Global Equity Research 13 June 2014 Top Stories Send me your feedback! GLOBAL Stock Guide ▼Ipsen (IPN.PA, N – €34.75) (Richard Vosser), Europe J.P. Morgan Markets Downgrading to Neutral: TASQ (tasquinimod) Overall Survival benefit a bridge too far Since the start of 2013 Ipsen shares have risen 47%, as the value of the base business and Daily Economic Briefing significant growth potential from Somatuline have been better appreciated by investors. Regional First to Market
UK Banks (Raul Sinha), Europe Prefer domestic UK and pure play EM banks over HSBC & STAN Inside this Report: We have been Neutral on StanChart and HSBC in the context of European banks since May Research by Region and Sept 2013, respectively, driven by the recovery in Europe as well as the prospect of negative EPS revisions in a weak EM revenue environment. Key Rating, Price Target & EPS Changes European Technology (Sandeep Deshpande), Europe What to expect at the J.P. Morgan Technology CEO Conference next week - ALERT Market at a Glance We have 36 hardware and software companies attending the conference: Several Market Monitor companies (such as SAP, STMicro, ARM, Dassault, Hexagon, and Capgemini) have recently hosted Capital Markets Days, and we look forward to hearing more details on their updated Economics Calendar strategies and financial plans. J.P. Morgan Forecasts - Economics and Commodities Tokyo Signals, Noise & Strategy - Vol 20 (Patrick Rial, CFA), Japan Are You Paying Attention? Analyst Focus List “Like three days passing / cherry blossoms gone, unseen / how I see this world” – Ryota Oshima, 18th century haiku poet. Today’s Events MedTech - 2014 CEO Asian shipbuilding industries (Sokje Lee), Asia Pacific Conference Call: New shipping economics in eco-ship epoch Conference Call Series: Boston Scientific The ways of ship investment are changing. (BSX) at 11am ET/ 16:00 UK, DIAL-IN: 888-748-4893 or 517-319-9536;
Indonesia Automobiles (Aditya Srinath, CFA), Asia Pacific Passcode: MEDTECH Engine Check: Datsun Go+ completes the LCGC Competitive Landscape Conference Call: Natural Gas Outlook in Low-cost green cars (LCGCs) now account for 13% of 1ndonesian 4W sales, taking share the Northeast at 2:00pm ET, DIAL-IN: initially from MPVs. 888-324-7508 (US); 1-773-756-4709 (Outside US); Passcode: MLP Food Retail in Emerging Markets (Andrea Teixeira, CFA), Latin America Favor Retailers that Expand Profitably. Picks are: Walmex, CBD, Magnit, Lenta, Savola Corporate Marketing & BIM In the second annual edition of this proprietary analysis, in collaboration with six of our ANSYS, INC. (LOS ANGELES, PASADENA) (TORONTO) Global consumer equity research teams, including LatAm, Middle East, Poland, Russia, DCC Iroko Pharmaceuticals (Private) (NEW South Africa, and Turkey teams. YORK) WILLIAMS-SONOMA, INC. (PRINCETON) ▲Advantest (6857) (N – ¥1,224) (Hisashi Moriyama), Japan Order Trend Strong, Underweight Rating No Longer Justified; Upgrading to Neutral We stated in our June 11 report on SPE sector telephone interviews that orders at Advantest are tracking well ahead of plan.
Q-Strategy Help in EM (Sanaya Tavaria), CEEMEA Stock screens that combine thematic macro and quant EM equities are up 10% in the past three months, outperforming DM by 6%.
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
Global Published Research áTOP
Europe
Recommendation Changes Price Target and Estimate Changes, continued ▲Dufry (DUFN VX – Neutral) (Jaafar Mestari) Standard Chartered (STAN LN – Neutral) Steady-state was the enemy: upgrading to Neutral following The (Raul Sinha) Nuance Group acquisition UK Banks: Prefer domestic UK and pure play EM banks over HSBC & STAN
▼Ipsen (IPN FP – Neutral) Storebrand (STB NO – Overweight) (Richard Vosser) (Daniel Do-Thoi) Downgrading to Neutral: TASQ (tasquinimod) Overall Survival benefit Updating numbers and highlighting paid-up policy conversions a bridge too far as potential upcoming catalyst Price Target and Estimate Changes Results and Company Views Active Biotech (ACTI SS – Underweight) 3i (III LN – Overweight) (James D Gordon) (Christopher Brown) Reiterating our UW recommendation ahead of TASQ Phase III read- Action site visit underlines its potential - we believe a doubling of out, which looks likely to disappoint the current value is not unreasonable
Atkins (WS) (ATK LN – Overweight) Asia Resource Minerals PLC (ARMS LN – Neutral) (Jolyon S Wellington) (Ben Defay) FY14 results in line with expectations, showing organic growth and Change of CEO; position relocated to Indonesia - ALERT strategic improvement Fenner (FENR LN – Neutral) Dufry (DUFN VX – Neutral) (Andrew J Wilson) (Jaafar Mestari) AEP Capital Markets Day Feedback - Growth and margin targets Steady-state was the enemy: upgrading to Neutral following The the headline takeaways - ALERT Nuance Group acquisition Halma (HLMA LN – Neutral) HSBC Holdings plc (HSBA LN – Neutral) (Andrew J Wilson) (Raul Sinha) FY14 Results - First Take - ALERT UK Banks: Prefer domestic UK and pure play EM banks over HSBC & STAN Sector Research Ipsen (IPN FP – Neutral) European Technology (Richard Vosser) (Sandeep Deshpande) Downgrading to Neutral: TASQ (tasquinimod) Overall Survival benefit What to expect at the J.P. Morgan Technology CEO Conference a bridge too far next week - ALERT
PZ Cussons (PZC LN – Neutral) UK Non Life (Celine Pannuti, CFA) (Andreas van Embden) FY14 growth despite tough markets but hard to repeat in FY15. PT Update on UK Motor insurance regulation from CMA - ALERT cut to 350p
2
Asia
Price Target and Estimate Changes Strategy
KPJ Healthcare Berhad (KPJH.KL – Neutral), Malaysia Emerging Markets Strategy Dashboards, Global (Simone Yeoh) (Adrian Mowat) Earnings downgrades stabilizing but consistency in performance is Identifying change and providing perspective on key economic key from here; prefer IHH (OW) and equity market data of global emerging markets
PT Tower Bersama Infrastructure Tbk (TBIG.JK – Overweight), Q-Strategy Help in EM, Global Indonesia (Sanaya Tavaria) (Princy Singh) Stock screens that combine thematic macro and quant Management meeting: Maintaining growth guidance, M&A focus continues Economics Reliance Power (RPOL.BO – Underweight), India (Sumit Kishore) A par for the course May CPI print, India (Sajjid Z Chinoy) What's in the price? April IP delivers a housewarming gift to the new Results and Company Views government, India (Sajjid Z Chinoy) Bank of China - H (3988.HK – Overweight), China (Katherine Lei) Bank of Korea on hold, with comments in line with our China Summit 2014: Feedback from the Conference expectation, South Korea (Min Joo Kang) Belle International Holdings Ltd. (1880.HK – Neutral), China (Ebru Sener Kurumlu) BI holds; focus still on current account balance, Indonesia Footwear drag continues (Benjamin Shatil)
Cathay Pacific (0293.HK – Overweight), Hong Kong Import prices declined in May, South Korea (Corrine Png) (Min Joo Kang) Pax loads improved in May, cargo demand strengthened on US routes; stay OW May new loans higher than expected; signs of rebalancing between bank loans and non-bank financing, China China Hongqiao Group (1378.HK – Neutral), China (Grace Ng) (Daniel Kang) China Summit 2014: Feeback from the Conference What’s not to like about India’s May trade deficit?, India (Sajjid Z Chinoy) IJM Corporation (IJMS.KL – Overweight), Malaysia (Hoy Kit Mak) Sector Research Introducing the IJM Corp/IJM Land arbitrage/intrinsic value calculator Asian Refining update, Asia Pacific IJM Corporation (IJMS.KL – Overweight), Malaysia (Samuel Lee, CFA) (Hoy Kit Mak) Weak middle distillates have led GRMs lower in 2Q Scomi investment finally pays off - ALERT Asian shipbuilding industries, South Korea Infosys (INFY.BO – Overweight), India (Sokje Lee) (Viju K George) New shipping economics in eco-ship epoch Revenue growth recovery will likely get delayed due to the management change; this could be a long haul for Infosys Hong Kong Property, Hong Kong (Cusson Leung) Infosys (INFY.BO – Overweight), India Falling land prices to sustain development returns (Viju K George) Vishal Sikka will be the next CEO of Infosys; this could likely be a Hong Kong Property, Hong Kong long haul even if he's the right man for the job (Cusson Leung) Intensifying primary launches; stay positive on developers Lenovo Group Limited (0992.HK – Overweight), China (Gokul Hariharan) Indonesia Automobiles, Indonesia China Summit 2014: Feedback from the conference – PC profit (Aditya Srinath, CFA) growth and Moto share gains remain the upside catalysts Engine Check: Datsun Go+ completes the LCGC Competitive Landscape Namchow Chemical Industrial Co. (1702.TT, – Not Covered), Taiwan Know Your Power, India (Andre Chang, CFA) (Sumit Kishore) Company Visit Note Election euphoria does not translate into demand growth or PLF improvement in May
3
Promise Inc(3057.TW, – Not Covered), Taiwan Thailand O&G, Thailand (Gokul Hariharan) (Scott L Darling) Riding the strong big data trend - Company Visit Note Diesel prices cut by 14 satang; slightly negative for PTT Plc
SP Setia (SETI.KL – Neutral), Malaysia (Simone Yeoh) 1HFY14 results: Profits below expectations, but pre-sales in line
Weichai Power (2338.HK – Overweight), China (Karen Li, CFA) A step forward to become a world champion with control in KION obtained
Australia
Publications Publications, continued
Goodman Group (GMG, OW – A$5.19) (Richard Jones, CFA) Leighton Holdings Limited (LEI, UW – A$19.81) (Anthony Japan projects lift FY14 EPS guidance to 7% Passe-de Silva) Taking steps on path to strategic change but plenty of Seven Group Holdings (SVW, N – A$7.70) (Anthony Passe-de uncertainty remains Silva) Scheme fails to bridge nexus to oil & gas but Group keeps looking Strategy Weekender (Paul Brunker) Asian investors on Aussie equities: more puzzled than hurt Mineral Resources Limited (MIN, UW – A$9.70) (Anthony Passe-de Silva) Australia Economic Update (Ben Jarman) Questioning MIN's step into AQA battle Labour supply ebbs further in Australia
Newcrest Mining (NCM, N – A$9.71) (Mark Busuttil) New Zealand Economic Update (Ben Jarman) Higher than expected depreciation expense sees downgrades to Wheeler of fortune FY15 NPAT estimate Ocado (Borja Olcese) Ramsay Health Care (RHC, N – A$46.80) (Steven Wheen) A unique and disruptive business model. Initiating coverage with Acquisition now a fait accompli an Overweight rating and 500p PT
Japan
Recommendation Changes Results and Company Views, continued Nintendo (7974) (Underweight) Advantest (6857) (Neutral) ▲ (Haruka Mori) (Hisashi Moriyama) E3 Report (3): Takeaways from Analyst Briefing, Tour of E3 Booth Order Trend Strong, Underweight Rating No Longer Justified; - ALERT Upgrading to Neutral Yamato Holdings (9064) (Neutral) Price Target and Estimate Changes (Dan Lu) Nikkei Reports Eight-company Joint Trucking Initiative - ALERT Advantest (6857) (Neutral) (Hisashi Moriyama) Order Trend Strong, Underweight Rating No Longer Justified; Strategy Upgrading to Neutral Tokyo Signals, Noise & Strategy - Vol 20 (Patrick Rial, CFA) Results and Company Views Are You Paying Attention? Kirin Holdings (2503) (Overweight) (Ritsuko Tsunoda) Sector Research The World Cup Is Finally Here—Will the Spotlight Fall on Kirin? Electronic Components Update (Masashi Itaya) May Sales: Rohm
4
LatAm
Recommendation, Price Target and Estimate Strategy, continued Changes Q-Strategy Help in EM Gran Tierra Energy (GTE – Overweight) (Sanaya Tavaria) (Caio M Carvalhal) Stock screens that combine thematic macro and quant We Continue Positive on Peruvian Operations and Reinforce OW and Top Pick The Earnings Landscape (Robert Smith) EPS revisions ratios for all the major regions and markets LatAm Company and Sector News Economics Food Retail in Emerging Markets (Andrea Teixeira, CFA) Brazil Favor Retailers that Expand Profitably. Picks are: Walmex, CBD, (Cassiana Fernandez) Magnit, Lenta, Savola & BIM The blues remains the same
Strategy Credit Research
