Asia Pacific Equity Research

5 May 2011

Top Stories Wireless Data, Asia Pacific The importance of population density and spectrum (James R. Sullivan, CFA) The best relative opportunities for wireless data economics, in our view, are integrated operators in Australia (Telstra), New Zealand (Telecom NZ), and Malaysia (Celcom, Maxis and Digi). PLDT also appears attractive. The worst positioned are operators in markets with limited spectrum and high population density (e.g. India).

SMID Caps, Asia Pacific Introducing “Street-Quant”; Xinyi Glass, NVC Lighting, Haitian our top picks (Leon Chik, CFA) We launch a new analysis of SMID Caps that combines macro-based screens for outperforming stocks from our quantitative team together with on-the-ground research for news and themes. We are cautious on heavy industrial firms, especially those with a fragmented market or in industries subject to government cooling steps.

SM Prime Holdings, Inc. (OW), Philippines Upgrade to Overweight with PT raised to Php15 (Gilbert Lopez) SMPH stands out in the property sector as a company for which we see positive earnings momentum. We believe investor expectations for SMPH’s China shopping malls are low. China malls are likely to help SMPH achieve a stronger profit growth trajectory of 14%, while leaving room for positive surprises.

Consumer, Taiwan Increasing our estimates and price targets (Caren Huang) 1Q11 performance was strong, and we are bullish about 2H11. We raise our share price targets for PCS (OW, to NT$200 from NT$148), Uni-President (N, to NT$44 from NT$41), and FEDS (N, to NT54 from NT$50). PCS is our top pick in the space, followed by FEDS and Uni-President.

SK Telecom (OW), South Korea First meaningful earnings growth in five years (Sungmin Chang, CFA) SKT’s OP of W598B and EBITDA of W1.05T represent yoy growth of 16% and 10%, respectively, in contrast to the consistent earnings decline from 2006 to 2010. We expect healthy earnings momentum, easing concerns about tariff cuts, and attractive dividend yield to drive the share price up to our W205,000 target.

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Sunil Garg (852) 2800-8518 sunil.garg@jpmorgan.com Send me your feedback! AM perspective Adrian Mowat, Chief Equity Strategist Reliving 2Q10

Source: Bloomberg, 3 May 2011. Graph shows performance of MSCI EM. In our view, macro conditions today are similar to in 2Q10. In 1Q10, above-consensus economic and profit data supported markets even as European peripheral stress increased. But in 2Q10 the fundamental support was removed and markets refocused on structural issues. Note the similarity in EM 1Q performance. The current danger is developed market stagflation; primary and imported manufactured goods inflation in weak developed economies. US consumers face a double squeeze of higher net taxes and cost of living. For more, please see Key Trades and Risks, Mowat et al, 21 April 2011. Click below for the: J.P. Morgan Daily Valuations Latest Weekly AP Banks Analyzer (.xls) Daily Global Economic Briefing

Link to Other FTMs page Link to Morgan Markets page

Recommendation and Forecast Changes • Esprit Holdings (Neutral), Hong Kong (Ebru Sener

Kurumlu) Cutting estimates and price target

• Far Eastern Department Stores (Neutral), Taiwan (Caren Huang) Taiwan Consumer Industry: Not just convenient

• Hero Honda (Underweight), India (Aditya Makharia) 4Q FY11 PAT of Rs.5B (-16% yoy) in line with estimates

• Oberoi Realty (Overweight), India (Saurabh Kumar) 4Q pre-sales surprise positively, earnings negatively

• President Chain Store Corp (Overweight), Taiwan (Caren Huang) Taiwan Consumer Industry: Not just convenient

• SM Prime Holdings, Inc. (Overweight), TIP Markets (Gilbert Lopez) Moving in the right direction

• Tata Power (Overweight), India (Shilpa Krishnan) Factoring in a favorable outlook for coal mines: Maintain OW

• Thai banks, TIP Markets (Anne Jirajariyavech) Lack of positive catalyst in near term

• Uni-President Enterprises Co (Neutral), Taiwan (Caren Huang) Taiwan Consumer Industry: Not just convenient

• Wintek Corporation (Underweight), Taiwan (Narci Chang)

Competition has intensified; we cut our PT to NT$40

Strategy • Market Strategy, Asia Pacific (Steve Malin)

Global Factor Performance Summary: April 2011

Results and Company Views • Bharti Airtel Limited (Overweight), India (Malvika Gupta)

Q4'FY11e: Looking for a solid quarter in India and further clarity in Africa - ALERT

• China Citic Bank - H Share (Overweight), China (Samuel Chen) 1Q11 management review - ALERT

• China XLX Fertilizer Ltd., Singapore (Brynjar Eirik Bustnes, CFA) Company visit note

• Genting Singapore (Neutral), Singapore (May Yee Soh) Competitor disappoints in 1Q - ALERT

• Hyundai Wia (Underweight), South Korea (Wan Sun Park)

Strong 1Q11: M/T margins stronger; auto revenue robust on Kia sales; we think stock is expensive

• Mando (Overweight), South Korea (Wan Sun Park) Solid 1Q11 results: New order growth (+19%Y/Y) and mix improvement to continue

• Mundra Port and SEZ Ltd (Neutral), India (Sumit Kishore)

Acquires US$2bn coal terminal in Australia - ALERT • OCBC Bank (Overweight), Singapore (Harsh Wardhan

Modi) GEH 1Q results in-line, we expect small positive surprise for OCBC 1Q - ALERT

• Punjab National Bank (Overweight), India (Adarsh Parasrampuria) Asset quality disappoints but valuations reasonable; maintain Overweight

• Sands China Ltd (Overweight), HongKong (Kenneth Fong , CFA) A good 1Q11 on better luck and yield management; more room to outperform in 2H - ALERT

• Standard Chartered Plc (HK) (Overweight), Hong Kong (Sunil Garg) Costs likely to disappoint investors in 1Q IMS

• WCT Berhad (Overweight), Malaysia (Hoy Kit Mak) Refocusing on Malaysia?

Sector Research • Banks, China (Samuel Chen)

China Banks: New regulatory framework consistent with our previous views, a non-event - ALERT

• Cosmetics & Personal Care, Food & Food Manufacture, India (Latika Chopra, CFA) India Consumer & Retail: Off the Shelf

• Oil & Gas, Asia Pacific (Brynjar Eirik Bustnes, CFA) Crude Reality: Thailand to begin raising industrial LPG prices in July

• Petrochemicals, Asia Pacific (Samuel Lee, CFA) Chemical Reactions – April: China concerns take the momentum out of rising product prices

• Property, REITs, Singapore (Christopher Gee, CFA) Asia Real Estate Relative Value Ideas: New idea in Indonesia: prefer APLN over LPKR

Analyst Trading/Focus list • Asia Analyst Focus List, China (Chapman Deng)

Remove China Resources Power Holdings as Long - ALERT

• Asia Analyst Focus List, China (Leon Chik, CFA) Remove Pair Trade: The United Laboratories as Long and China Shineway Pharmaceutical Group Limited as Short - ALERT

Markets at a glance China Hong Kong India SHASHR Index 3,001.39 HSI Index 23,315.24 Sensex Index 18,469.36 Chg from previous day -2.26% Chg from previous day -1.35% Chg from previous day -0.35%T/O value (CNYmn / US$MM) 125,528 / 19,333 T/O value (HK$ mn / US$MM) 69,541 / 8,951 T/O value (INR bn / US$MM) 725 / 16,298Chg from previous day 16.29% Chg from previous day 0.00% Chg from previous day -27.91%Exchange rate CNY6.5 / US$1 Exchange rate HKD7.77 / US$1 Exchange rate INR44.5 / US$1O/N interbank (%) 2.60 O/N interbank (%) 0.01 O/N interbank (%) 7.25Market cap (CNYBn) 18,697.2 Market cap (HK$Bn) 20,667.9 Market cap (US$Bn) 1504.7Market cap (US$ Bn) 2,880 Market cap (US$ Bn) 2,660 Market cap (INR Bn) 66,911FY1E Market P/E 13.4 FY1E Market P/E 13.6 FY1E Market P/E 19.6FY2E Market P/E 11.2 FY2E Market P/E 12.9 FY2E Market P/E 16.1

Indonesia Malaysia Philippines JCI Index 3,814.93 KLCI Index 1,528.43 PSE Index 4,298.21 Chg from previous day 0.03% Chg from previous day -0.20% Chg from previous day -0.49%T/O value (Rp bn / US$MM) 4,457 / 521 T/O value (MYR MM / US$MM) - T/O value (Php MM / US$MM) 3,782 / 88Chg from previous day 39.60% Chg from previous day - Chg from previous day -0.27%Exchange rate Rp8,553 / US$1 Exchange rate MYR2.98 / US$1 Exchange rate Php42.87 / US$1O/N interbank (%) 6.89 O/N interbank (%) 2.74 O/N interbank (%) 4.25Market cap (US$Bn) 397.6 Market cap (US$ bn) 274.1 Market cap (US$ bn) 94.4Market cap (Rp bn) 3,400,574 Market cap (MYR bn) 816 Market cap (Php bn) 4,048FY1E Market P/E 17.5 FY1E Market P/E 15.7 FY1E Market P/E 16.5FY2E Market P/E 14.4 FY2E Market P/E 13.4 FY2E Market P/E 14.6

Singapore South Korea Taiwan STI Index 3,113.76 KOSPI Index 2,180.64 TWSE Index 8,947.35 Chg from previous day -1.26% Chg from previous day -0.91% DoD Change 0.01%T/O value (SGD MM / US$MM) 1,223 / 996 T/O value (KRW bn / US$MM) 8,462 / 7,873 52-Week Range 9,207 / 7,032Chg from previous day 4.52% Chg from previous day -0.3% T/O value (NT$ mn / US$MM) 20,477 / 717Exchange rate SGD1.23 / US$1 Exchange rate KRW1074.85 / US$1 Chg from previous day -2.93%O/N interbank (%) 0.06 O/N interbank (%) 3.00 Exchange rate TWD28.6 / US$1Market cap (US$ bn) 571.7 Market cap (KRW Bn) 1,311 O/N interbank (%) 0.30Market cap (SGD bn) 702 Market cap (US$ Bn) 1,220 10 Year Gov Bond Yield (%) 1.40FY1E Market P/E 15.8 FY1E Market P/E 13.1 Market cap (NT$Bn) 23,690.0 FY2E Market P/E 13.8 FY2E Market P/E 11.0 Market cap (US$ Bn) 932 FY1E Market P/E 17.4 FY2E Market P/E 13.6

Thailand SET Index 1,073.97 Chg from previous day 0.33% T/O value (Bt bn / US$MM) 32 / 1,054 Chg from previous day -19.18% Exchange rate Bt29.97 / US$1 O/N interbank (%) 2.37 Market cap (US$Bn) 295.3 Market cap (Bt bn) 8,850 FY1E Market P/E 15.6 FY2E Market P/E 13.7

Source: Bloomberg, J.P. Morgan estimates.

Asia Analyst Focus List OPEN TRADES (as of May 04, 2011 close) Long Trades – Relative1 Country/ Company Name

BBG Ticker Analyst Name Rating2 Add Date

Add Price

Current Price

Price Target2

Trade Time Horizon

Abs. Perf Since Add

Date (%)

Return Relative to Country Index

(%)3

Australia OneSteel Limited OST AU Benjamin Wilson OW 2-May-11 2.08 2.14 3.10 6-12 M 2.9 3.7ASX Ltd ASX AU Russell Gill OW 6-Apr-11 33.75 31.81 38.80 6-12 M -5.7 -3.5Insurance Australia Group IAG AU Siddharth Parameswaran OW 18-Mar-11 3.36 3.52 4.40 6-12 M 4.8 1.0Suncorp Group Ltd SUN AU Siddharth Parameswaran OW 18-Mar-11 7.95 7.93 10.86 6-12 M -0.3 -4.0Crown Limited CWN AU Stuart Jackson, CFA OW 15-Mar-11 7.82 8.48 9.60 6-12 M 8.4 2.7Qantas Airways QAN AU Scott Carroll OW 2-Mar-11 2.28 2.12 2.86 6-12 M -7.0 -7.0Charter Hall Group CHC AU Rob Stanton OW 24-Feb-11 2.34 2.39 2.83 6-12 M 2.1 2.4Credit Corp Limited CCP AU Alexander Mees, ACA OW 15-Feb-11 4.90 5.54 6.28 6-12 M 13.1 15.7ING Office Fund IOF AU Michael Scott OW 7-Feb-11 0.60 0.62 0.70 6-12 M 3.4 4.6Mirvac Group MGR AU Richard Jones, CFA OW 4-Feb-11 1.24 1.22 1.49 6-12 M -1.6 -0.5iiNet IIN AU Laurent Horrut OW 2-Aug-10 2.66 2.69 3.41 6-12 M 1.0 -4.1Campbell Brothers Limited CPB AU Alexander Mees, ACA OW 9-Sep-09 22.13 45.09 39.18 6-12 M 103.7 98.3China (SHASHR) Lenovo Group Limited 992 HK Gokul Hariharan OW 21-Mar-11 4.18 4.33 5.80 6-12 M 3.6 5.1Noah Holdings Ltd NOAH US Samuel Chen OW 26-Feb-11 13.63 17.02 22.50 6-12 M 24.9 25.3China Agri-Industries 606 HK Ying-Jian Chan OW 25-Jan-11 7.81 8.73 10.60 6-12 M 11.8 4.7China Cosco Holdings, Ltd. 1919 HK Corrine Png OW 11-Jan-11 8.70 7.20 11.80 6-12 M -17.2 -19.5China Minsheng Banking - A 600016 CH Samuel Chen OW 27-Nov-10 5.13 6.18 8.20 6-12 M 20.5 20.7China Minsheng Banking - H 1988 HK Samuel Chen OW 27-Nov-10 6.90 7.29 10.00 6-12 M 5.7 5.9The United Laboratories 3933 HK Leon Chik, CFA OW 5-Nov-10 15.52 12.36 22.00 6-12 M -20.4 -11.9Shenzhen Expressway - H 548 HK Karen Li, CFA OW 8-Sep-10 3.77 5.06 9.10 6-12 M 34.1 27.8China Unicom H Share 762 HK Lucy Liu OW 2-Aug-10 10.78 15.38 18.60 6-12 M 42.7 35.5Focus Media FMCN US Dick Wei OW 3-Jun-10 15.87 35.35 33.00 6-12 M 122.7 110.6AAC Acoustic 2018 HK Alvin Kwock OW 8-Sep-08 4.75 20.40 22.00 6-12 M 329.7 296.3Industrial and Commercial Bank of China - A 601398 CH Samuel Chen OW 30-Oct-09 4.79 4.53 7.00 6-12 M -5.3 -0.8Hong Kong AIA Group Ltd 1299 HK Bao Ling Chan OW 18-Apr-11 25.70 26.20 28.00 6-12 M 1.9 3.2Pacific Basin Shipping 2343 HK Corrine Png OW 11-Jan-11 4.88 4.74 7.00 6-12 M -2.8 0.9China Minsheng Banking - H 1988 HK Samuel Chen OW 27-Nov-10 6.90 7.29 10.00 6-12 M 5.7 5.9Wheelock & Company Ltd 20 HK Benjamin Lo, CFA OW 19-Nov-10 28.85 32.50 35.80 6-12 M 12.7 12.8Longfor Properties Co. Ltd. 960 HK Ryan Li OW 18-Nov-10 9.35 11.88 14.50 6-12 M 27.0 27.0HSBC Holdings plc 5 HK Sunil Garg OW 24-May-10 69.75 83.95 110.00 6-12 M 20.4 -10.9COSCO Pacific 1199 HK Karen Li, CFA OW 26-Aug-08 9.99 15.56 20.70 6-12 M 55.7 31.3India Sintex Industries Limited SINT IN Princy Singh OW 13-Jan-11 167.30 182.20 270.00 6-12 M 8.9 13.0IndusInd Bank IIB IN Seshadri K Sen, CFA OW 19-Nov-10 265.15 238.65 325.00 6-12 M -10.0 -3.4Ballarpur Industries Ltd. BILT IN Princy Singh OW 20-Oct-10 37.13 32.85 50.00 6-12 M -11.5 -2.8Apollo Hospitals Enterprise Ltd. APHS IN Princy Singh OW 5-Oct-10 463.15 460.05 590.00 6-12 M -0.7 10.3Indonesia Bank Rakyat Indonesia BBRI IJ Aditya Srinath, CFA OW 1-Apr-11 5850.00 6400.00 7300.00 6-12 M 9.4 6.5Japan Canon (7751) 7751 JT Hisashi Moriyama OW 14-Jan-11 4185 3895 5000 6-12 M -6.9 0.2Nikon (7731) 7731 JT Hisashi Moriyama OW 4-Jan-11 1732 1715 2500 6-12 M -1.0 4.3Inpex Corporation 1605 JT Brynjar Eirik Bustnes OW 1-Sep-10 384334 600000 750000 6-12 M 56.1 49.3DAINIPPON SCREEN MFG. (7735) 7735 JT Hisashi Moriyama OW 22-Jun-10 489 767 1100 6-12 M 56.9 59.6FUJIFILM Holdings (4901) 4901 JT Hisashi Moriyama OW 26-Jan-10 2891 2470 3800 6-12 M -14.6 -8.5Honda Motor (7267) 7267 JT Kohei Takahashi OW 19-Jan-10 3229 3225 3900 6-12 M -0.1 9.3Hitachi (6501) 6501 JT Yoshiharu Izumi OW 29-Jul-09 302 451 590 6-12 M 49.3 55.6Malaysia IJM Land IJMLD MK Simone Yeoh OW 3-May-11 2.80 2.79 3.40 6-12 M -0.4 -0.4Dialog Group Bhd DLG MK Hoy Kit Mak OW 28-Apr-11 2.56 2.50 3.00 6-12 M -2.3 -2.0RHB Capital RHBC MK Harsh Wardhan Modi OW 18-Nov-10 7.68 8.80 10.40 6-12 M 14.7 12.2Philippines Philippine Stock Exchange PSE PM Harsh Wardhan Modi OW 9-Oct-07 352.95 513.00 605.00 6-12 M 45.3 52.0International Container Terminal Services Inc ICT PM Jeanette G Yutan OW 8-Sep-10 35.15 48.70 49.00 6-12 M 38.5 36.1Singapore CapitaMalls Asia CMA SP Joy Wang OW 21-Jan-11 1.89 1.69 2.75 6-12 M -10.5 -8.5Singapore Airlines SIA SP Corrine Png OW 23-May-10 13.88 13.86 20.00 6-12 M -0.1 -15.1Noble Group Ltd NOBL SP Ajay Mirchandani OW 12-Nov-09 1.76 2.12 2.75 6-12 M 20.3 7.3Olam International Limited OLAM SP Ajay Mirchandani OW 2-Oct-08 1.64 2.82 3.70 6-12 M 72.1 45.4DBS Group Holdings DBS SP Harsh Wardhan Modi OW 8-Aug-08 14.46 14.76 24.00 6-12 M 2.1 -4.8South Korea Nong Shim 004370 KS Jinah Lee OW 17-Mar-11 220500 251000 270000 6-12 M 13.8 1.7Samsung Engineering 028050 KS Jinmook Kim OW 6-Feb-11 206000 225500 250000 6-12 M 9.5 3.0LG Electronics 066570 KS JJ Park OW 15-Jan-11 114000 105500 140000 6-12 M -7.5 -12.2

