CONVICTION CALL

CONVICTION CALL

CONVICTION CALL

CONVICTION CALL

Conviction List | A S I A
NOMURA INTERNATIONAL (HK) LIMITED

Sean Darby

+852 2252 2182

sean.darby@nomura.com

Overview In order to highlight the strongest investment ideas in Nomura coverage, we have decided to create a stock conviction list compiled from our bottom-up research, which will include not only straightforward Buy recommendations but also Sell and Switching ones as well. Here we launch our first conviction list.

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Launch of conviction list
Introduction
Nomura has around 60 Asia ex-Japan analysts covering more than 570 stocks from mainland China down to Australia and across to India. In order to highlight our strongest investment ideas, recommendations and changes in views we have decided to create a stock conviction list compiled from our bottom-up research. We hope to provide investors with a broad range of investment ideas that take advantage of any mispricing of Asian stocks. Equally, the conviction list will be aligned to our current investment stance both in terms of market direction and macro outlook. We hope that our readers will find the recommended stock list a useful way of implementing our research.

Strategist
Sean Darby +852 2252 2182 sean.darby@nomura.com

Analysts
Winnie Chan +852 2252 2199 winnie.chan@nomura.com Amy Lee +852 2252 2181 amy.lee@nomura.com

Methodology
Only stocks covered by Nomura’s research team will be candidates for inclusion and suggested stocks will be equally weighted and measured both on an absolute basis and also on relative basis against the MSCI Asia ex-Japan and Australia in US dollar terms. Please see page 3 for the full description of the methodology.

Top-down view: further earnings revision and rotation
With China and India front-running the global economy in this cycle, the breadth in earnings revision forecasts ought to widen. We expect the earnings revision factor to become a much more worthwhile investment tool over the next two quarters. Also, investors have been reluctant to chase stocks with operating leverage, fearing that growth will not be sustained. However, with inventory/shipment ratios in Korea and Taiwan at close to record lows, we would expect investors to continue to switch into these markets as earnings visibility improves.

Key arguments for conviction calls
A summary of analysts’ views on the conviction names together with their contact details.

Any authors named on this report are economists unless otherwise indicated. See the important disclosures and analyst certifications on pages 8 to 11.
Nomura 1 18 September 2009

Equal weighting.533* Rating BUY Call date Return na dividends. Nomura research Exhibit 1. For outright Buy recommendations the stop loss will be 15%.5 19 9.Nomura. Once a month. Nomura International (Hong Kong) Limited – Investment Strategy Nomura 2 18 September 2009 . scrip issues will be assumed to be undertaken unless where stipulated. ** PT under review to account for the most recent data. Complete record upon request.com) rather than the date of this document.3 203. Past performance should not and cannot be viewed as an indicator of future performance. Transaction costs not included in returns. STRAIGHT LONGS Stock 1 2 3 4 5 6 7 Maanshan Iron & Steel UMC Pacific Basin NCSoft Corporation Kasikornbank Datang International Power China CITIC Bank Total STRAIGHT SHORTS Stock 1 City Developments Total SWITCHES Stock Long Short Long Short Maruti Suzuki India Tata Motor Kogas China Southern Airlines -'H' Code CIT SP Price 10. Once a week a detailed 92.85 5. Stop losses will be implemented on the recommendations.000 Code MSIL IN TTMT IN 036460 KS 1055 HK Price 1. recommendations and changes in views within Nomura coverage. given what look to be overstretched valuations. 2009.05 56. others as of 17 September. Indian stocks are priced as of 15 September.Conviction List | Asia Sean Darby Cheat sheet The conviction list OUR FIRST MOVE In order to highlight the strongest investment ideas.25 4. Here we launch our first conviction list. MSCI Asia ex Japan y-t-d 500 450 400 350 300 250 200 May-09 Feb-09 Mar-09 Jan-09 Jun-09 Jul-09 Aug-09 Sep-09 Apr-09 Taiwan 8% Thailand 8% Korea 17% Singapore 8% Hong Kong 42% India 17% Source: Nomura International (Hong Kong) Limited – Investment Strategy Source: Bloomberg.000 82* 6 6. performance measured both on an absolute basis and on a relative basis against MSCI Asia ex-Japan and Australia in US dollar terms.500 569.35 15. Ratings and price targets are as of the date of the most recently published report (http://www. Source: Bloomberg.66 REDUCE 17 Sep 09 HOW IT WORKS Only stocks covered by Nomura’s research team will be candidates for inclusion. but we maintain our REDUCE call. we have decided to create a stock conviction list compiled from our bottom-up research.5** REDUCE 17 Sep 09 63. For Switches the above will apply to the respective recommendation.000 BUY 1. Maximum 25% of recommended stocks in one sector or one country. Transaction fees are not taken into account.66 77.59 5.300 2.67 REDUCE 17 Sep 09 na breakdown of performance will be published.37 PT 8. 2009. * PT under review with an upward bias. Geographic distribution (aggregate) Exhibit 2.1 Rating Call date Return na na na na na na na BUY 17 Sep 09 BUY 17 Sep 09 BUY 17 Sep 09 BUY 17 Sep 09 BUY 17 Sep 09 BUY 17 Sep 09 BUY 17 Sep 09 036570 KS 154.44 PT Rating Call date Return na 6. Note: Call date is the date the stock was added to the conviction list. for Sell recommendations it will be 10%. a review of the recommendations within the conviction list will be published. We have decided to include both straightforward Buy recommendations and also Sell and Switching ones as well.51 PT 1. Any corporate action such as Code 323 HK 2303 TT 2343 HK KBANK TB 991 HK 998 HK Price 5.