Brazil Equity Strategy Presentation Gildemeister (AUTGIL - Underweight) (Emy Shayo Cherman) (Daniel Sensel) Binary Outcome 1Q14 review: "You've got a fast car. Is it fast enough so you can fly away?" - We don't think so Emerging Markets Strategy Dashboards (Adrian Mowat) Marfrig (MARFRI - Neutral) Identifying change and providing perspective on key economic and (Daniel Sensel) equity market data of global emerging markets The '20s Look Attractive After the Issuance of the New '19s and the Launch of the Tender for the '21s JPMQ : Global Pairs Trading Ideas (Robert Smith)
Price Reactions To Earnings Announcements (Robert Smith) Latest True Market Surprises For Global Stocks
CEEMEA
Strategy Economics, continued
Emerging Markets Strategy Dashboards Turkey (Adrian Mowat) (Yarkin Cebeci) Identifying change and providing perspective on key economic and CAD narrows, financing improves in April equity market data of global emerging markets Commodities and FX Q-Strategy Help in EM (Sanaya Tavaria) Stock screens that combine thematic macro and quant Natural Gas Weekly & Storage Recap (Scott C. Speaker) Price action suggests gas market recognition of lower end- Economics October storage trajectory potential
Middle East and North Africa Today (Brahim Razgallah)
5
US
Recommendation Changes Results and Company Views, continued
▲Accuray (ARAY – Overweight) Nektar Therapeutics (NKTR – Overweight) (Tycho W. Peterson) (Cory Kasimov) Upgrading to Overweight on Continued Order Momentum and OIC Panel Provides Some Welcome Relief for Naloxegol... We Attractive Valuation; PT Goes to $12 Anticipate Approval by the 9/16 PDUFA - ALERT
▼lululemon athletica inc. (LULU – Neutral) Santander Consumer (SC) (SC – Overweight) (Brian J. Tunick) (Richard Shane) SC On-Site Visit - ALERT Downgrading to Neutral; Decelerating Comps, Rising Investments, and Margin Pressures Pushing Us to the Sidelines Strategy Price Target and Estimate Changes JPMQ: Pairs Trade Model (Dubravko Lakos-Bujas) Accuray (ARAY – Overweight) (Tycho W. Peterson) Pair Trade Close Alert (UAL US / LUV US) Upgrading to Overweight on Continued Order Momentum and Attractive Valuation; PT Goes to $12 Sector Research
DigitalGlobe, Inc. (DGI – Neutral) Clinical Laboratories (Paul Coster, CFA) (Lisa C. Gill) Tweaking Estimates; Establishing YE15 Price Target of $34.50 Another Positive Month for Office Visits in May - ALERT
Intel (INTC – Overweight) Communications Equipment & Data Networking (Christopher Danely) (Rod Hall, CFA) Intel Hikes 2Q14 and 2014 Guidance on PC Demand Upside. Raising Hall Monitor: June 2014 Estimates and Reiterate Overweight EE/MI lululemon athletica inc. (LULU – Neutral) (C. Stephen Tusa, Jr CFA) (Brian J. Tunick) Takeaways from JPM China Conference: The Year of the Duck Downgrading to Neutral; Decelerating Comps, Rising Investments, and Margin Pressures Pushing Us to the Sidelines Energy Infrastructure/MLPs (Jeremy Tonet, CFA) Synaptics Inc. (SYNA – Overweight) Weekly Comp Tables (Paul Coster, CFA) Adjusting Model for Renesas; Price Target Goes to $98.00 JPM Trust Tracker (Richard Shane) Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA – Overweight) May 2014 Preview (Brian J. Tunick) Takeaways from ULTA HQ Visit Med Utilization Tracker (Justin Lake) Results and Company Views Doc Office Visits +1.2% in May Medical Utilization Tracker bluebird bio (BLUE – Overweight) (Michael Weinstein) (Cory Kasimov) Physician Office Visits Up 1.2% in May Previewing Initial Look at LentiGlobin Gene Therapy Data in Beta- Thalassemia at EHA This Weekend Monthly Tire Review: June 2014 (Ryan Brinkman) C.R. Bard Inc. (BCR – Neutral) Industry Fundamentals Strong: Expect Slower But Still Solid (Michael Weinstein) Growth As Shipments Cycle Tougher Comps Panel Support is Unanimous; Modest Efficacy Leaves Door Open for Competition - ALERT U.S. Asset Managers (Kenneth B. Worthington, CFA) CONSOL Energy (CNX – Overweight) May 2014 Monthly Performance/Sales: Weaker Sales MoM (ex. (John Bridges, CFA, ACSM) MM) Driven by Lower US Equity Sales Everything's Relative; but Compared with the Coal Sector, this Duckling is Now a Swan. U.S. Asset Managers (Kenneth B. Worthington, CFA) LabCorp (LH – Neutral) Weekly Fund Flows: Jun 05 - Jun 11. Fixed Income and Equity (Lisa C. Gill) Up, MM Funds Show Outflows LH Week Day 5: Conference Call Recap
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Europe Equity Research 13 June 2014
▼ Neutral Previous: Overweight Ipsen IPN.PA, IPN FP Downgrading to Neutral: TASQ (tasquinimod) Overall Price: €34.75 ▼ Price Target: €36.00 Survival benefit a bridge too far Previous: €38.00
Since the start of 2013 Ipsen shares have risen 47%, as the value of the base European Healthcare (Pharma, business and significant growth potential from Somatuline have been better Biotech) appreciated by investors. With limited upside from these areas, we see Richard Vosser AC tasquinimod (TASQ) PIII prostate cancer data in 4Q’14 as the only significant (44-20) 7742-6652 catalyst in the next 12 mths. Unfortunately, we believe this data is unlikely to [email protected] demonstrate the survival advantage required for TASQ to be successful. Thus, Bloomberg JPMA VOSSER
of this, extending the trial repeatedly trying to show an OS benefit. Price Performance TASQ has a low likelihood of showing a survival benefit in the Phase 36 III, in our view: We see multiple reasons that could reduce the potential for 32 TASQ to show an OS benefit (1) Treatment only to progression; (2) Use of € Zytiga (Xtandi/Xofigo) earlier in the placebo arm; (3) A more 28 heterogeneous patient population; (4) Potential for a relatively high 24 treatment dropout rate and dose reductions in a more severe population Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 IPN.PA share price (€) enrolled into Phase III and (5) inconclusive OS benefit in Phase II. MSCI-Eu (rebased) YTD 1m 3m 12m Without an OS benefit, we see limited upside to current levels: We Abs 1.1% 5.7% 10.0% 27.6% continue to include no sales for TASQ in our model, but even if TASQ Rel -4.7% 3.1% 4.9% 8.6% reaches the market in a niche with peak sales of €100m, this would only be worth an extra €2 taking our Embedded Value to €38, only 9% upside. Downgrades to our forecasts: Outside of our analysis on TASQ, we have also revised our forecasts for the disappointing Dysport New Formulation data and the relaunch of Increlex, which leads to Adjusted EPS cuts of 3- 16% through 2014-2020. As a result we have lowered our PT to €36, which is based on 16x 2015 EPS estimates.
Ipsen (IPN.PA;IPN FP) FYE Dec 2012A 2013E 2013E 2014E 2014E 2015E 2015E Company Data (Prev) (Curr) (Prev) (Curr) (Prev) (Curr) Price (€) 34.75 Adj. EPS FY (€) 1.74 1.92 1.85 2.07 2.00 2.51 2.25 Date Of Price 12 Jun 14 Revenue FY (€ mn) 1,277 1,298 1,282 1,341 1,298 1,429 1,380 Price Target (€) 36.00 EBIT FY (€ mn) 117 182 191 207 207 251 232 Price Target End Date 31-Dec-14 EBIT Margin FY 9.2% 14.1% 14.9% 15.4% 15.9% 17.5% 16.8% 52-week Range (€) 37.13-26.33 Net Income FY (€ mn) (28) 155 152 169 165 218 198 Market Cap (€ bn) 2.90 Headline EPS FY (€) (0.33) 1.86 1.83 2.03 1.98 2.62 2.38 Shares O/S (mn) 83 Headline P/E FY NM 18.7 19.0 17.2 17.6 13.3 14.6 Adj P/E FY 19.9 18.1 18.8 16.8 17.3 13.8 15.4 Source: Company data, Bloomberg, J.P. Morgan estimates. See page 21 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.
www.jpmorganmarkets.com Europe Equity Research 13 June 2014
HSBA.L, HSBA LN Neutral Price: 621p UK Banks Price Target: 675p Prefer domestic UK and pure play EM banks over STAN.L, STAN LN Neutral HSBC & STAN Price: 1,330p Price Target: 1,450p
We have been Neutral on StanChart and HSBC in the context of European UK Banks banks since May and Sept 2013, respectively, driven by the recovery in AC Raul Sinha Europe as well as the prospect of negative EPS revisions in a weak EM (44-20) 7742-2190 revenue environment. Consensus EPS has been revised lower by c20% and [email protected] c15% for the two banks over the period, respectively. With pressures on EM/ Bloomberg JPMA SINHA
See page 17 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.
www.jpmorganmarkets.com Europe Equity Research 13 June 2014
European Technology What to expect at the J.P. Morgan Technology CEO Conference next week - ALERT
We have 36 hardware and software companies attending the conference: European Technology Several companies (such as SAP, STMicro, ARM, Dassault, Hexagon, and AC Sandeep Deshpande Capgemini) have recently hosted Capital Markets Days, and we look forward (44-20) 7134-5276 to hearing more details on their updated strategies and financial plans. Overall, [email protected] we expect to get a mood of the end market whether consumer or enterprise, Bloomberg JPMA DESHPANDE
See page 2 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.
www.jpmorganmarkets.com Japan Equity Research 12 June 2014
Clients should contact representatives and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. Tokyo Signals, Noise & Strategy - Vol 20 Are You Paying Attention?
“Like three days passing / cherry blossoms gone, unseen / how I see this world”– Strategy Ryota Oshima, 18th century haiku poet. Patrick Rial, CFA AC The governance structure of Japan Inc. that persisted throughout the post-War (81-3) 6736-8649 era, which denied shareholders a voice, and certainly their claim as the ultimate [email protected] JPMorgan Securities Japan Co., Ltd. owners of capital, is weakening. Jesper J Koll Japan’s political leadership has embarked on a fundamental reorientation: return (81-3) 6736-8600 on capital matters and shareholders are moving from the fringe to the center. [email protected] The concrete steps in the adoption of the stewardship code by domestic asset JPMorgan Securities Japan Co., Ltd. managers, national pension reform, and the traction that the JPX-Nikkei 400 is Rajiv Batra generating, all speak to this trend. (91-22) 6157-3568 [email protected] Naysayers claim that Japan still lags the rest of the world. While we have J.P. Morgan India Private Limited Contents quibbles with such generalizations, on the whole, they are correct. However, in Strategy Insights 2 the market, fortunes are rarely made by pointing out the way things are, but Noise & Signals from the Local Press 9 rather in recognizing changes on the margin that are not yet discounted. Tactical View – Neutral 10 New Insights from Our Analysts 11 With this in mind, we note that the JPX-Nikkei 400 is emerging as a topic of J.P. Morgan Japan Top-Down Thesis 12 interest among both investors and corporates. An index rebalance will be What We’re Watching – Key Drivers of Our Thesis 14 announced on Aug. 7. While we think the index has shortcomings as an This is Japan 15 investment, companies appear eager to take steps to gain admission to this group Tokyo Signals, Noise & Strategy Backlog 16 of “Japan All Stars.”In that sense, the potential impact of the index is greater than if it were an investment product alone.
The speed at which the stewardship code is being adopted by domestic institutions has also been a positive surprise. In total, 127 fund operators, both foreign and domestic, have pledged to adopt the code. In the long run, this represents a tidal change in fiduciary oversight, and investors who aren’t paying attention risk missing the cherry blossoms before they fall, in our view.
From the business weeklies: Weekly Toyo Keizai advises on how to navigate the treacherous IPO and new issues markets in Japan. The magazine also surveys top auto journalists on the strength of Toyota’s revival. Diamond Weekly looks at the Sharp’s Kameyama plant 10 years after opening.
New insights from our analysts: Dairo Murata sees top convenience stores continuing to squeeze out 2nd-tier rivals with continuous new store openings and better cost structures. Hisashi Moriyama raises Toshiba and Fuji Electric to “Overweight” as the consolidation phase in domestic semiconductors has resulted in a limited number of strong players, while the “Internet of things” is set to drive top-line growth going forward.
TIJ: The secrets of Nagano residents' longevity are revealed.
See page 18 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.
www.jpmorganmarkets.com Asia Pacific Equity Research 12 June 2014
Clients should contact representatives and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.
