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Global Equity Research
6 May 2014
Top Stories
Flows & Liquidity (Nikolaos Panigirtzoglou), Global Strong flows from the US into the Euro area US investors accounted for around half of the inflow into euro area equities by foreign investors between Feb 2013 and Jan 2014, and appear to account for a significant part of the flows into peripheral markets.
Equity Strategy (Mislav Matejka, CFA), Europe May Chartbook – Don’t sell because of poor seasonals, a number of fundamental positives yet to play out Global equities (MXWO) are at record highs. At the same time poor May-Sept seasonals are upon us.
SouFun Holdings Ltd (SFUN, OW – $12.59) (Alex Yao), Asia Pacific 1Q14 preview The weak property transaction volume data in 1Q indicates an uncertain outlook for China’s property market in 2014.
Westpac Banking Corporation (WBC, OW – A$34.45) (Scott Manning), Australia 1H14 Result: Sector-Leading Core Tier-1 Ratio Unaffected By APRA Conglomerates Rules WBC’s 1H14 cash earnings of A$3.77bn were above our (consensus) expectations of ~A$3.65bn due to improved provisioning.
Alstom (ALO FP, N – €29.76, PT €33.00) (Andreas Willi), Europe Upside to €33 - what to expect from New Alstom on May 7th We update our valuation analysis of New Alstom following additional details provided on last Thursday's call.
Amadeus IT Holding (AMS SM, OW – €30.27) (Stacy Pollard), Europe Southwest IT deal could add 2-3% to revenues - ALERT Amadeus has signed an airline IT agreement with Southwest Airlines for its domestic operations to run the full Altéa suite.
▼Siam Cement (SCC.BK, N – Bt426.00) (Samuel Lee, CFA), Asia Pacific Weak domestic outlook with limited upside from petrochemicals; downgrade to Neutral with new Bt430 PT SCC’s 1Q14 earnings were below consensus estimates, and the subsequent management update guided for a worse-than-expected outlook on domestic business.
Mexico Strategy Dashboards (Nur Cristiani, CFA), Latin America It's Springtime For Our Heatmap Too As we move on to the 2Q our Mexico Economic Heatmap is getting greener, most markedly in consumer and construction data.
Cielo (CIEL3.SA, N – R$39.27) (Domingos Falavina), Latin America New Central Bank Rules - Benign as Expected- Increasing PT and Previewing 1Q14 We increase Cielo’s YE14 PT to R$40/share (from R$34/share).
Garanti (GARAN TI, UW – TL8.08) (Paul Formanko), CEEMEA Resilient Q1, PT upgrade to TL7.5 (6.5), see more upside in Halkbank (OW), Alpha (OW), Erste (OW) Upgrading estimates on resilient NIM, as we believe the previously guided margin collapse is now unlikely to materialize; post recent rally, keep UW, PT TL7.5 (6.5).
Intel (INTC, OW – $26.17) (Christopher Danely) , United States Value Investor Alert on Intel – Shutting Down Mobile Could Unlock Roughly $0.50 in 2015 EPS In this note we examine the financial impact if Intel were to shut down its unprofitable Mobile and Communications Group.
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GLOBAL Stock Guide J.P. Morgan Markets Daily Economic Briefing Regional First to Market Inside this Report:
Research by Region Key Rating, Price Target & EPS Changes Market at a Glance Market Monitor Economics Calendar
J.P. Morgan Forecasts - Economics and Commodities Analyst Focus List
Today’s Events Conference Call: EE/MI 2014 CEO Conference Call Series: Dover (DOV), @ 10:00am ET, DIAL-IN: 888-603-7019 (US); +1-312-470-7146 (outside US); Passcode: TUSA Conference Call: The ECB should do more but probably won't, @ 4PM London/11AM New York Conference Call: LatAm Cement, Construction & Real Estate Outlook for 2014, at 10:00 ET, 15:00 UK, 11:00 São Paulo, 9:00 Mexico, 10:00 Santiago, Dial in: 866-803-2143 (US); +1-210-795-1098 (outside US), Passcode: JPMORGAN Corporate Marketing ASSA ABLOY (NEW YORK) FUTURE LAND DEVELOPMENT HOLDINGS LTD (1030 HK) (SAN FRANCISCO) GIVAUDAN (CHICAGO) ILLUMINA INC (BOSTON) RELIANCE ADAG GROUP (BOSTON) ROCKWELL COLLINS (LOS ANGELES) TDS / US CELLULAR (BALTIMORE, PHILADELPHIA, PRINCETON, WILMINGTON)
See end pages for analyst certification. For important disclosures, please refer to the disclosure section at the end of the individual linked notes. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Global Published Research TOP
Europe
Price Target and Estimate Changes Alcatel-Lucent (ALU FP – Neutral) (Sandeep Deshpande) 1Q14 preview: FCF critical parameter. FCF estimates not aggressive so meeting earnings could take stk up
Alior Bank (ALR PW – Underweight) (Paul Formanko) Checking Q1 dashboard for the speed of growth; PT PLN80 (69) as capital addressed, remain UW
Alstom (ALO FP – Neutral) (Andreas Willi) Upside to €33 - what to expect from New Alstom on May 7th
Aperam (APAM NA – Neutral) (Alessandro Abate) TP to €20.5 (€14.5) on 2015E (14E) EBITDA with Q1'14 preview: we are long into results. Keep Neutral
AFL Bayer (BAYN GR – Overweight) (Richard Vosser) Current levels significantly undervalue the growth potential - Reiterate Overweight
CTT - Correios de Portugal (CTT PL – Overweight) (Christopher G Combe) Q1 Preview: Bullish ahead of results with upside risk to FY14 estimates; lifting PT on lower ERP
Ferragamo (SFER IM – Neutral) (Melanie A Flouquet) Q1 14 results preview and changes to estimates
Garanti (GARAN TI – Underweight) (Paul Formanko) Resilient Q1, PT upgrade to TL7.5 (6.5), see more upside in Halkbank (OW), Alpha (OW), Erste (OW)
Lloyds Banking Group (LLOY LN – Overweight) (Raul Sinha) Solid Q1 to bring focus onto TNAV & DPS upside
PostNL (PNL NA – Overweight) (Christopher G Combe) Q1 ongoing EBIT ahead of apparent consensus; Shares offer attractive 30% upside potential
Rentokil Initial (RTO LN – Underweight) (Robert Plant) Q1 trading statement conference call, the main point was that organic revenue growth improved across the quarter
Price Target and Estimate Changes, continued SOFTWARE AG (SOW GR – Underweight) (Stacy Pollard) Post Q1 results: Updating our model to reflect results and disposal of IDS
Tod's (TOD IM – Neutral) (Melanie A Flouquet) Q1 2014E Sales preview and changes to estimates
Results and Company Views AFL bpost (BPOST BB – Overweight) (Christopher G Combe) Q1 Preview: Estimates imply upside vs. consensus; focus on updated 2014 outlook
InterContinental Hotels (IHG LN – Neutral) (Komal Dhillon) Q114 trading update first take
Laird (LRD LN – Overweight) (Alexander Mees) Q1 2014 IMS: Solid start with earnings set to accelerate through the year; estimates unchanged
Siemens (SIE GR – Overweight) (Andreas Willi) May 7th - an important day in a defining month for the CEO's tenure
Sky Deutschland (SKYD GR – Overweight) (Mark O'Donnell) Q1 14 preview - we expect subscriber net adds up strongly - ALERT
Strategy Equity Strategy (Mislav Matejka, CFA) May Chartbook – Don’t sell because of poor seasonals, a number of fundamental positives yet to play out
Pan-European Small/Mid-Caps (Eduardo Lecubarri) Radar — Adding Bellway and Cineworld as "Investment Opportunities", Removing RPC, ETO & CSR
The Global SMid Radar (Eduardo Lecubarri) Adding Bellway and Cineworld to 'Investment Opportunities', Closing RPC, EOne and CSR
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RPC Group (RPC LN – Overweight) (Alexander Mees) RPC serves an ACE
Securitas (SECUB SS – Underweight) (Robert Plant) Q114 results, the negative is the decline in the Spanish margin, albeit the rest of the group seems to be trading better
Smith & Nephew (SN/ LN – Not Rated) (David Adlington) Trough growth quarter navigated
Sector Research OCTG 360 (Alessandro Abate) April key data: OCTG price down (-$10/t)
Asia
Recommendation Changes
▼PT Global Mediacom Tbk (BMTR.JK – Neutral), Indonesia (Princy Singh) MNC Group: BMTR/MNCN/MSKY: 1Q14 - Earnings below estimates, guidance implies pick up through 2014; D/g BMTR to N
▼Siam Cement (SCC.BK – Neutral), Thailand (Samuel Lee, CFA) Weak domestic outlook with limited upside from petrochemicals; downgrade to Neutral
Price Target and Estimate Changes AirAsia BHD (AIRA.KL – Neutral), Malaysia (Corrine Png) Indo's growth was better than seasonality while MY, TH were weaker; Indo & Phils need to lift loads
Grasim Industries Ltd (GRAS.BO – Overweight), India (Pinakin Parekh, CFA) Grasim and Ultratech: VSF and Cement both at cyclical lows even as company well positioned in both segments
MNC Sky Vision tbk (MSKY.JK – Overweight), Indonesia (Princy Singh) MNC Group: BMTR/MNCN/MSKY: 1Q14 - Earnings below estimates, guidance implies pick up through 2014; D/g BMTR to N
PT Global Mediacom Tbk (BMTR.JK – Neutral), Indonesia (Princy Singh) MNC Group: BMTR/MNCN/MSKY: 1Q14 - Earnings below estimates, guidance implies pick up through 2014; D/g BMTR to N
PT Media Nusantara Citra Tbk (MNCN.JK – Neutral), Indonesia (Princy Singh) MNC Group: BMTR/MNCN/MSKY: 1Q14 - Earnings below estimates, guidance implies pick up through 2014; D/g BMTR to N
SIA Engineering Company (SIAE.SI – Overweight), Singapore (Corrine Png) Declared special dividend; 4Q FY14 almost exactly in line with our forecast; outlook stable, stay OW
Siam Cement (SCC.BK – Neutral), Thailand (Samuel Lee, CFA) Weak domestic outlook with limited upside from petrochemicals; downgrade to Neutral
SouFun Holdings Ltd (SFUN – Overweight), China (Alex Yao) 1Q14 preview
Results and Company Views, continued Godrej Properties (GODR.NS – Overweight), India (Gunjan Prithyani) Moving in the right direction. Maintain OW
Sina Corp (SINA – Overweight), China (Alex Yao) First take on revocation of two licenses - ALERT
Vietnam Dairy Products JSC (VNM.HM – Not Covered), Vietnam (Aditya Srinath, CFA) AGM notes: Sacrificing profitability to protect market share - Company Visit Note
Strategy Asia Pacific Strategy Dashboards, Asia Pacific (Adrian Mowat) Identifying change and providing perspective on key economic and equity market data for Asian markets
Fund Manager Monthly – Asia, Asia Pacific (Robert Smith) Summarizing Quant Market Activity, April 2014
Global Developed Markets Strategy Dashboards, Global (Adrian Mowat) Key economic and equity market data for developed markets
Hong Kong Monthly Wrap, Hong Kong, China (Cusson Leung) April 2014: Remained range bound
Indian Equities, India (Bijay Kumar, CFA) Internal Risks vs. External Returns
Indonesia Monthly Wrap, Indonesia (Aditya Srinath, CFA) April 2014: Partial Eclipse after Parliament Elections
Economics 1Q14 GDP slows on net exports, domestic demand steadies – on policy watch, Indonesia (Sin Beng Ong)
Sector Research China Property Weekly, China (Ryan Li, CFA) Property sales for the week ending May 04, 2014
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UltraTech Cement Ltd (ULTC.BO – Neutral), India (Pinakin Parekh, CFA) Grasim and Ultratech: VSF and Cement both at cyclical lows even as company well positioned in both segments
Results and Company Views ABB Ltd (ABB.BO – Underweight), India (Sumit Kishore) Management strikes an optimistic chord on the conference call
ABB Ltd (ABB.BO – Underweight), India (Sumit Kishore) Mar-q PAT below consensus, but order inflow and margin performance better than expected
China Longyuan Power Group Corp. (0916.HK – Overweight), China (Boris Kan) Apr 2014 wind power generation remained weak
Dr. Reddy's Laboratories Limited (REDY.BO – Overweight), India (Neha Manpuria) Comments on Copaxone by generic players; Implication for DRRD
Genting Singapore (GENS.SI – Underweight), Singapore (Cusson Leung) 1Q result beat on VIP roll volume and favorable win rate
Container Shipping, Asia Pacific (Corrine Png) Asia-Europe/Med spot freight rates rose; Transpacific rates steady and Intra-Asia rates steady/higher
Hong Kong property, Hong Kong (Cusson Leung) Volume rebound underpins re-rating of the developers - top pick SHKP
JPM Asia Telco Investing our Recommendations, China, India, South Korea (James R. Sullivan, CFA) Back Testing Analysis: 2nd May 2014
Metals Monthly, India, China (Daniel Kang) Aluminium moving into first annual deficit in 6 years
Shipyards & Oil Services, Asia Pacific (Ajay Mirchandani) Perisai frontrunner for MOPU job; Mexico reform delay; DO raises Brazil capex slowdown concern
The Lodestone, India (Pinakin Parekh, CFA) JPM turns more positive on Aluminum; Indian steel companies maintain prices for May
Australia
Publications Westpac Banking Corporation (WBC, OW – A$34.45) (Scott Manning) 1H14 Result: Sector-Leading Core Tier-1 Ratio Unaffected By APRA Conglomerates Rules Aurizon Holdings Limited (AZJ, N – A$4.92) (Carolyn Holmes) Potential $6bn West Pilbara infrastructure project Ardent Leisure Group (AAD, N – A$2.54) (Armina Soemino) 3Q FY14 Result: Strong Rollout in Main Event and Health Clubs Continues but Appears Priced In News Corporation (NWS, N – A$18.09) (Jarrod McDonald) Acquires Harlequin Book Publishing for C$455m - ALERT Australian Banking Sector (Scott Manning) APRA Conglomerates Rules: Further Retention of Capital In The System
Publications, continued Australian Economic Update (Tom Kennedy) Aussie building approvals slip, though details still okay Australian and New Zealand Telcos (Paul Brunker) Reviewing our forecasts versus consensus Bendigo and Adelaide Bank (BEN, NR – A$11.39) (Scott Manning) Acquisition of Rural Finance Loan Book Building Materials (Jason Steed) AUS Dwelling Approvals: Headline Weak, Underlying Trend Remains Strong
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LatAm
Recommendation, Price Target and Estimate Changes Cielo (CIEL3.SA – Neutral) (Domingos Falavina) New Central Bank Rules - Benign as Expected- Increasing PT and Previewing 1Q14
Santos Brasil (STBP11.SA – Neutral) (Fernando Abdalla) Volume Outlook Still Challenging; Remain N
LatAm Company and Sector News Banco de Chile (BCH – Neutral) (Saul Martinez) 1Q14 Profitability Helped by Inflation; Underlying Trends Are Mixed - ALERT
Bancolombia (CIB – Neutral) (Saul Martinez) Mostly Positive First Take on 1Q14 - ALERT
BR Properties (BRPR3.SA – Overweight) (Marcelo Motta) Outlook Remains Challenging for BRPR with Same Property Rents Growing Below Inflation
CVC Brasil (CVCB3.SA – Overweight) (Andrea Teixeira, CFA) Soft 1Q14 Results In Line with Expectations. Strong Bookings, but Lower Take Rate - ALERT
Entel (ENT.SN – Overweight) (Andre Baggio, CFA) 1Q14: Reasonable Growth, But Margins Remain Under Pressure
Iochpe-Maxion (MYPK3.SA – Overweight) (Cassio Lucin) Sale of Steel Wheel Capacity Could Be Good for Costs, But Price Leaves Doubts - ALERT
