16 May 2018 | 4:59PM HKT

China Consumer Pulse Check: From 0 to 5mn: What the explosive growth of one coffee brand reveals about Chinese consumers

3 trends relevant for advertising, retailing and food services consumer in the form of delivery and targeted locations Anita Yiu +852-2978-7200 | [email protected] In just 7 months, Luckin Coffee (Privately held) has stand to benefit, in our view. Goldman Sachs (Asia) L.L.C. catapulted from nonexistence to selling 5mn cups of coffee Sho Kawano 3) Millennials on cooking: No thanks, not yet - 35% of +81(3)6437-9905 | [email protected] in the 4-month trial operation period ending May 8. We do Goldman Sachs Japan Co., Ltd. respondents in a survey were willing to rent a not take a view on the longer term success of its business Timothy Zhao home without a kitchen. When eating out, experience is +65-6654-5771 | [email protected] model, but we think the brand’s surging popularity highlights Goldman Sachs (Singapore) Pte now the top ranked factor for restaurant choice, surprisingly three trends that are relevant for our covered companies: SoYoung Lee +852-2978-7098 | [email protected] above food safety, which is probably why Luckin Goldman Sachs (Singapore) Pte 1) Getting attention: Real world presence (still) critical - complements its delivery stations with full-service stores. There’s no doubt that digital marketing is important, but we believe it would be a mistake for companies to ignore offline Key stocks presence. In particular, Luckin highlighted that elevator n Elevator advertising giant: (Buy) advertising (industry +c.20% yoy in 2017) has helped it n Conveniently located snack stores: Zhou Hei Ya (Buy) rapidly build brand awareness. We also expect more Clear delivery strength: Yum China (Neutral) development in New Marketing with the growing integration n of online and offline worlds. n Food delivery (Ele.me): Alibaba (Buy, on CL)

2) Convenience: Bringing products to consumers - What else surprised us this month Luckin management flagged the lack of convenience as a Travel to Korea +13% yoy in March, the first positive key pain point for today’s coffee customer. Indeed, n print since the group tour ban in 2017. We expect considering China’s long working hours and commuting continued rebound ahead. We also expect outbound time, convenience is valued, increasingly expected and travel to HK to remain healthy at +MSD in 2018E. uniquely affordable among consumers in China (US$0.8 delivery fee). Companies that bring their products to the

Goldman Sachs 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. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html . Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S. Goldman Sachs China Consumer Pulse Check

n Premium cosmetics companies continue to go from strength to strength. Shiseido (Buy, on CL)’s China/HK cFX sales accelerated to +27% yoy in 1Q18.

Visit our portal to see our full coverage.

16 May 2018  Goldman Sachs China Consumer Pulse Check What we can learn from Luckin Coffee’s sudden success with young office workers

Founded just 7 months ago, Luckin Coffee has become very popular amongst young office workers in China’s top cities. According to the company, it sold 5mn cups of coffee to 1.3mn consumers in the 4 months ending May 8; by end of May, it expects to have 525 points of sales, eclipsing Costa Coffee, which has been building its China presence over the last 12 years.

How did this happen? Luckin Coffee appears to have taken a page from the internet playbook: the company is aggressively investing in customer acquisition and scale with subsidies and advertising, and positions itself as a disruptor - bringing lower prices and greater convenience to the coffee experience. It also has a laser-focus on young office workers: 84% of its Beijing POS are in offices and malls in commercial districts and the company is also launching enterprise catering services. While we do not take a view on the sustainability of this business model, we think the brand’s popularity highlights 3 key trends with Chinese consumers that are relevant for our covered companies:

1. Getting attention: Real world presence (still) critical 2. Convenience: Bringing the product/service to the consumer 3. Millennials on cooking: No thanks, not yet

Exhibit 1: Luckin Coffee’s explosive growth since October puts it at #2 in terms of POS Company Starbucks Costa Coffee Heytea Coffee Box Luckin Coffee

Logo

Country of Origin USA UK China China China Year started in China1 1999 2006 2012 2015 2017 # stores/POS2 3,236 c.420 84 100+ 525 Price3 Rmb 31 (US$4.9) Rmb 34 (US$5.4) Rmb 30 (US$4.7) Rmb 28 (US$4.4) Rmb 24 (US$3.8) - Full-service coffee shops - Full-service tea shops - Pick-up and delivery Store format - Full-service coffee shops - Full-service coffee shops - Delivery-only stations - Stalls within malls stations - Delivery-only stations Official delivery No Yes, Ele.me Yes, Meituan Yes, Meituan Yes, SF Express 1. Year when each company started their drink business in China, e.g. Coffee Box was founded in 2012 providing delivery services for Starbucks, and entered the coffee shop business in 2015. 2. 525 POS to opened by May 2018 per Luckin Coffee’s guidance; 3,236 Starbucks stores as of April 1, 2018; c.420 Costa Coffee stores as of end of 2017; 100+ Coffee Box stations and 84 Heytea stores as of May 2018. 3. Price of large-size/Venti Latte for Luckin Coffee, Starbucks and Costa Coffee; uniform-size Latte for Coffee Box; average spending in Beijing & Shanghai for Heytea (without promotion).

Source: Company data, Dianping.com, data compiled by Goldman Sachs Global Investment Research

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 2: Luckin Coffee’s premium design, live streaming of Exhibit 3: Luckin Coffee’s consumers are younger than Exhibit 4: Luckin Coffee targets white-collar consumers by coffee making, heavy promotion and customer referral Starbucks’ consumers opening POS within commercial districts and close to program Age distribution of mobile app users of Luckin Coffee (Apr 2018) Starbucks stores (data as of May 2018) Photos of Luckin Coffee coffee cup, packaging and screenshot and Starbucks (2017) Location of Luckin Coffee POS in Beijing and straight-line of live streaming video counter distance to the nearest Starbucks stores

2% 8% 10%

23% 20% 1km+ 29% Colleges 16% 20% 22%

27% <500m Offices & malls 55% 48% in commercial districts, 84% 22%

Luckin Coffee Starbucks 500m-1km 16% Promotion: register & get 1 for free; buy 2 get 1 for free; buy 5 get 5 for free ... through social network sharing (WeChat, cell number): refer a friend to register, 24 and below 25-29 30-34 35-39 40 and above get 1 for free Note: age distribution for Starbucks is estimated by GS based on Analysys data

Source: Company data, Goldman Sachs Global Investment Research Source: Analysys, Jiguang.cn , Goldman Sachs Global Investment Research Source: Company data, Baidu Map, data compiled by Goldman Sachs Global Investment Research

1) Getting attention: Real world presence (still) critical Especially when targeting young office workers, there’s no doubt that digital marketing matters. Luckin Coffee catapulted to become the daily #1 most downloaded food & beverage iPhone app in April (interestingly, its rank dropped on the weekends, when most workers are not in office) by requiring that all orders be placed via its app. Its WeChat advertising and promotion strategy (Exhibit 2) incentivizes users to refer friends within their social network.

