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18 October 2010Nomura 1

Any authors named on this report are strategists unless otherwise indicated.See the important disclosures and analyst certifications on pages 8 to 12.

Strategy | M A L A Y S I A

Wai Kee Choong +60 3 2027 6893 [email protected]

A c t i o nExcept for minor elements, the 2011 Budget is consistent with the early

announcements on the New Economic Model and the 10th

Malaysia Plan. Keyinitiatives and measures continue to revolve around the plan to transform the

country towards a high-income developed nation. From the markets perspective,

the budget is largely a non-event. But there are goodies in store for low- to middle-

income households no toll hikes for 5 years and grants for first-time house

buyers. Scrapping of import duties on retail goods could be a boost to services and

tourism sectors.

A n c h o r t h e m e s

We recently introduced Malaysias consumption boomstory. We believe this is an

interesting theme not properly researched and overlooked by the street.

While the consensus earnings upgrades cycle is likely to remain in positive territory,

we believe the Malaysia consumption boom story will be the next focus.

A fami l ia r s to ry

The big pictureAfter strong 1H GDP growth, the government is projecting 2H GDP growth will

moderate, for 7% growth in the full year. This is in line with our expectations.

However, the projected 5.4% fiscal deficit is a concern. Coupled with the larger

allocations for the Employee Provident Fund to invest abroad, the Ringgit could

face some headwinds, we believe.

Positive surpriseContrary to earlier expectations, there were no curbs on property financing, nor

tightening of credit card guidelines. These measures would likely have dampened

consumer sentiment. Instead, incentives were given to assist f irst-time home

buyers. Removal of 5-30% import duties on 300 retail goods and a freeze in toll

rates for five years should boost consumption and tourism income.

Negative surprisesThe budget reaffirmed projects announced earlier, such as the MRT, the five

highways, the Kuala Lumpur International Financial District (KLIFD) and the

Malaysia Rubber board land. No fresh details were tabled, however. The proposed

100-storey tower would add supply to off ice space, in addition to the newly

announced KLIFD.

Sector implicationsWe are maintaining our Bullish stance on the consumption theme. Our top picks in

the consumer-related space are Maybank, AMMB, AFG, QSR, Genting Malaysia,

Media Prima, and Malaysia Airlines.

N O M U R A S E C U R I T I E S M A L A Y S I A S D N B H D

St o c k s f o r a c t i o n

We like stocks leveraged on to the

consumption theme in Malaysia.

Stock Rating

Price

(RM)

Price

target

(RM)

Maybank Buy 8.88 10.70

AMMB Buy 5.91 6.70

AFG Buy 3.24 3.90

QSR Buy 5.09 6.12

Genting Malaysia Buy 3.52 3.94

Media Prima Buy 2.30 2.90

Ma lays ia n Ai rlin e Sys tems Bu y 2.27 2 .4 0

Pricing as at 15 October close

RUNNINGTHEME

S t r a t e g i s t

Wai Kee Choong

+60 3 2027 6893

[email protected]

A n a l y s t sJulian Chua

+60 3 2027 6892

[email protected]

Jacinda Loh

+60 3 2027 6889

[email protected]

Ken Arieff Wong

+60 3 2027 6895

[email protected]

Muzhafar Mukhtar

+60 3 2027 6891

[email protected]

Daniel Raats

+852 2252 2197

[email protected]

B. Roshan Raj

+65 6433 6961

[email protected]

Andrew Lee

+852 2252 6197

[email protected]

Tanuj Shori

+65 6433 6981

[email protected]

Sai Min Chow+65 6433 6169

[email protected]

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Strategy | Malaysia Wai Kee Choong


Drilling down

A fami l ia r s to r yThe four key strategies reinvigorate private investment, human capital development,

improving quality of life, and strengthening public service delivery are key elements

of the New Economic Model, the 10th Malaysia Plan, the Government Transformation

Plan (GTP) and Economic Transformation Plan (ETP).

First Strategy: Reinvigorating Private Investment

To encourage the private sector to take the lead in selected high-impact projects such

as the KLIFD, the five highways and the MRT, which could potentially boost private-

sector investment by 12.5% in 2011F, according to the government.

