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14 November 2011
Gunjan Prithyani
(91-22) 6157-3593 gunjan.x.prithyani@jpmorgan.com J.P. Morgan India Private Limited
Mar 11
Jul 11
Nov 11
Portfolio Stance Underweight Neutral Neutral Overweight Overweight Overweight Neutral Underweight Overweight Underweight
Picks Mahindra & Mahindra ITC Reliance Industries, ONGC HDFC Bank, Kotak Mahindra Bank, Indusind Bank Glenmark Pharma L&T, Siemens TCS, Wipro Hindalco, Tata Steel Bharti Airtel Tata Power, Power Grid
Avoids Maruti Suzuki, Titan, Pantaloon Hindustan Unilever, Dabur State owned R&M companies, Coal India IDFC, SKS, BoI ABB Infosys ACC, Ambuja, IPPs
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. www.morganmarkets.com
But soft equity markets have resulted in only INR 11 bn being raised so far this fiscal. There are concerns over achieving the budgeted targets in the five months through to the end of the fiscal year. Yields on the benchmark 10 year bond have risen by nearly 60 bps over the recent past on expectations that the fiscal deficit target may not be adhered to. Market participants have been considering the other options available to the Government to achieve the budgeted target, in the event investor sentiment does not improve over the near term. These include Cash rich State owned companies: 1. Paying out a substantial cash dividend to shareholders, including the Government. 2. Partially buying back the Governments stake in these companies. 3. Picking up Government stakes in other state owned companies. We believe that investor reaction to these options would be varied. Option 1 would be most preferred, particularly over the near term, as it would put cash back into the hands of the Government and minority shareholders as well. Options 2 and 3 however may not enthuse minority shareholders.
Dividend payouts by cash rich state owned companies should be well received. but selective buy backs and increased cross holdings may not enthuse minority share holders
The response to Option 2 would largely depend on the pricing for the buyback. Current SEBI guidelines stipulate that the buyback price should be guided by the average market price prevailing for the last 6 months, the book value and the intrinsic value of the stock. Given the recent downward spiral in stock prices, these buybacks would in all probability have to be done at above current market prices. Also special permission may be required to allow only the Government to tender stock as part of the buyback program. These terms would prima facie appear unfair to the minority shareholders (unless specific care is taken to mitigate the adverse impact arising). Option 3 is likely to be viewed by minority shareholders with skepticism as well, given the limited advantage to be derived from allocating capital to cross holdings, at least over the near term.
Dec-10
Mar-11 SENSEX
Jun-11
Sep-11
We present below a list of the large cash rich state owned companies, along with an assessment from our sector analysts on their ability to participate in the Governments divestment process.
Table 1: PSU Companies with relatively higher cash holding
Company Name Cash, Bank Balance + Investments as on Mar 31st 2011 ( INR mn) 469,260 297,931 285,301 181,951 173,637 126,892 100,693 82,636 72,299 65,313 57,575 53,855 51,269 2,018,612 Analyst estimate of deployable divestment fund ( INR mn) 350,000 178,758 0 0 NA 76,135 60,000 NA NA 50,000 0 NA 0 714,894 NALCO has capital expenditure plans including Ph III expansion and setting up smelter in Indonesia Comment
Coal India Ltd. Oil & Natural Gas Corpn. Ltd. N T P C Ltd. Steel Authority Of India Ltd. N M D C Ltd. Oil India Ltd. Bharat Heavy Electricals Ltd. N H P C Ltd. M M T C Ltd. Bharat Electronics Ltd. Power Grid Corpn. Of India Ltd. Neyveli Lignite Corpn. Ltd. National Aluminium Co. Ltd. Total
Source: J.P. Morgan, CMIE
Deployable divestment fund is c.75% of cash, as companies would keep a cash cushion, especially in respect of statutory liabilities (excluding non-cash OBR adj. of Rs146bn) Deployable divestment fund is c.60% of cash balance, as companies would keep a cash cushion, especially in respect of statutory liabilities like site restoration fund and funding overseas acquisitions Cash balances required to meet a) immediate debt repayment needs and b) equity commitments towards growth plans of 45GW / mining acquisitions SAIL has a large capital expenditure plan and was net debt as of Sep-11 NMDC has announced a plan to set up 3MT steel plant in Chhattishgarh Deployable divestment fund is c.60% of cash balance, as companies would keep a cash cushion, and it is also actively looking at overseas acquisitions Capacity expansions mostly done, but part of cash would be required for equity commitments towards JVs with state gencos Significant capital expenditure is over; a large part of cash can be invested. Internal funding needs are huge.12th Plan capital expenditure target of Rs. 1000 bn and their business will remain FCF negative over this period.