We have decided to do something quite radical by also including Switch recommendations expressing stock Sell and Buy ideas against each other. They will be highlighted immediately in the next morning’s daily research and through a separate research note. recommendations and changes in views we have decided to create a stock conviction list compiled from our bottom-up research. for Sell recommendations it will be 10%. a review of the recommendation within the conviction list will be published. but not built along a 12-month horizon Quantitative screening will diffuse and freshen the list Inclusion of Switch calls the biggest departure Methodology In order to maintain consistent performance review and transparent recommendation procedure. trend. We have decided to include both straightforward Buy recommendations and also Sell and Switching ones as well. In order to highlight our strongest investment ideas. Any corporate action such as dividends. It is anticipated that the holding period and return for stocks within the conviction list may be shorter than the analysts’ investment period or target return. We will also include outright Sells where we believe it is appropriate and it is-line with analyst recommendations. Nomura 3 18 September 2009 . There will be no greater concentration of 25% of recommended stocks in one sector or one country. We hope that our readers will find the recommended stock list a useful way of implementing our research. For outright Buy recommendations the stop loss will be 15%. one country or investment style and to ensure that the selected stocks are reasonably diversified. The suggested stocks will be equally weighted and measured both on an absolute basis and also on relative basis against the MSCI Asia ex-Japan and Australia in US dollar terms. In order to ensure that there is no undue concentration of recommendations in one sector. Once a week a detailed breakdown of performance will be published. In this way.Conviction List | Asia Sean Darby Overview How it works Introduction Nomura has around 60 Asia ex-Japan analysts covering over 570 stocks from mainland China down to Australia and across to India. Once a month. This should also mean that there is a transparent investment process. these will be correspondingly highlighted through regular changes to our conviction list. Closing prices will be used to determine the daily performance of the individual stocks. Stop losses will be implemented on the recommendations. economy No definite holding period. For Switches the above will apply to the respective recommendation. Only stocks covered by Nomura’s research team will be candidates for inclusion. Any changes to the suggested conviction list will be implemented after Asian equity markets have closed. Sell and Switch calls within our universe bracketed by stance. Since greater weight will be placed on fresh ideas or analyst rating changes that appear from the daily Nomura research. Conviction Buy. scrip issues will be assumed to be undertaken unless where stipulated. Equally. we highlight the details of methodology for the conviction list: The aim of the conviction list is to highlight our strongest recommendations from Nomura's research analyst department. the conviction list will be aligned to our current investment stance both in terms of market direction and macro outlook. we hope to provide investors with a broad range of investment ideas that take advantage of any mis-pricing of Asian stocks. each month a series of quantitative screens will be used to highlight potential changes to the conviction list as well as additions.

