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China Consumer Discretionary

What’s new: China’s passenger vehicle (PV) average daily unit sales for 1-

25 March continued to show steady YoY growth, similar to our 2 previous

weekly reports issued in March. Sales volume for the period totalled

1,296,665 units, a rise of 10% YoY in terms of average daily sales — better

than the 1% YoY sales volume growth in February and the 6% YoY growth

for January-February combined. The recovery suggests to us that sales in

China are now back to normal levels after the Chinese New Year (CNY)

effect in February, in line with our prior expectations.

Segment-wise, SUVs continued to lead the way in growth terms, with

average daily unit sales up by 53% YoY. On the other hand, sedans’

average daily sales were flat YoY, while those of MPVs fell by 6% YoY.

What’s the impact: GAC and BMW Brilliance recorded strong YoY growth

in their average daily sales. GAC’s average daily sales were up by 40%

YoY, as GAC Honda’s Crider sedan, Vezel SUV and GAC Motor’s GS4

registered robust sales volume growth for 1-25 March. Meanwhile, BMW

Brilliance’s average daily sales for the period were up by 29% YoY, due to

better sales from 5 Series sedan. In addition, BMW started the sale of its 2

Series MPV, leading to incremental sales for the brand. BAIC, however,

recorded average daily sales growth at 15% YoY, lower than the 21% YoY

growth recorded for the period of 1-18 March, due to a slowdown of sales

from Beijing Brand and Beijing Benz.

What we recommend: For the rest of 2016, we expect strong sales

momentum for China PVs, driven by the purchase-tax cut (from 10% to

5%) for small-engine PVs and strong product pipelines of various auto

OEMs. Geely, BYD and BAIC are our top picks among the auto OEMs.

Model of the week: Dongfeng Honda’s CR-V is our model of the week,

with average daily sales rising by 81% YoY and accounting for 43% of

Dongfeng Honda’s total sales units during the period. Since the launch

of the facelift version in April 2015, the CR-V has been consistently

recording strong sales growth. With a length of 4550mm, CRV-V belongs to

the compact SUV segment, rivals including Dongfeng Nissan’s Qashqai,

Changan Mazda’s CX-5 and FAW Toyota’s RAV4 Audi A4L. It is currently

priced at CNY179,800-249,800.

31 March 2016

China Autos – PV Weekly Monitor

1-25 March: maintaining steady YoY sales growth

China PV average daily unit sales volume for 1-25 March rose by 10% YoY, similar to the trend in the previous week

SUV average daily sales rose by 53% YoY; sedans flat YoY; MPVs down by 6% YoY

GAC and BMW Brilliance were again the top performers for the period, up by 40% and 29% YoY, respectively; BAIC turning softer

Key stock calls

Source: Daiwa forecasts

China PV sales summary

1-25 Mar ADS YoY

2016 YTD sales YoY

2016E YoY

Geely 0% 6% 18%

BAIC 15% 2% 18%

GWM 7% 15% 6%

GAC 40% 52% 17%

BMW Brilliance 29% 45% 15%

DongFeng 9% 23% 8%

Changan Auto 13% 11% n.a.

SAIC 7% 9% n.a.

Tianjing FAW Xiali 19% 33% n.a.

FAW VW 22% 5% n.a.

Market Total 10% 12% 12%

Source: CAM, Daiwa forecasts Note: * ADS = Average Daily Sales

Dongfeng Honda’s CR-V SUV

Source: Company

Kelvin Lau(852) 2848 4467

[email protected]

Brian Lam(852) 2532 4341

[email protected]

New Prev.

Geely Automobile (175 HK)Rating Buy Buy

Target 4.90 4.90

Upside p 27.9%

BYD (1211 HK)Rating Outperform Outperform

Target 50.00 50.00

Upside p 12.7%

BAIC Motor (1958 HK)Rating Buy Buy

Target 9.40 9.40

Upside p 58.2%

2

China Autos – PV Weekly Monitor: 31 March 2016

Brand-by-brand performance

Geely

Geely registered total sales of 29,546 units for 1-25 March, flat YoY in terms of average

daily sales. As we have noted previously, Geely’s sales registration is back end-loaded

towards the end of the month. Therefore, its actual performance can only be assessed

closer to the end of a month, when its monthly sales data is released. We note this decline

is already better than in recent months, as Geely’s YoY average daily sales during the 1st

to 3rd

week of the month since 2H15 have typically been flat to down by 10% YoY.

BAIC

BAIC recorded total sales of 116,754 units during 1-25 March, a rise of 15% YoY in terms

of average daily sales, lower than its 21% YoY growth in the previous period (ie,1-18

March), as the sale volume growth rates for both Beijing Brand and Beijing Benz are

turning slower. For instance, Beijing Brand’s average daily sales for period of 1-25 March

grew by 47% YoY, slower than the 60% YoY growth for 1-18 March, while that of Beijing

Benz grew by 57% YoY, slower than the 87% YoY for 1-18 March.

Meanwhile, Beijing Hyundai’s average daily sales grew by 3% YoY for the period; similar to

its 4% YoY growth for 1-18 March. Beijing Hyundai’s SUV continued the strong growth of

58% YoY in terms of average daily sales unit, while the launch of its Elantra Lingdong

sedan in early March provided incremental sales. However, the rest of Beijing Hyundai’s

sedan recorded YoY decline of 20% to 60% in average daily unit sales for 1-25 March.

Guangzhou Automobile (GAC)

GAC recorded strong sales volume growth for the period, with total sales of 85,130 units, a

rise of 40% YoY in terms of average daily unit sales.

For GAC Honda, average daily sales were up by 36% YoY. Alongside its Vezel SUV (up

100% YoY in terms of average daily sales), its Crider sedan also recorded a strong sales

volume growth at 74% YoY. Crider’s growth was due to the launch of a facelifted model in

December 2015. In addition, its Fit hatchback registered solid growth, with average daily

sales rising by 43% YoY.

GAC Motor’s (GAMC) average daily sales for the period were up by 117% YoY,

spearheaded again by its GS4 SUV, which accounted for more than 90% of GAMC’s sales

volume during the period. However, the average daily unit sale for GAMC’s other models,

such as the GA3 and GA5, were down by 70-80% YoY.