Indian Govt. Ownership (%) 74.1 90.0 84.5 90.0 67.7 99.3 69.4 85.8 78.4 86.4 87.2 93.6 75.9
Market Capitalization ( INR mn) 2,274,049 2,061,030 1,432,237 872,238 793,267 642,400 486,353 436,418 310,054 291,528 154,377 131,029 126,260
Early this year, state owned companies that were expected to be part of the divestment program included ONGC, SAIL, IOC, Hindustan Copper, BHEL and NBCC.
Approach for Disinvestment On 5th November 2009, Government approved the following action plan for disinvestment in profit making government companies: Already listed profitable CPSEs (not meeting mandatory shareholding of 10%) are to be made compliant by Offer for Sale by Government or by the CPSEs through issue of fresh shares or a combination of both Unlisted CPSEs with no accumulated losses and having earned net profit in three preceding consecutive years are to be listed Follow-on public offers would be considered taking into consideration the needs for capital investment of CPSE, on a case by case basis, and Government could simultaneously or independently offer a portion of its equity shareholding In all cases of disinvestment, the Government would retain at least 51% equity and the management control All cases of disinvestment are to be decided on a case by case basis
The Department of Disinvestment is to identify CPSEs in consultation with respective administrative Ministries and submit proposal to Government in cases requiring Offer for Sale of Government equity
Figure 2: Amount raised through disinvestment (Rs. bn)
400 300 200 100 0
INR bn
Budgeted
Source: Ministry of Disinvestment
Actual
Sale of minority shareholding Sale of majority shareholding of one CPSE to another CPSE Strategic sale Receipts from other related transactions Sale of residual shareholding in disinvested companies
82%
Source: Ministry of Disinvestment
Within the divestment process, the government initially tried various options including strategic sales, either of the corporation or specific assets i.e. privatization, sale of a majority stake to another state-owned company and minority stake sales to financial investors. However, given the political opposition to privatization, Governments across the political spectrum have over the last few years reconciled to minority stake sales to financial investors. Note that minority stake sales have accounted for 82% of the total fund raised via divestment. Majority stake sale from one CPSE to another There are only three instances where Government divested itself of a majority shareholding in a CPSE by selling the shares to another CPSE without going through a process of competitive bidding. Subsequently, it was felt that disinvestment by sale of shares to CPSEs did not result in any of the advantages normally associated with the block transfer of majority shareholding, since the public sector character of the company did not change. Thereafter, Government on 18th September, 2002 issued guidelines that the CPSEs should be prohibited from participating in disinvestment transactions, unless an exemption was specifically given in a particular case.
FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01
25,000 25,000 35,000 40,000 70,000 50,000 48,000 50,000 100,000 100,000
1,055 5,540
FY02
120,000
30,901
25,676
56,577
FY03
120,000
22,527
10,953
33,480
145,000 40,000 No target fixed No target fixed No target fixed No target fixed No target fixed 400,000 400,000
3,421 -
648 21 -
Minority shares sold in Dec, 1991 and Feb, 1992 by auction method in bundles of "very good", "good" and "average" companies Shares sold separately for each company by auction method. Equity of 6 companies sold by auction method but proceeds received in 94-95. Shares sold by auction method. Shares sold by auction method. GDR -VSNL GDR -MTNL GDR-VSNL; Domestic offerings of CONCOR and GAIL; Cross purchase by 3 Oil sector companies i.e. GAIL, ONGC and IOC. GDR-GAIL; Domestic offering of VSNL; capital reduction and dividend from BALCO; Strategic sale of MFIL. Sale of KRL, CPCL and BRPL to CPSEs; Strategic sale of BALCO and LJMC. Strategic sale of CMC, HTL, VSNL, IBP, PPL, hotel properties of ITDC and HCI, slump sale of Hotel Centaur Juhu Beach, Mumbai and leasing of Ashok Bangalore; Special dividend from VSNL, STC and MMTC; sale of shares to VSNL employees. Strategic sale of HZL, IPCL, hotel properties of ITDC, slump sale of Centaur Hotel Mumbai Airport, Mumbai; Premium for renunciation of rights issue in favour of SMC ; Put Option of MFIL; Sale of shares to employees of HZL and CMC. Strategic sale of JCL; Call Option of HZL; Offer for Sale of MUL, IBP, IPCL, CMC, DCI, GAIL and ONGC; Sale of shares of ICI Ltd. Offer for Sale of NTPC and spill over of ONGC; sale of shares to IPCL employees. Sale of MUL shares to Indian public sector financial institutions & banks and employees Sale of MUL shares to public sector financial institutions, public sector banks and Indian mutual funds.IPO of REC and PGC.