In our view, what’s more noteworthy is the unwavering and growing importance of offline presence. In particular, Luckin Coffee utilizes elevator advertising, which is efficient, “captive and repetitive” according to management; it is also an effective way to target by location (e.g., office elevators), in our view. In fact, elevator advertising is one of the fastest growing advertising channels, growing c.20% yoy in 2017. It has been used by other start-ups previously to rapidly establish awareness (e.g., food delivery Ele.me in 2015 and bike sharing OfO in 2016) and the channel’s biggest advertisers feature both online and offline giants (e.g., JD.com, Tmall, KFC were among the largest elevator advertisers in 2017 according to CTR). That is to say, although consumers are becoming increasingly digital, brands cannot ignore building an offline presence.

Looking forward, we expect more development in New Marketing (the convergence of online and offline marketing) as customer databases and retail IT systems become more integrated with New Retail (the convergence of online and offline retail). For example, Luckin already uses location-based advertising to alert users when there is a new POS opening nearby.

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 5: Luckin Coffee has become one of the most popular food & drink app in China Exhibit 6: Luckin Coffee focuses on elevator ads as the main medium for offline advertising Luckin Coffee and Starbucks app ranks within Food & Drink category on iPhone App Store Apartment elevator poster ad by Focus Media

1

11

21

31

41

51

61

71 2/9 2/16 2/23 3/2 3/9 3/16 3/23 3/30 4/6 4/13 4/20 4/27 5/4 5/11 Luckin Coffee Starbucks Public holiday

Source: App Annie Source: Goldman Sachs Global Investment Research

Exhibit 7: Robust growth in elevator and cinema advertising Exhibit 8: Consumers spend 19% of ad watching time on elevator ads Nominal advertising dollar yoy growth in China % of time spent on advertising media (2017)

Internet 31.5% Cinema 25.5% Elevator screen 20.4% Internet ad, 26% Elevator poster 18.8% Other ad media, 34% Radio 6.9% TV 1.7% Traditional out-of-home -1.0% Transportation -1.0% 2016 TV ad, 21% Magazine -18.9% 2017 Elevator ad, 19% Newspaper -32.5% -50% -30% -10% 10% 30% 50%

Source: CTR, iResearch Source: Nielsen

16 May 2018  Goldman Sachs China Consumer Pulse Check

2) Convenience: Bringing the product/service to the consumer In addition to offering lower prices, Luckin Coffee has been focused on bringing convenience to the coffee drinker in the form of: i) delivery, and ii) convenient locations (office lobbies). Given that China ranks #3 in terms of longest working hours for 20-34 year olds (according to a survey by staffing company Manpower Group) and commuting time is long (Beijing, Shanghai c.1 hour and 45min per day on average, about double that of the US average, according to Baidu and US Census Bureau respectively), it is not surprising that consumers value convenience. We believe companies that can bring their products and services to the consumer stand to benefit from this trend.

n Delivery - Growing into a habit, enabled by low delivery (labor) cost, eating into home cooking

o Who, What, When, Where? A growing habit . While food delivery was initially concentrated in China’s largest high-density cities, low-tier cities (tier 3-5) already account for 40% of Meituan’s food delivery orders as of 2017, according to the company. Indeed, food delivery (c.Rmb290bn market as of 2017, according to Euromonitor) is increasingly growing into a consumer habit. Consumers are ordering in - not only when they’re in the office and short on time - but also when they’re at home: food delivery giant-Ele.me now receives more daily orders on weekends than on weekdays, and 48% of Meituan’s orders in 2017 were delivered to homes, as per the company.

o How? Low delivery (labor) cost . The average delivery fee in China is US$0.8 and the average basket size for food delivery is just US$6.4, less than 1/4 of the cost in the US as of 2017. China’s huge low cost delivery workforce of 5mn+ has been the key enabler. That is, while all consumers, if given the choice would probably value convenience; in China, convenience is much more affordable.

Uniquely China: In a o Implication? Eating into home cooking, complementary to restaurants . 60% of respondents on Meituan’s survey competition to bring more used food delivery as a substitute for home cooking (Exhibit 14). A much lower proportion of respondents (28%) convenience to the consumer, claimed to use food delivery as a substitute for eating in restaurants, implying that food delivery is complementary some restaurant chains have gone to the length of delivering and incremental to restaurant sales. After all, the experience of dining out is still irreplaceable (we discuss more in and collecting equipment for the next section). hot pot dinners. n Convenient locations - Offices, transport hubs

o Similar to start-ups that provided unmanned snack shelves in office pantries, Luckin focuses on office consumers who we believe are willing and able to spend. In Japan and Korea, convenience stores similarly have brought themselves closer to consumers and offer more food services. In China, we see the effort led by some food and beverage companies that are targeting high-traffic hubs such as train stations.

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 9: Who: 40% of food delivery orders are from Exhibit 10: What: Food delivery market already at c.290rmb, Exhibit 11: When: Food delivery becoming a habit as low-tier cities with growing share from full-service restaurants consumers order more on weekends than during the week China breakdown by city tiers, 2016 (food delivery order Home delivery value by restaurant types Distribution of number of orders by day (2017) breakdown as of Jan-Oct 2017)

Order # yoy (Rmb, billions) 16% 9% 6% +300% Low-tier 350 80% 17% 15% +238% cities: 40% 17% orders and 300 70% 15% growing 24 25% 19% +187% 60% fastest 250 14% 22% 50% 200 154 40% 13% 26% Tier 1 150 40% +147% 30% Tier 2 12% 41% 100 20% Tier 3 27% 114 50 10% 11% 20% +135% Tier 4 11% 0 0% 5% 10% Tier 5 Population Retail sales Food delivery orders 2009 2010 2011 2012 2013 2014 2015 2016 2017

Note: China’s population and retail sales distritbution by city tier is calculated by GS based on Wind Others (street stalls, cafes, etc.) Full-service restaurants 9% data. Order distribution refers to Meituan’s order number distribution by city tier. Fast food Home delivery total value yoy % (RHS) Mon Tue Wed Thu Fri Sat Sun

Source: Wind, Meituan, Goldman Sachs Global Investment Research Source: Euromonitor Source: Ele.me

Exhibit 12: Where: Nearly half of the food delivery orders Exhibit 13: How: Food delivery is much more affordable in Exhibit 14: Implication: Food delivery replaces home are delivered to home, followed by offices and schools China with delivery cost and average food delivery basket cooking more, incremental to restaurant sales Percentage of orders by ordering location types (2017) size <1/4 of that in the US (2017) What other dining options does food delivery replace?