GAC Toyota’s recorded a strong performance, with its average daily sales up by 22% YoY.

The growth was fuelled by the strong sales of its Levin sedan, up by 67% YoY in terms of

average daily unit sales, following the introduction of Levin’s Hybrid version in late October

2015. On the other hand, its Camry sedan reported weak sales, with average daily sales

down by 44% YoY during the period.

Great Wall Motor (GWM)

Similar to previous months, GWM’s performance was soft. During the period, its average

daily sales grew by 7% YoY — significantly below the SUV market’s average growth of

53% YoY. Moreover, GWM’s growth in this period was not significantly different from its

February growth rate of 13% YoY. We believe that GWM’s weak product pipeline will lead

to it losing market share in the SUV segment throughout 2016.

Geely’s average daily

unit sales declined YoY

due to a methodology

bias — but were better

than they have been in

since 2H15

BAIC maintaining steady

growth, but turning

softer than previous

periods in March

GAC Honda and GAMC

registered strong sales

volume growth; GAC

Toyota also performed

well

GWM saw no material

improvement from

February

3


BMW Brilliance

BMW Brilliance reported strong sales for the period, with 29% YoY growth in terms of

average daily sales. The growth was again driven by BMW Brilliance, and in particular, its

3 Series sedan (the model’s average daily sales grew by 71% YoY). The model has been

selling well since the launch of its facelifted version in September 2015. In addition, the

sales for its 5 Series has started improving, now up by 16% YoY in terms of average daily

sales, up from 56% YoY decline in February. Moreover, BMW started the sale of its 2

Series (Active Tourer) in mid-March, contributing to about 5% of sales volume for BMW

Brilliance.

We believe there is still significant upside in 2H16 for Brilliance, as its 2 Series should see

ramped-up sales volume and its new-generation X1 should be released in June or July.

Dongfeng Motor

Dongfeng Motor recorded sales of 165,481 units for the period, up by 9% YoY in terms of

average daily sales due to mixed performance of its sub-brands – Dongfeng Nissan and

Dongfeng Honda delivered solid performances, but Dongfeng PSA was again a weak spot.

Dongfeng Liuzhou also recorded weak sales for the period.

Dongfeng Nissan’s sales totalled 72,974 units, up by 15% YoY in terms of average daily

sales, led by its Qashqai (+155% YoY) and Lannia (launched in October 2015). For

Dongfeng Honda, sales reached 33,022 units, up by 40% YoY in terms of average daily

sales. Similar to previous months, Dongfeng Honda’s sales volume growth was supported

by its SUV models, namely the CR-V (up by 281% YoY) and XR-V (up by 39% YoY).

On the other hand, Dongfeng PSA’s weak performance continued. Its total sales during the

period came in at 33,290 units, declining its average daily sales by 8% YoY. On the other

hand, Dongfeng Liuzhou, one of Dongfeng’s self-owned brand, also recorded an average

daily sales decline of 16% YoY for the period.

Changan

Changan’s total sales reached 164,475 units, up by 13% YoY. Similar to past few months,

the strong performance of Changan Ford and Changan Mazda was offset by the weaker

sales from Changan Suzuki.

Changan Ford’s average daily sales were up by 24% YoY, driven by its SUV sales, which

grew by 68% YoY on an average daily sales basis. Changan Ford’s SUV line-up includes

the Edge (launched in May 215) and Kuga (up by 45% YoY). Meanwhile, Changan Mazda

recorded 30% YoY growth in its average daily sales, triggered by 57% YoY sales volume

growth for the Mazda 3 Axela. On the other hand, Changan Suzuki continued its poor

performance, as its average daily sales were down by 19% YoY, since its old models

recorded YoY sales decline of 30% to 60%, only compensated by Vitara SUV, which was

launched in December 2015.

SAIC

SAIC’s total sales for 1-25 March totalled 374,230 units, up by 7% YoY in terms of average

daily sales.

SAIC VW continued to perform well, with average daily sales up by 30% YoY. The strength

was due to rapid sales volume growth for its sub-brand, Skoda. Under this sub-brand, the

Yeti SUV (up by 451% YoY) and Superb sedan (up by 86% YoY) majorly accounted for the

growth. On the other hand, SAIC GM’s average daily sales went down by 9% YoY as the

strong sales of its Buick Envision SUV (up by 48% YoY) were offset by the weaker sales

from GM’s sub-brand Chevrolet (down by 40% YoY).

BMW Brilliance sales

solid on strong 3 Series

momentum

Dongfeng Nissan and

Dongfeng Honda

continued the strong

performance; though

persistent weakness

from Dongfeng PSA was

a drag; Dongfeng

Liuzhou also recorded

weak sales

Changan Ford and

Changan Mazda growth

solid; Changan Suzuki

still weak

SAIC recorded modest

growth

4


China PV sales volume summary: 1-25 March 2016

1-25 Mar

Sales Average

Daily sales YoY

2016 YTD

Sales

2016 YTD

YoY Daiwa forecast, 2016E YoY

Geely (domestic sales only) 29,546 0% 123,071 6% 18.0% (incl. domestic and export)

BAIC 116,754 15% 343,292 2% 18.2%

- Beijing Brand 14,520 47% 66,016 22% 33.9%

- Beijing Benz 22,068 57% 68,648 60% 30.0%

- Beijing Hyundai 80,166 3% 208,628 -13% 10.6%

GWM (domestic sales only) 57,161 7% 189,978 15% 6.4% (incl. domestic and export)

GAC* 85,130 40% 267,360 52% 17.2%

- GAC Honda 40,315 36% 109,621 37% 14.0%

- GAC Toyota 29,005 22% 92,544 29% 7.3%

- GAC Motor 15,810 117% 65,195 167% 56.4%

Brilliance BMW 23,743 29% 64,499 45% 14.6%

DongFeng 165,481 9% 540,159 23% 8.3%

- DongFeng Nissan 72,974 15% 195,123 13% 16.7%

- DongFeng Honda 33,022 40% 102,775 75% 15.1%

- DongFeng PSA 33,290 -8% 129,986 -10% 1.9%

- DongFeng Fengshen 6,499 22% 35,433 32% 1.6%

- DongFeng Liuzhou 19,696 -16% 76,842 112% (30.3%)