Minority shares sold in SJVN, EIL, COAL INDIA , PGCIL, MOIL , SCI PFC
828,185
Source: Divestment Ministry
13,172
63,444
40,052
63,983
1,008,835
3mth 0 5 (7) (3) (4) (7) 2 13 11 5 (3) 3 (11) 14 (1) (3) (3)
6 mth (14) (8) (12) (26) (18) (17) (7) 17 15 (10) (8) 3 (22) (4) (19) (9) (11)
12 mth (7) 2 (11) (19) (16) (27) (17) 3 13 (18) (22) (7) (35) (5) (29) (52) (28)
RBI hiked benchmark rates by a cumulative 150 in last four policy meetings 8-Jun-11 7-Jul-11 5-Aug-11 5-Sep-11 4-Oct-11 2-Nov-11
15,000 10-May-11
Source: Bloomberg, J.P. Morgan
In our last monthly update, India Stratoscope - Valuations revisited (October 10th), we had opined that valuations had turned appealing and Indian equities could deliver returns of about 15% through to the end of the fiscal year. We maintain that view.
We remain positive through to the end of the fiscal year....but expect consolidation over the near term, after the sharp move up last month.
But near term, we expect the markets to trade sideways, with more volatility to come as: 1) Indian equities have rallied sharply by about 5% over the last month. 2) Near term data on growth is expected to be disappointing. The weak data on growth also has implications for tax collections and the fiscal deficit. 3) Considerable work remains to be done to achieve a resolution to the credit crises in Europe and the outlook for global growth remains patchy. From a local perspective, the RBI signaling a pause to monetary tightening should put a floor to market valuations. Also inflation is expected to roll over from December onwards, off a high base effect. Current policy rates provide the RBI with considerable flexibility to act in the event growth tails off sharply. A meaningful correction in global prices and / or progress on key progress reforms (the Winter session of Parliament starts on November 22nd) would be key re-rating triggers to look forward to.
Portfolio Stance
Our portfolio strategy is premised on the following key views: 1) Global macro data points are likely to remain weak over the near term and sentiment volatile as policy makers grapple with the issues on hand. Our Chief Asian and Emerging Market Strategist Adrian Mowat maintains an Underweight stance on Commodities and Energy.
Our sectoral allocation is biased towards local sectors vs. global sectors.
Our economics team is cautious on global growth outlook. Global real GDP growth is expected to moderate from 2.6% in CY2011E to 2% in CY2012E, with a large part of the forecast slowdown to be front ended. 2) Growth in India is slowing as evidenced by a number of high frequency data indicators IIP, PMI (both Industrial and Services), Auto sales, Cement dispatches, credit growth, etc. 3) The medium term outlook for imported inflation is also improving with the fall in global commodity prices. India, with its current account deficit and under investment in infrastructure is a major beneficiary of lower commodity prices. A better than forecast monsoon also augurs well for food inflation. Slower growth and moderation in inflation should with a lag mark the end of the tightening cycle. In the backdrop of the above, our sectoral stance is biased towards local sectors vs. global sectors. Valuations for some local sectors, particularly Financials and Industrials have almost reached levels seen during the global financial crises (please refer to Annexure 2 for sectoral valuation charts). We remain wary of the Discretionary space though as the extent of slowdown suggested by high frequency data points do not appear to be yet factored into earnings estimates. We view the space as a late cycle play. We are not however shedding our defensive bias yet as indicated by our continuing Overweight on Telecom and Healthcare as also our Neutral stance on Staples. The key risks to our sector strategy are higher commodity / energy prices.