China US Order ASP (US$) 6.4 22.3 60% Why ordering food delivery? Avg. delivery fee "Short dining time" and "don’t want to 0.8 4.1 Others, 0.15 (US$) cook" are the top 2 reasons Avg. delivery time 29 42 Stores, 0.07 (min) Residential Major delivery areas, 0.48 Electric bicycles Cars, bicycles Hotels, 0.08 vehicles 28% 25% 22% Over 5 million Mainly employed by Schools / deliverymen; employed by restaurants; 3P platforms universities, Delivery personnel 11% 0.11 3P delivery companies (e.g. Grubhub) responsible Office (e.g. Meituan, Ele.me) for ordering buidlings, 0.11 Cooking at Restaurant Hot food from Takeout from Canteens home visiting supermarkets restaurants

Source: Meituan Source: Ele.me, Meituan, SeeLevel, data compiled by Goldman Sachs Global Source: Meituan Investment Research

-GERŭX[EMXXSPEYRGLHIPMZIV]MR'LMRE ũ

That is going to create a whole new revenue stream for us. Belinda Wong, CEO of Starbucks China at Starbucks Conference Call, January 31, 2018

16 May 2018  Goldman Sachs China Consumer Pulse Check

3) Millennials on cooking: No thanks, not yet According to a survey by Tencent Penguin Intelligence, 35% survey respondents were willing to rent a home without a kitchen and 7% were even willing to buy a home without a kitchen. Such a survey is likely skewed towards digital and young consumers, and kitchens are not going to become obsolete in our view; on the contrary, demand for premium and smart kitchen appliances continues to be on the rise . Nevertheless, we believe the survey supports consumers’ clear shift from home cooking to restaurant and food delivery. In 2017, restaurant sales growth outpaced that of grocery (food and beverage) retail sales and continues to gain share of the food market.

Millennials , born in the 1980s and 1990s (also coined as post-80s and post-90s generation respectively), are a key driver of this trend. Optmistic and in many cases financially supported by their parents , this generation is driving the growth of leisure. In 2017, they contributed 60%/70% of restaurant transactions/sales value.

Uniquely China: Dining is a Why is this generation choosing to cook less? We believe their preference for convenience, and the availability and (social) experience. One affordability of food delivery (discussed in above section) are major drivers. Importantly, eating and drinking (non-alcoholic restaurant chain offers beverages) is also an important center of social life in China. Friends and family meet around meals and tea/coffee; dining out human-size bear dolls to accompany single diners. is still a more popular social activity than going to a bar for example. Hence, we believe the experience aspect of dining is important and it ranks as the top factor, above taste and even food safety, for how consumers choose restaurants.

Exhibit 15: 35% people are willing to rent a home without a kitchen Exhibit 16: Restaurant sales growth outpaced food & beverage retail sales in 2017 Tencent survey in 2014: will you consider to purchase or rent a home without a kitchen? China’s restaurant sales and food & beverage retail amount and growth rate

(Rmb, billions) Yes for home 5,000 2016: Restaurant growth 30% purchase 4,500 outpacing grocery food & 7% beverage retail 25% 4,000 3,500 20% 3,000 2,500 15% Yes for rent, No for either rent 2,000 No for home 10% or purchase purchase 1,500 58% 35% 1,000 5% 500 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 Restaurant sales (LHS) Food & beverage retail sales (LHS) Restaurant sales yoy (RHS) Food & beverage retail sales yoy (RHS)

Source: Tencent Penguin Intelligence Source: NBS

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 17: Millennials contribute 62% restaurant volume and 75% restaurant sales Exhibit 18: Experience and dining environment ranked as most important (more than food Percentage of post 80s/90s population within China’s total, restaurant volume and sales safety) Most important factor when selecting restaurants

Dining environment 19.2% 26% 38% Food tastes 17.8% Food safety 14.7% c.70% Price level 13.1%

75% Service level 11.3% 62% Nutrition & health 10.4% c.30% Comments 7.6%

Population Restaurant volume (2016) Restaurant sales (2017) Location 4.8% Post 80s/90s Others Promotion 0.7% Note: population percentage data is calculated by GS based on CEIC data Others 0.4%

Source: CEIC, Meituan, Unilever Source: China Cuisine Association

16 May 2018  Goldman Sachs China Consumer Pulse Check Key stocks

Premium duck snack with convenient store networks and delivery business Largest restaurant chain on delivery, KFC top ranking on online presence

ZHOU HEI YA (1458.HK) YUM CHINA (YUMC) Buy Lincoln Kong, CFA Neutral Michelle Cheng

Why we’re highlighting this: Why we’re highlighting this: Eating-out consumers favor convenience from easily passing by and stepping in, home delivery, Yum China is China’s largest restaurant chain overall and on delivery. We see delivery as the etc. ZHY focuses on expanding store networks at transport hubs, e.g. subway stations, high- main driver of YUMC sales growth with c.40% yoy growth vs. high single digit sales growth in speed railway and airports that have high store foot traffic and customer value. 300+ of its 1,027 2017. The acquisition of Daojia.com, a online food delivery service provider, completed last May stores as of end 2017 are located at transport hubs, contributing approximately 41% of total would improve the overall delivery efficiency and customer experience. The company is also an revenue in 2017. ZHY’s food delivery were available in 55 cities through 5 online platforms in industry leader in reaching consumers who live on mobile internet online via mobile apps, online 2017, contributing over 10% of revenue from self-operated retail stores from 3% in 2016. food delivery platforms, WeChat Mini Program and brand ads on WeChat Moments.

We expect further upside in both membership numbers and sales per member Delivery is a main driver of YUMC sales growth KFC ranks top on Mini Program Membership and sales per member YUMC delivery and sales growth Top rank of food-related programs

Delivery as % sales (RHS) Delivery growth yoy

cFX sales growth yoy Week of May 13, 2018 70% 20% Rank Overall rank Mini Program 1 33 Meituan Food Delivery

60% 16% 2 43 i McDonald’s 15% 14% 15% 344KFC+ 50% 13% 450+Ele.me 12%

40% April 2018 10% Rank Overall rank Mini Program 30% 1 59 Meituan Food Delivery 2 64 i McDonald’s 20% 5% 366KFC+

468Ele.me 10% Source: Aldwx.com 0% 0% 1Q17 2Q17 3Q17 4Q17 1Q18

Source: Goldman Sachs Global Investment Research Source: Goldman Sachs Global Investment Research

Underlying thesis: We see ZHY’s premium brand positioning and sticky demand for its Underlying thesis: We see long-term upside for KFC from store network expansion on the products leave ample room for sustained sales growth. The company’s continued brand back of strong margin and payback, but margin pressure in the near-term due to additional investment and raw material costs will pressure the near-term margin, but we believe an investments into Pizza Hut. An inflection point might emerge if Pizza Hut investment acceleration in sales growth is likely from 2018. We forecast 20% sales CAGR over 2018- stabilizes while KFC’s operating leverage including higher margins and solid SSSG can 19E and see sales upside from company’s membership schemes and stabilizing ASP trend. support the whole company’s earnings growth.

