestra acquisition goes ahead. More M&A to come CKI, Power Assets and Cheung Kong Holdings have succeeded in their bid to acquire Australia gas network operator, Envestra, after APA agreed to sell its entire 33% stake in the company.

China Water Utilities (Elaine Wu) , Asia Pacific 1H14 results preview: GDI likely to beat China water utilities will begin reporting results on 12 Aug.

AFL Pacific Basin Shipping (2343.HK, OW – HK$4.34) (Corrine Png) , Asia Pacific Key takeaways from management meeting We hosted Pacific Basin Shipping’s management for an investors' lunch meeting which reinforced our positive view on the dry bulk shipping sector’s recovery and PacBasin’s operating outlook.

Send me your feedback!

GLOBAL Stock Guide

J.P. Morgan Markets

Daily Economic Briefing

Regional First to Market

Inside this Report:

Research by Region

Key Rating, Price Target & EPS Changes

Market at a Glance

Market Monitor

Economics Calendar

J.P. Morgan Forecasts - Economics and Commodities

Analyst Focus List

Corporate Marketing LG ELECTRONICS (SAN FRANCISCO)

See end pages for analyst certification. For important disclosures, please refer to the disclosure section at the end of the individual linked notes. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

1

https://jpmorganmarkets.com/research/content/GPS-1463154-0










mailto:[email protected]?subject=Feedback%20on%20International%20FTM!


http://www.jpmorganmarkets.com/

http://jpmm.com/research/content/publication/163433

http://www.jpmm.com/Research/FirstToMarket

Upcoming Event

Please click here for more details J.P. Morgan is pleased to host the 2014 Southern Cone & Andean Conference on September 10-11, 2014 Location: Country Club Lima Hotel, Peru.

Global Published Research TOP

Europe

Price Target and Estimate Changes Adecco SA (ADEN VX – Overweight) (Robert Plant) 2Q14 conference call highlights slight upward trajectory in revenue growth

adidas Group (ADS GR – Neutral) (Chiara Battistini) Stuck in a bunker

Andritz (ANDR AV – Overweight) (Andreas Willi) With 25% potential upside, Andritz is one of our top picks

AstraZeneca (AZN LN – Underweight) (James D Gordon) Post Q2 update, ESMO next fundamental catalyst, stock continues to trade above our £37 PT

Beiersdorf (BEI GR – Neutral) (Celine Pannuti, CFA) Lower visibility - We cut EPS by 2%

Bizim (BIZIM TI – Underweight) (Borja Olcese) Cutting estimates and PT further post 2Q results

Brenntag (BNR GR – Overweight) (Robert Plant) The Q2 conference call was a bit better than our first read of the results, especially on the margin

Results and Company Views ABB (ABBN VX – Neutral) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

AVEVA Plc (AVV LN – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Aviva plc (AV/ LN – Overweight) (Ashik Musaddi, CFA) 1H14 results - Beat across board, reiterate OW

Banco Sabadell (SAB SM – Neutral) (Sofie Peterzens) Earnings trajectory translates into a 10% RoNAV in 2016E - maintain Neutral

Bank Asya (ASYAB TI – Not Rated) (Paul Formanko) Moving to Not Rated.

Dassault Systèmes (DSY FP – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Euronext (ENX FP – Neutral) (Edward Morris, CFA) Q2 results show excellent cost control

2

















https://mm.jpmorgan.com/OpenPubServlet?action=latest&publication=9000700


CCH (CCH LN – Overweight) (Mike J Gibbs) Q214 results first take

Cobham (COB LN – Neutral) (David H Perry, CFA) Cutting our 2015-17E EPS by c3%; remain Neutral

Commerzbank (CBK GR – Neutral) (Kian Abouhossein) Good progress on non-core asset reduction: Remain Neutral

Emerson Electric Co. (EMR US – Neutral) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Henderson Group (Neutral) (Edward Morris, CFA) Henderson Group: Strong flows, confident outlook, but full year consensus appears stretched

AFL Hexagon (HEXAB SS – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

InterContinental Hotels (IHG LN – Neutral) (Komal Dhillon) Capex drag likely to continue in the medium term

KBC Group (KBC BB – Overweight) (Paul Formanko) Strong quarter supports our €56 PT, further >30% upside

Monte Paschi di Siena (BMPS IM – Neutral) (Delphine Lee) Better capital but cautious outlook on NII - remain N

Natixis (KN FP – Neutral) (Delphine Lee) On track to deliver 7% dividend yield in 2014e

Nestle (NESN VX – Overweight) (Celine Pannuti, CFA) Bucking the trend - FY15 estimates unchanged

Novo Nordisk (NOVOB DC – Overweight) (Richard Vosser) Tresiba CV event rate analysis reassures. Upcoming pipeline data offers significant optionality

QIWI (QIWI US – Overweight) (Alexei Gogolev) Management M&A/dividend comments misinterpreted; Buy on weakness

AFL Rio Tinto plc (RIO LN – Overweight) (Dominic O'Kane) Strong H1'14 results re-accelerate cash returns timeframe; remains top pick

Spirax-Sarco (SPX LN – Overweight) (Andrew J Wilson) Earnings growth to accelerate when IP picks-up, but margin progression and solid organic growth until then

STADA Arzneimittel (SAZ GY – Neutral) (David Adlington) Russia expected to improve; however, remains a risk in our view

General Electric Co. (GE US – Neutral) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Honeywell (HON US – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Mitsubishi Electric (6503) (6503 JT – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

AFL Munich Re (MUV2 GR – Overweight) (Michael Huttner, CFA) The higher 95% combined ratio is a negative but we still believe Munich will surprise positively on reserving 4Q14e: OW

Rockwell Automation (ROK US – Underweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

RSA (RSA LN – Neutral) (Andreas van Embden) £180m of gross savings to support primarily UK re-underwriting; 12-15% RTNAV target unchanged

Salzgitter (SZG GR – Overweight) (Alessandro Abate) Raising our Q2 estimates

SAP (SAP GR – Neutral) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Schneider Electric (SU FP – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Siemens (SIE GR – Overweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

AFL Yokogawa Electric (6841) (6841 JT – Underweight) (Andreas Willi) Industrial Automation: How the Internet of Things and Digitalization change the market and drive growth

Sector Research Oil industry 3-minute read (Fred Lucas) Big Oil - unlocking the value of infrastructure as focus replaces imperatives of scale & full value chain asset control

W. Europe Car Registrations (Jose M Asumendi) Jul '14: Tracking at +5% y/y, +6% YTD

3






























Asia

Recommendation Changes

▼Neptune Orient Lines (NOL) (NEPS.SI – Neutral), Singapore (Corrine Png) Downgrade to Neutral: Results disappoint, restructuring mitigates losses but risk of equity-raising high

Price Target and Estimate Changes Cheung Kong Infrastructure (1038.HK – Overweight), Hong Kong (Elaine Wu) Cheung Kong Infrastructure & Power Assets: Envestra acquisition goes ahead. More M&A to come

China Unicom (Hong Kong) Limited (0762.HK – Overweight), China (Michelle Wei, CFA) Organic growth decent; still room for multiple expansion

Hiwin (2049.TW – Overweight), Taiwan (William Chen) Well positioned for industrial robot demand

HKT Trust and HKT Limited (6823.HK – Overweight), Hong Kong (Michelle Wei, CFA) PCCW Limited: Non-HKT businesses miss; but still a good proxy play for HKT Trust

Japan Display (6740) (6740.T – Overweight), Japan (Narci Chang) Resolution migration is gathering steam in 2H; Stay OW

Jubilant Foodworks Ltd (JUBI.BO – Underweight), India (Latika Chopra, CFA) Weak Q1 performance - Subdued SSSG and further margin contraction

AFL Lite-On Technology Corporation (2301.TW – Underweight), Taiwan (William Chen) Positives priced in; we see more downside than upside

Media Prima Berhad (MPRM.KL – Overweight), Malaysia (Simone Yeoh) Near term earnings to disappoint, but strong dividend support & positive longer term prospects

Neptune Orient Lines (NOL) (NEPS.SI – Neutral), Singapore (Corrine Png) Downgrade to Neutral: Results disappoint, restructuring mitigates losses but risk of equity-raising high

Nestlé India Limited (NEST.BO – Neutral), India (Latika Chopra, CFA) Sales growth improves; High RM inflation weighs on margins

NHN Entertainment (181710.KS – Underweight), South Korea (Stanley Yang) 2Q turned to operating loss, Not yet bottomed out

AFL Nippon Electric Glass (5214) (5214.T – Underweight), Japan (Narci Chang) Another miss and guidance cut; Glass fiber not big enough to save the company; Reiterate UW

Results and Company Views, continued AFL China Everbright International (0257.HK – Overweight), China, Hong Kong (Elaine Wu) China Water Utilities: 1H14 results preview: GDI likely to beat

China Shipping Container Lines - H (2866.HK – Underweight), China, Hong Kong (Corrine Png) Downgrade to UW from OW

Ctrip.com International, Ltd (CTRP – Overweight), China (Alex Yao) Joining hands with Priceline - ALERT

Fortis Healthcare Ltd (FOHE.BO – Overweight), India (Neha Manpuria) Better-than-expected margin performance in quarter, with scope for further improvement

Guangdong Investment Limited (0270.HK – Overweight), China, Hong Kong (Elaine Wu) China Water Utilities: 1H14 results preview: GDI likely to beat

Hindalco Industries (HALC.BO – Overweight), India (Pinakin Parekh, CFA) Novelis reports slightly weaker results; Earnings momentum should pick up as initiatives of Auto and Recycling ramp up

MakeMyTrip Ltd. (MMYT – Overweight), India (Viju K George) Takeaways from our chat with management – we are waiting for the multiplier effect to play out; stay OW

Neptune Orient Lines (NOL) (NEPS.SI – Neutral), Singapore (Corrine Png) Key takeaways from management briefing

AFL Pacific Basin Shipping (2343.HK – Overweight), Hong Kong (Corrine Png) Key takeaways from management meeting

PTT Exploration & Production (PTTE.BK – Overweight), Thailand (Scott L Darling) Strong growth on track with Zawtika ramp-up; focus on exploration in 2H14; top energy pick in Thailand

Robinson Department Store (ROBI.BK – Overweight), Thailand (Kae Pornpunnarath, CFA) 2Q14: weak but in-line; look for a better 2H14

Sound Global Limited (0967.HK – Overweight), China, Hong Kong (Elaine Wu) China Water Utilities: 1H14 results preview: GDI likely to beat

Tata Steel Ltd (TISC.BO – Overweight), India (Pinakin Parekh, CFA) Shah Comm Jharkhand report says TATA mine (among others) illegal, Courts to decide now; TATA Prod from said mine at<20%

4



























PCCW Limited (0008.HK – Overweight), Hong Kong (Michelle Wei, CFA) PCCW Limited: Non-HKT businesses miss; but still a good proxy play for HKT Trust

Power Assets Holdings Ltd (0006.HK – Overweight), Hong Kong (Elaine Wu) Cheung Kong Infrastructure & Power Assets: Envestra acquisition goes ahead. More M&A to come

SMIC (0981.HK – Neutral), China (Gokul Hariharan) Near-term dynamics challenging, 28nm hope in 2H15; Stay Neutral

Thai Oil Public Company (TOP.BK – Neutral), Thailand (Samuel Lee, CFA) Refining in-line, PX remains disappointing; Maintain Neutral

Yangzijiang Shipbuilding Holdings Ltd. (YAZG.SI – Neutral), Singapore (Sokje Lee) 2Q14 results: Ready for the next round?

YY Inc (YY – Overweight), China (Alex Yao) New initiatives demonstrate platform scalability; PT to US$118

Results and Company Views Beijing Enterprises Water (0371.HK – Neutral), China, Hong Kong (Elaine Wu) China Water Utilities: 1H14 results preview: GDI likely to beat

Uni-President China Holdings Ltd (0220.HK – Underweight), China (Ebru Sener Kurumlu) 1H14 Preview: Noodles likely remained weak

Strategy Emerging Markets Strategy Dashboards, Emerging Markets (Adrian Mowat) Identifying change and providing perspective on key economic and equity market data of global emerging markets

Economics Emerging Asia regional reference pack essay - August 2014, Asia Pacific (Jahangir Aziz)

Export momentum eased moderately in July, Taiwan (Grace Ng)

Sector Research China Machinery Data, China (Karen Li, CFA) Excavator sales slid further in July

China Steel Sector, China (Daniel Kang) Late July CISA output seasonally softens

Asia Analyst Focus list Asia Analyst Focus List, Hong Kong (Corrine Png) Add Pacific Basin Shipping

Australia

Publications Rio Tinto Limited (RIO, OW – A$66.32) (Lyndon Fagan) Strong 1H14 result, capex guidance lowered and capital management in reach

Tabcorp Holdings (TAH, N – A$3.56) (Matthew Ryan) FY14 Result: Solid result but downgrading recommendation to Neutral on valuation

Iluka Resources (ILU, OW – A$8.62) (Mark Busuttil) Delaying Balranald could be an appropriate supply response to weak prices

Mineral Sands (Mark Busuttil) Price recovery pushed out as producers prioritise reintroducing curtailed supply

BWP Trust (BWP, UW – A$2.49) (Scott Molloy) FY14 Result. Six more Bunnings warehouses to be vacated, ~2.5% estimated impact on NTA Henderson Group (Edward Morris, CFA) Strong flows, confident outlook, but full year consensus appears stretched

Base Resources & Mineral Deposits (Mark Busuttil) Updating forecasts for latest mineral sands prices

Publications, continued DUET Group (DUE, N – A$2.43) (Christopher Laybutt) DBP Shipper Terms Agreed

Goodman Fielder Limited (GFF, UW – A$0.63) (Stuart Jackson, CFA) FY14 Result Preview – Disappointing result will be irrelevant as market focuses on deal timeline

NIB Holdings Limited (NHF, N – A$3.21) (Siddharth Parameswaran) FY14 Results Preview - Key issues to note

Suncorp Group Ltd (SUN, N – A$14.00) (Siddharth Parameswaran) FY14 Preview - What to look for at the coming result

Global gas market watch (Benjamin Wilson) China's National Energy Administration slashes 2020 sale gas output target

Strategy Weekender (Paul Brunker) Skew here: using return patterns to look for over-loved and unloved stocks

Australia Economic Update (Ben Jarman) Australian labour market data shake up the rates debate

5





























Domino's Pizza Enterprises Ltd (DMP, N – A$21.04) (Armina Soemino) FY14 Result Preview: Two new initiatives to drive ANZ growth next year, waiting on Europe turnaround

Wotif.com Holdings (WTF, N – A$3.30) (Armina Soemino) FY14 Result Preview: Commentary around competition and margins should be interesting

Ansell Limited (ANN, UW – A$18.52) (Steven Wheen) Result focus shifts to how guidance was achieved

DEXUS Property Group (DXS, N – A$1.14) (Benjamin Brayshaw) FY14 preview and FY15 expectations

Airlines (Corrine Png) IATA June 2014 data: Passenger and cargo traffic growth continued to surpass 2013 pace; outlook positive

21st Century Fox (Alexia S. Quadrani) Studio Drives Solid FQ4 Results; 2016 Targets Reaffirmed

Japan

Price Target and Estimate Changes

DeNA (2432) (Neutral) (Haruka Mori) 1Q Results: Coin Consumption Stable, but Profit Rebound Still a Ways Off

Showa Shell Sekiyu (5002) (Neutral) (Yuji Nishiyama) Likelihood of Ongoing Dividend Hikes Is Appealing

Cosmo Oil (5007) (Neutral) (Yuji Nishiyama) Spotlight on How Assets Will Be Transferred When Joint Refining Operations Start

Fuji Heavy Industries (7270) (Overweight) (Akira Kishimoto) Earnings Growth to Move up a Gear from 2Q as Business Conditions Normalize

AFL Mazda Motor (7261) (Overweight) (Akira Kishimoto) Growth to Continue While Profitability Improves

Suzuki Motor (7269) (Overweight) (Akira Kishimoto) New Earnings Structure Taking Hold, with Japan as Cash Cow and India Driving Growth

Disco (6146) (Overweight) (Hisashi Moriyama) Maintaining Positive Stance; Full-Term Operating Profit Guidance Raised Despite Lower 1H Plan

Nikon (7731) (Underweight) (Hisashi Moriyama) Downward Revision Accounts for External Headwinds, but Still Some Uncertainty About the Stepper Business

Results and Company Views

Haseko Corporation (1808) (Overweight) (Hirokazu Anai) 1Q Results: Positive Impression, with Construction Margin Improving More Quickly than Projected

Results and Company Views, continued

Olympus (7733) (Overweight) (Hisashi Moriyama) Endoscope Business Still Strong, Issues Remain in Image Systems Segment

Rohto Pharmaceutical (4527) (Overweight) (Masayuki Onozuka) Weak Start In Line with Expectations, Numerous New Products Offer Chance for Recovery - ALERT

Sanken Electric (6707) (Overweight) (Masashi Itaya) 1Q Results: Subsidiary Strong; Mixed Impression - ALERT

AFL Sawai Pharmaceutical (4555) (Overweight) (Masayuki Onozuka) Limited Deterioration in CoGS Ratio Despite Weaker Than Expected Sales Due to One-Off Factors; Ready for Growth in 2Q - ALERT

AFL Sumitomo Metal Mining (5713) (Overweight) (Shogo Umeda) 1Q Results: Progress in Line, but Extent of Profit Growth in 2Q Onward Uncertain; No Change in Underlying Earning Power