Restoque (LLIS3.SA – Underweight) (Andrea Teixeira, CFA) Operating Improvements in 1Q14 after a Difficult Year. Remain UW on Valuation - ALERT
Aerospace and Defense (Joseph B. Nadol III) Weekly Surveillance: 4/28/14 - 5/2/14
Strategy EM Corporate Weekly Monitor (Yang-Myung Hong) Steady on the surface, but maintain Neutral view with selective approach given more limited risk reward
Emerging Markets Corporate Weekly Analytics (Alisa Meyers) For the week ended May 2, 2014
Strategy, continued Emerging Markets Cross Product Strategy Weekly (Holly Huffman)
Global Developed Markets Strategy Dashboards (Adrian Mowat) Key economic and equity market data for developed markets
JPMQ : Global Pairs Trading Ideas (Robert Smith)
Mexico Strategy Dashboards (Nur Cristiani, CFA) It's Springtime For Our Heatmap Too
Q-Scores across the World Report (Robert Smith) Latest Quant Rankings by Sector for Global Stocks
The "Sentiment Radar" Screening Tool (Robert Smith) Targeting Underperformance Candidates
Economics Brazil (Fabio Akira) growth-inflation debate in the spotlight; watch for new IP methodology
El Salvador: Public debt stock climbs 1.5% in 1Q14 (Franco A Uccelli)
Guatemala: Public debt stock rises 2.1% in 1Q14 (Franco A Uccelli)
Jamaica: Trade deficit narrows sharply in January (Franco A Uccelli)
Mexico Color (Gabriel Lozano) Consumer confidence, April CPI and Banxico Minutes
Panama: Opposition wins presidential election (Franco A Uccelli)
Credit Research Alsacia (Neutral) (Daniel Sensel) Local newspaper is reporting that the company is requesting a CLP 100 increase in the PPT – ALERT
LatAm reference pieces JPM- Banks Weekly: Valuation Comparables and Performance Summary (Saul Martinez)
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CEEMEA
Price Target and Estimate Changes Alior Bank (ALR PW – Underweight) (Paul Formanko) Checking Q1 dashboard for the speed of growth; PT PLN80 (69) as capital addressed, remain UW
Garanti (GARAN TI – Underweight) (Paul Formanko) Resilient Q1, PT upgrade to TL7.5 (6.5), see more upside in Halkbank (OW), Alpha (OW), Erste (OW)
Teva Pharmaceuticals (TEVA US – Neutral) (Chris Schott, CFA) Updating Model Post 1Q Results
Results and Company Views Aeroflot (AFLT RX – Neutral) (Sergey V Arinin) Weak March 14 traffic growth; the pressure on traffic may continue - ALERT
Aldar Properties (ALDAR UH – Neutral) (Muneeza Hasan) 1Q14 results preview - ALERT
ALROSA (ALRS RM – Overweight) (Yuriy A Vlasov) New $1,090 mn credit lines extend LT portion of debt to 88% and provide more flexibility for oil & gas asset divestment - ALERT
First Quantum Minerals (FQM LN – Neutral) (Fraser Jamieson) Weak start to 2014 driven by continued concentrate inventory build-up - ALERT
Koza Gold (KOZAL TI – Neutral) (Allan Cooke) 1Q14 EPS at TL0.95/sh. Strong quarterly result but significant local challenges continue to weigh - ALERT
Ülker (ULKER TI – Neutral) (Muneeza Hasan) 1Q14 results preview - ALERT
Strategy CEEMEA Monthly Wrap April 2014 (David Aserkoff, CFA) April shower brings cold west investors
Global Developed Markets Strategy Dashboards (Adrian Mowat) Key economic and equity market data for developed markets
Global Performance - April 2014 (Ayan Ghosh) Equities, Bonds and Currency performance
Strategy, continued SA Equity Strategy: Monthly Wrap (Ayan Ghosh) Value outperformance continues
The Global SMid Radar (Eduardo Lecubarri) Adding Bellway and Cineworld to 'Investment Opportunities', Closing RPC, EOne and CSR
Economics EMEA EM Growth Dispersion: Euro Area Upswing Amid Ukraine-Russia Conflict – Full Version (Reference Presentation) (Michael Marrese)
Europe, Middle East and Africa Emerging Markets Weekly (Michael Marrese)
Global Data Watch (Bruce Kasman) Central banks grapple with conflicting signals
Middle East and North Africa Today (Brahim Razgallah)
Sub-Saharan Regional Outlook (Giulia Pellegrini)
Turkey (Yarkin Cebeci)
Turkey (Yarkin Cebeci) CPI surprises on the upside yet again in April
Commodities and FX FX Markets Weekly (John Normand) Where capitulation has and hasn't occurred
Credit Research CEEMEA Credit Analytics (Zafar Nazim, CFA) May 2014
Rates EMBIG Model Portfolio Rebalancing May 2014 (Jonny Goulden) Move Ukraine and Russia to UW
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US
Recommendation Changes
init TriNet (TNET – Overweight) (Tien-tsin Huang, CFA) Initiate at Overweight with $27 Price Target
Price Target and Estimate Changes
American International Group (AIG – Neutral) (Jimmy S. Bhullar, CFA) Déjà Vu All Over Again; 1Q Weaker than it Appears; L-T View Positive, but Street Estimates Seem High
Amicus Therapeutics (FOLD – Neutral) (Anupam Rama) Our Thoughts Post The 1Q Call
Big Lots, Inc. (BIG – Overweight) (Matthew R. Boss, CPA) Broadlines, Apparel & Footwear: "Defensive Growth" w/ Optionality; Low-End Stability Points to 2H Opportunity; Field Work & Store Pics
Cardtronics, Inc (CATM – Neutral) (Reginald L. Smith, CFA) Earnings Review: Solid Results; Mgmt Addresses Key Investor Concerns, Relief Rally Warranted
CareFusion (CFN – Overweight) (Michael Weinstein) Disappointing 3Q; Pyxis Key to 4Q Turn, Capital Allocation Key to FY15
CME Group Inc. (CME – Neutral) (Kenneth B. Worthington, CFA) 1Q Results Consistent With Expectations, Strong Quarter For Volumes But Outlook Is Tepid
Fabrinet (FN – Overweight) (Paul Coster, CFA) F3Q14 Results: Solid Quarter; Soft Guidance Was Anticipated; PT to $22.50
Family Dollar Stores, Inc. (FDO – Neutral) (Matthew R. Boss, CPA) Broadlines, Apparel & Footwear: "Defensive Growth" w/ Optionality; Low-End Stability Points to 2H Opportunity; Field Work & Store Pics
Monotype Imaging (TYPE – Neutral) (Sterling Auty, CFA) OEM Growth Remains Steady
Northern Tier (NTI – Neutral) (Igor Grinman) Model Update
Novozymes (NZYMb.CO – Neutral) (Jeffrey J. Zekauskas) Fueled by Ethanol
Peregrine Semiconductor (PSMI – Neutral) (Harlan Sur) Solid Near-Term Results...Still Uncertain on Adoption of G1 Integrated Solution; Reiterate Neutral
Public Storage (PSA – Overweight) (Michael W. Mueller, CFA) Model Update
Results and Company Views
Alexandria Real Estate Equities (ARE – Neutral) (Anthony Paolone, CFA) 1Q beats and guidance bumped up; overall good quarter
Axiall Corp (AXLL – Neutral) (Jeffrey J. Zekauskas) 1Q:14 Adjusted EBITDA Consistent with Street Estimates - ALERT
Cellular Dynamics (ICEL – Overweight) (Tycho W. Peterson) 1Q14 Quick Take: Bad Ticker - "Natural Volatility" in Cardiomyocyte Volumes Drives Big Top-Line Miss - ALERT
Hecla Mining (HL – Neutral) (John Bridges, CFA, ACSM) Strong result in line with our hopes. Positive drill results. Conservative guidance could help in H2
Intel (INTC – Overweight) (Christopher Danely) Value Investor Alert on Intel – Shutting Down Mobile Could Unlock Roughly $0.50 in 2015 EPS
KAR Auction Services, Inc. (KAR – Overweight) (Ryan Brinkman) 1Q Seemingly A Touch Softer, But Likely Driven By Weather Which Could Help 2Q; ARPU Better - ALERT
Lufthansa (LHAG.DE – Neutral) (Jamie Baker) Q114 Results: 60 Second Update - ALERT
Retail Properties of America (RPAI – Underweight) (Michael W. Mueller, CFA) 1Q $0.03 ahead but guidance implies a lower near-term run rate; Finding ways to recycle capital
STAG Industrial, Inc. (STAG – Overweight) (Michael W. Mueller, CFA) 1Q Slightly Below; Good Start to the Year for Acquisitions
Tenet (THC – Overweight) (Justin Lake) Q1 Beats and FY Guidance Reaffirmed - ALERT
Vornado Realty Trust (VNO – Overweight) (Anthony Paolone, CFA) 1Q FFO misses but the business metrics were in-line to slightly better
Whole Foods Market (WFM – Overweight) (Ken Goldman) Pivot Points - Key Issues into Earnings
Sector Research
1Q14 Wireless Scorecard (Philip Cusick, CFA) Postpaid Adds Better Mostly from Tablets but Prepaid Adds Much Weaker in Seasonally Strong Quarter
Alt Energy | Applied & Emerging Technologies (Paul Coster, CFA) Weekly Tear Sheet
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Qualys (QLYS – Neutral) (Sterling Auty, CFA) 1Q14: Strong Front-loaded Bookings Provided Revenue Upside
Scotts Miracle-Gro Co. (SMG – Overweight) (Jeffrey J. Zekauskas) Miracle Margins
Standard Pacific (SPF – Neutral) (Michael Rehaut, CFA) Post-Call Notes: Pricing Remains Solid for SPF; We Leave Our EPS Ests. Largely Unchanged; Maintain PT and Neutral Rating
Sysco Corporation (SYY – Neutral) (John Ivankoe) Beginning to Trend to Model, but Valuation Reflects This
Tyson Foods (TSN – Neutral) (Ken Goldman) Adjusting Estimates Following Big Multiple Contraction Day
Veeco Instruments (VECO – Overweight) (Paul Coster, CFA) Solid 1Q Results, 2Q EPS Guidance Misses but MOCVD Outlook Is Encouraging; Less So Synos
VIVUS, Inc (VVUS – Neutral) (Cory Kasimov) 1Q Snapshot - Qsymia Still Struggling to Gain Traction
Westlake Chemical Corp. (WLK – Overweight) (Jeffrey J. Zekauskas) Olefins Margins Expand: Vinyls to Come
Education Services (Jeffrey Y. Volshteyn) J.P. Morgan's Expert Conference Call Discussing Global Trends in Education - Monday May 12 @ 11:00am ET/16:00 UK - ALERT
Media: Ad Agencies (Alexia S. Quadrani) Upbeat Comments from Recent Meetings With Agency Management
Packaged Food - Monthly Currency Update (Ken Goldman) Currency a Tailwind to All Last Month; Biggest Beneficiaries MDLZ, K, HAIN, and CPB
Payment Processing (Tien-tsin Huang, CFA) Payments Market Share Handbook Fifth Edition
The Housing Trader (Michael Rehaut, CFA) May: Builders and Products Should Be Flat; Long WLH, LGIH, CSTE; Short MDC, BECN, SWK
www.jpmorganmarkets.com
Global Asset Allocation02 May 2014
Flows & LiquidityStrong flows from the US into the Euro area
Global Asset Allocation
Nikolaos Panigirtzoglou AC
(44-20) 7134-7815
J.P. Morgan Securities plc
Mika Inkinen
(44-20) 7742 6565
J.P. Morgan Securities plc
Matthew Lehmann
(1-212) 834-8315
J.P. Morgan Securities LLC
Jigar Vakharia
(91-22) 6157-3281
J.P. Morgan India Private Limited
See page 16 for analyst certification and important disclosures.
US investors accounted for around half of the inflow into euro area equities by foreign investors between Feb 2013 and Jan 2014, and appear to account for a significant part of the flows into peripheralmarkets.
From the $150bn of Euro area equities bought by US investors over that period, around $20bn went into Italian and Spanish equities.
The flow support for Italian and Spanish government debt has experienced a shift since last September, away from domestic banks into non-domestic investors.
Of the €50bn of Spanish government debt securities bought by non-domestic investors between September 2013 and January 2014, €9bn likely came from the US.
Of the €38bn of Italian government debt securities bought by non-domestic investors between September 2013 and January 2014, €12bn likely came from the US.
The position of US investors appears to be neutral relative to benchmarks in both euro area equities and bonds.
The overall flow picture is consistent with the hypothesis that the outflows from EM assets have benefited peripheral assets.
Credit creation weakens in EM ex-China. It remains stubbornly negative in the Euro area.
EM equity outflows after 5 consecutive weeks of inflows.
The outperformance of euro area assets and the strength of the euro area are raising questions about financial flows into the region from abroad. How big have portfolio flows into the euro area been? Monthly balance of payments data confirm indeed that portfolio flows have been strong. The pace of foreign flows into euro area equities, at €21bn per month in the three months to February, is at the high end of the historical range. These foreign flows into euro area equities suffered between early 2011 and mid 2012 due to concerns about a Greek exit euro break up fears, but improved dramatically in the second half of 2012 as these concerns receded and stayed overall strong since then. These flows slowed somewhat at the end of 2013, but picked up strongly again this year (Figure 1).
How much of these flows went into bank vs. non-bank equities? Foreign flows into euro area equities were dominated by non-bank (i.e. non-MFI) equities up until the end of last year. It was only this year that foreign investors started pouring money into euro area bank equities. From the €23bn foreign investors invested into euro area equities in January and February this year, €17bn went into bank equities.
Figure 1: Buying of euro area equities by foreign investors €bn per month, 3-month averages, last obs
is Feb.
Source: ECB
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Don’t sell in May; A number of positives yet to play out Global equities (MXWO) are at record highs. Entering summer has typically not been the best time to stay
bullish, given traditionally poor May-September seasonals. So, why not take some risk off the table? We advise against positioning more defensively as we continue to see a number of factors working in favour of equities:
1) Q1 results are coming in strong. Our expectation was that Q1 reporting season would act to refocus the market back onto robust fundamentals, and that this would add support to the constructive stance. Indeed, the 74% of S&P500 constituents that have released results so far are showing a run rate of 6% Q1 yoy EPS growth, significantly above original consensus projections that called for 0% (see page 8). Q1 S&P500 EPS is up almost 1$ in just a few weeks and 4x more companies are revising ’14 earnings guidance higher than lower.
2) European recovery is broadening out and gaining momentum. IFO and PMIs are near 3 year highs and peripheral bond spreads are at multi year best levels. Just the mere notion that ECB appears to be ready to provide more support, if needed, is strengthening the risk-reward of bullish European trade, in our view. “ECB put” is starting to take shape.
3) Corporates turning expansionary is a major support. This is the next big catalyst that we were looking for to help stocks. Capex is picking up, as is the M&A. The average premium that acquirers are offering for targets is not stretched in historical context (see page 29).
4) Equities have seen inflows in every single week of this year, bar one. We think this will continue. Our analysis shows a clear positive correlation between the size of inflows and equity P/E multiples. What is very encouraging for the future equity performance, in our view, is that while new money is coming into the asset class, it doesn’t appear that investors are positioned very bullishly. This is seen in macro HF beta that is almost back to zero (see page 38).