Second Strategy: Intensifying Human Capital Development

To address the perennial concern of a brain drain and lack of skilled labour, the 2011

Budget is proposing a long-term strategy to strengthen education at all levels. A total

of RM40bn has been allocated for this strategy.

Third Strategy: Enhancing Quality of Life of The Rakyat

Some RM568mn will be allocated to develop almost 90,000 housing units for the low-

income group. Favorable housing loans at a 4% interest rate for a maximum of

RM60,000 for low-cost houses, government-guaranteed down-payments of 10% for

houses below RM220,000 for first-time buyers earning less than RM3,000 a month,

and a 50% stamp duty exemption for first-time house buyers of houses not exceeding

RM350,000.

Fourth Strategy: Strengthening Public Service Delivery

The Prime Minister emphasised that the government needs to continuously improve to

enhance productivity and make dealings with the Rakyat and businesses more

transparent and easy to navigate. For example, to expedite the process of propertyregistration, the Stamp Act 1949 was amended to enable the Valuation and Property

Services Department to assess properties after the payment of stamp duty to the

Inland Revenue Board. This improvement should reduce the property registration

process from 30 days to one day.

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Exhibit 1. Sector measures and impact

Sector Measures Amount (RMmn) Nomura comment

Construction MRT Project

The Mass Rapid Transit (MRT) inGreater KL (Klang Valley) will beimplemented beginning 2011. Thisproject, with an estimated pri vateinvestment of RM40bn, is expected tobe fully completed by 2020. 40,000

In line with our view, the MRT project may get the go-aheadsoon. But execution risks remain, considering govt wants privateinvestments to be a major portion of the project. In terms ofconstruction companies, order books should have upside, butearnings would take a long time to materialise. We think thebiggest beneficiaries of MRT would be Gamuda and IJM.

Public Private partnershipinitiatives

The Government will intensify thePublic-Private Partnership (PPP)initiatives. Several PPP projectsidentified under the 10MP will beimplemented in 2011 through privateinvestment of RM12.5bn. Among thePPP projects are: 12,500

After a long time, the govt has focused on the PPP model forinfrastructure development, which, in our view, is a moresustainable model for growth. Construction of highways shouldbenefit local construction as well as BOT operators likeGamuda, IJM and PLUS.

Construction of highways such as theAmpang-Cheras-Pandan ElevatedHighway, Guthrie-DamansaraExpressway, Damansara-PetalingJaya Highway, Pantai Barat-Banting-Taiping Highway, Sungai Dua-JuruHighway and Paroi -Senawang-KL IAHighway;

Corridor and RegionalDevelopment

The Government allocates RM850mnin infrastructure support forinfrastructure around regionalcorridors including: 850 Mostly would benefit small regional contractors

RM339mn for Iskandar Malaysia forthe construction of highways,development of housing areas as wellas providing and improving publictransportation se rvices.

RM133mn for The Northern CorridorEconomic Region (NCER), whichincludes the development of anAgricultural Products ProcessingCentre, Tourism Infrastructure and aBiotechnology Incubator Centre.

RM93mn for Sarawak Corridor ofRenewable Energy (SCORE),including telecommunication, watersupplies, airport and roads. For theSabah Development Corridor, a sumof RM110mn is allocated, amongothers, for palm oil industry clusterprojects, agro-i ndustrial precinct a ndintegrated farming centre.

Sub-total 58,350

In-line with our expectations, the Malaysia 2011 budget had astrong emphasis on key projects. The government sent outpositive signals on the MRT project and at the same timepushed Public Private partnerships and the landmark integrateddevelopment project. Although order book newsflow shouldremain strong on the back of high profile projects, we believethat construction stocks have already run up in light of the

expectations. We would wait for fundamental earnings supportfor the construction names to get positi ve on the next leg of a re-rating.

Source: Budget 2011

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Exhibit 2. Sector measures and impact (cont'd)

Sector Measures Nomura comment

Toll RoadsToll rates at PEB's highways will befrozen for the next 5 years

No real impact; cash compensation will be coming under current concessionagreement. Takeover offer may render this irrelevant.

Construction of 6 highways under thePPP initiative

The biggest impact on PEB would be from the West Coast Expressway. We notethat is actually not news: it was mentioned during the NEM speech in March,under the same initiative (PPP). No news of real progress has surfaced since.