Changan Auto 164,475 13% 623,108 11% -

- Changan Ford 68,382 24% 229,653 22% -

- Changan Mazda 13,066 30% 39,890 26% -

- Changan Suzuki 8,283 -19% 28,833 -13% -

- Changan Motor 74,744 8% 307,618 3% -

SAIC 374,230 7% 1,354,641 9% -

- SAIC Volkswagen 129,589 30% 475,081 6% -

- SAIC GM 83,110 -9% 355,308 2% -

- SAIC PV 13,519 242% 50,067 107% -

- SAIC GM Wuling 148,012 -5% 474,185 11% -

Tianjing FAW Xiali 54,698 19% 148,396 33% -

- Tianjing FAW 1,811 -65% 5,674 -70% -

- FAW Toyota 52,887 29% 142,722 54% -

FAW VW 90,906 22% 380,510 5% -

Market Total 1,296,665 10% 4,910,339 12% 11.6%

Source: CAM, Daiwa forecasts Note: * indicates that weekly number may not reconcile with monthly number due to difference of panel coverage between weekly and monthly data

5


China PV: 4S shops’ pricing of representative models

Brand Key Model (mid-spec) Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16

Geely EC7 (1.5 MT) 71,300 71,450 71,400 71,150 70,050 68,600 67,800 67,800 67,775 67,775 67,750 68,110 67,725

MoM -0.3% 0.2% -0.1% -0.4% -1.5% -2.1% -1.2% 0.0% 0.0% 0.0% 0.0% 0.5% 0.8%

YoY on a like-for-like basis -3.2% -2.9% -2.8% -2.1% -2.3% -3.3% -11.7% -9.7% -7.3% -7.3% -7.1% -5.0% -5.3%

GWM H6 (2.0T MT 4WD) 142,744 142,578 142,244 134,704 140,901 140,113 140,488 140,363 140,300 140,147 140,244 140,244 140,022

MoM 0.0% -0.1% -0.2% -5.3% 4.6% -0.6% 0.3% -0.1% 0.0% -0.1% 0.1% 0.0% -0.2%


Beijing Benz C-class (C200L) 343,050 344,550 341,700 343,300 341,700 336,940 332,850 332,050 331,540 331,040 327,380 328,130 325,760

MoM 0.0% 0.4% -0.8% 0.5% -0.5% -1.4% -1.2% -0.2% -0.2% -0.2% -1.1% 0.2% -0.7%

YoY on a like-for-like basis 10.6% 10.3% 11.8% 12.6% 11.8% 10.3% -9.8% -7.5% -5.8% -4.0% -4.8% -4.3% -5.0%

Beijing Benz E-class (E260L) 461,938 466,070 463,400 462,080 461,580 459,940 455,600 450,050 449,800 449,500 447,200 444,200 440,450

MoM 0.4% 0.9% -0.6% -0.3% -0.1% -0.4% -0.9% -1.2% -0.1% -0.1% -0.5% -0.7% -0.8%

YoY on a like-for-like basis -1.9% -2.2% -2.6% -2.6% -11.5% -8.2% -4.4% -3.0% 0.1% -0.1% -1.6% -3.4% -4.7%

Beijing Hyundai Sonata (1.6T DLX ver.) 163,050 217,800 216,500 214,450 207,800 206,100 201,450 199,800 197,800 192,600 190,200 191,600 192,050

MoM -0.2% 33.6% -0.6% -0.9% -3.1% -0.8% -2.3% -0.8% -1.0% -2.6% -1.2% 0.7% 0.2%

YoY on a like-for-like basis -2.2% 29.3% 29.8% 30.9% 27.0% 26.7% 24.6% 23.3% 22.1% 19.1% 17.8% 17.3% 17.8%

Beijing Hyundai ix35 (2.0 GLX 2WD) 190,550 190,300 187,500 184,250 183,300 181,750 180,700 179,600 176,750 175,250 174,200 174,050 174,100

MoM 4.9% -0.1% -1.5% -1.7% -0.5% -0.8% -0.6% -0.6% -1.6% -0.8% -0.6% -0.1% 0.0%

YoY on a like-for-like basis 0.6% 0.0% -0.9% -2.1% -1.9% -1.9% -1.6% -2.0% -3.0% -3.4% -3.8% -4.2% -8.6%

GAC Honda Accord (2.4 CVT EX) 203,300 202,450 205,650 203,300 201,200 200,500 199,900 199,900 199,700 199,400 199,100 202,150 204,050

MoM 0.4% -0.4% 1.6% -1.1% -1.0% -0.3% -0.3% 0.0% -0.1% -0.2% -0.2% 1.5% 0.9%

YoY on a like-for-like basis -6.5% -6.9% -4.5% -4.1% -4.7% -4.7% -4.1% -3.7% -3.1% -2.1% -1.5% -0.2% 0.4%

GAC Honda Odyssey (2.4 CVT) 263,900 263,150 261,800 258,425 257,350 255,325 253,700 253,300 252,650 252,500 251,600 251,450 251,150

MoM -0.1% -0.3% -0.5% -1.3% -0.4% -0.8% -0.6% -0.2% -0.3% -0.1% -0.1% -0.1% -0.1%

YoY on a like-for-like basis 11.8% 10.6% 9.8% 9.0% 8.8% 7.9% -4.9% -4.6% -4.7% -4.5% -4.7% -4.8% -4.8%

GAC Honda City (1.5 AT) 93,470 91,210 90,500 89,900 88,750 87,175 85,850 85,400 85,550 85,550 85,000 84,550 84,550

MoM 0.1% -2.4% -0.8% -0.7% -1.3% -1.8% -1.5% -0.5% 0.2% 0.0% -1.2% -0.5% 0.0%


GAC Toyota Camry (2.5 luxury version) 207,700 204,400 199,820 195,275 193,675 191,200 190,650 189,420 188,320 188,120 190,160 192,000 191,875

MoM -2.0% -1.6% -2.2% -2.3% -0.8% -1.3% -0.3% -0.6% -0.6% -0.1% 1.1% 1.0% -0.1%

YoY on a like-for-like basis 13.5% 10.8% 9.1% 6.9% 6.4% 5.4% 5.6% 7.0% 7.0% 6.1% 7.2% -9.4% -7.6%

GAC Toyota Highlander (3.5 AT 4WD luxury version)