5) The global activity backdrop is still the one of an upcycle. Global PMIs (ex Japan) are holding at elevated levels. US jobless claims remain well behaved, averaging near cycle best 320k. JPM expects US activity to pick up from Q2 onwards, with some encouraging recent dataflow. Even EM activity should improve from Q2, according to our economists. JPM expects bond yields to resume their uptrend, which we believe would be helpful for equities in terms of leadership and in terms of further inflows.
www.jpmorganmarkets.com
Asia Pacific Equity Research05 May 2014
SouFun Holdings LtdOverweightSFUN, SFUN US
1Q14 previewPrice: $12.59
Price Target: $19.60
China
Internet
Alex Yao AC
(852) 2800 8535
Bloomberg JPMA YAO <GO>
Yong Wang
(852) 2800-8579
J.P. Morgan Securities (Asia Pacific) Limited
YTD 1m 3m 12mAbs -23.6% -16.0% -19.9% 146.4
%Rel -22.3% -12.4% -23.1% 123.0
%
Bloomberg SFUN US, Reuters SFUN(Year-end Dec, $ mn) FY13 FY14E FY15E FY16E FY13 FY14E FY15E FY16E
Net Sales 637 840 1,082 1,328 ROE(%) 97.2% 62.0% 44.9% 35.7% 52-Week range 19.94-4.60Operating Profit (EBIT) 350 462 582 715 ROIC(%) 212.4% 253.0% 547.0% 696.9% Shares Outstg 305MNEBITDA 355 467 589 723 Cash 836.9 1,394.1 1,954.5 2,622.5 Market Cap(US) US$3,839MNPre Tax Profit 368 490 620 755 Equity 443.5 878.8 1,429.2 2,098.9 Free float -
Reported Net profit 298 402 509 619 Qtr GAAP EPS ($) 1Q 2Q 3Q 4Q Avg daily vol. 9.4MM shares
Reported EPS (US$) 3.51 0.91 1.14 1.38 EPS (13) 0.34 0.67 1.22 1.27 Avg daily val ($) 144.81MNP/E (x) 3.6 13.9 11.0 9.1 EPS (14) E 0.11 0.19 0.29 0.32 Dividend Yield -Adj. EPS * 3.61 0.92 1.16 1.41 EPS (15) E 0.14 0.25 0.36 0.38 Index (NASD) 4123.90
Adj. P/E (X) 3.5 13.6 10.8 8.9 1M 3M 12M Price Target 19.60
EV/EBITDA (x) 11.4 7.4 4.9 3.1 Abs. Perf.(%) (16.0%) (22.7%) 146.4% Price Target End Date 31-Dec-14P/B (x) 2.2 5.6 3.5 2.4 Rel. Perf.(%) (12.4%) (23.1%) 122.9% Price Date 02 May 14
Y/E BPS (US$) 5.68 2.24 3.62 5.29Source: Company, J. P. Morgan estimates, Bloomberg. * Note: Excluding share-based compensation expense.
See page 7 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.
4
8
12
16
20
$
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
SFUN share price ($)
CCMP (rebased)
The weak property transaction volume data in 1Q indicates an uncertainoutlook for China’s property market in 2014. Among SouFun's three major businesses, e-commerce is potentially the most vulnerable as it is directly related to property transactions (new home sales). However, we expect the negative impact to be limited in 1Q given the low penetration of e-commerce in overall property transactions volumes in China. In our view, the key driver of SouFun’s e-commerce growth over the next 1-2 years will be penetration improvement rather than total property market transaction volume. SouFun will report 1Q14 earnings results before U.S. market open on May 7, 2014.
Sales volume of commercial residential property declined for the first three months of 2014. Total floor area of commercial residential properties sold year-to-date (Jan-Mar 2014) saw 6% YoY decline compared to 41% volume increase during the same period in 2013. March alone saw a 10% sales volume decline. In accordance with the market weakness, SouFun’s ecommerce business could be affected in the quarter.
Cutting 1Q e-commerce revenue forecast but expecting a recovery in 2H14. We cut 1Q14 revenue forecast by 3% to US$122MM, due to a less optimistic outlook of SouFun’s e-commerce business. We expect such a weakness to be offset by a revenue recovery in 2H14 due to geographic expansion and mobile contribution. Our 2014 revenue and profit estimates remain unchanged.
Other key financial forecasts. We expect 1Q14 non-GAAP EPS of US$0.92. Gross margin/non-GAAP operating margin will be 78%/43% in 1QE.
Maintain Overweight with Dec-14 PT of US$19.6. Our PT is based on 2014E non-GAAP FD EPADS of US$0.92, an FY14-16E EPADS CAGR of 24% and a PEG of 0.9x. PT implies a 2014E P/E of 21x.
www.jpmorganmarkets.com
Australia Equity Research05 May 2014
Westpac Banking CorporationOverweightWBC.AX, WBC AU
1H14 Result: Sector-Leading Core Tier-1 Ratio Unaffected By APRA Conglomerates Rules
▲
Price: A$34.45
Price Target: A$34.99Previous: A$34.59
Australia
Banks
Scott Manning AC
(61-2) 9003-8643
Bloomberg JPMA MANNING <GO>
J.P. Morgan Securities Australia Limited
Bharat Anand
(61-2) 9003-8642
J.P. Morgan Securities Australia Limited
Vineet Ahuja
(91-22) 6157-3302
J.P. Morgan India Private Limited
YTD 1m 3m 12mAbs 6.4% -0.4% 13.7% 3.9%Rel 2.7% -1.7% 4.6% -3.6%
Westpac Banking Corporation (Reuters: WBC.AX, Bloomberg: WBC AU)
Year-end Sep (A$) FY12A FY13A FY14E FY15E FY16ERevenues (A$ mn) 18,076 18,833 19,871 20,634 21,439Expenses (A$ mn) (7,379) (7,759) (8,178) (8,376) (8,603)Pre-Provision Profit (A$ mn) 10,697 11,074 11,693 12,259 12,836Provisions (A$ mn) (1,212) (847) (823) (1,049) (1,063)Tax & Other (A$ mn) (2,887) (3,164) (3,352) (3,442) (3,611)Cash Earnings (A$ mn) 6,598 7,063 7,518 7,768 8,162Cash EPS (A$) 2.09 2.19 2.36 2.43 2.55Cash EPS Growth 4.0% 4.6% 7.7% 3.2% 4.8%Payout Ratio 77.2% 76.5% 75.3% 76.2% 75.6%Dividend Yield 4.8% 5.6% 5.3% 5.5% 5.7%P/E (x) 16.5 15.7 14.6 14.2 13.5Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataShares O/S (mn) 3,109Market Cap (A$ mn) 107,105.30Market Cap ($ mn) 99,346.35Price (A$) 34.45Date Of Price 05 May 14Free Float(%) -3M - Avg daily vol (mn) 6.403M - Avg daily val (A$ mn) 213.683M - Avg daily val ($ mn) 198.2ASX200-Bnk 8982.99Exchange Rate 0.93Price Target End Date 31-Dec-14Price Target (A$) 34.99
See page 16 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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30
34
38
A$
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
WBC.AX share price (A$)
ASX200-Bnk (rebased)
WBC’s 1H14 cash earnings of A$3.77bn were above our (consensus) expectations of ~A$3.65bn due to improved provisioning. At the operating level, the result was as expected, with stable margins, recovering growth, and good cost management.WBC’s sector-leading CET1 ratio of 8.82% was a highlight, being flat on a year ago – absorbing 60bp from special dividends and the Lloyds deal. Further, WBC’s comments that it had received notification from APRA that it is unaffected by the new Conglomerates capital rules triggered an avalanche of announcements from the other major banks, which will face headwinds of ~20bp to ~60bp in coming years. In a sector that remains fully valued, WBC's solid earnings and capital position see us retain a relative Overweight recommendation.
Underlying earnings quality was solid. Stronger treasury contributions and wealth performance fees offset reduced contributions from CVA to leave net ‘low P/E’ revenues as expected. Annualised underlying revenue growth of 7% and cost growth of 5% at a sector-leading ~40% cost-to-income ratio delivered 8% pre-provision earnings growth.
Earnings estimates remain unchanged – arguably a touch conservative.We are leaving our 2H14E and FY15E estimates largely unchanged. Our 2H14E earnings estimates are flat on 1H14 in the expectation that the strong 1H14 provisioning outcome (12bp / GLA) is not repeated, and offset by underlying pre-provision growth and a full period contribution from Lloyds (A$20m benefit to 1H14 from three months of consolidation). We have also allowed for a 2bp decline in NIM, contrary to comments from the WBC CFO that the exit margin is close to the average for 1H and deposit pricing and wholesale funding costs continue to improve to provide an offset on tighter front-book asset spreads.
Capital continues to be the bright spot. WBC’s 8.8% CET1 ratio is sector-leading (ANZ 8.3%, CBA 8.5%, NAB 8.5%) and will not be affected by the new APRA Conglomerates standards (ANZ A$800m / 20bp, CBA A$2.2bn / 65bp, NAB A$2.0bn / 53bp). Although we expect a smooth transition to absorb these new requirements through to 2017, it does keep industry returns, and therefore valuations, in check. WBC’s sector-leading efficiency and capital see us retain our Overweight recommendation in a quite tightly bunched field of peer-relative valuation metrics (refer Table 2).
www.jpmorganmarkets.com
Europe Equity Research05 May 2014
AlstomNeutralALSO.PA, ALO FP
Upside to €33 - what to expect from New Alstom on May 7th
▲
Price: €29.76
Price Target: €33.00Previous: €23.00
European Capital Goods
Andreas Willi AC
(44-20) 7134-4569
Bloomberg JPMA WILLI <GO>
Akash Gupta
(44-20) 7742-7978
Glen Liddy
(44-20) 7134-4570
Alexander Whight
(44-20) 7134-4566
William Ashman
(44-20) 7742-5777
J.P. Morgan Securities plc
For Specialist Sales advice:
Timm Schulze-Melander, CFA
(44 20) 7134-1331
YTD 1m 3m 12mAbs 14.8% 35.5% 44.1% -3.9%Rel 12.0% 34.9% 37.9% -16.6%
Alstom (ALSO.PA;ALO FP)
FYE Mar 2012A 2013A 2014E 2015EAdj. EPS FY (€) 2.88 2.75 2.17 2.07Adjusted P/E FY 10.3 10.8 13.7 14.4Revenue FY (€ mn) 19,934 20,269 20,016 19,993EBIT FY (€ mn) 1,072 1,187 1,185 1,137EBIT Margin FY 5.4% 5.9% 5.9% 5.7%Earning Before tax FY (€ mn)
895 964 903 842
Net Att. Income FY (€ mn) 732 802 716 686Headline EPS FY (€) 2.49 2.66 2.33 2.23Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataPrice (€) 29.76Date Of Price 02 May 14Price Target (€) 33.00Price Target End Date 31-Dec-1452-week Range (€) 32.46-18.69Market Cap (€ bn) 9.09Shares O/S (mn) 306
See page 7 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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€
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
ALSO.PA share price (€)
MSCI-Eu (rebased)
We update our valuation analysis of New Alstom following additional details provided on last Thursday's call. Our analysis now yields a value of €33assuming the GE deal completes, based on a valuation of Transport on 9.5x CY2015E EV/EBIT (€32 before after initial details were provided of the GE offer). This indicates 10% upside assuming the GE deal completes (review ongoing by French Government, potential Siemens offer). Our expected €5.5bncash distribution to Alstom shareholders represents ~60% of the current equity value and hence augments the upside. Given the fixed price offered by GE for Alstom Energy, we expect the focus next Wednesday at Alstom's full year results to be on the results of Transport and the net debt position.
Alstom full year results: For Transport, we look for Q4 orders of €1,190mn and sales of €1,446mn. For the full year, this results in orders of €6.7bn, sales of €5.6bn, operating profit (before restructuring, other income/expense and central costs) of €320mn (5.7% margin). Our operating profit estimate is 2% ahead of Inquiry consensus. We look for year end net debt (Alstom definition) of €3.4bn. We look for a dividend of €0.42 compared to €0.84 last year. Given the large expected cash distribution post deal completion, the level of FY2014 dividend is of more limited importance.
Outlook for FY2015: We expect the outlook to focus on Transport. Here we look for 7% like for like sales growth and progress on the operating margin (on old accounting definition pre charges and corporate/other) to 5.9%. Consensus looks for 5% sales growth and a 5.8% margin. We also expect Alstom to provide some more comments on the P&L, balance sheet and cash flow dynamics of the New Alstom.
New Alstom: We provide a pro-forma analysis based on available details which we expect to refine post the results or once Alstom provides more details. We assume a strong balance sheet for the company to start with at €1.5bn cash (€1bn for M&A) and no debt. We believe the company should not have gross debt given customer advances and desire to have a solid investment grade credit rating. This results in a dilutive valuation on P/E until the M&A cash is reinvested. We expect Alstom to focus on signaling assets and investments to increase sales generated outside Europe (70% in FY2013). At a share price of €30 and assuming the deal with GE completes as per the binding offer from April 30, Alstom Transport would be valued at 7x EV/EBIT and 15x adj. P/E CY2015E.
www.jpmorganmarkets.com
Europe Equity Research06 May 2014
Amadeus IT HoldingOverweightAMA.MC, AMS SM
Southwest IT deal could add 2-3% to revenues -ALERT
Price: €30.27
05 May 2014
European Software & IT Services
Stacy Pollard AC
(44-20) 7134-5420
Bloomberg JPMA POLLARD <GO>
Hannes Leitner
(44-20) 7742-8666
J.P. Morgan Securities plc
See page 2 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Amadeus has signed an airline IT agreement with Southwest Airlines for its domestic operations to run the full Altéa suite. Southwest is the largest US airline by domestic passengers, reporting around 108m revenue passengers and 133m passengers boarded (PBs) per year. The deal is significant to Amadeus for several reasons: 1) it could add 2-3% to revenues per year by 2017, 2) Southwest would be the first US domestic carrier to go live on Altéa, 3) Southwest is also a hybrid carrier, and known for its innovation. While we knew this deal was part of the pipeline, we did not expect a signing to come so early (nor had weassigned a high probability to the event), so we believe the share will react positively to the news this morning. This also follows on the very significant hotel IT deal with IHG announced a month ago. Amadeusremains one of our top picks for the year.
Revenue opportunity perhaps €80-90m per year, by our estimate.That is around a 2.5% addition to our 2014 revenue estimate of €3,319m. However, the full run rate would not be reached until 2017 (with some flow beginning in 2016, and perhaps some smaller development fees coming earlier). These are our estimates, as neither company has commented on the financials of the deal. While the average per PB (passenger boarded) fee for Amadeus was €0.96 last year, we have reason to believe Southwest would be smaller: 1) it's a large deal and we'd expect a volume discount, 2) the flights are mainly domestic and lower value, 3) Southwest is a Hybrid/LCC (low cost carrier), and thus may not take all the functionality within each module.
A foot in the door in the US. Southwest is the largest US airline by domestic passengers (with around 108m revenue passengers and 133m passengers boarded per year). We assume the deal is on a typical 10-year contract.
Single solution for domestic and international. Southwest already went live on Altéa for its international operations (around 3m passengers boarded) in January 2014, and the plan is to run a single solution for both international and domestic flights. The deal includes the full Altéa suite: Revenue, Inventory and Departure Control Systems. There could be room to up-sell other modules (such as Revenue Management or Revenue Accounting) at a future stage.
www.jpmorganmarkets.com
Asia Pacific Equity Research05 May 2014
Siam Cement▼ Neutral
Previous: Overweight
SCC.BK, SCC TB
Weak domestic outlook with limited upside from petrochemicals; downgrade to Neutral
▼
Price: Bt426.00
Price Target: Bt430.00Previous: Bt530.00
Thailand
Regional Petrochemicals and Refining
Samuel Lee, CFA AC
(852) 2800-8536
Bloomberg JPMA SLEE <GO>
J.P. Morgan Securities (Asia Pacific) Limited
Sumedh Samant
(66-2) 684 2682
JPMorgan Securities (Thailand) Limited
Anne Jirajariyavech, CFA
(66-2) 684-2684
JPMorgan Securities (Thailand) Limited
YTD 1m 3m 12mAbs 6.5% 0.9% 4.4% -12.3%Rel -3.0% -0.9% -5.6% -1.7%
Siam Cement (Reuters: SCC.BK, Bloomberg: SCC TB)
Bt in mn, year-end Dec FY11A FY12A FY13A FY14E FY15ERevenue (Bt mn) 368,579 407,601 434,251 457,060 460,403Net Profit (Bt mn) 27,281 23,580 36,522 36,100 37,017EPS (Bt) 22.73 19.65 30.44 30.08 30.85Core EPS (Bt) 21.05 19.65 29.30 30.08 30.85DPS (Bt) 12.50 11.00 15.50 13.54 13.88Revenue growth (%) 22.3% 10.6% 6.5% 5.3% 0.7%EPS growth (%) (27.0%) (13.6%) 54.9% (1.2%) 2.5%ROCE 6.9% 4.9% 10.0% 9.7% 9.6%ROE 18.5% 16.6% 23.1% 20.9% 19.2%ROA 6.9% 6.1% 8.4% 8.0% 7.8%P/E (x) 18.7 21.7 14.0 14.2 13.8P/BV (x) 3.6 3.6 3.2 2.8 2.5EV/EBITDA (x) 17.0 20.6 13.2 12.6 12.0Dividend Yield 2.9% 2.6% 3.6% 3.2% 3.3%Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataShares O/S (mn) 1,200Market Cap (Bt mn) 511,200Market Cap ($ mn) 15,776Price (Bt) 426.00Date Of Price 02 May 14Free Float(%) -3M - Avg daily vol (mn) 1.443M - Avg daily val (Bt mn) 606.813M - Avg daily val ($ mn) 18.7SET 1421.48Exchange Rate 32.40Fiscal Year End DecPrice Target (Bt) 430.00Price Target End Date 30-Dec-14
See page 19 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.