LG Chem Ltd 051910 KS Samuel Lee, CFA OW 14-Oct-10 323567 502000 491000 6-12 M 55.1 35.9LG Innotek 011070 KS Hyunjoon Roh OW 23-Mar-10 111111 105500 240000 6-12 M -5.0 -37.7LG Display 034220 KS JJ Park OW 15-Mar-10 35451 38550 50000 6-12 M 8.7 -27.1Taiwan Wistron Corporation 3231 TT Alvin Kwock OW 27-Apr-11 47.10 50.70 65.00 6-12 M 7.6 8.8Teco Electric & Machinery 1504 TT Nick Lai OW 16-Feb-11 17.65 20.15 24.00 6-12 M 14.2 11.0SPIL (Siliconware Precision Industries) 2325 TT Rick Hsu OW 15-Feb-11 40.45 38.40 46.00 6-12 M -5.1 -8.2TSMC 2330 TT Rick Hsu OW 19-Jan-11 78.00 73.80 88.00 6-12 M -5.4 -2.5Formosa Chemicals and Fibre Corp 1326 TT Samuel Lee, CFA OW 9-Dec-10 93.90 109.50 120.00 6-12 M 16.6 19.5Novatek Microelectronics Corp. 3034 TT Cynthia Chou OW 3-Dec-10 98.50 88.70 120.00 6-12 M -9.9 -7.0Quanta Computer Inc. 2382 TT Alvin Kwock OW 13-Oct-10 48.15 59.30 62.00 6-12 M 23.2 26.1First Financial Holding Co Ltd 2892 TT Joseph Leung OW 3-Sep-10 18.85 26.65 33.00 6-12 M 41.4 44.3Powertech Technology Inc 6239 TT Cynthia Chou OW 2-Aug-10 101.50 103.50 130.00 6-12 M 2.0 4.9Unimicron Technology Corp. 3037 TT Christopher Ma OW 18-Apr-10 39.74 46.70 60.00 6-12 M 17.5 20.4Thailand LPN Development LPN TB Anne Jirajariyavech OW 18-Jan-11 8.28 10.30 10.50 6-12 M 24.4 18.5Banpu Public BANPU TB Sukit Chawalitakul OW 15-Oct-10 713.26 726.00 888.00 6-12 M 1.8 -6.1PTT Public Company PTT TB Sukit Chawalitakul OW 23-Mar-10 248.77 361.00 437.00 6-12 M 45.1 11.8

Long Trades – Absolute1 Company Name BBG Ticker Analyst Name Rating2 Add Date

Add VWAP

Current VWAP

Price Target2

Trade Time Horizon

Abs. Perf Since Add Date (%)

Return Relative to MSCI AsiaXJ (%)

LG Electronics 066570 KS JJ Park OW 15-Sep-10 98365 104709 140000 < 3 M 14.77 14.65Powertech Technology Inc 6239 TT Cynthia Chou OW 4-Aug-10 100.96 103.04 130.00 < 6 M 13.75 18.47China ZhengTong Auto Service Holding Limited 1728 HK Frank Li OW 4-Mar-11 7.48 8.27 8.8 < 3 M 10.77 5.78COSCO Pacific 1199 HK Karen Li, CFA OW 10-Mar-11 15.25 15.48 20.7 < 3 M 1.81 6.49Banpu Public BANPU TB Sukit Chawalitakul OW 25-Jan-11 750.71 726.64 888.0 < 6 M 0.05 4.13Asian Property Development AP TB Anne Jirajariyavech OW 4-Apr-11 5.23 5.00 7.5 < 6 M -3.80 1.07

Short Trades – Relative1 or Absolute1 Country/ Company Name BBG Ticker Analyst Name Rating2 Add Date Add Price Current Price

Price Target2

Trade Time Horizon

Abs. Perf Since Add Date (%)

Return Relative to Country Index (%)3

Australia Woodside Petroleum WPL AU Benjamin Wilson UW 7-Apr-11 46.95 44.70 42.80 6-12 M -4.8 -2.6

Pair Trades – Absolute1

Company Name BBG Ticker Analyst Name Country

Long/ Short Rating2 Add Date

Add VWAP

Current VWAP

Price Target2

Trade Time

Horizon Abs. Perf

Since Add Date (%)

Return Relative to MSCI

AsiaXJ (%)The United Laboratories 3933 HK Leon Chik, CFA China Long OW 16-Jul-10 9.71 12.44 22.00 < 3 M 28.24 24.58China Shineway Pharmaceutical Group Limited 2877 HK Leon Chik, CFA China Short UW 16-Jul-10 18.78 18.87 22.00 < 3 M -0.55 -19.73 Pair Trade 27.68 China Agri-Industries 606 HK Ying-Jian Chan China Long OW 26-Jan-11 8.12 8.65 10.60 < 3 M 10.95 3.31Wilmar International Limited WIL SP Ying-Jian Chan Singapore Short N 26-Jan-11 5.38 5.15 5.40 < 3 M 0.39 -3.20 Pair Trade 11.34 Dongfang Electric Corporation Limited - H 1072 HK Boris Kan China Long OW 21-Apr-11 26.34 27.68 39.50 < 6 M 5.10 -1.18China High Speed Transmission 658 HK Boris Kan China Short N 21-Apr-11 10.97 10.39 13.50 < 6 M 5.27 1.19 Pair Trade 10.37 Agung Podomoro Land APLN IJ

Liliana Bambang Indonesia Long OW 3-May-11 358.95 358.95 455.00 < 6 M 0.00 0.00

Lippo Karawaci Tbk LPKR IJ Liliana Bambang Indonesia Short OW 3-May-11 772.68 772.68 800.00 < 6 M 0.00 0.00

Pair Trade 0.00 Techtronic Industries 669 HK Leon Chik, CFA China Long OW 16-Dec-10 10.24 10.28 14.00 < 6 M 0.50 7.17VTech Holdings 303 HK Leon Chik, CFA China Short N 16-Dec-10 87.22 87.59 77.00 < 6 M -0.52 -6.69 Pair Trade -0.02 iShares MSCI Taiwan Index Fund EWT US Adrian Mowat Taiwan Long - 18-Feb-11 15.17 15.66 - < 6 M 3.23 6.26

iShares MSCI South Korea Index Fund EWY US Adrian Mowat South Korea Short - 18-Feb-11 60.38 68.28 - < 6 M -13.08 -5.90

Pair Trade -9.85

1 - Relative indicates trades that are intended to generate returns relative to the relevant country index over the next 6-12 months. Absolute indicates trades that are intended to generate absolute returns in less than 6 months. 2 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 3 - Relative returns for relative trades are relative to MSCI country indices except for Shanghai listed A-Shares which are relative to the SHASHR. Source: Bloomberg, J.P. Morgan estimates. J.P. Morgan’s Asia Analyst Focus List (AFL) is a selection of instruments chosen by individual analysts/strategists as ‘Relative’ or ‘Absolute’ trades over a defined time horizon. The Relative trade list is a selection of stocks chosen by individual analysts that represent their top picks with the potential to provide an annualized total return in excess of +/-20% over the next 6-12 months - either Long or Short and relative to the relevant country index (which are MSCI country indices, except for Shanghai listed A-shares which are relative to SHASHR). The Absolute trade list is a selection of stocks and/or indices, chosen by individual analysts and strategists, respectively, representing their trading ideas - either Long or Short, that are intended to generate absolute returns in the short term (< 6 months). The ideas may be expressed as single stocks or in pairs. A stock or index will be removed from this list if its absolute return (based on VWAP) falls below 10%. If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL list pursuant to applicable law and/or J.P. Morgan policy without any further notice. Each trade is current only for the time horizon indicated. The short-term action expressed in the absolute trade list (Long or Short) may differ from J.P. Morgan's rating on the corresponding equities (Overweight, Neutral, or Underweight). For J.P. Morgan's long-term view on these names, including an analysis of valuation methodology and risk, please see the most recent company-specific research available at MorganMarkets http://www.morganmarkets.com or contact your J.P. Morgan representative. The Analyst Focus List is not intended to be viewed as model portfolios. 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. 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://mm.jpmorgan.com/disclosures/company. Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request. See the end pages of each individual note 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.

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Asia Pacific Equity Research 04 May 2011

The Economics of Wireless Data - Part One

The Importance of Population Density and Spectrum

Wireless Services, Wireline Services/Incumbents, Broadband, Alternative Carriers/Emerging Wireline James R. Sullivan, CFAAC

(65) 6882-2374 james.r.sullivan@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Laurent Horrut (61-2) 9220-1593 laurent.j.horrut@jpmorgan.com

J.P. Morgan Securities Australia Limited

Sungmin Chang, CFA (82-2) 758-5719 sungmin.chang@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

Lucy Liu (852) 2800-8566 lucy.y.liu@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Malvika Gupta (91-22) 6157 3595 malvika.x.gupta@jpmorgan.com

J.P. Morgan India Private Limited

Vishesh Gupta (65) 6882 2367 vishesh.x.gupta@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

• The most important driver of industry economics? Wireless data is now the largest driver of wireless revenue gr owth. This report is the first in our series examining the economics of wireless data.

• Investment Implications: Our analy sis indicates that the best relative opportunities for wireless data economics are integrated operators in Australia ( Telstra), New Zealand ( Telecom New Zealand), and Malaysia (Celcom, Maxis, Digi – no tr ue integrated operators); PLDT also appears attractive given its large spectru m holdings. The worst positioned would be operators in markets with li mited spectrum and high population densities, India being the most obvious example.

• Voice vs. Data economics: Voice se rvices show clear economies of scale, whereas our analy sis shows that wireless data exhibits variable levels of diseconomies of scale due to the differential impact of population density and spectrum and base station proliferation.

• Impact of scale differs, pricing doesn’t: Wireless voice prici ng has always leveraged voice's inherent ec onomies of scale to offer significant volume discounts, designe d to m aximize revenue per user (rather than revenue per minute). Wireless data is currently priced on similar volume discounts, de spite diseconom ies of scale. This has the potential to drive significant margin compression over time.

• Potential Solutions: We profile several potential mitigating factors, such as additional spectrum, WiFi off-loading, and Femtocells.

The Capital Intensity slope and inflection points of major Asia Pacific operators

Source: J.P. Morgan, ATiC Consulting

Challenging data economics: Limited “free period”, rapid base station proliferation

Better data economics: Large “free period”, limited base station proliferation

Asia Pacific Equity Research 04 May 2011

SMID Cap Ideas

Introducing Street-Quant

SMID Caps

Leon Chik, CFAAC

(852) 2800-8590 leon.hk.chik@jpmorgan.com

Andrew Hsu (852) 2800-8572 andrew.tj.hsu@jpmorgan.com

Quant Strategy

Steve MalinAC

(852) 2800 8568 steven.j.malin@jpmorgan.com

Robert Smith (852) 2800 8569 robert.z.smith@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

One year small cap performance

-20%-10%

0%10%20%30%

4/29/1

0

6/29/1

0

8/29/1

0

10/29

/10

12/29

/10

2/28/1

1

4/30/1

1

MSCI APxJ APxJ Small Source: Bloomberg

3 month small cap performance

-12%

-8%

-4%

0%

4%

8%

2/1/11

2/16/1

1

3/3/11

3/18/1

1

4/2/11

4/17/1

1

5/2/11

MSCI APxJ Source: Bloomberg

· Changes and news: We are launching a n ew analysis of SMID-Caps that combines macro-based screens for outperforming stocks f rom our quantitative te am together w ith on-the-ground r esearch f or S MID-Cap news and themes. In this monthly analysis that we are calling ‘Street-Quant’, w e de tail ne ws a nd di scussions w ith m anagement on our companies under coverage as well as companies with high potential that we do not cover but exhibit strong quantitative charateristics.

· High conviction ideas: Our hi gh c onviction t op pi cks i nclude Xinyi Glass, NVC Lighting and Haitian. These companies have demonstrated an ability to pass on higher costs and are direct or indirect beneficiaries of affordable housing and energy savings themes in China.

· Industry trends: We have seen more evidence that rising commodity costs a re starting t o manifest t hemselves i n l ower m argins. Accordingly w e ar e be coming more caut ious on heavy i ndustrial companies, especitally those where there is a fragmented market or in industries subject to government cooling measures.

· Company visits and updates: After our SMID-Cap corporate access day on 28t h A pril, w e hi ghlight our f indings f rom t he f ollowing companies.

· Xinyi Glass (868 HK; OW) · NVC Lighting (2222 HK; OW) · Kingboard Chemicals (148 HK; OW) · Kingboard Laminates (1888 HK;OW) · Fufeng Group (546 HK; OW) · China Medical Services (867 HK; NR)

Regional SMID Cap Highlights of the week

Company Name Code Price (TP) MCAP US$m

Vol US$m 1W Chg 3M Chg

10e PE (x)

11e PE (x)

10e EV/ EBITDA

10e ROE (%)

P/B (x)

10e Yld (%)

ND/E (%)

XINYI GLASS HOLD (OW)* 868 HK 9.6 (11) 4,332 23.4 2.3 47.2 13.0 10.7 10.5 36.2 3.9 4.2 29.2 KB CHEMICAL (OW)* 148 HK 43 (65) 4,708 5.7 (1.4) (5.6) 8.1 7.3 4.8 16.9 1.2 3.1 21.8 KB LAMINATES (OW)* 1888 HK 6.35 (10) 2,442 4.4 (10.7) (17.9) 7.5 7.3 5.0 24.1 1.8 6.3 7.2 HAITIAN (OW)* 1882 HK 10.96 (14) 2,243 3.1 (4.7) 18.2 12.0 10.3 7.6 28.3 2.6 6.1 (35.7) CHENMING (OW)* 1812 HK 6.51 (9) 2,273 1.7 (3.3) (1.8) 6.7 5.1 6.4 12.3 0.8 8.9 129.1 SKYWORTH (OW)* 751 HK 5.18 (7) 1,723 16.1 (0.4) 4.2 9.6 8.3 10.4 15.6 1.8 1.3 56.2 FUFENG (OW)* 546 HK 5.84 (8) 1,287 6.8 (7.0) (10.0) 7.9 7.0 5.4 30.9 2.1 3.5 (1.5) NVC LIGHTING (OW)* 2222 HK 4.25 (6) 1,216 10.3 8.7 2.7 18.2 14.2 13.5 18.1 2.9 0.0 (38.0) TCL MULTIMEDIA (N)* 1070 HK 3.16 (3.1) 440 2.2 (2.2) 1.3 17.1 6.9 5.6 6.2 1.0 0.0 30.7 Source: Bloomberg; * J.P. Morgan estimates for stocks under coverage. (Prices as of 3 May 2011).

Asia Pacific Equity Research 04 May 2011

SM Prime Holdings, Inc. ▲ Overweight

Previous: Neutral

SMPH.PS, SMPH PM

Moving in the right direction ▲

Price: Php11.96

Price Target: Php15.00 Previous: Php13.85

Philippines Property

Gilbert LopezAC

(63-2) 878-1188 gilbert.y.lopez@jpmorgan.com

J.P. Morgan Securities Philippines, Inc.

Christopher Gee, CFA (65) 6882-2345 christopher.ka.gee@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

9

11

13

Php

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

SMPH.PS share price (Php)PSE (rebased)

YTD 1m 3m 12m Abs 5.1% 2.2% 9.9% 16.7% Rel 2.8% 0.1% -1.1% -13.9%

SM Prime Holdings, Inc. (Reuters: SMPH.PS, Bloomberg: SMPH PM) Php in mn, year-end Dec FY08A FY09A FY10A FY11E FY12E FY13E Revenue 17,839 20,497 23,716 26,266 30,026 34,183 Net Profit 6,412.2 7,023.4 7,856.3 8,915.4 10,148.1 11,519.4 EPS (Php) 0.48 0.53 0.58 0.64 0.73 0.83 DPS (Php) 0.24 0.26 0.26 0.30 0.34 0.39 Revenue growth (%) 11.7% 14.9% 15.7% 10.8% 14.3% 13.8% EPS growth (%) 2.4% 9.5% 10.9% 9.8% 13.8% 13.5% ROCE 14.7% 14.3% 14.1% 13.8% 14.5% 15.5% ROE 14.4% 14.9% 14.9% 14.7% 15.5% 16.2% P/E (x) 24.9 22.7 20.5 18.7 16.4 14.4 P/BV (x) 3.4 3.4 2.8 2.6 2.4 2.2 EV/EBITDA (x) 13.0 12.6 11.0 9.7 8.5 7.7 Dividend Yield 2.0% 2.2% 2.2% 2.5% 2.9% 3.3%

Company Data Shares O/S (mn) 13,899 Market cap (Php mn) 166,231 Market cap ($ mn) 3,878 Price (Php) 11.96 Date Of Price 04 May 11 Free float (%) 28.0% 3mth Avg daily volume 5,551,507.00 3M - Average daily Value (Php mn) 62.34 Average 3m Daily Turnover ($ mn) 1.45 PSE 4,298 Exchange Rate 42.87 Fiscal Year End Dec

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

· Upgrading to Overweight: We upgrade S M P rime ( SMPH) to Overweight with a price target of PhP15.00, which is based on our NAV estimate. SMPH stands out in the sector as a company for which we see positive earnings m omentum. A s t he P hilippines’ o nly pur e p roperty investor f ocusing on retail property, S MPH possesses un ique characteristics, especially in a region dominated by residential property.