Asian shipbuilding industries New shipping economics in eco-ship epoch
The ways of ship investment are changing. Freight rate forecasts based on Ship Building & Repairs supply and demand projection are giving way to cost savings from eco- Sokje Lee AC ships. From our analysis, a 10% improvement in fuel efficiency can (82-2) 758-5729 increase equity IRR by 5~6%pt. Furthermore, eco-ship can make profit [email protected] even in the worst shipping cycle. Tightening environmental regulation is Bloomberg JPMA SOKJELEE
See page 12 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.
www.jpmorganmarkets.com Asia Pacific Equity Research 12 June 2014
Indonesia Automobiles Engine Check: Datsun Go+ completes the LCGC Competitive Landscape
Low-cost green cars (LCGCs) now account for 13% of 1ndonesian 4W Head of ASEAN Strategy & sales, taking share initially from MPVs. The Datsun Go+ completes the Indonesian Research stable of first-round LCGC launches. With four players, the competition Aditya Srinath, CFA AC appears, at first instance, less fierce than the broader passenger market. We (62-21) 5291-8573 expect LCGCs to account for over 20% of 4-wheelers over the next five [email protected] years. Discounting in the MPV market means that LCGC profitability is Bloomberg JPMA SRINATH
30% 20% 10%
0% Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Source: CEIC, GAIKINDO. See page 5 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.
www.jpmorganmarkets.com Latin America Equity Research 13 June 2014
Food Retail in Emerging Markets Favor Retailers that Expand Profitably. Picks are: Walmex, CBD, Magnit, Lenta, Savola & BIM
In the second annual edition of this proprietary analysis, in collaboration with six LatAm Food & Beverage, Retail of our Global consumer equity research teams, including LatAm, Middle East, and Healthcare Poland, Russia, South Africa, and Turkey teams. We analyzed and contrasted key Andrea Teixeira, CFA AC performance and valuation metrics for 21 food retailers in our coverage universe (1-212) 622-6735 in EM. Our main conclusion is that investors should continue to favor retailers [email protected] that deliver floor space growth that is accretive to returns, as stock performance J.P. Morgan Securities LLC tends to track ROIC. EV/EBITDAR, and enterprise value over invested capital Pedro Leduc against ROIC shows a good predictor of performance (all adjusted for leases). (52-55) 5339-4846 [email protected] In LatAm, we continue to favor Walmex, CBD (food), Falabella and J.P. Morgan Casa de Bolsa, S.A. de C.V., Inretail. All these companies have been growing floor space with returns J.P. Morgan Grupo Financiero higher than cost of capital, and delivering high marginal ROIC. Focus on small Joseph Giordano formats such as Bodega express (WMX) or Mini Mercado (CBD) has been (55-11) 4950-3020 paying off, and ROIC is one of the key determinants of EPS growth going [email protected] forward. Banco J.P. Morgan S.A. South African Retail We do not find compelling value in the South Africa food retailers given Stephen Carrott continued consumer macro-headwinds which have hit food retail sales growth (27-11) 507-0373 particularly hard. Pick n’ Pay’s turnaround is gaining momentum, but on a Feb [email protected] FY15 JPME PE of 32x, we feel this is more than priced in, hence our J.P. Morgan Equities South Africa Proprietary Ltd. Underweight view. We continue to accumulate SHP on any dips in the share price. Russian Consumer & Retail Elena Jouronova, CFA In Russia we favor Magnit and Lenta. Both are, in our view, structural (7-495) 967-3888 winners in the sector due to their low price formats, focus on operating [email protected] efficiencies, quality management. Lenta is set to demonstrate the fastest growth J.P. Morgan Bank International LLC among listed peers while Magnit’s attraction is also its strong balance sheet (we European Retail recommend buying Magnit’s local shares). Borja Olcese (34-91) 516-1511 Our preference in Turkey remains for BIM, both in the short term and longer [email protected] term. BIM has better growth prospects and returns and is less exposed to the J.P. Morgan Securities plc cycle. Management also has better track record in delivering guidance. Jaime Vazquez (34-91) 516-1421 We believe that the environment in Poland remains highly competitive, [email protected] reflected in ongoing subdued sales and margin pressure at Biedronka. With J.P. Morgan Securities plc negative sales momentum, and reduced margin visibility, we remain cautious. Poland Consumer Michal Kuzawinski Within MENA, Savola remains our preferred consumer play as we expect (48-22) 44 19534 Savola’s retail segment (2014-16E JPMe 46% of rev & 32% of EBITDA) to [email protected] drive the group’s mid to long-term earnings growth, with continued healthy J.P. Morgan Securities plc Hyper/Super mkt ops and Savola’s foray into the convenience store format in MENA Consumer 2013 where the company plans to take the total store count to 1,000 in 5yrs Muneeza Hasan (JPMe 770 stores) from 23 in 2013. The segment is set to benefit from (971) 4428-1766 indigenous customer traffic underpinned by a healthy rate of urbanization, [email protected] government spending and improving living standards resulting in growing JPMorgan Chase Bank, N.A., Dubai Branch preference for organized retail.
See page 17 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.
www.jpmorganmarkets.com Japan Equity Research 12 June 2014
▲ Neutral Previous: Underweight Advantest (6857) 6857.T, 6857 JT Order Trend Strong, Underweight Rating No Longer Price: ¥1,224 ▲ Price Target: ¥1,350 Justified; Upgrading to Neutral Previous: ¥950
We stated in our June 11 report on SPE sector telephone interviews that orders at Japan Advantest are tracking well ahead of plan. After also reviewing our earnings Electronics/Precision & Industrial estimates for Advantest, we think an argument can be made that the stock is not AC tremendously overvalued. Additionally, because final demand from Chinese Hisashi Moriyama smartphone makers is likely a key reason April–June orders are outpacing plan, (81-3) 6736-8601 [email protected] this probably represents new demand. We also think Advantest is seeing strong Bloomberg JPMA MORIYAMA
Advantest Corporation (Reuters: 6857.T, Bloomberg: 6857 JT) 2013/3 2014/3 2015/3 E 2016/3 E 2017/3 E Company Data Sales (¥ mn) 132,903 111,878 153,000 169,000 180,000 Price (¥) 1,224 Operating Profit (¥ mn) 80 -36,369 13,000 17,000 21,000 Date Of Price 11 Jun 14 Pretax Profit (¥ mn) -1,293 -35,501 13,000 17,000 21,000 Market Cap (¥ bn) 212.08 Net Profit (¥ mn) -3,821 -35,540 10,500 16,000 20,000 Shares O/S (mn) 173 EPS (¥) -22.03 -204.10 60.30 91.88 114.85 52-week Range (¥) 1,710-988 P/E (x) NM NM 20.3 13.3 10.7 TOPIX 1,239.07 ROE -2.8% -27.6% 8.5% 11.2% 12.0% DPS (¥) 20.00 Source: Company data, Bloomberg, J.P. Morgan estimates. Dividend Yield 1.6% ROE 8.5% Price Target (¥) 1,350 Price Target End Date 31-Dec-14 See page 11 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.
www.jpmorganmarkets.com Global Emerging Markets Equity Research 13 June 2014
Q-Strategy Help in EM Stock screens that combine thematic macro and quant
EM equities are up 10% in the past three months, outperforming DM by Emerging Markets Equity Strategy 6%. A reduction in risk premiums, improving economic conditions, and Sanaya Tavaria AC reversal in extreme bearish positioning are driving a sharp rally in EM (1-212) 622-5469 equities. We remain bullish, with a target of 1200 for MSCI EM by [email protected] year-end. J.P. Morgan Securities LLC Adrian Mowat Our economists forecast EM GDP growth to accelerate from 2.7% (1Q) (852) 2800-8599 to 4.1 % (2Q) and 4.9% (3Q). US growth is forecast to rebound from [email protected] -1% (1Q) to 3% for the rest of the year. 2015 EM EPS can surprise J.P. Morgan Securities (Asia Pacific) Limited positively in our view as exports plus a domestic cyclical lift support Pedro Martins Junior, CFA revenue growth and a focus on costs boosts margins. The market should (55-11) 4950-4121 discount better 2015 EPS in 2H14. We introduce a screen of stocks in [email protected] our OW and neutral markets with high earnings Q-scores (see Table 4). Banco J.P. Morgan S.A. David Aserkoff, CFA Top 5 stocks combining Q-scores and top down macro strategy: (44-20) 7134-5887 Largan Precision, Catcher Technology, Compal Electronics, Hero [email protected] Motocorp, and Siliconware Precision. J.P. Morgan Securities plc Top 5 stocks with highest overall Q-scores: Kroton Educacional, Rajiv Batra Largan Precision, Catcher Technology, HCL Technologies, Steinhoff (91-22) 6157-3568 [email protected] International. J.P. Morgan India Private Limited For more on J.P. Morgan's Quant products, see page 7. For our detailed Kevyn H Kadakia macro views, see Key Trades and Risks, Mowat et al, 18 May 2014. (91-22) 6157-3250 The quantitative tool uses the J.P. Morgan Q-score developed by Robert Smith and J.P. [email protected] Morgan’s quant team. The J.P. Morgan Q-Score provides an indication of a company’s J.P. Morgan India Private Limited expected return versus both its country peers and its regional industry peers using a Quantitative Strategy balanced multi-factor quantitative approach. For more details, please see page 6. Robert Smith AC Table 1: Top stocks combining Q-scores and top-down macro strategy (852) 2800 8569 Name Ticker Country JPM Key Trades Overall Q-score [email protected] Reco Bloomberg JPMA RSMITH
See page 8 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.
www.jpmorganmarkets.com
áTOP Appendix Key Rating, Price Target & EPS Changes
Europe
Rating Changes J.P. Morgan EPS Estimate Changes Company New Rating Old Rating Company Current FY Next FY Increases Increases Dufry N UW Storebrand +7.8% +0.1% Decreases Decreases Ipsen N OW Atkins (WS) -0.2% -0.4% HSBC Holdings plc -0.1% -1.1% Ipsen -3.6% -3.4% Price Target Changes PZ Cussons -1.1% -4.0% Standard Chartered -3.8% -5.0% Price Target Revisions Company Rating New Old Active Biotech nm nm Increases Dufry -33.7% +4.8% Dufry N SFr. 166.00 SFr. 141.00 Source: J.P. Morgan estimates Storebrand OW kr 42.30 kr 41.00 Decreases Active Biotech UW 36.00 kr 59.00 kr Atkins (WS) OW 1,548 p 1,619 p HSBC Holdings plc N 675 p 700 p Ipsen N € 36.00 € 38.00 PZ Cussons N 350 p 370 p Standard Chartered N 1,450 p 1,500 p Source: J.P. Morgan estimates.
Asia
Price Target Changes J.P. Morgan EPS Estimate Changes Price Target Company Current FY Next FY Company Rating New Old Increases Increases PT Tower Bersama Infrastructure Tbk +24.1% +9.4% KPJ Healthcare Berhad N R3.60 R3.50 Revisions Reliance Power UW INR63.0 INR54.0 KPJ Healthcare Berhad +15.1% -8.1% PT Tower Bersama Infrastructure Tbk OW Rp8,300.00 Rp6,920.00 Reliance Power -6.2% +14.5% Source: J.P. Morgan estimates.
J.P. Morgan DPS Estimate Changes Company Current FY Next FY Revisions KPJ Healthcare Berhad -14.5% +5.4%
Australia
Estimate Changes* Price Target Changes Company FY_14 FY_15 Target Upgrades Company New Old RHC 0.0% +5.3% Upgrades Downgrades GMG 5.30 5.21 MIN -1.8% -5.9% RHC 48.04 43.43 NCM -0.4% -40.0% Downgrades SVW -1.5% -8.0% MIN 9.26 10.38 * EPS Changes > +/- 1% NCM 10.35 11.00 SVW 8.30 8.64 Source: J.P. Morgan estimates.
16
Japan Rating Changes J.P. Morgan EPS Estimate Changes Company New Old Company Current FY Next FY Increases Revisions Advantest (6857) N UW Advantest (6857) +10.0% -0.4% Source: J.P. Morgan estimates. Note: Numbers and companies above may differ from the corresponding numbers or companies in Price Target Changes the individual notes inside the FTM. Price Target Company Rating New Old Increases Advantest (6857) N ¥1,350 ¥950 Source: J.P. Morgan estimates.