Valuation and key risks: Our 12-month target price is HK$9.4 based on an 22X PE multiple Valuation and key risks: Our 12-month target price is US$43 based on 10.5x/8.7x 2019E applied to 2018E EPS. Risks include competition over key store locations and higher rental EV/EBITDA for KFC/Pizza Hut. Risks include stronger/weaker-than-expected SSSG, greater- costs, change in consumer preferences, or unfavorable duck cost trend. /lesser-than-expected competition and execution risks.

16 May 2018  Goldman Sachs China Consumer Pulse Check

Life-circle advertising on elevators and cinemas New retail and food delivery to further drive revenue growth

FOCUS MEDIA (002027.SZ) ALIBABA (BABA) Buy Xufa Liao, CFA Buy, on Conviction List Piyush Mubayi

Why we’re highlighting this: Why we’re highlighting this: Offline advertising is still important despite larger focus on internet advertising, and particularly BABA’s new retail initiative has seen TAM growing to c.US$5 trillion, according to the we see elevator and cinema ads are beneficiaries of the shift of ad dollars. Focus Media is company. New retail drove 935% yoy growth in other core revenue in FY4Q18. The &KLQD¶VODUJHVWRSHUDWRURIOLIH-circle ad media, with 90%+/75%+/60%+ share of the inside- concolidation of Ele.me further expands BABA’s foodprint in online food delivery, driving building LCD/poster frame/cinema ad market in 2017. We believe this scale advantage gives traffic growth and providing incremental data. higher value to advertisers as most big advertisers carry out nationwide ad campaigns. We see the risk of new entrants and competition is also low. We forecast that Other (new retail)+Ele.me will account for 13.6% of BABA’s revenue in FY2019E CTR data revealed strong advertising spending growth in Feb-18 Segment revenue forecast Weighted average ad revenue growth of Focus Media Other (new retail) Ele.me as % of revenue 40% (Rmb, bn) 14.6% 120 13.6% 13.5% 15% 33% 30% 30% 30% 100 12% 26% 27% 31 24% 22% 22% 24% 80 22% 25 9% 20% 20% 19% 20% 6.3% 18% 18% 17% 60 6% 13% 14% 40 17 10% 72 9% 58 3% 9% 20 37 16 0% 0 0%

Jul-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 FY2018 FY2019E FY2020E FY2021E

Source: CTR, Gao Hua Securities Research Source: Company data, Goldman Sachs Global Investment Research

Underlying thesis: Focus Media’s superior media formats, strong bargaining power and Underlying thesis: We model a Rmb17.1bn revenue contributed by Ele.me in FY2019E, operating leverage are driving its fast and stable growth and very high capital return. We or c.4.3% of total revenue in FY2019E. New retail and Ele.me would be a margin drag at expect the company’s revenue share in China’s advertising market to increase from 2% in least in the near term given the investment and different cost structure, but will be important 2016. to 2.7% in 2021E, driving a revenue/NP CAGR of 17% in 2017-21E. We also expect top -line growth drivers going forward. We expect BABA’s revenue to grow at catalysts including recovery of advertising expendture and low-tier city penetration. 60%/41%/35% and non-GAAP operating margin of 32.5%/34.1%/35.9% in FY2019-2021E.

Valuation and key risks: Our 12-month target price Rmb16.78 is based on 23x 2021E EPS Valuation and key risks: Our 12-month target price of US$268 is based on SOTP discounted back to 2018 using an 8% COE. Key risks: slowdown in economic growth valuation. Key risks: slower GMV growth, lower monetization, more intense competition. dragging on ad expenditure; increasing competition from price wars.

Market cap, Last Up/down P/E P/B EV/EBITDA Ticker Company name Sector GS rating Crncy GS TP Analyst US$bn PX side 18E 19E 18E 19E 18E 19E 1458.HK Zhou Hei Ya Intl Food & Beverages 2.1 Buy HKD 9.4 7.0 35% Lincoln Kong, CFA 16.3x 14.2x 2.9x 2.5x 10.8x 9.0x YUMC Yum China Holdings Restaurants 14.5 Neutral USD 43.0 37.4 15% Michelle Cheng 21.4x 21.0x 4.5x 3.8x 9.1x 8.4x 002027.SZ Focus Media Information Tech Media 22.9 Buy Rmb 16.78 12.06 39% Xufa Liao, CFA 21.8x 18.0x 9.6x 7.3x 19.6x 15.7x BABA Alibaba Group Internet 520.2 Buy, on CL USD 268.0 198.6 35% Piyush Mubayi 30.8x 22.5x 7.5x 5.9x 23.7x 16.3x

Source: Datastream, Goldman Sachs Global Investment Research; Note: Upside as of May 15, 2018

16 May 2018  Goldman Sachs China Consumer Pulse Check Snapshot in four charts

Exhibit 19: Macro vitals: Consumer confidence still robust Exhibit 20: Online/offline: Online sales of goods slowed down to +23% while offline sales picked up with +7% yoy in April

Yoy Index Yoy Penetration 25% 130 70% 25% Online Retail sales penetration of 120 yoy, left 20% 60% goods, right 20% 110 15% 50% Online sales of 100 Keqiang 40% 15% goods, left 10% index, left 90 5% 30% 10% 80 Postal express Consumer 20% package 0% 70 2 4 6 1 3 5 7 0 2 4 6 3 5 7 0 2 4 6 1 3 5 7 1 3 5 7 1 6 2 4 6 2 4 8 1 3 5 7 3 1 5 7 5% volume, left 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 confidence, ------l l l t t t t r r r r r r r r c c c c v v v v y y y g g g g p p p p b b b b n n n n 10% u u u c c c c a a a a 7 7 p p p p 8 7 8 7 7 7 7 8 7 e e e e a a a o o o o u u u u e e e e e e e e u u u u right J J J J J J J 1 1 1 1 1 1

-5% 60 1 1 1 1 1 O O O O A A A A S S S S F F F F D D D D A A A A N N N N M M M M ------M M M / / / / l t r r c y v g p n b n n n n c u Offline sales of a p e a o u e e u J a a a a

0% J 0% O A S F J J J J D A N M M / goods, left n a J

Source: NBS, CEIC, Goldman Sachs Global Investment Research Source: NBS, State Post Bureau, CEIC, Goldman Sachs Global Investment Research

Exhibit 21: Areas of spend: Korean cosmetics accelerating Exhibit 22: Chinese inbound travel to Korea recorded positive growth in March; we expect Data as of Mar 2018 continued rebound ahead Chinese inbound to Korea monthly

Incremental change (000 persons) L3M vs 9M prior, ppts GSe 30% 1,000 300% Decline Accelerating growth getting less 900 250% bad 20% 800 200% 700 Cognac, wine Korean cosmetics 150% 10% HK jewelry 600 500 100% Milk price Eating out Int’l travel L3M Car units Sports 400 0% Luxury growth 50% -10% 0% Food retail 10% 20% 30% 300 Furniture 0% Beer volume Property price Gaming 200 Moutai -10% Appliances -50% (37%, -5%) 100 Mobile 0 -100% -20% Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18

Decline deepening Decelerating growth Chinese inbound to Korea (LHS) yoy growth (RHS) -30%