Banking &Finance

1) SC will offer 3 new stockbrokinglicences to eligible local, foreign or JVcompanies to increase retail marketparticipation.

Increased competition in the retail stockbroking space

2) Government-linked InvestmentCompanies will divest theirshareholdings i n major listed companiesto increase liquidity and trading velocityin the market.

No surprise. The Economic Transformation Programme targets the reduction ofgovernment stakes in GLCs to 15-30%. Posi tive for Bursa Malaysia.

3) SC will increase the number ofProprietary Day Traders operating in themarket.

Mildly positive for Bursa Malaysia.

4) Bursa Malaysia will develop aninternational board to enable foreign

securities to be listed, especiallysyariah-compliant products.

Long-term positi ve for Bursa Malaysia.

5) Home ownership scheme for firs t-time house buyers with householdincomes of less than RM3,000.Cagamas provides a guarantee on thedown-payment of 10% for houses belowRM220,000.

Positive for banks' mortgage business. Housing loans RM250Khave been the main growth driver for mortgages, expanding at 24% y-y. Also notethere were no announcements limiting loan-to-value for third (or more) housingloans, nor were credit card g uidelines tightened as initially feared (see AseanBank Check, Malaysia: likely Budget 2011 measures, 12 October, 2010).

Media 6% service tax will be imposed on paidtelevision broadcasting services.

Astro subscribers will have to pay 6% more for their monthly subscriptions.

Plantations

Mandatory Blending of Biofuels withPetroleum Diesel (B5 Programme)beginning in Putrajaya, Kuala Lumpur,Selangor, Negeri Sembilan and Melakain June 2011.

Overall positive, though the impact is to be fe lt in the long run. This news is notnew; it was announced previously (with supposed implementation by 2010, latershifted to 2011). The reiteration in the budget speech is a positive reaffirmation ofthe 2011 target, though implementation overall may be challenging i f theinfrastructure (such as blending plants) is not completed in time. Any biofuelblending done is incremental demand, and as such would lower supplies availablefor exports (a positive for prices).

TobaccoNo increase in excise duties fortobacco.

The government's decision not to increase tobacco duties this budget is la rgelyexpected, given the surprise hike of 15.8% on 4 October, 2010. The recent trend(in the last three years) of increasing tobacco duties near to the budget willincreasingly be expected going forward. No impact on tobacco companies.

Power

Policies geared towards stimulating thedevelopment of green technologies including pioneer status and investmenttax allowances for RE gencos until2015, exemption on import duties andsales for RE and energy efficiency

equipment until 2012, i ncome taxexempt trading of CERs until 2012, andthe implementation of a Feed in Tariffmechanism for individual andindependent RE gencos.

Government GDP growth forecasts for 2011 in the range of 5-6% are consistentwith our house view of 5.2%; this may suggests that our +4% FY11F volumegrowth assumption for TNB is somewhat on the light side. Beyond this, the PMalluded to a continued drive to improve market liquidity through having GLICsdivest stakes in corporations, which may further fuel market interest in thepossibility that Khazanah is looking to pa re its interest in TNB (currently 35.6%).

While these measures may improve liquidity, we still view Malaysias regulatoryambiguities and TNBs sub-par ROAs as a more serious obstacle to increasedforeign shareholder participation in the name. Green technology developmentpolicies should underpin at least some gains on regional peers in this field; but wefail to see this making a material impact to industry players under our coverage.

As anticipated, the PMs address gave no further colour on the rationalisation ofgas price subsidies to the power sector, where we believe changes anywherenear the magnitude suggested by PEMANDU will be dif ficult to implement pre-elections.

At first glance, the budget does not appear to contain any surprises relative toNomura and the streets expectations. Despite none of the structural issues facingthe industry being addressed, from the power sectors perspective we believe themarket approached this announcement with realistic expectations. Taken againstthat backdrop, our preference for Tenaga relative to YTLP largely on accountof the companys positive leverage to an appreciating ringgit is unchanged. At

13.3x FY11F earnings, and with a steady, volume-led earnings recovery, webelieve TNB remains an attractive risk-reward prospect.