US
Rating Changes J.P. Morgan EPS Estimate Changes* Company New Rating Old Rating Company Current FY Next FY Increases Increases Accuray OW N Accuray +0.7% +28.2% Decreases Intel +4.1% +1.9% lululemon athletica inc. N OW Synaptics Inc. +16.4% +10.2% SouFun Holdings Ltd N OW Decreases lululemon athletica inc. -5.3% -11.4% Price Target Changes SouFun Holdings Ltd -18.7% -13.3% Revisions Price Target DigitalGlobe, Inc. -3.1% +0.5% Company Rating New Old Gran Tierra Energy +2.1% -1.3% Increases * EPS Changes > +/- 1% Accuray OW 12.00 9.00 DigitalGlobe, Inc. N 34.50 31.50 Intel OW 31.00 30.00 Synaptics Inc. OW 98.00 86.00 Ulta Salon, Cosmetics & Fragrance, Inc. OW 110.00 105.00 Decreases lululemon athletica inc. N 42.00 56.00 SouFun Holdings Ltd N 10.00 17.00 Source: J.P. Morgan estimates.
17
áTOP Conference Calls
Today
MedTech - 2014 CEO Conference Call Series: Boston Scientific (BSX), Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst ), Featuring: Mike Mahoney (CEO, BSX), on Friday, Jun 13, @ 11am ET/ 16:00 UK, DIAL-IN: 888-748-4893 or 517-319- 9536; Passcode: MEDTECH, Replay through 6/19: : 800-406-7490 or 402-220-4881; passcode: 21214 (PODCAST AVAILABLE) Natural Gas Outlook in the Northeast, Hosted by: Jeremy Tonet (Master Limited Partnerships Equity Analyst), Featuring: Steve Kean (President & COO of Kinder Morgan), Tom Martin (President of Kinder Morgan Natural Gas Group), on Friday, June 13 @ 2:00pm ET, DIAL-IN: 888-324-7508 (US); 1-773-756-4709 (Outside US); Passcode: MLP, Replay through 6/20: 866-485-0036 (US); 1-203-369-1608 (outside US); Passcode: 61314 (PODCAST AVAILABLE)
Upcoming
EE/MI 2014 CEO Conference Call Series: Rockwell Automation (ROK), Hosted by: Steve Tusa (Electrical Equipment / Multi-industry Equity Analyst), Featuring: Keith Nosbusch (Chairman and CEO, ROK), on Tuesday, June 17 @ 11:00am, DIAL-IN: 888-603-7019 (US); +1-312-470-7146 (outside US); Passcode: TUSA, Replay through 6/24: 800-964-3941 (US); + 1-203-369-3117 (Outside US); Passcode: 2137 (PODCAST AVAILABLE) Biotechnology - 2014 CEO/CFO Conference Call Series - Agios Pharma, Hosted by: Geoff Meacham (Biotechnology Equity Analyst), Featuring: David Schenkein (CEO, Agios Pharma), on Friday, June 20 @ 10:00am, DIAL-IN: 888-889-1309 (US); +1-210-234-5884 (outside US); Passcode: BIOTECH, Replay Through 6/27: 866-507-6406 (US); +1-203-369-1896 (Outside US); Passcode: 54128 (PODCAST AVAILABLE) MedTech - 2014 CEO Conference Call Series: Boston Scientific, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst ), Featuring: Mike Mahoney (CEO), on Friday, June 20 @ 11:00am ET / 16:00 UK, DIAL-IN: 888-748-4893 (US); +1-517-319-9536 (outside US); Passcode: MEDTECH, Replay through 6/26: 800-406-7490 (US); +1-402-220-4881 (Outside US); Passcode: 21214 (PODCAST AVAILABLE) Biotechnology - 2014 CEO/CFO Conference Call Series - Agios Pharma, Hosted by: Cory Kasimov (Biotech Equity Analyst), Featuring: David Schenkein (CEO), on Friday, June 20 @ 10:00am, DIAL-IN: 888-889-1309 (US); +1-210-234-5884 (outside US); Passcode: BIOTECH; Replay through 6/21: 888-567-0440 (US); +1-203-369-3442 (Outside US); Passcode: 2814 MedTech - 2014 CEO Conference Call Series: Cooper, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst ), Featuring: Bob Weiss (CEO, Cooper), on Friday, Jun 20, @ 11am ET/8am PT (except during earnings), DIAL-IN: 888-748-4893 or 517- 319-9536; Passcode: MEDTECH, Replay through 6/26: : 800-406-7490 or 402-220-4881; passcode: 21214 (PODCAST AVAILABLE) Conference Call Replays EE/MI 2014 CEO Conference Call Series: Lennox International (LII), Hosted by: Steve Tusa (Electrical Equipment / Multi-industry Equity Analyst), Featuring: Todd Bluedorn (Chairman and CEO, LII), Replay through 6/13: 866-463-2176 (US); + 1-203-369-1374 (Outside US); Passcode: 6912 (PODCAST AVAILABLE) Analysis of New EPA Carbon Emissions Rule, Hosted by: Joseph Allman (Oil & Gas Exploration & Production), John Bridges (Precious Metals & Coal), Christopher Turnure (Electric Utilities), Featuring: Granville Martin (J.P. Morgan’s Office of Environmental Affairs), Replay through 6/13: 800-627-5350 (US); 1-402-220-0228 (outside US); Passcode: 60614 U.S. Economic Outlook, Hosted by: Bruce Kasman (J.P. Morgan Chief Economist), Replay through 6/14: 888-458-8113 (US); +1-402-998- 1351 (outside US); Passcode: 6909591# (PODCAST AVAILABLE) Used Agricultural Equipment Update: Hosted by: Ann Duignan (US Machinery Equity Analyst), Featuring: Darwin Melnyk (IRON Solutions CEO), Replay through 6/16: 866-448-5641 (US); +1-203-369-1186 (Outside US); Passcode: 9742 (PODCAST AVAILABLE) LatAm Cement, Construction & Real Estate Outlook for 2H14, Hosted by: Adrian Huerta (LatAm Cement & Construction and Real Estate ), Marcelo Motta (Brazilian Homebuilders and Real Estate ), Replay through 6/16: 800-294-9493 (US); +1-402-220-3767 (outside US); Passcode: 54192 ECB Bank Measures and Outlook, Hosted by: Kian Abouhossein, Delphine Lee & Sofie Peterzens (European Banks Equity Research Team), Replay Through 6/17: +1-954-334-0342 (US); 020 7031 4064 (UK); Passcode: 945492 (REPORT AVAILABLE) Post-ATS US IPF Physician Survey; Increasing Projected Esbriet Market Share, Hosted by: Anupam Rama (Biotech Equity Analyst), Replay Through 6/17: 866-352-6818 (US); +1-203-369-0071 (Outside US); Passcode: 6514 (SLIDES, REPORT & PODCAST AVAILABLE) Healthcare Technology & Distribution - 2014 CEO Conference Call Series: LabCorp (LH), Hosted by: Lisa Gill (Healthcare Technology & Distribution Equity Analyst), Featuring: Dave King (CFO, LH), Replay Through 6/19: 866-421-6880 (US); +1-203-369-0823 (outside US); Passcode: 61214 (PODCAST AVAILABLE)
18
Upcoming Conferences Homepage Jun 17 – 18, 2014 – Technology CEO Conference June 30,2014 - 2014 Emerging Markets Macro: Second Half London, UK, J.P. Morgan offices, 25 Bank Street Outlook J.P. Morgan, 270 Park Ave, New York June 18,2014 - European Sectors and Strategy Outlook Hotel Orfila, Madrid July 29 – 30, 2014 – 9th Annual Mexico CEO/CFO Conference Jun 19, 2014 – 5th Annual Oil & Gas 1x1 Corporate Access Day Mexico City Hilton Boston Downtown, Boston Aug 13 – 14, 2014 – Auto Conference Jun 24 – 25, 2014 – Media CEO Conference New York, NY, J.P. Morgan, 270 Park Avenue London, UK, J.P. Morgan offices, 25 Bank Street Sept 23 – 24, 2014 – Asia and CEEMEA Emerging Markets June 25, 2014 – Emerging Markets Equity Strategy: 2014 Corporate Conference Second Half Outlook London, UK, J.P. Morgan offices, 25 Bank Street London, United Kingdom, J.P. Morgan offices, 25 Bank Street, E14 5JP Nov 12, 2014 – Ultimate Services Investor Conference New York, NY, Westin Grand Central Hotel, 212, East 42nd June 25 – 26, 2014 – 3rd Southern Cone and Andean Street Conference Lima, Peru December 1 – 5, 2014 – 7th Brazil Opportunities Conference São Paulo June 26, 2014 – European Healthcare Conference London, UK, J.P. Morgan offices, 25 Bank Street
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.
19
Corporate Marketing Calendar áTOP
Fri Jun-13-14 Mon Jun-16-14 Tue Jun-17-14 Wed Jun-18-14 Thu Jun-19-14 ANSYS, INC. (LOS BLUEBIRD BIO (BOSTON) ALLIANCE TRUST PLC ALLIANCE TRUST PLC COCA-COLA EAST JAPAN ANGELES, PASADENA) CBL & Associates (NEW YORK) (RICHMOND) CO., LTD (NEW YORK) DCC (TORONTO) (BOSTON) BLUEBIRD BIO BLOOMIN BRANDS, INC. FIRST PACIFIC Iroko Pharmaceuticals COGNIZANT (DALLAS) (NEW YORK) (NEW YORK) (LOS ANGELES) (Private) (NEW YORK) MegaFon (NEW YORK) COGNIZANT (AUSTIN, COCA-COLA EAST JAPAN GAP INC (NEW YORK) WILLIAMS-SONOMA, INC. NATIONAL BANK OF HOUSTON) CO., LTD (NEW YORK) LENNOX INTERNATIONAL (PRINCETON) GREECE (NEW YORK) EQT MIDSTREAM FIRST PACIFIC (CHICAGO) INC (NEW YORK) VERITIV (NEW YORK) PARTNERS (BOSTON) INOGEN INC (BOSTON) MOHAWK INDUSTRIES INC FIRST PACIFIC LENNOX INTERNATIONAL (BOSTON) (WASHINGTON) INC (BALTIMORE) QIHOO 360 (NEW YORK) INOGEN INC (NEW YORK) QUINTAIN ESTATES AND QUINTAIN ESTATES AND QUINTAIN ESTATES AND DEVELOPMENT PLC DEVELOPMENT PLC DEVELOPMENT PLC (BOSTON) (CHICAGO) (NEW YORK) VERITIV (PHILADELPHIA, VERITIV (CHICAGO) RSA INSURANCE GROUP SHORT HILLS) PLC (AUSTIN, DENVER) VERITIV (BOSTON)
20
Markets at a glance áTOP
China Hong Kong India SHASHR Index 2,148.22 HSI Index 23,175.02 Sensex Index 25,576.21 Chg from previous day -0.16% Chg from previous day -0.35% Chg from previous day 0.40% T/O value (CNYmn / US$MM) 70,522 / 11,340 T/O value (HK$ mn / US$MM) 52,503 / 6,773 T/O value (INR MM / US$MM) 5,909 / 100 Chg from previous day 10.66% Chg from previous day -12.74% Chg from previous day 683.48% Exchange rate CNY6.2 / US$1 Exchange rate HKD7.75 / US$1 Exchange rate INR59.3 / US$1 O/N interbank (%) 2.60 O/N interbank (%) 0.04 O/N interbank (%) 8.00 Market cap (CNYBn) 14,955.3 Market cap (HK$Bn) 27,018.1 Market cap (US$Bn) 1514.0 Market cap (US$ Bn) 2,405 Market cap (US$ Bn) 3,486 Market cap (INR Bn) 89,713 FY1E Market P/E 10.7 FY1E Market P/E 14.1 FY1E Market P/E 21.4 FY2E Market P/E 9.1 FY2E Market P/E 12.2 FY2E Market P/E 17.9
Indonesia Malaysia Philippines JCI Index 4,934.41 KLCI Index 1,873.87 PSE Index 6,809.18 Chg from previous day -0.76% Chg from previous day -0.24% Chg from previous day 0.00% T/O value (Rp bn / US$MM) 3,772 / 320 T/O value (MYR MM / US$MM) 1,242 / 387 T/O value (Php MM / US$MM) 7,605 / 174 Chg from previous day -0.81% Chg from previous day -27.44% Chg from previous day 0.00% Exchange rate Rp11,790 / US$1 Exchange rate MYR3.21 / US$1 Exchange rate Php43.78 / US$1 O/N interbank (%) 7.83 O/N interbank (%) 3.00 O/N interbank (%) 3.50 Market cap (US$Bn) 417.7 Market cap (US$ bn) 327.1 Market cap (US$ bn) 174.0 Market cap (Rp bn) 4,924,514 Market cap (MYR bn) 1,049 Market cap (Php bn) 7,616 FY1E Market P/E 19.1 FY1E Market P/E 18.7 FY1E Market P/E 17.9 FY2E Market P/E 15.9 FY2E Market P/E 17.2 FY2E Market P/E 15.7
Singapore South Korea Taiwan STI Index 3,293.01 KOSPI Index 2,011.65 TWSE Index 9,204.65 Chg from previous day 0.09% Chg from previous day -0.15% DoD Change -0.27% T/O value (SGD MM / US$MM) 632 / 506 T/O value (KRW bn / US$MM) 4,273 / 4,199 52-Week Range 9,230 / 7,663 Chg from previous day -29.34% Chg from previous day 11.9% T/O value (NT$ mn / US$MM) 133,805 / 4,461 Exchange rate SGD1.25 / US$1 Exchange rate KRW1017.59 / US$1 Chg from previous day -1.28% O/N interbank (%) 0.04 O/N interbank (%) 2.50 Exchange rate TWD30.0 / US$1 Market cap (US$ bn) 613.6 Market cap (KRW Bn) 1,289,559 O/N interbank (%) 0.39 Market cap (SGD bn) 766 Market cap (US$ Bn) 1,267 10 Year Gov Bond Yield (%) 2.64 FY1E Market P/E 21.0 FY1E Market P/E 13.1 Market cap (NT$Bn) 26,244.0 FY2E Market P/E 15.3 FY2E Market P/E 10.3 Market cap (US$ Bn) 1,006 FY1E Market P/E 16.5
FY2E Market P/E 14.1
Thailand Japan Australia SET Index 1,457.02 TPX Index 1,237.75 ASX200 Index 5,428.80 Chg from previous day -0.46% Chg from previous day -0.11% Chg from previous day -0.46% T/O value (Bt bn / US$MM) 48 / 1,467 T/O value (JPY bn / US$bn) 1,859 / 18 T/O value (AUD MM / US$MM) 3,435 / 3,650 Chg from previous day -26.50% Chg from previous day 14.02% Chg from previous day 10.88% Exchange rate Bt32.45 / US$1 Exchange rate JPY102.01 / US$1 Exchange rate AUD0.94 / US$1 O/N interbank (%) 1.90 O/N interbank (%) 0.15 O/N interbank (%) 2.50 Market cap (US$Bn) 402.3 Market cap (US$ bn) 4371.4 Market cap (AUD$ bn) 1501.0 Market cap (Bt bn) 13,055 Market cap (JPY bn) 445,930 Market cap (US$ bn) 1,412 FY1E Market P/E 14.5 FY1E Market P/E 19.2 FY1E Market P/E 17.1 FY2E Market P/E 12.5 FY2E Market P/E 18.9 FY2E Market P/E 15.9
UK Euro Stoxx US UKX Index 6,838.87 SX5E Index 3,289.09 S&P Index 1,943.89 Chg from previous day -0.50% Chg from previous day -0.75% Chg from previous day -0.35% T/O value (GBP Bn / US$bn) 3.54 / 5.94 T/O value (Euro bn / US$bn) 7.94 / 10.75 T/O value (US$ bn) 21.53 Chg from previous day 12.32% Chg from previous day 2.32% Chg from previous day -8.23% Exchange rate US$1.68 / GBP1 Exchange rate US$1.35 / EURO1 O/N interbank (%) 0.09 O/N interbank (%) 0.47 O/N interbank (%) 2.21 Market cap (US$ bn) 17858.6 Market cap (US$ bn) 3131.1 Market cap (US$ bn) 3366.7 FY1E Market P/E 16.4 Market cap (GBP bn) 1,864 Market cap (Euro bn) 2,487 FY2E Market P/E 14.8 FY1E Market P/E 14.2 FY1E Market P/E 14.7 FY2E Market P/E 13.0 FY2E Market P/E 12.9
Source: Bloomberg, J.P. Morgan estimates.