· Reliable earnings with high ROE to boot: SMPH’s ea rnings ha ve been the sector’s most reliable, t hanks t o a st eady mall expansion and support from the Philippines’ resilient consumption. Coupled with better capital m anagement t han peers, the end r esult i s the s ector’s highest ROE of 16 %. F inally, w e find t hat the r etail property s egment, w here SMPH ha s c lear m arket leadership, i s less ov ercrowded than ot her property segments due to its considerable entry barriers.

· China malls: low expectations = growth upside: We believe investor expectations for SMPH’s China shopping malls are low, as i t i s a new business w here success i s st ill a qu estion mark. We t hink t hat C hina malls will help SMPH achieve a stronger profit growth trajectory of 14% (versus sub -10% i n recent y ears), w hile leaving r oom f or pos itive surprises. I n t he Philippines, S MPH’s e xisting s hopping mall por tfolio also has a lot of redevelopment and expansion opportunities that should enhance future growth as well.

· Risks led by execution and macro: We i ncrease o ur NAV estimate from P hP13.85 t o P hP15.00 t o a ccount f or ne w projects a nd ou r expectation of improved growth moving forward. Key r isks include: 1) project execution may disappoint, causing delays and affecting earnings; 2) P hilippine c onsumption may weaken s ignificantly; a nd 3) a m uch more competitive industry.

Asia Pacific Equity Research 05 May 2011

Taiwan Consumer Industry

Not just convenient

Taiwan Retailing

Caren HuangAC

(886-2) 2725-9872 caren.huang@jpmorgan.com

J.P. Morgan Securities (Taiwan) Limited.

Ebru Sener Kurumlu (852) 2800-8521 ebru.sener@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Nick Lai (886-2) 2725-9864 nick.yc.lai@jpmorgan.com

J.P. Morgan Securities (Taiwan) Limited.

Relative share price performance vs. TWSE index Rel perf(%) YTD 3M 6M 12M FEDS 8.4 3.8 25.9 77.3 PCSC 14.4 26.5 12.9 57.8 UPEC -6.2 3.6 -8.7 13.8 Source: Bloomberg.

Relative performance (rebased)

50

100

150

200

250

Jan-10 Jul-10 Jan-11

FEDS PCSCUPEC TWSE Index

Source: Bloomberg.

• Strong 1Q11 performance: The consumer sector’s earnings increased a healthy 11% Y/Y in 1Q11 d ue to sol id discretionary spending and a strong dom estic economy. Likewise, the sector has outperform ed further YTD b y 6% agai nst TWSE vs. 43% gr owth in 2 010. The outperformance was due to solid privat e consumption in 1Q11 , which rose by 4.5% Q/Q compared with 3.6% Q/Q growth in 4Q10.

• We remain bullish on 2H11: Key drivers include: (1) The broadening domestic growth base with the hike in salaries and improving c onsumer con fidence. Our econom ist Grace Ng recently raised Taiwan’s 2011 real GDP estimate to 5.6% y/y from 4.5%. (2) High-te en growth in i ncoming t ourists and t he likel y implementation of individual Chinese tourist scheme in 2H11, which would be a positive share price cataly st and additional earnings driver in 2012. (3) Consensus earnings upgrade, whic h we thi nk i s a trend likely to persist. For instance, the Street’s estimates for PCS have been raised by 10% since the beginning of the year. Our current FY11/12 esti mates for PCS are 12%/16% ahead of consensus.

• PCS (OW): We raise our FY11 /12 estimates by 14%/20%, incorporating higher oper ating m argins and strong investment income from other retailing subsid iaries. We raise our PT to NT$200 (Jun-12) from NT$148 (Jun-11). We believe continued strong earning momentum will be a potential share price catalyst in 2H11.

• Uni-President (Neutral): We raise our FY11/12 estimates slightly by 5%/10% as a result of the higher co ntribution from PCS. We raise our Dec-11 PT to NT$44 from NT$41. Raw material cost remains a concern on its China operation, which may offset the robust performance of PCS.

• FEDS (Neutral): We raise our FY11 /FY12 earni ngs b y 9%/6% to incorporate the stronger profit margins fro m the Taiwan operation. Accordingly, we raise our Dec-11 PT to NT$54 from NT$50.

• Recommendation: We are positive on the domestic con sumer discretionary them e in Taiwan and are OW in our strategy model portfolio. Within the space, PCS is our preferred pick, followed by FEDS and Uni-President.

Valuation summary Company Ticker PT (LC) Rating Price(LC) Mkt cap P/E (x) P/B (x) ROE

May-04, 11 (US$ MM) FY11E FY12E FY11E FY12E FY11E FY12EFEDS 2903 TT 54 N 52.7 2,270 21.2 17.9 2.3 2.2 11% 13% PCS 2912 TT 200 OW 153.5 5,603 21.0 17.4 7.0 6.2 35% 38% Uni-President 1216 TT 44 N 40.5 6,054 15.0 13.0 2.3 2.1 16% 17%

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

Asia Pacific Equity Research 04 May 2011

SK Telecom

Overweight 017670.KS, 017670 KS

First meaningful earnings growth in five years

Price: W166,000

Price Target: W205,000

South Korea Wireless Services

Sungmin Chang, CFAAC

(82-2) 758-5719 sungmin.chang@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

Gonsuk Lee (82-2) 758 5710 gonsuk.lee@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

James R. Sullivan, CFA (65) 6882-2374 james.r.sullivan@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

150,000

180,000

210,000W

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

017670.KS share price (W )KOSPI (rebased)

YTD 1m 3m 12m Abs -3.8% 0.6% 0.6% -3.8% Rel -9.1% -2.5% -4.2% -30.7%

SK Telecom (Reuters: 017670.KS, Bloomberg: 017670 KS) Year-end Dec FY10A FY11E FY12E FY13E Revenue (W bn) 12,460 12,995 13,588 13,904 Operating Profit (W bn) 2,035 2,334 2,560 2,559 Net Profit (W bn) 1,411 1,669 1,791 1,825 EPS (W) 17,469 20,673 22,186 22,600 Revenue growth 3.0% 4.3% 4.6% 2.3% Operating profit growth -6.6% 14.7% 9.7% 0.0% EPS growth 9.5% 18.3% 7.3% 1.9% ROE 12.4% 14.3% 14.5% 13.2% P/E (x) 9.5 8.0 7.5 7.3 P/BV (x) 1.2 1.1 1.0 0.9 EV/EBITDA (x) 3.4 2.9 2.5 2.2

Company Data 52-week Range (W) 181,000 - 154,500 Market cap (W bn) 13,404 Market cap ($ mn) 12,541 Shares O/S (mn) 81 Fiscal Year End Dec Price (W) 166,000 Date Of Price 04 May 11 Free float (%) 23.2% 3M Avg daily Value (W bn) 16.15 3M Avg daily Value ($ mn) 15.11 3M Avg daily vol 133,315 KOSPI 2,181 Exchange Rate 1,068.80

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

Bloomberg JPMA CHANG <GO>

· First meaningful earnings growth since 2006: OP of W 598b a nd EBITDA of W1.05t represent yoy growth of 16% and 10% respectively in contrast to consistent earnings decline from 2006 to 2010. We .believe healthy earnings growth will continue over the next few quarters.

· Material de-leveraging to continue on shrinking working capital: Net debt decreased by W1.16t to W2.24t in 1Q11. As roughly W2.1t of accounts receivable gets monetized over the next six quarters in addition to our forecast for decent FCF from operations, we think SKT’s balance sheet should continue to improve.

· Capex is guided to decline in the medium to longer term, while tariff cut decision should be made soon; While W30 0b increase i n cap ex was a negative surprise, we be lieve this i s pul ling forward next year’s capex, and as suc h we t hink capex w ill de cline f rom 2012. We al so continue to believe tariff cuts will be minimal this year as di scussed in our update report dated April 27th.

· Maintain OW with W205,000 price target based on 2011E EV/EBITDA of 3.6x: We expe ct h ealthy ea rnings momentum, easing concerns on tariff cuts and attractive dividend yield to drive share performance over the next six months.

Asia Pacific Equity Research 04 May 2011

Esprit Holdings

Neutral 0330.HK, 330 HK

Cutting estimates and price target ▼

Price: HK$32.15

Price Target: HK$36.00 Previous: HK$45.00

Hong Kong Apparel Retailing

Ebru Sener KurumluAC

(852) 2800-8521 ebru.sener@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

30

45

60HK$

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

0330.HK share price (HK$)HSI (rebased)

YTD 1m 3m 12m Abs -11.8% -8.0% -13.5% -40.5% Rel -14.4% -7.3% -12.3% -54.1%

Esprit Holdings (Reuters: 0330.HK, Bloomberg: 330 HK) HK$ in mn, year-end Jun FY09A FY10A FY11E FY12E FY13E Revenue 34,485 33,734 33,837 39,052 43,477 Net Profit 4,745 4,226 3,353 4,090 4,746 EPS (HK$) 3.81 3.28 2.60 3.18 3.68 Recurring EPS (HK$) 3.84 2.87 2.60 3.18 3.68 DPS (HK$) 2.85 1.40 1.56 1.91 2.21 Revenue growth (%) -7.4% -2.2% 0.3% 15.4% 11.3% Net profit growth (%) -26.4% -10.9% -20.7% 22.0% 16.0% Recurring profit growth (%) -25.8% -22.8% -9.2% 22.0% 16.0% ROE 31.3% 27.7% 20.0% 22.4% 23.7% P/E (x) 8.4 9.8 12.4 10.1 8.7 P/BV (x) 2.8 2.6 2.4 2.2 2.0 EV/EBITDA (x) 5.6 8.0 7.5 6.0 5.1 Dividend Yield 8.9% 4.4% 4.9% 5.9% 6.9%

Shares O/S (mn) 1,290 Market cap (HK$ mn) 41,488 Market cap ($ mn) 5,343 Price (HK$) 32.15 Date Of Price 04 May 11 Free float (%) 93.7% 3mth Avg daily volume 7,714,274.00 3M - Average daily Value (HK$ mn) 286.96 Average 3m Daily Turnover ($ mn) 36.95 HSI 23,315 Exchange Rate 7.77 Fiscal Year End Jun

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

· Cutting estimates, Neutral: Following E sprit’s a nnouncement of 3Q operational update, we are cutting our estimates for FY11 and FY12 by 4% and 6%, respectively. While r etail bu siness appe ars t o have stabilized and bridged the g ap between peers, wholesale con tinues t o disappoint posting 9% decline in sales in LC terms in 3QFY11. We are also cutting our Dec-11 PT to HK$36. We believe i t will take time for the corporate initiatives to have a meaningful impact on the brand and despite t he poor performance YTD, we r ecommend avoiding the s tock until we see clear signs of improvement. We would turn more positive on the name once we see signs of improvement in upcoming data points.

· 3QFY11 update: 3QFY11 revenue was down a round 1.1% y/y i n LC terms following a 5.6% y/y increase in 2QFY11 and 2.6% y/y decline in 1QFY11. This led to total revenue to be up by 0.7% in LC for 9MFY11. Sequential improvement we have seen in 2QFY11 reversed in 3QFY11 and this comes mainly from the wholesale business. Wholesale business: 3QFY11 w holesale revenue w as dow n a round 9% y /y i n L C t erms following a 0.4% increase i n 2QFY11 a nd 12.8% de cline i n 1QFY11. This led to wholesale revenue being down by 7.1% in LC for 9MFY11. Retail bu siness: 3QFY11 retail r evenue w as up around 7% y /y i n L C terms following a 7% increase in 2QFY11 and 11% increase in 1QFY11. This led to retail revenue being up by 8.1% in LC for 9MFY11.

· 2HFY11 challenging: Management did not provide guidance on r etail and w holesale business pe rformance f or 4Q FY11, b ut no ted that from cost p erspective 2H FY11 will b e c hallenging g iven high c otton p rices and higher spending on brand building, implementing the initiatives. We now e xpect flat revenue a nd 9% de cline in e arnings i n H K$ terms i n FY11. For FY12, we have c22% earnings growth expectation; however, it is worth highlighting that this is supported by a 7-8% increase in the average Euro rate during that period.

Asia Pacific Equity Research 05 May 2011

Hero Honda

Underweight HROH.BO, HH IN

4Q FY11 PAT of Rs.5B (-16% yoy) in line with estimates ▲

Price: Rs1,598.70

Price Target: Rs1,550.00 Previous: Rs1,508.00

India Automobile Manufacture

Aditya MakhariaAC

(91-22) 6157-3596 aditya.s.makharia@jpmorgan.com

Bharat Iyer (91-22) 6157-3600 bharat.x.iyer@jpmorgan.com

J.P. Morgan India Private Limited

1,200

1,800

2,400

Rs

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

HROH.BO share price (Rs)NIFTY (rebased)

YTD 1m 3m 12m Abs -19.5% -1.2% 4.0% -16.8% Rel -9.8% 5.1% 1.4% -24.3%

· Hero Honda’s 4Q reported PAT of Rs.5B (-16% yoy) was in line with our estimate. While r evenues e xpanded 3 1% yoy t o Rs.53.9B, a djusted E BITDA margin came in at 12.2% (vs. 11.2% in 3Q). Margins expanded sequentially as the co mpany b enefited f rom price increases taken o ver 2 H. H owever, hi gher depreciation charges and increased tax rates (+510bp yoy) offset the above.

· Conference call takeaways: Volume outlook: Man agement ex pects industry volume growth t o moderate t o c. 12-15% i n t he year (a fter ro bust g rowth o f c.24% in the past two years). Margin outlook: Management expects margins to remain range-bound o ver th e n ear te rm given f irm c ommodity p rices, r ising R&D expenses, rebranding costs (as the group rolls out its corporate brand) and expenses r elated t o exports. Royalty (and its accounting treatment): Management highlighted that according to the agreement with Honda, it has to incur a fixed spend of Rs.24B (JPY 45B) over the next 14 quarters (i.e. until 2014). This amount is payable irrespective of the volumes sold by Hero Honda. Thus, management will a mortize Rs1.7B p er q uarter ( the expenditure will b e clubbed under depreciation expenses). However, in order ot make a like-for-like comparison, we are charging this as an operating expense. Also, the OEM will incur further r oyalty c harges o n t he new b ikes t hat a re i ntroduced f rom the Honda stable (however, these are likely to contribute to only 10-15% of sales, thus the impact will be limited). Capacity expansion: the company i s c lose to finalizing the location of its fourth plant and has guided for a capex of Rs.9B in FY12 ( compared t o the modest Rs 3B i n FY11). H ero H onda has d e bottlenecked capacity at the existing plants to c.6m units (the Haridwar plant is 2.25m units).

· We raise our price target: We are marginally adjusting our estimates for FY12 (+4%) a nd F Y13 ( -1%) f ollowing th e 4 Q r esults. We ar e rolling f orward ou r price target to Jun-11 and set a revised PT of Rs1,550. We value the company at a f orward P /E of 1 3.5x, which is in li ne with t he s tock’s historical mean P /E multiple. A s H ero h as n ow split with H onda, we a re lo wering o ur e arnings multiple to f actor in a r ising c ompetitive e nvironment a s well a s e merging challenges for th e lo cal group ( relating t o b randing, t echnology). F urther, industry growth rates are l ikely to moderate from hereon as the r ising monthly operating co sts ar e i mpacting co nsumer s entiment. Key up side r isks: higher-than-anticipated industry growth rates and market share gains for Hero Honda.

Table 1: Hero Honda earnings results summary (Bloomberg: HH IN, Reuters: HROH.BO) Earnings revision and valuations YE Mar. 4QFY11 JPMe 3QFY11 % Ch qoq 4QFY10 % Ch yoy FY12E FY13E Unit Sales 1,454,431 1,428,030 2% 1,186,536 23% Old EPS (INR) 107.7 124.8 Net Sales 53,909 52,150 51,617 4% 41,223 31% New EPS (INR) 111.8 123.0

% change 4% -1% EBITDA 6,599 5,796 5,766 14% 7,117 -7% P/E (x) 14.3 13.0 % Margin 12.2% 11.1% 11.2% 17.3% ROE (%) 54.6 46.5

P/B (x) 7.8 6.0 PAT (Rep) 5,016 5,061 4,289 17% 5,988 -16% EV/EBITDA (x) 10.2 8.5

Source: Company, J.P. Morgan estimates

Asia Pacific Equity Research 04 May 2011

Oberoi Realty

Overweight OEBO.BO, OBER IN

4Q pre-sales surprise positively, earnings negatively ▼

Price: Rs252.75

Price Target: Rs292.00 Previous: Rs320.00

India Property

Saurabh KumarAC

(91-22) 6157-3590 saurabh.s.kumar@jpmorgan.com

Gunjan Prithyani (91-22) 6157-3593 gunjan.x.prithyani@jpmorgan.com

J.P. Morgan India Private Limited

200

260

320

Rs

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

OEBO.BO share price (Rs)BSE30 (rebased)

YTD 1m 3m 12m Abs -1.1% -0.6% 5.4% -2.8% Rel 9.1% 5.7% 2.8% -10.6%

Oberoi Realty (Reuters: OEBO.BO, Bloomberg: OBER IN) Rs in , year-end Mar FY09A FY10A FY11A FY12E FY13E Revenue (Rs mn) 4,255 7,836 10,621 12,614 19,885 Net Profit (Rs mn) 2,515 4,574 5,304 5,608 7,812 EPS 8.7 15.8 16.2 17.1 23.8 Net debt to Equity -11.9% -23.7% -45.6% -20.5% -3.5% EPS growth (%) -15.0% 81.8% 2.0% 5.7% 39.3% ROE 18.9% 27.7% 20.1% 15.1% 17.9% P/E (x) 29.0 16.0 15.6 14.8 10.6 P/BV (x) 5.1 3.9 2.4 2.1 1.7

Shares O/S (mn) 328 Market cap ($ mn) 1,864 Price (Rs) 252.75 Date Of Price 04 May 11 3mth Avg daily volume (mn) 0.06 3M - Average daily Value (Rs mn) 15 Average 3m Daily Turnover ($ mn) 0.34 BSE30 18,469 Exchange Rate 44.52

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

· PAT 11% below estimates: Oberoi reported 4Q P AT o f R s 1.37B (-33% Q/Q, +30% Y/Y), around 11% below our estimate. A lower-than-expected EBITDA margin on a ccount of mix (higher contribution from Andheri project and past sales getting booked on delivery) was the key reason for the deviation. EBITDA margin for the quarter stood at 54% compared to the 9M FY11 level of 61%. Revenue of Rs2.7B (-33% Q/Q, +58% Y /Y) w as largely i n l ine w ith our forecast. Cash on book w as Rs14.6B, down marginally Q/Q.