Source: CEIC, Goldman Sachs Global Investment Research Source: KTO, Goldman Sachs Global Investment Research

16 May 2018  Goldman Sachs China Consumer Pulse Check Dashboards and emerging trends

Exhibit 23: Sector dashboard yoy growth

Jan-Feb vs 3M prior, x xxApr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Mar 18 Apr 18 Mar 18 18 ppts Apparel Apparel & footwear retail sales 10% 8% 7% 6% 9% 6% 8% 10% 10% 8% 15% 9% 15% 6% Looking Fueled by stronger Korea cosmetics export to China 0% -15% 10% 15% 29% 42% 21% 47% 30% 25% 32% 32% -2% more Cosmetics inbound from China beautiful Japan cosmetics export to China 182% 138% 122% 130% 113% 110% 81% 85% 117% 102% 108% 108% 7% (favorable FX, Jewelry jewelry, watch, gifts retail sales 0% 1% -1% 13% 7% 15% 8% 8% 6% 21% 23% 23% 11% pressure on Korea) Dairy Milk powder import volume rolling 3m 7% -6% 21% 40% 69% 91% 97% 62% 10% 9% and local consumption (low Raw milk price 1% 0% 0% 0% 0% 1% 1% 1% 0% -2% -2% -2% -2% unemployment), Raw milk production -2% -2% -0% -4% -3% -3% 1% -1% -1% -0% HK jewelry printed F&B Live hog price -23% -32% -34% -25% -22% -19% -11% -15% -14% -19% -30% -30% -15% Eating Beer production volume -1% 1% 6% 2% -3% -1% -2% -3% -5% 1% 3% 3% 5% All alcohol segment better Moutai wholesale price 48% 44% 41% 47% 51% 34% 31% 45% 47% 32% 33% 33% -9% Alcohol (beer, moutai, Cognac shipments to the Far East, rolling 12m -2% 5% 5% 11% 11% 15% 12% 15% 11% 12% 15% 15% 2% cognac, waine) China wine import volume, rolling 12m 9% 10% 12% 15% 15% 19% 19% 18% 18% 22% 23% 16% 23% 3% printed solid growth Supermarket retail sales 4% 4% 4% 4% 4% 3% 5% 4% 4% 4% 5% 5% 1% Food retail Food, beverage, tobacco & liquor retail sales 12% 14% 11% 10% 8% 8% 10% 7% 9% 9% 11% 9% 11% 3% Primary residential property, GFA sold 5% 8% 18% 0% 2% -6% -9% 4% 4% 2% 3% -4% 3% -1% Primary residential property, ASP 3% 4% 7% 4% 1% 3% 6% 8% 16% 13% 5% 10% 5% -8% Property Secondary residential property, Tier-1 cities volume -21% -30% -29% -53% -64% -56% -47% 33% -15% -9% -13% -13% -16% Secondary residential property, Tier-1 cities ASP 20% 20% 17% 18% 14% 8% 9% 10% 8% 6% 2% 2% -6% Better Furniture retail sales 14% 14% 15% 12% 11% 16% 10% 12% 13% 9% 11% 8% home 11% -0% Home appliances and video equipment retail sales 10% 14% 13% 13% 8% 7% 5% 8% 9% 9% 15% 15% 7% Furniture & Air conditioner wholesale volume 70% 67% 67% 74% 37% 18% 29% 10% 21% 25% 21% appliances 21% 3% Washing machine wholesale volume 6% 10% 10% 10% 6% 8% 7% 10% 7% 7% 6% 6% -2% Refrigerator wholesale volume -8% -11% -4% -7% -2% -1% 5% -4% -8% -7% 2% 2% 8% Cars New passenger car sales units 1% 2% 5% 6% 6% 1% 3% 4% 1% Chinese Mobility Mobile 3G/4G subscribers 24% 24% 24% 23% 23% 23% 22% 21% 20% 19% 20% 20% -0% international Smartphone monthly shipment, rolling 3m 5% -11% -12% -16% -13% -12% -10% -12% -23% -27% -29% -29% -8% outbound Passenger traffic from 4 major Chinese airlines, int’l 2% 4% 3% 4% 6% 10% 15% 16% 13% 7% 19% 19% 7% strengthened including Korea, Passenger traffic from 4 major Chinese airlines, domestic 13% 18% 16% 13% 11% 13% 13% 19% 17% 8% 13% 13% -2% which printed Chinese outbound to Hong Kong (overnight) 3% 10% 1% 7% 3% 6% 10% 13% 9% 13% 6% 6% -5% positive growth for Travel Chinese outbound to Macau (overnight) 14% 19% 15% 20% 11% 16% 15% 19% 15% 20% 9% 9% -9% the first time since the group tour ban Chinese outbound to Japan 3% 2% 1% 7% 21% 30% 31% 31% 32% 18% 17% 17% -10% in March 2017 Having Chinese outbound to Korea -67% -64% -66% -69% -61% -56% -49% -42% -38% -44% 12% 12% 53% more fun Chinese outbound to Thailand -8% 3% 7% 8% 10% 15% 70% 83% 52% 32% 27% 27% -28% "Fun" consumption Media Movie Box office revenue 48% 16% -5% 5% 70% 28% 41% 5% 16% 35% 52% 52% 33% ranging from box Sporting and recreational goods retail sales 9% 11% 29% 27% 15% 13% 20% 15% 2% -4% 12% 12% 8% Sports office to restaurant Sportswear: Pou Sheng cFX sales growth 18% 11% 13% 8% 20% 11% 19% 21% 21% 16% 21% 21% 2% recorded strong growth thanks to Eating out Total retaurant sales yoy growth 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% 10% 10% -1% improving Gaming Macau overall GGR 16% 24% 26% 29% 20% 16% 22% 23% 15% 20% 22% 22% 3% consumer Daily use goods retail sales 8% 9% 11% 7% 7% 8% 7% 8% 5% 10% 17% 12% 17% 9% sentiment Well- Personal care Diaper sales in baby specialty stores* 12% 7% 7% 8% 8% 7% 7% 5% 5% 5% being Health Chinese & Western medicine retail sales 13% 14% 14% 13% 11% 15% 12% 11% 14% 10% 11% 8% 11% -1% Swiss watch import to China recorded Swiss Watch China import value 39% 34% 12% 22% 3% 1% 18% 40% 12% 33% -7% -7% -35% the first negative Korea Duty Free Shop industry sales 2% 7% 11% 9% 22% 31% 12% 34% 26% 22% 67% 67% 40% growth in 18 Luxury Luxury Japan Dept store cosmetics sales 15% 17% 17% 16% 20% 29% 20% 24% 14% 11% 16% 16% -0% months on difficult comparative base Luxury auto import to China 23% 22% 17% 19% 18% 12% 15% 14% 18% 23% 18% 18% -1% Macau VIP GGR 18% 37% 39% 48% 34% 27% 31% 28% 11% 24% 21% 21% -0% Note 1: * denotes bi-monthly data Note 2: The darker the blue/red represents the more positive/negative the values respectively.