360
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440
480
520
Bt
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
SCC.BK share price (Bt)
SET (rebased)
We downgrade SCC to Neutral with a revised Dec-14 PT of Bt430. SCC’s 1Q14 earnings were below consensus estimates and the subsequentmanagement update guided for a worse-than-expected outlook on domestic business. SCC has few earnings growth drivers in the near term in our view, given flat-to-negative y/y domestic cement-building materials demand, andour bearish outlook on petrochemicals spreads. As SCC is seen as a Thailand domestic consumption proxy, we think its share price performance may remain capped until an inflection point is reached in the current political situation. Although we like the long-term rerating potential of SCC, we would be cautious in the near term and look to enter below Bt400. PTTGC remains our top pick in the Thai petchem space.
Downbeat guidance on domestic demand, petrochems. Management guided for flat domestic cement demand and negative building materials demand growth for 2014. While SCC is likely to maintain production with higher exports shipment, profitability could suffer given far lower profit margins on exports. While management expects PE and PP spreads to hold up, PVC spreads are expected to soften further while associates fundamentals (PTA, BD etc) remain weak.
Moderate c3% pa core earnings growth in 2014-15 as increased income from higher petrochemicals volumes and incremental capacities is likely to be offset by weak domestic sales, lower profitability on exports and our bearish assumptions for petchem spreads. Consensus earnings appear quite optimistic at around 9-17% above JPMe and may see some downgrades,given below-expectation 1Q14 earnings.
Valuation and share price view: Our revised Dec-14 PT is Bt430, based on our SOTP. With its recent share price run (+9% YTD; SET +9%), SCC is already trading above LT average valuations and lacks share price catalysts in the near term, in our view. Key risks on both sides include unexpected swings in the political situation and sharp movement in petrochem spreads.
www.jpmorganmarkets.com
Latin America Equity Research05 May 2014
Mexico Strategy DashboardsIt's Springtime For Our Heatmap Too
Mexico Equity Strategy
Nur Cristiani, CFA AC
(52-55) 5540-9374
Bloomberg JPMA CRISTANI <GO>
J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero
Pedro Martins Junior, CFA
(55-11) 4950-4121
Banco J.P. Morgan S.A.
Emy Shayo Cherman
(55-11) 4950-6684
Banco J.P. Morgan S.A.
Diego Celedon
(56-2) 425-5245
Inversiones J.P. Morgan Limitada
Varun Ghotgalkar
(91-22) 6157-5002
J.P. Morgan India Private Limited
See page 28 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.
As we move on to the 2Q our Mexico Economic Heatmap is getting greener, most markedly in consumer and construction data. Our Sector Economic Indicators point to value in Industrials, Materials and Staples, in line with our strategy, especially as we warm up to the domestic consumer. 1Q14 earnings season was weak with EPS y/y growth at -6.3% vs. consensus estimates of +2%. Nonetheless, top line growth beat estimates and EBITDA margins expanded by c.40bps. April was an eventful month politically with the introduction of the National Infrastructure Plan (PNI) shortly followed by the Energy Secondary Laws. Though the investments announced by the PNI were expected, we welcome the government’s transparency on projects andtimeframes as well as plans for private involvement. Regarding the Energy laws, we were positively surprised by their market friendliness. We expect discussions and final approval in June, before the Ministry of Energy rules on Pemex’s Round Zero. Here is our 30-pg. monthly recap on performance,1Q14 results, economics, politics and valuation.
Remain Neutral, but gaining confidence on growth. We continue to favor names in the Industrial/Construction space with further support provided by our Sector Economic Indicators while warming up to consumption. Top picks remain Cemex, Pinfra, Oma, Terrafina, Femsa and Liverpool. We recently added Walmex to our EM portfolio.
Early signs of domestic demand pick-up. Despite weak figures for unemployment and disappointing April PMIs, economic data during April continued to point towards a stronger 2Q. We are particularly hopeful on the recovery of domestic demand driven by continued strength in construction and reacceleration of manufacturing after Jan/Feb’s slump. In that regard, during April we saw non-oil consumer imports increase 2.3% m/m, with food inflation dragging down headline inflation to 3.5% from 3.8% in March. Remittances reached a 2-year high growing 16% oya in March. While consumer credit remains subdued, dropping 5.3% oya, corporate credit growth edged up 20bps. Though underwhelming PMIs for April and disappointing 1Q GDP growth in the US add downside risks, we remain comfortable with our 4% growth estimate for 2Q14's GDP.
Turning greener and pointing to opportunities in Industrials, Materials & Staples. Our Mexico Economic Heatmap is turning greener, particularly in Consumer (consumer confidence, job creation, remittances and credit growth) and Construction (job creation and housing credit). The deterioration that we saw in Walmex SSS we attribute more to calendar effects (Holy Week) and expect a slightly better figure for April (see our analyst’s note on that here). We are more concerned about the deceleration in PMIs for March but will wait to see next month’s data to confirm any trend. Our sector indicators point to value in industrials, materials and staples considering stock price divergence vs. related economic indicators.
Link to our Mexico 101 report here.
Link to our note on the National Infrastructure Program here.
Click here for our analysis of the government's proposal for the Energy Secondary Laws.
Link to our latest flow of funds reporthere.
Link to our latest LatAm model portfolio here and here for our EM model portfolio.
www.jpmorganmarkets.com
Latin America Equity Research06 May 2014
CieloNeutralCIEL3.SA, CIEL3 BZ
New Central Bank Rules - Benign as Expected-Increasing PT and Previewing 1Q14
▲
Price: R$39.27
Price Target: R$40.00Previous: R$34.00
Latin American Financials
Domingos Falavina AC
(55-11) 4950-3474
Bloomberg JPMA FALAVINA <GO>
Banco J.P. Morgan S.A.
Saul Martinez
(1-212) 622-3602
J.P. Morgan Securities LLC
Yuri R Fernandes
(55-11) 4950-3711
Banco J.P. Morgan S.A.
Christopher Delgado
(1-212) 622-6601
J.P. Morgan Securities LLC
YTD 1m 3m 12mAbs 20.5% 10.7% 26.6% 45.6%Rel 16.7% 6.1% 12.0% 49.2%
Cielo SA (CIEL3.SA;CIEL3 BZ)
FYE Dec 2011A 2012A 2013A 2014E(Prev)
2014E(Curr)
2015E(Prev)
2015E(Curr)
EPS - Recurring (R$)Q1 (Mar) 0.27 0.36 0.40 0.45 0.50 0.51 0.57Q2 (Jun) 0.27 0.35 0.40 0.47 0.50 0.53 0.57Q3 (Sep) 0.29 0.37 0.44 0.50 0.54 0.57 0.62Q4 (Dec) 0.32 0.39 0.46 0.53 0.57 0.59 0.65FY 1.15 1.47 1.70 1.95 2.10 2.20 2.41
Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataPrice (R$) 39.27Date Of Price 05 May 14Price Target (R$) 40.00Price Target End Date 31-Dec-1452-week Range (R$) 40.07-25.29Market Cap (R$ mn) 61,741.51Fiscal Year End DecShares O/S (mn) 1,572
See page 7 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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R$
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
CIEL3.SA share price (R$)
IBOV (rebased)
We increase Cielo’s YE14 PT to R$40/share (from R$34/share). The benign interpretation of two new Central Bank circulars on payment industry in Brazil issued on April 24th and the favorable competitive dynamics in the industry drive us to increase our estimates by 7-10% for 14E and 15E. We now forecast 23.5% bottom line growth for 2014 and 14.6% bottom line growth for 2015 (vs 15% and 13% at Bloomberg consensus). Cielo is the only vehicle to gain exposure to thecard industry’s secular growth story in a country where card usage representedonly 25.9% of private consumption in 2012, versus 40% in the USA or 55% in Canada. Despite very good earnings prospects, Cielo is trading at 18.1x 12-month forward P/E, at its all time high, the key reason justifying our Neutral rating.
Benign regulation focused on the safety of the payments’ industry: Enacted rules define that payment account balance of electronic money issuers must be kept under Central Bank custody. This does not differ materially from previous rulings. Our take: Current regulation will allow acquirers to continue using the 2 days float. If more strict rules are implemented also for acquirers, similar to the ones now enacted to electronic money issuers, we estimate a ~0.7%-1.5%bottom line impact in 2014 and 2015. Table 2 provides sensitivity analysis of removing 2 day float from acquirers, a consequence of separating issuer-bank fund flow completely from acquirers’ accts payable and receivable.
Increasing earnings estimates by 7.7% in 14 and 9.6% in 15. The more favorable than anticipated competitive environment and persistently high pre-payment volumes drive increases to our forecasts.
Secular growth story is there, good to recap. Card usage as percentage of private consumption expenditures stood at 25.9% in YE12, up ~2% per year since 2005’s 15%. In YE12, USA card usage as percentage of PCE stand at 40%, Canada 55% and Mexico 9.8%.
Multiples at all time high, only below Visa and Mastercard. We are increasing our YE14 DCF-based PT to R$40/share from previous R$34/share. Our PT implies Cielo trading at 19x 2014E P/E, an implied 6% discount to global peers average, and only below the brands Visa and Mastercard.
1Q14 preview – robust start to the year... again. We expect Cielo to print a solid quarter driven by strong 24% processed volume growth (Credit+Debit) and resilient margins. All in, we forecast R$780mn in net income, up 24% Y-o-Y.
www.jpmorganmarkets.com
CEEMEA Equity Research06 May 2014
GarantiUnderweightGARAN.IS, GARAN TI
Resilient Q1, PT upgrade to TL7.5 (6.5), see more upside in Halkbank (OW), Alpha (OW), Erste (OW)
▲
Price: TL8.08
Price Target: TL7.50Previous: TL6.50
CEEMEA Banks
Paul Formanko AC
(44-20) 7134-4718
Bloomberg JPMA FORMANKO <GO>
Rohit Nigam, CFA
(44-20) 7134-4719
Anna V Marshall
(44-20) 7742-2762
J.P. Morgan Securities plc
YTD 1m 3m 12mAbs 15.1% 5.5% 34.4% -23.3%
Garanti (GARAN.IS;GARAN TI)
FYE Dec 2013A 2014E(Prev)
2014E(Curr)
2015E(Prev)
2015E(Curr)
2016E(Prev)
2016E(Curr)
Adj.EPS FY (TL) 0.84 0.52 0.75 0.75 0.90 1.05 1.10P/E (x) FY 10.0 15.4 10.8 10.8 9.0 7.7 7.4NAV/Sh FY (TL) 5.42 5.79 5.86 6.43 6.58 7.27 7.45P/NAV FY 1.5 1.4 1.4 1.3 1.2 1.1 1.1ROA FY 1.8% 1.0% 1.4% 1.2% 1.5% 1.6% 1.6%Tier 1 Ratio FY 12.8% 12.2% 12.4% 12.3% 12.1% 12.4% 12.0%Net Income Attributable to Ordinary Shareholders FY (TL mn)
3,381 2,203 3,133 3,156 3,789 4,393 4,602
ROE FY 16.0% 9.3% 13.2% 12.2% 14.5% 15.2% 15.6%Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataPrice (TL) 8.08Date Of Price 02 May 14Price Target (TL) 7.50Price Target End Date 31-Dec-1452-week Range (TL) 11.35-5.72Market Cap (TL bn) 33.94Shares O/S (mn) 4,200
See page 7 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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11
TL
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
Upgrading estimates on resilient NIM, as we believe the previously guided margin collapse is now unlikely to materialize; post recent rally, keepUW, PT TL7.5 (6.5). Our new 14E EPS is TL0.75 (0.52, +44%), 15E EPSTL0.90 (0.75, +20%) and 16E EPS TL1.10 (1.05, +5%). Our new Dec-14 PT is TL7.5 (6.5). We now expect a 12% y/y EPS decline in 14E, followed by21% rebound in 15E and +21% in 16E. We see better value in Halkbank.
Resilient Q1 despite challenging macro: Following 3 sequential quarters (2-4Q13) of profits decline, Garanti delivered a strong Q1 rebound:consolidated net profit of TL888mn, representing 40% of our previously published FY14 forecast of TL2.2bn. The biggest positive surprise wasNIM, which remained flat at 3.8% (company methodology) vs. up to 100bps potential 14E NIM contraction guided previously, which is now unlikely to materialize. We have now factored in c. 50bps NIM drop in 14E,as we see funding costs stabilizing and the contribution from higher yielding securities rising.
Asset quality trends relatively positive: NPL ratio only modestly rising to 2.8% in Q1 vs. 2.7% in Q4, despite TL volatility and macro slow-down in the last 3 quarters. NPL formation remains relatively low q/q: consumer lending NPLs at 2% (1.9%); business and SME unchanged at 1.8%; only credit cards have seen a larger increase from 4% to 4.4%. Capital position remains healthy with B3 CAR at 13.5% and CT1 at 12.4%.
Valuation: 14-16E P/E multiples 10.8/9.0/7.4x and P/NAV 1.4/1/2/1.1x forexpected RoNAV of 13%/14%/16% in 14-16E. We see better value in Halkbank 9.1/6.9/5.7x P/E, 1.2/1.0/0.9x P/NAV, 14%/16%/17%,respectively. Within the CEEMEA Banks universe we also like PKO, Millennium, Alpha, Piraeus, Standard, QNB and Erste (see page 2).
Drivers of the earnings upgrade (details on page 3): 14E net profits are increased to TL3.1bn (2.2bn) on higher revenue of TL11bn (9.8bn); similarly, 15E net profits upgraded to TL3.8bn (3.2bn) on better revenue of TL12.6bn (11.6bn), primarily driven by a better NIM outlook - expect NIM 3.27% (2.70%) in 14E, 3.53% (3.06%) in 15E vs. 3.73% in 13A.
www.jpmorganmarkets.com
North America Equity Research06 May 2014
IntelOverweightINTC, INTC US
Value Investor Alert on Intel – Shutting Down Mobile Could Unlock Roughly $0.50 in 2015 EPS
Price: $26.17
Price Target: $30.00
Semiconductors
Christopher Danely AC
(1-415) 315-6774
Bloomberg JPMA DANELY <GO>
Shaon Baqui
(1-415) 315-6766
Philip Lee
(1-415) 315-3918
J.P. Morgan Securities LLC
YTD 1m 3m 12mAbs 1.5% 0.0% 11.3% 9.5%Rel -1.4% -1.0% 3.7% -7.0%
Intel Corp (INTC;INTC US)
FYE Dec 2013A 2014E 2015EEPS (incl stk comp) ($)Q1 (Mar) 0.40 0.38A 0.47Q2 (Jun) 0.39 0.45 0.49Q3 (Sep) 0.49 0.54 0.58Q4 (Dec) 0.51 0.58 0.60FY 1.80 1.95 2.15Bloomberg EPS FY ($) 1.96 1.94 2.04Source: Company data, Bloomberg, J.P. Morgan estimates.
Company DataPrice ($) 26.17Date Of Price 05 May 1452-week Range ($) 27.24-21.89Market Cap ($ mn) 133,911.90Fiscal Year End DecShares O/S (mn) 5,117Price Target ($) 30.00Price Target End Date 31-Dec-14
See page 19 for analyst certification and important 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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27
$
May-13 Aug-13 Nov-13 Feb-14 May-14
Price Performance
INTC share price ($)
S&P500 (rebased)
In this note we examine the financial impact if Intel were to shut down its unprofitable Mobile and Communications Group. Intel has failed to generate material revenue or EPS from its mobile division due to the inherent disadvantages of its x86 CPUs versus ARM and low profitability of tablet/smartphone processors. Intel lost $0.13 on its mobile division in 1Q14, and if Intel were to shut down its Mobile business, we estimate it could unlock roughly $0.50 in 2015 EPS – resulting in 25% upside to Consensus EPS of $2.00.