Key takeaways from the conference call · Development business: New bookings a t Rs3.3B increased during the

quarter (3Q R s2B) p rimarily dr iven by the launch of O beroi E squire (Exquisite II) in Goregaon project (0.3msf sold at Rs 11.7K psf). For full year F Y11, book ings a t R s9.2B w ere dow n 25 % Y /Y a nd be low ou r estimate of Rs13B given the delay in new launches (Mulund/Worli). Of the total Rs27B sales order-book, the company is yet to recognize Rs11.2B as r evenues and receive cash flows o f R s8B. The l aunch of marquee W orli (luxury p roject) i s e xpected s oon ( 2Q F Y12) a nd that could materially change the company’s pre-sales numbers next year.

· Rental business is steady: Oberoi Mall and Commerz I are operating at 94% and 75% occupancy rates, respectively. The Westin hotel witnessed an improvement over last quarter, with margins improving to 35% driven by a higher oc cupancy r ate ( 77% i n 4Q , up from 62% i n 3 Q); w hile ARRs remained largely flat Q/Q at Rs7,679. Further, work on Commerz II (Gurgaon) and Prisma (JVLR) is progressing well; however visibility on leasing/sales is expected to improve once the projects near completion over FY12/13.

· We revise down our Mar-12 PT to Rs292 (from Rs320) based on 2x FY13E P/BV (ROE of 18%), as we cut earnings by 30% for FY12E/13E. Our PT equates to 12x FY13E EPS. Our presales assumptions are now Rs13.4/20B f or F Y12/13, compared t o t he F Y11 l evel of R s9.2B. T he increase is p rimarily on a ccount of the l aunch of l uxury W orli project (2Q FY12) and a for sale commercial project in Andheri.

Asia Pacific Equity Research 04 May 2011

Tata Power

Overweight TTPW.BO, TPWR IN

Factoring in a favorable outlook for coal mines: Maintain OW ▲

Price: Rs1,328.10

Price Target: Rs1,500.00 Previous: Rs1,490.00

India Electric Utilities

Shilpa KrishnanAC

(65) 6882-2348 shilpa.x.krishnan@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Sumit Kishore (91-22) 6157-3581 sumit.x.kishore@jpmorgan.com

J.P. Morgan India Private Limited

Deepika Belani (91-22) 6157-3582 deepika.x.belani@jpmorgan.com

J.P. Morgan India Private Limited

1,100

1,400

1,700

Rs

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

TTPW .BO share price (Rs)NIFTY (rebased)

YTD 1m 3m 12m Abs -5.5% -2.9% 9.7% -1.5% Rel 4.2% 3.4% 7.1% -9.0%

Tata Power (Reuters: TTPW.BO, Bloomberg: TPWR IN) Rs in mn, year-end Mar FY09A FY10A FY11E FY12E FY13E Revenue 175,875 186,864 198,046 241,770 299,899 Adjusted Profit 9,630 19,889 18,424 22,853 25,755 Adjusted EPS (Rs) 43.49 83.82 77.63 96.29 108.52 Revenue growth (%) 61.5% 6.2% 6.0% 22.1% 24.0% Adjusted profit growth (%) 30.0% 106.5% -7.4% 24.0% 12.7% ROCE 11.5% 11.4% 9.9% 11.6% 13.5% ROE 8.7% 14.8% 12.1% 13.1% 12.9% Adjusted P/E (x) 30.54 15.85 17.11 13.79 12.24 P/BV (x) 3.0 2.4 2.2 1.9 1.7 EV/EBITDA (x) 13.0 10.7 11.4 8.9 6.8

Shares O/S (mn) 237 Market cap (Rs mn) 315,167 Market cap ($ mn) 7,080 Price (Rs) 1,328.10 Date Of Price 03 May 11 Free float (%) 56.2% 3mth Avg daily volume (mn) 0.32 3M - Average daily Value (Rs mn) 395.22 Average 3m Daily Turnover ($ mn) 8.88 NIFTY 5,537 Exchange Rate 44.52 Fiscal Year End Mar

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

· Potential coal beta, maintain OW: O ver t he pa st 3 months, T PWR ha s outperformed the Sensex by 8%. Being the only IPP net-long on i mported coal, we expect the outperformance to continue as (a) coal prices are likely to remain strong, (b) LT contracts in Indonesian coal mines are expected to reset t o hi gher prices. Over 9M FY11 c oal r ealizations have already improved ~ 30% t o US$76/MT a nd ( c) t he i ncrease i n r ealizations i s accompanied by i mprovements a t ope rating l evel i n c oming qua rters. EBIT/MT has remained stable at ~US$20/MT over past 3 quarters.

· More positive on long term coal price realization and operating margins. We ha ve r evisited our c oal m ine model a nd i ncorporated t he following adjustments- (a) KPC & Arutmin coal mine volumes of ~63MMT in C Y11 i ncreasing t o 115 MMT by C Y18 i n l ine w ith e stimates of our Bumi analyst, Stevanus Juanda, (b) Net sales realizations of US$85-90 over the ne xt 5 y ears, a nd ( c) Pick up i n E BIT t o ~US$24/MT i n C Y11, increasing t o U S$32 by CY18. Our es timates cont inue t o reflect our skepticism on B umi’s a bility t o r ein i n pr oduction c osts, w ith r ising fuel cost and deteriorating s tripping r atio. Our FY12 consol EPS estimates a re up 7.5% and coal mine valuations is up ~12% to Rs675/share.

· Project status and IPP view: Mundra UMPP Unit-I (800MW) is on track for Sep-11. Maithon Unit-I of 525MW is delayed and CoD is expected in May-11 and Unit-II 3 -4 months hence. Our valuation of Maithon i s down 6.5% to Rs114/share. Also, given our concerns on I PP space on e xecution and fuel availability issues, we now take 50% haircut on the value attributed to TPWR’s 1000MW under-development at Orissa (cut of Rs60/share).

· Our revised Mar-12 SOP PT of Rs1500 (from Rs1490) incorporates the positive view on coal mines. The stock is trading at 1.9x FY12E BV, slightly below NTPC (2.0x), though TPWR’s recent execution track record has been better. Key downside r isk to PT includes de lays in securing c learances for under development O rissa p rojects which account for ~4% of our PT, and inability to realize value for telecom investments (9.5% of SOP).

Asia Pacific Equity Research 04 May 2011

Thai banks

Lack of positive catalyst in near term

Thailand Banks

Anne JirajariyavechAC

(66-2) 684-2684 anne.x.jirajariyavech@jpmorgan.com

JPMorgan Securities (Thailand) Limited

Sunil Garg (852) 2800-8518 sunil.garg@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Thai banking sector's 12M forward PB

1.52x

1.34x

0.87x

1.10x

1.57x

1.80x

50

100

150

200

250

300

350

400

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Source: Bloomberg and J.P. Morgan

· After re-rating, we see limited possibility of further outperformance for the sector. Improvements in loan growth, non-NII growth, and asset quality are priced in. NIM is under pressure due to deposit competition. We see no positive catalyst in the near term and turn more cautious. In this report, we lower ratings of BAY to Neutral (from OW) and TCAP to Underweight (from Neutral) as we are concerned regarding the impact from auto industry. Our top picks are SCB and KTB as we see l ess downside r isk on e arnings g iven t he s upport from c orporate term loan growth.

· The sector already had a decent re-rating. Current va luation at 1.5x PB is significantly above average at 1.3x (PE at 11x is also higher than average). Further r e-rating r equires significant ea rnings upg rade w hich has to be driven by the acceleration in loan growth and NIM recovery.

· Expect loan growth to slow in 2Q-3Q11 due to lower working capital demand from production sectors given the business disruptions from the situation in Japan. There will be potential slowdown in auto loans as auto delivery gets delayed. Only corporate term loan is expected to face less pressure.

· NIM missed expectation for two consecutive quarters and banks warned deposit competition will remain and banks still need to lock in long-term f unding. W e, therefore, c ut N IM f orecast by 10bp. This resulted in we maintaining ope rating prof it f or this y ear d espite s trong 1Q11 performance. Net profit is r aised by 6%, mainly driven by the revaluation gain at SCB in 1Q11.

· FY2011 expectations: 25% ne t pr ofit g rowth, 27% pr e-tax operating profit growth, 20% PPOP growth, 12.5% loan growth, NIM 3.04% (+9bp), 18% non-NII growth, c redit cost 59bp (-9bp). BAY, KTB, and SCB are expected to deliver strongest pre-tax operating profit growths.

Equity Ratings and Price Targets

Mkt Cap Rating Price Target Company Symbol (Bt mn) Price (Bt) Cur Prev Cur Prev Bank of Ayudhya BAY.BK 165,520 27.25 N OW

33.00 30.00

Bangkok Bank BBLf.BK 309,233 162.00 N N

190.00 175.00 KASIKORNBANK KBANKf.BK 291,978 122.00 OW OW

155.00 143.00

Krung Thai Bank KTB.BK 213,533 19.10 OW OW

24.00 23.00 Siam Commercial Bank SCB.BK 383,393 113.00 OW OW

146.00 140.00

TMB Bank Public Company Limited TMB.BK 97,504 2.24 UW UW

1.30 1.10 Thanachart Capital TCAP.BK 39,661 29.75 UW N

32.00 35.00

Tisco Financial Group Pcl. TISCO.BK 26,568 36.50 N N

43.00 40.00 Kiatnakin Bank KK.BK 20,299 32.00 UW UW 32.00 30.00 Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 3 May 11.

Asia Pacific Equity Research 03 May 2011

Wintek Corporation

Underweight 2384.TW, 2384 TT

Competition has intensified; we cut our PT to NT$40 ▼

Price: NT$40.15

Price Target: NT$40.00 Previous: NT$47.00

Taiwan Semiconductors

Narci ChangAC

(886-2) 2725-9899 narci.h.chang@jpmorgan.com

J.P. Morgan Securities (Taiwan) Limited.

JJ Park (822) 758-5717 jj.park@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

Rahul Chadha (91-22) 6157-3261 rahul.z.chadha@jpmorgan.com

J.P. Morgan India Private Limited

20

40

60

NT$

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

2384.TW share price (NT$)TSE (rebased)

YTD 1m 3m 12m Abs -19.9% -25.9% -19.2% 56.8% Rel -19.6% -27.0% -17.4% 44.3%

· 1Q11 results below our forecast: 1Q11 NP wa s 67% b elow o ur estimate and 55% below consensus, largely due t o the t echnical challenge i n the transition pe riod f or iPad 2 t ouch panels. As w e had indicated before, the lower margins in touch panel will likely continue as pricing pre ssure r emains sev ere de spite the higher s pecification requirement for slimness and the responsiveness of touch panels.

· 2Q11 could also miss market expectations: Due t o Apple’s or der adjustment, we think it will be difficult for Wintek to record the market estimate of 20% Q/Q growth. Although margins could recover s lightly on the back of improved yield rate and higher utilization rate in 2Q11, pricing pressure remains intact which could limit its margin recovery. Of note, p rices o f 10 " glass-based c apacitive t ouch pa nels have f allen by ~10% in 1Q11 vis-à-vis our expectation of 5%/quarter. Excess capacity and intensified competition from panel makers and now ODMs continue to hamper margins of touch panels, in our view.

· Lowering material cost likely to be tough: We think cover glass and LCD panels are the two key areas that Wintek needs to address in order to supply Apple products. In particular, cover glass is a key material that represents more t han 3 0% of BOM. Hence, we be lieve Wi ntek could face further challenges in lowering material costs relative to major competitors in the A pple supply c hain (i.e. C MI i s qua lified for L CD panels whereas its affiliate G-tech is qualified for cover glass).

· We maintain our non-consensus cautious stance: Despite the strong growth momentum seen in iPhone and iPad sales, we remain cautious on Wintek gi ven the high market expectations and potential negative catalysts such as: (1) CMI will likely start shipping iPad 2 touch panels in 3Q11; (2) excess supply and competition continue to put pressure on margins; and (3) limited cost benefits over key materials (i.e. cover glass and T FT-LCD pa nels). We l ower our P /E-based Dec-11 P T to N T$40 from NT$47, which implies 13x F Y11E diluted EPS, incorporating the estimated dilution from the board-approved GDR issuance.

Wintek share price: NT$40.15 (May 3, 2011) Reuters: 2384.TW; Bloomberg: 2384 TT (consolidated basis) NT$ B, year-end Dec FY09 FY10E FY11E FY12E FY09 FY10E FY11E FY12E 52-Week range 20.1 - 62.3 Sales 27.4 63.9 102.9 109.1 ROE (%) -10.6 7.9 14.1 11.3 Shares Outstg (M) 1,497.0 Operating profit -2.1 2.8 5.9 6.0 Core ROIC (%) -4.2 5.4 7.3 5.5 Mkt cap (NT$ B) 60.1 EBITDA 3.9 9.1 13.3 16.5 Y/E BPS (NT$) 20.5 22.1 27.8 28.5 Mkt cap (US$ M) 2,105.1 Pre-tax profit -2.7 2.6 6.0 5.7 P/B (x) 2.0 1.8 1.4 1.4 Avg daily volume (M) 51.8 Net profit -2.6 2.1 5.0 4.8 Cash div. (NT$/Share) 0.0 0.0 1.2 2.5 Avg daily value (US$ M) 95.5 MV of employee bonus 0.0 0.0 0.0 0.0 Quarterly EPS (NT$) 1Q 2Q 3Q 4Q Index (TWSE) 8,946.1 Adjusted net profit -2.6 2.1 5.0 4.8 EPS (FY10) -0.9 0.3 1.0 1.2 Free float 70% EPS (NT$) -2.3 1.7 3.4 3.2 EPS (FY11E) 0.2 0.9 1.1 1.2 2010 dividend yield (%) 3.0% P/E (x) -17.4 23.6 11.7 12.6 EPS (FY12E) 0.4 0.8 0.9 1.0 Exchange rate NT$28.6/US$1 Gross debt 25.0 24.5 49.0 63.0 Local 1M 3M 12M QFII Holding 27.6% Cash 6.2 6.2 14.1 7.3 Abs. Perf.(%) -25.9 -19.2 56.8 Equity 23.2 28.6 41.7 42.7 Rel. Perf.(%) -27.0 -17.4 44.3 Price target (Dec-11) NT$40.0 Source: Company, Bloomberg, J.P. Morgan estimates.

Asia Pacific Equity Research 04 May 2011

Global Factor Performance Summary

April 2011

Global Quantitative Strategy

Steve MalinAC

(852) 2800 8568 steven.j.malin@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Robert Smith (852) 2800 8569 robert.z.smith@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Marco Dion (44-20) 7325-8647 marco.x.dion@jpmorgan.com

J.P. Morgan Securities Ltd.

Satoshi Okamoto (81-3) 6736-8647 satoshi.okamoto@jpmorgan.com

JPMorgan Securities Japan Co., Ltd.

Berowne Hlavaty (61-2) 9220-1591 berowne.d.hlavaty@jpmorgan.com

J.P. Morgan Securities Australia Limited

Latha Nair (91-22) 6157-3285 latha.x.nair@jpmorgan.com

J.P. Morgan India Private Limited

Arfi Khan (91-22) 6157-3266 arfi.m.khan@jpmorgan.com

J.P. Morgan India Private Limited

· This monthly publ ication summarises f actor returns for a r ange of popular quant factors in a range of global universes.

· In all, 9 (MSCI based) universes a re included in the report. Asia ex Japan, A ustralia, Japan, Europe, U S, G EM, E M e x A sia, G lobal Developed and All World.

· For each universe we include a summary of performance over the last month, 12 months and YTD for 4 popular composite alpha sources that we refer to as the Value, Earnings, Quality and Price families.

· We also include a table detailing performance over the last month for 42 popular alpha and risk factors.

· April was a good month for many basic quant strategies in most regions. Momentum w as pa rticularly ef fective – especially i n Asia E x and Europe.

· With Earnings factors, Price momentum factors and Quality factors al l generally pe rforming a nd Valuation f actors the on ly dr ag, our s imple composite model enjoyed strong returns. (See table below.)

· The exception was in US l arge caps where t here continues to be l ittle observable traction for simple factors.

Table 2: Monthly L/S Returns for April for global large cap (MSCI) universes Universe Valuation Earnings Price Quality ModelAsia Ex Jp 0.2% 2.8% 8.9% 6.2% 7.3%Japan 0.5% 2.5% 3.9% 3.8% 4.0%Australia -2.5% 3.6% 0.3% 5.8% 3.3%Europe -2.7% 2.9% 5.1% 2.8% 3.3%US -2.6% -0.4% 0.2% 1.5% -1.0%GEM -0.1% 2.6% 6.8% 4.4% 5.6%EM x Asia -1.1% 2.5% 3.3% 0.6% 2.4%GDM -1.7% 1.9% 3.1% 3.3% 2.3%World -0.8% 1.4% 4.5% 3.8% 3.5%

Source: Barra, MSCI, Thomson Reuters, J.P. Morgan

Figure 1: Performance of a simple quant composite factor through April 2010.

-5.0%0.0%5.0%

10.0%

Asia

Ex Jp

Japa

n

Austr

alia

Euro

pe US

GEM

EM x

Asia

GDM

Wor

ld

Composite Performance

Source: Barra, MSCI, Thomson Reuters, J.P. Morgan

Asia Pacific Equity Research 04 May 2011

Bharti Airtel Limited

Overweight BRTI.BO, BHARTI IN

Q4'FY11e: Looking for a solid quarter in India and further clarity in Africa - ALERT

Price: Rs374.45

03 May 2011

Wireless Services

Malvika GuptaAC

(91-22) 6157 3595 malvika.x.gupta@jpmorgan.com

J.P. Morgan India Private Limited

James R. Sullivan, CFA (65) 6882-2374 james.r.sullivan@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Bharti reports its Q4 and FY11 results tomorrow, Thursday, May 5. Our expectations are:

· Expect strong volume growth: We f orecast 6% Q/Q minutes gr owth to 211bn units for Bharti in Q4 driven by s trong net adds and also given the higher ~93% active sub base. We’re looking for some MOU pressure and forecast 447 minutes down from 449 in Q3.

· Some voice ARPM pressures on account of MNP: Our own experience showed price aggression among telcos for post-paid subs during the quarter (MNP was launched on January 20 across India). We forecast a 3% or 1.2 paisa Q /Q de cline i n v oice A RPM t o I NR 0.38 but e xpect non -voice revenue to cushion this resulting in a flat blended ARPM at INR 0.44.

