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 A par for the course May CPI print, India (Sumit Kishore) (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