352,950 379,700 379,700 379,775 379,800 379,800 379,800 379,800 379,800 379,800 379,800 379,800 379,800

MoM -0.2% 7.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

YoY on a like-for-like basis -2.4% 4.6% 5.2% 5.4% 5.7% 5.8% 6.2% 6.4% 6.9% 7.3% 7.4% 7.4% 7.6%

Brilliance BMW 3-Series (320 Li) 310,400 307,280 303,280 299,980 294,450 288,300 285,400 281,950 278,667 295,700 289,950 290,000 289,700

MoM 1.1% -1.0% -1.3% -1.1% -1.8% -2.1% -1.0% -1.2% -1.2% -2.1% -1.9% 0.0% -0.1%


Brilliance BMW 5-Series (525 Li) 410,960 410,640 407,130 405,180 400,290 392,331 388,231 385,050 383,500 380,800 378,850 383,800 384,100

MoM 0.4% -0.1% -0.9% -0.5% -1.2% -2.0% -1.0% -0.8% -0.4% -0.7% -0.5% 1.3% 0.1%


Source: CAM

6


Global auto manufacturers: valuation comparisons

Name

Bloomberg Trading Share price Rating PER (x) PBR (x) EV/EBITDA(x) Div yield (%) ROE (%)

Code Currency 30-Mar-16

FY16E FY17E FY16E FY17E FY16E FY17E FY16E FY17E FY16E FY17E

China H-share listed

Geely Automobile Holdings Lt * 175 HK HKD 3.83 Buy 8.4 7.1 1.2 1.1 3.0 2.1 1.5 1.7 16.0 16.2

BAIC Motor Corp Ltd-H * 1958 HK HKD 5.94 Buy 5.9 5.2 0.9 0.8 4.2 3.7 7.3 8.3 16.6 17.0

BYD Co Ltd-H * 1211 HK HKD 44.35 Outperform 34.9 23.5 2.0 1.9 11.1 9.2 n.a. n.a. 6.7 7.9

Great Wall Motor Company-H * 2333 HK HKD 6.16 Hold 6.5 6.4 1.1 1.0 4.3 4.2 4.7 4.8 17.6 16.1

Guangzhou Automobile Group-H * 2238 HK HKD 7.98 Hold 9.5 9.2 1.0 1.0 19.1 13.7 3.4 3.5 11.4 10.8

Dongfeng Motor Grp Co Ltd-H * 489 HK HKD 9.76 Outperform 5.3 5.2 0.7 0.7 n.a. n.a. 2.8 2.9 14.7 13.4

Brilliance China Automotive * 1114 HK HKD 8.11 Buy 8.6 7.8 1.5 1.3 n.a. n.a. 1.7 1.9 18.5 17.4

China A-share listed

Byd Co Ltd -A

002594 CH CNY 58.80 NR 41.9 29.2 4.1 3.7 14.0 12.0 0.0 0.0 10.8 13.1

Guangzhou Automobile Group-A

601238 CH CNY 20.42 NR 24.3 19.4 3.1 2.7 28.6 39.6 0.0 0.0 13.2 14.4

Great Wall Motor Co Ltd-A

601633 CH CNY 9.13 NR 9.0 8.3 1.8 1.6 5.7 5.3 0.0 0.0 21.1 20.1

Saic Motor Corp Ltd-A

600104 CH CNY 19.76 NR 6.8 6.7 1.2 1.1 10.7 9.7 0.1 0.1 17.0 16.5

Chongqing Changan Automobi-B

200625 CH HKD 13.84 NR 4.6 4.2 1.3 1.0 14.3 20.8 0.0 0.1 29.6 27.4

Faw Car Company Limited-A

000800 CH CNY 14.20 NR 417.6 568.0 2.5 2.4 18.2 18.4 n.a. n.a. 3.6 3.4

Anhui Jianghuai Auto Co-A

600418 CH CNY 11.36 NR 11.7 9.6 1.6 1.4 9.4 8.4 0.0 0.1 15.2 16.4

Jiangsu Yueda Investment C-A

600805 CH CNY 8.55 NR 10.9 8.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Tianjin Faw Xiali Automobi-A

000927 CH CNY 6.47 NR n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Lifan Industry Group Co Lt-A

601777 CH CNY 11.79 NR 28.8 21.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Haima Automobile Group Co-A


Shenyang Jinbei Automotive-A


US

Ford Motor Co

F US USD 13.35 NR 6.8 6.6 1.5 1.3 3.2 3.0 0.0 0.0 25.6 22.1

General Motors Co

GM US USD 30.99 NR 5.6 5.4 1.1 0.9 2.3 2.2 0.0 0.0 21.2 18.2

Europe

Daimler Ag-Registered Shares

DAI GR EUR 68.30 NR 7.9 7.7 1.3 1.2 2.6 2.5 0.0 0.1 17.6 16.2

Bayerische Motoren Werke AG

BMW GR EUR 82.16 NR 8.5 8.2 1.2 1.1 7.0 6.7 0.0 0.0 14.7 13.7

Volkswagen AG

VoW GR EUR 128.45 NR 7.2 6.2 0.7 0.6 1.4 1.3 0.0 0.0 9.3 9.3

Fiat Chrysler Automobiles NV

FCA IM EUR 7.24 NR 5.6 4.3 0.7 0.6 1.4 1.3 0.0 0.0 12.6 15.2

Peugeot SA

UG FP EUR 15.36 NR 9.1 8.1 1.1 1.0 1.9 1.8 0.0 0.0 13.0 12.9

Renault SA

RNO FP EUR 87.84 NR 7.4 6.6 0.8 0.7 4.5 4.4 0.0 0.0 11.8 12.0

Japan

Honda Motor Co Ltd *, ** 7267 JP JPY 2992.50 Hold 9.8 9.1 0.7 0.7 7.0 6.6 0.0 0.0 7.8 7.9

Nissan Motor Co Ltd *, ** 7201 JP JPY 1040.00 Hold 7.7 7.4 0.9 0.8 2.8 2.7 0.0 0.0 11.4 11.1

Toyota Motor Corp *, ** 7203 JP JPY 6000.00 Outperform 8.0 8.2 1.0 1.0 9.0 9.1 0.0 0.0 13.5 12.0