Source: Budget 2011 Speech

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Exhibit 3. Sector measures and impact (cont'd)

Sector Measures Nomura comment

Property1) RM568mn allocated to build 87,300 units of low-cost affordablehousing.

2) Additional RM50mn allocated to assist estate workers to ownhouses, to be managed by Bank Simpanan Nasional. Loans may beobtained by estate workers of up to RM60,000 at 4% interest rate and

40-year repayment period.3) Announcement of My First Home Scheme to be administered byCagamas Berhad to guarantee 10% downpayment for houses belowRM220,000. This is only for first-time home buyers with householdincome of less than RM3,000 per month. In other words, eligiblecitizens will obtain a 100% loan without having to pay the 10%required downpayment.

4) 50% stamp duty exemption for instruments of transfer of residentialproperty for first-time home buyers for houses not exceedingRM350,000. Stamp duty exemption of 50% also applicable on loanagreements instruments to finance such first-time purchases ofhouses. This is applicable to sales and purchase agreementsexecuted from 1 Jan, 2011.

5)Civil servants, which number 1.2mn in Malaysia, will have themaximum loan e ligibility under their housing loan scheme increased toRM450,000 from RM360,000 currently.

6) Government confirmed the development of Malaysian RubberBoard land in Sungai Buloh covering 2,680 acres to be undertaken byEPF (RM10bn worth) to be completed by 2025; however, it did notname any potential developers.

7) Reduce the property registration process at the Valuation andProperty Services Department from 30 days to 1 day.

Sector incentives were skewed towardsincentivising ownership and boosting affordabilityfor the lower-income group and young adults whohave newly joined the workforce; notably missingwere the earlier-feared measures of potential loan-to-value cap of 80% and imposition of a realproperty gains tax. This positive undertone shouldremove a ny remaining o verhang arising from suchfears, in our view, and continue to ensure healthydemand for launches, especially in the mid-to-highend range as has been seen over the past fewmonths continue to be seen benefiting mid- tohigh-end de velopers like SP Setia (SPSB MK,BUY). Schemes to improve affordability for first-time home buyers are likely to ensure that propertydevelopers with lower- to mid-end developmentspriced within the RM220-350k range benefit. Giventhe price range, these developments may besituated outside the major cities. We note thatUEM Land (ULHB MK, Not Rated) has justlaunched Nusa Bayu, a medium-cost development(GDV: RM700mn) of terrace homes priced at an

average of RM220,000 in the Nusajaya area.Similarly, Glomac Berhad (GLMC MK, Not Rated)has Saujana Utama (future launches planned ofRM280mn), a Sungai Buloh township comprisingmainly terrace homes priced at an average ofRM275,000.

Retail

1) Import duty on 300 goods to be abolished; these duties range from5-30%. Goods benefiting from the import duty abolition are, forexample, apparel, handbags, certain textiles, perfumes and footwear.

Taken together, these measures are likely aimedat spurring consumption by improving affordabilityof products for locals, and increasing theattractiveness of such goods to tourists.

2) Sales tax of 10% to be exempted on all types of mobile phone;previously the exemption applied only to phones with Internet and PDAapplications.

Mall / retail operators are likely beneficiaries, eg,Parkson Holdings (PKS MK, Not Rated)

3) Service tax to be raised from 5% to 6%.

Telcos

Currently, ordinary mobile phones are subject to 10% sales tax, butmobile phones with various applications such as Internet and personaldigital assistant (PDA) are e xempted from sales tax. For the purposeof streamlining tax treatment, the government proposes that sales taxbe exempted on all types of mobile phones.

Marginal impact for mobile operators, as this maynot drive higher cellular usage, revenue orearnings as ce llular penetration is already high at108% implies majority of population alreadyhas a mobile handset and, hence, lower mobilehandset prices may not drive new real subs.However, some marginal demand upside could bedriven by existing lower-end subs and new subs inunderpenetrated areas in East Coast, Sabah, andSarawak.

The government will extend the investment allowance period for thelast-mile broadband service providers. In addition, import duty andsales tax exemption on broadband equipment are also extended for

two years until 2012.

These extensions are a positive but barelyexciting these have been in place for the pastfew years. Importantly, the absence of new

incentives is unlikely to change the rate ofbroadband growth, which at 38% penetration levelis trending below the 50% target by end-FY10.