In contrast. exchange rates or government stimulus. we would expect investors to continue to switch into these markets as earnings visibility improves. the removal or inclusion of a stock will not impinge on its inclusion within other suggested baskets recommended by quantitative analysts.Conviction List | Asia Sean Darby There will be no less than 10 stocks and no more than 20 stocks. The addition or deletion of a stock in no way impacts the rating call or price rating by the analyst. changes in risk premium have dominated equity-market returns with high beta. with inventory/shipment ratios in Korea and Taiwan at close to record lows. In Asia. these changes have been acute. Transaction fees are not taken into account. macro strategists or sector analysts. with China. return volatility and poor financial factors (such as net gearing) performing the best. Hence. the breadth in earnings revision forecasts ought to widen. Equally. However. equity prices tend to reflect different macro factors such as interest rates. changes in risk premiums and volatility have had a more profound effect on Asian prices than changes in earnings expectations. Asian markets have kept a ready eye on risk-related measures … … but we see earnings revision emerging as an increasingly useful tool Nomura 4 18 September 2009 . Top-down view: further earnings revision and rotation Over the course of an economic cycle. Suspended stocks will be priced at the last trading price and will remain within the conviction list for a maximum of five days. the more export-orientated economies have equally experienced the weakest credit growth. With China and India front-running the global economy in this cycle. operating leverage counterparts that perform well when companies begin to respond to new orders. India and Indonesia not only being the most domestically-focused but also experiencing the highest credit growth and aggregate money supply. We expect the earnings revision factor to become a much more worthwhile investment tool over the next two quarters. Investors have been reluctant to chase stocks with operating leverage. Ironically. fearing that growth will not be sustained. We would argue also that investors have also split companies into those with financial leverage and benefiting from low interest rates compared to their cyclical. investors have paid for both financial leverage and the defensive aspects of these countries’ internal growth. Since 2Q09. To be considered for inclusion the stock should have a turnover of more than US$5mn per day and market capitalisation greater than US$2bn.

