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.

BEST IDEAS

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 Nomuras 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

Conviction List | Asia

Sean Darby

Cheat sheet

The conviction list

OUR FIRST MOVE In order to highlight the strongest investment ideas, recommendations and changes in views within Nomura coverage, we have decided to create a stock conviction list compiled from our bottom-up research. We have decided to include both straightforward Buy recommendations and also Sell and Switching ones as well. Here we launch our first conviction list. 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 10.44 PT Rating Call date Return na 6.66 REDUCE 17 Sep 09

HOW IT WORKS Only stocks covered by Nomuras research team will be candidates for inclusion. Equal weighting, performance measured both on an absolute basis and on a relative basis against MSCI Asia ex-Japan and Australia in US dollar terms. Maximum 25% of recommended stocks in one sector or one country. Stop losses will be implemented on the recommendations. For outright Buy recommendations the stop loss will be 15%, for Sell recommendations it will be 10%. For Switches the above will apply to the respective recommendation. Any corporate action such as

Code 323 HK 2303 TT 2343 HK KBANK TB 991 HK 998 HK

Price 5.35 15.85 5.66 77.25 4.59 5.37

PT 8.5 19 9.3 203,000 82* 6 6.1

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 154,000

Code MSIL IN TTMT IN 036460 KS 1055 HK

Price 1,500 569.05 56,300 2.51

PT 1,533*

Rating BUY

Call date Return na

dividends, scrip issues will be assumed to be undertaken unless where stipulated. Once a week a detailed

92.5** REDUCE 17 Sep 09 63,000 BUY

1.67 REDUCE 17 Sep 09

na

breakdown of performance will be published. Once a month, a review of the recommendations within the conviction list will be published. Transaction fees are not taken into account.

Note: Call date is the date the stock was added to the conviction list. Indian stocks are priced as of 15 September, 2009; others as of 17 September, 2009. Ratings and price targets are as of the date of the most recently published report (http://www.Nomura.com) rather than the date of this document. Transaction costs not included in returns. Past performance should not and cannot be viewed as an indicator of future performance. Complete record upon request. * PT under review with an upward bias. ** PT under review to account for the most recent data, but we maintain our REDUCE call, given what look to be overstretched valuations. Source: Bloomberg, Nomura research

Exhibit 1. Geographic distribution (aggregate)

Exhibit 2. 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, Nomura International (Hong Kong) Limited Investment Strategy

Nomura

18 September 2009

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. 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 have decided to include both straightforward Buy recommendations and also Sell and Switching ones as well. In this way, we hope to provide investors with a broad range of investment ideas that take advantage of any mis-pricing 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. 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. Since greater weight will be placed on fresh ideas or analyst rating changes that appear from the daily Nomura research, these will be correspondingly highlighted through regular changes to our conviction list. In order to ensure that there is no undue concentration of recommendations in one sector, one country or investment style and to ensure that the selected stocks are reasonably diversified, each month a series of quantitative screens will be used to highlight potential changes to the conviction list as well as additions. This should also mean that there is a transparent investment process. We have decided to do something quite radical by also including Switch recommendations expressing stock Sell and Buy ideas against each other. We will also include outright Sells where we believe it is appropriate and it is-line with analyst recommendations.
Conviction Buy, Sell and Switch calls within our universe bracketed by stance, trend, economy

No definite holding period, 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, 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. Only stocks covered by Nomuras research team will be candidates for inclusion. 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. There will be no greater concentration of 25% of recommended stocks in one sector or one country. Any changes to the suggested conviction list will be implemented after Asian equity markets have closed. They will be highlighted immediately in the next mornings daily research and through a separate research note. Closing prices will be used to determine the daily performance of the individual stocks. Stop losses will be implemented on the recommendations. For outright Buy recommendations the stop loss will be 15%, for Sell recommendations it will be 10%. For Switches the above will apply to the respective recommendation. Any corporate action such as dividends, scrip issues will be assumed to be undertaken unless where stipulated. Once a week a detailed breakdown of performance will be published. Once a month, a review of the recommendation within the conviction list will be published.

Nomura

18 September 2009

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. Equally, the removal or inclusion of a stock will not impinge on its inclusion within other suggested baskets recommended by quantitative analysts, macro strategists or sector analysts. Suspended stocks will be priced at the last trading price and will remain within the conviction list for a maximum of five days. Transaction fees are not taken into account. 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.