Sumitomo Realty & Development (8830) (Overweight) (Hirokazu Anai) 1Q: No Surprise from Results, Roughly on Par with Guidance

Taiyo Yuden (6976) (Overweight) (Masashi Itaya) Negative View of 1Q Results, but Good Opportunity to Buy on Dips - ALERT

THK (6481) (Underweight) (Toru Nakahashi) April-June Results Short of Expectations; Watch Trend in Back-end Chip-Related Orders

YAMADA DENKI (9831) (Neutral) (Dairo Murata) 1Q Results: Below Our Forecast; 1H Progress Looks Insufficient Given 2H Outlook - ALERT

6

























Japan Display (6740) (Overweight) (Narci Chang) Resolution migration is gathering steam in 2H; Stay OW

K's Holdings (8282) (Overweight) (Dairo Murata) 1Q Results: Major Overshoot of Our Forecast; Positive Impression – ALERT

Meiji Holdings (2269) (Not Rated) (Ritsuko Tsunoda) Summary of Company’s View on 1Q Results - ALERT

Mitsubishi (8058) (Overweight) (Kazuhisa Mori) 1Q Results: Brisk Start, Robust Energy and Non-Resources Allay Coking Coal Concerns

AFL Nippon Electric Glass (5214) (Underweight) (Narci Chang) Another miss and guidance cut; Glass fiber not big enough to save the company; Reiterate UW

Sector Research

Auto Sector (Akira Kishimoto) Japanese Automakers’ China Sales (July), China’s Anti-Monopoly Probe - ALERT

Big Four General Contractors (Hirokazu Anai) 1Q Results: Sharp Recovery in Building Construction Margin Improvement at Shimizu

Online Securities Companies (Natsumu Tsujino, CFA) Monthly Data July 2014: Brokerage in July about 40% of 1Q Total; Update on NISAs

LatAm

Recommendation, Price Target and Estimate Changes ALL (ALLL3.SA – Overweight) (Fernando Abdalla) It's All About the Merger; Maintain OW and Set Dec-15 PT of R$11

Credito Real (CREAL.MX – Overweight) (Christopher Delgado) Banking on the Future: Reiterate Overweight and Establish 2015 Price Target of Ps. 40 per Share

Grupo Mexico (GMEXICOB.MX – Neutral) (Rodolfo Angele, CFA) LatAm Copper: SCCO in a sweet spot; GMex discount to NAV at 14% presents a trading opportunity of SCCO vs. GMex

Southern Copper Corporation (SCCO – Overweight) (Rodolfo Angele, CFA) LatAm Copper: SCCO in a sweet spot; GMex discount to NAV at 14% presents a trading opportunity of SCCO vs. GMex

LatAm Company and Sector News Alupar (ALUP11.SA – Overweight) (Marcos M Severine) Reported Clean and In-line 2Q14 - Watch for Ferreira Gomes Early Start-up - ALERT

Arteris (ARTR3.SA – Neutral) (Fernando Abdalla) 2Q14 Results: Weak Operational Figures on the Back of Lower Than Expected Traffic and Construction Segment; Remain N - ALERT

BM&F Bovespa (BVMF3.SA – Neutral) (Domingos Falavina) 2Q14: Known Challenging Volumes vs. Good Cost Control - ALERT

Braskem (Overweight) (Caio M Carvalhal) Braskem: Better than Expected Results, but Reaction Should Be Impaired by the Negative News Flow on Naphtha Prices Renegotiation - ALERT

LatAm Company and Sector News, continued YPF (YPF – Neutral) (Caio M Carvalhal) Results beat on higher realization price; positive share price reaction likely - ALERT

LatAm Capital Goods and Agribusiness (Cassio Lucin) Corn Production Higher-Than-Expected from Increases in Planted Area

Strategy Brazil Equity Strategy (Emy Shayo Cherman) Argentina and Russia Equity Impact on Brazil

Chile Equity Strategy (Diego Celedon) Slower Growth, Weak Business Sentiment & Downside Risk to EPS; Downgrading to UW

Mexico Equity Strategy (Nur Cristiani, CFA) IPC Rebalancing 2014: Our Take on Flows

Emerging Markets Strategy Dashboards (Adrian Mowat) Identifying change and providing perspective on key economic and equity market data of global emerging markets

Economics Brazil commentary (Fabio Akira) Watch for July IPCA

Chile (Iker Cabiedes) Slowing demand is driving a sharp correction in the trade balance

7

























Cetip (CTIP3.SA – Overweight) (Domingos Falavina) 2Q14: Stable Deductions Line Q-o-Q Indicates No Additional Discounts Granted for In-Line Quarter - ALERT

Credicorp (BAP – Neutral) (Saul Martinez) Something for Everybody in 2Q14; Mixed Trends; FY Earnings Estimates Look Too High - ALERT

Ecorodovias (ECOR3.SA – Neutral) (Fernando Abdalla) 2Q14 Results: Weak Operational Figures; Logistics Segment Disappointed Once Again - Maintain N - ALERT

Estacio (ESTC3.SA – Overweight) (Marcelo Santos, CFA) Keeping Up Strong Results in 2Q14

Gran Tierra Energy (GTE – Overweight) (Caio M Carvalhal) Disappointing results, but priced in on recent negative performance; Continue OW on Peruvian operations development - ALERT

Grupo Financiero Galicia (GGAL – Underweight) (Saul Martinez) Mostly Positive First Take on 2Q14; Argentina Risk, Not Quarterly Results, to Drive Stock for Now - ALERT

Guararapes Confeccoes (GUAR3.SA – Neutral) (Andrea Teixeira, CFA) Good 2Q14 on Solid Retail Sales and Strong Financial Services Results - ALERT

Linx (LINX3.SA – Overweight) (Andre Baggio, CFA) Strong Growth Again in 2Q14

MercadoLibre, Inc. (MELI – Overweight) (Andre Baggio, CFA) Strong 2Q14 as Growth Accelerates Despite Tough Quarter

RaiaDrogasil (RADL3.SA – Overweight) (Andrea Teixeira, CFA) 2Q14 Beat: Solid Growth and Margin Expansion, EPS +54% Y/Y, Reiterate OW - ALERT

Randon (RAPT4.SA – Overweight) (Cassio Lucin) 2Q14 - Better than Expected as Railway Cars Boosted Numbers - ALERT

TUPY (TUPY3.SA – Overweight) (Cassio Lucin) 2Q14 Below Our Numbers on Tough Brazilian Environment - ALERT

Costa Rica (Franco A Uccelli) Fiscal outlook increasingly uncertain

Dominican Republic (Franco A Uccelli) Real GDP expands 5.2%oya in 1H14

ECB preview (Greg Fuzesi) Waiting to see how risks unfold

Guatemala (Franco A Uccelli) Remittances surge 9.9%oya in Jan-Jul

Mexico (Steven Palacio) Inflation temporarily rises above Banxico’s target

Mexico Color (Gabriel Lozano) July inflation to reach Banxico's upper band

Mexico (Steven Palacio) Minimum wage reform is not without pitfalls

No panic at the ECB (Greg Fuzesi) The ECB did not send a strong policy signal today.

Peru (Ben Ramsey) BCRP stands pat at 3.75%, but drops reserve requirements again

Reform watch (Gabriel Lozano) The last steps of the approval of the energy overhaul

Credit Research Bancolombia (BCOLO - Overweight) (Natalia Corfield) Mixed 2Q14 Results; Maintain Overweight Issuer Rating On Positive Underlying Trends

GVO (GRPVIR - Neutral) (Daniel Sensel) 2014 FY Results: Not Thaaat Sweet; Maintain Neutral

8

























CEEMEA


Bizim (BIZIM TI – Underweight) (Borja Olcese) Cutting estimates and PT further post 2Q results

KBC Group (KBC BB – Overweight) (Paul Formanko) Strong quarter supports our €56 PT, further >30% upside

QIWI (QIWI US – Overweight) (Alexei Gogolev) Management M&A/dividend comments misinterpreted; Buy on weakness


Alior Bank (ALR PW – Underweight) (Paul Formanko) Solid quarter: strong NII and loan growth - ALERT

Aquarius Platinum Limited (AQP LN – Neutral) (Abhishek Tiwari) Aquarius Platinum Limited: Strong FY14 operating performance. Regulatory/fiscal risks elevated in SA and Zim - ALERT

Aquarius Platinum Limited (SA) (AQP SJ – Neutral) (Abhishek Tiwari) Aquarius Platinum Limited: Strong FY14 operating performance. Regulatory/fiscal risks elevated in SA and Zim - ALERT

Emlak Konut (EKGYO TI – Overweight) (Muneeza Hasan) 2Q14 NI inline with lower GP offset by higher interest/other income - ALERT

KBC Group (KBC BB – Overweight) (Paul Formanko) Q2 above JPMe/Consensus driven by core revenues - ALERT

MTN Group Limited (MTN SJ – Overweight) (Ziyad Joosub) 1H14 results: Solid operational beat, FCF/yield dynamics attractive whilst Nigeria margins to be fluid

Novolipetsk Steel (NLMK LI – Neutral) (Roman M Gorokhov) Strong 2Q14 IFRS results. Margin growth outpaces expectations - ALERT

Old Mutual Plc (OML LN – Overweight) (Francois Du Toit) 1H14 results first look – ALERT

Results and Company Views, continued OTE (HTO GA – Overweight) (Karim de Baecque) Q2 EBITDA ahead, improving KPI momentum in Greek fixed - ALERT

QIWI (QIWI US – Overweight) (Alexei Gogolev) 2Q14: significant beat on revenues and earnings; FY14 guidance increased (again) - market upgrades expected - ALERT

Randgold Resources Ltd (RRS LN – Neutral) (Allan Cooke) 2Q14 EPS at US57c. Lower ounces at Tongon and Kibali. FY14 +1Moz target in sight - ALERT

Strategy

Emerging Markets Strategy Dashboards (Adrian Mowat) Identifying change and providing perspective on key economic and equity market data of global emerging markets

Economics

CEE (Nora Szentivanyi) Weighing the impact of Russia’s food ban

Middle East and North Africa Today (Brahim Razgallah)

Russia (Anatoliy A Shal) Countersanctions to lift local food inflation

Commodities and FX

Natural Gas Weekly & Storage Recap (Scott C. Speaker) Weather-adjusted demand strengthening trend continues amid generally mild weather; LNG update

Sector Research

Russian Consumer (Elena Jouronova, CFA) Food import restrictions may add up to 300bps to food CPI. Mixed impact on retailers - ALERT

Turkish Beverages (Muneeza Hasan) Thoughts ahead of 2Q14 results; prefer CCI over AEFES - ALERT

9






















US

Recommendation Changes

init BioCryst Pharmaceuticals (BCRX – Overweight) (Cory Kasimov) A Swell Idea in the Orphan Disease Space; Initiating at Overweight

▼Rubicon Technology (RBCN – Neutral) (Paul Coster, CFA) Solid 2Q Results, Disappointing Guidance; Persistent Excess Capacity; Downgrading to Neutral


Advanced Micro Devices (AMD – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

AES Corp. (AES – Neutral) (Christopher Turnure) 2014 Guidance Intact, Accelerated Asset Sales Drive More Buybacks

Allscripts (MDRX – Overweight) (Gavin Weiss) 2Q14 Positive Business Momentum Continues

Alnylam Pharmaceuticals (ALNY – Overweight) (Geoff Meacham) Our Thoughts Post the 2Q Call

Altera (ALTR – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

Amarin Corporation (AMRN – Neutral) (Chris Schott, CFA) Updating Model for 2Q

AMC Networks (AMCX – Neutral) (Alexia S. Quadrani) Programming Efforts Continue; We Await Greater Clarity Into New Slate

American Capital (ACAS – Overweight) (Richard Shane) Mixed Results, but Encouraging Progress toward Change in Corporate Structure

Amicus Therapeutics (FOLD – Overweight) (Michael E Ulz) Our Thoughts Post The 2Q14 Call

Annie's, Inc. (BNNY – Neutral) (Ken Goldman) Getting Interesting but Still Plenty of Risk; Staying Neutral

Apollo Investment (AINV – Overweight) (Richard Shane) Right On Track

Price Target and Estimate Changes, continued

Kythera Biopharmaceuticals (KYTH – Overweight) (Chris Schott, CFA) Model Update Post 2Q Results

Lamar Advertising Co. (LAMR – Neutral) (Alexia S. Quadrani) Q2 Results and Outlook Roughly In Line

Linear Technology (LLTC – Underweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

Mallinckrodt (MNK – Neutral) (Chris Schott, CFA) Model Update Post F3Q Results

Maxim Integrated Products (MXIM – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

Medivation (MDVN – Overweight) (Geoff Meacham) Our Thoughts Post the 2Q Call

Microchip Technology (MCHP – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

Monster Beverage Corp. (MNST – Overweight) (John Faucher) Strong Gross Margins Drive Q2; Raising Estimates

Mylan Inc. (MYL – Overweight) (Chris Schott, CFA) Model Update Post 2Q Results

NextEra Energy Inc. (NEE – Overweight) (Christopher Turnure) Mild Near-Term Uncertainty But Still An Undervalued Story Post-IPO

NVIDIA Corporation (NVDA – Neutral) (Harlan Sur) Strong Execution Across All Fronts - Raising Estimates and Price Target

ON Semiconductor Corporation (ONNN – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

PROS Holdings (PRO – Neutral) (Sterling Auty, CFA) 2Q'14: Good Bookings, but Implementation Delays Hurt Organic Revenue Growth

10



























Bankrate Inc (RATE – Neutral) (Doug Anmuth) Mixed 2Q Results Driven By Shift To Affiliates; Focus On Lead Quality Should Drive Long-Term Growth In Insurance

BCE Inc (BCE.TO – Overweight) (Richard Choe) Strong Wireless Performance; Positive Wireline Trends to Accelerate in 2H14; Price Target to $53

Big Lots, Inc. (BIG – Overweight) (Matthew R. Boss, CPA) Retail Rarity: HQ & Regional Field Work = Turnaround Traction w/ 2H P&L Inflection On Tap (Pics Herein)

Brinker International (EAT – Overweight) (John Ivankoe) Even With More Cautious F15 Estimates Than Guidance, F16 FCF Yield Continues To Be The Reason to Own

Broadridge (BR – Neutral) (Tien-tsin Huang, CFA) F4Q Recap - Prudently In-Line Guidance

CareFusion (CFN – Overweight) (Michael Weinstein) Alaris Rounds Out Solid FY14; Pyxis Should Deliver in FY15

CBS Corporation (CBS – Overweight) (Alexia S. Quadrani) Solid H2,14 Outlook; Increased Buyback Boosts 2015 Estimates

CBS Outdoor Americas (CBSO – Overweight) (Alexia S. Quadrani) Weak National Leads to Q2 Miss; Modest Growth Expected in Q3; Trimming Estimates

CF Industries Holdings, Inc. (CF – Neutral) (Jeffrey J. Zekauskas) MLP Unlikely

Charles River Laboratories (CRL – Overweight) (Tycho W. Peterson) 2Q Review: Healthy Quarter and Solid Setup Heading into 2H; Establishing 2015 PT of $65

Clovis Oncology (CLVS – Overweight) (Cory Kasimov) 2Q Snapshot - Rociletinib (aka CO-1686) Remains On Track...Next Stop Barcelona

Coeur Mining (CDE – Neutral) (John Bridges, CFA, ACSM) Q2 Wrap: With its out-of-the-money La Preciosa project, CDE remains the Go-To stock for silver bulls

Computer Sciences (CSC – Neutral) (Tien-tsin Huang, CFA) F1Q Recap - Keeping Estimates Largely Unchanged After F1Q Beat

Cooper Tire (CTB – Neutral) (Ryan Brinkman) Positive Outlook and Repurchase Plan Trump Softer Trend to Quarter

Q2 Holdings Inc. (QTWO – Overweight) (Sterling Auty, CFA) 2Q14: Growth, Gross Margins & Large Customer Wins Ahead of Schedule

Rubicon Technology (RBCN – Neutral) (Paul Coster, CFA) Solid 2Q Results, Disappointing Guidance; Persistent Excess Capacity; Downgrading to Neutral

Scripps Networks Interactive (SNI – Neutral) (Alexia S. Quadrani) Q2 Mostly In Line; Lowering Estimates on Softer Ad Outlook

SolarCity (SCTY – Overweight) (Paul Coster, CFA) Solid 2Q Operating Metrics; Increasing PT to $83

Talmer Bancorp (TLMR – Overweight) (Steven Alexopoulos, CFA) 2Q14: Noisy Quarter but Good Net Loan Growth with Pipelines Building & TBV up 3% Q/Q; Maintain OW

Taminco Corp (TAM – Neutral) (Jeffrey J. Zekauskas) We Reduce Estimates

TELUS (T.TO – Neutral) (Richard Choe) Strong Wireless Results; Wireline Remains Solid; Expect Aggressive Buyback; PT to $42

Texas Instruments (TXN – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

The Intercontinental Exchange (ICE – Overweight) (Kenneth B. Worthington, CFA) Mgmt Delivers on 3Q Buyback and Increased Savings, but Can't Offset Weak Current Volumes

Third Point Reinsurance Ltd. (TPRE – Neutral) (Jimmy S. Bhullar, CFA) Margins Better than Expected, Portfolio Returns Slightly Worse

Tornier (TRNX – Overweight) (Michael Weinstein) Another Solid Beat and Raise as Sales Realignment Begins to Pay Dividends

TrueCar Inc. (TRUE – Overweight) (Doug Anmuth) Solid First Public Quarter Driven by Improved Conversion Efficiency and Dealer Network Expansion; Remain OW, PT to $20