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Portfolio Stance Underweight Neutral Neutral Overweight Overweight Overweight Neutral Underweight Overweight Underweight
Picks Mahindra & Mahindra ITC Reliance Industries, ONGC HDFC Bank, Kotak Mahindra Bank, Indusind Bank Glenmark Pharma L&T, Siemens TCS, Wipro Hindalco, Tata Steel Bharti Airtel Tata Power, Power Grid
Avoids Maruti Suzuki, Titan, Pantaloon Hindustan Unilever, Dabur State owned R&M companies, Coal India IDFC, SKS, BoI ABB Infosys ACC, Ambuja, IPPs
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Annexure 1 - Valuations
Figure 5: MSCI India - P/B and ROE
Valuations on a P/B basis are at a 20% discount to the last decades average. Forecast RoEs are expected to remain largely unchanged at about 17%.
24 22 20 18 16 14
1.5 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11
Source: MSCI, IBES, Bloomberg
24
18
12
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10 Nov-09
Nov-94
Nov-95
Nov-96
Nov-97
Nov-98
Nov-99
Nov-00
Nov-01
Nov-02
Nov-03
Nov-04
Nov-05
Nov-06
Nov-07
Nov-08
Nov-10
12
Nov-11
2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 0.9 0.7 0.5
Equities Expensive
Bonds Expensive
Mar-11
Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities
Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities
FY11 15 32 18 13 22 19 26 19 4 11 16.6
FY13(E) 15 34 17 15 17 21 26 16 4 12 16.9
FY11 15.0 18.2 7.9 NA 20.8 12.8 18.2 8.9 7.6 13.1 11.3
FY13(E) 12.1 13.2 6.8 NA 12.7 7.1 13.4 6.1 6.3 8.3 8.3
FY11 3.8 1.7 1.9 1.2 1.1 0.5 1.1 1.6 0.6 1.1 1.2
FY13(E) 3.8 2.1 2.4 1.6 1.1 0.6 1.0 2.0 2.5 1.2 1.5
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PE re/derating (23) (29) (1) (17) (40) (16) (23) (16) (14) (29) (23)
Performance (16) 8 12 (18) (21) (5) (34) (4) (25) (58) (27)
16 12 8
An analysis of historic valuation trends, over the last six years, indicates that current market valuations have derated to below one standard deviation lower than average levels. Key sectoral valuation trends can be summarized as follows: a) Most sectors are trading at between their historic average and one standard deviation lower.
b) Consumer Staples is the only sector trading at above one standard deviation higher than the historic range. c) Industrials, Financials and Consumer Discretionary are trading below one standard deviation lower than the historical range.
25
20
15
14
10 6
12 6
20 18 14 12 6 8
16 12
6 4
15
16
9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 6.4
7.3 6.3
7.6
09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4
Source: J.P. Morgan estimates
% 70 60 50 40 30 20 10 0 (10) Jan 08
IIP
Jul 08
Jan 09
Capital goods
Jul 09
Jan 10
Consumer durable
Jul 10
Jan 11
Jul 11
Consumer non-durable
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Credit growth (19% oya) has been moderating. Deposit growth at 16%oya, however continues to lag.
14 12 10 8 6 4 2 0 (2) Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 WPI ( % yoy)
Source: J.P. Morgan Economics
10 9 8 7 6 5
INR depreciated 2% vs. the US$ over the month. The move was largely led by heightened risk aversion and a strong USD. FX reserves remained largely unchanged over the month.
INR/ US$
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Companies Recommended in This Report (all prices in this report as of market close on 11 November 2011) ACC Limited (ACC.BO/Rs1218.60/Underweight), Ambuja Cements Limited (ABUJ.BO/Rs163.30/Underweight), Bank of India (BOI.BO/Rs331.80/Underweight), Bharti Airtel Limited (BRTI.BO/Rs395.60/Overweight), Dabur India Limited (DABU.BO/Rs98.75/Neutral), Glenmark Pharmaceuticals Ltd. (GLEN.NS/Rs333.40/Overweight), HDFC Bank (HDBK.BO/Rs464.05/Overweight), Hindalco Industries (HALC.BO/Rs128.70/Overweight), Hindustan Unilever Limited (HLL.BO/Rs395.65/Underweight), IDFC (IDFC.BO/Rs118.75/Neutral), ITC Limited (ITC.BO/Rs212.65/Overweight), IndusInd Bank (INBK.BO/Rs268.80/Overweight), Infosys (INFY.BO/Rs2775.70/Neutral), Larsen & Toubro (LART.BO/Rs1330.40/Overweight), Mahindra & Mahindra (MAHM.BO/Rs841.40/Overweight), Maruti Suzuki India Ltd (MRTI.BO/Rs1059.75/Neutral), Oil and Natural Gas Corporation (ONGC.BO/Rs265.65/Overweight), Pantaloon Retail (India) Ltd (PART.BO/Rs171.50/Neutral), Power Grid Corporation of India (PGRD.BO/Rs105.45/Overweight), Reliance Industries Ltd (RELI.BO/Rs885.35/Overweight), SKS Microfinance (SKSM.BO/Rs157.25/Underweight), Siemens India (SIEM.BO/Rs829.35/Overweight), Tata Consultancy Services (TCS.BO/Rs1131.00/Overweight), Tata Power (TTPW.BO/Rs102.10/Overweight), Tata Steel Ltd (TISC.BO/Rs429.85/Overweight), Titan Industries Limited (TITN.BO/Rs214.80/Underweight), Wipro Ltd. (WIPR.BO/Rs382.10/Overweight)
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.