· Data – good traction but no significant rev contribution yet: We view the 2mn 3G subs indicated by Bharti as good data traction but we don’t regard all these as “full usage” subs as we believe a several are likely using 3G on a trial basis so far. We incorporate INR 481m of revenue or 0.5% of wireless revenue in the quarter.

· Solid revenue growth: For t he India w ireless s egment, w e’re l ooking f or 2.2% revenue growth, a moderation f rom the 3.9% seem in the seasonally strong Q3 and a lso noting the fewer number of days in Q4. For the India business a s a w hole, w e l ooking f or 2.7% Q /Q gr owth t o INR 120bn. EBITDA margin expectation for the India business is 36.2% down 1pp Q/Q (on a n unde rlying bus iness) dr iven pr imarily b y e xpectations of hi gher network opex.

· Africa: Watching pricing and volumes closely: We are slightly concerned about developments in Africa going into results. We note that in Nigeria (~40% of the African portfolio) Bharti cut tariffs late in the Dec quarter and MTN responded in February while G lo cut r ates i n March. We’re l ooking for 5.6% revenue growth to INR 43bn and a modest 60bp margin expansion to 25.7% for the Africa business.

· Consolidated expectations: Revenue INR 163b n, + 3.5% Q /Q. EBITDA margin of 33%, +1.4pp on a reported basis, and a 80bp Q/Q decline on a n underlying basis. Net Income of INR 17.9bn and EPS of INR 4.7.

· Conference call on Thursday, May 5 at 2:30pm India time. Dial in details: India +91 11 4444 9999; Hong Kong + 800 932 044; S ingapore + 800 9101 003; UK +800 008 7408; USA +866 792 7450 Passcode: 139519

· Key issues we’re looking for further clarity on [1] MNP impact on post-paid pricing [2] O verall pr icing [3] 3G t ake-up and impact [4] C apex guidance for FY12 [ 5] Commentary around r egulations and [ 6] For Bharti Africa, pricing competition, capex outlook, elasticity, cost reduction efforts.

· See the tables below for more details.

Asia Pacific Equity Research 04 May 2011

China Citic Bank - H Share

Overweight 0998.HK, 998 HK

1Q11 management review - ALERT

Price: HK$5.57

03 May 2011

Banks

Samuel ChenAC

(852) 2800-8557 samuel.s.chen@jpmorgan.com

Cindy Xu (852) 2800-8502 cindy.p.xu@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Management's briefing today, in our view, supports our optimistic view on the bank's outlook and our OW call on Citic-H as one of our top picks. · NIM continues its rising trend. 1Q11 NIM of 2.89% ( 34bps y /y or

19bps q/q) was led by increase in loan yield of 57bps (vs. 2010) to offset the 16bps increase in deposit cost. On parent only, 1Q11 NIM was at 3%, 20bps a bove 4Q 10, l argely dr iven by P BOC’s f our r ate hi kes a nd increasing credit pr icing power on t he back of current prudent monetary policy. Management be lieves the N IM expansion t rend may continue in 2Q11 thanks to the improving credit yields on new loans.

· Business transformation to drive earnings: The bank recently signed a strategic agreement with Alibaba to seek more diversified financial services by leveraging Alibaba’s advanced IT skills in retail banking, E-commerce, cash management and SME business. While Citic aims for 15-18% y/y loan growth in FY11 (JPM est.: 16%), it’s focusing more on SME and retail business loans. Total SME loans climbed by Rmb9.9bn in 1Q11, accounting for 30% of new loan increase. In l ight of such robust growth momentum, management a ims t o gradually increase t he pe rcentage of SME loans to 10-15% of total loans in the next two years. Meanwhile, it also pl ans t o boos t fee i ncome at least b y 35% y /y i n F Y11, led by investment ba nking, c redit c ard a nd w ealth m anagement bus iness i n addition to its traditional strength in international business.

· Benign asset quality. LGFV loan ba lance f urther d eclined in 1Q11 through na tural r etirement and full c ollection of pr incipal a nd interest. While there ar e some SML category LGFV l oans, there is no NPL in LGFV l oans. Management al so expects little impact from property tightening gi ven c urrent l ow pr oportion, pr udent a pprovals a nd hi gh-quality c ollateral. M oreover, t hanks t o t he t imely a lert, t he ba nk di d not see any asset risk caused from Japan earthquake.

· Current capital ratios already reflected LGFV impact. 1Q11 tier-1 and total CAR ratio already reflects 0.2% impact from increased risk weighting of LGFV l oan a nd market r isk, w hich i ncreased t he R WA by R mb26bn and Rmb8bn due to new regulations, respectively. Management expects the Rmb26bn r ight of fering to receive CSRC approval in May and to be completed in June.

· Maintain OW and one of top picks in H share. Trading at 1.2x 11E P/B and 6.7x 11E P/E, Citic-H is the cheapest stock among all H share listed China ba nks. Given i ts a bout 20% ROE a nd our e stimated 20% CAGR EPS growth in 2011-2012, we think market has greatly underappreciated the s tock a nd e xpect m ore r e-rating oppor tunity t o ha ppen from c urrent undemanding valuation. We maintain OW on Citic as our conviction buy idea and one of our top picks in the sector from 6-12 months perspective.

Asia Pacific Equity Research 04 May 2011

China XLX Fertilizer Ltd.

1866.HK, 1866 HK

Company visit note

Price: HK$2.72

Singapore Agriculture/Fertilizers

Brynjar Eirik Bustnes, CFAAC

(852) 2800-8578 brynjar.e.bustnes@jpmorgan.com

Akhil Handa (852) 2800 8563 akhil.x.handa@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Price performance

2

3

3

4

4

Apr-10 Jul-10 Oct-10 Jan-11 Apr-11China Xlx Fertil Share PriceHSCEI(rebased)

Source: Bloomberg

Revenue mix (mn Rmb)

0

500

1000

1500

2000

Urea Co. Fertilizer Methanol2009 2010

Source: Company reports

Operating profit mix (mn Rmb)

(100)-

100 200 300 400

Urea Co. Fertilizer Methanol2009 2010

Source: Company reports

· China XLX is one of the largest coal based urea producers in China (a highly fragmented market with about 189 players and about 60mmtpa total urea capacity) with an annual production capacity of 1.25mn tonnes of urea, 0.2mn tones of methanol and 0.6 mn tones of compound fertilizer in the Henan province. We present here the highlights of our meeting with the management of the company.

· Cost control is the key: In the highly fragmented chemicals market of PRC, it is d ifficult t o h ave p ricing p ower an d p roduct d ifferentiation an d h ence co st control is of upmost importance. China XLX has a relatively good cost structure due to newer plants (high energy conversion) and higher conversion rate of coal which saves on overall coal and electricity consumption. For urea production, it generates about 30% of the t otal e lectricity consumption i n-house ( lower cost) and consumes around 15-20% lower power than the peers.

· Higher product pricing expected: The company expects cost push in both urea and methanol production to drive up the international as well as domestic prices. Moreover, the subsidy support to farmers is further expected to lend support to the f ertilizer p rices. I n a ddition th e c ompany e xpects to s ee d istributors re -building inventories ahead of the low-tariff export window and the July-August application season.

· Expansion plans: In 4Q10, XLX announced plans to invest about Rmb 3B on the fourth plant which would have an annual urea production capacity of 0.8 mn tonne ( commence p roduction i n 2 013) t aking X LX’s o verall u rea cap acity t o over 2m n t onnes. T his i s pos itive c onsidering X LX i s r unning c lose t o 100% urea cap acity u tilization. This p lant would utilize t hermal c oal in stead o f th e current a nthracite co al based pr oduction a nd management expects it to br ing down the overall production cost.

· Industry consolidation- In the highly fragmented PRC fertilizer industry with 189 players, only 14 have capacity over 1mmtpa. The company expects industry consolidation driven by losses and government lead policy action.

· NOTE: THIS DOCUMENT IS INTENDED AS INFORMATION ONLY AND NOT AS A RECOMMENDATION F OR ANY S TOCK. IT CO NTAINS F ACTUAL I NFORMATION, OBTAINED BY T HE ANALYSTS DURI NG MEETINGS WITH MANAGEMENT. J.P. MORGAN DO ES NO T CO VER T HIS CO MPANY AND H AS NO R ATING O N T HE STOCK.

China XLX Fertiliser Ltd (Bloomberg: 1866 HK, Reuters: 1866.HK) (Rmb mn) 2007A 2008A 2009A 2010A 10A vs 09A(%) 2011E* 2012E* Revenue 1,541 2,085 2,330 2,851 22% 3,470 3,705 COGS (1,125) (1,603) (2,014) (2,487) 23% (3,019) (3,192) Gross profit 416 482 315 364 16% 451 513 PBT 333 350 152 176 17% 240 279 Net income 317 332 119 145 22% 196 226 Source: Company reports, *Bloomberg consensus estimates

Asia Pacific Equity Research 04 May 2011

Genting Singapore

Neutral GENS.SI, GENS SP

Competitor disappoints in 1Q - ALERT

Price: S$2.12

03 May 2011

Gaming

May Yee SohAC

(60-3) 2270 4725 mayyee.soh@jpmorgan.com

JPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X)

· MBS missed on poorer luck + margins. Las Vegas Sands (LVS US, OW) reported 1QFY11 results this morning. Marina Bay Sands (MBS) turned in adjusted EBITDA of US$284.5MM (S$349MM), -7% QoQ on t he back of poorer V IP win r ate of 2.56% vs. 4Q 10’s 3.11%. T he remaining shortfall relates to hi gher expe nses, specifically bad debts, accrued i ncentive compensation a nd e ntertainment-related. T his l ed t he 6% -pt Q oQ dr op i n EBITDA margins to 48.6% vs. 4Q10's 54.6%. These drags more than offset the pos itive v olume upt icks w ith: 1) hi gher VIP pl ay ( +24% QoQ) a nd stronger mass (+5% QoQ) and slot handle (+11% QoQ). On a luck-adjusted basis, a djusted E BITDA w ould ha ve c ome i n a t U S$311MM ( S$382MM) with margins hov ering a t ~ 53%. Against our US gaming t eam’s e stimate, this set of results missed their above-consensus estimates by 16% on lower-than-expected win rates and margins. They are disappointed with the results and have subsequently cut EBITDA estimates by 5-6% for lower win rates and margins.

· Conference call highlights: 1) April was an ‘excellent’ month for MBS; 2) Junket li censing r emains a n ongoi ng progress. There a re c urrently 31 companies i n t he q ueue w ith s ome P LCs i ncluded. Management e xpects some decision to take place in 2011; 3) The tragedy in Japan could speed up gaming liberalization in Japan as the country looks to reinstate its reputation as a good tourist destination.

· Key surprises: MBS’s strong traction on the mass and slots front with daily gaming revenue of ~US$3.7MM could mean further threat to Resorts World Sentosa’s (RWS) mass market business. We be lieve that RWS could be generating about US$3-4MM/day on t he mass floor. Also, it was surprising that management is now anticipating some junket licensing decision in 2011 after being conservative in the past.

· Impact to GENS. GENS is scheduled to release 1Q11 results on 12 May. Despite M BS’s VIP v olume i mprovements dur ing t he qua rter, w e be lieve that t his i s unl ikely t o be a t t he expense of R WS. The CNY boost i n Feb could w ell ha ve e xpanded t he ov erall V IP ga ming pi e i n our vi ew. W e continue to be lieve tha t GENS would remain on t he VIP forefront, a t least on volumes, t hanks to generous c redit extension. But we would watch ou t for trends in the mass and slots front as MBS appears to have gained further traction (+5-11%) a fter 4Q 10’s 6 -35% v olume upt icks. D o r ecall that RWS’s mass and slots volumes only managed a single digit uptick in 4Q10 despite the year-end holidays. All-in, assuming normal luck, we expect RWS to post 1Q11 EBITDA of ~S$450MM-500MM, or 26-29% of our estimates and 24-27% of consensus expectations. Against MBS’s actual numbers, our projection, w hich i mplies 17 -30% QoQ gr owth against MBS’s 7% Q oQ decline, could seem overly optimistic. Even if RWS meets ours and market expectations next week, we do not expect significant positive earnings revision after t his se t of nu mbers fr om MB S. The st ock’s 2 -3% i ntraday decline today could be reflecting this and concerns over potential earnings disappointment next week.

Asia Pacific Equity Research 05 May 2011

Hyundai Wia

Underweight 011210.KS, 011210 KS

Strong 1Q11: M/T margins stronger; auto revenue robust on Kia sales; we think stock is expensive

Price: W131,000

Price Target: W69,000

South Korea Auto/Machinery

Wan Sun ParkAC

(82-2) 758-5722 wansun.c.park@jpmorgan.com

Gonsuk Lee (82-2) 758 5710 gonsuk.lee@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

40,000

100,000

160,000

W

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

011210.KS share price (W )KOSPI (rebased)

YTD 1m 3m 12m Abs 101.5% 70.8% 101.5% 101.5% Rel 96.2% 67.7% 96.7% 74.6%

Hyundai Wia (Reuters: 011210.KS, Bloomberg: 011210 KS) Year-end Dec FY10A FY11E FY12E FY13E Revenue (W bn) 4,435 4,886 5,224 5,521 Operating Profit (W bn) 132 188 225 291 Net Profit (W bn) 137 187 218 268 EPS (W) 6,289 7,282 8,474 10,418 Revenue growth 42.2% 10.2% 6.9% 5.7% Operating Profit growth 7.4% 42.5% 20.1% 29.0% EPS growth 77.0% 15.8% 16.4% 22.9% ROA 5.3% 6.2% 6.3% 6.9% ROE 15.4% 16.1% 14.8% 15.8% P/E (x) 20.8 18.0 15.5 12.6 P/BV (x) 3.0 2.4 2.1 1.9 EV/EBITDA (x) 12.3 8.3 7.1 5.4

Company Data 52-week Range (W) 164,500 - 65,000 Market cap (W bn) 3,371 Market cap ($ mn) 3,154 Shares O/S (mn) 26 Fiscal Year End Dec Price (W) 131,000 Date Of Price 04 May 11 Free float (%) 42.3% 3M Avg daily Value (W bn) 3M Avg daily Value ($ mn) 3M Avg daily vol KOSPI 2,181 Exchange Rate 1,068.80

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

Bloomberg JPMA WPARK <GO>

· Strong 1Q11 results: The IFRS-consolidated revenue grew by 49% Y/Y to W1,497B with OPM of 4.8%. By division, auto revenue surged by 66% Y/Y on strong sales of Kia Motors. Machinery revenue rose by 12% Y/Y to W 345B on the steady r ecovery of g lobal m achine tools demand. N P grew by 278% Y/Y off the low ba se o f 1Q 10 t o W 55B, with NPM of 3.7%.

· M/T margins turnaround faster than expected: 1Q11 g lobal M/T OPM c ame in at 3.1%. The c ompany guided full-year M/T OPM to reach 4%, indicating sequential improvement in M/T OPM for coming quarters. Management targets over W1T i n M/T revenue f or FY11, in line with J.P. Morgan estimate of W1.24T.

· Auto parts margins declined Y/Y from 6.1% to 5.3%: Going forward, management initiatives on customer diversification will likely intensify. Wia has a l imited number of ov erseas OEM customers, including GM (2-3% of a uto pa rts revenue) a nd S AIC. In t otal, n on-Hyundai M otor Group r evenue is around 7 -8% of Wia’s auto parts r evenue. Wia is in talks with ad ditional E uropean cl ients including R NO. We do not believe W ia i s e xcluded f rom unde rlying structural changes of g lobal sourcing by overseas OEMs, but we think it is still at a very infant stage of development vs. peers. Among the company’s product line-up, we see a higher chance of customer diversification on CVJ and transmission.

· PT and valuation: We value the stock at 9x 1-year forward EPS, which generates a Dec-11 PT of W69,000. 9x P/E is at a c.30% discount to our target multiples of 13x for Hyundai Mobis and Mando. However, 9x is at a 13% premium to multiples of Korean smaller parts makers with more diversified c ustomer profile, trading at around 8x. Upside risk t o our earnings: better-than-expected 1Q results, based on which we will revisit our model. A d ownside r isk is a c ontinued high v aluation. Wia i s t he most expensive Korean parts company, t rading a t 18x FY11E EPS and 17x consensus EPS. Korean parts suppliers trade at 12.5x FY11E EPS.

Asia Pacific Equity Research 04 May 2011

Mando

Overweight 060980.KS, 060980 KS

Solid 1Q11 results: New order growth (+19%Y/Y) and mix improvement to continue

Price: W178,000

Price Target: W200,000

South Korea Auto Parts

Wan Sun ParkAC

(82-2) 758-5722 wansun.c.park@jpmorgan.com

Gonsuk Lee (82-2) 758 5710 gonsuk.lee@jpmorgan.com

J.P. Morgan Securities (Far East) Ltd, Seoul Branch

60,000

120,000

180,000W

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

060980.KS share price (W )KOSPI (rebased)

YTD 1m 3m 12m Abs 38.0% 0.0% 21.9% 114.5% Rel 32.7% -3.1% 17.1% 87.6%

Mando (Reuters: 060980.KS, Bloomberg: 060980 KS) Year-end Dec FY10A FY11E FY12E FY13E Revenue (W bn) 3,652 4,257 5,024 5,736 Operating Profit (W bn) 255 314 381 439 Net Profit (W bn) 191 234 288 336 EPS (W) 10,970 13,401 16,542 19,242 Revenue growth 33.9% 16.6% 18.0% 14.2% Operating Profit growth 44.4% 23.0% 21.3% 15.1% EPS growth 64.8% 22.2% 23.4% 16.3% ROA 7.8% 8.1% 8.7% 8.7% ROE 18.0% 17.4% 18.1% 17.8% P/E (x) 16.2 13.3 10.8 9.3 P/BV (x) 2.5 2.1 1.8 1.6 EV/EBITDA (x) 8.5 7.1 6.1 5.3

Company Data 52-week Range (W) 218,000 - 83,000 Market cap (W bn) 3,242 Market cap ($ mn) 3,033 Shares O/S (mn) 18 Fiscal Year End Dec Price (W) 178,000 Date Of Price 04 May 11 Free float (%) 41.0% 3M Avg daily Value (W bn) 30.90 3M Avg daily Value ($ mn) 28.91 3M Avg daily vol 180,458 KOSPI 2,181 Exchange Rate 1,068.80

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

Bloomberg JPMA WPARK <GO>

· Solid 1Q11 results: Mando r ecorded I FRS-consolidated r evenue of W1,028B ( +26.0% Y/Y; -0.6% Q/Q). O P was at W70 B (-4.9% Y/Y; +17.6% Q/Q) w ith 6.8% OP margins. O P margins edged up Q/Q, off the low base of 4Q10 when OPM was suppressed to 5.7% due to the high cost reflection. OP margins declined by 2.2% Y/Y due to the change in the cost allocation method f rom FY11, w hich w ill s pread to two major c ost ite ms (i.e., CR a nd l abor c osts) e venly o ver f our qua rters. In FY10, a llocations were mostly made over 2Q/4Q with seasonally s trong top lines. 1Q11 NP rose by 3% Y/Y and 18% Q/Q to W59B (NPM of 5.7%).