Two Harbors (TWO – Overweight) (Richard Shane) 2Q14 BV Increases 3.5%, Increase PT to $11.50 and Remain OW

Vishay Intertechnology (VSH – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX

11





























Cypress Semiconductor (CY – Underweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX D&B (DNB – Neutral) (Andrew C. Steinerman) Good 2Q14 for DNB, Outlook Unchanged; Bulk of Investment Still Ahead DeVry (DV – Neutral) (Jeffrey Y. Volshteyn) Strong 4Q14; Medical and International Segments Continue to Shine; DeVry U Remains a Drag Emergent BioSolutions (EBS – Overweight) (Cory Kasimov) 2Q Snapshot & Model Update Emerson Electric Co. (EMR – Neutral) (C. Stephen Tusa, Jr CFA) Cheaper Stock But Still No Reset, As Earnings Risk Lingers Out of 3Q Miss - Cutting Ests EnerNOC Inc. (ENOC – Overweight) (Paul Coster, CFA) 2Q14 Results: Investments Bearing Fruit Exterran Holdings (EXH – Neutral) (Samantha Hoh, CFA) Updating Estimates for 2Q14 Results Fairchild Semiconductor (FCS – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX Fifth Street Finance Corp. (FSC – Overweight) (Richard Shane) NII In-Line with Pre-Announcement; Originations & Yield Decline Genomic Health (GHDX – Neutral) (Tycho W. Peterson) 2Q14 Review: Generally In Line Results, As Focus Remains on Prostate Ramp; Establishing 2015 PT of $28 Harman International (HAR – Overweight) (Ryan Brinkman) Look Past FY15 Guidance to Strong Backlog and Penetration-led Hike to FY16 Guidance, Both Confirming of Bull Thesis Huntington Ingalls Industries (HII – Neutral) (Joseph B. Nadol III) Strong Margin and Cash Flow Are Q2 Highlights; an Outline of the Path Forward Appears to Be on Deck Insulet Corp (PODD – Overweight) (Michael Weinstein) 2Q Reset: Far from Good News, But It Looks To Us Like a Speed Bump; No Change to Thesis Intel (INTC – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX Kimco Realty Corporation (KIM – Neutral) (Michael W. Mueller, CFA) Model Update

VIVUS, Inc (VVUS – Neutral) (Cory Kasimov) 2Q Snapshot & Model Update WhiteWave Foods (WWAV – Overweight) (Ken Goldman) Due for a Breather but All the Right Boxes are Checked; Maintain Overweight Xilinx (XLNX – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX Zynga Inc (ZNGA – Neutral) (Doug Anmuth) Soft 2Q Results & Guidance; Licensing Strategy May Increase Hit Potential; Remain Neutral


Analog Devices (ADI – Overweight) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX Avago Technologies (AVGO – Neutral) (Harlan Sur) Semiconductors: 2Q14 Earnings Season: Model Updates on INTC, AMD, ALTR, CY, FCS, LLTC, MCHP, MXIM, ONNN, TXN, VSH, and XLNX Express Scripts, Inc. (ESRX – Overweight) (Lisa C. Gill) Management Meetings Reinforce Our Positive View Federal Realty Investment Trust (FRT – Overweight) (Michael W. Mueller, CFA) 2Q FFO Comes In Ahead; Good Core Stats and Development Progress Haynes International (HAYN – Overweight) (Michael F. Gambardella) F3Q EPS solidly beats guidance, uncertain Street. Sequential improvement noted, but not quantified - ALERT Rexford Industrial Realty (REXR – Overweight) (Michael W. Mueller, CFA) 2Q Ahead on a Strong Quarter

Sector Research

Horvers' Housing Monitor (Christopher Horvers, CFA) Pricing vs. Turnover Debate Heading Toward a Crossroads U.S. Asset Managers (Kenneth B. Worthington, CFA) Weekly Fund Flows: Jul 31 - Aug 06. Week of Outflows for FI and Equity, MM Funds Generate Inflows

12




























www.jpmorganmarkets.com

Global Equity Research07 August 2014

Industrial AutomationHow the Internet of Things and Digitalization change the market and drive growth

European Capital Goods

Andreas Willi AC

(44-20) 7134-4569

[email protected]

Bloomberg JPMA WILLI <GO>

J.P. Morgan Securities plc

Akash Gupta

(44-20) 7742-7978

[email protected]


European Software & IT Services

Stacy Pollard AC

(44-20) 7134-5420

[email protected]

Bloomberg JPMA POLLARD <GO>


Electrical Equipment & Multi-Industry North America

C. Stephen Tusa, Jr CFA AC

(1-212) 622-6623

[email protected]

Bloomberg JPMA TUSA <GO>

J.P. Morgan Securities LLC

Machinery, Integrated Heavy Equipment

Toru Nakahashi AC

(81-3) 6736-8644

[email protected]

Bloomberg JPMA NAKAHASHI <GO>

JPMorgan Securities Japan Co., Ltd.

Electronics/Precision & Industrial

Hisashi Moriyama AC

(81-3) 6736-8601

[email protected]

Bloomberg JPMA MORIYAMA <GO>

JPMorgan Securities Japan Co., Ltd.

For Specialist sales advice, please contact:

Timm Schulze-Melander, CFA

(44 20) 7134-1331

[email protected]

See page 189 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

The Internet of Things (IoT), Industrial Software and Digitalization feature increasingly prominently in the investor communications of Automation companies and investments could increase, also through acquisitions. In this in-depth report, we aim to look beyond the “hype” and provide investors with the background to scrutinize these topics. We see Industrial Software as an increasingly important differentiator in the offerings of Automation companies. We see the European companies, with Siemens in the lead, better positioned than their US/Japanese competitors. We are mindful of the risk of cannibalization to equipment and spares sales resulting from increased service efficiency and longer useful life which could have broader impact on the sector.

Hype vs reality: Industrial Internet, IoT or Industry 4.0 are differentiators when it comes to mind-share with customers but so far have been limited revenue drivers. The technology is mostly available today but we only expect a slow adoption given traditional conservatism among customers. For the automation industry, the Industrial Internet represents a positive vision, providing a new story after the emerging market capex growth theme for the past 10 years. We believe investors will increasingly scrutinize Automation companies for their relative capabilities. Organic investments and M&A may increase. For the current market leaders, the increasing importance of software and solutions capabilities provides a differentiation versus the more product focused Emerging Markets competitors.

Industrial Software an attractive end-market: We see industrial software as an increasing competitive differentiator, also adding higher growth at superior margins with higher entry barriers than equipment. However, Capital Goods companies are also encountering new competitors, having to adapt their equipment focused business models, and at times faced a difficult integration of acquired software companies given their different cultures. We see high single digit organic growth in industrial software at superior margins and returns. Industrial software companies trade at a 40% premium to the automation industry.

Moderate contribution today but can drive organic growth differentiation: Software accounts for 5-15% of current automation sales for most Capital Goods companies. While this is still small, it can drive an overall difference in through-cycle growth for the respective divisions/companies of 1-2% which has material implications for valuations which the market may underestimate. We see higher growth in software targeted at discrete and hybrid industries given their lower penetration compared to many process industries.

European automation companies in the lead: We conclude that the European Automation companies ABB, Schneider and Siemens are further advanced than their US and Japanese competitors in building up software capabilities but also in integrating automation and power to efficient solutions. European customers are also leading the way on adoption.


Europe Equity Research07 August 2014

AndritzOverweightANDR.VI, ANDR AV

With 25% potential upside, Andritz is one of our top picks

▲

Price: €41.22

Price Target: €52.00Previous: €49.00

European Capital Goods

Andreas Willi AC

(44-20) 7134-4569

[email protected]

Bloomberg JPMA WILLI <GO>

Akash Gupta

(44-20) 7742-7978

[email protected]

Glen Liddy

(44-20) 7134-4570

[email protected]

Alexander Whight

(44-20) 7134-4566

[email protected]


For Specialist Sales advice, please contact

Timm Schulze-Melander, CFA

(44 20) 7134-1331

[email protected]

YTD 1m 3m 12mAbs -12.5% -7.3% -3.9% -5.7%Rel -13.0% -2.1% -2.1% -14.2%

Andritz (ANDR.VI;ANDR AV)

FYE Dec 2013A 2014E(Prev)

2014E(Curr)

2015E(Prev)

2015E(Curr)

2016E

Adj.EPS FY (€) 1.35 2.76 2.65 3.28 3.16 3.47Adj.P/E FY 30.5 15.0 15.5 12.6 13.1 11.9Headline EPS FY (€) 0.64 1.99 1.89 2.70 2.58 2.89Headline P/E FY 64.4 20.7 21.9 15.3 16.0 14.2Revenue FY (€ mn) 5,711 5,805 5,904 6,192 6,135 6,388EBIT FY (€ mn) 90 299 291 397 381 423EBIT Margin FY 1.6% 5.1% 4.9% 6.4% 6.2% 6.6%Earning Before tax FY (€ mn)

80 292 287 395 380 425

Net Att. Income FY (€ mn) 67 207 196 281 269 301Source: Company data, Bloomberg, J.P. Morgan estimates.

Company DataPrice (€) 41.22Date Of Price 07 Aug 14Price Target (€) 52.00Price Target End Date 31-Dec-1552-week Range (€) 48.75-38.12Market Cap (€ bn) 4.29Shares O/S (mn) 104


38

42

46

50

€

Aug-13 Nov-13 Feb-14 May-14 Aug-14

Price Performance

ANDR.VI share price (€)

MSCI-Eu (rebased)

We believe that Andritz can re-rate over time with execution issues now largely behind it and with the Q2 earnings beat marking a turnaround on the difficult past 12 months. Our target price moves to €52, now based on Dec 2015 vs €49 and Dec 2014 before. Andritz trades on 8.4x 2015E EV/EBITA (after stripping out prepayments) vs the wider Sector on 11x. Please see our Feb 11 report for further details on the investment case.

Andritz back on track For the first time since Q4 2012, Andritz delivered a beat on JPM/consensus expectations as the project execution issues that dragged the company down fade. EBITA was 17/9% ahead of JPM/consensus as revenues increased earlier than we had expected, driven by the improved backlog since Q3 2013.

But top-line momentum looks modest like elsewhere: Orders fell 2% short of our estimates with the rolling 4 quarter book to bill at 1.05x, pointing to moderate growth over the next 12 months only. The outlook for Hydro was toned down somewhat with the market now expected to decline slightly vs flat before for 2014 in terms of orders. The outlook in Pulp remains good with a debate over whether the next greenfield projects come in Q4 or H1 2015.

Earnings adjusted for tax, lower growth: Our EBITA estimates of €371mn for 2014 and €441mn for 2015 are roughly in-line with pre-results consensus while our adj. EPS falls 4% due to updated tax rate guidance and somewhat lower growth (later booking of next larger pulp order). The improvement in 2015 in our estimates is driven by €20mn from normalization in Pulp to 6.2% margins, in-line with the 2010-2012 average, benefits from Metals/Schuler restructuring with charges falling away (combined €20mn) and return to 6.5% margins in Separation with product issues behind (7.5% average 2008-2012).

Valuation – target price of €52: With CYQ2 earnings we roll forward our target prices to Dec 2015. For Andritz, based on 9.5x EV/EBITA 2016E we arrive at €52. In our EV adjustment we subtract net customer advances from cash but credit the EBITA with (limited) interest income. On a simple EV/EBITA, the TP implies 8.2x. Value realization will also depend on use of excess cash, which we estimate at €7 per share by year/end 2016 (assuming net debt of zero including pensions and excl pre-payments).

https://markets.jpmorgan.com/research/email/-n6ir97h/GPS-1318826-0.pdf



Rio Tinto plcOverweightRIO.L, RIO LN

Strong H1'14 results re-accelerate cash returns timeframe; remains top pick

▲

Price: 3,373p

Price Target: 4,250pPrevious: 4,050p

European Metals & Mining

Dominic O'Kane AC

(44-20) 7742-6729

[email protected]

Bloomberg JPMA OKANE <GO>


Fraser Jamieson

(44- 20) 7742-5930

[email protected]


Lyndon Fagan

(61-2) 9003-8648

[email protected]

J.P. Morgan Securities Australia Limited

Roger Bell, CFA

(44-20) 7134-5932

[email protected]


European Steel

Alessandro Abate

(44-20) 7134-9744

[email protected]


For Specialist Sales advice, please contact

James H McGeoch

(44-20) 7134-0690

[email protected]

Rio Tinto plc (RIO.L;RIO LN)


2014E(Curr)

2015E(Prev)

2015E(Curr)

Adj. EPS FY ($) 5.53 4.84 5.21 5.51 5.69Bloomberg EPS FY ($) 5.27 - 5.00 - 5.50Adj. EBITDA FY ($ mn) 21,509 20,308 20,603 22,645 22,841EBITDA Margin FY 42.0% 46.0% 44.5% 45.9% 47.6%Adj. P/E FY 10.3 11.8 10.9 10.3 10.0EV/EBITDA (x) FY 6.0 6.3 6.2 5.5 5.5FCFF Yield FY 6.6% 8.0% 9.3% 13.3% 12.7%Dividend Yield FY 3.4% 3.7% 3.7% 4.0% 4.0%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company DataPrice (p) 3,373Date Of Price 07 Aug 14Price Target (p) 4,250Price Target End Date 30-Jun-1552-week Range (p) 3,642-2,905Market Cap (£ mn) 62,370.14Shares O/S (mn) 1,849


2,900

3,100

3,300

3,500

3,700

p


Price Performance

RIO.L share price (p)

MSCI-Eu (rebased)

Rio Tinto’s H1'14 results demonstrated the company’s ability to generate FCF as strong cost performances in Aluminium & Copper in particular more than offset negative commodity price momentum (FCF $2.0bn vs JPMe $0.7bn). Equally, with net debt having already hit target, management’s commentary left little doubt that capital returns are highly likely to be announced with FY'14 results. We believe this could signal a structural change in capital allocation which could, in turn, have positive ratings implications. We believe RIO’s valuation remains attractive, with a base case P/NPV 0.80x, an 11% discount to BHP, and spot PERs of 11.1/10.3x for FY14/15E at a 30-35% discount coupled with strong FCF improvement; it remains our top pick.

Strong underlying earnings with net debt target achieved. H1’14 underlying earnings of $5.2bn came in an impressive 9% ahead of JPMe$4.7bn, driven by better than expected realised prices in iron ore and strong cost performances in Aluminium and Copper. Net debt of $16.1bn wasmaterially below our $17.4bn estimate, despite a $0.6bn working capital build which is expected to reverse in H2.

Capex guidance cut by $2bn: 2014 capex guidance has been lowered to $9bn from $11bn, implying $5.2bn in H2. Management noted that the $1.5bn cost increase at Kitimat has been offset by cuts from most other divisions, including $0.6bn in iron ore and lower spend at Oyu Tolgoi as negotiations continue over the path forward for Phase II. Guidance for 2015 and beyond remains ~$8bn, including $2-4bn pa on unapproved projects which should ultimately support earnings growth.

Capital returns an early-15 proposition (again): Crucially, managementnoted that net debt has met their “mid teens $bn” target. Our forecasts suggest net debt should remain flat through H2 before falling by a cumulative $8.0bn by the end of 2016. Having been dampened as iron ore prices fell earlier in the year, we believe expectations of a capital return announcement with FY’14 results will rightly rise on the back of these results. Returning all of this “excess” cash to shareholders would equate to an additional yield of ~4% pa on top of the current ~4% dividend yield.

Earnings, cash flow and PT up: We raise our FY’14E EPS by 8% and FY’15/16E by 3%/4% while our June-15 NPV-based price target is up 5%.



AstraZenecaUnderweightAZN.L, AZN LN

Post Q2 update, ESMO next fundamental catalyst, stock continues to trade above our £37 PT

Price: 4,189p

Price Target: 3,700p

European Healthcare (Pharma, Biotech)

James D Gordon AC

(44-20) 7742-6654

[email protected]

Bloomberg JPMA GORDON1 <GO>

Richard Vosser

(44-20) 7742-6652

[email protected]

Diana Na

(44 20) 7742 7922

[email protected]


For Specialist Sales advice please contact:

Marjan Daeipour

(44 20) 7134-1329

[email protected]

YTD 1m 3m 12mAbs 17.2% -5.9% -9.5% 30.0%Rel 16.7% -0.7% -7.7% 21.2%

AstraZeneca (AZN.L;AZN LN)


2014E(Curr)

2015E(Prev)

2015E(Curr)

Revenue FY ($ mn) 25,711 25,276 26,094 25,091 25,513EBIT FY ($ mn) 3,712 4,625 4,322 4,872 5,026Core EPS FY ($) 5.05 4.43 4.58 4.13 4.13Adj P/E FY 14.0 16.0 15.4 17.1 17.1Cash EPS FY ($) 5.05 4.26 4.20 3.94 3.99Cash adj. P/E FY 14.0 16.6 16.8 17.9 17.7DPS (Gross) FY ($) 2.80 2.80 2.80 2.80 2.80Div. Yield FY 4.0% 4.0% 4.0% 4.0% 4.0%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company DataPrice (p) 4,189Date Of Price 07 Aug 14Price Target (p) 3,700Price Target End Date 30-Jun-1552-week Range (p) 4,845-3,087Market Cap (£ bn) 52.15Shares O/S (mn) 1,245


3,000

3,500

4,000

4,500

5,000

p


Price Performance

AZN.L share price (p)

MSCI-Eu (rebased)

Next key fundamental catalyst is ESMO conference Sep 26-30th, where we remain cautious. We expect ESMO updates on PD-L1 for Lung and Head & Neck (H&N) cancer. On Lung, updated PI combo data needs to demonstrate more incremental benefit from adding CTLA-4 to PD-L1, the benefit appearing modest at ASCO. For H&N, ESMO could show how efficacycompares vs. competitors, where Merck has reported similar data, starting PIII imminently, with BMS already in PIII. We only see room for adding $300m H&N peak at this time. We reiterate our £37 PT, 12% potential downside.