For Sarawak Corridor of Renewable Energy (SCORE), a total ofRM93mn is allocated for facilities, including telecommunication, watersupplies, airport and roads as well as halal food industrial parks.

Telecom and broadband penetration (13-15%) inSarawak remains lower than in other mainlandregions. Hence, investment in telecom facilities willbe positive for cellular operators and fixed-lineoperators.

The Multimedia Development Corridor enters its third phase in 2011.The focus is on creation of a n innovative digital economy to achievethe target of a high-income nation. To enhance the potential of the ICTindustry, the MY Creative Content Programme will be implemented toencourage development of local content creation, hosting local contentand unlocking new channels for content. This programme involves anallocation of RM119mn.

Support for development of local content couldbenefit the telecom sector in the longer term.Telcos can tap such content, which in turn coulddrive the uptake of data services, on both cellularand broadband platforms (fixed, mobile). Currently,data contributes 20-35% of revenue for ce llularoperators.

Source: Budget 2011 Speech

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Valuation methodology

Maybank: Our Gordon-growth based price target is derived after imputing a FY12F

ROE forecast of 16.2%. Our price target of RM10.70 implies a P/BV of 2.5x, which

is just above its post-crisis average P/BV of 2.4x.

Alliance Financial Group: Our Gordon-growth based price target of RM3.90 is

derived after imputing a FY12F ROE forecast of 13.8% and rolling forward to

FY12F book value of RM2.29. This implies an FY12F P/BV of 1.7x, which is

midway between the post-crisis mean and +1 std deviation P/BV.

AMMB Holdings: Our Gordon Growth-based price target is derived after imputing

an ROE forecast of 13.9% and FY12F book value of RM3.89. Our price target

implies an FY12F P/BV of 1.7x, which is midway between the post-crisis mean of

1.5x and +1 standard deviation level of 2.1x.

QSR Brands: Our SOTP valuation is arrived at by ascribing: 1) a 22.2x multiple to

the FY11F PAT of the Indian operations, based on the three-year India consumer

stock average multiple; and 2) the rest of the businesses at 12x FY11F PAT, based

on the midway of the stock's historical mean and -1SD level. Our fair value is based

on the average of FY11F-12F fair value, given we believe the company's growthprofile is likely to be different by FY12F, as India's growth is likely to be more

meaningful then as the Malaysian operations mature and growth stabilises for

Malaysia.

Media Prima: Our DCF-based price target is RM2.90, using a discount rate of

10.3% (risk-free rate 3.75%, beta of 1.3x and terminal growth rate of 2%).

Genting Malaysia: Our price target is based on the stocks average historical

discount to DCF-based RNAV since 1997. On average, GENM shares have traded

at a 12% discount to DCF-based RNAV since then. Applied to our DCF-derived

RNAV estimate for FY11F, this translates into a price target of RM3.94/share.

GENMs intrinsic value, if measured by the discounted cashflow (DCF) model,

comes to RM4.48/share (before discounts), on our estimate. In deriving this value,

we have discounted its future cashflow by a weighted average cost of capital

(WACC) of 9.7%. The WACC is derived from a cost of equity of 9.7%, risk-free rate

of 3.75%, equity risk premium of 4.5% and beta of 1.32 (methodology unchanged).

Malaysian Airline System: We value MAS by pegging FY11F BVPS to its

historical mid-cycle P/BV of 1.8x to arrive at our price target of RM2.40. Our mid-

cycle valuation for MAS is based on our view that the turnaround in costs is likely to

improve its cost competitiveness and that its fleet rejuvenation will drive revenues,

as the airline moves away from five to six years of being under the weather, so to

speak. We see room for recovery owing to the turnaround in costs and the rebound

in passenger numbers in FY10F, with its fleet rejuvenation driving more savings as

the new aircraft comes into service in FY11F.

Investment risks

Maybank: 1) weaker-than-expected economic growth could result in slower loan

growth and higher credit costs, and; 2) Bank Negara curbs on mortgage LTV would

result in slower growth in the consumer space.

Alliance Financial Group: 1) higher-than-expected loan charge-offs and sluggish

loan growth if the domestic economy recovers more slowly than expected; and 2)

delay in further policy rate hikes by Bank Negara would result in slower margin

expansion than forecast.