Korea

Hyundai Motor Co * 005380 KS KRW 155500.00 Buy 6.1 5.6 0.5 0.4 4.2 3.8 3.0 3.2 10.3 10.2

Kia Motors Corp * 000270 KS KRW 49250.00 Buy 6.8 6.3 0.7 0.7 3.9 3.5 2.4 2.6 11.3 11.1

India

Tata Motors Ltd ** TTMT IN INR 388.60 NR 11.2 8.7 1.7 1.5 4.3 3.6 0.0 0.0 16.8 17.9

Mahindra & Mahindra Ltd ** MM IN INR 1219.75 NR 19.7 15.4 2.6 2.4 12.1 9.7 0.0 0.0 13.4 14.6

Total

Weighted average

11.1 10.7 1.2 1.1 6.3 6.2 0.4 0.4 14.3 13.5

High

417.6 568.0 4.1 3.7 28.6 39.6 7.3 8.3 29.6 27.4

Low

4.6 4.2 0.5 0.4 1.4 1.3 0.0 0.0 3.6 3.4

Median

8.4 7.8 1.2 1.0 4.5 4.4 0.0 0.0 13.5 14.4

Source: Bloomberg, *Daiwa forecasts Note: **Mar year-end

7


Daiwa’s Asia Pacific Research Directory

HONG KONG

Takashi FUJIKURA (852) 2848 4051 [email protected]

Regional Research Head

Kosuke MIZUNO (852) 2848 4949 / (852) 2773 8273

[email protected]

Regional Research Co-head

John HETHERINGTON (852) 2773 8787 [email protected]

Regional Deputy Head of Asia Pacific Research

Rohan DALZIELL (852) 2848 4938 [email protected]

Regional Head of Product Management

Kevin LAI (852) 2848 4926 [email protected]

Chief Economist for Asia ex-Japan; Macro Economics (Regional)

Junjie TANG (852) 2773 8736 [email protected]

Macro Economics (China)

Jonas KAN (852) 2848 4439 [email protected]

Head of Hong Kong and China Property

Cynthia CHAN (852) 2773 8243 [email protected]

Property (China)

Leon QI (852) 2532 4381 [email protected]

Banking (Hong Kong/China); Broker (China); Insurance (China)

Anson CHAN (852) 2532 4350 [email protected]

Consumer (Hong Kong/China)

Jamie SOO (852) 2773 8529 [email protected]

Gaming and Leisure (Hong Kong/China)

Dennis IP (852) 2848 4068 [email protected]

Power; Utilities; Renewables and Environment (Hong Kong/China)

John CHOI (852) 2773 8730 [email protected]

Head of Hong Kong and China Internet; Regional Head of Small/Mid Cap

Kelvin LAU (852) 2848 4467 [email protected]

Head of Automobiles; Transportation and Industrial (Hong Kong/China)

Brian LAM (852) 2532 4341 [email protected]

Transportation – Railway; Construction and Engineering (China)

Jibo MA (852) 2848 4489 [email protected]

Head of Custom Products Group

Thomas HO (852) 2773 8716 [email protected]

Custom Products Group

PHILIPPINES

Bianca SOLEMA (63) 2 737 3023 [email protected]

Utilities and Energy

SOUTH KOREA

Sung Yop CHUNG (82) 2 787 9157 [email protected]

Pan-Asia Co-head/Regional Head of Automobiles and Components; Automobiles; Shipbuilding; Steel

Mike OH (82) 2 787 9179 [email protected]

Banking; Capital Goods (Construction and Machinery)

Iris PARK (82) 2 787 9165 [email protected]

Consumer/Retail

SK KIM (82) 2 787 9173 [email protected]

IT/Electronics – Semiconductor/Display and Tech Hardware

Thomas Y KWON (82) 2 787 9181 [email protected]

Pan-Asia Head of Internet & Telecommunications; Software – Internet/On-line Game

Kevin JIN (82) 2 787 9168 [email protected]

Small/Mid Cap

TAIWAN

Rick HSU (886) 2 8758 6261 [email protected]

Head of Regional Technology; Head of Taiwan Research; Semiconductor/IC Design (Regional)

Christie CHIEN (886) 2 8758 6257 [email protected]

Banking; Insurance (Taiwan); Macro Economics (Regional)

Steven TSENG (886) 2 8758 6252 [email protected]

IT/Technology Hardware (PC Hardware)

Christine WANG (886) 2 8758 6249 [email protected]

IT/Technology Hardware (Automation); Pharmaceuticals and Healthcare; Consumer

Kylie HUANG (886) 2 8758 6248 [email protected]

IT/Technology Hardware (Handsets and Components)

Helen CHIEN (886) 2 8758 6254 [email protected]

Small/Mid Cap

INDIA

Punit SRIVASTAVA (91) 22 6622 1013 [email protected]

Head of India Research; Strategy; Banking/Finance

Saurabh MEHTA (91) 22 6622 1009 [email protected]

Capital Goods; Utilities

SINGAPORE

Ramakrishna MARUVADA (65) 6499 6543 [email protected]

Head of Singapore Research; Telecommunications (China/ASEAN/India)

Royston TAN (65) 6321 3086 [email protected]

Oil and Gas; Capital Goods

David LUM (65) 6329 2102 [email protected]

Banking; Property and REITs

Shane GOH (65) 64996546 [email protected]

Small/Mid Cap (Singapore)

Jame OSMAN (65) 6321 3092 [email protected]

Telecommunications (ASEAN/India); Pharmaceuticals and Healthcare; Consumer (Singapore)

8


Daiwa’s Offices

Office / Branch / Affiliate Address Tel Fax

DAIWA SECURITIES GROUP INC

HEAD OFFICE Gran Tokyo North Tower, 1-9-1, Marunouchi, Chiyoda-ku, Tokyo, 100-6753 (81) 3 5555 3111 (81) 3 5555 0661

Daiwa Securities Trust Company One Evertrust Plaza, Jersey City, NJ 07302, U.S.A. (1) 201 333 7300 (1) 201 333 7726

Daiwa Securities Trust and Banking (Europe) PLC (Head Office) 5 King William Street, London EC4N 7JB, United Kingdom (44) 207 320 8000 (44) 207 410 0129

Daiwa Europe Trustees (Ireland) Ltd Level 3, Block 5, Harcourt Centre, Harcourt Road, Dublin 2, Ireland (353) 1 603 9900 (353) 1 478 3469