21
Market Monitor áTOP
June 12, 2014 as of market close
Change Average High Low
Trailing Level 1 Day Week 30 days MTD YTD 4-Wk 26-Wk 12-Wk 12-Wk Equities* S&P 500 1930 -0.7% -0.5% 2.2% 0.3% 4.4% 1914 1853 1951 1816 NASDAQ 100 3764 -0.9% -0.3% 4.7% 0.7% 4.8% 3703 3604 3801 3447 Dow Jones Industrials 16734 -0.7% -0.6% 0.7% 0.1% 1.0% 16680 16320 16946 16027 FTSE 6843 0.1% 0.4% -0.5% 0.0% 1.4% 6843 6700 6878 6520 Euro STOXX 50 3284 -0.1% 0.5% 2.3% 1.2% 5.6% 3234 3124 3314 3053 Hang Seng 23175 -0.4% 0.3% 2.6% 0.4% -0.6% 22995 22551 23316 21182 Sector Performance* S&P Telecom Services 157 -0.3% -0.7% -1.2% -1.9% 1.1% 159 153 162 148 S&P Energy 708 0.3% 1.5% 2.3% 2.1% 8.6% 693 652 708 632 S&P Materials 308 -0.9% -1.1% 1.0% -0.3% 5.6% 307 294 313 290 S&P Financial 304 -0.6% -0.3% 2.8% 1.4% 3.1% 299 294 308 287 S&P Consumer Discretionary 520 -1.3% -1.2% 2.9% 0.0% -1.9% 517 515 530 494 S&P Healthcare 689 -0.6% -1.0% 1.8% -0.2% 7.2% 685 666 695 645 S&P Information Technology 621 -0.9% -0.3% 4.0% 0.5% 6.1% 613 590 629 575 S&P Utilities 213 0.3% -2.3% -0.1% -1.2% 10.3% 214 205 220 204 S&P Consumer Staples 458 -0.9% -1.0% 0.4% -0.9% 3.4% 457 440 463 435 S&P Industrials 467 -1.3% -0.8% 1.4% 0.4% 3.2% 465 449 478 439 Fixed Income** Treasury (%): 2-Yr 0.42% -1bp 4bp 6bp 5bp 4bp 0.38% 0.37% 0.47% 0.33% 10-Yr 2.59% -5bp 0bp 4bp 13bp -42bp 2.55% 2.72% 2.80% 2.44% 30-Yr 3.41% -6bp -2bp 4bp 10bp -53bp 3.39% 3.62% 3.67% 3.29% Credit** HG Credit (JULI, Z-spread)1 96bp 0.4bp -1.5bp -2.9bp -2.3bp -17.3bp 99bp 107bp 108bp 95bp HY Credit (T-spread) 404bp 0.3bp -11.2bp -10.0bp -14.6bp -36.4bp 415bp 427bp 423bp 403bp Currency** JPY/USD 102.07 -0.24 -0.49 -0.06 0.38 -3.25 101.97 102.70 103.87 101.23 USD/EUR 1.36 0.00 -0.01 -0.02 -0.01 -0.03 1.36 1.37 1.39 1.35 USD/GBP 1.68 0.01 0.01 0.01 0.01 0.03 1.68 1.66 1.70 1.65 Commodities Gold ($/ounce)* 1273.45 12.39 19.76 -32.50 23.72 67.80 1270.31 1281.67 1334.70 1243.92 Volatility** VIX Index 12.56 0.96 0.88 0.39 1.16 -1.16 11.85 14.02 17.03 10.73 Source: *Bloomberg, **J.P. Morgan
22
á Upcoming US Economics Releases (Time: EDT) TOP
Bruce Kasman Chief Global Economist [email protected] (1-212) 834-5515
Monday Tuesday Wednesday Thursday Friday 9 Jun 10 Jun 11 Jun 12 Jun 13 Jun
St. Louis Fed President Bullard speaks on NFIB survey (7:30am) QSS (10:00am) Initial claims (8:30am) PPI (8:30am) economic outlook in Florida (9:10am) May 1Q w/e Jun 7 305,000 May 0.3% Boston Fed President Rosengren speaks in Federal budget (2:00pm) Retail sales (8:30am) Core 0.3% Guatemala (1:30pm) JOLTS (10:00am) May May 0.8% Consumer sentiment (9:55am)
Apr Ex. auto 0.4% Jun prelim 82.5 Wholesale trade (10:00am) Auction 10-year note (r) $21bn Import prices (8:30am) Apr May 0.2% Business inventories (10:00am) Auction 3-year note $28bn Apr 0.5%
Auction 30-year bond (r) $13bn Announce 30-year TIPS (r) $7bn
16 Jun 17 Jun 18 Jun 19 Jun 20 Jun
Empire State survey (8:30am) CPI (8:30am) Current account (8:30am) Initial claims (8:30am) Jun May 1Q w/e Jun 14 TIC data (9:00am) Housing starts (8:30am) Philadelphia Fed survey (10:00am) Apr May FOMC statement and projections Jun Industrial production (9:15am) (2:00pm) and press conference Leading indicators (10:00am) May FOMC meeting (2:30pm) May NAHB survey (10:00am) Jun Auction 30-year TIPS (r) $7bn Announce 2-year note $30bn Announce 2-year FRN (r) $13bn Announce 5-year note $35bn Announce 7-year note $29bn
23 Jun 24 Jun 25 Jun 26 Jun 27 Jun
Manufacturing PMI (9:45am) S&P/Case-Shiller HPI (9:00am) Durable goods (8:30am) Initial claims (8:30am) Consumer sentiment (9:55am) Jun flash Apr May w/e Jun 21 Jun final Existing home sales (10:00am) FHFA HPI (9:00am) Real GDP (8:30am) Personal income (8:30am) May Apr 1Q final May New home sales (10:00am) Services PMI (9:45am) KC Fed survey (11:00am) May Jun flash Jun Consumer confidence (10:00am) Jun Auction 2-year FRN (r) $13bn Auction 7-year note $29bn Richmond Fed survey (10:00am) Auction 5-year note $35bn Jun St. Louis Fed President Bullard speaks on monetary policy in New York (1:05pm) Auction 2-year note $30bn
30 Jun 1 Jul 2 Jul 3 Jul 4 Jul
Chicago PMI (9:45am) Manufacturing PMI (9:45am) ADP employment (8:15am) Initial claims (8:30am) Independence Day, markets closed Jun Jun final Jun w/e Jun 28 Pending home sales (10:00am) ISM manufacturing (10:00am) Factory orders (10:00am) Employment (8:30am) May Jun May Jun Dallas Fed survey (10:30am) Construction spending (10:00am) International trade (8:30am) Jun May May Light vehicle sales Services PMI (9:45am) Jun Jun final ISM nonmanufacturing (10:00am) Jun
Announce 3-year note $27bn Announce 10-year note (r) $21bn Announce 30-year bond (r) $13bn
23
Latin America Economic Calendar
Monday Tuesday Wednesday Thursday Friday 9 Jun 10 Jun 11 Jun 12 Jun 13 Jun
Chile: Brazil: Mexico: Brazil: Argentina: Trade balance May IGP-M 1st release Jun Industrial production Apr: -1.5%oya Retail sales Apr CPI May Mexico: Mexico: Uruguay: 0.6%m/m sa 8.6%oya Brazil: CPI May: GFI Mar: 3.1%oya Industrial production Apr Chile: Economic activity Apr Headline: -0.36%m/m Central bank reserves (prior week) BCCh meeting: On hold, 4% 0.3% m/m sa Headline: 3.47%oya Nominal wages May: 4.5%oya Peru: Colombia: Core: 0.07%m/m BCRP meeting On hold BanRep minutes Core:2.98%oya Auto report May Peru: Trade balance Apr
During the week: Colombia: Consumer confidence May Mexico: Auto report May 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun
Brazil: Colombia: Brazil: Colombia: Colombia: IGP-10 Jun Trade balance Apr IGP-M 2nd release Jun 1Q GDP BanRep meeting Colombia: Mexico: IPCA-15 Jun Mexico: Mexico: Industrial production Apr Central bank reserves (prior week) Mexico: Aggregate supply and demand 1Q Retail sales Apr Retail sales Apr Formal employment May Banxico minutes Peru: Banamex economic survey Unemployment rate May Economic activity Apr Uruguay: GDP 1Q
During the week: Brazil: Job creation May Tax collection May Colombia: Outstanding loans Apr 23 Jun 24 Jun 25 Jun 26 Jun 27 Jun
Argentina Argentina: Argentina: Brazil: Brazil: Current account 1Q Consumer confidence Jun Industrial production May Consumer confidence Jun IGP-M Jun GDP 1Q Brazil: Brazil: Unemployment rate May PPI manufacturing May Mexico: Current account balance May BCB credit report May Central government budget balance Unemployment rate May FDI May May Mexico: Chile: Economic activity index Apr BCCh minutes CPI Jun 1H Colombia: Central bank reserves (prior week) Unemployment rate May Mexico: Trade balance May
During the week: Colombia: Vehicle sales May Industrial confidence May Retail confidence May Current account balance 1Q 30 Jun 1 Jul 2 Jul 3 Jul 4 Jul
Argentina: Brazil: Brazil: Argentina: Colombia: Economic activity Apr PMI manufacturing Jun FIPE Jun Auto report Jun PPI Jun Construction activity May Trade balance Jun Industrial production May Mexico: BanRep minutes Brazil: Mexico: Banxico economic survey Mexico: Net debt % GDP May Remittances May Uruguay: Consumer confidence Jun Nominal budget balance May Central bank reserves (prior week) Unemployment rate May Primary budget balance May HSBC manufacturing PMI Jun CPI Jun Chile: IMEF manufacturing PMI Jun Manufacturing index May IMEF non-manufacturing PMI Jun Unemployment rate May Peru: Retail sales May CPI Jun Mexico: WPI Jun Bank credit May Uruguay: PS budget balance May Trade balance Jun
During the week: Argentina: Tax collection Jun Colombia: Budget balance May
Link to Global Economics Calendar on J.P. Morgan Markets page
24
Australia áTOP
J.P. Morgan Forecasts - Economics and Commodities 13Q1A 13Q2A 13Q3A 13Q4A 14Q1A 14Q2E 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 2.3 2.3 2.6 2.6 2.7 2.6 2.2 2.3 2.4 2.4 2.5 2.4 2.5 2.4 Currency A$/US$ (period end) 1.04 0.91 0.93 0.89 0.93 0.92 0.90 0.89 0.90 0.89 0.89 0.89 0.93 0.89 0.89 0.80 A$/US$ (period average) 1.04 0.99 0.92 0.93 0.90 0.92 0.91 0.90 0.90 0.89 0.89 0.89 0.97 0.91 0.89 0.80 Commodities (period average) Gold (US$ per ounce) 1,634 1,417 1,330 1,272 1,292 1,250 1,260 1,285 1,275 1,275 1,275 1,275 1,413 1,272 1,275 1,300 Silver (US$ per ounce) 30.2 23.2 21.5 20.8 20.5 21.3 21.5 21.8 22.0 22.0 22.0 22.0 23.9 21.2 22.0 17.5 Oil (WTI) (US$/bbl) 94 94 106 98 99 88 93 91 88 83 85 85 98 93 85 80 Aluminium (US$/lb) 0.91 0.83 0.81 0.80 0.78 0.83 0.84 0.84 0.86 0.86 0.86 0.86 0.84 0.82 0.86 1.00 Copper (US$/lb) 3.60 3.25 3.21 3.25 3.19 3.22 3.06 3.15 3.18 3.18 3.18 3.18 3.33 3.16 3.18 3.40 Lead (US$/lb) 1.04 0.93 0.95 0.96 0.95 0.98 1.03 1.07 1.02 1.02 1.02 1.02 0.97 1.01 1.02 0.91 Nickel (US$/lb) 7.87 6.79 6.33 6.31 6.64 8.62 8.39 9.98 10.89 10.89 10.89 10.89 6.82 8.41 10.89 8.16 Zinc (US$/lb) 0.92 0.84 0.84 0.86 0.92 0.92 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$/t) 149 126 133 135 120 115 120 115 109 110 110 111 135 118 110 80 Iron Ore - Fines (USc/Fe%) 228 191 199 200 180 169 177 169 159 160 161 162 204 174 161 113 Iron Ore - Lump (USc/Fe%) 240 203 211 212 192 181 189 181 172 173 174 175 216 186 173 125 Coking Coal (US$/t) 165 172 145 165 143 120 125 130 135 140 145 150 162 130 143 160 Thermal Coal (US$/t) 92 86 77 82 78 75 75 77 79 80 80 81 84 76 80 95 Uranium (US$/lb) 42.6 40.5 36.0 35.1 35.3 40.2 40.5 45.8 51.3 51.6 51.9 52.2 38.6 40.5 51.7 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.