AMMB Holdings: key downside risks include: 1) imposition of property loan-to-value (LTV) caps may be a negative catalyst; and 2) weaker-than-expected

economic growth could result in slower loan growth and higher credit costs.

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QSR Brands: 1) non-renewal of the franchise licence with Yum! after the 10+10

year contract period; 2) deteriorating domestic consumer confidence on worries of

a double dip in QSRs key markets; 3) fewer-than-expected store openings; and 4)

a sharp and sustained spike in input costs.

Media Prima: 1) if the global recovery is slower than expected, consumer

demand/sentiment and ultimately advertising spending will follow; 2) forex

changes a sharp depreciation in the ringgit would lead to significantly higher costsof programming content and newsprint; and 3) competition if competitors become

more aggressive in gaining TV adex market share, it may result in greater

discounting for ad space.

Genting Malaysia: although we believe that to a large extent fear of potential loss

of revenue to the two Singapore casinos has been largely priced in, a shaper-than-

expected fall in GENMs revenue would likely see the shares trading at a sharper

discount to RNAV. Conversely, lesser-than-expected loss in revenue could be an

upside risk to our estimates and price target. Historically, the shares have traded at

up to a 45% discount to RNAV in 1998 and 34% discount in 2001.

Malaysian Airline System: main price target risks for MAS are possibility of

variance in passenger volumes/yields, oil prices and currency movements from

Nomura estimates. Another downside risk is in delays of deliveries of its planes.

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ANALYST CERTIFICATIONSWe, Wai Kee Choong, Julian Chua, Jacinda Loh, Ke n Wong, Muzhafar Mukhtar, Daniel Raats, B.Roshan Raj, Andrew Kam Wing Lee, Tanuj Shori and Min Chow Sai, hereby certify (1) that the viewsexpressed in this Research report accurately reflect our personal views about any or all of the subjectsecurities or issuers referred to i n this Research report, (2) no part of our compensation was, is or willbe directly or indirectly related to the specific recommendations or views expressed in this Researchreport and (3) no part of our compensation is tied to any specific investment banking transactionsperformed by Nomura Securities International, Inc., Nomura International plc or any other NomuraGroup company.

Conflict-of-interest disclosuresImportant disclosures may be accessed through the following website:http://www.nomura.com/research/pages/disclosures/disclosures.aspx . If you have difficulty with thissite or you do not have a password, please contact your Nomura Securities International, Inc.salesperson (1-877-865-5752) or email [email protected] for assistance.Online availability of research and additional conflict-of-interest disclosuresNomura Japanese Equity Research is available electronically for clients in the US o n NOMURA.COM,REUTERS, BLOOMBERG and THOMSON ONE ANALYTICS. For clients in Europe, Japan andelsewhere in Asia it is available on NOMURA.COM, REUTERS and BLOOMBERG.Important disclosures may be accessed through the left hand side of the Nomura Disclosure web pagehttp://www.nomura.com/researchor requested from Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, please email [email protected] fortechnical assistance.The analysts responsible for preparing this report have received compensation based upon various

factors including the firm's total revenues, a portion of which is generated b y Investment Bankingactivities.Industry Specialists identified in some Nomura research reports are senior employees within the Firmwho are responsible for the sales and trading effort in the sector for which they have coverage. IndustrySpecialists do not contribute in any manner to the content of research report in which their namesappear.Distribution of ratings (Global)Nomura Global Equity Research has 1878 companies under coverage.48% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified asa Buy rating; 41% of companies with this rating are investment banking clients of the Nomura Group*.37% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classifiedas a Hold rating; 54% of companies with this rating are i nvestment banking clients of the NomuraGroup*.13% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are c lassified

as a Sell rating; 16% of companies with this rating are i nvestment banking clients of the NomuraGroup*.As at 30 September 2010.*The Nomura Group as defined in the Disclaimer section at the end of this report.Explanation of Nomura's equity research rating system in Europe, Middle East andAfrica, US and Latin America for ratings published from 27 October 2008The rating system is a relative system i ndicating expected performance against a specific benchmarkidentified for each individual stock. Analysts may also indicate absolute upside to price target defi nedas (fair value - current price)/current price, subject to limited management discretion. In most cases,the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using anappropriate valuation methodology such as discounted cash f low or multiple analysis, etc.STOCKSA rating of 'Buy',indicates that the analyst expects the stock to outperform the Benchmark over the