Losses in Intel’s Mobile and Communications business mounting. In 2013, Intel’s Mobile and Communications Group generated a $3.1 billion operating loss, resulting in a $0.47 drag on Intel’s EPS of $1.80. Despite continued investments, the losses widened to roughly $929.0 million in 1Q14 off revenues of only $156.0 million, for a roughly $0.13 drag on Intel’s EPS of $0.38.
We continue to believe mobile is unprofitable for Intel. We continue to believe Intel will lose money and not gain material EPS from tablets or smartphones due to the disadvantages of x86 versus ARM and overall low profitability of the tablet and handset processor market (please see our March 3 note, “Meetings at MWC”). Even if Intel were to gain 25% of the tablet and smartphone processor market over the next three years, we estimate it would contribute $2.8 billion (5%) revenues, but result in a loss of roughly $0.18.
We believe Intel should shut down mobile, just like TI. In 2008, TI decided to exit a large wireless business due to profitability concerns, and re-focus its efforts on the higher margin analog and embedded businesses, where it has an advantage. Consequently, TI is currently achieving new highs in gross margins and EPS, and trades at a premium to the S&P500. We believe Intel should follow TI’s lead and exit the mobile business, and focus on the PC and foundry businesses where it has an advantage.
Shutting down wireless could unlock $0.50 in 2015 EPS. If Intel were to shut down its Mobile and Communications business, we estimate it would unlock roughly $0.50 of EPS in 2015. Consequently, we believe Consensus 2015 EPS estimates could rise roughly 25% from $2.00 to $2.50.
Valuation. We are maintaining our Dec 2014 price target of $30.00, or 14X C15 EPS, a premium to Intel’s current multiple due to upside to estimates, but in line with the S&P. We remain OW INTC due to upside to Consensus driven by stability in the PC market and improved guidance and spending.
20
Appendix TOP
Key Rating, Price Target & EPS Changes Europe
Price Target Changes Price Target Company Rating New Old Increases
Alior Bank UW 80.00 zl 69.00 zl Alstom N € 33.00 € 23.00 Aperam N € 20.50 € 14.50 CTT - Correios de Portugal OW € 9.40 € 8.50 Garanti UW 7.50 TL 6.50 TL RPC Group OW 690 p 675 p Securitas UW 70.56 kr 65.48 kr Decreases PostNL OW € 4.10 € 4.20 SOFTWARE AG UW € 27.00 € 28.00 Source: J.P. Morgan estimates.
J.P. Morgan EPS Estimate Changes Company Current FY Next FY Increases
Aperam nm +41.0% Garanti +42.2% +20.1% Lloyds Banking Group +1.7% +1.7% PostNL +0.0% +0.2% Decreases Ferragamo -0.5% -0.9% Smith & Nephew -2.3% -0.1% SOFTWARE AG -0.4% -1.2% Tod's -2.9% -0.4% Revisions Alcatel-Lucent -17.2% +0.2% Alior Bank +7.7% -10.6% Bayer -0.7% +0.0% Rentokil Initial -2.1% +1.3% RPC Group -0.2% +3.8% Securitas +1.1% -0.1%
Asia
Rating Changes Company New Rating Old Rating Decrease
Siam Cement N OW Price Target Changes Price Target Company Rating New Old Increase
UltraTech Cement Ltd N INR1,750.0 INR1,560.0 Decreases AirAsia BHD N R2.30 R2.50 Siam Cement N THB430.00 THB530.00 Source: J.P. Morgan estimates.
J.P. Morgan EPS Estimate Changes Company Current FY Next FY Increases
Genting Singapore +0.7% +0.5% Decreases AirAsia BHD -8.7% -0.3% Grasim Industries Ltd -2.1% -7.7% SIA Engineering Company -2.8% -2.7% Revisions Siam Cement +3.4% -8.6% UltraTech Cement Ltd +8.5% -1.6% J.P. Morgan DPS Estimate Changes Company Current FY Next FY Decrease
AirAsia BHD -100.0% -4.7% Revisions SIA Engineering Company +16.4% -2.4% Siam Cement +24.1% -6.9%
Australia
Rating Changes Company New Rating Old Rating Others BEN NR N
Estimate Changes*
Company FY_14 FY_15 Upgrades WBC +2.2% +0.6% Downgrades AAD -1.1% -1.1%
* EPS Changes > +/- 1%
Price Target Changes
Target Company New Old Upgrades WBC 34.99 34.59 AAD 2.59 2.40 Downgrades ANZ 34.75 34.94 CBA 77.22 78.41 NAB 35.45 35.89
Source: J.P. Morgan estimates.
21
LatAm
Price Target Changes
Price Target Company Rating New Old Increases
Cielo N 40.00 34.00 Santos Brasil N 19.50 18.00 Source: J.P. Morgan estimates.
J.P. Morgan EPS Estimate Changes
Company Current FY Next FY Increases
Cielo +7.7% +9.6% Santos Brasil +19.0% +67.1%
CEEMEA
Price Target Changes Price Target Company Rating New Old Increases
Alior Bank UW 80.00 zl 69.00 zl Garanti UW 7.50 TL 6.50 TL Source: J.P. Morgan estimates.
J.P. Morgan EPS Estimate Changes Company Current FY Next FY Increases
Garanti +42.2% +20.1% Revisions Alior Bank +7.7% -10.6%
US
Initiations
Company Rating Price Target TriNet OW 27.00
Price Target Changes
Price Target Company Rating New Old Increases
Big Lots, Inc. OW 45.00 42.00 Northern Tier N 29.00 25.00 Peregrine Semiconductor N 7.50 7.00 Westlake Chemical Corp. OW 80.00 74.50 Decreases CME Group Inc. N 69.50 76.50 Family Dollar Stores, Inc. N 56.00 60.00 Fabrinet OW 22.50 23.00 Scotts Miracle-Gro Co. OW 66.00 67.00 Tyson Foods N 42.00 45.00 Veeco Instruments OW 42.50 44.00 VIVUS, Inc N 5.00 8.00 Source: J.P. Morgan estimates.
J.P. Morgan EPS Estimate Changes*
Company Current FY Next FY Increases
American International Group +5.4% +1.3% Cardtronics, Inc +1.7% +1.0% Standard Pacific +0.9% +1.7% VIVUS, Inc +19.7% +12.6% Westlake Chemical Corp. +8.8% +6.0% Decreases CME Group Inc. -5.6% -4.5% Fabrinet -2.5% -6.5% Family Dollar Stores, Inc. -8.4% -11.9% Monotype Imaging -29.7% -19.6% National CineMedia, Inc. -15.8% -11.7% Qualys -100.3% -84.3% Scotts Miracle-Gro Co. -3.9% -0.1% Sysco Corporation -1.5% -0.2% Revisions CareFusion -3.3% +1.5% Peregrine Semiconductor -0.7% +41.5% Veeco Instruments +83.5% -6.8% * EPS Changes > +/- 1%
22
Conference Calls TOP
Conference calls are intended only for clients of J.P. Morgan and are available for replay for a limited amount of time. These calls are not open to any members of the press. For important disclosures on all companies covered by the firm’s research department, please refer to the following disclosure link: https://jpmm.com/research/disclosures
Today
EE/MI 2014 CEO Conference Call Series: Dover (DOV), Hosted by: Steve Tusa (Electrical Equipment / Multi-industry Equity Analyst), Featuring: Bob Livingston (President and CEO, Dover), on Tuesday, May 6 @ 10:00am ET, DIAL-IN: 888-603-7019 (US); +1-312-470-7146 (outside US); Passcode: TUSA, Replay through 5/13: 866-491-2847 (US); + 1-203-369-1714 (Outside US); Passcode: 6815 (PODCAST AVAILABLE)
The ECB should do more but probably won't, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst ), Featuring: Joe Almeida (CEO, Covidien), on Tuesday, May 6 at 4PM London/11AM New York, DIAL-IN: Clients must pre-register for the call to obtain the dial-in number and PIN: click this link to register, Replay through 5/11: 800-839-9131 (US); +1-203-369-3640 (outside US); Passcode: 1017 (SLIDES, REPORT & PODCAST AVAILABLE)
LatAm Cement, Construction & Real Estate Outlook for 2014, Hosted by: Adrian Huerta (J.P. Morgan LatAm Cement, Construction & Real Estate ) and Marcelo Motta (J.P. Morgan Brazilian Real Estate & Construction), Tuesday, 6 May 2014 | 10:00 ET | 15:00 UK | 11:00 São Paulo | 9:00 Mexico | 10:00 Santiago, Dial in: 866-803-2143 (US); +1-210-795-1098 (outside US), International Toll Free Dial-in Numbers: Brazil 0800-8911992 | Chile 1230-020-2846 | Colombia 01800-9-156448 | Mexico 001-866-888-0267 | Peru 0800-53744 | United Kingdom 0800-279-3953, Passcode: JPMORGAN, Replay through 5/12: 888-5660574 (US); +1-402-998-0680 (outside US) Passcode: 54192
Upcoming Biotech: GILD / Industry > Conf Call to Discuss a Payer Survey, Hosted by: Geoff Meacham (Biotech Equity Analyst), on Wednesday, May 7 @ 10:30am ET / 15:30 UK, DIAL-IN: 888-889-1309 (US); +1-312-470-7054 (outside US); Passcode: BIOTECH, Replay through 5/14: 888-568-0381 (US); +1-203-369-3469 (Outside US); Passcode: 50714 (PODCAST AVAILABLE)
Biotechnology - 2014 CEO/CFO Conference Call Series- Celgene, Hosted by: Geoff Meacham (Biotechnology Equity Analyst), Cory Kasimov (SMid Biotechnology Equity Analyst), Featuring: Jackie Fouse (CFO, Celgene), on Thursday, May 8 @ 10:00am ET, DIAL-IN: 888-889-1309 (US); +1-210-234-5884 (outside US); Passcode: BIOTECH, Replay through 5/9: 888-567-0440 (US); +1-203-369-3442 (Outside US); Passcode: 2814 (PODCAST AVAILABLE)
Life Sciences 2014 CEO/CFO Conference Call Series- Roche Diagnostics (ROG.VX), Hosted by: Tycho Peterson (Life Science Tools & Diagnostics Equity Analyst), Featuring: Roland Diggelmann (President, Roche Diagnostics), on Thursday, May 8 @ 11:00am, DIAL-IN: 888-677-5380 (US); +1-773-799-3356 (Outside US); Passcode: LIFE SCIENCE, Replay through 5/14: 888-568-0807 (US); +1- 402-998-0235 (outside US); Passcode: 50814 (PODCAST AVAILABLE)
MedTech - 2014 CEO Conference Call Series: Zimmer, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst), Featuring: David Dvorak (CEO, Zimmer), on Friday, May 9 @ 11am ET/8am PT, DIAL-IN: 888-748-4893 or 517-319-9536; Passcode: MEDTECH, Replay Through 5/15: 800-406-7490 or 402-220-4881; Passcode: 21214. (PODCAST AVAILABLE)
Education Services: Expert Conference Call Discussing Global Trends in Education, Hosted by: Jeff Volshteyn (U.S. Business, Education & Information Services), Marcelo Santos (Latin American Education), Leon Chik (Asia Education/SMID-Caps), Featuring: Robert Lytle (Partner and Co-Head of Education Practice, The Parthenon Group), Chris Ross (Partner, The Parthenon Group), on Monday, May 12 @ 11:00am ET / 16:00 UK, DIAL-IN: 800-779-1474 (US); +1- 312-470-7113 (outside US); Passcode: EDUCATION, Replay through 5/19: 866-448-2574 (US); +1-203-369-1170 (US); Passcode: 7968 (PODCAST AVAILABLE)
Healthcare Technology & Distribution - 2014 CEO Conference Call Series: Cardinal Health, Hosted by: Lisa Gill (Healthcare Technology & Distribution Equity Analyst), Featuring: George Barrett (CEO, Cardinal Health), on Monday, May 12 @ 11:00am EST, DIAL-IN: 888-455-9439 (US); +1-773-799-3580 (outside US); Passcode: HEALTHCARE, Replay Through 5/18:800-947-6592 (US); +1-402-220-4606 (outside US); Passcode: 4564 (PODCAST AVAILABLE)
Life Sciences 2014 CEO/CFO Conference Call Series- Roche Diagnostics (ROG.VX), Hosted by: Tycho Peterson (Life Science Tools & Diagnostics Equity Analyst), Featuring: Rob Friel (CEO, PerkinElme), Andy Wilson (CFO, PerkinElme), on Thursday, May 14 @ 11:00am, DIAL-IN: 888-677-5380 (US); +1-773-799-3356 (Outside US); Passcode: LIFE SCIENCE, Replay through 5/20: 888-568-0807 (US); +1- 402-998-0235 (outside US); Passcode: 50814 (PODCAST AVAILABLE)
MedTech - 2014 CEO Conference Call Series: Becton Dickinson, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst), Featuring: Vince Forlenza (CEO, Becton Dickinson), on Thursday, May 15 @ 1:00pm ET / 18:00 UK, DIAL-IN: 888-748-4893 (US); +1-517-319-9536 (outside US); Passcode: MEDTECH, Replay Through 5/16: 800-406-7490 (US); +1-402-220-4881 (Outside US); Passcode: 21214. (PODCAST AVAILABLE)
MedTech - 2014 CEO Conference Call Series: Dexcom, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst), Featuring: Terry Gregg (CEO, Dexcom), on Friday, May 16 @ 11am ET/8am PT, DIAL-IN: 888-748-4893 or 517-319-9536; Passcode: MEDTECH, Replay Through 5/21: 800-406-7490 or 402-220-4881; Passcode: 21214. (PODCAST AVAILABLE)
EE/MI 2014 CEO Conference Call Series: Danaher (DHR), Hosted by: Steve Tusa (Electrical Equipment / Multi-industry Equity Analyst), Featuring: Larry Culp (President and CEO, Danaher), on Tuesday, May 27 @ 11:00am ET, DIAL-IN: 888-603-7019 (US); +1-312-470-7146 (outside US); Passcode: TUSA, Replay through 6/3: 866-421-6934 (US); + 1-203-369-0825 (Outside US); Passcode: 5124 (PODCAST AVAILABLE)
23
Conference Call Replays LatAm Metals & Mining / Pulp & Paper Outlook for 2014, Hosted by: Rodolfo Angele (J.P. Morgan LatAm Metals & Mining), Lucas Ferreira (J.P. Morgan LatAm Pulp & Paper) and Mandeep Singh Manihani (J.P. Morgan LatAm Metals & Mining), Replay through 5/6: 888-566-0574 (US); +1-402-998-0680 (outside US); Passcode: 54192