ESMO conference next fundamental catalyst: Expect focus on H&N and Lung cancer PI Immuno-onco data. At ESMO, Sep 26-30, we expect focus on PD-L1 H&N PI data, and PIII details. Post the PIII go-decision, we add risk-adj. forecasts of $0.3bn by 2025. We’ve analysed the competitive situation, noting the c.14% H&N response rate (RR) Astra reported at ASCO (unselected pts) is similar to MRK’s c.20% RR (PD-L1 high pts).BMS are already in PIII for H&N, PI data undisclosed. ESMO will also see updated PD-L1/CTLA-4 Lung combo data, for upside we need to see greater differentiation, ASCO data having shown little benefit vs. mono.

On M&A, post the Aug 26th PUSU 3m deadline, we could see increasing clarity on whether Astra engage in a Pfizer deal; we think this unlikely.

Reflecting Almirall Respiratory deal, we find only modest EmV accretion. Following Astra’s c.$2bn Almirall respiratory acquisition, we add Tudorza (LAMA mono) and '44 (LAMA/LABA) to our model, with in-market sales of $0.6bn by 2020, Astra will consolidate $0.3bn. We remain optimistic that Astra will negotiate direct US, EU & Japanese promotional rights, in order to derive synergies with the Symbicort salesforce. In the absence of early stage Almirall pipeline, or acquisition of direct distribution rights, we find only c.46p / 1.2% Embedded value accretion.

£37 PT reiterated, following minor forecast changes. We update for Q2’14, Almirall and PD-L1 upgrades offset by nearer-term downgrades to Bydureon and Synagis. We model increasing R&D, balanced by significant SG&A cost cutting post Nexium generics. Core EPS estimates are unchanged for 2014, trimmed low single digit beyond. We set our June-15 PT at a sector multiple of 15.5x 2015E Cash EPS (prev. 16x, sector has de-rated), equating to £37, 12% potential downside, we remain UW.



Novo NordiskOverweightNOVOb.CO, NOVOB DC

Tresiba CV event rate analysis reassures. Upcoming pipeline data offers significant optionality

Price: Dkr247.80

Price Target: Dkr280.00

European Healthcare (Pharma, Biotech)

Richard Vosser AC

(44-20) 7742-6652

[email protected]

Bloomberg JPMA VOSSER <GO>

James D Gordon

(44-20) 7742-6654

[email protected]

Diana Na

(44 20) 7742 7922

[email protected]


For Specialist Sales advice, please contact:

Marjan Daeipour

(44 20) 7134-1329

[email protected]

YTD 1m 3m 12mAbs 23.3% -1.5% 6.2% 28.9%Rel 22.8% 3.7% 8.0% 20.1%

Novo Nordisk (NOVOb.CO;NOVOB DC)


2014E(Curr)

2015E(Prev)

2015E(Curr)

2016E(Prev)

2016E(Curr)

Adj. EPS FY (Dkr) 9.40 10.16 10.05 11.63 11.55 13.14 13.01Revenue FY (Dkr mn) 83,572 87,544 87,803 96,569 96,506 103,610 103,232EBIT FY (Dkr mn) 31,493 33,273 33,426 37,831 37,569 41,405 41,007EBITDA FY (Dkr mn) 34,292 36,081 36,234 40,849 40,588 44,626 44,228EV/EBITDA FY 19.3 18.4 18.4 16.3 16.4 14.9 15.1EBIT Margin FY 37.7% 38.0% 38.1% 39.2% 38.9% 40.0% 39.7%DPS FY (Dkr) 0.90 4.89 4.83 5.62 5.58 6.34 6.28P/E (x) FY 26.4 24.4 24.7 21.3 21.4 18.9 19.0Source: Company data, Bloomberg, J.P. Morgan estimates.

Company DataPrice (Dkr) 247.80Date Of Price 07 Aug 14Price Target (Dkr) 280.00Price Target End Date 30-Jun-1552-week Range (Dkr) 265.30-179.60Market Cap (Dkr bn) 667.48Shares O/S (mn) 2,694


180

200

220

240

260

280

Dkr


Price Performance

NOVOb.CO share price (Dkr)

MSCI-Eu (rebased)

Now that the difficult 1H’14 results are behind us, where Novo still managed to grow operating profit at 13% in LC (local currency), we believe investors can now focus on the upcoming pipeline datapoints over the next 6-12 months. As well as Phase III data for semaglutide and FIAsp offering upside of at least Dkr13 per share, we see current levels offering options (worth Dkr30 per share) on 2 wildcard opportunities: early approval of Tresiba in the US in 2016 (we assume 2018 in our forecasts) and oral semaglutide phase II data (zero in our forecasts). With substantial upside potential from the pipeline and a 2014-17E EPS CAGR of 14% (vs. 7% for the Large Cap Pharma Sector), we reiterate our Overweight rating and PT of DKr280.

2015 Phase III pipeline offers significant upside potential to DKr13 (+5%): We believe that the potential for semaglutide (a 1x weekly diabetes product) and FIAsp (faster acting meal time insulin) has yet to be reflected in Novo’s value. We forecast semaglutide has the potential to regain market share in the GLP-1 space, with sales of DKr6bn ($1.1bn), 70% risk adj., by 2025, worth DKr5 per share. FIAsp should allow sustainable 6% growth of the short-acting insulin franchise; we forecast sales of DKr9.5bn by 2025 (70% risk adj.), worth DKr8 per share.

2 wildcard options offer further upside potential, which could be worth another DKr30 per share (+12%): Tresiba US filing and approval in 2015: Although we remain cautious around an early filing in 1H’15 (giventhe difficulty of meeting FDA requirements at interim analysis), we believe at current levels a 2015 US approval would offer upside of c. DKr10. Our DEVOTE trial event rate analysis adds to comfort over Tresiba CV risk profile as the DEVOTE event rate seems in-line with Lantus in the ORIGIN trial. Oral semaglutide Phase II data in early 2015 offers a free option for a high-risk, but high-reward opportunity, potentially worth DKr20.

Liraglutide (3mg) obesity limited downside and potential for DKr5 (+2%) of upside: Expectations for a positive FDA panel vote on Sept 11th, followed by approval in Dec 2014 now seem low enough, given a modest efficacy benefit balanced by side effects and hence we see limited downside and potential upside of Dkr5 (+2%).

Minor earnings changes. Following the 2Q’14 results, we have trimmed our EPS estimates by 1% for 2014-2017 on the back of lower hedging gains.

CEEMEA Equity Research 07 August 2014

MTN Group Limited (MTN SJ)

1H14 results: Solid operational beat, FCF/yield dynamics attractive whilst Nigeria margins to be fluid

OverweightPrice: 22,415c

07 Aug 2014

The results were a solid operational beat on the EBITDA line whilst greater than expected FX translation losses diluted growth at the HEPS level. Management is showing operational execution that the market has been looking for, and whilst Nigeria growth was soft this was driven by regulatory hurdles – we think credit must be given to management for driving profit growth via excellent opex management. Given higher margin structure post results, we believe upside risk exists to our 3-year proportionate FCF CAGR estimate for MTN of 24.7% and 3-year EBITDA CAGR of 11.1%. Assuming no operational/regulatory shocks, we find it challenging to envision a scenario in whichMTN does not accumulate ongoing higher cash balances – particularly given the (1) 13% lower capex guidance for FY14E (R26.2bn), (2) Nigeria/SA growth acceleration, (3) benign M&A landscape combined with prudent internal M&A valuation processes, and (4) capital injections from tower deals in 2014 (Nigeria’s c12,000 tower network could raise close to USD1bn). We believe there remains upside risk to current dividend guidance and thus incorporate a 4-year CAGR of 20% for ordinary dividends at MTN into our forecasts/valuation. In our view, a 20% progressive yield will be a key driver for gradual multiple expansion at MTN.

Summary of key H1 2014 Group-level metrics:

Revenue up 10.7% R72.759bn vs JPM at 10.5% (R72.1bn) – mixed performance, with SA and Large Opco cluster exceeding our estimates and Nigeria disappointing.

EBITDA increased by 19.6% yoy to R33.7bn (10.6% yoy in LCY) vs JPM at R31.05bn or 10.3% yoy (8.5% beat on our numbers).

EBITDA margin at 46.3% vs JPMe at 43.1%. A key driver for this was Nigeria margins; whilst we still expect Nigeria margins to remain elevated, we believe ex-tower deal impact 58% is more likely than 60% given net interconnect evolution. Whilst the rationale for our view is explained below, we do want to take away from the strong opex management at a Group level – adjusting for net interconnect impact at Nigeria Group EBITDA margins would still be 45.4%, meaningfully higher than our 43.1% estimate.

HEPS was up 8.96% yoy at 729cps versus JPMe for 6.9% yoy or 715cps. Normalised HEPS excluding both FX translation movements on cash balances in FY14 (loss of R736m) and FY13 ( \gain of R1.014bn) grew 19.8% yoy in ZAR terms by our estimates if we make appropriate tax adjustments.

Dividend at 444c or up 20% yoy was in-line with our expectations of 445cps. We note we are at the top of consensus on FY14E dividends, forecasting 20% growth yoy versus BBG consensus at 11% yoy.. In our view MTN remains one of the most attractive telecom names globally in terms of FCF growth outlook and progressive dividend.

Nigeria revenue – APPM/MOU figures reveal how detrimental Regulatory restriction with respect to on-net promotions has been, whilst underlying data growth figure is distorted by base. Nigeria LCY service revenue decelerated to 6.6% yoy in Q2 2014 from 9.7% yoy in Q1 2014 given ongoing voice revenue pressure. The pressure was driven by the Regulatory ban on on-net promotions that has now been removed whilst issues with a new SIM registration platform also impacted net-add uptake – this has now been resolved. In the table below, we see to what extent the Regulatory ban on on-net promotional pricing has had on MTN Nigeria in H1 2014, e.g. traffic growth dropped to 5.9% yoy from 78% yoy in FY13 whilst APPM (average price per minute) also increased 28.8% sequentially from H2 2014. We believe these figures are not reflective of normalised growth dynamics in Nigeria and with the launch of new “all-net” promotions in late June we expect MTN Nigeria to show accelerated growth trends in H2 2014. To note Etisalat Nigeria grew Naira service revenue 51.1% in Q2 2014 from 26.9% in Q1 2014, benefiting from MTN Nigeria’s restrictions on promotional activity. Nigeria LCY data growth of 15.9% is understated due to H1 2013 restatements not being made; based on current


Asia Pacific Equity Research08 August 2014

China Unicom (Hong Kong) Limited

Overweight0762.HK, 762 HK

Organic growth decent; still room for multiple expansion

▲

Price: HK$12.80

Price Target: HK$14.80Previous: HK$12.60

China

Telecoms

Michelle Wei, CFA AC

(852) 2800-8562

[email protected]

Bloomberg JPMA WEI <GO>

James R. Sullivan, CFA

(65) 6882-2374

[email protected]

Namita Mitla

(91-22) 6157-3301

[email protected]

J.P. Morgan Securities (Asia Pacific) Limited

YTD 1m 3m 12mAbs 10.3% 6.1% 3.7% 13.9%Rel 5.7% 2.5% -8.4% 0.9%

China Unicom (Hong Kong) Limited (Reuters: 0762.HK, Bloomberg: 762 HK)

Rmb in mn, year-end Dec FY11A FY12A FY13A FY14E FY15E FY16ERevenue (Rmb mn) 209,152 248,926 295,039 298,820 307,573 321,353EBITDA (Rmb mn) 63,397 72,659 83,964 94,311 103,672 112,728EBITDA Growth 6.7% 14.6% 15.6% 12.3% 9.9% 8.7%Net Profit (Rmb mn) 4,212 7,096 10,409 12,529 15,348 19,074EPS (Rmb) 0.18 0.30 0.44 0.53 0.65 0.81EPS growth (%) 20.0% 68.5% 46.1% 20.9% 22.5% 24.3%DPS (Rmb) 0.10 0.12 0.16 0.19 0.24 0.29EV/EBITDA (x) 5.3 4.7 4.4 3.8 3.4 2.9P/E (x) 56.9 33.8 23.1 19.1 15.6 12.6Dividend Yield 1.0% 1.2% 1.6% 1.9% 2.3% 2.9%FCF to mkt cap (%) (4.7%) (6.4%) 2.3% 4.2% 5.6% 12.1%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company Data52-week Range (HK$) 13.82-9.03Market Cap (Rmb mn) 239,834Market Cap ($ mn) 38,913Shares O/S (mn) 23,562Free Float(%) 18.5%3M - Avg daily vol (mn) 31.823M - Avg daily val (HK$ mn) 391.473M - Avg daily val ($ mn) 50.5HSI 2,4387.56Exchange Rate 7.75Price (HK$) 12.80Date Of Price 07 Aug 14Price Target End Date 31-Dec-15


9

10

11

12

13

14

HK$


Price Performance

0762.HK share price (HK$)

HSI (rebased)

China Unicom (CU)’s 2Q14 earnings were hurt by a few one-offs, but organic growth remained strong at >30% yoy, or >50% if we strip out VAT impact. We think the share price rally in the past few months was mainly driven by fund flow to China. Given its underperformance of CM and MSCI China, we think it has yet to price in that CU should be the main beneficiary from tower sharing and S&M cost reductions. We maintain OW with our PT raised from HK$12.6 to HK$14.8. Weak 2Q14 growth due to one-off losses and VAT: 2Q14 earnings edged

down 1% to Rmb3.39bn, mainly due to non-recurring reasons such as: 1) PHS asset write-off of Rmb0.8bn in 2Q14 (Rmb1.15bn in total in 1H14, remaining asset value is only Rmb0.15bn); 2) net FX loss from Rmb depreciation (net gain of Rmb0.73bn in 1H13 vs. net loss of Rmb0.36bn in 1H14); and 3) one-month impact of VAT resulting in a PBT reduction of Rmb0.8bn. Stripping these out, we estimate the pre-VAT organic growth was over 50% in 2Q14 and over 30% post-VAT, mainly driven by further margin improvement of 3ppt yoy.

Minimal capex upside risk: CU maintains its capex target of Rmb80bn for this year and guides for stable capex trend in the next few years. It aims to spend Rmb1.1bn in 2014 to roll out 100K 4G BTS (68K in 1H14), with TDD covering 300 cities and FDD 200 cities. CU will continue to expand and deepen the coverage of its HSPA network by adding 60K BTS this year, and to upgrade it to 4G where competitive intensity is high and data demand is strong. Mgmt believes the network advantage will continue for at least 2-3 years.

S&M transition on-going: The slower mobile service revenue growth of 12% in 1H14 (vs. 20% in 2013) reflects CU’s stricter control of handset subsidies and commissions starting early this year while also giving customers more tariff and service rebates. 2% of the 3% yoy ARPU decline in 1H was due to that.

Recent sell-off provides re-entry point: The establishment of a tower co and SASAC’s S&M cost-cutting requirement for telcos overall should benefit CU the most due to its smaller network scale (vs. CM) and highest operating leverage. The P/E multiple expansion from 14x at the recent trough to 17x was largely driven by fund flow to China rather than positive structural industry developments, in light of 1) the high correlation between CU's share price and MXCN index, and 2) CU has lagged CM by 9% and MXCN by 4% since April 30 when the tower co. news first came out. We raise our PT to HK$14.8 on lower capex forecasts and better margin assumptions.



Cheung Kong Infrastructure & Power Assets

1038.HK, 1038 HKOverweightPrice: HK$55.40

Price Target: HK$67.00

Envestra acquisition goes ahead. More M&A to come 0006.HK, 6 HKOverweightPrice: HK$70.80


Hong Kong

Utilities

Elaine Wu AC

(852) 2800-8575

[email protected]

Bloomberg JPMA EWU <GO>

Boris Kan

(852) 2800-8573

[email protected]



CKI, Power Assets and Cheung Kong Holdings have succeeded in their bid to acquire Australia gas network operator, Envestra, after APA agreed to sell its entire 33% stake in the company. We believe the remaining shareholders will follow and Envestra will be privatized. This is Power Assets’ first acquisition since it raised ~HK$60B from the HKEI IPO. We believe more M&A will arise in 2H14. Stay OW on CKI and PAH.

Privatization of Envestra likely: APA Group has agreed to sell its 33% stake in Envestra (ENV AU, Neutral). As of 7 Aug, the CKI consortium received acceptance of the offer from 73% of shares outstanding. If >90% accept the offer by 21 Aug, then the consortium can acquire 100% of the company and Envestra will likely be privatized.

Impact on Power Assets: PAH, CKI and CKH will each acquire 27.5% of Envestra for HK$4.7B each if the consortium bought 100% of the company (CKI already owns 17.5% of Envestra). PAH will fund the acquisition with its cash on hand and will still be in a net cash position with HK$60B of cash remaining after the transaction, on our estimates.

Impact on CKI: We believe CKI will use debt to fund the acquisitionand net gearing will rise to 15% (from 10% at end-2013). After this transaction, CKI will still have room to gear up and fund HK$10-15B of M&A, on our estimates. Thereafter, it may consider perpetual bond or equity issuance, in our view.