next 12 months.A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmarkover the next 12 months.A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark overthe next 12 months.A rating of 'RS-Rating Suspended', indicates that the rating and target price have been suspendedtemporarily to comply with applicable regulations and/or firm policies in certain circumstances includingwhen Nomura is acting in an advisory capacity in a merger or strategic transaction involving thecompany.Benchmarks are as follows: United States/Europe: Please see valuation methodologies for

explanations of relevant benchmarks for s tocks (accessible through the le ft hand side of the NomuraDisclosure web page: http://www.nomura.com/research);Global Emerging Markets (ex-Asia): MSCI

Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology.SECTORSA 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark duringthe next 12 months.A 'Neutral' stance, indicates that the analyst expects the sector to per form in line with the Benchmarkduring the next 12 months.A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark

during the next 12 months.Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; GlobalEmerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.

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Explanation of Nomura's equity research rating system for Asian companies undercoverage ex Japan published from 30 October 2008 and in Japan from 6 January2009STOCKSStock recommendations are based on absolute valuation upside (downside), which is defined as (PriceTarget - Current Price) / C urrent Price, subject to limited management discretion. In most cases, thePrice Target will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriatevaluation methodology such as discounted cash flow, multiple analysis, etc.A 'Buy' recommendation indicates that potential upside is 15% or more.A 'Neutral' recommendation i ndicates that potential upside is less than 15% or downside is less than5%.A 'Reduce' recommendation indicates that potential downside is 5% or more.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 includingwhen Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subjectcompany.Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regularresearch coverage of the Nomura entity identified in the top banner. Investors should not expectcontinuing or additional information from Nomura relating to such securities and/or companies.SECTORSA 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation ofthe stocks under coverage is) a positive absolute recommendation.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 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation ofthe stocks under coverage is) a negative absolute recommendation.Explanation of Nomura's equity research rating system in Japan published prior to 6January 2009 (and ratings in Europe, Middle East and Africa, US and Latin Americapublished prior to 27 October 2008)STOCKSA rating of '1' or 'Strong buy', indicates that the analyst expects the stock to outperform the

Benchmark by 15% or more o ver the next six months.A rating of '2' or 'Buy', indicates that the analyst expects the stock to outperform the Benchmark by 5%

or more but less than 15% over the next six months.A rating of '3' or 'Neutral', indicates that the analyst expects the stock to either outperform orunderperform the Benchmark by less than 5% over the next six months.A rating of '4' or 'Reduce', indicates that the analyst expects the stock to underperform the Benchmarkby 5% or more but less than 15% over the next six months.A rating of '5' or 'Sell', indicates that the analyst expects the stock to underperform the Benchmark by15% or more over the next six months.Stocks labeled 'Not rated' or shown as 'No rating' are not in Nomura's regular research coverage.

Nomura might not publish additional research reports concerning this company, and i t undertakes noobligation to update the analysis, estimates, projections, conclusions or other information containedherein.SECTORSA 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark duringthe next six months.A 'Neutral' stance, indicates that the analyst expects the sector to per form in line with the Benchmarkduring the next six months.A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark

during the next six months.Benchmarks are as follows: Japan: TOPIX; United States: S&P 500, MSCI World TechnologyHardware & Equipment; Europe, by sector - Hardware/Semiconductors: FTSE W Europe IT Hardware;

Telecoms: FTSE W Europe Business Services; Business Services: FTSE W Europe; Auto &Components: FTSE W Europe Auto & Parts; Communications equipment: FTSE W Europe ITHardware; Ecology Focus: Bloomberg World Energy Alternate Sources; Global Emerging Markets:MSCI Emerging Markets ex-Asia.Explanation of Nomura's equity research rating system for Asian companies undercoverage ex Japan published prior to 30 October 2008STOCKSStock recommendations are based on absolute valuation upside (downside), which is defined as (FairValue - C urrent Price)/Current Price, subject to limited management discretion. In most cases, the FairValue will equal the analyst's assessment of the current intrinsic fair value of the stock using anappropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. However, ifthe analyst doesn't think the market will revalue the stock over the specified time horizon due to a lackof events or catalysts, then the fair value may differ from the intrinsic fair value. In most cases,therefore, our recommendation is an assessment o f the difference between current market price andour estimate of current intrinsic fair value. Recommendations are set with a 6-12 month horizon unless

specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside ordownside based on the prevailing market price to di ffer from the upside or downside implied by therecommendation.A 'Strong buy' recommendation indicates that upside is more than 20%.A 'Buy' recommendation indicates that upside is between 10% and 20%.A 'Neutral' recommendation i ndicates that upside or downside is less than 10%.

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A 'Reduce' recommendation indicates that downside is between 10% and 20%.A 'Sell' recommendation indicates that downside is more than 20%.SECTORSA 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation ofthe stocks under coverage is) a positive absolute recommendation.A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation ofthe stocks under coverage is) a neutral absolute recommendation.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.

Price targetsPrice targets, if discussed, reflect in part the a nalyst's estimates for the company's earnings. Theachievement of any price target may be impeded by general market a nd macroeconomic trends, andby other risks related to the company or the market, and may not occur if the company's earnings differfrom estimates.

DISCLAIMERSThis publication contains material that has been prepared by the Nomura entity identified on the bannerat the top or the bottom of page 1 herein and, if applicable, with the contributions of one or moreNomura entities whose employees and their respective affiliations are specified on page 1 herein orelsewhere identified in the publication. Affiliates and subsidiaries of Nomura Holdings, Inc. (collectively,the 'Nomura Group'), include: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura Internationalplc, United Kingdom; Nomura Securities International, Inc. ('NSI'), New York, NY; Nomura International(Hong Kong) L td., Hong Kong; Nomura Financial Investment (Korea) Co., Ltd., Korea (Information on

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ACCURATE, COMPLETE, RELIABLE, FIT FOR ANY PARTICULAR PURPOSE ORMERCHANTABLE AND DOES NOT ACCEPT LIABILITY FOR ANY ACT (OR DECISION NOT TOACT) RESULTING FROM USE OF THIS PUBLICATION AND RELATED DATA. TO THE MAXIMUMEXTENT PERMISSIBLE ALL WARRANTIES AND OTHER ASSURANCES BY NOMURA GROUPARE HEREBY EXCLUDED AND NOMURA GROUP SHALL HAVE NO L IABILITY FOR THE USE,MISUSE, OR DISTRIBUTION OF THIS INFORMATION.Opinions expressed are current opinions as of the original publication date appearing on this materialonly and the information, including the opinions contained herein, are s ubject to change without notice.Nomura is under no duty to update this publication. If and as applicable, NSI's investment bankingrelationships, investment banking and non-investment banking compensation and securities ownership(identified in this report as 'Disclosures Required in the United States'), if any, are specified indisclaimers and related disclosures in this report. In addition, other members of the Nomura Group mayfrom time to time perform i nvestment banking or other services (including acting as advisor, manageror lender) for, or so licit investment banking or other business from, companies mentioned herein.Further, the Nomura Group, and/or its officers, directors and employees, including persons, withoutlimitation, involved in the preparation or issuance of this material may, to the extent permitted byapplicable law and/or regulation, have long or short positions in, and buy or sell, the securities(including ownership by NSI, referenced above), or derivatives (including options) thereof, ofcompanies mentioned herein, or re lated securities or derivatives. In addition, the Nomura Group,excluding NSI, may act as a market maker and principal, willing to buy and sell certain of the securitiesof companies mentioned herein. Further, the Nomura Group may buy and sell certain of the securitiesof companies mentioned herein, as agent for its clients.Investors should consider this report as only a single factor in making their investment decision and, assuch, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that maybe associated with any investment decision. Please see the further disclaimers in the disclosureinformation on companies covered by Nomura analysts available at www.nomura.com/research underthe 'Disclosure' tab. Nomura Group produces a number of different types of research product including,among others, fundamental analysis, quantitative analysis and short term trading ideas;recommendations contained in one type of research product may differ from recommendationscontained in other types of research product, whether as a result of differing time horizons,methodologies or otherwise; i t is possible that individual employees of Nomura may have different

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