Global Investment Bank Picks and Outlook, Hosted by: Kian Abouhossein (Head of Global Investment Banks and European Banks), Replay Through 5/10: 1-954-334-0342 (US); 020 7031 4064 (UK) Access Code: 943888 (PODCAST AVAILABLE)
U.S. Economic Outlook, Speaker: Bruce Kasman, Replay through: 05/10, Toll Free access: 888-458-8113; All other callers: 402-998-1351 Passcode: 6909591
The Outlook for Baxter, Hosted by: Mike Weinstein (Medical Technology & Devices Equity Analyst ), Replay through 5/12: 800-217-1707 (US); +1-402-220-3902 (Outside US); Passcode: 12548 (PODCAST AVAILABLE)
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24
Corporate Marketing Calendar TOP
Tue May-6-14 Wed May-7-14 Thu May-8-14 Fri May-9-14 Mon May-12-14
ASSA ABLOY (NEW YORK) FUTURE LAND DEVELOPMENT HOLDINGS LTD (1030 HK) (SAN FRANCISCO) GIVAUDAN (CHICAGO) ILLUMINA INC (BOSTON) RELIANCE ADAG GROUP (BOSTON) ROCKWELL COLLINS (LOS ANGELES) TDS / US CELLULAR (BALTIMORE, PHILADELPHIA, PRINCETON, WILMINGTON)
FUTURE LAND DEVELOPMENT HOLDINGS LTD (1030 HK) (LOS ANGELES) GIVAUDAN (BOSTON) ILLUMINA INC (NEW YORK) RELIANCE ADAG GROUP (NEW YORK)
DAIMLER AG (BOSTON) FUTURE LAND DEVELOPMENT HOLDINGS LTD (1030 HK) (LOS ANGELES) GIVAUDAN (NEW YORK) ILLUMINA INC (NEW YORK) PIRELLI (CHICAGO) STILLWATER MINING COMPANY (BALTIMORE, PHILADELPHIA, WAYNE, WILMINGTON)
CRITEO SA (BOSTON) DAIMLER AG (NEW YORK) METTLER - TOLEDO INTERNATIONAL (NEW YORK)
BARRACUDA NETWORKS INC. (BOSTON) INSURANCE AUSTRALIA GROUP LIMITED (NEW YORK, PHILADELPHIA, RADNOR) MANPOWERGROUP INC. (NEW YORK) MILLS (ARLINGTON, WASHINGTON)
25
Markets at a glance TOP
China
Hong Kong
India SHASHR Index 2,122.48
HSI Index 21,976.33
Sensex Index 22,445.12
Chg from previous day 0.35%
Chg from previous day -1.28%
Chg from previous day 0.18% T/O value (CNYmn / US$MM) 60,144 / 9,632
T/O value (HK$ mn / US$MM) 48,256 / 6,225
T/O value (INR MM / US$MM) 4,393 / 73
Chg from previous day 5.73%
Chg from previous day -0.03%
Chg from previous day 1222.95% Exchange rate CNY6.2 / US$1
Exchange rate HKD7.75 / US$1
Exchange rate INR60.2 / US$1
O/N interbank (%) 2.37
O/N interbank (%) 0.04
O/N interbank (%) 8.00 Market cap (CNYBn) 14,759.5
Market cap (HK$Bn) 26,272.6
Market cap (US$Bn) 1246.8
Market cap (US$ Bn) 2,364
Market cap (US$ Bn) 3,389
Market cap (INR Bn) 75,086 FY1E Market P/E 11.0
FY1E Market P/E 13.9
FY1E Market P/E 18.5
FY2E Market P/E 9.2
FY2E Market P/E 12.1
FY2E Market P/E 16.3
Indonesia
Malaysia
Philippines
JCI Index 4,842.50
KLCI Index 1,860.54
PSE Index 6,766.46 Chg from previous day 0.08%
Chg from previous day -0.46%
Chg from previous day 0.35%
T/O value (Rp bn / US$MM) 3,238 / 281
T/O value (MYR MM / US$MM) 1,387 / 426
T/O value (Php MM / US$MM) 4,802 / 108 Chg from previous day -33.58%
Chg from previous day -73.73%
Chg from previous day -26.60%
Exchange rate Rp11,520 / US$1
Exchange rate MYR3.26 / US$1
Exchange rate Php44.41 / US$1 O/N interbank (%) 7.93
O/N interbank (%) 2.95
O/N interbank (%) 3.50
Market cap (US$Bn) 420.9
Market cap (US$ bn) 320.6
Market cap (US$ bn) 171.9 Market cap (Rp bn) 4,848,863
Market cap (MYR bn) 1,044
Market cap (Php bn) 7,635
FY1E Market P/E 19.4
FY1E Market P/E 18.6
FY1E Market P/E 19.3 FY2E Market P/E 15.9
FY2E Market P/E 17.1
FY2E Market P/E 17.4
Singapore
South Korea
Taiwan STI Index 3,241.60
KOSPI Index 1,959.45
TWSE Index 8,870.43
Chg from previous day -0.71%
Chg from previous day -0.10%
DoD Change 0.04% T/O value (SGD MM / US$MM) 539 / 431
T/O value (KRW bn / US$MM) 3,202 / 3,111
52-Week Range 9,022 / 7,663
Chg from previous day -77.16%
Chg from previous day 0.0%
T/O value (NT$ mn / US$MM) 116,059 / 3,852 Exchange rate SGD1.25 / US$1
Exchange rate KRW1029.29 / US$1
Chg from previous day 7.07%
O/N interbank (%) 0.06
O/N interbank (%) 2.50
Exchange rate TWD30.1 / US$1 Market cap (US$ bn) 608.9
Market cap (KRW Bn) 1,257,396
O/N interbank (%) 0.39
Market cap (SGD bn) 761
Market cap (US$ Bn) 1,222
10 Year Gov Bond Yield (%) 2.64 FY1E Market P/E 16.7
FY1E Market P/E 12.8
Market cap (NT$Bn) 25,218.3
FY2E Market P/E 15.2
FY2E Market P/E 10.5
Market cap (US$ Bn) 953
FY1E Market P/E 15.7
FY2E Market P/E 13.0
Thailand
Japan
Australia
SET Index 1,424.48
TPX Index 1,185.48
ASX200 Index 5,462.22
Chg from previous day 0.07%
Chg from previous day 0.08%
Chg from previous day 0.08% T/O value (Bt bn / US$MM) 31 / 961
T/O value (JPY bn / US$bn) 1,555 / 15
T/O value (AUD MM / US$MM) 2,933 / 3,163
Chg from previous day -6.05%
Chg from previous day -0.13%
Chg from previous day -8.83% Exchange rate Bt32.35 / US$1
Exchange rate JPY102.12 / US$1
Exchange rate AUD0.93 / US$1
O/N interbank (%) 1.90
O/N interbank (%) 0.15
O/N interbank (%) 2.50 Market cap (US$Bn) 391.8
Market cap (US$ bn) 4157.6
Market cap (AUD$ bn) 1501.5
Market cap (Bt bn) 12,675
Market cap (JPY bn) 424,574
Market cap (US$ bn) 1,392 FY1E Market P/E 13.8
FY1E Market P/E 16.9
FY1E Market P/E 17.0
FY2E Market P/E 12.2
FY2E Market P/E 19.0
FY2E Market P/E 15.8
UK
Euro Stoxx
US
UKX Index 6,822.42
SX5E Index 3,177.89
S&P Index 1,881.14
Chg from previous day 0.20%
Chg from previous day -0.65%
Chg from previous day -0.13% T/O value (GBP Bn / US$bn) 4.06 / 6.85
T/O value (Euro bn / US$bn) 8.99 / 12.47
T/O value (US$ bn) 26.58
Chg from previous day 35.13%
Chg from previous day 0.00%
Chg from previous day 0.76% Exchange rate US$1.69 / GBP1
Exchange rate US$1.39 / EURO1
O/N interbank (%) 0.09
O/N interbank (%) 0.46
O/N interbank (%) 2.21
Market cap (US$ bn) 17306.1 Market cap (US$ bn) 3131.2
Market cap (US$ bn) 3315.9
FY1E Market P/E 16.0
Market cap (GBP bn) 1,856
Market cap (Euro bn) 2,391
FY2E Market P/E 14.4 FY1E Market P/E 14.0
FY1E Market P/E 14.1
FY2E Market P/E 12.8
FY2E Market P/E 12.4
Source: Bloomberg, J.P. Morgan estimates.
26
Market Monitor TOP
May 05, 2014 as of market close
Change Average High Low
Level 1 Day Week Trailing 30 days MTD YTD 4-Wk 26-Wk 12-Wk 12-Wk
Equities* S&P 500
1885 0.2% 0.8% 1.0% 0.0% 2.0% 1864 1827 1891 1797
NASDAQ 100
3605 0.5% 1.7% 1.9% 0.6% 0.4% 3546 3549 3727 3447 Dow Jones Industrials
16531 0.1% 0.5% 0.7% -0.3% -0.3% 16396 16151 16581 15794
FTSE
6822 0.0% 1.8% 1.9% 0.6% 1.1% 6674 6664 6866 6520 Euro STOXX 50
3171 -0.2% 0.2% -1.8% -0.8% 2.0% 3169 3086 3230 3005
Hang Seng
21976 -1.3% -0.7% -2.4% -0.7% -5.7% 22551 22677 23187 21182 Sector Performance* S&P Telecom Services
156 0.4% 1.8% -0.1% 0.7% 0.4% 155 153 158 145
S&P Energy
689 0.5% 0.8% 4.5% 0.4% 5.8% 673 640 689 609 S&P Materials
301 0.5% 1.8% 0.9% 0.3% 3.3% 298 288 303 282
S&P Financial
295 -0.4% 0.8% -1.2% -0.4% 0.1% 294 291 303 287 S&P Consumer Discretionary
510 0.1% 1.6% -0.5% 0.7% -3.8% 506 514 534 494
S&P Healthcare
673 0.6% 0.7% 0.1% -0.1% 4.7% 665 654 695 645 S&P Information Technology
599 0.4% 1.2% 1.9% 0.2% 2.2% 590 578 604 575
S&P Utilities
218 0.8% -1.2% 3.2% -0.9% 12.6% 216 201 220 197 S&P Consumer Staples
453 -0.1% -0.4% 2.7% -0.3% 2.3% 447 437 455 421
S&P Industrials
456 0.1% 0.6% 0.8% -0.3% 0.8% 452 441 458 433 Fixed Income** Treasury (%): 2-Yr 0.42% -1bp -1bp 0bp 0bp 3bp 0.40% 0.36% 0.47% 0.30%
10-Yr 2.61% 2bp -7bp -11bp -4bp -39bp 2.66% 2.75% 2.80% 2.59%
30-Yr 3.41% 4bp -5bp -18bp -5bp -53bp 3.48% 3.70% 3.73% 3.37%
Credit** HG Credit (JULI, Z-spread)1
98bp -0.2bp -2.2bp -2.6bp -1.6bp -15.1bp 100bp 113bp 115bp 98bp
HY Credit (T-spread)
412bp 0.6bp 1.1bp 1.7bp -0.5bp -28.1bp 413bp 438bp 454bp 406bp Currency** JPY/USD
102.42 0.00 0.20 -1.45 0.20 -2.90 102.33 102.32 103.87 101.45
USD/EUR
1.39 0.00 0.00 0.02 0.00 0.00 1.38 1.37 1.39 1.36 USD/GBP
1.69 0.00 0.01 0.03 0.00 0.03 1.68 1.65 1.69 1.64
Commodities Oil ($/barrel)**
107.72 -0.87 -0.48 1.00 -0.35 -3.08 108.39 108.39 111.20 104.79
Natural Gas**
4.69 0.01 -0.11 0.25 -0.13 0.46 4.65 4.44 6.15 4.28 Gold ($/ounce)*
1310.27 10.65 13.59 6.63 18.72 104.62 1300.93 1281.39 1383.05 1267.27
Volatility** VIX Index 13.29 0.38 -0.68 -0.67 -0.12 -0.43 14.19 14.27 17.82 12.91
Source: *Bloomberg, **J.P. Morgan
27
Upcoming US Economics Releases (Time: EDT) TOP
Bruce Kasman
Chief Global Economist [email protected] (1-212) 834-5515
Monday Tuesday Wednesday Thursday Friday
5 May Services PMI (9:45am) Apr final 54.5 ISM nonmanufacturing (10:00am) Apr 54.0 Senior loan officer survey (2:00pm) 2Q
6 May International trade (8:30am) Mar -$39.7bn Auction 3-year note $29bn Fed Governor Stein speaks on economy in New York (7:00pm)
7 May Productivity and costs (8:30am) 1Q pre -1.1% Unit labor costs 3.6% Consumer credit (3:00pm) Mar Auction 10-year note $24bn Fed Chair Yellen testifies to Joint Economic Committee (10:00am)
8 May Initial claims (8:30am) w/e May 3 325,000 Chain store sales Apr
Auction 30-year bond $16bn
Philadelphia Fed President Plosser speaks in New York (8:00am) Fed Governor Tarullo and Chicago Fed Pres. Evans speak in Chicago (9:30am) St. Louis Fed President Bullard speaks at conference in St. Louis (2:00pm)
9 May JOLTS (10:00am) Mar Wholesale trade (10:00am) Mar Minneapolis Fed President Kocherlakota speaks in Minnesota
12 May Federal budget (2:00pm) Apr Philadelphia Fed President Plosser speaks in Philadelphia (12:00pm)
13 May NFIB survey (7:30am) Apr Retail sales (8:30am) Apr Import prices (8:30am) Apr Business inventories (10:00am) Mar
14 May PPI (8:30am) Apr
15 May Initial claims (8:30am) w/e May 10 CPI (8:30am) Apr Empire State survey (8:30am) May TIC data (9:00am) Mar Industrial production (9:15am) Apr Philadelphia Fed survey (10:00am) May NAHB survey (10:00am) May
Announce 10-year TIPS (r) $13bn
Fed Chair Yellen speaks in DC (7:00pm)
16 May Housing starts (8:30am) Apr Consumer sentiment (9:55am) May prelim St. Louis Fed President Bullard speaks on monetary policy in Arkansas (11:50am)
19 May
20 May
21 May Fed Chair Yellen gives NYU commencement address (11:00am) Kansas City Fed President George speaks in Washington, DC (12:50pm) Minneapolis Fed President Kocherlakota speaks in Minneapolis (1:30pm) FOMC minutes
22 May Initial claims (8:30am) w/e May 17 Manufacturing PMI (9:45am) May flash Existing home sales (10:00am) Apr Leading indicators (10:00am) Apr KC Fed survey (11:00am) May
Auction 10-year TIPS (r) $13bn Announce 2-year note $31bn Announce 2-year FRN (r) $13bn Announce 5-year note $35bn Announce 7-year note $29bn
23 May New home sales (10:00am) Apr
26 May Memorial Day, markets closed
27 May Durable goods (8:30am) Apr Services PMI (9:45am) May flash S&P/Case-Shiller HPI (9:00am) Mar, 1Q FHFA HPI (9:00am) Mar, 1Q Consumer confidence (10:00am) May Richmond Fed survey (10:00am) May Dallas Fed survey (10:30am) May
Auction 2-year note $31bn
28 May Auction 2-year FRN (r) $13bn Auction 5-year note $35bn
29 May Initial claims (8:30am) w/e May 24 Real GDP (8:30am) 1Q second Pending home sales (10:00am) Apr
Auction 7-year note $29bn
Kansas City Fed President George speaks at Stanford (9:30pm)
30 May Personal income (8:30am) Apr Chicago PMI (9:45am) May Consumer sentiment (9:55am) May final Richmond Fed President Lacker speaks at Stanford (2:00pm) San Francisco Fed President Williams and Philadelphia Fed President Plosser speak at Stanford (5:00pm)
28
Latin America Economic Calendar Monday Tuesday Wednesday Thursday Friday
5 May Chile: Economic activity Mar: 3.1%oya Colombia: PPI Apr CPI Apr 0.30% m/m Uruguay: CPI Apr: 0.3%m/m CPI Apr: 9.5%oya
6 May Argentina: Auto report Apr Brazil: FIPE CPI Apr PPI Manufacturing Mar PMI Apr Chile: BCCh minutes Colombia CPI core Apr Mexico: Consumer confidence Apr: 91.0 Central bank reserves (Prior week) Banamex economic survey
7 May Brazil: IGP-DI Apr 0.51% m/m Industrial production Mar -2.4% m/m -3.0%oya Chile: Trade balance Apr Mexico: Auto report Apr Banxico economic survey
8 May Chile: CPI Apr: 0.16%m/m CPI Apr: 3.86&oya Mexico: CPI Apr: Headline: -0.17%m/m Core: 0.33%m/m Headline:3.51%oya Core: 3.15%oya Peru: BCRP meeting on hold