Revising up EPS estimates: We have revised up our 2014-16E recurring EPS estimates on CKI and PAH by 6-8% to factor in the Envestra acquisition (earnings contribution starting in Sep 2014) and the better-than-expected interim results.

Other potential M&As: According to reports on Bloomberg and Abc.net.au, some possible acquisition targets for CKI and PAH include Fortum’s announced sale of its power grid in Sweden (2H14 likely) and privatization of the New South Wales power grid (possible in 2015-16).

Table 1: Details of the acquisition, assuming the consortium acquires 100% of Envestra

Equity stake (% of total)

Existing shareholding Newly acquired shares Investment amount (HK$MM)

FY15E EPS upside %

CKI 45.0% 17.5% 27.5% 4,698 4%Cheung Kong Holdings 27.5% 0.0% 27.5% 4,698 1%Power Assets 27.5% 0.0% 27.5% 4,698 3%Total 100.0% 17.5% 82.5% 14,095

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



Equity Ratings and Price Targets

Mkt Cap Rating Price TargetCompany Ticker (HK$ mn) Price (HK$) Cur Prev Cur PrevBeijing Enterprises Water 371 HK 42,348.63 5.02 N n/c 5.00 n/cChina Everbright International 257 HK 47,886.04 10.68 OW n/c 13.00 n/cGuangdong Investment Limited 270 HK 54,164.78 8.68 OW n/c 10.00 n/cSound Global Limited 967 HK 11,180.80 7.62 OW n/c 9.00 n/cSource: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 04 Aug 14.

China Water Utilities1H14 results preview: GDI likely to beat

China, Hong Kong

Utilities

Elaine Wu AC

(852) 2800-8575

[email protected]

Bloomberg JPMA EWU <GO>

Boris Kan

(852) 2800-8573

[email protected]



China water utilities will begin reporting results on 12 Aug. We expect most to report in-line results, except for GDI, which may beat on higher earnings from power and property segments. We remain OW on GDI (270 HK) ahead of the water tariff review in December and potential M&A. CEI(257 HK) remains our top pick on potential new project wins in 2H14.

China Everbright Int’l (257 HK, OW) will report on 12 Aug. We expect in-line results, with net profit rising by 28% yoy, on our estimates. We believe consensus 2015-16 EPS estimates will be revisedup to factor in the Hankore acquisition and new WTE project wins(6,800 tons of new capacity awarded YTD vs 1,260 tons in 2013).

Sound Global (967 HK, OW) will report on 20 Aug. We expect in-line results, with net profit rising by 36% yoy on higher construction and operation earnings. We believe consensus 2015-16 EPS estimates will be revised up on better-than-expected new project wins (>600k tons of new BOT capacity won YTD vs 2014 target of 1MM tons).

Guangdong Investment (270 HK, OW) will likely report on 29 Aug. We believe GDI’s results will beat our and consensus’ estimates on better-than-expected earnings from the power segment (lower coal prices) and property segment (higher rental income). In 1Q14, GDI invested in two wastewater treatment projects. We will look for updates on new water M&A as potential positive catalysts.

Beijing Enterprises Water (371 HK, Neutral) will likely report inline results on 29 Aug, with net profit rising by 45% yoy on higher construction and operation earnings, on our estimates. Companies acquired in 2013 should have contributed in 1H for the first time. We will look for guidance on new capacity growth and plant upgrades.

Company Announcement date

JPM expectation

JPMe 1H14 net profit (LC MM)

yoy growth

JPMe 1H14 EPS (LC)

yoy growth

JPM comments

BJ Water 29-Aug Inline 745 45% 0.09 27% Profit jump due to first year earnings contribution from companies acquired in 2013

Everbright Int’l

12-Aug Inline 830 28% 0.19 15% Consensus EPS likely to revise up after results on Hankore acquisition and better-than-expected new project wins

GD Investment

29-Aug Beat 2,636* 4% 0.42* 0% Better-than-expected earnings due to power and property segments. Consensus EPS likely to be revised up

Sound Global

20-Aug Inline 238 36% 0.17 29% Consensus EPS likely to be revised up after results on better-than-expected new project wins

Source: J.P. Morgan estimates. *Recurring profit before tax for GDI



Pacific Basin ShippingOverweight2343.HK, 2343 HK

Key takeaways from management meetingPrice: HK$4.34


Hong Kong

Shipping

Corrine Png AC

(65) 6882-1514

[email protected]

Bloomberg JPMA PNG <GO>


YTD 1m 3m 12m

Abs -22.0% -9.9% -2.9% -7.8%Rel -27.3% -14.3% -14.8% -19.9%

Pacific Basin Shipping (Reuters: 2343.HK, Bloomberg: 2343 HK)

$ in mn, year-end Dec FY12A FY13A FY14E FY15E FY16ERevenue ($ mn) 1,443 1,709 1,710 2,015 2,251Net Profit ($ mn) (158) 2 (122) 83 174EPS ($) (0.08) 0.00 (0.06) 0.04 0.09DPS ($) 0.01 0.01 0.00 0.02 0.05Revenue growth (%) 9.9% 18.4% 0.1% 17.8% 11.7%EPS growth (%) NM NM NM NM 111.1%ROCE 3.0% 1.6% (0.7%) 5.3% 8.0%ROE (11.3%) 0.1% (9.7%) 6.8% 13.5%P/E (x) NM 711.5 NM 13.1 6.2P/BV (x) 0.8 0.8 0.9 0.9 0.8EV/EBITDA (x) 11.0 13.9 23.7 8.9 6.6Dividend Yield 1.1% 1.2% 0.0% 3.8% 8.0%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company DataShares O/S (mn) 1,935Market Cap ($ mn) 1,084Market Cap ($ mn) 1,084Price (HK$) 4.34Date Of Price 07 Aug 14Free Float(%) 91.4%3M - Avg daily vol (mn) 5.823M - Avg daily val (HK$ mn) 27.313M - Avg daily val ($ mn) 3.5HSI 24,584.13Exchange Rate 7.75Fiscal Year End Dec


4.2

4.6

5.0

5.4

HK$


Price Performance

2343.HK share price (HK$)

HSI (rebased)

We hosted Pacific Basin Shipping’s management for an investors' lunch meeting which reinforced our positive view on the dry bulk shipping sector’s recovery and PacBasin’s operating outlook. We believe PacBasin’s recent share price correction has already factored in the weak Towage business and soft rates near term and see this as a compelling entry point for investors. Industry supply growth is expected to moderate from 2H14. Moreover, we believe the bulk carrier order book remains overstated. Vessel delivery shortfalls have been substantial, averaging 31% in the past five years, and will likely continue or even worsen, given the financing challenges faced by ship builders and owners. PacBasin operates in the smaller sized vessel segment where the order-book-to-fleet ratio is lower at 19%(Handysize) vs the sector average of 23% and there is a larger share of vessels >25 years (13% vs sector average of 4%) and a higher scrap rate of 4% vs the sector average of 2%. PacBasin’s early counter-cyclical strategy to acquire cheap vessels will also provide a significant long-term cost advantage over peers. 3Q14 earnings will likely reflect the soft market rates but we expect the

industry outlook and freight rates to improve from 4Q14, driven by moderating supply growth and a pick-up in demand. PacBasin has already secured contract cover for 59% of Handysize and Handymax revenue days in 2H14. Its 41% spot market exposure in 2H14 and largely open position in 2015 will provide earnings leverage when freight rates recover. Does not expect further write-down of its Towage business.

Competitive cost structure should position PacBasin well for future growth:PacBasin’s young and fuel efficient fleet averaging only 6.5 years versus Handysize sector average of 9.5 years (many bought at the bottom of the cycle)provide PacBasin with a competitive cost structure over peers. Its Handymaxchartered-in costs are expected to fall (c.23% based on existing commitments)h/h in 2H14 which should help improve the performance of this segment.

Limited scope for further industry capacity growth in 2015-16: Quality shipyards are already full with delivery slots available only from 2017/18 in Japan and late 2016/2017 for quality yards in China. Moreover, new vessel order momentum has slowed in recent months. Ship financing remains challenging for weak operators/investors as well as private shipyards. PacBasin will continue to look to acquire more vessels but good bargains are harder to find now. No plans to invest in other vessel segments (e.g. Ultramax, Capesize vessels).

Appendix TOP

Key Rating, Price Target & EPS Changes Europe

Price Target Changes Price Target Company Rating New Old Increases

Andritz OW € 52.00 € 49.00 Natixis N € 4.60 € 4.10 QIWI OW $64.00 $62.00 Rio Tinto plc OW 4,250 p 4,050 p Decreases Adecco SA OW SFr. 87.48 SFr. 87.72 adidas Group N € 62.00 € 65.00 Beiersdorf N € 67.00 € 72.50 Bizim UW 16.00 TL 16.50 TL Brenntag OW € 50.88 € 53.47 Cobham N 290 p 305 p Henderson Group N 240 p 250 p Monte Paschi di Siena N € 1.30 € 1.50 STADA Arzneimittel N € 36.80 € 39.00 Source: J.P. Morgan estimates.

J.P. Morgan EPS Estimate Changes Company Current FY Next FY Increases

Euronext +242.2% +253.0% Hexagon +1.0% +0.2% KBC Group +3.5% +0.0% Natixis +5.9% +0.8% QIWI +3.9% +4.5% Rio Tinto plc +7.7% +3.2% Decreases Adecco SA -0.8% -1.8% adidas Group -0.1% -3.5% Andritz -3.7% -3.7% Beiersdorf -1.5% -1.5% Bizim -9.0% -10.1% Brenntag -68.3% -68.0% Cobham -2.3% -3.2% Commerzbank -3.1% -4.9% Henderson Group -5.9% -6.8% InterContinental Hotels -1.8% -0.8% Monte Paschi di Siena nm -9.7% Nestle -4.8% -0.4% Novo Nordisk -1.1% -0.7% STADA Arzneimittel -3.0% -3.6% Revisions AstraZeneca -1.3% +1.1% Banco Sabadell +0.3% -0.0% CCH -0.8% +0.3% Spirax-Sarco -0.4% +0.2% Source: J.P. Morgan estimates

23

Asia

Rating Changes Company New Rating Old Rating Decreases

Neptune Orient Lines (NOL) N OW Price Target Changes Price Target Company Rating New Old Increases

PCCW Limited OW HK$5.25 HK$4.40 Lite-On Technology Corporation UW NT$42.00 NT$40.00 Jubilant Foodworks Ltd UW INR1,100.0 INR1,025.0 Nestlé India Limited N INR5,350.0 INR4,550.0 Yangzijiang Shipbuilding Holdings Ltd. N 1.15 1.00 YY Inc OW $118.00 $108.00 Decreases NHN Entertainment UW KRW 54,000 KRW 62,000 Hiwin OW NT$340.00 NT$350.00 Media Prima Berhad OW R2.70 R2.80 Neptune Orient Lines (NOL) N 0.90 1.10 Source: J.P. Morgan estimates.


Cheung Kong Infrastructure +210.5% +7.9% Lite-On Technology Corporation +3.6% +4.5% Nestlé India Limited +0.1% +0.9% PCCW Limited +35.0% +39.7% Power Assets Holdings Ltd +2.6% +6.2% Yangzijiang Shipbuilding Holdings Ltd. +73.6% +34.9% YY Inc +14.8% +16.7% Decreases Hiwin -8.2% -4.8% Jubilant Foodworks Ltd -1.1% -0.5% Media Prima Berhad -9.9% -10.0% Neptune Orient Lines (NOL) -43.5% -271.5% NHN Entertainment -40.7% -31.5% SMIC -0.4% -23.2% Thai Oil Public Company -13.9% -19.1% Revisions HKT Trust and HKT Limited +1.0% -0.2% J.P. Morgan DPS Estimate Changes Company Current FY Next FY Increases

Cheung Kong Infrastructure +1.9% HKT Trust and HKT Limited +3.6% +0.3% PCCW Limited +7.1% +14.5% Yangzijiang Shipbuilding Holdings Ltd. +22.6% +73.6% Decreases Hiwin -23.9% -1.4% Thai Oil Public Company -23.3% -13.9% Revisions Lite-On Technology Corporation -0.9% Media Prima Berhad +8.0% -4.5%

Australia

Rating Changes Company New Rating Old Rating Downgrade TAH N OW

Estimate Changes*

Company FY_14 FY_15 Upgrades DXS 0.0% +5.0% RIO (USD) +7.7% +3.2% SUN +11.3% +1.7% Downgrades BSE nc -49.8% BWP -0.1% -1.2% HGG (GBP) -5.9% -6.8% ILU nc -59.2% MDL (USD) nc -93.6% Others DUE +6.8% -4.2% NHF +5.4% -1.4% TAH -1.9% +2.7%

* EPS Changes > +/- 1%

Price Target Changes

Target Company New Old Upgrades BWP 2.22 2.19 NHF 3.15 3.03 RIO 80.00 76.00 SUN 14.17 13.40 TAH 3.70 3.65 Downgrades BSE 0.50 0.55 HGG 4.34 4.52 ILU 10.25 11.30 MDL 2.70 2.90

Source: J.P. Morgan estimates.

24

Japan


Fuji Heavy Industries (7270) OW ¥3,400 ¥3,300 Decreases DeNA (2432) N ¥1,300 ¥1,700 Disco (6146) OW ¥10,000 ¥11,000 Source: J.P. Morgan estimates.


Fuji Heavy Industries (7270) +6.1% +12.9% Mazda Motor (7261) +14.0% +2.2% Sumitomo Realty & Development (8830) +7.3% Decreases Cosmo Oil (5007) -2.4% -14.0% DeNA (2432) -32.6% -36.8% Mitsui Fudosan (8801) -9.6% -8.8% Showa Shell Sekiyu (5002) -1.3% -6.4% Revisions Disco (6146) -10.1% Nippon Electric Glass (5214) -2.2% Suzuki Motor (7269) +5.2% -6.8% Source: J.P. Morgan estimates. Note: Numbers and companies above may differ from the corresponding numbers or companies in the individual notes inside the FTM.

LatAm


Price Target Company Rating New Old Increases

Credito Real OW 40.00 28.00 Grupo Mexico N 53.00 48.00 Southern Copper Corporation OW 42.00 37.00 Source: J.P. Morgan estimates.

J.P. Morgan EPS Estimate Changes

Company Current FY Next FY Increases

Grupo Mexico +27.0% +27.3% Southern Copper Corporation +1.4% +9.4% Decreases ALL -65.1% -21.4% Credito Real -2.9% -5.1%

CEEMEA


QIWI OW $64.00 $62.00 Decreases Bizim UW 16.00 TL 16.50 TL Source: J.P. Morgan estimates.


KBC Group +3.5% +0.0% QIWI +3.9% +4.5% Decreases Bizim -9.0% -10.1%

25

US

Rating Changes

Company New Rating Old Rating Decreases

Rubicon Technology N OW

Initiations

Company Rating Price Target BioCryst Pharmaceuticals OW 20.00


Price Target Company Rating New Old Increases

BCE Inc OW 53.00 51.00 Big Lots, Inc. OW 53.00 46.00 CBS Corporation OW 70.00 68.00 CBS Outdoor Americas OW 37.00 35.00 CF Industries Holdings, Inc. N 250.00 240.00 CareFusion OW 48.00 44.00 Charles River Laboratories OW 65.00 61.00 Cooper Tire N 37.00 36.00 D&B N 112.00 105.00 Intel OW 37.00 31.00 Monster Beverage Corp. OW 80.00 74.00 NextEra Energy Inc. OW 106.00 105.00 NVIDIA Corporation N 20.00 19.00 Southern Copper Corporation OW 42.00 37.00 SolarCity OW 83.00 77.00 TELUS N 42.00 40.00 Taminco Corp N 23.00 18.00 Talmer Bancorp OW 17.00 16.50 Tornier OW 23.00 20.00 Two Harbors OW 11.50 11.00 WhiteWave Foods OW 35.00 34.00 TrueCar Inc. OW 20.00 19.00 Decreases AES Corp. N 16.00 17.00 AMC Networks N 62.00 72.00 Annie's, Inc. N 32.00 34.00 Coeur Mining N 8.50 10.00 Clovis Oncology OW 92.00 101.00 Emerson Electric Co. N 69.00 72.00 Huntington Ingalls Industries N 102.00 113.00 The Intercontinental Exchange OW 223.00 230.00 Lamar Advertising Co. N 54.00 57.00 Allscripts OW 19.00 20.00 Insulet Corp OW 45.00 48.00 Bankrate Inc N 17.00 19.00 Rubicon Technology N 8.00 13.00 Xilinx OW 47.00 52.00 Source: J.P. Morgan estimates.