Top-down view: further earnings revision and rotation

Over the course of an economic cycle, equity prices tend to reflect different macro factors such as interest rates, exchange rates or government stimulus. Since 2Q09, changes in risk premium have dominated equity-market returns with high beta, return volatility and poor financial factors (such as net gearing) performing the best. With China and India front-running the global economy in this cycle, the breadth in earnings revision forecasts ought to widen. Ironically, changes in risk premiums and volatility have had a more profound effect on Asian prices than changes in earnings expectations. We expect the earnings revision factor to become a much more worthwhile investment tool over the next two quarters. 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, operating leverage counterparts that perform well when companies begin to respond to new orders. In Asia, these changes have been acute, with China, India and Indonesia not only being the most domestically-focused but also experiencing the highest credit growth and aggregate money supply. Hence, investors have paid for both financial leverage and the defensive aspects of these countries internal growth. In contrast, the more export-orientated economies have equally experienced the weakest credit growth. 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.
Asian markets have kept a ready eye on risk-related measures

but we see earnings revision emerging as an increasingly useful tool

Nomura

18 September 2009

Conviction List | Asia

Sean Darby

Stock selection

Key arguments for conviction calls

Exhibit 3. 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 are seeing signs of demand returning at the downstream industries, such as property, auto, and capital goods, which will lead to demand growth and higher prices. Maanshans 1H09 results were broadly in-line with our expectations. On a quarterly basis, 2Q09 operations actually showed strong improvement from 1Q09. Price recovery and a rising capacity utilisation rate supported a turnaround in 2Q09, which we believe will persist into 2H09F. We think the market has not factored in the structural change in long steel (ie, the diminishing pricing premium enjoyed by flat steel due to limited capacity expansion). We reiterate our BUY call. Analyst Josephine Ho +852 2252 2177 josephine.ho@nomura.com Nick Wang +852 2252 1598 nick.wang@nomura.com

UMC

2303 TT The turn from a profitless recovery to a profitable one supports our Bullish Rick Hsu stance on the sector. We forecast a turn to sustainable profitability from 2Q10F +886 2 2547 9331 onward, with Taiwan foundries making money to cover losses at peers. rick.hsu@nomura.com We believe the advanced IDM outsourcing story stands to boost the foundry sectors structural profitability and lift sector revenues at a CAGR of 22% over 2009-12F, outpacing the global semi average CAGR of 8%. UMC will be a key beneficiary, in our view. 2343 HK We maintain our positive view on the bulk shipping sector, underpinned by infrastructure-led demand and actual supply growth being significantly slower than actual growth. Hence, we maintain a BUY on Pacific Basin, with our HK$9.30 price target unchanged. 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. We expect rates to remain volatile but see a sustainable recovery from end-3Q09F onwards, driven by seasonal factors (coal demand in winter and the start of the grain harvest season) and robust steel demand. 036570 KS Overseas growth momentum remains the key to a further re-rating of the online gaming sector, which has witnessed resilient domestic growth in the current recessionary environment. NCSofts game, Aion, losing steam in China is double-discounted in the share price, in our view. We remain cautious on Aions momentum in China, but stay tuned in on potential upside surprise from the launch of Aion in the US. Upcoming teaser site opening for Guild Wars 2 will likely boost investor sentiment. Reiterate BUY. KBANK TB We expect a key shift in drivers for economic growth in Thailand, with the domestic economy driving growth rather than exports. Banks should be key beneficiaries, as domestic economy-led growth is much more credit intensive. We reiterate our BUY on KBANK. We expect the bank to continue to exhibit sector leading growth rates. The bank is also building a strong foundation to sustain growth over the medium term. We think valuations remain attractive. 991 HK We have positive view over the sector since power output growth is set to recover on a pick-up over the economy. And the market expects end-user power tariffs may be hiked (on-grid unchanged) in 2H09F underpinned by contained CPI in China, which removes the overhang on profit redirection from IPPs to power grids. Cost savings from growing coal output should lift margins Datangs internal coal output is slated to reach 40mn tonnes (20% of its total requirement) by FY10F and 120mn tonnes (40%) by FY12F. A stronger oil price lately would means Datangs coal-to-pp project becoming value accretive (from value destructive) Its quality power portfolio should help safeguard earnings from coal price fluctuations. 998 HK Policy fine-tuning is unlikely to be a turning point in the economic cycle. Current valuations for Chinese banks look undemanding. The pull-back in bank shares due to policy scares and sector/country rotation presents a good buying opportunity, in our view. While 1H09 net profits were -16% y-y, we see positive sequential movements in NII and fee income. With the likely NIM rebound and China Citic Banks rapid expansion, the bank should return to positive growth, with profitability improvement. Andrew Lee +852 2252 6197 andrew.lee@nomura.com Cecilia Chan +852 2252 6181 cecilia.chan@nomura.com