9 May Argentina: GDP 4Q Brazil: IGP-M 1st release May IPCA Apr 0.77% m/m Vehicle sales and production Apr Colombia: BanRep minutes Mexico: GFI Feb: -1.8%oya Banxico minutes Nominal wages Apr: 4.3%oya Peru: Trade balance Mar
During the week: Argentina: Tax collection Apr Chile: Auto report Apr
12 May Mexico: Industrial production Mar Uruguay: Industrial production Mar
13 May Mexico: Central bank reserves (Prior week) Uruguay: Unemployment rate Mar
14 May Colombia Retail sales Mar Industrial production Mar
15 May Argentina: CPI Apr Brazil: IGP-10 May Retail sales Mar Chile: BCCh meeting Peru: Economic activity Mar Unemployment rate Apr
16 May Argentina: Economic activity Mar Brazil: Economic activity Mar
During the week: Brazil: Job creation Apr Colombia: Consumer confidence Apr 19 May Argentina: Unemployment rate 1Q Brazil: IGP-M 2nd release May Chile: GDP 1Q Current account 1Q
20 May Colombia: Trade balance Mar Mexico: Central bank reserves (Prior week) Banamex economic survey
21 May Brazil: IPCA-15 May Mexico: Retail sales Mar Banxico inflation report
22 May Brazil: Unemployment rate Apr Mexico: Unemployment rate Apr CPI May 1H
23 May Argentina: Industrial production Apr Brazil: Consumer confidence May Current account balance Apr FDI Apr Mexico: Economic activity index Mar GDP 1Q Current account 1Q
During the week: Brazil: Tax collection Apr Colombia: Outstanding loans Mar Vehicle sales Apr Mexico: Formal employment Apr 26 May Mexico: Trade balance Apr Peru: 1Q GDP
27 May Mexico: Central bank reserves (Prior week)
28 May Brazil: PPI manufacturing Apr COPOM meeting
29 May Brazil: IGP-M May BCB credit report Apr Central government budget balance Apr
30 May Argentina: Construction activity Apr Brazil: 1Q GDP Nominal budget balance Apr Primary budget balance Apr Net Debt % GDP Apr Chile: Manufacturing index Apr Unemployment rate Apr Retail sales Apr Colombia: Unemployment rate Apr BanRep meeting Mexico: Bank credit Apr PS budget balance Apr
During the week: Colombia: Industrial confidence Apr Retail confidence Apr Link to Global Economics Calendar on J.P. Morgan Markets page
29
Australia TOP
J.P. Morgan Forecasts - Economics and Commodities 13Q1A 13Q2A 13Q3A 13Q4A 14Q1A 14Q2E 14Q3E 14Q4E 15Q1E 15Q2E 15Q3E 15Q4E CY13A CY14E CY15E Long Term Economic (%, annualised growth) GDP 0.5 0.7 0.6 0.8 0.4 0.9 0.7 0.9 0.6 0.6 1.0 0.6 2.4 2.7 2.9 CPI 2.3 2.3 2.3 2.6 2.6 2.7 2.6 2.2 2.3 2.4 2.4 2.5 2.4 2.5 2.4 Currency A$/US$ (period end) 1.04 0.91 0.93 0.89 0.93 0.90 0.88 0.87 0.89 0.89 0.89 0.89 0.93 0.87 0.89 0.80 A$/US$ (period average) 1.04 0.99 0.92 0.93 0.90 0.91 0.89 0.88 0.88 0.89 0.89 0.89 0.97 0.89 0.89 0.80 Commodities (period average) Gold (US$ per ounce) 1,634 1,417 1,330 1,272 1,255 1,250 1,260 1,285 1,275 1,275 1,275 1,275 1,413 1,263 1,275 1,300 Silver (US$ per ounce) 30.2 23.2 21.5 20.8 21.0 21.3 21.5 21.8 22.0 22.0 22.0 22.0 23.9 21.4 22.0 17.5 Oil (WTI) (US$/bbl) 94 94 106 98 94 88 93 91 88 83 85 85 98 92 85 80 Aluminium (US$/lb) 0.91 0.83 0.81 0.80 0.83 0.83 0.84 0.84 0.86 0.86 0.86 0.86 0.84 0.84 0.86 1.00 Copper (US$/lb) 3.60 3.25 3.21 3.25 3.27 3.22 3.06 3.15 3.18 3.18 3.18 3.18 3.33 3.18 3.18 3.40 Lead (US$/lb) 1.04 0.93 0.95 0.96 1.03 0.98 1.03 1.07 1.02 1.02 1.02 1.02 0.97 1.03 1.02 0.91 Nickel (US$/lb) 7.87 6.79 6.33 6.31 6.65 6.92 6.85 7.26 7.14 7.14 7.14 7.14 6.82 6.92 7.14 8.16 Zinc (US$/lb) 0.92 0.84 0.84 0.86 0.91 0.92 0.93 0.94 1.02 1.02 1.02 1.02 0.87 0.92 1.02 0.91 Iron ore spot CFR (US$/t) 149 126 133 135 130 120 125 125 109 110 110 111 135 125 110 80 Iron Ore - Fines (USc/Fe%) 228 191 199 200 193 177 185 185 159 160 161 162 204 185 161 113 Iron Ore - Lump (USc/Fe%) 240 203 211 212 206 189 197 197 172 173 174 175 216 197 173 125 Coking Coal (US$/t) 165 172 145 165 143 130 135 138 145 145 150 150 162 137 148 160 Thermal Coal (US$/t) 92 86 77 82 79 75 75 77 79 80 80 81 84 77 80 95 Uranium (US$/lb) 42.6 40.5 36.0 35.1 36.2 40.5 40.7 46.1 51.6 51.9 52.2 52.5 38.6 40.9 52.1 60.0
Source: J.P. Morgan
This material is provided for information only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument. This material is not a research report, although it may refer to information and data contained in J.P. Morgan published research reports or models from all J.P. Morgan affiliated regions. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this publication must make its own independent decisions regarding any securities or financial instruments mentioned herein. Please refer to the most recent published research or model for complete information on the specific stocks mentioned in this publication, including important disclosures and analysts' certifications. © 2014 JPMorgan Chase & Co.
30
European Analyst Focus List TOP
J.P. Morgan AFL 02 May
Ticker Name Industry Ccy Close Price Analyst
Focus list add date
Focus List add price
Price Target
Potential Upside
/Downside* Position Rating PT end
date AGS BB Ageas Insurance EUR 31.0 Ashik Musaddi, CFA 22-Jan-10 25.40 40.61 31% Long OW Dec-14 UBSN VX UBS Diversified Financials CHF 18.4 Kian Abouhossein 06-Sep-11 10.46 23.00 25% Long OW Dec-14 WPP LN WPP Group Media GBp 1,286.0 Filippo Pietro Lo Franco 06-Jun-13 1,120 1,552 21% Long OW Dec-14 ABI BB Anheuser Busch InBev Food, Beverage & Tobacco EUR 78.4 Mike J Gibbs 14-Jun-13 69.56 94.00 20% Long OW Feb-15 ERICB SS Ericsson Technology Hardware & Equipment SEK 78.5 Sandeep Deshpande 08-Jul-13 77.00 90.00 15% Long OW Dec-14 AIR FP Airbus Group Capital Goods EUR 49.5 David H Perry, CFA 15-Jul-13 41.84 65.00 31% Long OW Dec-14 EZJ LN easyJet Transportation GBp 1,653.0 Jamie Baker 16-Sep-13 1,299 1,965 19% Long OW Dec-14 DAI GR Daimler AG Automobiles & Components EUR 66.9 Jose M Asumendi 16-Sep-13 57.10 80.00 20% Long OW Dec-14 OR FP L'Oréal Household & Personal Products EUR 124.0 Celine Pannuti, CFA 16-Sep-13 124.90 135.00 9% Long OW Dec-14 FP FP TOTAL Energy EUR 51.5 Nitin Sharma 16-Sep-13 42.80 52.50 2% Long OW Dec-14 PNDORA DC PANDORA Consumer Durables & Apparel DKK 361.0 Chiara Battistini 16-Sep-13 222.80 425.00 18% Long OW Dec-14 SMDS LN D S Smith Materials GBp 313.2 Alexander Mees 16-Sep-13 284 360 15% Long OW Mar-15 HEXAB SS Hexagon AB Electronic Equip., Instruments SEK 207.2 Stacy Pollard 16-Sep-13 197.40 250.00 21% Long OW Sep-14 BPOST BB bpost Transportation EUR 16.2 Christopher G Combe 16-Sep-13 14.20 19.10 18% Long OW Dec-14 UTDI GR United Internet Internet Software & Services EUR 30.9 Hannes Wittig 23-Sep-13 26.60 42.00 36% Long OW Dec-14 TSCO LN Tesco Food & Staples Retailing GBp 286.6 Jaime Vazquez 25-Sep-13 374 250 13% Short UW Dec-14 SMP LN St. Modwen Real Estate GBp 362.0 Neil Green, CFA 8-Oct-13 309 425 17% Long OW Jan-15 JMAT LN Johnson Matthey Materials GBp 3,359.0 Martin Evans 14-Oct-13 2,821 3,900 16% Long OW Dec-14 BAYN GR Bayer Pharmaceuticals, Biotechnology EUR 100.8 Richard Vosser 21-Nov-13 94.89 120.00 19% Long OW Dec-14 RTN LN Restaurant Group Consumer Services GBp 635.5 Victoria A Greer 06-Dec-13 549 755 19% Long OW Apr-15 SOLB BB Solvay Materials EUR 116.3 Ben Scarlett 07-Jan-14 112.5 80.0 31% Short UW Dec-14 AAL LN Anglo American Materials GBp 1,562.5 Fraser Jamieson 08-Jan-14 1,273 1,300 17% Short UW Dec-14 JUP LN Jupiter Diversified Financials GBp 390.0 Edward Morris, CFA 10-Jan-14 382 474 22% Long OW Dec-14 LAND LN Land Securities Real Estate GBp 1,064.0 Tim Leckie, CFA 14-Jan-14 989.50 1,100 3% Long OW Jan-15 HEI GR HeidelbergCement Construction Materials EUR 62.4 Rajesh Patki 28-Jan-14 56.25 74.00 19% Long OW Apr-15 Source: Bloomberg, J.P. Morgan estimates. Share price data as at COB 01 May 2014. *From Latest Closing Price J.P. Morgan may remove a stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice.
J.P. Morgan AFL 02 May - Performance
Absolute performance Country performance MSCI Europe Industry Performance
Ticker Name Position
Price Returns
since addition to
AFL
Total Returns since
addition to AFL (incl.
dvds)
1M 3M YTD
Total Returns
since addition to AFL
1M 3M YTD
Total Returns
since addition to
AFL
1M 3M YTD
AGS BB Ageas Long 22.0% 50.0% (5.3%) (2.8%) 0.1% 48.8% (0.9%) 8.0% 6.9% 86.6% 0.7% 4.8% 1.6% UBSN VX UBS Long 75.9% 79.0% (1.5%) 2.3% 8.7% 69.3% 0.4% 5.6% 5.4% 64.9% (2.3%) 1.3% 1.5% WPP LN WPP Group Long 14.8% 17.9% 2.7% 0.7% (6.8%) 11.2% 2.6% 6.0% 2.4% 24.1% (0.0%) 0.7% (2.3%) ABI BB Anheuser Busch InBev Long 12.8% 12.0% 1.0% 10.4% 1.5% 21.6% (0.9%) 8.0% 6.9% 9.3% 3.5% 10.2% 5.6% ERICB SS Ericsson Long 1.9% 3.9% (6.4%) 1.6% 3.6% 19.1% 0.6% 8.0% 5.6% 18.3% (5.6%) 0.6% (3.4%) AIR FP Airbus Group Long 18.3% 18.3% (5.7%) (5.9%) (11.3%) 17.1% 1.7% 8.3% 5.0% 15.0% (1.2%) 3.4% 1.4% EZJ LN easyJet Long 27.3% 30.6% (7.7%) 5.7% 13.1% 5.1% 2.6% 6.0% 2.4% 19.8% (3.3%) 4.4% 6.7% DAI GR Daimler AG Long 17.1% 20.5% (0.7%) 11.7% 9.9% 11.5% (0.2%) 3.2% 0.5% 16.3% (1.1%) 9.2% 7.7% OR FP L'Oréal Long (0.7%) (0.3%) 5.8% 3.7% (0.9%) 9.4% 1.7% 8.3% 5.0% 7.4% 2.9% 4.2% 0.0% FP FP TOTAL Long 20.3% 24.8% 7.6% 23.1% 17.1% 9.4% 1.7% 8.3% 5.0% 13.4% 6.2% 13.4% 8.6% PNDORA DC PANDORA Long 62.0% 63.4% (1.4%) 16.1% 25.1% 25.5% (0.8%) 10.2% 15.9% (0.4%) 4.4% 6.2% 1.6% SMDS LN D S Smith Long 10.2% 13.1% (1.8%) (3.6%) (4.6%) 5.1% 2.6% 6.0% 2.4% 5.9% 1.8% 6.8% 4.7% HEXAB SS Hexagon AB Long 5.0% 5.8% (6.8%) (0.4%) 1.9% 10.2% 0.6% 8.0% 5.6% (3.9%) (5.6%) 0.6% (3.4%) BPOST BB bpost Long 14.3% 20.5% (1.9%) 12.4% 14.3% 11.8% (0.9%) 8.0% 6.9% 19.8% (3.3%) 4.4% 6.7% UTDI GR United Internet Long 15.9% 15.9% (11.7%) (4.8%) (0.2%) 11.2% (0.2%) 3.2% 0.5% 8.5% (2.1%) 1.3% (3.8%) TSCO LN Tesco Short 23.4% 16.4% (1.7%) 7.1% 11.0% 6.2% 2.6% 6.0% 2.4% (4.0%) 1.1% 1.6% (3.9%) SMP LN St. Modwen Long 17.2% 16.3% (8.8%) (5.0%) (0.7%) 9.3% 2.6% 6.0% 2.4% 14.5% 2.9% 7.7% 8.7% JMAT LN Johnson Matthey Long 19.1% 13.1% 1.9% 4.0% 2.4% 6.8% 2.6% 6.0% 2.4% 9.3% 1.8% 6.8% 4.7% BAYN GR Bayer Long 6.2% 6.3% 4.5% 4.4% 0.1% 4.4% (0.2%) 3.2% 0.5% 10.8% 3.6% 9.3% 10.0% RTN LN Restaurant Group Long 15.8% 15.5% (9.4%) 3.7% 7.2% 5.5% 2.6% 6.0% 2.4% 9.7% 1.8% 3.9% 2.5% SOLB BB Solvay Short (3.4%) (8.7%) (2.3%) (12.5%) -- 7.4% (0.9%) 8.0% -- 6.1% 1.8% 6.8% -- AAL LN Anglo American Short (23.8%) (27.1%) (1.3%) (11.7%) -- 2.8% 2.6% 6.0% -- 6.2% 1.8% 6.8% -- JUP LN Jupiter Long 2.1% 3.2% (7.0%) 6.3% -- 2.5% 2.6% 6.0% -- (2.9%) (2.3%) 1.3% -- LAND LN Land Securities Long 7.5% 7.9% 2.4% 3.8% -- 2.1% 2.6% 6.0% -- 7.4% 2.9% 7.7% -- HEI GR HeidelbergCement Long 10.9% 7.9% (2.2%) 13.4% -- 2.1% (0.2%) 3.2% -- 6.7% 1.8% 6.8% -- Source: Bloomberg, J.P. Morgan estimates. Share price data as at COB 01 May 2014. Returns not shown where the period on the AFL is less than 1M/3M. J.P. Morgan may remove a stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice.
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Asia Analyst Focus List
Open Trades (as of May 05, 2014 close) Country OW UW
Sector OW UW
India Tata Steel Ltd Hero Motocorp Ltd.
Autos Mazda Motor DongFeng Motor Co., Ltd. Indonesia MNC Sky Vision tbk Bank Danamon
Consumer Puregold Price Club Uni-President China Holdings Ltd
Malaysia SapuraKencana Petroleum Bhd Maxis Berhad
Emerging Technology Lite-On Technology Corporation Philippines Puregold Price Club Globe Telecom
Financials Ping An Insurance Group - H
Singapore Singapore Airlines Far East Hospitality Trust
Infrastructure CSR Corp Ltd. South Korea Samsung Engineering
Internet Tencent
Taiwan ASE Far EasTone Telecom
Metals & Mining Tata Steel Ltd Thailand KASIKORNBANK
Oil and Gas PetroChina Sinopec Shanghai Petrochemical
Refining and Chemicals
SMID-Caps TAL Education Group VTech Holdings
Technology TSMC Innolux Corporation
Telecommunications Maxis Berhad
Transportation Singapore Airlines Hanjin Shipping Co Ltd
Utilities & Power Equipment China Everbright International Shanghai Electric Group
Source: J.P. Morgan. Country relative performance in US$ (MSCI AC Asia Pacific ex JP)
Source: J.P. Morgan, Bloomberg.