25
European Analyst Focus List áTOP
J.P. Morgan AFL 12 June
Potential Close Focus list Focus List Price Upside PT end Ticker Name Industry Ccy Price Analyst add date add price Target /Downside* Position Rating date AGS BB Ageas Insurance EUR 30.3 Ashik Musaddi, CFA 22-Jan-10 25.40 40.61 34% Long OW Dec-14 UBSN VX UBS Diversified Financials CHF 18.0 Kian Abouhossein 06-Sep-11 10.46 23.00 28% Long OW Dec-14 WPP LN WPP Group Media GBp 1,303.0 Filippo Pietro Lo Franco 06-Jun-13 1,120 1,552 19% Long OW Dec-14 ABI BB Anheuser Busch InBev Food, Beverage & Tobacco EUR 83.3 Mike J Gibbs 14-Jun-13 69.56 93.00 12% Long OW May-15 ERICB SS Ericsson Technology Hardware & Equipment SEK 82.9 Sandeep Deshpande 08-Jul-13 77.00 90.00 9% Long OW Dec-14 AIR FP Airbus Group Capital Goods EUR 52.2 David H Perry, CFA 15-Jul-13 41.84 65.00 24% Long OW Dec-14 EZJ LN easyJet Transportation GBp 1,530.0 Jamie Baker 16-Sep-13 1,299 1,909 25% Long OW Dec-14 DAI GR Daimler AG Automobiles & Components EUR 69.7 Jose M Asumendi 16-Sep-13 57.10 80.00 15% Long OW Dec-14 OR FP L'Oréal Household & Personal Products EUR 128.6 Celine Pannuti, CFA 16-Sep-13 124.90 135.00 5% Long OW Dec-14 FP FP TOTAL Energy EUR 51.7 Nitin Sharma 16-Sep-13 42.80 54.50 5% Long OW Dec-14 PNDORA DC PANDORA Consumer Durables & Apparel DKK 404.3 Chiara Battistini 16-Sep-13 222.80 445.00 10% Long OW Dec-14 SMDS LN D S Smith Materials GBp 317.0 Alexander Mees 16-Sep-13 284 360 14% Long OW Mar-15 HEXAB SS Hexagon AB Electronic Equip., Instruments SEK 216.7 Stacy Pollard 16-Sep-13 197.40 250.00 15% Long OW Dec-14 UTDI GR United Internet Internet Software & Services EUR 34.7 Hannes Wittig 23-Sep-13 26.60 45.00 30% Long OW Dec-14 TSCO LN Tesco Food & Staples Retailing GBp 295.0 Jaime Vazquez 25-Sep-13 374 235 20% Short UW Dec-14 SMP LN St. Modwen Real Estate GBp 385.0 Neil Green, CFA 8-Oct-13 309 425 10% Long OW Apr-15 JMAT LN Johnson Matthey Materials GBp 3,247.0 Martin Evans 14-Oct-13 2,821 3,850 19% Long OW Dec-14 RTN LN Restaurant Group Consumer Services GBp 613.0 Victoria A Greer 06-Dec-13 549 755 23% Long OW Apr-15 SOLB BB Solvay Materials EUR 120.3 Ben Scarlett 07-Jan-14 112.5 82.0 32% Short UW Dec-14 AAL LN Anglo American Materials GBp 1,464.5 Fraser Jamieson 08-Jan-14 1,273 1,350 8% Short UW Dec-14 JUP LN Jupiter Diversified Financials GBp 415.1 Edward Morris, CFA 10-Jan-14 382 474 14% Long OW Dec-14 LAND LN Land Securities Real Estate GBp 1,074.0 Tim Leckie, CFA 14-Jan-14 989.50 1,100 2% Long OW Jan-15 HEI GR HeidelbergCement Construction Materials EUR 64.1 Rajesh Patki 28-Jan-14 56.25 74.00 15% Long OW Apr-15 RIO LN Rio Tinto Plc Materials GBp 3,156.5 Dominic O’Kane 12-May-14 3,188 4,500 43% Long OW Dec-14 BAB LN Babcock Intl Group Commercial & Professional Serv GBp 1,220.0 Robert Plant 19-May-14 1,185.0 1,500.0 23% Long OW Dec-14 ABF LN Associated British Foods Food Products GBp 3,044.0 Catherine Farrant 23-May-14 3,020.0 3,500.0 15% Long OW Apr-15 RMG LN Royal Mail Group Air Freight & Logistics GBp 499.8 Christopher G Combe 27-May-14 526.0 765.0 53% Long OW Mar-15 Source: Bloomberg, J.P. Morgan estimates. Share price data as at COB 11 June 2014. *From Latest Closing Price J.P. Morgan may remove a stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice.
J.P. Morgan AFL 12 June - Performance
Absolute performance Country performance MSCI Europe Industry Performance
Price Total Returns Total Total Returns since Returns Returns Ticker Name Position since addition to 1M 3M YTD since 1M 3M YTD since 1M 3M YTD addition to AFL (incl. addition addition to AFL dvds) to AFL AFL AGS BB Ageas Long 19.3% 53.5% 0.7% 1.2% 2.5% 55.1% 1.4% 8.5% 11.5% 93.5% 2.2% 8.3% 5.4% UBSN VX UBS Long 72.0% 77.5% (1.0%) 3.0% 7.8% 74.1% 2.0% 8.3% 8.5% 67.4% 2.1% 5.7% 3.0% WPP LN WPP Group Long 16.3% 21.7% 5.4% 10.0% (3.8%) 12.4% 0.0% 5.9% 3.5% 30.0% 3.6% 7.7% 2.3% ABI BB Anheuser Busch InBev Long 19.7% 21.2% 4.3% 17.6% 9.8% 26.8% 1.4% 8.5% 11.5% 14.5% 2.2% 13.5% 10.7% ERICB SS Ericsson Long 7.6% 9.7% 1.9% 5.9% 9.3% 22.8% 2.1% 9.4% 8.9% 25.6% 2.9% 5.2% 2.5% AIR FP Airbus Group Long 24.8% 26.6% 0.8% 6.0% (5.1%) 21.1% 2.2% 10.7% 8.7% 17.9% 0.4% 7.4% 3.9% EZJ LN easyJet Long 17.8% 20.9% (7.7%) (5.3%) 4.7% 6.2% 0.0% 5.9% 3.5% 25.0% 2.2% 9.0% 11.3% DAI GR Daimler AG Long 22.0% 25.6% 4.9% 11.9% 14.5% 15.5% 2.0% 9.9% 4.2% 20.2% 4.8% 11.2% 11.4% OR FP L'Oréal Long 3.0% 3.4% 1.7% 12.4% 2.8% 13.1% 2.2% 10.7% 8.7% 12.7% 3.0% 10.6% 4.9% FP FP TOTAL Long 20.8% 26.8% 1.1% 15.2% 19.0% 13.1% 2.2% 10.7% 8.7% 16.8% 1.1% 14.4% 11.8% PNDORA DC PANDORA Long 81.5% 83.0% 3.1% 18.1% 40.1% 32.1% 4.0% 10.1% 22.0% 1.2% 1.8% 11.2% 3.2% SMDS LN D S Smith Long 11.6% 14.5% (0.7%) 2.2% (3.5%) 6.2% 0.0% 5.9% 3.5% 8.8% (0.1%) 10.9% 7.5% HEXAB SS Hexagon AB Long 9.8% 12.0% 0.2% 1.5% 8.0% 13.6% 2.1% 9.4% 8.9% 2.0% 2.9% 5.2% 2.5% UTDI GR United Internet Long 30.3% 31.9% 9.8% 11.4% 13.6% 15.2% 2.0% 9.9% 4.2% 9.2% 1.8% 4.5% (3.2%) TSCO LN Tesco Short 21.1% 13.9% 0.3% (0.9%) 8.4% 7.3% 0.0% 5.9% 3.5% (2.3%) 0.4% 6.8% (2.1%) SMP LN St. Modwen Long 24.6% 23.7% 3.2% (0.4%) 5.6% 10.4% 0.0% 5.9% 3.5% 24.0% 3.7% 14.5% 17.7% JMAT LN Johnson Matthey Long 15.1% 11.1% 0.1% 7.6% 0.5% 8.0% 0.0% 5.9% 3.5% 12.3% (0.1%) 10.9% 7.5% RTN LN Restaurant Group Long 11.7% 11.6% (4.4%) (11.9%) 3.5% 6.6% 0.0% 5.9% 3.5% 18.3% 3.7% 10.7% 10.6% SOLB BB Solvay Short (6.9%) (13.8%) 0.3% (11.1%) -- 12.0% 1.4% 8.5% -- 9.0% (0.1%) 10.9% -- AAL LN Anglo American Short (15.0%) (19.0%) 10.6% (5.5%) -- 3.9% 0.0% 5.9% -- 9.1% (0.1%) 10.9% -- JUP LN Jupiter Long 8.7% 10.5% 1.1% 7.2% -- 3.6% 0.0% 5.9% -- (1.4%) 2.1% 5.7% -- LAND LN Land Securities Long 8.5% 9.3% (2.5%) 3.9% -- 3.2% 0.0% 5.9% -- 16.2% 3.7% 14.5% -- HEI GR HeidelbergCement Long 14.0% 11.6% 1.8% 8.9% -- 5.8% 2.0% 9.9% -- 9.7% (0.1%) 10.9% -- RIO LN Rio Tinto plc Long (1.0%) (5.5%) (5.2%) -- -- 0.3% 0.0% -- -- 0.2% (0.1%) -- -- BAB LN Babcock Intl Group Long 3.0% 3.6% ------0.2% ------2.5% ------ABF LN Associated British Foods Long 0.8% 3.5% ------0.6% ------1.0% ------RMG LN Royal Mail Group Long (5.0%) (6.2%) ------0.1% ------0.2% ------Source: Bloomberg, J.P. Morgan estimates. Share price data as at COB 11 June 2014. Returns not shown where the period on the AFL is less than 1M/3M. J.P. Morgan may remove a stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice.