· 1Q11 orders of W1.7T (+42% Y/Y) represents 29% of full-year target of W5.77T (+19% Y/Y): The highest Y/Y rise in FY11 ne w orders will likely come from Chinese local OEMs (+149% Y/Y), fueled by the Geely JV (W400B). GM new order growth is also expected to be strong, up 29% Y/Y to W1.65T. Among FY11 new or ders, H MC Group w ill c ontinue t o account f or t he highest gr owth of 37%, followed by GM ( 29%)/Chinese OEMs (19%)/European OEMs (10%).

· FY11 revenue/OPM guidance maintained at W4.2T/7.4%: Mando’s FY11 revenue of W4.2T represents 17% Y/Y growth which surpasses those of m ajor gl obal O EMs. Besides the customer por tfolio, pr oduct m ix improvement should contribute meaningfully to the strong Y/Y growth, as higher-end product sales including ABS/EPS are expected to rise by 40%-50% Y/Y. 1 Q11 results were 5% higher than the internal ta rget for the quarter a nd represented 25% of ful l-year N P gui dance. C onsidering the solid results in the seasonally weak 1Q, we continue to feel that Mando’s FY11 gui dance would pr ove c onservative. H owever, our forecasts remain unchanged, w hile we f ine-tune our F Y12-13 forecasts b y re flecting the impact of the Kayaba JV, which will be under the equity method gain.

· We maintain our OW rating and Dec-11 PT of W200,000: Mando i s trading at about 13x F Y11E EPS, i n line w ith K orean a nd gl obal pa rts suppliers’ average. Positive cat alysts i nclude further penetration into or expanding r elationship with global O EMs; (2) m argins improvement in overseas subs ; and (3) m anagement i nitiatives t o pur sue gr owth t hrough acquisitions.

Asia Pacific Equity Research 04 May 2011

Mundra Port and SEZ Ltd

Neutral MPSE.BO, MSEZ IN

Acquires US$2bn coal terminal in Australia - ALERT

Price: Rs143.85

02 May 2011

Infrastructure

Sumit KishoreAC

(91-22) 6157-3581 sumit.x.kishore@jpmorgan.com

J.P. Morgan India Private Limited

Shilpa Krishnan (65) 6882-2348 shilpa.x.krishnan@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Deepika Belani (91-22) 6157-3582 deepika.x.belani@jpmorgan.com

J.P. Morgan India Private Limited

· MPSEZ has acquired the long term lease of 50MTPA capacity Abbot Point Coal Terminal (ABCT), l ocated i n Q ueensland (Australia) for a consideration of AUD1.85bn (~US$2bn). According to management, ABCT has an asset base of ~US$1.6bn. It is an operating port a nd handled ~ 17MMT of c oal in F Y10 ( year-end J une). T he capacity of t he terminal h as r ecently be en enhanced f rom 21M MT to 50MMT. The deal is fully debt funded and is expected to be closed by June-2011. The acquisition loan has been raised for a period of 2 y ears at Libor+200bps, management expects to refinance this debt at project level over the next few months.

· Acquisition appears expensive. According to management, ABCT has already entered into take-or-pay agreements for the enhanced capacity of 50MMT. The coal t erminal i s e xpected to handle 20MMT of cargo i n FY11 ( year-end June); v olumes a re e xpected t o s cale up r apidly t o ~50MMT by FY16. As per company, EBITDA i s expected to increase from AUD59mn in FY11 to AUD213mn by FY16. These estimates also factor in EBITDA margin improvement from ~54% in FY11 to ~70% by FY16, as capacity utilization improves. The acquisition price is at 8.7x target EBITDA in FY16, and estimated FY13 EV/EBITDA is ~15.5x. The average valuation of ports globally is ~12x CY12 EV/EBITDA.

· The acquisition appears EPS dilutive at least over next 2 years. Owing to high capital co sts, w e expect A BCT t o generate a l oss o f ~AUD48mn i n F Y12 ( year-end J un) and ~AUD22mn i n F Y13. P rima-facie there appears to be a downside of ~12% to our FY12 consol EPS estimate of MPSEZ and ~6% in FY13. See our recent report on MPSEZ ('All s et f or a s trong F Y12’) for v iews on e xisting bus iness ope rations (ex-ABCT). The acquisition adds risk to the MPSEZ balance sheet, post deal we es timate ne t-D/E t o i ncrease t o ~2.34x i n F Y12 (year-end March).

· Synergy with ADE's coal tenement in Galilee still distant. Abbot Point is more than 500km from Galilee and there is no existing rail line yet. Capex on rail can be as high as US$3-4bn in our estimate and may take at least over 3 years to construct. We would see any move to route rail capex through Mundra Port as a negative.

· Bottomline- richly valued acquisition. Acquisition of an operating asset ha s limited MPSEZ's exe cution risk i n ABCT. However, the company seems to have paid upfront for growth that would pan out over next 3-4years if projections are met. We m aintain our N eutral view on the stock, but would avoid entering the stock in the near-term till there is more clarity on the deal and take-or-pay arrangements.

Asia Pacific Equity Research 04 May 2011

OCBC Bank

Overweight OCBC.SI, OCBC SP

GEH 1Q results in-line, we expect small positive surprise for OCBC 1Q - ALERT

Price: S$9.23

04 May 2011

Singapore Banks

Harsh Wardhan ModiAC

(65) 6882- 2450 harsh.w.modi@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Sunil Garg (852) 2800-8518 sunil.garg@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

· GEH 1Q11 profits declined 11% y/y but almost doubled (up 86% q/q) from lows of 4Q10, as income from non-par funds rebounded from lows. We be lieve t he bo nd sell-off l ate l ast y ear l ed t o l ow non -par profits, while r elatively s table as set m arkets i n 1 Q11 l ed t o m ore normalized level of gains in non-par. Detailed results in table below.

· Limited read-through for OCBC as the GEH results were in-line with our e xpectations. We expect S $600mn of 1Q 11 profits a t O CBC, a s against street estimates of S$582mn (as per Reuters).

· NBEV growth was impressive, up 30% y/y, but down 27% q/q due to seasonality. This i s pr imarily due t o higher focus on sale o f R egular Premium pr oducts ( tables on pa ge 2 ). C onsistent strength in N BEV bodes well for the longer-term value of the franchise.

· Expenses increased significantly, up 53 % y /y on hi gher h eadcount. Also, GEH raised S$400mn, 4.6%, 15 year debt (callable at 10 years) in January this year, which adds to interest costs. T his levering up of the balance sheet should lead to higher but more volatile RoE at the insurer.

· GEH shareholders approved S$364mn capital reduction exercise on 14th April. This will lead to S$317mn inflows for OCBC.

Asia Pacific Equity Research 05 May 2011

Punjab National Bank

Overweight PNBK.BO, PNB IN

Asset quality disappoints but valuations reasonable; maintain Overweight ▼

Price: Rs1,116.90

Price Target: Rs1,300.00 Previous: Rs1,350.00

India Banks

Adarsh ParasrampuriaAC

(91-22) 6157-3576 adarsh.x.parasrampuria@jpmorgan.com

J.P. Morgan India Private Limited

Seshadri K Sen, CFA (91-22) 6157-3575 seshadri.k.sen@jpmorgan.com

J.P. Morgan India Private Limited

Sunil Garg (852) 2800-8518 sunil.garg@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

900

1,100

1,300

Rs

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

PNBK.BO share price (Rs)BSE30 (rebased)

YTD 1m 3m 12m Abs -8.7% -6.5% 5.4% 7.4% Rel 1.5% -0.2% 2.8% -0.4%

Punjab National Bank (Reuters: PNBK.BO, Bloomberg: PNB IN) Year-end Mar (Rs in mn) FY09A FY10A FY11E FY12E FY13E Operating Profit 50,779 65,206 87,567 100,116 118,678 Net Profit 30,889 39,055 44,335 51,907 62,334 Cash EPS (Rs) 97.97 123.87 139.94 163.84 196.76 Fully Diluted EPS (Rs) 84.26 106.96 133.57 156.55 188.42 DPS (Rs) 20.00 22.00 22.00 26.40 31.68 EPS growth (%) 50.8% 26.4% 13.0% 17.1% 20.1% ROE 25.8% 26.6% 24.5% 23.5% 23.3% P/E 11.4 9.0 8.0 6.8 5.7 BVPS (Rs) 416.74 514.09 631.13 764.08 923.77 P/BV 2.7 2.2 1.8 1.5 1.2 Div. Yield 1.8% 2.0% 2.0% 2.4% 2.8%

52-wk range (Rs) 1,399.90 - 900.00 Market cap (Rs mn) 352,162 Market cap ($ mn) 7,911 Shares outstanding (mn) 315 Fiscal Year End Mar Price (Rs) 1,116.90 Date Of Price 04 May 11 Avg daily value (Rs mn) 217.2 Avg daily value ($ mn) 4.9 Avg daily vol (mn) 0.1 BSE30 18,469 Exchange Rate 44.52

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

· PNB reported net profit of Rs12B, up 6% y/y: Although headline PAT wa s 10 % h igher t han J PMe mainly due t o hi gher non-interest income, c ontinued hi gh s lippages i n 4Q 11 w ere d isappointing. A sset quality trend is a concern, but valuations after the recent correction look reasonable relative to high ROEs even factoring in high credit costs.

· Margin contraction in line with expectations: NII was 5% lower than expected but, adjusting for the Rs1.0B IT refund in 3Q11, 20bp margin contraction was in line with expectations. Although funding pressure was ev ident from t he increase i n bu lk de posits a nd market bor rowing and saving rate r ises would add to the pressure on funding costs, PNB has raised the PLR/base rate by 50bp, offsetting funding cost pressure.

· Slippages remain high: Asset quality trend remained weak, with gross slippages a t 2.2% in 4Q F Y11 a nd R s4.5B i n slippages f rom t he restructured book. Also a Rs10B write-off led to a ~450bp fall in NPA coverage. Recoveries have been improving but high slippages continue to disappoint and remain a concern. We factor in higher credit costs at ~90bp in FY12.

· Opex/fee income a positive surprise: Employee ex penses w ere 13% lower than expected in spite of the second pension provisions for retired employees. Overall the pension l iability a t R s33.5B wa s marginally lower t han the Rs36B earlier g uided. Non-interest income w as hi gher with strong core fee income growth (20% y/y) and higher recovery from prudentially written off accounts.

· Maintain Overweight: We t rim our ear nings estimates by 1-3% for FY12-13, f actoring i n m arginally hi gher c redit c osts, a nd r educe ou r Gordon g rowth b ased Mar-12 P T t o R s1300 (from R s1350). A sset quality r emains a concern but w e e xpect R OAs t o remain hi gh a t 1.3 -1.35% in spite of higher credit costs. We thus believe current valuations at 1.5x F Y12E book a re reasonable, a lthough t here could be near-term weakness on the asset quality disappointment.

Asia Pacific Equity Research 04 May 2011

Sands China Ltd

Overweight 1928.HK, 1928 HK

A good 1Q11 on better luck and yield management; more room to outperform in 2H - ALERT

Price: HK$22.40

03 May 2011

Gaming

Kenneth Fong , CFAAC

(852) 2800-8597 kenneth.kc.fong@jpmorgan.com

Benjamin Lo, CFA (852) 2800-8598 benjamin.mc.lo@jpmorgan.com

Sylvia Chan (852) 2800-8593 sylvia.sw.chan@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

· A strong quarter on better than expected luck factor. Sands China’s (SC) 1Q11 property E BITDA c ame i n a t U S$379mn (vs JPMe US$360mn a nd c onsensus U S$350mn), up 10% q -q on the ba ck of a good v olume ( +6% q -q) a nd m argin ( up 1.6% q -q). P erformance o f casino Sands and Venetian Macao are in line with expectation while the surprise is m ainly dr iven by t he s trong VIP pe rformance at the F our Seasons casino on higher win rate (3.90% vs. theoretical 2.85%). Group EBITDA margin continued to improve to 33.4% (from 4Q10 31.8%) as overall win rate improved. Non-gaming revenue slightly disappointed.

· Business trending in the right direction. Sands management continues to t ransform t he bus iness s tep by st ep. On its VIP si de, t hey ar e gradually scaling back the direct VIP program to avoid direct competition w ith junkets a nd r ebuild their junket V IP bus iness. D irect VIP as a percentage of total VIP has decreased from 25% in 2010 to only 19% in 1Q 11. O n its mass m arket f ront, management i s ac tively managing non-cash rebates to lower-yielding mass market customers to enhance margin. This is evidenced in the continued decrease in the non-gaming allowance, particularly at the Venetian Macao. We believe both of these initiatives are sensible and should gradually pay off in the 2H.

· Update on Lot 5 & 6. Management acknowledged a 5 week construction de lay i n l ight of t he labor s hortage i n Macau. There a re currently 5,500 workers on site and will need 1,500 more to complete the project on time. They expect the project to open phase 1 with 1,000 hotel rooms and a casino (out of the two) in 1Q11 (previously guided 4Q10). We f orecast t he p roject to open i n l ate 1Q11. Management is in negotiation with two international brands after the drop out of Shangri-la hotel management contracts.

· Strategically positioned for a better 2H mass market performance. After an average of 30% rally in the Macau names, we believe the sector could take a breather f rom here. A s imilar s ituation was observed after the share price rally in September 2010 on the back of analysts’ revenue upgrades and ahead of the October Golden Week holiday. To position for the s ector, w e recommend ow ning a na me w ith: 1) l agged share p rice performance, 2) s trategically pos itioned to b enefit from a s tronger a nd defensive mass market segment in 2H, and 3) more incremental positive newsflow ahead as ca talysts. With that, we be lieve Sands China fulfils all these criteria. On top of the operational improvement we mentioned above, w e e xpect to s ee more pr ogress in t he L ot 5& 6 ( Sands' ne xt casino project) construction when Galaxy Macau frees up labor gradually into its opening.

Asia Pacific Equity Research 04 May 2011

Standard Chartered Plc (HK)

Overweight 2888.HK, 2888 HK

Costs likely to disappoint investors in 1Q IMS

Price: HK$213.00

Price Target: HK$240.00

Hong Kong Banks

Sunil GargAC

(852) 2800-8518 sunil.garg@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Joseph Leung (852) 2800-8517 joseph.mj.leung@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Kian Abouhossein (44-20) 7325-1523 kian.abouhossein@jpmorgan.com

J.P. Morgan Securities Ltd.

Suzy Tian (852) 2800 8552 suzy.t.tian@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

170

210

250

HK$

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

2888.HK share price (HK$)HSI (rebased)

YTD 1m 3m 12m Abs 0.6% 4.0% 1.2% 1.5% Rel -2.0% 4.7% 2.4% -12.1%

Standard Chartered Plc (HK) (Reuters: 2888.HK, Bloomberg: 2888 HK) Year-end Dec ($ in mn) FY09A FY10A FY11E FY12E FY13E Operating Profit ($ mn) 7,232 7,039 7,954 9,108 10,115 Net Profit ($ mn) 3,279 4,231 4,814 5,437 6,037 Cash EPS ($) 1.65 1.93 1.98 2.17 2.34 Fully Diluted EPS ($) 1.69 1.95 1.99 2.18 2.36 DPS ($) 0.66 0.67 0.75 0.85 0.95 EPS growth (%) (17.9%) 16.8% 2.6% 9.5% 7.9% ROE 13.3% 12.9% 12.1% 12.6% 12.9% P/E 16.3 14.0 13.6 12.4 11.5 BVPS ($) 13.50 16.27 17.05 18.00 18.85 P/BV 2.0 1.7 1.6 1.5 1.5 Div. Yield 2.4% 2.4% 2.7% 3.1% 3.5%

52-wk range (HK$) 245.00 - 169.80 Market cap ($ mn) 64,533 Market cap ($ mn) 64,533 Shares outstanding (mn) 2,353 Fiscal Year End Dec Price (HK$) 213.00 Date Of Price 03 May 11 Avg daily value (HK$ mn) Avg daily value ($ mn) Avg daily vol (mn) HSI 23,633 Exchange Rate 7.77

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

Group – Strong L/D ratio. Balance sheet growth remains strong but slower run rate vs. 2010. RWA growth

Standard’s 1Q’11 IMS retains the group’s positive stance on delivery and outlook with (1) double digit income growth (2) higher consumer bank contribution and positive momentum in both segments. Negative jaws in 1Q (y/y) are however likely to be seen as a disappointment. While jaws have tightened vs. the deterioration in 2010, we see cost management in a growth environment as a generic problem in financial services – Standard is unlikely to remain immune to that. Valuations are attractive, but are likely to get even more attractive in the near-term, in our view. · Wholesale Banking – (1) INCOME - Client income above 1H’10 run

rate and over 80% of wholesale bank income. Cash/Trade/ FX hedging strong on v olumes but pr essure on t rade m argins. S trong c orporate finance but deal closure delayed by market conditions. Strong growth in commodities, capital markets and FX. OWN ACCOUNT income "very strong" ( 2) COSTS – Run r ate slightly a head of 2H’10 due t o h igher. FTE and investment spend (3) A/Q robust - no material impairments.

· Consumer Banking – (1) INCOME – “low doubl e di git” g rowth. Liabilities margins stabilizing but asset margins are still under pressure, albeit appears to be moderating. Strength in WM (HK/SG notably) and deposit i ncome. I ncome i n o ther areas g rowing of f a low b ase, particularly as unsecured business being grown selectively. (2) COSTS – controlled with run rate lower than 2H’10. HEADCOUNT lowered vs. Dec-10 (3) Asset quality –continued to improve.

· Our forecasts factor in 12% income growth and 11% cost growth for 2011E. We see modest upside to both these with limited change to PPOP. UK Bank levy will be an added drag. With provisions unlikely to be a material swing factor, focus will be on managing costs within revenue growth – a task that would be tough in a growth environment. Standard demonstrated the ability to do so in 2009 – replicating in 2011E will be critical.