J.P. Morgan EPS Estimate Changes*

Company Current FY Next FY Increases

AES Corp. +0.7% +1.8% Amarin Corporation +3.4% +0.2% American Capital +164.1% +66.1% Big Lots, Inc. +0.0% +1.9% CBS Corporation +1.4% +1.3% Charles River Laboratories +3.7% +2.1% Cooper Tire +5.5% +14.8% Cypress Semiconductor +205.8% +456.6% DeVry +9.4% EnerNOC Inc. +20.0% +1.6% Fairchild Semiconductor +143.4% +53.0% Genomic Health +13.3% +18.4% Intel +7.4% +6.1% Lamar Advertising Co. +1.4% +56.5% Mallinckrodt +19.1% +13.4% Medivation +68.5% +1.8% Monster Beverage Corp. +1.4% +0.3% NVIDIA Corporation +6.4% +6.1% Q2 Holdings Inc. +7.0% +11.3% Southern Copper Corporation +1.4% +9.4% Texas Instruments +3.8% +2.5% TrueCar Inc. +9.0% +36.4% Two Harbors +129.4% +0.7% Vishay Intertechnology +2.6% +0.6% VIVUS, Inc +26.9% +0.5% WhiteWave Foods +2.2% +2.2% Decreases Allscripts -3.6% -4.8% Alnylam Pharmaceuticals -204.4% -41.6% AMC Networks -2.8% -2.3% Annie's, Inc. -3.5% -0.0% Bankrate Inc -35.6% -11.6% D&B -1.0% -1.0% Emerson Electric Co. -1.6% -3.5% Exterran Holdings -2.0% -1.4% Fifth Street Finance Corp. -13.5% -4.7% Harman International -9.2% -1.1% Kythera Biopharmaceuticals -1.0% -7.1% Maxim Integrated Products -18.1% -17.1% Microchip Technology -1.5% -2.1% Mylan Inc. -2.0% -1.1% PROS Holdings -36.5% -35.6% Rubicon Technology -22.2% -155.2% Scripps Networks Interactive -2.8% -2.7% SolarCity -3.7% -126.3% Taminco Corp -20.3% -20.7% The Intercontinental Exchange -4.2% -1.8% Tornier -4.2% -19.6% Xilinx -3.5% -6.2% Zynga Inc -26.9% -127.5% Revisions Advanced Micro Devices -70.9% +70.7% Amicus Therapeutics +3.7% -5.5% Apollo Investment +1.5% -4.7% CBS Outdoor Americas +5.5% -3.7% CF Industries Holdings, Inc. -0.8% +1.5%

26

Coeur Mining +14.4% -47.2% Emergent BioSolutions -63.5% Huntington Ingalls Industries +4.8% -3.1% Insulet Corp -159.8% +8.6% Kimco Realty Corporation +0.7% -1.1% Talmer Bancorp +21.8% -1.8% Third Point Reinsurance Ltd. -2.1% +0.0% * EPS Changes > +/- 1%

Conference Calls TOP

Upcoming

Norilsk Nickel - What’s Ahead for the Nickel & Copper Markets, Speaker: Mr. Vladimir Zhukov (Head of Norilsk Nickel Investor Relations), Mr. Mikhail Borovikov (Norilsk Nickel Investor Relations), Mr. Anton Berlin (Norilsk Nickel Head of Strategic Marketing), Participants: Mr. Fraser Jamieson (Head of European Metals & Mining, J.P. Morgan), Mr. Rodolfo Angele (Head of Latin American Metals and Mining, J.P. Morgan), Mr. Mandeep Manihani (Latin American Metals and Mining Analyst, J.P. Morgan), Mr. Luke Nelson (Australian Metals and Mining Analyst, J.P. Morgan), Mr. Daniel Kang (Head of Basic Materials - Asia Pacific, J.P. Morgan), Mr. James McGeoch (Global Specialist Sales - Metals, Mining and Steel, J.P. Morgan) Hosted By: Mr. Roman Gorokhov (Russian Metals and Mining Analyst, J.P. Morgan), on Tuesday, August 12, 2014 at 9:00 AM New York/ 10:00 AM Sao Paulo/ 2:00 PM London/ 5:00 PM Moscow, Dial in: Global Access Numbers: Please See Below: (http://www.btconferencing.com/globalaccess/?bid=54_automated ); Passcode: 6909591, Replay through 8/17, The phone numbers and pass codes for the replay will be available and distributed after the conference call has finished.

Conference Call Replays Global IB Outlook and Stock Picks, Hosted by: Kian Abouhossein & Delphine Lee (European Banks Equity Research Team), Replay through 8/8: +1-954-334-0342 (US); (0)20 7031 4064 (UK); Passcode: 946434

U.S. Economic Outlook, Hosted by: Bruce Kasman, Replay through 8/9: 888-458-8113 (US); +1-402-998-1351 (outside US); Passcode: 6909591 (PODCAST AVAILABLE)

JPM Mexico CEO Conference Recap, Hosted by: Nur Cristiani – (J.P. Morgan Mexico Equity Strategist), Joined on the call by: Andrea Teixeira - (J.P. Morgan LatAm Consumer Analyst); Saul Martinez – (J.P. Morgan LatAm Financials Analyst), Replay through 8/10: 800-294-9493 (US); +1-402-220-3767 (outside US) Passcode: 54192 Replay available approximately an hour after the call ends

Weather Trends Intl (WTI) - 2H14 Outlook, Hosted by: Matt Boss (Broadlines Retailing, Apparel & Footwear Equity Analyst), Featuring: Bill Kirk (CEO & Co-Founder of Weather Trends International), Replay Through 8/11: 866-397-8265 (US); +1-203-369-0540 (US); Passcode: 26518 (PODCAST AVAILABLE)

Upcoming Conferences

Homepage

Aug 12 – 13, 2014 – Auto Conference New York, NY, J.P. Morgan, 270 Park Avenue

August 20—21, 2014 - 8th Annual Brazil Retail and Healthcare Check-Up São Paulo, Brazil

September 3 – 4, 2014 - APAC Equity Investor Conference Ritz-Carlton Hotel, Boston

September 8 – 9, 2014 - ASEAN London 1x1 Forum J.P. Morgan, 25 Bank Street, London

September 9, 2014 - Global Oil & Gas Investor Forum J.P. Morgan, 25 Bank Street, London

September 10—11, 2014 - 3rd Southern Cone and Andean Conference Country Club Lima Hotel, Lima, Peru

October 17, 2014 - Japan Macro Forum J.P. Morgan, Tokyo

November 6 –7, 2014 - China Opportunities Forum Mandarin Oriental Hotel, Hong Kong

Nov 12, 2014 – Ultimate Services Investor Conference New York, NY, Westin Grand Central Hotel, 212, East 42nd Street

November 13 –14, 2014 - ‘Best of British’ Conference J.P. Morgan, 60 Victoria Embankment, London

November 17 –18, 2014 - Global Technology, Media & Telecom Conference Conrad Hotel, Hong Kong

November 20 –28, 2014 - Asia Rising Dragons 1x1 Forum J.P. Morgan, Tokyo

27

http://www.btconferencing.com/globalaccess/?bid=54_automated


http://www.jpmorgan.com/pages/jpmorgan/investbk/global/na/usconferences

https://www.jpmorgan.com/cm/ContentServer?c=JPM_Content_C&pagename=JPM_redesign%2FJPM_Content_C%2FGeneric_Detail_Page_Template&cid=1273099308596










September 10, 2014 - London Small/Mid Cap Conference J.P. Morgan, 25 Bank Street, London

September 18, 2014 - J.P. Morgan SDN Forum 2014 J.P. Morgan, 560 Mission Street

September 16—17, 2014 - U.S. ‘All Stars’ Conference J.P. Morgan, 25 Bank Street, London

Sept 23 – 24, 2014 – Asia and CEEMEA Emerging Markets Corporate Conference London, UK, J.P. Morgan offices, 25 Bank Street

Sep - 29, 2014 - J.P. Morgan Italian Conference Four Seasons Hotel Milano, Via Gesù, 6/8, 20121, Milan, Italy

Sep - 30, 2014 - Milan Investor Forum Four Seasons Hotel Milano, Via Gesù, 6/8, 20121, Milan, Italy

October 2 – 3, 2014 - Australasian Investment Conference - London J.P. Morgan, 25 Bank Street, London

October 6, 2014 - Australasian Investment Conference - Edinburgh Balmoral Hotel, Edinburgh

October 8, 2014 - Japan Technology Forum J.P. Morgan, Tokyo

November 24, 2014 - Asia Rising Dragons 1x1 Forum Hilton Hotel, Kuala Lumpur

November 25, 2014 - Consumer Ingredients Conference J.P. Morgan, 25 Bank Street, London

November 25 –26, 2014 - Asia Rising Dragons 1x1 Forum Ritz-Carlton Hotel, Singapore

November 26, 2014 - Utility & Infrastructure Conference J.P. Morgan offices, 25 Bank Street, Canary Wharf, E14 5JP, London, UK

November 27 –28, 2014 - Asia Rising Dragons 1x1 Forum Mandarin Oriental Hotel, Hong Kong

December 1 – 5, 2014 – 7th Brazil Opportunities Conference São Paulo

December 4, 2014 - Utility and Infrastructure Conference J.P. Morgan, 25 Bank Street, London

December 8, 2014 - Japan MedTech Forum J.P. Morgan, Tokyo

January 12-15, 2014 33rd Annual Healthcare Conference San Francisco, CA

For additional conference information contact your J.P. Morgan representative or email [email protected].

Please remember that all J.P. Morgan conferences are by invitation only. Invitations are non-transferable.

28













mailto:[email protected]

Corporate Marketing Calendar TOP

Fri Aug-8-14 Mon Aug-11-14 Tue Aug-12-14 Wed Aug-13-14 Thu Aug-14-14

LG ELECTRONICS (SAN FRANCISCO)

CONTINENTAL (NEW YORK) ELEMENTIS (NEW YORK)

AMERICAN CAPITAL, LTD. (LOS ANGELES, SANTA FE) AVIS BUDGET GROUP (MADISON, MENOMONEE FALLS, MILWAUKEE) KFORCE (BALTIMORE) NOAH HOLDINGS (PHILADELPHIA) NOVO NORDISK (SAN FRANCISCO) TALMER BANCORP (NEW YORK) ZOETIS INC (LOS ANGELES)

AMERICAN CAPITAL, LTD. (SAN FRANCISCO) AVIS BUDGET GROUP (CHICAGO) CEMEX (BOSTON) EVONIK INDUSTRIES AG (BOSTON) NICE SYSTEMS LTD. (NEW YORK) NOAH HOLDINGS (PHILADELPHIA) TALMER BANCORP (BALTIMORE, KING OF PRUSSIA, PRINCETON, RADNOR) WIX.COM LTD. (NEW YORK) ZOETIS INC (SAN FRANCISCO, SAN MATEO)

AMERICAN CAPITAL, LTD. (DALLAS) AVIS BUDGET GROUP (MINNEAPOLIS) LENOVO GROUP LTD (NEW YORK) NOAH HOLDINGS (PHILADELPHIA, WASHINGTON, WILMINGTON) SPECTRANETICS CORPORATION (BALTIMORE, BERWYN, LANCASTER) TRUECAR (NEW YORK)

29

Markets at a glance TOP

China

Hong Kong

India SHASHR Index 2,290.50

HSI Index 24,387.56

Sensex Index 25,589.01

Chg from previous day -1.35%


Chg from previous day -0.30% T/O value (CNYmn / US$MM) 138,369 / 22,459

T/O value (HK$ mn / US$MM) 69,714 / 8,994

T/O value (INR MM / US$MM) 5,027 / 82


Chg from previous day 0.01%

Chg from previous day 904.17% Exchange rate CNY6.2 / US$1

Exchange rate HKD7.75 / US$1

Exchange rate INR61.2 / US$1

O/N interbank (%) 3.36


O/N interbank (%) 8.00 Market cap (CNYBn) 16,061.0

Market cap (HK$Bn) 29,048.8

Market cap (US$Bn) 1467.7

Market cap (US$ Bn) 2,607


Market cap (INR Bn) 89,871 FY1E Market P/E 12.9

FY1E Market P/E 14.3





Indonesia

Malaysia

Philippines

JCI Index 5,066.98

KLCI Index 1,867.32

PSE Index 6,955.21 Chg from previous day 0.17%



T/O value (Rp bn / US$MM) 4,510 / 382

T/O value (MYR MM / US$MM) 2,328 / 726

T/O value (Php MM / US$MM) 6,948 / 158 Chg from previous day 0.49%



Exchange rate Rp11,796 / US$1

Exchange rate MYR3.21 / US$1

Exchange rate Php44.08 / US$1 O/N interbank (%) 7.74



Market cap (US$Bn) 426.4

Market cap (US$ bn) 331.7

Market cap (US$ bn) 177.2 Market cap (Rp bn) 5,030,248

Market cap (MYR bn) 1,064

Market cap (Php bn) 7,813



FY1E Market P/E 18.4 FY2E Market P/E 16.4



Singapore

South Korea

Taiwan STI Index 3,314.22

KOSPI Index 2,054.51

TWSE Index 9,131.44



DoD Change -0.14% T/O value (SGD MM / US$MM) 727 / 581

T/O value (KRW bn / US$MM) 3,684 / 3,551

52-Week Range 9,594 / 7,737



T/O value (NT$ mn / US$MM) 109,381 / 3,641 Exchange rate SGD1.25 / US$1

Exchange rate KRW1037.49 / US$1




Exchange rate TWD30.0 / US$1 Market cap (US$ bn) 608.8

Market cap (KRW Bn) 1,329,009


Market cap (SGD bn) 762


10 Year Gov Bond Yield (%) 1.60 FY1E Market P/E 21.1


Market cap (NT$Bn) 26,059.3



Market cap (US$ Bn) 992



Thailand

Japan

Australia SET Index 1,522.27

TPX Index 1,258.12

ASX200 Index 5,509.01



Chg from previous day -0.05% T/O value (Bt bn / US$MM) 44 / 1,373

T/O value (JPY bn / US$bn) 2,051 / 20

T/O value (AUD MM / US$MM) 4,022 / 4,340



Chg from previous day 8.04% Exchange rate Bt32.28 / US$1

Exchange rate JPY102.34 / US$1

Exchange rate AUD0.93 / US$1



O/N interbank (%) 2.50 Market cap (US$Bn) 423.9


Market cap (AUD$ bn) 1517.2

Market cap (Bt bn) 13,685

Market cap (JPY bn) 454,020

Market cap (US$ bn) 1,406 FY1E Market P/E 15.3






UK

Euro Stoxx

US UKX Index 6,636.16

SX5E Index 3,050.37

S&P Index 1,920.24



Chg from previous day 0.00% T/O value (GBP Bn / US$bn) 4.87 / 8.21

T/O value (Euro bn / US$bn) 8.59 / 11.50

T/O value (US$ bn) 27.01



Chg from previous day -3.40% Exchange rate US$1.69 / GBP1

Exchange rate US$1.34 / EURO1




Market cap (US$ bn) 17596.3 Market cap (US$ bn) 3051.3



Market cap (GBP bn) 1,811

Market cap (Euro bn) 2,312

FY2E Market P/E 14.5 FY1E Market P/E 13.9




Source: Bloomberg, J.P. Morgan estimates.

30

Market Monitor TOP

August 07, 2014 as of market close

Change Average High Low

Level 1 Day Week Trailing 30 days MTD YTD 4-Wk 26-Wk 12-Wk 12-Wk

Equities* S&P 500

1910 -0.6% -1.1% -3.2% -1.1% 3.3% 1961 1898 1988 1871

NASDAQ 100

3858 -0.4% -0.9% -0.9% -0.9% 7.4% 3924 3709 3986 3565 Dow Jones Industrials

16368 -0.5% -1.2% -3.6% -1.2% -1.3% 16863 16539 17138 16368

FTSE

6597 -0.6% -2.0% -1.8% -2.0% -2.2% 6733 6732 6878 6597 Euro STOXX 50

3013 -1.2% -3.3% -5.9% -3.3% -3.1% 3143 3168 3315 3013

Hang Seng

24388 -0.8% -1.5% 5.2% -1.5% 4.6% 24028 22796 24757 22583 Sector Performance* S&P Telecom Services

157 -1.0% -3.5% -1.4% -3.5% 0.7% 162 156 167 157

S&P Energy

692 -0.7% -1.6% -5.2% -1.6% 6.2% 717 679 737 681 S&P Materials

307 -0.9% 0.0% -2.3% 0.0% 5.3% 313 303 317 300

S&P Financial

298 -0.5% -1.2% -3.0% -1.2% 1.2% 306 299 311 292 S&P Consumer Discretionary

518 -0.5% -0.8% -3.7% -0.8% -2.3% 530 519 540 502

S&P Healthcare

692 -1.2% -1.7% -2.8% -1.7% 7.8% 710 685 721 670 S&P Information Technology

633 -0.5% -1.3% -1.0% -1.3% 8.1% 646 610 656 593

S&P Utilities

206 1.1% -1.6% -5.5% -1.6% 6.6% 214 212 225 204 S&P Consumer Staples

447 -0.8% 0.7% -4.0% 0.7% 0.9% 457 448 467 444

S&P Industrials

443 0.1% -0.7% -4.8% -0.7% -2.0% 459 455 478 443 Fixed Income** Treasury (%): 2-Yr 0.43% -2bp -10bp -6bp -10bp 5bp 0.48% 0.41% 0.56% 0.33%

10-Yr 2.42% -5bp -13bp -12bp -13bp -58bp 2.50% 2.62% 2.65% 2.42%

30-Yr 3.23% -4bp -8bp -12bp -8bp -71bp 3.29% 3.48% 3.48% 3.22%

Credit** HG Credit (JULI, Z-spread)1

98bp 0.5bp 4.3bp 3.3bp 4.3bp -15.4bp 95bp 101bp 101bp 93bp

HY Credit (T-spread)

471bp 0.0bp 15.7bp 66.7bp 15.7bp 30.8bp 439bp 420bp 475bp 393bp Currency** JPY/USD