26
Asia Analyst Focus List
Open Trades (as of June 12, 2014 close)
Country OW UW Sector OW UW China PetroChina Sun Art Retail Group Limited Autos Mazda Motor India Sesa Sterlite Bharat Heavy Electricals (BHEL) Basic Materials Tata Steel Ltd CSR Limited Indonesia Bank Danamon Consumer Matahari Department Store 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 Singapore Airlines Far East Hospitality Trust Infrastructure GS Engineering & Construction South Korea Hyundai Motor Company Hanjin Shipping Co Ltd Oil and Gas PetroChina Sinopec Shanghai Petrochemical Taiwan ASE ASUSTek Computer Property Sun Hung Kai Properties Agile Property Holdings Ltd Thailand KASIKORNBANK SMID-Caps TAL Education Group VTech Holdings Technology TSMC Wintek Telecommunications 21Vianet Group Inc. Maxis Berhad Transportation Singapore Airlines 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) Sector relative performance in US$ (MSCI AC Asia Pacific ex JP)
Source: J.P. Morgan, Bloomberg. Source: J.P. Morgan, Bloomberg.
Last Four Weeks’ Additions
Company Name BBG Ticker Analyst Name Rating Add Date Add Price Current Price Price Target BYD Company Limited 1211 HK Alvin Kwock OW 14-May-14 39.30 42.60 67.00 LPN Development LPN TB Anne Jirajariyavech, CFA UW 14-May-14 17.00 20.00 14.00 GS Engineering & Construction 006360 KS Karen Li, CFA UW 15-May-14 37550.00 32300.00 27000.00 China Everbright International 257 HK Boris Kan OW 15-May-14 9.36 10.62 13.00 ASUSTek Computer 2357 TT Alvin Kwock UW 15-May-14 309.00 326.00 265.00 Esprit Holdings 330 HK Ebru Sener Kurumlu UW 16-May-14 11.72 11.28 11.30 PetroChina 857 HK Adrian Mowat OW 19-May-14 9.28 9.45 11.25 Sun Art Retail Group Limited 6808 HK Adrian Mowat UW 19-May-14 9.98 9.22 8.60 Tenaga TNB MK Hoy Kit Mak OW 19-May-14 12.20 11.66 16.50 Ayala Land ALI PM Yutan, Jeanette G OW 19-May-14 32.50 31.55 36.00 Hyundai Motor Company 005380 KS Seo, Scott OW 19-May-14 233500.00 225000.00 330000.00 Hanjin Shipping Co Ltd 117930 KS Seo, Scott UW 19-May-14 6150.00 6250.00 4000.00 Matahari Department Store LPPF IJ Ebru Sener Kurumlu OW 19-May-14 14500.00 13750.00 18000.00 Fubon Financial Holdings 2881 TT Klaczek, Josh OW 19-May-14 41.00 43.30 51.00 ANZ Banking Group ANZ AU Klaczek, Josh UW 19-May-14 32.66 33.83 34.75 CSR Limited CSR AU Kang, Daniel UW 19-May-14 3.32 3.45 3.00 21Vianet Group Inc. VNET US Sullivan, James R OW 16-May-14 25.85 26.83 35.00 Wintek 2384 TT Park, JJ UW 20-May-14 10.40 10.35 7.00 Sesa Sterlite SSLT IN Iyer, Bharat X OW 20-May-14 245.75 292.50 265.00 Bharat Heavy Electricals (BHEL) BHEL IN Iyer, Bharat X UW 20-May-14 277.80 243.65 130.00 Sun Hung Kai Properties 16 HK Leung, Cusson OW 20-May-14 100.80 106.20 128.00 Agile Property Holdings Ltd 3383 HK Leung, Cusson UW 20-May-14 5.58 6.04 6.00
Source: J.P. Morgan, Bloomberg. Priced at June 12, 2014
27
Last Four Weeks’ Deletions
Company Name BBG Ticker Analyst Name Rating Removal Date Add Price Removal Date Price Price Target Far EasTone Telecom 4904 TT Alvin Kwock UW 15-May-14 63.7 64.10 62.00 Uni-President China Holdings Ltd 220 HK Ebru Sener Kurumlu UW 16-May-14 6.61 6.42 4.00 SapuraKencana Petroleum Bhd SAKP MK Hoy Kit Mak OW 19-May-14 4.25 4.28 5.70 Puregold Price Club PGOLD PM Yutan, Jeanette G OW 19-May-14 39.3 42.25 58.00 Samsung Engineering 028050 KS Seo, Scott UW 19-May-14 84500 83300.00 50000.00 Puregold Price Club PGOLD PM Ebru Sener Kurumlu OW 19-May-14 43.8 42.25 58.00 Ping An Insurance Group - H 2318 HK Klaczek, Josh OW 19-May-14 56.15 56.65 88.00 Innolux Corporation 3481 TT Park, JJ UW 20-May-14 14.9 11.60 10.00 Tata Steel Ltd TATA IN Iyer, Bharat X OW 20-May-14 289.4 467.15 620.00 MNC Sky Vision tbk MSKY IJ Srinath, Aditya S OW 27-May-14 2285 2090.00 3000.00 DongFeng Motor Co., Ltd. 489 HK Lai, Nick YC UW 29-May-14 10.94 11.38 8.50 CSR Corp Ltd. 1766 HK Karen Li, CFA OW 9-Jun-14 5.7 5.80 8.60 LPN Development LPN TB Anne Jirajariyavech, CFA UW 11-Jun-14 17 19.60 14.00
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.
Abs. Perf Spread Over BBG Current Price Price Target Since Add MSCI Country Country/Company Name Ticker Analyst Name Country Rating1 Add Date Add Price Price Target1 End Date Date (%) Index (%)2 PetroChina 857 HK Scott L Darling China OW 19-May-14 9.28 9.45 11.25 12/31/14 1.8 -2.4 Sun Art Retail Group Limited 6808 HK Shen Li, CFA China UW 19-May-14 9.98 9.22 8.60 6/30/15 -7.6 -11.9 Aggregate China performance 27.6 19.8 Sesa Sterlite SSLT IN Pinakin Parekh, CFA India OW 20-May-14 245.75 292.50 265.00 12/31/14 19.0 14.0 Bharat Heavy Electricals (BHEL) BHEL IN Sumit Kishore India UW 20-May-14 277.80 243.65 151.00 3/31/15 -12.3 -17.3 Aggregate India performance 77.3 87.5 Bank Danamon BDMN IJ Harsh Wardhan Modi Indonesia UW 24-Apr-14 4355.00 4300.00 3000.00 6/30/15 -1.3 -1.5 Aggregate Indonesia performance 31.9 33.2 Tenaga TNB MK Ajay Mirchandani Malaysia OW 19-May-14 12.20 11.66 16.50 8/31/14 -4.4 -3.4 Maxis Berhad MAXIS MK Princy Singh Malaysia UW 2-Sep-13 6.87 6.75 5.25 6/30/15 -1.7 -9.5 Aggregate Malaysia performance 10.7 12.6 Ayala Land ALI PM Jeanette Yutan Philippines OW 19-May-14 32.50 31.55 36.00 12/31/14 -2.9 -2.0 Globe Telecom GLO PM Princy Singh Philippines UW 19-Feb-14 1778.00 1692.00 1520.00 12/31/14 -4.8 -13.8 Aggregate Philippines performance -7.2 -6.6 Singapore Airlines SIA SP Corrine Png Singapore OW 19-Feb-14 10.10 10.62 13.00 6/30/15 5.1 -1.2 Far East Hospitality Trust FEHT SP Joy Wang Singapore UW 19-Feb-14 0.80 0.87 0.80 6/30/14 8.7 2.4 Aggregate Singapore performance -8.7 -7.2 Hyundai Motor Company 005380 KS Wan Sun Park Korea OW 19-May-14 233500.00 225000.00 330000.00 12/1/14 -3.6 -3.4 Hanjin Shipping Co Ltd 117930 KS Corrine Png Korea UW 19-May-14 6150.00 6250.00 4000.00 6/30/15 1.6 1.9 Aggregate South Korea performance -3.6 -11.7 ASE 2311 TT Gokul Hariharan Taiwan OW 17-Feb-14 29.50 38.60 40.00 12/31/14 30.8 21.1 ASUSTek Computer 2357 TT Gokul Hariharan Taiwan UW 15-May-14 309.00 326.00 265.00 12/31/14 5.5 2.2 Aggregate Taiwan performance 4.3 45.5 KASIKORNBANK KBANK TB Anne Jirajariyavech, CFA Thailand OW 8-Oct-13 177.50 201.00 230.00 12/31/14 13.2 12.9 Aggregate Thailand performance 14.6 -32.4 Average Country OW (US$) Asia Pacific ex JP 9.1 9.2 Average Country UW (US$) Asia Pacific ex JP 4.7 4.8 Aggregate Country (US$)3 Asia Pacific ex JP 4.4 4.5
1 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 2 – Spread over MSCI country indices except for Shanghai listed A-Shares which are spread over SHASHR. 3 - Spread over MSCI country index incorporates the impact of currency movements Source: Bloomberg, J.P. Morgan. Priced at June 12, 2014 (prices and price-related data based on current day's close)
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AFL – Sector team stocks
All returns shown in US$ terms, and reflect performance since date added to the AFL. All aggregates include cumulative returns since inception of the AFL on September 2, 2013. Aggregate US$ return spread uses the MSCI AC Asia Pacific ex JP Index as the benchmark.