Pacific Basin

NCSoft

Stanley Yang +82 2 3783 2331 stanley.yang@nomura.com

Kasikornbank

Srikanth Vadlamani +65 6433 6957 srikanth.vadlamani@nomura.com

Datang Power

Ivan Lee, CFA +852 2252 6213 ivan.lee@nomura.com Evan Li +852 2252 2191 evan.li@nomura.com

China Citic Bank

May Yan +852 2252 6190 may.yan@nomura.com Allen Zhang (Associate) +852 2252 1559 qin.zhang@nomura.com

City Development

CIT SP While CDLs 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, anthony.darwell@nomura.com lifting earnings for FY10-11F and CDLs intrinsic NAV and price target. Nevertheless, we see inventory clearance at CDL and in the broader market being driven by pricing; hence we see broader market expectations of a sustained rise in asset prices as premature.

Nomura

18 September 2009

Conviction List | Asia

Sean Darby

Company Tata Motor

Bloomberg code Analyst comments TTMT IN TTMTs book value is only INR60bn (INR116.4/share) and the company had gross debt of INR349bn and net debt of some INR324bn. In such a scenario, cashflow from domestic operations may be just enough to meet interest costs. Note that in addition, the company plans to undertake capex of INR25bn per year. Also note that despite the rights issue of approx US$1bn, debt for JLR is still INR165bn (some US$03.4bn) compared to US$3bn raised at the time of acquisition. MSIL IN We believe there are a number of levers by which MSIL may be able to improve its margins from 1Q FY10 levels. Note that its margins are still much below its peak level (13%), although other auto companies in India have reported peak margins in their recent results. We are increasing our earnings estimates by 28% and 29% for FY10F and FY11F, respectively, to factor in higher margins and volume estimates. Our BUY call stands. 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, 2009; hence, if speculation regarding the restoration of the old air ticket pricing mechanism is realised, Chinese airlines share prices may be under pressure. We believe CSA would see the greatest negative impact, since it has the largest exposure (80% of overall revenues) to China domestic routes. 036460 KS With the resumption of cost pass-on from FY10F and receivables to be retreated by FY12F, we believe overhangs are removed and Kogas becomes a pure beneficiary of rising oil prices. At 0.8x FY10F P/BV, vs peers at 2.5x, valuations look attractive.

Analyst Kapil Singh 91.22.4037.4199 kapil.singh@nomura.com Prabhat Awasthi 91.22.4037.4180 prabhat.awasthi@nomura.com Kapil Singh 91.22.4037.4199 kapil.singh@nomura.com Prabhat Awasthi 91.22.4037.4180 prabhat.awasthi@nomura.com Jim Wong +852 2252 2195 jim.wong@nomura.com Shirley Lam +852 2252 2196 shirley.lam@nomura.com Ivan Lee, CFA +852 2252 6213 ivan.lee@nomura.com Grace Ding +852 2252 2193 grace.ding@nomura.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.Nomura.com) rather than the date of this document. For valuation methodology and risks to our price target, please refer to the most recently published report (http://www.Nomura.com). Source: Nomura estimates

Exhibit 4. Historical prices of the companies in the conviction list

Market Avg. 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) 4,456 6,352 1,409 2,773 5,477 6,949 27,045 6,705 5,302 8,977 2,125 3,612 25.1 35 13.5 69 20 15.1 31.6 Rating BUY BUY BUY TP 8.5 19 9.3 Last Price Performance (%) price 5.35 5.66 1M 5.9 3M YTD 5Y 11 93.8 100.3

15.85 15.7 48.1 113.3 -31.5 5.8 10.8 60.8 96.9 -8.3 192.8 57.9 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 203,000 154,000 32.8 BUY BUY BUY 82* 6 6.1 6.66 77.25 4.59 5.37 10.42

7.3 16.6 -2.3 14 8

12 39.1 0

11 102.6

22.8 REDUCE 67.3 REDUCE 26.7 BUY

2.2 19.4 63.6 57.9 52

92.5** 569.05 21.7 62.6 233.8 1,533* 1.67

1,500 11.2 39.5 172.8 322.8 2.51 2.9 23 94.6 28.7 -2.1 71.4

8.5 REDUCE 15.9

South Korea Power & Utilities

BUY 63,000 56,300 14.9 21.3

* PT under review with an upward bias. ** PT under review to account for the most recent data, but we maintain our REDUCE call given what look to be overstretched valuations. Indian stocks are priced as of 15 September, 2009; others as of 17 September, 2009 Source: Bloomberg; Nomura International (Hong Kong) Limited Investment Strategy