Important Disclosures
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for HDFC Bank, Hindalco Industries, ITC Limited, Tata Power, Tata Steel Ltd, Power Grid Corporation of India within the past 12 months. Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Bharti Airtel Limited: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of HDFC Bank: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of Larsen & Toubro: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of Mahindra & Mahindra: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of Tata Power: Bijay Kumar. The following analysts (and/or their associates or household members) own a long position in the shares of Infosys: Bijay Kumar.
Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of IndusInd Bank, Mahindra & Mahindra. Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Bharti Airtel Limited, Glenmark Pharmaceuticals Ltd., HDFC Bank, Hindalco Industries, IndusInd Bank, ITC Limited, Larsen & Toubro, Mahindra & Mahindra, Oil and Natural Gas Corporation, Reliance Industries Ltd, Siemens India, Tata Power, Tata Consultancy Services, Tata Steel Ltd, Wipro Ltd., Bank of India, Dabur India Limited, IDFC, Infosys, Maruti Suzuki India Ltd, Hindustan Unilever Limited, Pantaloon Retail (India) Ltd, Titan Industries Limited, Ambuja Cements Limited, ACC Limited, Power Grid Corporation of India.
Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: HDFC Bank, Hindalco Industries, ITC Limited, Tata Power, Tata Steel Ltd, Power Grid Corporation of India. Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Bharti Airtel Limited, HDFC Bank, Hindalco Industries, IndusInd Bank, Larsen & Toubro, Reliance Industries Ltd, Siemens India, Tata Power, Tata Consultancy Services, Tata Steel Ltd, Wipro Ltd., Bank of India, IDFC, Infosys, Maruti Suzuki India Ltd.
Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Bharti Airtel Limited, HDFC Bank, Hindalco Industries, Larsen & Toubro, Reliance Industries Ltd, Tata Consultancy Services, Tata Steel Ltd, Bank of India, IDFC. Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking HDFC Bank, Hindalco Industries, ITC Limited, Tata Power, Tata Steel Ltd, Power Grid Corporation of India. Investment Banking (next 3 months): J.P. Morgan expects to receive, or intend to seek, compensation for investment banking services in the next three months from Bharti Airtel Limited, HDFC Bank, Hindalco Industries, ITC Limited, Larsen & Toubro, Oil and
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Natural Gas Corporation, Reliance Industries Ltd, Siemens India, Tata Power, Tata Consultancy Services, Tata Steel Ltd, Power Grid Corporation of India.
Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Bharti Airtel Limited, HDFC Bank, Hindalco Industries, IndusInd Bank, Larsen & Toubro, Reliance Industries Ltd, Siemens India, Tata Power, Tata Consultancy Services, Tata Steel Ltd, Wipro Ltd., Bank of India, IDFC, Infosys, Maruti Suzuki India Ltd.
An affiliate of JPMS owns a significant stake in HDFC Securities Limited, a privately held subsidiary of HDFC.
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J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 47% 51% 45% 70% Neutral (hold) 42% 44% 47% 60% Underweight (sell) 11% 33% 7% 52%
*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.morganmarkets.com , contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com . Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.
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information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded as professional clients as defined under the DFSA rules. General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to JPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein. JPMS distributes in the U.S. research published by non-U.S. affiliates and accepts responsibility for its contents. Periodic updates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other publicly available information. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. "Other Disclosures" last revised September 30, 2011.
Copyright 2011 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. #$J&098$#*P
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