chan@nomura. Analyst Josephine Ho +852 2252 2177 josephine. with Taiwan foundries making money to cover losses at peers.com UMC 2303 TT The turn from a profitless recovery to a profitable one supports our Bullish Rick Hsu stance on the sector. with the domestic economy driving growth rather than exports. While 1H09 net profits were -16% y-y. We expect rates to remain volatile but see a sustainable recovery from end-3Q09F onwards. which removes the overhang on profit redirection from IPPs to power grids.zhang@nomura. outpacing the global semi average CAGR of 8%.com City Development CIT SP While CDL’s 1H09 earnings were broadly in-line with our full-year expectations Tony Darwell a faster pace of inventory clearance of existing units in the past four months is +65 6433 6963 likely to see us raise our sales volume assumptions for select developments. We believe the fair value for Pacific Basin is at mid-cycle valuations due to the positive view on the bulk shipping industry and we estimate the company will remain profitable. Price recovery and a rising capacity utilisation rate supported a turnaround in 2Q09. Reiterate BUY. hence we see broader market expectations of a sustained rise in asset prices as premature. with profitability improvement.lee@nomura. We think the market has not factored in the structural change in long steel (ie.com Allen Zhang (Associate) +852 2252 1559 qin. We remain cautious on Aion’s momentum in China. With the likely NIM rebound and China Citic Bank’s rapid expansion. A stronger oil price lately would means Datang’s coal-to-pp project becoming value accretive (from value destructive) Its quality power portfolio should help safeguard earnings from coal price fluctuations.ho@nomura. we see positive sequential movements in NII and fee income. 998 HK Policy fine-tuning is unlikely to be a turning point in the economic cycle. We reiterate our BUY on KBANK. Current valuations for Chinese banks look undemanding.yan@nomura. We think valuations remain attractive.vadlamani@nomura. we maintain a BUY on Pacific Basin.com lifting earnings for FY10-11F and CDL’s intrinsic NAV and price target. Aion. 991 HK We have positive view over the sector since power output growth is set to recover on a pick-up over the economy.li@nomura. which we believe will persist into 2H09F.hsu@nomura.com Kasikornbank Srikanth Vadlamani +65 6433 6957 srikanth. 036570 KS Overseas growth momentum remains the key to a further re-rating of the online gaming sector. with our HK$9.darwell@nomura. Nomura 5 18 September 2009 .com China Citic Bank May Yan +852 2252 6190 may. 2343 HK We maintain our positive view on the bulk shipping sector.Conviction List | Asia Sean Darby Stock selection Key arguments for conviction calls Exhibit 3. but stay tuned in on potential upside surprise from the launch of Aion in the US. rick. as domestic economy-led growth is much more credit intensive.com Evan Li +852 2252 2191 evan. Banks should be key beneficiaries. Andrew Lee +852 2252 6197 andrew. driven by seasonal factors (coal demand in winter and the start of the grain harvest season) and robust steel demand.com Pacific Basin NCSoft Stanley Yang +82 2 3783 2331 stanley. which will lead to demand growth and higher prices. in our view. Maanshan’s 1H09 results were broadly in-line with our expectations. And the market expects end-user power tariffs may be hiked (on-grid unchanged) in 2H09F underpinned by contained CPI in China. underpinned by infrastructure-led demand and actual supply growth being significantly slower than actual growth. We forecast a turn to sustainable profitability from 2Q10F +886 2 2547 9331 onward. 2Q09 operations actually showed strong improvement from 1Q09.com Datang Power Ivan Lee.com Cecilia Chan +852 2252 6181 cecilia. The bank is also building a strong foundation to sustain growth over the medium term. in our view. NCSoft’s game. in our view.wang@nomura. We expect the bank to continue to exhibit sector leading growth rates. Summary of key arguments Company Maanshan Iron & Steel Bloomberg code Analyst comments 323 HK Stimulus money is giving support to domestic steel consumption in China. we see inventory clearance at CDL and in the broader market being driven by pricing. such as property.com Nick Wang +852 2252 1598 nick. CFA +852 2252 6213 ivan. UMC will be a key beneficiary. Upcoming teaser site opening for Guild Wars 2 will likely boost investor sentiment.yang@nomura. the diminishing pricing premium enjoyed by flat steel due to limited capacity expansion). The pull-back in bank shares due to “policy scares” and sector/country rotation presents a good buying opportunity.30 price target unchanged. Cost savings from growing coal output should lift margins — Datang’s internal coal output is slated to reach 40mn tonnes (20% of its total requirement) by FY10F and 120mn tonnes (40%) by FY12F. On a quarterly basis. We reiterate our BUY call. auto. KBANK TB We expect a key shift in drivers for economic growth in Thailand. Nevertheless. the bank should return to positive growth. anthony. We are seeing signs of demand returning at the downstream industries. and capital goods. Hence. which has witnessed resilient domestic growth in the current recessionary environment.com We believe the advanced IDM outsourcing story stands to boost the foundry sector’s structural profitability and lift sector revenues at a CAGR of 22% over 2009-12F. losing steam in China is double-discounted in the share price.lee@nomura.