Daiwa Capital Markets America Inc. New York Head Office Financial Square, 32 Old Slip, New York, NY10005, U.S.A. (1) 212 612 7000 (1) 212 612 7100

Daiwa Capital Markets America Inc. San Francisco Branch 555 California Street, Suite 3360, San Francisco, CA 94104, U.S.A. (1) 415 955 8100 (1) 415 956 1935

Daiwa Capital Markets Europe Limited, London Head Office 5 King William Street, London EC4N 7AX, United Kingdom (44) 20 7597 8000 (44) 20 7597 8600

Daiwa Capital Markets Europe Limited, Frankfurt Branch Neue Mainzer Str. 1, 60311 Frankfurt/Main, Germany (49) 69 717 080 (49) 69 723 340

Daiwa Capital Markets Europe Limited, Paris Representative Office 17, rue de Surène 75008 Paris, France (33) 1 56 262 200 (33) 1 47 550 808

Daiwa Capital Markets Europe Limited, Geneva Branch 50 rue du Rhône, P.O.Box 3198, 1211 Geneva 3, Switzerland (41) 22 818 7400 (41) 22 818 7441

Daiwa Capital Markets Europe Limited, Moscow Representative Office

Midland Plaza 7th Floor, 10 Arbat Street, Moscow 119002, Russian Federation

(7) 495 641 3416 (7) 495 775 6238

Daiwa Capital Markets Europe Limited, Bahrain Branch 7th Floor, The Tower, Bahrain Commercial Complex, P.O. Box 30069, Manama, Bahrain

(973) 17 534 452 (973) 17 535 113

Daiwa Capital Markets Hong Kong Limited Level 28, One Pacific Place, 88 Queensway, Hong Kong (852) 2525 0121 (852) 2845 1621

Daiwa Capital Markets Singapore Limited 6 Shenton Way #26-08, OUE Downtown 2, Singapore 068809, Republic of Singapore

(65) 6220 3666 (65) 6223 6198

Daiwa Capital Markets Australia Limited Level 34, Rialto North Tower, 525 Collins Street, Melbourne, Victoria 3000, Australia

(61) 3 9916 1300 (61) 3 9916 1330

DBP-Daiwa Capital Markets Philippines, Inc 18th Floor, Citibank Tower, 8741 Paseo de Roxas, Salcedo Village, Makati City, Republic of the Philippines

(632) 813 7344 (632) 848 0105

Daiwa-Cathay Capital Markets Co Ltd 14/F, 200, Keelung Road, Sec 1, Taipei, Taiwan, R.O.C. (886) 2 2723 9698 (886) 2 2345 3638

Daiwa Securities Capital Markets Korea Co., Ltd. 20 Fl.& 21Fl. One IFC, 10 Gukjegeumyung-Ro, Yeongdeungpo-gu, Seoul, Korea

(82) 2 787 9100 (82) 2 787 9191

Daiwa Securities Co. Ltd., Beijing Representative Office Room 301/302，Kerry Center，1 Guanghua Road，Chaoyang District，

Beijing 100020, People’s Republic of China

(86) 10 6500 6688 (86) 10 6500 3594

Daiwa (Shanghai) Corporate Strategic Advisory Co. Ltd. 44/F, Hang Seng Bank Tower, 1000 Lujiazui Ring Road, Pudong, Shanghai China 200120 , People’s Republic of China

(86) 21 3858 2000 (86) 21 3858 2111

Daiwa Securities Co. Ltd., Bangkok Representative Office 18th Floor, M Thai Tower, All Seasons Place, 87 Wireless Road,

Lumpini, Pathumwan, Bangkok 10330, Thailand (66) 2 252 5650 (66) 2 252 5665

Daiwa Capital Markets India Private Ltd 10th Floor, 3 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra East, Mumbai – 400051, India

(91) 22 6622 1000 (91) 22 6622 1019

Daiwa Securities Co. Ltd., Hanoi Representative Office Suite 405, Pacific Palace Building, 83B, Ly Thuong Kiet Street, Hoan Kiem Dist. Hanoi, Vietnam

(84) 4 3946 0460 (84) 4 3946 0461

DAIWA INSTITUTE OF RESEARCH LTD

HEAD OFFICE 15-6, Fuyuki, Koto-ku, Tokyo, 135-8460, Japan (81) 3 5620 5100 (81) 3 5620 5603

MARUNOUCHI OFFICE Gran Tokyo North Tower, 1-9-1, Marunouchi, Chiyoda-ku, Tokyo, 100-6756 (81) 3 5555 7011 (81) 3 5202 2021

New York Research Center 11th Floor, Financial Square, 32 Old Slip, NY, NY 10005-3504, U.S.A. (1) 212 612 6100 (1) 212 612 8417

London Research Centre 3/F, 5 King William Street, London, EC4N 7AX, United Kingdom (44) 207 597 8000 (44) 207 597 8550

9


Important Disclosures and Disclaimer

This publication is produced by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, and distributed by Daiwa Securities Group Inc. and/or its non-U.S. affiliates, except to the extent expressly provided herein. This publication and the contents hereof are intended for information purposes only, and may be subject to change without further notice. Any use, disclosure, distribution, dissemination, copying, printing or reliance on this publication for any other purpose without our prior consent or approval is strictly prohibited. Neither Daiwa Securities Group Inc. nor any of its respective parent, holding, subsidiaries or affiliates, nor any of its respective directors, officers, servants and employees, represent nor warrant the accuracy or completeness of the information contained herein or as to the existence of other facts which might be significant, and will not accept any responsibility or liability whatsoever for any use of or reliance upon this publication or any of the contents hereof. Neither this publication, nor any content hereof, constitute, or are to be construed as, an offer or solicitation of an offer to buy or sell any of the securities or investments mentioned herein in any country or jurisdiction nor, unless expressly provided, any recommendation or investment opinion or advice. Any view, recommendation, opinion or advice expressed in this publication may not necessarily reflect those of Daiwa Securities Group Inc., and/or its affiliates nor any of its respective directors, officers, servants and employees except where the publication states otherwise. This research report is not to be relied upon by any person in making any investment decision or otherwise advising with respect to, or dealing in, the securities mentioned, as it does not take into account the specific investment objectives, financial situation and particular needs of any person. Daiwa Securities Group Inc., its subsidiaries or affiliates, or its or their respective directors, officers and employees from time to time have trades as principals, or have positions in, or have other interests in the securities of the company under research including market making activities, derivatives in respect of such securities or may have also performed investment banking and other services for the issuer of such securities. The following are additional disclosures. Ownership of Securities For “Ownership of Securities” information, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. Investment Banking Relationship For “Investment Banking Relationship”, please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Japan