102.36 -0.24 0.25 0.73 0.25 -2.96 101.85 102.10 102.93 101.23

USD/EUR

1.34 0.00 0.00 -0.03 0.00 -0.05 1.35 1.37 1.37 1.34 USD/GBP

1.68 0.00 0.00 -0.03 0.00 0.03 1.70 1.68 1.72 1.67

Commodities Gold ($/ounce)*

1312.62 6.77 30.07 -15.18 30.07 106.97 1304.78 1303.48 1338.62 1243.92

Volatility** VIX Index 16.66 0.29 -0.29 5.01 -0.29 2.94 13.59 13.44 17.03 10.32

Source: *Bloomberg, **J.P. Morgan

31

Upcoming US Economics Releases (Time: EDT) TOP

Bruce Kasman

Chief Global Economist [email protected] (1-212) 834-5515

Monday Tuesday Wednesday Thursday Friday

4 Aug Senior loan officer survey (2:00pm) 3Q

5 Aug Services PMI (9:45am) Jul final 61.0 ISM nonmanufacturing (10:00am) Jul 56.0 Factory orders (10:00am) Jun 0.6%

6 Aug International trade (8:30am) Jun -$43.0bn Announce 3-year note $26bn Announce 10-year note $24bn Announce 30-year bond $16bn

7 Aug Initial claims (8:30am) w/e Aug 2 300,000 Consumer credit (3:00pm) Jun Chain store sales Jul

8 Aug Productivity and costs (8:30am) 2Q prelim 2.3% Unit labor costs 0.2% Wholesale trade (10:00am) Jun

11 Aug

12 Aug NFIB survey (7:30am) Jul JOLTS (10:00am) Jun Federal budget (2:00pm) Jul Auction 3-year note $26bn

13 Aug Retail sales (8:30am) Jul Business inventories (10:00am) Jun Auction 10-year note $24bn New York Fed President Dudley (9:05am) and Boston Fed President Rosengren (9:20am) speak on wholesale funding in New York

14 Aug Initial claims (8:30am) w/e Aug 9 Import prices (8:30am) Jul Auction 30-year bond $16bn Announce 5-year TIPS (r) $16bn

15 Aug PPI (8:30am) Jul Empire State survey (8:30am) Aug TIC data (9:00am) Jun Industrial production (9:15am) Jul Consumer sentiment (9:55am) Aug preliminary

18 Aug NAHB survey (10:00am) Aug

19 Aug CPI (8:30am) Jul Housing starts (8:30am) Jul

20 Aug FOMC minutes

21 Aug Initial claims (8:30am) w/e Aug 16 Manufacturing PMI (9:45am) Aug flash Existing home sales (10:00am) Jul Philadelphia Fed survey (10:00am) Aug Leading indicators (10:00am) Jul Auction 5-year TIPS (r) $16bn Announce 2-year note $28bn Announce 2-year FRN (r) $13bn Announce 5-year note $35bn Announce 7-year note $29bn

22 Aug

25 Aug Services PMI (9:45am) Aug flash New home sales (10:00am) Jul Dallas Fed survey (10:30am) Aug

26 Aug Durable goods (8:30am) Jul S&P/Case-Shiller HPI (9:00am) Jun, 2Q FHFA HPI (9:00am) Jun, 2Q Consumer confidence (10:00am) Aug Richmond Fed survey (10:00am) Aug Auction 2-year note $28bn

27 Aug Auction 2-year FRN (r) $13bn Auction 5-year note $35bn

28 Aug Initial claims (8:30am) w/e Aug 23 Real GDP (8:30am) 2Q second Pending home sales (10:00am) Jul KC Fed survey (11:00am) Aug Auction 7-year note $29bn

29 Aug Personal income (8:30am) Jul Chicago PMI (9:45am) Aug Consumer sentiment (9:55am) Aug final

32

Latin America Economic Calendar Monday Tuesday Wednesday Thursday Friday

4 Aug Argentina: Tax collection Jul Colombia: PPI Jul

5 Aug Argentina: Auto report Jul Brazil: FIPE CPI Jul Chile: Economic activity Jun: 1.9%oya Colombia: CPI Jul: 0.05% m/m CP Jul: 2.79%oya Mexico: Consumer confidence Jul: 91.9sa Central bank reserves (Prior week) Banamex economic survey Uruguay: CPI Jul: 0.60%m/m Unemployment rate Jun

6 Aug Brazil: Vehicle sales and production Jul Colombia: CPI core Jul

7 Aug Brazil: IGP-DI Jul Chile: Trade balance Jul Mexico: CPI Jul: Headline: 0.25%m/m Core: 0.17%m/m Headline: 4.04%oya Core: 3.23%oya Peru: BCRP meeting

8 Aug Brazil: IPCA Jul 0.12% m/m 6.62% oya Chile: CPI Jul: 0.15%m/m CPI Jul: 4.41%oya Mexico: GFI May: 0.7%oya Nominal wages Jul: 4.2%oya Peru: Trade balance Jun

During the week: Chile: Auto report Jul Mexico: Auto report Jul 11 Aug Brazil: IGP-M 1st release Aug Mexico: Industrial production Jun Uruguay: Industrial production Jun

12 Aug Mexico: Central bank reserves (Prior week)

13 Aug Mexico: Banxico inflation report 2Q

14 Aug Brazil: Retail sales Jun Chile: BCCH meeting Colombia: BanRep minutes

15 Aug Argentina: CPI Jul Brazil: IGP-10 Aug Economic activity Jun Colombia: Retail sales Jun Industrial production Jun Peru: Economic activity Jun Unemployment rate Jul

During the week: Brazil: Job creation Jul Colombia: Consumer confidence Jul Mexico: Formal employment Jul 18 Aug Chile: GDP 2Q Current account 2Q

19 Aug Argentina: Unemployment rate 2Q Brazil: IGP-M 2nd preview Aug Colombia: Trade balance Jun Outstanding loans Jun Mexico: Central bank reserves (Prior week)

20 Aug Argentina: Economic activity Jun Brazil: IPCA-15 Aug Mexico: Banamex economic survey

21 Aug Argentina: Consumer confidence Aug Brazil: Unemployment rate Jul Mexico: Economic activity index Jun GDP 2Q

22 Aug Brazil: Current account balance Jul FDI Jul Mexico: Unemployment rate Jul CPI Aug 1H

During the week: Brazil: Tax collection Jul 25 Aug Brazil: Consumer confidence Aug Mexico: Retail sales Jun Current account 2Q Peru: GDP 2Q

26 Aug Brazil: BCB credit report Jul Mexico: Central bank reserves (Prior week)

27 Aug Brazil: PPI manufacturing Jul Mexico: Trade balance Jul

28 Aug Brazil: IGP-M Aug Budget balance Jul

29 Aug Argentina: Industrial production Jul Construction activity Jul Brazil: GDP 2Q Net debt % of GDP Jul Nominal budget balance Jul Primary budget balance Jul Chile: Manufacturing index Jul Unemployment rate Jul Retail sales Jul Colombia: Unemployment rate Jul BanRep meeting Mexico: Bank credit Jul

During the week: Colombia: Vehicle sales Jul Industrial confidence Jul Retail confidence Jul Link to Global Economics Calendar on J.P. Morgan Markets page

33

http://www.jpmm.com/research/content/publication/4287

Australia TOP

J.P. Morgan Forecasts - Economics and Commodities 13Q1A 13Q2A 13Q3A 13Q4A 14Q1A 14Q2A 14Q3E 14Q4E 15Q1E 15Q2E 15Q3E 15Q4E CY13A CY14E CY15E Long Term Economic (%, annualised growth) GDP 0.3 0.9 0.7 0.8 1.1 0.1 0.8 1.0 0.7 0.6 1.2 0.7 2.4 3.0 3.2 CPI 2.3 2.2 2.3 2.5 2.6 2.9 2.6 2.5 2.4 2.2 2.3 2.3 2.3 2.6 2.3 Currency A$/US$ (period end) 1.04 0.91 0.93 0.89 0.93 0.94 0.92 0.91 0.90 0.91 0.91 0.91 0.93 0.91 0.89 0.80 A$/US$ (period average) 1.04 0.99 0.92 0.93 0.90 0.93 0.93 0.92 0.91 0.91 0.91 0.91 0.97 0.92 0.91 0.80 Commodities (period average) Gold (US$ per ounce) 1,634 1,417 1,330 1,272 1,292 1,289 1,260 1,285 1,275 1,275 1,275 1,275 1,413 1,282 1,275 1,300 Silver (US$ per ounce) 30.2 23.2 21.5 20.8 20.5 19.6 21.5 21.8 22.0 22.0 22.0 22.0 23.9 20.8 22.0 17.5 Oil (WTI) (US$/bbl) 94 94 106 98 99 103 93 91 88 83 85 85 98 96 85 80 Aluminium (US$/lb) 0.91 0.83 0.81 0.80 0.78 0.82 0.84 0.84 0.86 0.86 0.86 0.86 0.84 0.82 0.86 1.00 Copper (US$/lb) 3.60 3.25 3.21 3.25 3.19 3.08 3.06 3.15 3.18 3.18 3.18 3.18 3.33 3.12 3.18 3.40 Lead (US$/lb) 1.04 0.93 0.95 0.96 0.95 0.95 1.03 1.07 1.02 1.02 1.02 1.02 0.97 1.00 1.02 0.91 Nickel (US$/lb) 7.87 6.79 6.33 6.31 6.64 8.37 8.39 9.98 10.89 10.89 10.89 10.89 6.82 8.35 10.89 8.16 Zinc (US$/lb) 0.92 0.84 0.84 0.86 0.92 0.94 0.93 0.94 1.02 1.02 1.02 1.02 0.87 0.93 1.02 0.91 Iron ore spot CFR (US$/t) 149 126 133 135 120 103 100 100 96 97 97 98 135 106 97 80 Iron Ore - Fines (USc/Fe%) 228 191 199 200 180 152 145 145 139 139 140 141 204 156 140 113 Iron Ore - Lump (USc/Fe%) 240 203 211 212 192 164 157 157 151 152 153 154 216 168 152 125 Coking Coal (US$/t) 165 172 145 165 143 120 120 125 130 130 135 140 162 127 134 160 Thermal Coal (US$/t) 92 86 77 82 78 73 75 77 77 78 78 79 84 76 78 85 Uranium (US$/lb) 42.6 40.5 36.0 35.1 35.3 29.9 40.2 45.6 50.9 51.3 51.6 51.9 38.6 37.7 51.4 60.0

Source: J.P. Morgan

This material is provided for information only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument. This material is not a research report, although it may refer to information and data contained in J.P. Morgan published research reports or models from all J.P. Morgan affiliated regions. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this publication must make its own independent decisions regarding any securities or financial instruments mentioned herein. Please refer to the most recent published research or model for complete information on the specific stocks mentioned in this publication, including important disclosures and analysts' certifications. © 2014 JPMorgan Chase & Co.

34

Analyst Focus List TOP

Asia Analyst Focus List

Open Trades (as of August 7, 2014 close)

Country OW UW

Sector OW UW China PetroChina Sun Art Retail Group Limited

Autos DongFeng Motor Co., Ltd.

India Sesa Sterlite Bharat Heavy Electricals (BHEL)

Basic Materials Tata Steel Ltd CSR Limited Indonesia Bank Danamon

Consumer Esprit Holdings

Malaysia Tenaga Maxis Berhad

Emerging Technology BYD Company Limited Lite-On Technology Corporation Philippines Ayala Land Globe Telecom

Financials Fubon Financial Holdings ANZ Banking Group

Singapore Far East Hospitality Trust

Infrastructure Weichai Power GS Engineering & Construction South Korea Hyundai Motor Company Hanjin Shipping Co Ltd

Oil and Gas PetroChina

Taiwan MediaTek Inc. ASUSTek Computer

Property Sun Hung Kai Properties Sino-Ocean Land Thailand KASIKORNBANK

SMID-Caps TAL Education Group VTech Holdings

Technology LG Display SPIL

Telecommunications 21Vianet Group Inc. Maxis Berhad

Transportation Pacific Basin Shipping Hanjin Shipping Co Ltd

Utilities & Power Equipment China Everbright International Shanghai Electric Group

Source: J.P. Morgan Country relative performance in US$ (MSCI AC Asia Pacific ex JP)

Source: J.P. Morgan, Bloomberg.

Sector relative performance in US$ (MSCI AC Asia Pacific ex JP)

Source: J.P. Morgan, Bloomberg.

Last Four Weeks’ Additions

Company Name BBG Ticker Analyst Name Rating Add Date Add Price Current Price Price Target LG Display 034220 KS Park, JJ OW 17-Jul-14 33750 33750.00 40000.00 SPIL 2325 TT Park, JJ UW 24-Jul-14 46.4 41.80 40.00 MediaTek Inc. 2454 TT Alvin Kwock OW 1-Aug-14 496.50 492.00 600.00 Pacific Basin Shipping 2343 HK Corrine Png OW 7-Aug-14 4.34 4.34 5.80 Source: J.P. Morgan, Bloomberg. Priced at Aug 07, 2014

35


Last Four Weeks’ Deletions

Company Name BBG Ticker Team Head Analyst Rating Removal Date Add Price Removal Date Price Price Target Wintek 2384 TT Park, JJ UW 16-Jul-14 10.4 11.95 7.00 TSMC 2330 TT Park, JJ OW 17-Jul-14 120 124.50 150.00 ASE 2311 TT Alvin Kwock OW 24-Jul-14 29.5 39.70 40.00 Singapore Airlines SIA SP Corrine Png OW 1-Aug-14 10.39 10.00 13.00 Singapore Airlines SIA SP James R. Sullivan OW 1-Aug-14 10.1 10.00 13.00 Source: J.P. Morgan, Bloomberg.

AFL – Country team stocks

All stock and market returns shown in local currency (LC) terms, and reflect performance since date added to the AFL. All aggregates include cumulative returns since inception of the AFL on September 2, 2013. Country AFL total aggregate returns are shown in US$ terms. Aggregate US$ return spread uses the MSCI AC Asia Pacific ex JP Index as the benchmark.

Country/Company Name BBG Ticker Analyst Name Country Rating1 Add Date Add Price Current

Price Price

Target1 Price Target

End Date

Abs. Perf Since Add

Date (%)

Spread Over MSCI Country

Index (%)2 PetroChina 857 HK Scott L Darling China OW 19-May-14 9.28 10.12 11.80 12/31/14 9.1 -2.2 Sun Art Retail Group Limited 6808 HK Shen Li, CFA China UW 19-May-14 9.98 9.63 8.60 6/30/15 -3.5 -14.8 Aggregate China performance 31.6 22.9 Sesa Sterlite SSLT IN Pinakin Parekh, CFA India OW 20-May-14 245.75 284.65 345.00 6/30/15 15.8 9.6 Bharat Heavy Electricals (BHEL) BHEL IN Sumit Kishore India UW 20-May-14 277.80 230.85 173.00 3/31/15 -16.9 -23.2 Aggregate India performance 84.1 89.1 Bank Danamon BDMN IJ Harsh Wardhan Modi Indonesia UW 24-Apr-14 4355.00 3800.00 3000.00 6/30/15 -12.7 -17.0 Aggregate Indonesia performance 45.3 46.5 Tenaga TNB MK Ajay Mirchandani Malaysia OW 19-May-14 12.20 12.10 16.50 8/31/15 -0.8 0.5 Maxis Berhad MAXIS MK Princy Singh Malaysia UW 2-Sep-13 6.87 6.59 5.25 6/30/15 -4.1 -11.5 Aggregate Malaysia performance 16.6 18.9 Ayala Land ALI PM Jeanette Yutan Philippines OW 19-May-14 32.50 31.40 36.00 12/31/14 -3.4 -3.8 Globe Telecom GLO PM Princy Singh Philippines UW 19-Feb-14 1778.00 1898.00 1520.00 12/31/14 6.7 -3.7 Aggregate Philippines performance -19.5 -17.9 Far East Hospitality Trust FEHT SP Joy Wang Singapore UW 19-Feb-14 0.80 0.86 0.80 6/30/14 6.9 -0.8 Aggregate Singapore performance -9.3 -11.4 Hyundai Motor Company 005380 KS Wan Sun Park Korea OW 19-May-14 233500.00 232000.00 310000.00 12/31/14 -0.6 -1.2 Hanjin Shipping Co Ltd 117930 KS Corrine Png Korea UW 19-May-14 6150.00 5800.00 3300.00 6/30/15 -5.7 -6.3 Aggregate South Korea performance -0.6 -1.1 MediaTek Inc. 2454 TT Alvin Kwock Taiwan OW 1-Aug-14 496.50 492.00 600.00 6/30/15 -0.9 -0.3 ASUSTek Computer 2357 TT Gokul Hariharan Taiwan UW 15-May-14 309.00 310.50 265.00 12/31/14 0.5 -3.2 Aggregate Taiwan performance 4.3 46.6 KASIKORNBANK KBANK TB Anne Jirajariyavech, CFA Thailand OW 8-Oct-13 177.50 218.00 230.00 12/31/14 22.8 18.2 Aggregate Thailand performance 14.6 -22.9 Average Country OW (US$)

Asia Pacific ex JP

10.5 10.9

Average Country UW (US$)

Asia Pacific ex JP

2.6 3.0 Aggregate Country (US$)3

Asia Pacific ex JP

7.8 8.3

1 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 2 – Spread over MSCI country indices except for Shanghai listed A-Shares which are spread over SHASHR. 3 - Spread over MSCI country index incorporates the impact of currency movements Source: Bloomberg, J.P. Morgan. Priced at Aug 07, 2014 (prices and price-related data based on current day's close) J.P Morgan’s Asia Analyst Focus List (AFL) is a selection of high-conviction stocks collaboratively chosen by each Country and Sector research team across Asia-Pacific. The AFL includes Overweight- and Underweight-rated stocks, Overweight having superior outperformance prospects in a team’s universe over the horizon of rating (6-12 months), and Underweight stocks having among the poorer relative performance prospects over the horizon of rating (6-12 months). The aim is to have one Overweight and one Underweight idea from each Research team in the AFL. Analysts can add or delete recommendations at any time and changes will be published, with the analyst’s rationale, on J.P. Morgan Markets. Please check J.P. Morgan Markets https://www.jpmorganmarkets.com for the most up-to- date AFL at any time, or contact your J.P. Morgan representative.