1 0 11 102. although other auto companies in India have reported peak margins in their recent results.22.22.com Prabhat Awasthi 91.wong@nomura. MSIL IN We believe there are a number of levers by which MSIL may be able to improve its margins from 1Q FY10 levels.300 14.8 10.com Maruti Suzuki India China Southern Airlines -'H' Kogas Note: Ratings and price targets are as of the date of the most recently published report (http://www.4180 prabhat.8 REDUCE 67.612 25.7 48. hence.51 2.lee@nomura.125 3.9 South Korea Power & Utilities BUY 63.6 -2.4037. others as of 17 September.4037. 3M Vol cap Market China Taiwan Sector Basic Materials Technology Company Maanshan Iron & Steel UMC Pacific Basin NCSoft Corporation Kasikornbank Datang International Power China CITIC Bank City Developments Tata Motors Maruti Suzuki India Limited China Southern Airlines KOGAS Ticker 323 HK 2303 TT 2343 HK 036570 KS KBANK TB 991 HK 998 HK CIT SP TTMT IN MSIL IN 1055 HK 036460 KS (US$mn) (US$mn) 4.9 21.8 60.Nomura. if speculation regarding the restoration of the old air ticket pricing mechanism is realised.4199 kapil.8 57. Also note that despite the rights issue of approx US$1bn. but we maintain our REDUCE call given what look to be overstretched valuations. We believe CSA would see the greatest negative impact. Note that in addition.67 1.com Shirley Lam +852 2252 2196 shirley.705 5.35 5.4037.3 -31.977 2.409 2.4199 kapil.com Jim Wong +852 2252 2195 jim.com Prabhat Awasthi 91.ding@nomura.477 6.6 Rating BUY BUY BUY TP 8. please refer to the most recently published report (http://www.22. debt for JLR is still INR165bn (some US$03.773 5.3 14 8 12 39.7 BUY 2. Source: Nomura estimates Exhibit 4.com) rather than the date of this document.05 21. CFA +852 2252 6213 ivan.6 28.4/share) and the company had gross debt of INR349bn and net debt of some INR324bn.66 77.500 11.302 8.5 19 9.singh@nomura.1 6.000 56. In such a scenario.8 BUY BUY BUY 82* 6 6. We are increasing our earnings estimates by 28% and 29% for FY10F and FY11F.4bn) compared to US$3bn raised at the time of acquisition.com Kapil Singh 91.singh@nomura.5 5.4180 prabhat.5x.3 Last Price Performance (%) price 5.9 0 0 Hong Kong Transport/Logistics South Korea Media & Internet Thailand China China Singapore India India China Financials Power & Utilities Financials Property Industrials Industrials Transport/Logistics BUY 203. respectively.8 322.37 10. Nomura International (Hong Kong) Limited – Investment Strategy Nomura 6 18 September 2009 . 2009 Source: Bloomberg.2 19.949 27.9 3M YTD 5Y 11 93.3 15.3 * PT under review with an upward bias.3 16. Our BUY call stands.com).1 71. valuations look attractive. For valuation methodology and risks to our price target.awasthi@nomura.42 7.7 -2. to factor in higher margins and volume estimates.Conviction List | Asia Sean Darby Company Tata Motor Bloomberg code Analyst comments TTMT IN TTMT’s book value is only INR60bn (INR116. Indian stocks are priced as of 15 September.9 23 94. 2009.85 15. At 0.8 2.1 113.8 96. 1055 HK Chinese airlines’ share prices rallied 8-17% in the day after the implementation of the new air ticket pricing mechanism on 20 April.4 8.9 52 92.4037.8 1.000 32.6 233. Historical prices of the companies in the conviction list Market Avg.7 62.045 6.3 192.9 -8. Chinese airlines’ share prices may be under pressure.1 31.6 22.000 154. Note that its margins are still much below its peak level (13%). ** PT under review to account for the most recent data.352 1.456 6.2 39.59 5.22.4 63.5 REDUCE 15.5 172. Analyst Kapil Singh 91. since it has the largest exposure (80% of overall revenues) to China domestic routes.1 35 13. we believe overhangs are removed and Kogas becomes a pure beneficiary of rising oil prices.25 4.awasthi@nomura.3 REDUCE 26.com Ivan Lee. 036460 KS With the resumption of cost pass-on from FY10F and receivables to be retreated by FY12F.533* 1.8 100. 2009.Nomura. the company plans to undertake capex of INR25bn per year.8x FY10F P/BV. cashflow from domestic operations may be just enough to meet interest costs.6 57.5 69 20 15. vs peers at 2.com Grace Ding +852 2252 2193 grace.lam@nomura.5** 569.66 1M 5.