Source: CNCIC, KITA, Wind, Ministry of Agriculture, hesitan.com, Bureau National Interprofessionnel du Cognac, NBS, Centaline Property Agency, China Auto Market, China IOL, MITT, CEIC, CBO, DICJ, Nielsen, Federation of the Swiss Watch Industry, Company Data, Goldman Sachs Global Investment Research

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 24: Company dashboard yoy growth

1Q17 2Q17 3Q17 4Q17 1Q18 1Q18 yoy 1Q18 vs 4Q17, ppts Global H&M China revenue cFX 19% 11% 3% -10% -3% -3% 7% Uniqlo China SSSG +sd +sd +low-mid sd ’+low-mid sd Apparel Local Heilan Home sales 1% 13% -2% 16% Semir Garment sales 7% 21% 11% 12% Global LG H&H China beauty-related sales 25% 25% 40% 42% 60% 60% 18% Prestige cosmetics continued to print Amorepacific China sales 30% 12% 12% 18% 5% 5% -13% Shiseido China/HK revenue in local currency 22% 15% 21% 20% 27% 27% 7% robust growth, Looking Cosmetics while Sa Sa, a HK- L’Oreal Asia Pacific LFL sales growth 7% 9% 15% 19% more based cosmetics Local Shanghai Jahwa sales -13% -14% 2% 55% specialty retailer beautiful Sa Sa total sales 5% 2% 1% 7% 14% 14% 8% also saw a Global Pandora APAC (cFX) sales 40% 34% 32% 13% comeback as -2% -7% 2% 3% Tiffany APAC (cFX) SSSG Chinese inbound Local Chow Tai Fook China SSSG 12% 11% 9% 5% 7% 7% 2% Jewelry spending increased Chow Tai Fook HK SSSG 4% 5% 13% 5% 17% 17% 12% Luk Fook Mainland China SSSG 11% 23% 11% -4% -2% -2% 2% Luk Fook Hong Kong SSSG 1% 3% 18% 1% 18% 18% 17% Global Mead Johnson Asia cFX sales -10% 2% 4% 5% Nestle Asia, Oceania and Africa organic sales 5% 5% 5% 5% 5% 5% 0% Dairy A2 Milk China and other Asia sales* 72% 72% 93% 93% Local Yili sales 3% 20% 18% 8% Mengniu sales* 8% 8% 16% 16% Pork Local WH Group (Shuanghui) sales -4% -8% 4% -2% -1% -1% 1% Global Orion China sales in local currency -32% -44% -17% -42% Ezaki Glico China sales in local currency -8% 3% 2% Snacks & Hershey China chocolate retail sales 0% Negative Negative Negative Flat Flat instant noodles Local Tingyi instant noodle sales 6% -3% 4% 13% Uni-President China instant noodle sales* -1% -1% 0% 0% Dali Foods sales* 10% 10% 12% 12% Eating Global ABI China sales 11% 7% 5% 7% 4% 4% -2% Premium segment better Carlsberg Asia organic net sales 6% 6% 7% 5% 16% 16% 11% of foreign brands Beer Local Yanjing Brewery sales 2% -1% -5% -17% recorded robust CR beer sales* 4% 4% 4% 4% growth as it is the Tsingtao Brewery sales 3% 2% 0% -6% main beneficiary of sales 36% 36% 116% 31% Local industry ASP Baijiu sales 15% 23% 43% 19% Yanghe Brewery sales 11% 18% 20% 15% Global Pernod Ricard Asia & RoW (cFX) sales -2% 2% 7% 7% 18% 18% 11% Western spirits Remy Cointreau China value depletions +strong dd +strong dd +strong dd +Solid dd & wine Treasury Wine Asia cFX sales* 29% 29% 37% 37% Global Wal-Mart China SSSG -1% 1% 3% 2% Food retail 7-Eleven Shanghai SSSG 6% +low sd +low sd Midea and Qingdao Local Sun Art SSSG -1% -1% -1% -1% Haier commented Local residential contract sales 100% 11% 63% 31% 3% 3% -28% that there will be no Property China Overseas Land residential contract sales 45% 25% -26% 21% 6% 6% -15% acquisition contribution, hence Global MUJI China SSSG 6% 2% 7% 4% Furniture nominal/organic Better Local Suofeiya 48% 49% 35% 23% growth will be the home Local Midea organic sales 31% 37% 45% 30% 17% 17% -13% same going Qingdao Haier organic sales 23% 23% 17% 15% 13% 13% -2% Appliances forward sales 20% 60% 25% 44% Suning SSSG 3% 6% 4% 4% 6% 6% 2% Note: * denotes semi-annual data; The darker the blue/red represents the more positive/negative the values respectively.

Source: Company data, Goldman Sachs Global Investment Research

16 May 2018  Goldman Sachs China Consumer Pulse Check

Exhibit 25: Company dashboard yoy growth

1Q17 2Q17 3Q17 4Q17 1Q18 1Q18 yoy 1Q18 vs 4Q17, ppts Global BMW China volume 12% 25% 9% 15% Apple China Honda China volume (local made) 17% 22% 16% 11% performed well in Cars SAIC volume -2% 11% 14% 13% high-end market Local Great Wall Motor volume 8% -10% 15% -8% with high ASP Geely volume 88% 111% 100% 24% (iPhone X ASP Mobility Global Apple Greater China sales -14% -10% 12% 11% 21% 21% 10% 10% higher than Samsung Electronics China sales 14% 14% 11% -6% other products) Phone Local Xiaomi Greater China phone shipment units -31% 1% 41% 29% while volume pressure continues. Huawei Greater China phone shipment units 23% 17% 13% 31% Other services OPPO Greater China phone shipment units 81% 29% 6% -6% (iCloud) revenue Lodging Local China Lodging Group same-hotel RevPAR 6% 8% 10% 7% 7% 7% 0% also increased in Local Air China passenger traffic 8% 2% 2% 8% China Southern passenger traffic 11% 11% 7% 12% 10% 10% -2% Airlines China Eastern passenger traffic 9% 9% 7% 11% 8% 8% -3% Hainan Airline passenger traffic 48% 57% 52% 52% 16% 16% -36% Travel booking Local Ctrip net revenue 46% 45% 42% 35% Sportswear Local IMAX China sales* -6% -6% 18% 18% companies saw Media Wanda Cinema sales 10% 22% 31% 10% continuous Huayi Brothers Sales -29% 31% 40% 13% improvement as Global Nike China (cFX) sales 15% 16% 12% 15% 19% 19% 4% consumer demand Having Adidas China (cFX) sales 30% 28% 28% 28% 26% 26% -2% continues to Sports more fun Local Anta retail sales (incl. e-com & kids) +low teens 20-30% +mid teens 20-25% 20-25% 20-25% increase Li Ning SSSG flat +hsd -lsd +mid teens +low teens +low teens Global Starbucks China/APAC SSSG 3% 1% 3% 1% 3% 3% 2% Pizza Hut China SSSG 2% 0% 0% 1% -5% -5% -6% Eating out Macau gaming KFC China SSSG 1% 4% 7% 7% 5% 5% -2% industry GGR Saizeriya China sales -3% 4% 17% 14% printed solid growth Local Tencent online gaming revenue 34% 39% 48% 44% Online gaming in 1Q18 attributable NetEase online gaming revenue 78% 46% 24% 21% to traffic increase in Global Wynn Macau total GGR 81% 73% 72% 50% 23% 23% -27% CNY Casinos Sands China total GGR 12% 24% 15% 8% 20% 20% 12% Local Galaxy Entertainment total GGR 4% 17% 24% 22% 32% 32% 10% Global Kimberly-Clark China diaper organic sales +lsd flat flat +lsd -hsd -hsd Unicharm China revenue in local currency 12% -11% 29% -30% Kimberly Clark Personal care Kao China revenue in local currency 50% 40% 10% +30-40% China diaper sales Well-being Pigeon China sales in local currency 23% 10% 27% 7% slowed down Local Hengan diapers revenue* -6% -6% -8% -8% mainly due to Local New Oriental sales 16% 23% 26% 23% losing market share Education TAL Education Group sales 51% 56% 83% 81% to local competitors Hard luxury Global Richemont APAC (cFX) sales 6% 23% 23% 11% via e-commerce Global LVMH Group AxJ (cFX) organic sales 20% 17% 21% 28% Luxury Soft luxury Gucci APAC (cFX) sales 63% 40% 55% 33% 49% 49% 16% Burberry Mainland China comp sales +hsd +mid teens +mid teens +msd Note: * denotes semi-annual data; The darker the blue/red represents the more positive/negative the values respectively.