Daiwa Securities Co. Ltd. and Daiwa Securities Group Inc. Daiwa Securities Co. Ltd. is a subsidiary of Daiwa Securities Group Inc. Investment Banking Relationship Within the preceding 12 months, the subsidiaries and/or affiliates of Daiwa Securities Group Inc. * has lead-managed public offerings and/or secondary offerings (excluding straight bonds) of the securities of the following companies: Modern Land (China) Co. Ltd (1107 HK); econtext Asia Ltd (1390 HK); GF Securities Co Ltd (1776 HK); Mirae Asset Life Insurance Co Ltd (085620 KS); China Reinsurance Group Corporation (1508 HK).

*Subsidiaries of Daiwa Securities Group Inc. for the purposes of this section shall mean any one or more of: Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司), Daiwa

Capital Markets Singapore Limited, Daiwa Capital Markets Australia Limited, Daiwa Capital Markets India Private Limited, Daiwa-Cathay Capital Markets Co., Ltd., Daiwa Securities Capital Markets Korea Co., Ltd.

Hong Kong

This research is distributed in Hong Kong by Daiwa Capital Markets Hong Kong Limited (大和資本市場香港有限公司) (“DHK”) which is regulated by the Hong Kong Securities and Futures

Commission. Recipients of this research in Hong Kong may contact DHK in respect of any matter arising from or in connection with this research. Relevant Relationship (DHK) DHK may from time to time have an individual employed by or associated with it serves as an officer of any of the companies under its research coverage.

Singapore This research is distributed in Singapore by Daiwa Capital Markets Singapore Limited and it may only be distributed in Singapore to accredited investors, expert investors and institutional investors as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. By virtue of distribution to these category of investors, Daiwa Capital Markets Singapore Limited and its representatives are not required to comply with Section 36 of the Financial Advisers Act (Chapter 110) (Section 36 relates to disclosure of Daiwa Capital Markets Singapore Limited’s interest and/or its representative’s interest in securities). Recipients of this research in Singapore may contact Daiwa Capital Markets Singapore Limited in respect of any matter arising from or in connection with the research.

Australia

This research is distributed in Australia by Daiwa Capital Markets Australia Limited and it may only be distributed in Australia to wholesale investors within the meaning of the Corporations Act. Recipients of this research in Australia may contact Daiwa Capital Markets Stockbroking Limited in respect of any matter arising from or in connection with the research.

India This research is distributed in India to Institutional Clients only by Daiwa Capital Markets India Private Limited (Daiwa India) which is an intermediary registered with Securities & Exchange Board of India as a Stock Broker, Merchant Bank and Research Analyst. Daiwa India, its Research Analyst and their family members and its associates do not have any financial interest save as disclosed or other undisclosed material conflict of interest in the securities or derivatives of any companies under coverage. Daiwa India and its associates may have received compensation for any products other than Investment Banking (as disclosed) or brokerage services from the subject company in this report during the past 12 months. Unless otherwise stated in BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action, Daiwa India and its associates do not hold more than 1% of any companies covered in this research report. There is no material disciplinary action against Daiwa India by any regulatory authority impacting equity research analysis activities as of the date of this report.

Taiwan This research is distributed in Taiwan by Daiwa-Cathay Capital Markets Co., Ltd and it may only be distributed in Taiwan to institutional investors or specific investors who have signed recommendation contracts with Daiwa-Cathay Capital Markets Co., Ltd in accordance with the Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers. Recipients of this research in Taiwan may contact Daiwa-Cathay Capital Markets Co., Ltd in respect of any matter arising from or in connection with the research.

Philippines This research is distributed in the Philippines by DBP-Daiwa Capital Markets Philippines, Inc. which is regulated by the Philippines Securities and Exchange Commission and the Philippines Stock Exchange, Inc. Recipients of this research in the Philippines may contact DBP-Daiwa Capital Markets Philippines, Inc. in respect of any matter arising from or in connection with the research. DBP-Daiwa Capital Markets Philippines, Inc. recommends that investors independently assess, with a professional advisor, the specific financial risks as well as the legal, regulatory, tax, accounting, and other consequences of a proposed transaction. DBP-Daiwa Capital Markets Philippines, Inc. may have positions or may be materially interested in the securities in any of the markets mentioned in the publication or may have performed other services for the issuers of such securities. For relevant securities and trading rules please visit SEC and PSE links at http://www.sec.gov.ph/irr/AmendedIRRfinalversion.pdf and http://www.pse.com.ph/ respectively.

Thailand

This research is distributed to only institutional investors in Thailand primarily by Thanachart Securities Public Company Limited (“TNS”).

This report is prepared by analysts who are employed by Daiwa Securities Group Inc. and/or its non-U.S. affiliates. This report is provided to you for informational purposes only and it is not, and is not to be construed as, an offer or an invitation to make an offer to sell or buy any securities. Neither Thanachart Securities Public Company Limited, Daiwa Securities Group Inc. nor any of their respective parent, holding, subsidiaries or affiliates, nor any of their respective directors, officers, servants and employees accept any liability whatsoever for any direct or consequential loss arising from any use of this research or its contents.

The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable. However, Thanachart Securities Public Company Limited, Daiwa Securities Group Inc. nor any of their respective parent, holding, subsidiaries or affiliates, nor any of their respective directors, officers, servants and employees make no representation or warranty, express or implied, as to their accuracy or completeness. Expressions of opinion herein are subject to change without notice. The use of any information, forecasts and opinions contained in this report shall be at the sole discretion and risk of the user.