5 1.6 2.6 0.3 -1 4. Source: Bloomberg. 2009.4 South Korea Media & Internet Thailand China China Singapore India India China Financials Power & Utilities Financials Property Industrials Industrials Transport/Logistics South Korea Power & Utilities Note: Indian stocks are priced as of 15 September.2 4.3 0.1 13.5 1.9 0.Conviction List | Asia Sean Darby Exhibit 5. Nomura valuation of the companies in the conviction list Last NOMURA EPS* Market China Taiwan Hong Kong Sector Basic Materials Technology Transport/Logistics Company Maanshan Iron & Steel UMC Pacific Basin NCsoft Corporation Kasikornbank Datang International Power China CITIC Bank City Developments Tata Motors Maruti Suzuki India Limited China Southern Airlines KOGAS Ticker 323 HK 2303 TT 2343 HK 036570 KS KBANK TB 991 HK 998 HK CIT SP TTMT IN MSIL IN 1055 HK 036460 KS Price 5.3 1.300 2009F 0.1 -0.1 8.000 77.500 569.6 5.1 0 8.6 -14.7 1.9 14 11. Nomura International (Hong Kong) Limited – Investment Strategy Nomura 7 18 September 2009 .2 -0.6 1.6 4.35 15.9 42.37 10.219 5.42 1.9 11.9 ROE (%) 2009F 3. others as of 17 September.5 1. 2009.849 P/E (x) 2009F 54 na na 19 14 15 13 21 52 36 na 12 P/BV (x) 2009F 1.4 0.5 10.25 4.2 1 5.85 5.05 2. * EPS in local currency.59 5.66 154.9 33.51 56.4 12.

In addition. etc.com/research or requested from Nomura Securities International. Explanation of Nomura's equity research rating system in Europe. If you have any difficulties with the website. Benchmarks are as follows: United States: S&P 500. is classified as a Hold rating. Important disclosures may be accessed through the left hand side of the Nomura Disclosure web page http://www. 61% of companies with this rating are investment banking clients of the Nomura Group*. As at 30 June 2009. or "Buy". indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. • A rating of "RS-Rating Suspended".nomura. indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. 21% have been assigned a Reduce rating which. or "Reduce". MSCI World Technology Hardware & Equipment. please contact your Nomura Securities International. subject to limited management discretion. the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as discounted cash flow or multiple analysis.current price)/current price. 36% have been assigned a Buy rating which.uk for technical assistance. Nomura 8 18 September 2009 . If you have difficulty with this site or you do not have a password. Middle East and Africa. 6% of companies with this rating are investment banking clients of the Nomura Group*. for purposes of mandatory disclosures. indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. For clients in Europe. *The Nomura Group as defined in the Disclaimer section at the end of this report.nomura.COM. Online availability of research and additional conflict-of-interest disclosures: Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA.asp. BLOOMBERG and THOMSON ONE ANALYTICS. A "Neutral" stance. US and Latin America for ratings published from 27 October 2008: The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock. Global Emerging Markets (ex-Asia): MSCI Emerging Markets exAsia. for purposes of mandatory disclosures. Sectors: A "Bullish" stance.COM. Analysts may also indicate absolute upside to price target defined as (fair value . please email researchchannelsupport@nomura. indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. • A rating of "2". Distribution of Ratings: Nomura Global Equity Research has 1613 companies under coverage. ” indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company. are classified as a Sell rating.Conviction List | Asia Sean Darby ANALYST CERTIFICATIONS Each of the research analysts referenced on page 1 hereof with regard to the section of this research report for which he or she is responsible certifies that 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 discussed herein. a portion of which is generated by Investment Banking activities. or will be.co. is. indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months.. Inc.com/research). each of the research analysts referenced on page 1 hereof hereby certifies that no part of his or her compensation was.co. or "Neutral". Stocks: • A rating of "1". are classified as a Buy rating.nomura. Inc. Nomura International plc or by any other Nomura Group company or affiliates thereof.. • A rating of "3". for purposes of mandatory disclosures. nor is it tied to any specific investment banking transactions performed by Nomura Securities International. salesperson (1-877865-5752) or email researchportal@nomura. The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues. directly or indirectly related to the specific recommendations or views that he or she has expressed in this research report.uk for assistance. 41% have been assigned a Neutral rating which.com/research/Disclosures/public/main. Europe: Please see valuation methodologies for explanations of relevant benchmarks for stocks (accessible through the left hand side of the Nomura Disclosure web page: http://www. REUTERS and BLOOMBERG. REUTERS. Japan and elsewhere in Asia it is available on NOMURA. In most cases. ISSUER SPECIFIC REGULATORY DISCLOSURES Conflict-of-interest disclosures Important disclosures may be accessed through the following website: http://www. Inc. 33% of companies with this rating are investment banking clients of the Nomura Group*. on 1-877865-5752.