Source: Company data, Goldman Sachs Global Investment Research

16 May 2018  Goldman Sachs Disclosure Appendix

Reg AC

We, Anita Yiu, Sho Kawano, Timothy Zhao and SoYoung Lee, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs’ Global Investment Research division. GS Factor Profile The Goldman Sachs Factor Profile provides investment context for a stock by comparing key attributes to the market (i.e. our coverage universe) and its sector peers. The four key attributes depicted are: Growth, Financial Returns, Multiple (e.g. valuation) and Integrated (a composite of Growth, Financial Returns and Multiple). Growth, Financial Returns and Multiple are calculated by using normalized ranks for specific metrics for each stock. The normalized ranks for the metrics are then averaged and converted into percentiles for the relevant attribute. The precise calculation of each metric may vary depending on the fiscal year, industry and region, but the standard approach is as follows: Growth is based on a stock’s forward-looking sales growth, EBITDA growth and EPS growth (for financial stocks, only EPS and sales growth), with a higher percentile indicating a higher growth company. Financial Returns is based on a stock’s forward-looking ROE, ROCE and CROCI (for financial stocks, only ROE), with a higher percentile indicating a company with higher financial returns. Multiple is based on a stock’s forward-looking P/E, P/B, price/dividend (P/D), EV/EBITDA, EV/FCF and EV/Debt Adjusted Cash Flow (DACF) (for financial stocks, only P/E, P/B and P/D), with a higher percentile indicating a stock trading at a higher multiple. The Integrated percentile is calculated as the average of the Growth percentile, Financial Returns percentile and (100% - Multiple percentile). Financial Returns and Multiple use the Goldman Sachs analyst forecasts at the fiscal year-end at least three quarters in the future. Growth uses inputs for the fiscal year at least seven quarters in the future compared with the year at least three quarters in the future (on a per-share basis for all metrics). For a more detailed description of how we calculate the GS Factor Profile, please contact your GS representative. M&A Rank Across our global coverage, we examine stocks using an M&A framework, considering both qualitative factors and quantitative factors (which may vary across sectors and regions) to incorporate the potential that certain companies could be acquired. We then assign a M&A rank as a means of scoring companies under our rated coverage from 1 to 3, with 1 representing high (30%-50%) probability of the company becoming an acquisition target, 2 representing medium (15%-30%) probability and 3 representing low (0%-15%) probability. For companies ranked 1 or 2, in line with our standard departmental guidelines we incorporate an M&A component into our target price. M&A rank of 3 is considered immaterial and therefore does not factor into our price target, and may or may not be discussed in research. Quantum Quantum is Goldman Sachs’ proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets. GS SUSTAIN GS SUSTAIN is a global investment strategy focused on the generation of long-term alpha through identifying high quality industry leaders. The GS SUSTAIN 50 list includes leaders we believe to be well positioned to deliver long-term outperformance through superior returns on capital, sustainable competitive advantage and effective management of ESG risks vs. global industry peers. Candidates are selected largely on a combination of quantifiable analysis of these three aspects of corporate performance. Disclosures Coverage group(s) of stocks by primary analyst(s) Sho Kawano: Japan-Retail/Restaurants. Japan-Retail/Restaurants: ABC-Mart, Adastria, Aeon, Ain Holdings, Askul, Cosmos Pharmaceutical, Don Quijote Co., FamilyMart UNY Holdings, Fast Retailing, H2O Retailing, Isetan Mitsukoshi Holdings, J. Front Retailing Co., K’s Holdings, Komeri, Lawson, Marui Group, MonotaRO, Nitori, Onward Holdings, Ryohin Keikaku, Saizeriya, Seven & i Holdings, Shimamura, Skylark Co., Sugi Holdings Co., Tsuruha Holdings, Welcia Holdings, Yamada Denki. Distribution of ratings/investment banking relationships Goldman Sachs Investment Research global Equity coverage universe

16 May 2018  Goldman Sachs

Rating Distribution Investment Banking Relationships Buy Hold Sell Buy Hold Sell Global 35% 53% 12% 63% 57% 51%