Sector relative performance in US$ (MSCI AC Asia Pacific ex JP)
Source: J.P. Morgan, Bloomberg.
Last Four Weeks’ Additions
Company Name BBG Ticker Team Head Analyst Rating Add Date Add Price Current Price Price Target Uni-President China Holdings Ltd 220 HK Ebru Sener Kurumlu UW 10-Apr-14 6.61 6.17 4.00 TSMC 2330 TT JJ Park OW 17-Apr-14 120.00 117.00 150.00 MNC Sky Vision tbk MSKY IJ Aditya Srinath, CFA OW 24-Apr-14 2285.00 2275.00 3100.00 Bank Danamon BDMN IJ Aditya Srinath, CFA UW 24-Apr-14 4355.00 4150.00 3000.00 TAL Education Group XRS US Leon Chik, CFA OW 24-Apr-14 23.33 23.47 34.00 China Everbright International 257 HK Boris Kan OW 24-Apr-14 10.36 9.95 13.00 Sinopec Shanghai Petrochemical 338 HK Scott L Darling UW 29-Apr-14 1.90 1.86 1.70 Source: J.P. Morgan, Bloomberg. Priced at May 05, 2014
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Last Four Weeks’ Deletions
Company Name BBG Ticker Team Head Analyst Rating
Removal Date Add Price
Removal Date Price Price Target
CJ Cheiljedang 097950 KS Ebru Sener Kurumlu UW 7-Apr-14 246500 289500.00 200000.00 Dangdang DANG US Alex Yao UW 7-Apr-14 7.81 12.85 7.50 Ambuja Cements Limited ACEM IN Daniel Kang UW 7-Apr-14 152.75 209.40 155.00 Lotte Chemical Corp 011170 KS Samuel Lee, CFA UW 7-Apr-14 177500 191000.00 155000.00 SK Hynix 000660 KS JJ Park OW 7-Apr-14 38800 37000.00 45000.00 Hutchison Telecom Hong Kong Holdings 215 HK James R. Sullivan, CFA OW 7-Apr-14 2.89 2.54 3.50 Synnex 2347 TT Alvin Kwock OW 8-Apr-14 52 46.90 62.00 LPN Development LPN TB Anne Jirajariyavech, CFA UW 16-Apr-14 15.7 18.00 14.00 China Resources Power Holdings 836 HK Boris Kan OW 24-Apr-14 19.14 19.72 26.60 Xinyi Glass 868 HK Leon Chik, CFA OW 24-Apr-14 6.09 6.32 10.00 Oil Search OSH AU Scott L Darling UW 29-Apr-14 8.42 8.89 7.26 Samsung Engineering 028050 KS Karen Li, CFA UW 30-Apr-14 70900 77300.00 50000.00 Hyundai Motor Company 005380 KS Scott YH Seo OW 5-May-14 244500 225000.00 330000.00 Source: J.P. Morgan, Bloomberg.
AFL – Country team stocks
All stock and market returns shown in local currency (LC) terms, and reflect performance since date added to the AFL. All aggregates include cumulative returns since inception of the AFL on September 2, 2013. Country AFL total aggregate returns are shown in US$ terms. Aggregate US$ return spread uses the MSCI AC Asia Pacific ex JP Index as the benchmark.
Country/Company Name BBG Ticker Analyst Name Country Rating1 Add Date
Add Price
Current Price
Price Target1
Price Target End Date
Abs. Perf Since Add Date (%)
Spread Over MSCI Country Index (%)2
Tata Steel Ltd TATA IN Pinakin Parekh, CFA India OW 2-Sep-13 289.40 397.55 550.00 12/31/14 37.4 21.7 Hero Motocorp Ltd. HMCL IN Aditya Makharia India UW 19-Feb-14 1944.25 2212.00 1920.00 3/30/15 13.8 7.2 Aggregate India performance 36.1 36.4 MNC Sky Vision tbk MSKY IJ Princy Singh Indonesia OW 24-Apr-14 2285.00 2275.00 3000.00 6/30/15 -0.4 1.4 Bank Danamon BDMN IJ Harsh Wardhan Modi Indonesia UW 24-Apr-14 4355.00 4150.00 3000.00 6/30/15 -4.7 -2.9 Aggregate Indonesia performance 41.9 44.9 SapuraKencana Petroleum Bhd SAKP MK Ajay Mirchandani Malaysia OW 11-Nov-13 4.25 4.28 5.70 1/31/16 0.7 -1.8 Maxis Berhad MAXIS MK Princy Singh Malaysia UW 2-Sep-13 6.87 6.92 5.25 12/31/14 0.7 -7.2 Aggregate Malaysia performance 15.0 14.7 Puregold Price Club PGOLD PM Princy Singh Philippines OW 2-Sep-13 39.30 46.00 58.00 12/31/14 17.0 3.3 Globe Telecom GLO PM Princy Singh Philippines UW 19-Feb-14 1778.00 1675.00 1520.00 12/31/14 -5.8 -12.5 Aggregate Philippines performance 6.3 6.9 Singapore Airlines SIA SP Corrine Png Singapore OW 19-Feb-14 10.10 10.30 13.00 12/31/14 2.0 -2.9 Far East Hospitality Trust FEHT SP Joy Wang Singapore UW 19-Feb-14 0.80 0.89 0.80 6/30/14 10.6 5.8 Aggregate Singapore performance -14.5 -12.5 Samsung Engineering 028050 KS Sokje Lee Korea UW 2-Sep-13 84500.00 77900.00 50000.00 12/31/14 -7.8 -10.0 Aggregate South Korea performance 0.6 -0.1 ASE 2311 TT Gokul Hariharan Taiwan OW 17-Feb-14 29.50 34.35 40.00 12/31/14 16.4 11.0 Far EasTone Telecom 4904 TT Lucy Liu Taiwan UW 14-Nov-13 63.70 65.70 62.00 12/31/14 3.1 -7.1 Aggregate Taiwan performance 34.7 33.2 KASIKORNBANK KBANK TB Anne Jirajariyavech, CFA Thailand OW 8-Oct-13 177.50 192.00 230.00 12/31/14 8.2 9.2 Aggregate Thailand performance -21.2 -23.2 Average Country OW (US$)
Asia Pacific ex JP
9.9 9.4
Average Country UW (US$)
Asia Pacific ex JP
4.4 3.9 Aggregate Country (US$)3
Asia Pacific ex JP
5.5 4.9
1 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 2 – Spread over MSCI country indices except for Shanghai listed A-Shares which are spread over SHASHR. 3 - Spread over MSCI country index incorporates the impact of currency movements Source: Bloomberg, J.P. Morgan. Priced at May 05, 2014 (prices and price-related data based on current day's close)
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AFL – Sector team stocks
All returns shown in US$ terms, and reflect performance since date added to the AFL. All aggregates include cumulative returns since inception of the AFL on September 2, 2013. Aggregate US$ return spread uses the MSCI AC Asia Pacific ex JP Index as the benchmark.
Company Name
BBG Ticker Analyst Name MSCI Sector Indices Rating1 Add Date
Add Price
Current Price
Price Target1
Price Target
End Date
Abs. Perf Since Add
Date (%)
Spread Over MSCI
Sector Index
(%)2 Mazda Motor (7261) 7261 JT Akira Kishimoto Autos OW 4-Apr-14 479.0 469.0 650.0 12/31/14 -1.1 3.4 DongFeng Motor Co., Ltd. 489 HK Nick Lai Autos UW 2-Sep-13 10.94 10.40 8.50 6/30/14 -4.9 -12.1 Aggregate Autos performance 5.9 6.6 Puregold Price Club PGOLD PM Princy Singh Consumer OW 19-Feb-14 43.80 46.00 58.00 12/31/14 5.3 -1.0 Uni-President China Holdings Ltd 220 HK Ebru Sener Kurumlu Consumer UW 10-Apr-14 6.61 6.17 4.00 12/31/14 -6.6 -5.5 Aggregate Consumer performance 35.7 35.2 Lite-On Technology Corporation 2301 TT William Chen Emerging Technology UW 2-Sep-13 50.00 46.65 40.00 12/31/14 -7.9 -22.2 Aggregate Emerging Technology performance 9.1 7.5 Ping An Insurance Group - H 2318 HK MW Kim Financials OW 2-Sep-13 56.15 57.00 88.00 12/31/14 1.5 -3.1 Aggregate Financials performance -6.0 -6.4 CSR Corp Ltd. 1766 HK Karen Li, CFA Infrastructure OW 10-Feb-14 5.70 5.86 8.60 12/31/14 2.9 -4.1 Aggregate Infrastructure performance -3.5 -4.3 Tencent 700 HK Alex Yao Internet OW 2-Sep-13 376.40 492.60 640.00 12/31/14 30.9 12.4 Aggregate Internet performance -29.4 -30.7 Tata Steel Ltd TATA IN Pinakin Parekh, CFA Metals & Mining OW 11-Nov-13 360.80 397.55 550.00 12/31/14 16.2 17.2 Aggregate Metals & Mining performance -45.4 -45.3 PetroChina 857 HK Scott L Darling Oil and Gas OW 2-Sep-13 8.54 8.77 11.25 12/31/14 2.7 1.9 Sinopec Shanghai Petrochemical 338 HK Scott L Darling Oil and Gas UW 29-Apr-14 1.90 1.86 1.70 12/31/14 -2.1 -1.7 Aggregate Oil and Gas performance -2.4 -2.3 TAL Education Group XRS US Leon Chik, CFA SMID-Caps OW 24-Apr-14 23.33 23.47 34.00 12/31/14 0.6 4.5 VTech Holdings 303 HK Leon Chik, CFA SMID-Caps UW 9-Jan-14 100.60 105.20 85.00 12/31/14 4.6 4.2 Aggregate SMID-Caps performance 2.9 2.8 TSMC 2330 TT JJ Park Technology OW 17-Apr-14 120.00 117.00 150.00 12/31/14 -2.4 -2.5 Innolux Corporation 3481 TT Narci Chang Technology UW 2-Sep-13 14.90 11.10 10.00 12/31/14 -26.4 -42.0 Aggregate Technology performance 2.1 1.1 Maxis Berhad MAXIS MK Princy Singh Telecommunications UW 19-Feb-14 6.95 6.92 5.25 12/31/14 0.7 -4.0 Aggregate Telecom performance -8.0 -7.7 Singapore Airlines SIA SP Corrine Png Transportation OW 4-Apr-14 10.39 10.30 13.00 12/31/14 -0.2 0.0 Hanjin Shipping Co Ltd 117930 KS Corrine Png Transportation UW 25-Mar-14 6480.00 6000.00 4100.00 12/31/14 -3.2 -5.3 Aggregate Transportation performance -49.1 -49.4 China Everbright International 257 HK Elaine Wu Utilities & Power Equipment OW 24-Apr-14 10.36 9.95 13.00 6/30/15 -3.9 -3.6 Shanghai Electric Group 2727 HK Boris Kan Utilities & Power Equipment UW 2-Sep-13 2.84 3.07 2.40 12/31/14 8.1 -5.3 Aggregate Utilities & Power Equipment performance 37.4 36.6 Average Sector OW (US$)
4.1 3.6
Average Sector UW (US$)
6.0 5.5 Aggregate Sector Performance
-1.9 -2.4
1 - Rating and price targets reflect J.P. Morgan's fundamental long-term views. 2 – Spread over MSCI sector indices except for Shanghai listed A-Shares which are spread over SHASHR. Source: Bloomberg, J.P. Morgan. Priced at May 02, 2014 (prices and price-related data based on previous day's close) J.P Morgan’s Asia Analyst Focus List (AFL) is a selection of high-conviction stocks collaboratively chosen by each Country and Sector research team across Asia-Pacific. The AFL includes Overweight- and Underweight-rated stocks, Overweight having superior outperformance prospects in a team’s universe over the horizon of rating (6-12 months), and Underweight stocks having among the poorer relative performance prospects over the horizon of rating (6-12 months). The aim is to have one Overweight and one Underweight idea from each Research team in the AFL. Analysts can add or delete recommendations at any time and changes will be published, with the analyst’s rationale, on J.P. Morgan Markets. Please check J.P. Morgan Markets https://www.jpmorganmarkets.com for the most up-to- date AFL at any time, or contact your J.P. Morgan representative. The Analyst Focus List is not a model portfolio. Please refer to specific company research for the fundamental investment thesis for each stock included in this list as well as the analysts’ complete views. If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice. Important disclosures, including price charts for all companies under coverage for at least one year, are available through the search function on J.P. Morgan's website https://jpmm.com/research/disclosures. Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request. Japanese stocks included in the Asia AFL are chosen according to the Asia AFL methodology above, independent of the Japanese Analyst Focus List (Japan AFL). Japan stocks are not included at the Country Team level, but may appear in Sector Team selections. To view the Japan AFL and its methodology, click here: Japan Analyst Focus List (Japan AFL)
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U.S. Equity Analysts' Focus List The U.S. Equity Analyst Focus List is a selection of stocks, chosen by individual analysts, that they believe will provide an annualized total return in excess of +/-20%. The Focus List can include Overweight- and Underweight-rated stocks, provided they meet the return criteria (a positive return for Overweights and a negative return for Underweights). Performance Relative to Benchmark indicates the relative performance to the index in which the stock trades (eg, Apple – NASD). The "Target beginning date" may differ from the "Focus List add date" because of changes to the target price made while the stock was on the Focus List.
The Analyst Focus List is not a model portfolio. Please refer to specific company research for the fundamental investment thesis for each stock included in this list as well as the analysts’ complete views. If a stock is placed under research restriction, J.P. Morgan may remove the stock from the AFL pursuant to applicable law and/or J.P. Morgan policy without any further notice. Important disclosures, including price charts for all companies under coverage for at least one year, are available through the search function on J.P. Morgan's website https://jpmm.com/disclosures/company . Total returns exclude commissions. Past results are not indicative of future performance. Additional information available upon request. If you have questions regarding stocks on the Focus List, please contact your salesperson or the covering analyst.
Mkt. Cap. ($MMs)
Focus List
Focus List Add Prev.Close
Focus List Target % Change
Performance Relative
Target Beginning Target
Company Name Ticker Analyst Rating 5/5/2014 Add Date Price 5/5/2014 Price Since Add to Benchmark Date End Date American Airlines AAL Jamie Baker OW $26,359 12/11/13 $24.88 $36.49 $55.00 46.66% 43.31% May-14 Dec-14
Cliffs Natural Resources CLF Michael F. Gambardella OW $2,779 04/01/13 $19.01 $18.27 $26.00 -3.89% -20.61% Apr-14 Dec-14
CVS Caremark Corp. CVS Lisa Gill OW $87,669 08/01/11 $36.35 $73.86 $82.00 103.19% 82.89% Dec-13 Dec-14 General Motors GM Ryan Brinkman OW $55,729 12/11/13 $40.90 $34.97 $50.00 -14.50% -20.89% Apr-14 Dec-14 Gilead Sciences GILD Geoff Meacham OW $122,750 08/16/11 $19.43 $77.71 $100.00 300.05% 257.28% Dec-13 Dec-14 Illumina, Inc. ILMN Tycho W. Peterson OW $18,185 01/17/14 $125.26 $139.16 $190.00 11.10% 13.01% Jan-14 Dec-14 Las Vegas Sands Corp LVS Joseph Greff OW $64,600 08/15/11 $43.59 $80.60 $91.00 84.90% 58.09% Apr-14 Dec-14 Navistar Int'l NAV Ann Duignan OW $2,963 03/08/13 $31.89 $37.26 $45.00 16.84% -0.56% Nov-13 Dec-14 NCR Corporation NCR Paul Coster, CFA OW $5,072 01/13/14 $35.52 $30.25 $45.50 -14.84% -18.48% Apr-14 Dec-14 Och-Ziff Capital Management OZM Ken Worthington OW $5,668 01/06/12 $8.45 $11.86 $17.50 40.36% 4.47% Feb-14 Dec-14 Verizon Communications VZ Philip Cusick OW $196,249 02/27/14 $46.35 $47.12 $55.00 1.66% -0.57% Apr-14 Dec-14 Source: J.P. Morgan estimates and Bloomberg data.
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