The Analyst Focus List is not a model portfolio. Please refer to specific company research for the fundamental investment thesis for each stock included in this list as well as the analysts’ complete views. If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice. Important disclosures, including price charts for all companies under coverage for at least one year, are available through the search function on J.P. Morgan's website https://jpmm.com/research/disclosures. Total returns exclude commissions. Past results are not indicative of future performance.

Additional information available upon request.

Japanese stocks included in the Asia AFL are chosen according to the Asia AFL methodology above, independent of the Japanese Analyst Focus List (Japan AFL). Japan stocks are not included at the Country Team level, but may appear in Sector Team selections. To view the Japan AFL and its methodology, click here: Japan Analyst Focus List (Japan AFL)

36

https://www.jpmorganmarkets.com/

https://jpmm.com/research/disclosures

https://markets.jpmorgan.com/CFP_Research/CFP?page=analyst_page&analystId=U407387

Japan Analyst Focus List

Most Preferred Stocks Over the Next 3 Months Code Company Code Company 2587 Suntory Beverage & Food 8031 Mitsui & Co 3391 Tsuruha 8411 Mizuho Financial Group 4555 Sawai Pharmaceutical 8795 T&D Holdings 5020 JX Holdings 8801 Mitsui Fudosan 5713 Sumitomo Metal Mining 9022 Central Japan Railway 6753 Sharp 9684 Square Enix Holdings 6770 Alps Electric 9962 Misumi 7003 Mitsui Engineering & Shipbuilding 066570 KS LG Electronics 7261 Mazda Motor

Source: J.P. Morgan.

Least Preferred Stocks Over the Next 3 Months Code Company Code Company 1812 Kajima 7262 Daihatsu Motor 2875 Toyo Suisan Kaisha 7751 Canon 4523 Eisai 8267 Aeon 5214 Nippon Electric Glass 8304 Aozora Bank 5232 Sumitomo Osaka Cement 8698 Monex Group 5423 TOKYO STEEL MFG 9064 Yamato Holdings 6758 Sony 9531 Tokyo Gas 6806 Hirose Electric 9697 CAPCOM 6841 Yokogawa Electric 006360 KS GS Engineering & Construction

Source: J.P. Morgan.

37


Japan Analyst Focus List

Sector Analyst Most/Least Code Stock Rating Add Date Add

Price Current

Price Price

Target

Price Target

End Date

AFL Abs. Perf

since Add Date

(%)

Return Relative

to Analyst

Coverage (%)

Infrastructure Hirokazu Anai Most 8801 Mitsui Fudosan OW 6/5/2013 2769 3269 3,700 Dec-15 18.0 1.9

Least 1812 Kajima N 8/27/2013 375 492 430 Dec-14 31.2 -15.5

Food and Toiletry Ritsuko Tsunoda

Most 2587 Suntory Beverage & Food OW 1/29/2014 3400 3990 4,200 Dec-15 17.4 4.3

Least 2875 Toyo Suisan Kaisha N 6/3/2014 3115 3180 3,100 Dec-15 2.1 2.5 Pharmaceutical Masayuki Onozuka

Most 4555 Sawai Pharmaceutical OW 8/27/2013 6470 5990 8,300 Dec-15 -7.4 -16.6

Least 4523 Eisai UW 2/21/2014 3947 4348 3,300 Dec-14 10.2 -7.5

Machinery Toru Nakahashi

Most 9962 Misumi OW 6/3/2014 2730 3205 3,600 Dec-15 17.4 13.7

Least 6841 Yokogawa Electric UW 6/3/2014 1266 1324 1,160 Dec-15 4.6 -0.9 Electronic Component Masashi Itaya

Most 6770 Alps Electric OW 8/6/2014 1443 1477 1,720 Dec-15 2.4 2.4

Least 6806 Hirose Electric N 6/3/2014 14610 13700 13,800 Dec-15 -6.2 10.6

Precision/SPE Hisashi Moriyama

Least 7751 Canon UW 2/21/2014 3123 3383 3,250 Dec-14 8.3 1.5 Retail Dairo Murata

Most 3391 Tsuruha OW 2/21/2014 4870 5980 6,300 Dec-14 22.8 17.6

Least 8267 Aeon UW 3/5/2014 1226 1153 1,050 Dec-14 -6.0 13.1

Financial Natsumu Tsujino

Most 8795 T&D Holdings OW 6/3/2014 1347 1257 2,180 Dec-14 -6.7 -0.8

Least 8698 Monex Group N 6/3/2014 364 307 400 Dec-15 -15.7 9.8 Games/Internet Haruka Mori

Most 9684 Square Enix Holdings OW 6/3/2014 1647 2232 2,400 Dec-15 35.5 33.3

Least 9697 CAPCOM N 10/8/2013 1878 1904 1,700 Dec-15 1.4 -58.2

Chemicals and Energy/Utilities Yuji Nishiyama

Most 5020 JX Holdings OW 6/18/2014 533 525 690 Dec-15 -1.5 -3.6

Least 9531 Tokyo Gas N 6/3/2014 578 584 570 Dec-15 1.0 2.1

Glass and Display Industry Narci Chang

Most 6753 Sharp OW 2/21/2014 328 306 430 Dec-15 -6.7 -13.9 Least 5214 Nippon Electric Glass UW 2/21/2014 457 568 380 Dec-15 24.3 -17.0 Bank Josh Klaczek Most 8411 Mizuho Financial Group OW 2/21/2014 215 197 265 Dec-14 -8.5 3.0 Least 8304 Aozora Bank N 2/21/2014 295 344 310 Dec-14 16.6 -28.1 Shipbuilding & Plant Engineering Sokje Lee

Most 7003 Mitsui Engineering & Shipbuilding OW 2/21/2014 207 204 320 Dec-14 -1.4 13.4 Least 006360 KS GS Engineering & Construction UW 6/3/2014 32800 37650 27000 Dec-14 14.8 -30.9 Transportation Dan Lu Most 9022 Central Japan Railway OW 5/20/2014 12755 14305 17000 Dec-15 12.2 -1.2 Least 9064 Yamato Holdings N 7/3/2014 2090 2125 1800 Dec-15 1.7 -0.4 Consumer Electronics JJ Park Most 066570 KS LG Electronics OW 6/3/2014 76300 78300 90000 Jun-15 2.6 -6.0 Least 6758 Sony N 2/21/2014 1766 1787 1500 Jun-15 1.2 1.2 Autos & Auto Parts Akira Kishimoto Most 7261 Mazda Motor OW 4/4/2014 2395 2449 3400 Dec-15 2.3 -2.2 Least 7262 Daihatsu Motor UW 7/3/2014 1753 1766 1600 Dec-15 0.7 -0.3 Trading Companies Kazuhisa Mori Most 8031 Mitsui & Co OW 3/4/2014 1564 1669 1940 Dec-14 6.7 0.9 Least 5423 TOKYO STEEL MFG UW 7/9/2014 530 611 550 Dec-15 15.3 -17.4 Nonferrous Metals, Other Basic Materials Shogo Umeda

Most 5713 Sumitomo Metal Mining OW 7/14/2014 1722 1691 2100 Dec-15 -1.8 0.5 Least 5232 Sumitomo Osaka Cement UW 7/14/2014 377 348 360 Dec-15 -7.7 5.4 Source: Bloomberg, J.P. Morgan Note: Share prices as of August 7, 2014.

The Japan Analyst Focus List (Japan AFL) comprises Most Preferred and Least Preferred stocks over the next three months, selected by sector analysts. Analysts select their Most Preferred stocks from stocks in their coverage that are rated Overweight, and their Least Preferred stocks from stocks that are rated Underweight, although Least Preferred stocks may also include stocks rated Neutral that the covering analyst thinks will underperform the sector in the near term. The Japan AFL ordinarily includes each analyst’s Most Preferred stock and Least Preferred stock as of the time of selection, but this does not constitute a pair-trade recommendation. Constituents of the Japan AFL may be changed in company reports published by analysts or in the Best of Japan periodic report published by the Japan Equity Research Department. For report details, please visit J.P. Morgan’s website at https://www.jpmorganmarkets.com, or contact your J.P. Morgan representative. The Japan Analyst Focus List is not a model portfolio. Please refer to the latest published report on each constituent stock for fundamental analysis and investment analysis. Stocks may be removed from the Japan AFL without prior notification when restrictions have been placed on them, or if required by regulatory authorities, or as dictated by J.P. Morgan’s internal policies. Please refer to J.P. Morgan’s research website at https://jpmm.com/research/disclosures for share price charts and other important disclosures. Total returns exclude commissions. Past results are not indicative of future performance. Additional information is available upon request.

38

https://www.jpmorganmarkets.com/


U.S. Equity Analysts' Focus List: Current Snapshot The U.S. Equity Analyst Focus List is a selection of stocks, chosen by individual analysts, that they believe will provide an annualized total return in excess of +/-20%. The Focus List can include Overweight- and Underweight-rated stocks, provided they meet the return criteria (a positive return for Overweights and a negative return for Underweights). Performance Relative to Benchmark indicates the relative performance to the index in which the stock trades (eg, Apple – NASD). The "Target beginning date" may differ from the "Focus List add date" because of changes to the target price made while the stock was on the Focus List.

The Analyst Focus List is not a model portfolio. Please refer to specific company research for the fundamental investment thesis for each stock included in this list as well as the analysts’ complete views. If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice. Important disclosures, including price charts for all companies under coverage for at least one year, are available through the search function on J.P. Morgan's website https://jpmm.com/disclosures/company . Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request. If you have questions regarding stocks on the Focus List, please contact your salesperson or the covering analyst.

Mkt. Cap. ($MMs)

Focus List

Focus List Prev.Close Focus List % Change

Performance Relative

Target Beginning Target

Company Name Ticker Analyst Rating 8/7/2014 Add Date Add Price 8/7/2014

Target Price Since Add to Benchmark Date End Date

American Airlines AAL Jamie Baker OW $26,543 12/11/13 $24.88 $36.86 $55.50 48.15% 39.88% Jul-14 Dec-14

Cliffs Natural Resources CLF Michael F. Gambardella OW $2,618 04/01/13 $19.01 $17.09 $18.00 -10.10% -26.31% Jul-14 Dec-15

Compania de Minas Buenaventura BVN John Bridges OW $3,371 08/05/14 $11.85 $12.23 $18.00 3.21% 3.90% Aug-14 Dec-14 CVS Caremark Corp. CVS Lisa Gill OW $88,145 08/01/11 $36.35 $76.11 $91.00 109.38% 89.08% Aug-14 Dec-15 General Motors GM Ryan Brinkman OW $53,131 12/11/13 $40.90 $33.11 $50.00 -19.05% -24.97% Apr-14 Dec-14 Gilead Sciences GILD Geoff Meacham OW $139,149 08/16/11 $19.43 $92.05 $110.00 373.87% 331.10% Jul-14 Dec-15 Illumina, Inc. ILMN Tycho W. Peterson OW $22,190 01/17/14 $125.26 $159.18 $230.00 27.08% 24.32% Jul-14 Dec-15 Las Vegas Sands Corp LVS Joseph Greff OW $53,740 08/15/11 $43.59 $66.73 $83.00 53.09% 26.27% Jul-14 Dec-14 Navistar Int'l NAV Ann Duignan OW $2,794 03/08/13 $31.89 $34.35 $44.00 7.71% -9.18% Jun-14 Dec-14 NCR Corporation NCR Paul Coster OW $5,130 01/13/14 $35.52 $30.52 $46.00 -14.08% -17.27% Jul-14 Dec-15 Och-Ziff Capital Management OZM Ken Worthington OW $6,138 01/06/12 $8.45 $12.96 $17.00 53.37% 17.48% Aug-14 Dec-14 The Carlyle Group CG Ken Worthington OW $10,067 06/16/14 $32.13 $30.59 $45.00 -4.79% -5.11% Jun-14 Dec-15 Verizon Communications VZ Philip Cusick OW $201,666 02/27/14 $46.35 $48.65 $59.00 4.96% 3.17% Jul-14 Dec-15 Source: J.P. Morgan estimates and Bloomberg data.

Last Four Weeks' Additions

Mkt. Cap. ($MMs) Focus List Focus List Prev.Close Focus List

Company Name Ticker Analyst Rating 8/7/2014 Add Date Add Price 8/7/2014 Target Price Compania de Minas Buenaventura BVN John Bridges OW $3,371 08/05/14 $11.85 $12.23 $18.00 Source: J.P. Morgan estimates and Bloomberg data.

39


https://jpmm.com/disclosures/company

Your feedback can help us to make the FTM better. Please take a moment to tell us what you think. Click here to send comments Click here to unsubscribe

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail [email protected]. Analyst Certification: As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that: (1) all of the views expressed in the 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 in the report. For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Research excerpts: This note includes excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please contact your salesperson or the covering analyst’s team or visit www.jpmorganmarkets.com. Other Disclosures: All research reports made available to clients are simultaneously available on our client website, J.P. Morgan Markets. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your sales representative. Options related research: If the information contained herein regards options related research, such information is available only to persons who have received 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 at http://www.optionsclearing.com/publications/risks/riskstoc.pdf Legal Entities Disclosures U.S.: JPMS is a member of NYSE, FINRA, SIPC and the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC. U.K.: JPMorgan Chase N.A., London Branch, is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and to limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from J.P. Morgan on request. J.P. Morgan Securities plc (JPMS plc) is a member of the London Stock Exchange and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England & Wales No. 2711006. Registered Office 25 Bank Street, London, E14 5JP. South Africa: J.P. Morgan Equities South Africa Proprietary Limited is a member of the Johannesburg Securities Exchange and is regulated by the Financial Services Board. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong and/or J.P. Morgan Broking (Hong Kong) Limited (CE number AAB027) is regulated by the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan Australia Limited (JPMAL) (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (JPMSAL) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by ASIC and is a Market, Clearing and Settlement Participant of ASX Limited and CHI-X. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited (Corporate Identity Number - U67120MH1992FTC068724), having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz - East, Mumbai – 400098, is a member of the National Stock Exchange of India Limited (SEBI Registration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI Registration Number - INB 010675237/INF 010675237) and is regulated by Securities and Exchange Board of India. Telephone: 91-22-6157 3000, Facsimile: 91-22-6157 3990 and Website: www.jpmipl.com. For non local research reports, this material is not distributed in India by J.P. Morgan India Private Limited. Thailand: This material is issued and distributed in Thailand by JPMorgan Securities (Thailand) Ltd., which is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission and its registered address is 3rd Floor, 20 North Sathorn Road, Silom, Bangrak, Bangkok 10500. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the OJK a.k.a. BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines Inc. is a Trading Participant of the Philippine Stock Exchange and a member of the Securities Clearing Corporation of the Philippines and the Securities Investor Protection Fund. It is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is a member of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission. Singapore: This material is issued and distributed in Singapore by or through J.P. Morgan Securities Singapore Private Limited (JPMSS) [MCI (P) 199/03/2014 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by the MAS. This material is provided in Singapore only to accredited investors, expert investors and institutional investors, as defined in Section 4A of the Securities and Futures Act, Cap. 289. Recipients of this document are to contact JPMSS or JPMCB Singapore in respect of any matters arising from, or in connection with, the document. Japan: JPMorgan Securities Japan Co., Ltd. is regulated by the Financial Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission in Malaysia.

40

mailto:[email protected]?subject=Feedback%20on%20International%20FTM!

mailto:[email protected]?subject=Unsubscribe%20to%20International%20FTM-%20List%20name:%20Rosato%20Jr.,%20Nicholas%20-%20International%20FTM




http://www.jpmorganmarkets.com/

http://www.optionsclearing.com/publications/risks/riskstoc.pdf

http://www.jpmipl.com/

Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number 35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of Saudi Arabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE. Country and Region Specific Disclosures U.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMS plc. Investment research issued by JPMS plc has been prepared in accordance with JPMS plc's policies for managing conflicts of interest arising as a result of publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. This report 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 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to "wholesale clients" only. This material does not take into account the specific investment objectives, financial situation or particular needs of the recipient. The recipient of this material must not distribute it to any third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the term "wholesale client" has the meaning given in section 761G of the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities plc, Frankfurt Branch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end data from two months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivative warrants, callable bull bear contracts 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. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case of share trading, and that a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorgan Securities Japan Co., Ltd., will be receiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by the commission rate which was individually agreed between JPMorgan 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 Financial Instruments Firms Association and Japan 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 the securities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures section above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the public" as determined in accordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein 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. Brazil: Ombudsman J.P. Morgan: 0800-7700847 / [email protected].

"Other Disclosures" last revised June 21, 2014.

This message is provided for information purposes only and should be read in conjunction with the latest research report on this company. The information is believed to be reliable, but J.P. Morgan does not warrant its completeness or accuracy. Opinions, estimates and assumptions constitute our judgment as of the date hereof and are subject to change without 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. All J.P. Morgan research is subject to a standard form global hedge clause as well as company specific disclosures included on all research and incorporated herein by reference. The recipient of this material must not distribute it to any third party without the prior written consent of J.P. Morgan. Additional information is available upon request © 2014 JPMorgan Chase & Co.

41

top stories send me your feedback! inside this report

Documents