Daiwa Securities Group Inc. and/or its non-U.S. affiliates perform and seek to perform business with companies covered in this research. Thanachart Securities Public Company Limited, Daiwa Securities Group Inc., their respective parent, holding, subsidiaries or affiliates, their respective directors, officers, servants and employees may have positions and financial interest in securities mentioned in this research. Thanachart Securities Public Company Limited, Daiwa Securities Group Inc., their respective parent, holding, subsidiaries or affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in this research. Therefore, investors should be aware of conflict of interest that may affect the objectivity of this research.

United Kingdom This research report is produced by Daiwa Securities Co. Ltd. and/or its affiliates and is distributed in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority (“FCA”) and is a member of the London Stock Exchange and Eurex. This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available. Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory.

Germany

https://daiwa3.bluematrix.com/sellside/Disclosures.action


http://www.sec.gov.ph/irr/AmendedIRRfinalversion.pdf%20and%20http:/www.pse.com.ph/

http://www.uk.daiwacm.com/about-us/corporate-governance-regulatory

10


This document is distributed in Germany by Daiwa Capital Markets Europe Limited, Niederlassung Frankfurt which is regulated by BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) for the conduct of business in Germany.

Bahrain This research material is distributed in Bahrain by Daiwa Capital Markets Europe Limited, Bahrain Branch, regulated by The Central Bank of Bahrain and holds Investment Business Firm – Category 2 license and having its official place of business at the Bahrain World Trade Centre, South Tower, 7th floor, P.O. Box 30069, Manama, Kingdom of Bahrain. Tel No. +973 17534452 Fax No. +973 535113

United States This report is distributed in the U.S. by Daiwa Capital Markets America Inc. (DCMA). It may not be accurate or complete and should not be relied upon as such. It reflects the preparer’s views at the time of its preparation, but may not reflect events occurring after its preparation; nor does it reflect DCMA’s views at any time. Neither DCMA nor the preparer has any obligation to update this report or to continue to prepare research on this subject. This report is not an offer to sell or the solicitation of any offer to buy securities. Unless this report says otherwise, any recommendation it makes is risky and appropriate only for sophisticated speculative investors able to incur significant losses. Readers should consult their financial advisors to determine whether any such recommendation is consistent with their own investment objectives, financial situation and needs. This report does not recommend to U.S. recipients the use of any of DCMA’s non-U.S. affiliates to effect trades in any security and is not supplied with any understanding that U.S. recipients of this report will direct commission business to such non-U.S. entities. Unless applicable law permits otherwise, non-U.S. customers wishing to effect a transaction in any securities referenced in this material should contact a Daiwa entity in their local jurisdiction. Most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as a process for doing so. As a result, the securities discussed in this report may not be eligible for sales in some jurisdictions. Customers wishing to obtain further information about this report should contact DCMA: Daiwa Capital Markets America Inc., Financial Square, 32 Old Slip, New York, New York 10005 (Tel no. 212-612-7000).

Ownership of Securities For “Ownership of Securities” information please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Investment Banking Relationships For “Investment Banking Relationships” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. DCMA Market Making For “DCMA Market Making” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action.

Research Analyst Conflicts For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this report have no financial interest in securities of the issuers covered in the report, are not (nor are any members of their household) an officer, director or advisory board member of the issuer(s) covered in the report, and are not aware of any material relevant conflict of interest involving the analyst or DCMA, and did not receive any compensation from the issuer during the past 12 months except as noted: no exceptions.

Research Analyst Certification For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the firm producing the report if no individual analysts[s] is named on the report); and no part of the compensation of such analyst(s) (or no part of the compensation of the firm if no individual analyst[s)] is named on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report.

The following explains the rating system in the report as compared to relevant local indices, unless otherwise stated, based on the beliefs of the author of the report. "1": the security could outperform the local index by more than 15% over the next 12 months. "2": the security is expected to outperform the local index by 5-15% over the next 12 months. "3": the security is expected to perform within 5% of the local index (better or worse) over the next 12 months. "4": the security is expected to underperform the local index by 5-15% over the next 12 months. "5": the security could underperform the local index by more than 15% over the next 12 months. Disclosure of investment ratings

Rating Percentage of total

Buy* 63.9%

Hold** 21.3%

Sell*** 14.8%

Source: Daiwa

Notes: data is for single-branded Daiwa research in Asia (ex Japan) and correct as of 31 December 2015. * comprised of Daiwa’s Buy and Outperform ratings. ** comprised of Daiwa’s Hold ratings. *** comprised of Daiwa’s Underperform and Sell ratings. Additional information may be available upon request.

Japan - additional notification items pursuant to Article 37 of the Financial Instruments and Exchange Law (This Notification is only applicable where report is distributed by Daiwa Securities Co. Ltd.)

If you decide to enter into a business arrangement with us based on the information described in materials presented along with this document, we ask you to pay close attention to the following items.

In addition to the purchase price of a financial instrument, we will collect a trading commission* for each transaction as agreed beforehand with you. Since commissions may be included in the purchase price or may not be charged for certain transactions, we recommend that you confirm the commission for each transaction.

In some cases, we may also charge a maximum of ¥ 2 million (including tax) per year as a standing proxy fee for our deposit of your securities, if you are a non-resident of Japan.

For derivative and margin transactions etc., we may require collateral or margin requirements in accordance with an agreement made beforehand with you. Ordinarily in such cases, the amount of the transaction will be in excess of the required collateral or margin requirements.

There is a risk that you will incur losses on your transactions due to changes in the market price of financial instruments based on fluctuations in interest rates, exchange rates, stock prices, real estate prices, commodity prices, and others. In addition, depending on the content of the transaction, the loss could exceed the amount of the collateral or margin requirements.

There may be a difference between bid price etc. and ask price etc. of OTC derivatives handled by us.

Before engaging in any trading, please thoroughly confirm accounting and tax treatments regarding your trading in financial instruments with such experts as certified public accountants. *The amount of the trading commission cannot be stated here in advance because it will be determined between our company and you based on current market conditions and the content of each transaction etc.

When making an actual transaction, please be sure to carefully read the materials presented to you prior to the execution of agreement, and to take responsibility for your own decisions regarding the signing of the agreement with us.

Corporate Name: Daiwa Securities Co. Ltd. Financial instruments firm: chief of Kanto Local Finance Bureau (Kin-sho) No.108 Memberships: Japan Securities Dealers Association, The Financial Futures Association of Japan Japan Securities Investment Advisers Association Type II Financial Instruments Firms Association






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