Asia Pacific Equity Research 04 May 2011

WCT Berhad

Overweight WCTE.KL, WCT MK

Refocusing on Malaysia?

Price: M$3.01

Price Target: M$4.10

Malaysia Construction

Hoy Kit MakAC

(60-3) 2270-4728 hoykit.mak@jpmorgan.com

JPMorgan Securities (Malaysia) Sdn. Bhd. (18146-X)

2.4

3.0M$

May-10 Aug-10 Nov-10 Feb-11 May-11

Pr ice Per fo rman ce

W CTE.KL share price (M$)FBMKLCI (rebased)

YTD 1m 3m 12m Abs -5.6% -2.9% -10.7% 1.3% Rel -6.2% -1.2% -10.2% -12.5%

WCT Berhad (Reuters: WCTE.KL, Bloomberg: WCT MK) M$ in mn, year-end Dec FY09A FY10A FY11E FY12E FY13E Revenue 4,842 1,709 2,553 2,770 3,340 Reported Net Profit 147 141 191 231 269 FD EPS (M$) 0.16 0.18 0.22 0.26 0.29 Net DPS (M$) 0.07 0.07 0.07 0.07 0.07 Revenue growth (%) 30.5% -64.7% 49.4% 8.5% 20.5% FD EPS growth (%) 11.4% 12.8% 24.7% 15.8% 13.1% ROE (%) 12.2% 10.5% 12.0% 12.5% 13.2% ROCE (%) 10.3% 11.7% 9.3% 10.4% 11.8% Adj P/E (x) 19.2 17.0 13.6 11.8 10.4 P/B (x) 0.9 0.8 0.7 0.6 0.6 EV/EBITDA (x) 7.8 6.7 7.2 6.0 5.0 Net Div yield (%) 2.3% 2.5% 2.5% 2.5% 2.5%

Shares O/S (mn) 796 Market cap (M$ mn) 2,396 Market cap ($ mn) 807 Price (M$) 3.01 Date Of Price 04 May 11 Free float (%) 75.2% 3mth Avg daily volume 2,408,690.00 3M - Average daily Value (M$ mn) 7.42 Average 3m Daily Turnover ($ mn) 2.50 FBMKLCI 1,528 Exchange Rate 2.97 Fiscal Year End Dec

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

· Local newsflow to take precedence. We met with management recently, and now expect to see more newsflow on the local front rather than on the Middle East, which we view pos itively given the favourable r isk-reward ratio for local j obs c urrently. For t he LRT e xtension w orks – Phase 2 (estimated a t more t han M $2B), management be lieves t hat WCT is the lowest bi dder, pl acing t he company i n good s tead t o s ecure t he pr oject, where the winning bid is likely to be known by end-2Q. WCT’s excellent execution track record and speed of delivery lends further credence to the bid. WCT i s a lso bidding for t he new MITI building, which we be lieve will cost at least M$500MM, and eyeing other projects under the 10th Malaysia Plan and ETP ( two major projects are MRT non-tunneling works and HSR), a nd i nfrastructure w orks i n I skandar. Management’s target of M$2B new construction orders for 2011 remains unchanged.

· Hopeful of securing M$2.8B Kota Kinabalu dam project in 2011. Outstanding c onstruction order boo k s tands a t M $3.5B ( including M$700MM internal jobs) as of end-1Q. WCT is awaiting the award of the M$2.8B Kota Kinabalu water dam, and i s hopeful to secure i t this year. Having received the Letter of Intent for the project, the longer the project award is delayed, the more critical water supply in Sabah becomes, as the state is widely expe cted to f ace a w ater supply shortage by 2014. W e reckon emphasis is likely to be on people friendly projects, particularly as the ruling coalition needs to win back its popularity among voters.

· Stay OW on WCT (PT:M$4.10). We expect the share price to re-rate on new construction order wins. Valuations remain undemanding in our view at C Y11E P/E of 13.6x, a gainst G amuda’s 18x a nd I JM's 16.7x. S hare price seems to have found support after earlier selling pressure at around the M$3.00 level despite concerns over i ts Middle East projects (43% of outstanding construction order book but minimal impact on valuation) as per our not e e ntitled “ Further updates on Bahrain, management says provision not required” dated 28th March.

Asia Pacific Equity Research 04 May 2011

China Banks

New regulatory framework consistent with our previous views, a non-event - ALERT

Banks

Samuel ChenAC

(852) 2800-8557 samuel.s.chen@jpmorgan.com

Cindy Xu (852) 2800-8502 cindy.p.xu@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Listed banks’ CAR on average

9.4% 10.2% 10.2% 11.0%12.2% 12.6% 12.8%

10.7%12.3% 11.5% 12.3% 12.4% 12.7% 13.2%

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%

2007 2008 2009 2010 2011E 2012E 2013E

Medium JSBs State-controlled banks

Source: Companies’ report, J.P. Morgan estimate.

· New regulatory framework consistent with our previous highlights. CBRC a nnounced t he gui delines on the implementation of the new regulatory f ramework f or t he ba nking s ector. The r equirement on c apital ratio, l everage r atio, pr ovision r atio a nd l iquidity a re c onsistent w ith our previous v iews (first hi ghlighted i n o ur n ote, China Banks: Various regulatory policy overhangs likely to be all cleared shortly, published on 23 Dec. 2010). The new requirement will be adopted in 2012 w ith sufficient grace periods.

· The new China version of Basel III. The new framework is largely similar to B asel I II but a more s tringent version. C ore t ier-, ti er-1 a nd t otal C AR requirement is 5%, 6% and 8% as we highlighted before. In addition, there is an ad ditional 2.5% capital reservation requirement, s o t hat effectively the requirement be comes 7.5% , 8.5% a nd 10 .5%. S ystem-important ba nks (SIBs) need 1% additional buffer on total CAR ( i.e. 11.5%) In addition, i f loan growth is excessive (i.e. notably above nominal GDP growth), regulator may demand for counter-cyclical buffer in the range of 0-2.5%.

· No additional equity raising pressure. While cur rently t ier-1 capital in China be longs t o core t ier-1, the ne w f ramework leaves room for the introduction of ne w t ier-1 ins truments like CoCos/prefs, w hich s hould reduce the pressure of equity capital raising. We estimate that banks under coverage would fully meet the requirement by end of this year in most cases or 2012. Equity capital raising would only include announced plans by Citic and Minsheng, and possibly Industrial, CMB and SDB.

· Other requirements are well known too. A s upplement t o t he c apital requirement is leverage ratio (tier-1 as % of on and off-balance sheet assets), set a t 4% i n t he ne w r egulatory f ramework, hi gher t han B asel I II's 3% . CBRC s aid m ost ba nks ha ve met t his r equirement. In a ddition, C BRC confirmed LLR to be no less than 2.5% while NPL coverage should also be 150% s ubject t o dynamic a djustment. M eanwhile, banks s hould ha ve liquidity coverage and a net stable funding ratio of 100% at minimum.

· Sufficient grace periods. SIBs are allowed to meet the requirement by 2013 and ot her banks by 2016. H owever, f or k ey pr ovisioning r equirement, CBRC recognized its requirement may not be reasonable and a llows some non-SIBs w ith bi g LLR/loan ga p or l ower pr ofitability ba nks t o m eet t he requirement b y 2018. For t he ba nks unde r our c overage, our c urrent estimates reflect their compliance on the new provision requirement by 2015 at latest (for some non-SIBs) and SIBs by 2012. We thus see no provisioning pressure on short-medium term earnings from the LLR requirement.

· Regulatory overhang fully cleared. As we argued at the beginning of the year, we see regulatory overhang fully cleared w ith t he announcement of this ne w f ramework a nd m ore c larity on L GFV l oans. W e s till e xpect r e-rating in the sector from 3-6M perspective, given optimistic earnings outlook and cheap valuation (1.5x FY11E PB in A-shares and 1.7x FY11E PB in H-shares).

Asia Pacific Equity Research 04 May 2011

India Consumer & Retail

Off the Shelf

Cosmetics & Personal Care, Food & Food Manufacture

Latika Chopra, CFAAC

(91-22) 6157-3584 latika.chopra@jpmorgan.com

J.P. Morgan India Private Limited

Ritesh Gupta (91-22) 6157 3307 ritesh.z.gupta@jpmorgan.com

J.P. Morgan India Private Limited

Regional Consumer Ebru Sener Kurumlu (852) 2800-8521 ebru.sener@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Figure 2: Relative performance of Indian consumer sector (MSCI)

90

100110

120130

140

May-10

Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11M

ar-11Apr-11

India Cons. Staples India

Source: Bloomberg.

Key developments in Indian consumer space over the past month: · New product launches. 1) Dabur forays int o hand sanitiser market w ith

the launch of Fem Safe Handz, 2) GSK Consumer is looking to diversify its product base further with an entry into the glucose segment, l aunching two products Boost Glucose in Northern and Western India and Glaxose D in E ast India, 3) Marico expands its f oods portfolio w ith t he launch of Saffola Gold Basmati Rice, and 4) HUL expands i ts pr emium s kin c are portfolio, introducing Fair & Lovely Anti Marks Eraser Pen.

· Price hikes. 1) Colgate undertook 2 -7% pr ice i ncreases a cross i ts ke y brands Colgate Dental Cream, Active Salt and Maxfresh Gel, 2) Dabur took more pr ice hikes – Real juices (5-7%), Fem Bleach (8-10%) and Meswak toothpaste (6-8%), 3) Hair Oil category saw more price hikes - Bajaj Corp raised prices for its leading brand Almond Drop hair oil by 9% and Emami undertook a 4% price hi ke f or i ts l eading Navratna cooling oi l, a nd 4) Britannia took 15-20% price hike across some of its brands like Bourbon.

· Global companies post healthy growth rates in India during Mar’11 qtr. Pepsico reported 20% and 18% volume growth rate for beverages and snacks di vision r espectively i n I ndia. L’Oreal registers 28% sa les gr owth for Indian operations. Unilever, in its Q1 trading statement, mentioned it registered strong volume growth in India.

· JPM Global Research. Key takeaways f rom results of P&G, Colgate and Unilever: 1) Rising input cost inflation hurting margins as companies raised their FY11 input costs guidance; 2) Price increases are gaining more ground and w eighted t owards H211 ( P&G a lso m entioned de celeration i n promotions); 3) E merging markets c ontinue t o w itness good growth w hile mature markets remain weak.

· Key commodity trends. Palm oil prices r emained flat m /m and copra prices i ncreased 3% m /m. Wheat (-3% m/m) a nd sugar ( flat m/m) pr ices continue to r emain subdued. LAB prices continue to rise s ignificantly and were up 7% m/m and HDPE prices were flat m/m.

· Performance and Valuation. Over the past month, BSE FMCG Index was up 1.8% , outperforming S ensex by 6.3% . N estle I ndia a nd C olgate I ndia were the better performers, up c10% each.

Asia Pacific Equity Research 05 May 2011

Crude Reality

Thailand to begin raising industrial LPG prices in July

Asia Oil & Gas

Brynjar Eirik Bustnes, CFAAC

(852) 2800-8578 brynjar.e.bustnes@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Sukit Chawalitakul (66-2) 684-2679 chawalitakul.sukit@jpmorgan.com

JPMorgan Securities (Thailand) Limited

Samuel Lee, CFA (852) 2800-8536 samuel.sw.lee@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Pradeep Mirchandani, CFA (91-22) 6157-3591 pradeep.a.mirchandani@jpmorgan.com

J.P. Morgan India Private Limited

Stevanus Juanda (62-21) 5291 8574 stevanus.x.juanda@jpmorgan.com

PT J.P. Morgan Securities Indonesia

Akhil Handa (852) 2800 8563 akhil.x.handa@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Brent price (US$/bbl)

65

75

85

95

105

115

125

Jun-

10

Aug-

10

Oct-1

0

Dec-

10

Feb-

11

Apr-1

1

Source: Bloomberg

Thailand to begin raising industrial LPG prices in July - Sukit ChawalitakulAC, Thailand

The T hai government announced that it w ould begin raising prices for LPG sold t o t he i ndustrial sector i n J uly. T he i nitial increase would be Bt3/kg and subsequently pr ices would increase by Bt3 every quarter. By July 2012, prices would then be 67% higher at Bt30/kg—in line with the world’s market price (according to expectations). While this price increase has been flagged for several months, we are still positively surprised given the government’s recent anti-market policies (most recent being the excise tax c ut on di esel). W hile i n t he r ight di rection, t he m ove w ill ha ve marginal i mpact on t he excessive us age of L PG g iven that i ndustrial customers consume onl y 13% of total L PG. The c hance of the government’s raising LPG prices for households and the transport sector in the near future is slim, we believe.

Click on the links below for the latest news, research, energy events and share price movements from Asian Oil & Gas Team.

Oil Markets Weekly – Global perspective

Highlights during the week

Latest research

Sector drivers: Upstream

Sector drivers: Refining

Sector drivers: Petrochemicals

Sector drivers: Offshore Drillers

Valuation Thailand petroleum consumption (FY10)

Petrochem33%

Household41%

Industrial13%

Transport13%

Source: PTIT. Note: Petrochemical firms already pay market prices for LPG feedstocks

Asia Pacific Equity Research 04 May 2011

Chemical Reactions - April

China concerns take the momentum out of rising product prices

Petrochemicals

Samuel Lee, CFAAC

(852) 2800-8536 samuel.sw.lee@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Sukit Chawalitakul (66-2) 684-2679 chawalitakul.sukit@jpmorgan.com

JPMorgan Securities (Thailand) Limited

Brynjar Eirik Bustnes (852) 2800-8578 brynjar.e.bustnes@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

Figure 3: Chart of the Month ME as a % of China PE imports continue to gain market share suggesting capacity continues to ramp-up in ME.

20%25%30%35%40%45%50%

Jan-

09Ap

r-09

Jul-0

9Oc

t-09

Jan-

10Ap

r-10

Jul-1

0Oc

t-10

Jan-

11

Source: CMAI Global.

· Product spreads fall in April: Due to credit tightening in China (news that t raders w ere liquidating pos itions) a nd pow er supply c onstraint impacting c onsumption of c hemicals a nd pl astics, m ost pr oduct p rices failed to rise higher in April while Naphtha costs increased by 9%. News of Japanese P X pr oduction r esuming s upply i n M ay a lso p ushed s pot PX/PTA s preads l ower. T he l one br ight s pot w as B utadiene, w here average prices were 19% higher M/M, mainly due to lack of supply as Asian Naphtha crackers started annual maintenance shutdowns.

· YTD Korean names remain the outperformers, which was followed by PCG, then the Taiwanese names and then the Thai names. Near-term we expe ct P E related names in Korea suc h as H onam and Hanwha to trade lower on falling spread s, while the Taiwanese na mes sho uld perform in-line with the market due to t heir relatively high di vidend yield. P CG w ill be reporting 4Q F Y11 results b efore t he end of M ay which w ill b e the f irst set of earnings containing pr oduction f rom t he new Methanol unit and could act as a near-term share price catalyst.

· News for the month: LGC reported record petrochemical earnings in 1Q while H onam r eported O P a nd N P t hat w ere hi gher t han expectations (however no breakdown was given). The Formosa group all reported very strong 1Q results and in particular, FCFC. However, April revenue for the F ormosa g roup f ell 1 -9% on t he ba ck of buy ing s entiment weakening i n C hina. March C hina import d ata s how Y TD PE i mports were down 14% Y/Y but imports from ME were up 16%

· MEG structural change story in-tact: While P X/PTA sp reads m ay face some pressure from previous record levels seen in March due to the Japanese earthquake, we believe the downside for MEG spreads will be limited as ME m aintenance shut down takes pl ace and because ME G spreads d id not sp ike i n March. MEGlobal r ecently i ndicated that they expect MEG to be tight in the next 3-5 years.

Table 3: Regional Petrochemical valuations Company Rating LC Price PT Mkt Cap PE (x) PB (x) ROE (%) Yield (%)

(LC) (LC) USD mil FY11e FY12e FY11e FY12e FY11e FY12e FY11e FY12e FPCC UW NT$ 97.8 78.0 32,615 20.4 17.4 3.8 3.6 18.9% 21.2% 4.0% 4.4% Nan Ya Plastics OW NT$ 85.0 100.0 23,366 11.8 10.4 2.2 2.0 19.3% 20.2% 5.5% 7.7% Formosa Plastics N NT$ 113.5 105.0 24,321 13.8 12.5 2.7 2.6 20.1% 21.1% 6.0% 6.5% FCFC OW NT$ 109.5 120.0 21,814 10.2 9.9 2.2 2.1 22.0% 21.5% 6.8% 8.6% LG Chem OW KRW 502,000 491,000 30,976 12.6 10.5 3.4 2.6 30.7% 28.2% 0.7% 0.7% Honam Petrochem N KRW 377,000 335,000 11,184 10.5 9.1 2.0 1.7 22.0% 20.1% 0.4% 0.5% Hanwha Chemical UW KRW 46,450 15,000 6,067 20.9 15.4 2.0 1.8 9.9% 12.3% 1.0% 1.3% PTTCH N THB 157.0 132.0 7,949 15.1 10.8 2.0 1.8 14.2% 17.7% 2.5% 2.9% PTTAR N THB 40.0 34.0 3,974 11.7 10.2 1.7 1.5 15.2% 15.7% 3.7% 4.2% SCG N THB 370.0 311.0 14,807 15.4 13.6 3.0 2.6 20.5% 20.6% 2.6% 2.9% IVL UW THB 53.0 32.5 8,509 23.4 20.3 4.3 3.8 23.7% 20.0% 1.3% 1.5% PCG OW MYR 7.18 7.80 19,301 18.0 12.2 2.6 2.3 15.1% 20.2% 3.1% 4.7% Source: Bloomberg. J.P. Morgan estimates. Note: Priced as of May 4, 2011.

Asia Pacific Equity Research 04 May 2011

Asia Real Estate Relative Value Ideas

New idea in Indonesia: prefer APLN over LPKR

Singapore Property, REITs

Christopher Gee, CFAAC

(65) 6882-2345 christopher.ka.gee@jpmorgan.com

J.P. Morgan Securities Singapore Private Limited

Sumedh Samant (91-22) 6157-3286 sumedh.y.samant@jpmorgan.com

J.P. Morgan India Private Limited

FTSE EPRA NAREIT Asia Index

1400

1500

1600

1700

1800

3-Jan 3-Feb 3-Mar 3-Apr 3-May Source: Bloomberg.