As of April 1, 2018, Goldman Sachs Global Investment Research had investment ratings on 2,896 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by the FINRA Rules. See ‘Ratings, Coverage groups and views and related definitions’ below. The Investment Banking Relationships chart reflects the percentage of subject companies within each rating category for whom Goldman Sachs has provided investment banking services within the previous twelve months. Regulatory disclosures Disclosures required by United States laws and regulations See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs trades or may trade as a principal in debt securities (or in related derivatives) of issuers discussed in this report. The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their households from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy generally prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director or advisor of any company in the analyst’s area of coverage. Non-U.S. Analysts: Non-U.S. analysts may not be associated persons of Goldman Sachs & Co. LLC and therefore may not be subject to FINRA Rule 2241 or FINRA Rule 2242 restrictions on communications with subject company, public appearances and trading securities held by the analysts. Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachs website at http://www.gs.com/research/hedge.html . Additional disclosures required under the laws and regulations of jurisdictions other than the United States The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: Goldman Sachs Australia Pty Ltd and its affiliates are not authorised deposit-taking institutions (as that term is defined in the Banking Act 1959 (Cth)) in Australia and do not provide banking services, nor carry on a banking business, in Australia. This research, and any access to it, is intended only for “wholesale clients” within the meaning of the Australian Corporations Act, unless otherwise agreed by Goldman Sachs. In producing research reports, members of the Global Investment Research Division of Goldman Sachs Australia may attend site visits and other meetings hosted by the companies and other entities which are the subject of its research reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Goldman Sachs Australia considers it is appropriate and reasonable in the specific circumstances relating to the site visit or meeting. To the extent that the contents of this document contains any financial product advice, it is general advice only and has been prepared by Goldman Sachs without taking into account a client’s objectives, financial situation or needs. A client should, before acting on any such advice, consider the appropriateness of the advice having regard to the client’s own objectives, financial situation and needs. Brazil: Disclosure information in relation to CVM Instruction 483 is available at http://www.gs.com/worldwide/brazil/area/gir/index.html . Where applicable, the Brazil-registered analyst primarily responsible for the content of this research report, as defined in Article 16 of CVM Instruction 483, is the first author named at the beginning of this report, unless indicated otherwise at the end of the text. Canada: Goldman Sachs Canada Inc. is an affiliate of The Goldman Sachs Group Inc. and therefore is included in the company specific disclosures relating to Goldman Sachs (as defined above). Goldman Sachs Canada Inc. has approved of, and agreed to take responsibility for, this research report in Canada if and to the extent that Goldman Sachs Canada Inc. disseminates this research report to its clients. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private Limited, Research Analyst - SEBI Registration Number INH000001493, 951-A, Rational House, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India, Corporate Identity Number U74140MH2006FTC160634, Phone +91 22 6616 9000, Fax +91 22 6616 9001. Goldman Sachs may beneficially own 1% or more of the securities (as such term is defined in clause 2 (h) the Indian Securities Contracts (Regulation) Act, 1956) of the subject company or companies referred to in this research report. Japan: See below. Korea: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. New Zealand: Goldman Sachs New Zealand Limited and its affiliates are neither “registered banks” nor “deposit takers” (as defined in the Reserve Bank of New Zealand Act 1989) in New Zealand. This research, and any access to it, is intended for “wholesale clients” (as defined in the Financial Advisers Act 2008) unless otherwise agreed by Goldman Sachs. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Singapore: Further information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference only and must not be reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the Financial Conduct Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request. European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/125/EC is available at http://www.gs.com/disclosures/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with Investment Research. Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer registered with the Kanto Financial Bureau under registration number Kinsho 69, and a member of Japan Securities Dealers Association, Financial Futures Association of Japan and Type II Financial Instruments Firms Association. Sales and purchase of equities are subject to commission pre-determined with clients plus

16 May 2018  Goldman Sachs consumption tax. See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company. Ratings, coverage groups and views and related definitions Buy (B), Neutral (N), Sell (S) - Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a stock’s total return potential relative to its coverage. Any stock not assigned as a Buy or a Sell on an Investment List with an active rating (i.e., a stock that is not Rating Suspended, Not Rated, Coverage Suspended or Not Covered), is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular analyst’s coverage group may vary as determined by the regional Investment Review Committee. Additionally, each Investment Review Committee manages Regional Conviction lists, which represent investment recommendations focused on the size of the total return potential and/or the likelihood of the realization of the return across their respective areas of coverage. The addition or removal of stocks from such Conviction lists do not represent a change in the analysts’ investment rating for such stocks. Total return potential represents the upside or downside differential between the current share price and the price target, including all paid or anticipated dividends, expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The total return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership. Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html . The analyst assigns one of the following coverage views which represents the analyst’s investment outlook on the coverage group relative to the group’s historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group’s historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group’s historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group’s historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target for this stock, because there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded. Global product; distributing entities The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897); in Brazil by Goldman Sachs do Brasil Corretora de Títulos e Valores Mobiliários S.A.; Ombudsman Goldman Sachs Brazil: 0800 727 5764 and / or [email protected]. Available Weekdays (except holidays), from 9am to 6pm. Ouvidoria Goldman Sachs Brasil: 0800 727 5764 e/ou [email protected]. Horário de funcionamento: segunda-feira à sexta-feira (exceto feriados), das 9h às 18h; in Canada by either Goldman Sachs Canada Inc. or Goldman Sachs & Co. LLC; in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W); and in the United States of America by Goldman Sachs & Co. LLC. Goldman Sachs International has approved this research in connection with its distribution in the United Kingdom and European Union. European Union: Goldman Sachs International authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman Sachs AG and Goldman Sachs International Zweigniederlassung Frankfurt, regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht, may also distribute research in Germany. General disclosures This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst’s judgment. Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division. Goldman Sachs & Co. LLC, the United States broker dealer, is a member of SIPC ( http://www.sipc.org ). Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and principal trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, principal trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. The analysts named in this report may have from time to time discussed with our clients, including Goldman Sachs salespersons and traders, or may discuss in this report, trading strategies that reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed in this report, which impact may be directionally counter to the analyst’s published price target expectations for such stocks. Any such trading strategies are distinct from and do not affect the analyst’s fundamental equity rating for such stocks, which rating reflects a stock’s return potential relative to its coverage group as described herein.

16 May 2018  Goldman Sachs

We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research. The views attributed to third party presenters at Goldman Sachs arranged conferences, including individuals from other parts of Goldman Sachs, do not necessarily reflect those of Global Investment Research and are not an official view of Goldman Sachs. Any third party referenced herein, including any salespeople, traders and other professionals or members of their household, may have positions in the products mentioned that are inconsistent with the views expressed by analysts named in this report. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at http://www.theocc.com/about/publications/character-risks.jsp . Transaction costs may be significant in option strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation will be supplied upon request. Differing Levels of Service provided by Global Investment Research: The level and types of services provided to you by the Global Investment Research division of GS may vary as compared to that provided to internal and other external clients of GS, depending on various factors including your individual preferences as to the frequency and manner of receiving communication, your risk profile and investment focus and perspective (e.g., marketwide, sector specific, long term, short term), the size and scope of your overall client relationship with GS, and legal and regulatory constraints. As an example, certain clients may request to receive notifications when research on specific securities is published, and certain clients may request that specific data underlying analysts’ fundamental analysis available on our internal client websites be delivered to them electronically through data feeds or otherwise. No change to an analyst’s fundamental research views (e.g., ratings, price targets, or material changes to earnings estimates for equity securities), will be communicated to any client prior to inclusion of such information in a research report broadly disseminated through electronic publication to our internal client websites or through other means, as necessary, to all clients who are entitled to receive such reports. All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all research content is redistributed to our clients or available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our research by third party aggregators. For research, models or other data related to one or more securities, markets or asset classes (including related services) that may be available to you, please contact your GS representative or go to http://360.gs.com . Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY 10282. © 2018 Goldman Sachs. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc.

16 May 2018  Start Your Finance

起点财经，网罗天下报告