Abs. Spread Perf Over Since MSCI Price Add Sector Add Current Price Target Date Index Company Name BBG Ticker Analyst Name MSCI Sector Indices Rating1 Add Date Price Price Target1 End Date (%) (%)2 Mazda Motor (7261) 7261 JT Akira Kishimoto Autos OW 4-Apr-14 479.0 480.0 680.0 12/31/14 1.5 1.7 Aggregate Autos performance -0.4 -0.9 Matahari Department Store LPPF IJ Princy Singh Consumer OW 19-May-14 14500.00 13750.00 18000.00 12/31/14 -8.1 -8.8 Esprit Holdings 330 HK Ebru Sener Kurumlu Consumer UW 16-May-14 11.72 11.28 11.30 6/30/15 -3.7 -3.9 Aggregate Consumer performance 20.0 20.2 BYD Company Limited 1211 HK Alvin Kwock Emerging Technology OW 14-May-14 39.30 42.60 65.00 6/30/15 8.4 1.2 Lite-On Technology Corporation 2301 TT William Chen Emerging Technology UW 2-Sep-13 50.00 48.95 40.00 12/31/14 -2.9 -25.1 Aggregate Emerging Technology performance 12.7 12.7 Fubon Financial Holdings 2881 TT Jemmy S Huang Financials OW 19-May-14 41.00 43.30 51.00 12/31/14 6.2 3.2 ANZ Banking Group ANZ AU Scott Manning Financials UW 19-May-14 32.66 33.83 34.75 12/31/14 4.4 1.4 Aggregate Financials performance -4.8 -4.8 GS Engineering & Construction 006360 KS Sokje Lee Infrastructure UW 15-May-14 37550.00 32300.00 27000.00 12/31/14 -13.2 -16.9 Aggregate Infrastructure performance -0.4 0.1 Tata Steel Ltd TATA IN Pinakin Parekh, CFA Metals & Mining OW 11-Nov-13 360.80 549.65 620.00 3/31/15 63.4 60.0 CSR Limited CSR AU Jason Steed Metals & Mining UW 19-May-14 3.32 3.45 3.00 12/31/14 4.8 2.0 Aggregate Metals & Mining performance -9.6 -9.4 PetroChina 857 HK Scott L Darling Oil and Gas OW 2-Sep-13 8.54 9.45 11.25 12/31/14 10.7 2.3 Sinopec Shanghai Petrochemical 338 HK Scott L Darling Oil and Gas UW 29-Apr-14 1.90 2.11 1.70 12/31/14 11.1 3.9 Aggregate Oil and Gas performance -5.0 -4.5 TAL Education Group XRS US Leon Chik, CFA SMID-Caps OW 24-Apr-14 23.33 26.31 34.00 12/31/14 12.8 15.2 VTech Holdings 303 HK Leon Chik, CFA SMID-Caps UW 9-Jan-14 100.60 107.50 82.00 12/31/14 6.9 5.0 Aggregate SMID-Caps performance 0.7 0.2 TSMC 2330 TT JJ Park Technology OW 17-Apr-14 120.00 123.50 150.00 12/31/14 3.5 -3.8 Wintek 2384 TT Narci Chang Technology UW 20-May-14 10.40 10.35 7.00 12/31/14 0.2 -1.9 Aggregate Technology performance 5.0 5.5 21Vianet Group Inc. VNET US Michelle Wei, CFA Telecommunications OW 16-May-14 25.85 26.83 35.00 12/31/15 3.8 3.7 Maxis Berhad MAXIS MK Princy Singh Telecommunications UW 19-Feb-14 6.95 6.75 5.25 6/30/15 -0.5 -8.6 Aggregate Telecom performance -9.9 -8.9 Singapore Airlines SIA SP Corrine Png Transportation OW 4-Apr-14 10.39 10.62 13.00 6/30/15 3.1 -1.4 Hanjin Shipping Co Ltd 117930 KS Corrine Png Transportation UW 25-Mar-14 6480.00 6250.00 4000.00 6/30/15 2.0 -4.8 Aggregate Transportation performance -51.1 -50.3 Sun Hung Kai Properties 16 HK Equity Cusson Leung Property OW 20-May-14 100.80 106.20 128.00 12/31/14 5.4 2.7 Agile Property Holdings Ltd 3383 HK Equity Ryan Li, CFA Property UW 20-May-14 5.58 6.04 6.00 12/31/14 8.3 5.6 Aggregate Property performance -2.9 -2.4 China Everbright International 257 HK Elaine Wu Utilities & Power Equipment OW 15-May-14 9.36 10.62 13.00 6/30/15 13.5 11.1 Shanghai Electric Group 2727 HK Boris Kan Utilities & Power Equipment UW 2-Sep-13 2.84 2.97 2.40 12/31/14 4.6 -14.2 Aggregate Utilities & Power Equipment performance 48.7 49.4 Average Sector OW (US$) 5.7 5.8 Average Sector UW (US$) 5.9 6.0 Aggregate Sector Performance -0.2 -0.1
1 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 2 – Spread over MSCI sector indices except for Shanghai listed A-Shares which are spread over SHASHR. Source: Bloomberg, J.P. Morgan. Priced at June 11, 2014 (prices and price-related data based on previous 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)
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Japan Analyst Focus List
Most Preferred Stocks Over the Next 3 Months Code Company Code Company 2587 Suntory Beverage & Food 8411 Mizuho Financial Group 3391 Tsuruha 8795 T&D Holdings 4555 Sawai Pharmaceutical 8801 Mitsui Fudosan 5002 Showa Shell Sekiyu 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 8031 Mitsui & Co Source: J.P. Morgan. Least Preferred Stocks Over the Next 3 Months Code Company Code Company 1812 Kajima 8015 Toyota Tsusho 2875 Toyo Suisan Kaisha 8267 Aeon 4523 Eisai 8304 Aozora Bank 5214 Nippon Electric Glass 8698 Monex Group 6758 Sony 9021 West Japan Railway 6806 Hirose Electric 9531 Tokyo Gas 6841 Yokogawa Electric 9697 CAPCOM 7272 Yamaha Motor 006360 KS GS Engineering & Construction 7751 Canon Source: J.P. Morgan.
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Japan Analyst Focus List AFL Abs. Return Perf Relative to Price since Analyst Add Current Price Target Add Date Coverage Sector Analyst Most/Least Code Stock Rating Add Date Price Price Target End Date (%) (%) Infrastructure Hirokazu Anai Most 8801 Mitsui Fudosan OW 6/5/2013 2769 3276 3,700 Dec-14 18.3 2.4
Least 1812 Kajima N 8/27/2013 375 432 430 Dec-14 15.2 0.3
Food and Toiletry Ritsuko Tsunoda Most 2587 Suntory Beverage & Food OW 1/29/2014 3400 3925 4,200 Dec-14 15.4 7.5
Least 2875 Toyo Suisan Kaisha N 6/3/2014 3115 3010 3,100 Dec-14 -3.4 5.2
Pharmaceutical Masayuki Onozuka Most 4555 Sawai Pharmaceutical OW 8/27/2013 6470 6010 8,300 Dec-14 -7.1 -11.3
Least 4523 Eisai UW 2/21/2014 3947 4116 3,300 Dec-14 4.3 -6.3
Machinery Toru Nakahashi Most 9962 Misumi OW 6/3/2014 2730 2736 3,000 Dec-14 0.2 -4.3
Least 6841 Yokogawa Electric UW 6/3/2014 1266 1281 1,160 Dec-14 1.2 3.3
Electronic Component Masashi Itaya Most 6770 Alps Electric OW 6/3/2014 1280 1324 1,590 Dec-14 3.4 2.8
Least 6806 Hirose Electric N 6/3/2014 14610 14790 15,000 Dec-14 1.2 -0.6
Precision/SPE Hisashi Moriyama Least 7751 Canon UW 2/21/2014 3123 3370 3,100 Dec-14 7.9 -2.9
Retail Dairo Murata Most 3391 Tsuruha OW 2/21/2014 4870 5360 6,300 Dec-14 10.1 8.9
Least 8267 Aeon UW 3/5/2014 1226 1233 1,050 Dec-14 0.6 2.5
Financial Natsumu Tsujino Most 8795 T&D Holdings OW 6/3/2014 1347 1381 2,180 Dec-14 2.5 -1.5
Least 8698 Monex Group N 6/3/2014 364 377 400 Dec-14 3.6 0.5
Games/Internet Haruka Mori Most 9684 Square Enix Holdings OW 6/3/2014 1647 1672 1,800 Dec-14 1.5 1.2
Least 9697 CAPCOM N 10/8/2013 1878 1708 1,700 Dec-14 -9.1 -47.8
Chemicals and Energy/Utilities Yuji Nishiyama Most 5002 Showa Shell Sekiyu OW 6/3/2014 1126 1201 1,200 Dec-14 6.7 6.8 Least 9531 Tokyo Gas N 6/3/2014 578 577 570 Dec-14 -0.2 0.0 Glass and Display Industry Narci Chang Most 6753 Sharp OW 2/21/2014 328 306 450 Dec-14 -6.7 -8.1 Least 5214 Nippon Electric Glass UW 2/21/2014 457 510 380 Dec-14 11.6 -10.2 Bank Josh Klaczek Most 8411 Mizuho Financial Group OW 2/21/2014 215 209 265 Dec-14 -2.8 5.0 Least 8304 Aozora Bank N 2/21/2014 295 325 310 Dec-14 10.2 -18.0 Shipbuilding & Plant Engineering Sokje Lee Most Mitsui Engineering & 7003 Shipbuilding OW 2/21/2014 207 208 300 Dec-14 0.5 4.8 Least GS Engineering & 006360 KS Construction UW 6/3/2014 32800 32300 27000 Dec-14 -1.5 -4.2 Transportation Dan Lu Most 9022 Central Japan Railway OW 5/20/2014 12755 13915 15000 Dec-14 9.1 2.0 Least 9021 West Japan Railway N 2/21/2014 4253 4394 3800 Dec-14 3.3 10.0 Consumer Electronics JJ Park Most 066570 KS LG Electronics OW 6/3/2014 76300 77700 80000 Dec-14 1.8 0.2 Least 6758 Sony N 2/21/2014 1766 1639 1500 Dec-14 -7.2 3.0 Autos & Auto Parts Kishimoto, Akira Most 7261 Mazda Motor OW 4/4/2014 479 480 680 Dec-14 0.2 -0.4 Least 7272 Yamaha Motor UW 2/25/2014 1534 1706 1450 Dec-14 11.2 -10.1 Trading Companies Mori, Kazuhisa Most 8031 Mitsui & Co OW 3/4/2014 1564 1560 2020 Dec-14 -0.3 -1.6 Least 8015 Toyota Tsusho UW 3/4/2014 2484 2764 2610 Dec-14 11.3 -9.9 Source: Bloomberg, J.P. Morgan Note: Share prices as of June 12, 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.
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CEEMEA Analyst Focus List J.P. Morgan CEEMEA AFL — 12 June 2014 Rel Perf since Add to AFL Local MSCI Index Potential (vs Local for Rel Valuation / Focus List Up/ MSCI Price Target Focus List Add Company Ticker Sector Analyst Rec Ccy Add Price Close Price Price Target Downside* Index)** End Date Date First Gulf Bank FGB UH Banks Bilandani OW UAE (AED) 8.95 16.45 19.00 16% 21% Dec-14 22-Dec-10 Emaar Properties EMAAR DB Property Hasan OW UAE (UAE) 3.17 9.50 13.00 37% 134% Dec-14 06-Apr-11 LW Bogdanka LWB PW Mining Kuzawinski OW Poland (PLN) 124.00 121.90 171.00 40% -16% Feb-15 08-May-12 Sberbank SBER RX Banks Kantarovich OW MICEX (RUB) 93.80 88.99 116.00 30% -10% Dec-14 31-Aug-12 Vakifbank VAKBN TI Banks Formanko OW Turkey (TL) 4.88 5.04 6.90 37% -6% Dec-15 24-Jun-13 Erste Bank EBS AV Banks Formanko OW Austria (Eur) 25.68 26.10 30.00 15% 0% Dec-14 13-Aug-13 STC STC AB Telecoms Sharma OW S. Arabia (SAR) 52.75 67.87 71.50 5% 16% Dec-14 17-Dec-13 Energa ENG PW Utilities Kuzawinski OW Poland (PLN) 15.75 20.44 19.00 -7% 23% Dec-14 13-Jan-14 Alpha Bank ALPHA GA Banks Formanko OW Greece (EUR) 0.69 0.74 0.95 29% -5% Dec-14 17-Apr-14 Source: Bloomberg, J.P. Morgan estimates. Share price data as at COB 11 June 2014. * From Latest Closing Price. **Stock Performance relative to MSCI Saudi Arabia, MSCI Turkey, MSCI Poland, MSCI UAE, MICEX, MSCI Austria, MSCI Greece. J.P. Morgan may remove a stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice.
U.S. Equity Analysts' Focus List
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.
Focus Mkt. Cap. Focus List Focus List Performance Target ($MMs) List Add Prev.Close Target % Change Relative Beginning Target Company Name Ticker Analyst Rating 6/12/2014 Add Date Price 6/12/2014 Price Since Add to Benchmark Date End Date American Airlines AAL Jamie Baker OW $28,952 12/11/13 $24.88 $42.29 $57.50 69.98% 62.64% Jun-14 Dec-14 Michael F. Cliffs Natural Resources CLF Gambardella OW $2,108 04/01/13 $19.01 $14.38 $26.00 -24.36% -43.21% Apr-14 Dec-14 CVS Caremark Corp. CVS Lisa Gill OW $88,838 08/01/11 $36.35 $77.32 $82.00 112.71% 92.41% Dec-13 Dec-14 General Motors GM Ryan Brinkman OW $56,964 12/11/13 $40.90 $36.12 $50.00 -11.69% -20.03% Apr-14 Dec-14 Gilead Sciences GILD Geoff Meacham OW $123,745 08/16/11 $19.43 $80.82 $100.00 316.06% 273.29% Dec-13 Dec-14 Illumina, Inc. ILMN Tycho W. Peterson OW $22,086 01/17/14 $125.26 $177.40 $190.00 41.63% 39.75% Jan-14 Dec-14 Las Vegas Sands Corp LVS Joseph Greff OW $58,757 08/15/11 $43.59 $73.80 $91.00 69.30% 42.49% Apr-14 Dec-14 Navistar Int'l NAV Ann Duignan OW $3,011 03/08/13 $31.89 $37.91 $44.00 18.88% -0.68% Jun-14 Dec-14 NCR Corporation NCR Paul Coster, CFA OW $5,403 01/13/14 $35.52 $32.84 $45.50 -7.55% -13.09% Apr-14 Dec-14 Och-Ziff Capital Management OZM Ken Worthington OW $6,290 01/06/12 $8.45 $13.39 $17.50 58.46% 22.57% Feb-14 Dec-14 Verizon Communications VZ Philip Cusick OW $203,082 02/27/14 $46.35 $49.37 $55.00 6.52% 2.41% Apr-14 Dec-14 Source: J.P. Morgan estimates and Bloomberg data.
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