Asia real estate relative value ideas: Average returns till date Average Returns

Net Relative to the Index

Closed ideas 5.01% 10.33% Open ideas 0.53% 2.20% Source: J. P. Morgan. Detailed summary table is on page Error! Bookmark not defined. and page Error! Bookmark not defined.

J.P. Morgan’s Asia-Pacific real estate equities research team list is on page Error! Bookmark not defined.

· ‘Prefer Agung Podomoro Land over Lippo Karawaci’: APLN’s 1Q11 numbers beat consensus while LPKR’s 1Q11 reported financials were in line. APLN is potentially revising up its marketing sales target from Rp3-3.5 tr to Rp4 tr, whereas LPKR is revising down its marketing sales t arget f rom R p3tr t o R p2.8tr. LPKR has out performed t he JAKPROP Index by 12% YTD and APLN by 20%.While we r eiterate our OW rating on both stocks, we expect to see LPKR running out of steam and APLN taking the baton of market-cap growth in the next three months.

· 'Prefer CPA over CFX' taken off the list: We have closed off our A-REIT relative value idea – ‘prefer Commonwealth Property Office Trust over CFS Retail Property Trust’ (+8.42% from 28th Feb)– following its outperformance relative to the regional FTSE E/N Asia Index (-1.17%). We have extended the other A-REIT relative value idea – ‘prefer MGR over WRT’ – for another three months as w e do not see any significant changes in fundamentals supporting our call.

· Uncertain macro environment merits active stock selection: As a result of m acro headwinds, g overnment i nterventions a nd up coming elections, the region real estate sector is likely to continue to experience significant volatility in 2011. The benchmark FTSE E/N Asia Index has traded w ithin a 10% range i n t he f our m onths y ear t o da te, a nd w e believe these relative value ideas are the best way to add alpha.

Asia real estate relative value ideas Prefer Entry price Over Entry price Entry date Time horizon

Sun Hung Kai Props HK$ 133.20 Guangzhou R&F HK$ 11.62 27 Jan 11 6 months Mirvac Group A$ 1.26 Westfield Retail Tst A$ 2.68 27 Jan 11 6 months SM Prime Holdings Php 10.98 Megaworld Php 2.18 27 Jan 11 6 months IJM Land RM 2.80 SP Setia RM 4.64 27 Jan 11 6 months Global Logistic Props S$ 2.12 FSTREH Index 750.9 27 Jan 11 6 months CapitaLand S$ 3.65 Keppel Land S$ 4.64 27 Jan 11 6 months City Developments S$ 11.6 Keppel Land S$ 4.5 5-Apr-11 3 months Asian Property Dev. Bt 5.33 SETPROP Index 152.3 5-Apr-11 3 months FTSE E/N Dev Asia Index

1580.76 HSCIPC Index 3205.26 5-Apr-11 3 months

Franshion Properties HK$ 2.46 Sino-Ocean Land HK$ 4.65 26-Apr-11 3 months Cheung Kong HK$ 125.5 Henderson Land

Development HK$ 53.15 26-Apr-11 3 months

Agung Podomoro Land Rp 360 Lippo Karawaci Rp 770 4-May-11 3 months Source: Bloomberg, J.P. Morgan for stated preference. Note: Additional information available on request. The results presented should not and cannot be viewed as an indicator of future performance. Prices are stock-split and stock-dividend adjusted Performance of closed relative value ideas Preferred Performance Over Performance Net performance Performance of

FTSE E/N Dev Asia index

Performance relative to

benchmark Commonwealth Property Office Trust

4.09% CFS Retail Property Trust -3.99% 8.42% -1.17% 9.70%

Source: Bloomberg, J.P. Morgan calculations. The results presented should not and cannot be viewed as an indicator of future performance.

Asia Pacific Equity Research 04 May 2011

Asia Analyst Focus List

Remove China Resources Power Holdings as Long - ALERT

China Independent Power Producers

Chapman DengAC

(852) 2800-8577 chapman.zw.deng@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

· Action: Remove China Resources Power Holdings as Long

· Trade: Absolute

· Time Horizon: < 6 months

· Rationale: The key catalyst for IPPs, tariff adjustment, has played out. As we believe rising fuel cost could again squeeze IPPs’ margin, hence we are closing our long CRP idea.

· We reiterate our r ating of O verweight f or C hina R esources P ower Holdings.

J.P. Morgan’s Asia Analyst Focus List (AFL) is a selection of instruments chosen by individual analysts/strategists as ‘Relative’ or ‘Absolute’ trades over a defined time horizon.

The Relative trade list is a selection of stocks chosen by individual analysts that represent their top picks with the potential to provide an annualized total return in excess of +/-20% over the next 6-12 months - either Long or Short and relative to the relevant country index (which are MSCI country indices, except for Shanghai listed A-shares which are relative to SHASHR).

The Absolute trade list is a selection of stocks and/or indices, chosen by individual analysts and strategists, respectively, representing their trading ideas - either Long or Short, that are intended to generate absolute returns in the short term (< 6 months). The ideas may be expressed as single stocks or in pairs. A stock or index will be removed from this list if its absolute return (based on VWAP) falls below 10%.

If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL list pursuant to applicable law and/or J.P. Morgan policy without any further notice.

Each trade is current only for the time horizon indicated. The short-term action expressed in the absolute trade list (Long or Short) may differ from J.P. Morgan's rating on the corresponding equities (Overweight, Neutral, or Underweight). For J.P. Morgan's long-term view on these names, including an analysis of valuation methodology and risk, please see the most recent company-specific research available at MorganMarkets http://www.morganmarkets.com or contact your J.P. Morgan representative.

The Analyst Focus List is not intended to be viewed as model portfolios. 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. 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://mm.jpmorgan.com/disclosures/company. Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request.

Asia Pacific Equity Research 04 May 2011

Asia Analyst Focus List

Remove Pair Trade: The United Laboratories as Long and China Shineway Pharmaceutical Group Limited as Short - ALERT

China Pharmaceuticals

Leon Chik, CFAAC

(852) 2800-8590 leon.hk.chik@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

· Action: Remove The United Laboratories as Long and China Shineway Pharmaceutical Group Limited as Short

· Trade: Pair Trade - Absolute

· Time Horizon: < 3 months

· Rationale: The pair trade has reached our short-term objective.

· We reiterate our rating of Overweight for The United Laboratories and Underweight for China Shineway Pharmaceutical Group Limited.

J.P. Morgan’s Asia Analyst Focus List (AFL) is a selection of instruments chosen by individual analysts/strategists as ‘Relative’ or ‘Absolute’ trades over a defined time horizon.

The Relative trade list is a selection of stocks chosen by individual analysts that represent their top picks with the potential to provide an annualized total return in excess of +/-20% over the next 6-12 months - either Long or Short and relative to the relevant country index (which are MSCI country indices, except for Shanghai listed A-shares which are relative to SHASHR).

The Absolute trade list is a selection of stocks and/or indices, chosen by individual analysts and strategists, respectively, representing their trading ideas - either Long or Short, that are intended to generate absolute returns in the short term (< 6 months). The ideas may be expressed as single stocks or in pairs. A stock or index will be removed from this list if its absolute return (based on VWAP) falls below 10%.

If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL list pursuant to applicable law and/or J.P. Morgan policy without any further notice.

Each trade is current only for the time horizon indicated. The short-term action expressed in the absolute trade list (Long or Short) may differ from J.P. Morgan's rating on the corresponding equities (Overweight, Neutral, or Underweight). For J.P. Morgan's long-term view on these names, including an analysis of valuation methodology and risk, please see the most recent company-specific research available at MorganMarkets http://www.morganmarkets.com or contact your J.P. Morgan representative.

The Analyst Focus List is not intended to be viewed as model portfolios. 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. 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://mm.jpmorgan.com/disclosures/company. Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request.

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Analyst Certification: The research analyst who is primarily responsible for this research and whose name is listed first on the front cover certifies (or in a case where multiple research analysts are primarily responsible for this research, the research analyst named first in each group on the front cover or named within the document individually certifies, with respect to each security or issuer that the research analyst covered in this research) that: (1) all of the views expressed in this research accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this research.

Important Disclosures

· Market Maker: JPMS makes a market in the stock of Philippine Long Distance Telephone Company. · Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Genting

Singapore, Honda Motor (7267), Inpex Corporation, Mando, Oberoi Realty, OCBC Bank, Standard Chartered Plc (HK), Tata Power, Telstra Corporation within the past 12 months.

· Director: A senior employee, executive officer or director of JPMorgan Chase & Co. and/or J.P. Morgan is a director and/or officer of China Resources Power Holdings.

· Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Bharti Airtel Limited: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of China Citic Bank - H Share: Cindy Xu. The following analysts (and/or their associates or household members) own a long position in the shares of Idea Cellular Limited: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of LPN Development: Adrian Mowat. The following analysts (and/or their associates or household members) own a long position in the shares of Tata Power: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of Telstra Corporation: Jarrod McDonald.

· Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of DAINIPPON SCREEN MFG. (7735), Nikon (7731), TMB Bank Public Company Limited.

· Client of the Firm: Bangkok Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Bank of Ayudhya is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Bharti Airtel Limited is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service. Canon (7751) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. China Citic Bank - H Share is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. China Resources Power Holdings is or was in the past 12 months a client of JPM. China Shineway Pharmaceutical Group Limited is or was in the past 12 months a client of JPM. China Unicom (Hong Kong) Limited is or was in the past 12 months a client of JPM. Digi is or was in the past 12 months a client of JPM. Esprit Holdings is or was in the past 12 months a client of JPM. FUJIFILM Holdings (4901) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Genting Singapore is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services. Globe Telecom is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service. Hero Honda is or was in the past 12 months a client of JPM. Hitachi (6501) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Honda Motor (7267) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Hyundai E&C is or was in the past 12 months a client of JPM. Idea Cellular Limited is or was in the past 12 months a client of JPM. Inpex Corporation is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. KASIKORNBANK is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Kiatnakin Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service. Krung Thai Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. LG Chem Ltd is or was in the past 12 months a client of JPM. LG Display is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. LG Electronics is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Mando is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. Maxis Berhad is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services. Nikon (7731) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. Oberoi Realty is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to

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the company investment banking services. OCBC Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Philippine Long Distance Telephone Company is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Punjab National Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. Reliance Communications Limited is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Samsung Engineering is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service. Siam Commercial Bank is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service and non-securities-related services. SK Telecom is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-securities-related services. SM Prime Holdings, Inc. is or was in the past 12 months a client of JPM. Standard Chartered Plc (HK) is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Tata Power is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. Telecom New Zealand is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-securities-related services. Telekom Malaysia is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Telstra Corporation is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services and non-investment banking securities-related service. Thanachart Capital is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service. TMB Bank Public Company Limited is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services, non-investment banking securities-related service and non-securities-related services. Uni President Enterprises Corp is or was in the past 12 months a client of JPM. Wintek Corporation is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the company investment banking services.

· Investment Banking (past 12 months): J.P. Morgan received, in the past 12 months, compensation for investment banking services from Genting Singapore, Honda Motor (7267), Inpex Corporation, LG Display, LG Electronics, Mando, Maxis Berhad, Nikon (7731), Oberoi Realty, OCBC Bank, Reliance Communications Limited, Standard Chartered Plc (HK), Tata Power, Telecom New Zealand, Telekom Malaysia, Telstra Corporation, TMB Bank Public Company Limited, Wintek Corporation.

· Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Bharti Airtel Limited, China Resources Power Holdings, FUJIFILM Holdings (4901), Genting Singapore, Hitachi (6501), Honda Motor (7267), Inpex Corporation, LG Chem Ltd, LG Display, LG Electronics, Mando, Maxis Berhad, Nikon (7731), Oberoi Realty, OCBC Bank, Philippine Long Distance Telephone Company, Reliance Communications Limited, Siam Commercial Bank, Standard Chartered Plc (HK), Tata Power, Telecom New Zealand, Telekom Malaysia, Telstra Corporation, TMB Bank Public Company Limited, Wintek Corporation.

· Non-Investment Banking Compensation: JPMS has received compensation in the past 12 months for products or services other than investment banking from Bangkok Bank, Bank of Ayudhya, Bharti Airtel Limited, Canon (7751), China Citic Bank - H Share, FUJIFILM Holdings (4901), Globe Telecom, Hitachi (6501), Honda Motor (7267), Inpex Corporation, KASIKORNBANK, Kiatnakin Bank, Krung Thai Bank, LG Display, LG Electronics, Mando, Nikon (7731), OCBC Bank, Philippine Long Distance Telephone Company, Punjab National Bank, Reliance Communications Limited, Samsung Engineering, Siam Commercial Bank, Standard Chartered Plc (HK), Tata Power, Telekom Malaysia, Telstra Corporation, Thanachart Capital, TMB Bank Public Company Limited. An affiliate of JPMS has received compensation in the past 12 months for products or services other than investment banking from Bangkok Bank, Bank of Ayudhya, Canon (7751), China Citic Bank - H Share, FUJIFILM Holdings (4901), Globe Telecom, Hitachi (6501), Honda Motor (7267), Inpex Corporation, KASIKORNBANK, Krung Thai Bank, LG Chem Ltd, LG Display, LG Electronics, Nikon (7731), OCBC Bank, Philippine Long Distance Telephone Company, Punjab National Bank, Reliance Communications Limited, Siam Commercial Bank, SM Prime Holdings, Inc., Standard Chartered Plc (HK), Tata Power, Telekom Malaysia, Telstra Corporation, Thanachart Capital, TMB Bank Public Company Limited.

· Broker: J.P. Morgan Securities Ltd. acts as Corporate Broker to Standard Chartered Plc (HK). · J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants

of Hyundai Engineering & Construction and owns 10,044,190 as of 04-May-11. · J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants

of LG Chem Ltd and owns 17,036,280 as of 04-May-11. · J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants

of LG Display and owns 19,838,760 as of 04-May-11. · J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants

of LG Electronics and owns 15,777,260 as of 04-May-11. · J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants

of LG Innotek and owns 1,065,860 as of 04-May-11.

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· J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants of Samsung Engineering Co. Ltd and owns 10,649,040 as of 04-May-11.

· J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants of SK Telecom and owns 10,393,270 as of 04-May-11.

· "J.P. Morgan Securities LLC and or its affiliates (J.P. Morgan) is acting as bookrunner to Telstra Corporation Limited (TLS) on US$1bn 144A bond offering as announced on 7 April 2011. J.P. Morgan will be receiving fees for so acting. J.P. Morgan may perform, or may seek to perform, other financial or advisory services for TLS or its associates and may have other interests in or relationships with TLS or its affiliates, and receive fees, commissions or other compensation in such capacities. J.P. Morgan has received fees, commissions or other compensation from TLS or its affiliates in the past 12 months, and expects to become entitled to receive such fees, commissions or other compensation in the future, in addition to the fees referred to above. J.P. Morgan may also deal in, hold or act as market maker in relation to TLS securities and receive fees for doing so."

· MSCI: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or used to create any financial products, including any indices. This information is provided on an 'as is' basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.

Important Disclosures for Equity Research Compendium Reports: 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://mm.jpmorgan.com/disclosures/company or by calling this U.S. toll-free number (1-800-477-0406)

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] J.P. Morgan Cazenove’s UK Small/Mid-Cap dedicated research analysts use the same rating categories; however, each stock’s expected total return is compared to the expected total return of the FTSE All Share Index, not to those analysts’ coverage universe. A list of these analysts is available on request. The analyst or analyst’s team’s coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe.

J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2011

Overweight (buy)

Neutral (hold)

Underweight (sell)

J.P. Morgan Global Equity Research Coverage 47% 42% 11% IB clients* 50% 45% 33% JPMS Equity Research Coverage 43% 49% 8% IB clients* 70% 62% 56%

*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks on any securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named on the front of this note or your J.P. Morgan representative.

Analysts’ Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of JPMS,

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and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

Other Disclosures

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

Options related research: If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation’s Characteristics and Risks of Standardized Options, please contact your J.P. Morgan Representative or visit the OCC’s website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf.

Legal Entities Disclosures U.S.: JPMS is a member of NYSE, FINRA and SIPC. J.P. Morgan Futures Inc. is a member of the NFA. JPMorgan Chase Bank, N.A. is a member of FDIC and is authorized and regulated in the UK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is a member of the London Stock Exchange and is authorized and regulated by the Financial Services Authority. Registered in England & Wales No. 2711006. Registered Office 125 London Wall, London EC2Y 5AJ. South Africa: J.P. Morgan Equities Limited is a member of the Johannesburg Securities Exchange and is regulated by the FSB. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd, Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan Australia Limited (ABN 52 002 888 011/AFS Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066) is a Market Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited, having its registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz East, Mumbai - 400098, is a member of the National Stock Exchange of India Limited (SEBI Registration Number - INB 230675231/INF 230675231/INE 230675231) and Bombay Stock Exchange Limited (SEBI Registration Number - INB010675237/INB010675237) and is regulated by Securities and Exchange Board of India. Thailand: JPMorgan Securities (Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines Inc. is a member of the Philippine Stock Exchange and is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is a member of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission. Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MICA (P) 025/01/2011 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by the Monetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by the MAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission in Malaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number 35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of Saudi Arabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific Disclosures U.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by JPMSL. Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arising as a result of publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is only available to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL in Australia to “wholesale clients” only. JPMSAL does not issue or distribute this material to “retail clients.” The recipient of this material must not distribute it to any third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the terms “wholesale client” and “retail client” have the meanings given to them in section 761G of the Corporations Act 2001. Germany: This material is distributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which are regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month end satisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end data from two months’ prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider/market maker for derivative warrants, callable bull bear contracts and stock options listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website:

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http://www.hkex.com.hk. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case of share trading, and that a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorgan Securities Japan Co., Ltd., will be receiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by the commission rate which was individually agreed between JPMorgan Securities Japan Co., Ltd., and the customer in advance. Financial Instruments Firms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau (kinsho) No. 82 Participating Association / Japan Securities Dealers Association, The Financial Futures Association of Japan. Korea: This report may have been edited or contributed to from time to time by affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of the securities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures section above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This material is issued and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the public" as determined in accordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded as professional clients as defined under the DFSA rules.

General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to JPMS and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is as of the close of market for the securities discussed, unless otherwise stated. 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. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S. affiliates and accepts responsibility for its contents. Periodic updates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other publicly available information. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.

“Other Disclosures” last revised January 8, 2011.

Copyright 2011 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan.#$J&098$#*P