• Stocks labeled "Not rated" or shown as "No rating" are not in Nomura's regular research coverage. estimates. Auto & Components: FTSE W Europe Auto & Parts. subject to limited management discretion. Business Services: FTSE W Europe. Explanation of Nomura's equity research rating system for Asian companies under coverage ex Japan published prior to 30 October 2008: Stocks: Stock recommendations are based on absolute valuation upside (downside). A "Bearish" rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation. or "Neutral". the Price Target will equal the analyst’s 12-month intrinsic valuation of the stock. indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over the next six months. • A rating of "4". In most cases. Benchmarks are as follows: Japan: TOPIX. the Fair Value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. A "Neutral" rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. • A rating of "RS" or "Rating Suspended" indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. or "Buy". indicates that the analyst expects the stock to either outperform or underperform the Benchmark by less than 5% over the next six months. projections. indicates that the analyst expects the stock to underperform the Benchmark by 15% or more over the next six months. indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. etc. Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia. multiple analysis. In most cases. which is defined as (Price Target – Current Price) / Current Price. based on an appropriate valuation methodology such as discounted cash flow. indicates that the analyst expects the stock to outperform the Benchmark by 5% or more but less than 15% over the next six months. our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. or "Reduce". and it undertakes no obligation to update the analysis. Europe: Dow Jones STOXX® 600. • A "Buy" recommendation indicates that potential upside is 15% or more. conclusions or other information contained herein. Middle East and Africa. MSCI World Technology Hardware & Equipment. However. if the analyst doesn't think the market will revalue the stock over the specified time horizon due to a lack of events or catalysts. In most cases. which is defined as (Fair Value . indicates that the analyst expects the sector to outperform the Benchmark during the next six months. Benchmarks are as follows: United States: S&P 500.Current Price)/Current Price. Sectors: A "Bullish" stance. • A rating of "2". indicates that the analyst expects the stock to underperform the Benchmark by 5% or more but less than 15% over the next six months. Telecoms: FTSE W Europe Business Services. • A rating of "5". A "Neutral" stance. subject to limited management discretion. US and Latin America published prior to 27 October 2008): Stocks: • A rating of "1". Nomura might not publish additional research reports concerning this company. Ecology Focus: Bloomberg World Energy Alternate Sources. • Stocks labelled as "Not rated" or shown as "No rating" are not in Nomura's regular research coverage. indicates that the analyst expects the sector to underperform the Benchmark during the next six months. then the fair value may differ from the intrinsic fair value. indicates that the analyst expects the sector to perform in line with the Benchmark during the next six months. by sector — Hardware/Semiconductors: FTSE W Europe IT Hardware. or "Strong buy". Global Emerging Markets: MSCI Emerging Markets ex-Asia. or "Sell". Communications equipment: FTSE W Europe IT Hardware. • A "Reduce" recommendation indicates that potential downside is 5% or more. • A "Neutral" recommendation indicates that potential upside is less than 15% or downside is less than 5%. • A rating of "3". Explanation of Nomura’s equity research rating system for Asian companies under coverage ex Japan published from 30 October 2008 and in Japan from 6 January 2009: Stocks: Stock recommendations are based on absolute valuation upside (downside). A "Bearish" stance. Europe. Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe. therefore. Sectors: A "Bullish" rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation.Conviction List | Asia Sean Darby A "Bearish" stance. United States: S&P 500. Recommendations are set with a 6-12 month horizon unless Nomura 9 18 September 2009 .

Korea. investment banking and non-investment banking compensation and securities ownership (identified in this report as "Disclosures Required in the United States"). are specified in disclaimers and related disclosures in this report. Nomura International plc. Seoul Branch. manager or lender) for. which is authorised and regulated by the U. of companies mentioned herein. • A "Sell" recommendation indicates that downside is more than 20%. This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc ("NIPlc"). and. • A "Strong buy" recommendation indicates that upside is more than 20%. the investment. NSI's investment banking relationships. Accordingly. • A "Buy" recommendation indicates that upside is between 10% and 20%. Taipei Branch. reflect in part the analyst's estimates for the company's earnings. Financial Services Authority ("FSA") and is a member of the London Stock Exchange. 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