Nomura

18 September 2009

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 5.35 15.85 5.66 154,000 77.25 4.59 5.37 10.42 1,500 569.05 2.51 56,300 2009F 0.1 -0.1 0 8,219 5.6 0.3 0.4 0.5 10.9 42.2 -0.2 4,849 P/E (x) 2009F 54 na na 19 14 15 13 21 52 36 na 12 P/BV (x) 2009F 1.3 1.2 1 5.5 1.5 1.5 1.7 1.6 2.6 4.6 1.9 0.9 ROE (%) 2009F 3.3 -1 4.9 33.9 11.4 12.9 14 11.6 5.1 13.6 -14.1 8.4

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, 2009; others as of 17 September, 2009; * EPS in local currency. Source: Bloomberg; Nomura International (Hong Kong) Limited Investment Strategy

Nomura

18 September 2009

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. In addition, each of the research analysts referenced on page 1 hereof hereby certifies that no part of his or her compensation was, is, or will be, directly or indirectly related to the specific recommendations or views that he or she has expressed in this research report, nor is it tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or by any other Nomura Group company or affiliates thereof.

ISSUER SPECIFIC REGULATORY DISCLOSURES

Conflict-of-interest disclosures
Important disclosures may be accessed through the following website: http://www.nomura.com/research/Disclosures/public/main.asp. If you have difficulty with this site or you do not have a password, please contact your Nomura Securities International, Inc. salesperson (1-877865-5752) or email researchportal@nomura.co.uk for assistance.

Online availability of research and additional conflict-of-interest disclosures:

Nomura Japanese Equity Research is available electronically for clients in the US on NOMURA.COM, REUTERS, BLOOMBERG and THOMSON ONE ANALYTICS. For clients in Europe, Japan and elsewhere 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 page http://www.nomura.com/research or requested from Nomura Securities International, Inc., on 1-877865-5752. If you have any difficulties with the website, please email researchchannelsupport@nomura.co.uk for technical 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 by Investment Banking activities.

Distribution of Ratings:
Nomura Global Equity Research has 1613 companies under coverage. 36% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 33% of companies with this rating are investment banking clients of the Nomura Group*. 41% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 61% of companies with this rating are investment banking clients of the Nomura Group*. 21% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 6% of companies with this rating are investment banking clients of the Nomura Group*. As at 30 June 2009. *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 and Africa, 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. Analysts may also indicate absolute upside to price target defined as (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 an appropriate valuation methodology such as discounted cash flow or multiple analysis, etc. Stocks: A rating of "1", or "Buy", indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of "2", or "Neutral", indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of "3", or "Reduce", indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of "RS-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 company. Benchmarks are as follows: United States: S&P 500, MSCI World Technology Hardware & Equipment; 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.nomura.com/research); Global Emerging Markets (ex-Asia): MSCI Emerging Markets exAsia. Sectors: A "Bullish" stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A "Neutral" stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months.

Nomura

18 September 2009

Conviction List | Asia

Sean Darby

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; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.

Explanation of Nomuras 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), which is defined as (Price Target Current Price) / Current Price, subject to limited management discretion. In most cases, the Price Target will equal the analysts 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A "Buy" recommendation indicates that potential upside is 15% or more. A "Neutral" recommendation indicates that potential upside is less than 15% or downside is less than 5%. 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 including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Stocks labelled as "Not rated" or shown as "No rating" are not in Nomura's regular research coverage. 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. 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 of the stocks under coverage is) a negative absolute recommendation.

Explanation of Nomura's equity research rating system in Japan published prior to 6 January 2009 (and ratings in Europe, Middle East and Africa, US and Latin America published prior to 27 October 2008):
Stocks: A rating of "1", or "Strong buy", indicates that the analyst expects the stock to outperform the Benchmark by 15% or more over 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 or underperform 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 Benchmark by 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 by 15% 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 it undertakes no obligation to update the analysis, estimates, projections, conclusions or other information contained herein. Sectors: A "Bullish" stance, indicates that the analyst expects the sector to outperform the Benchmark during the next six months. A "Neutral" stance, indicates that the analyst expects the sector to perform in line with the Benchmark during 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 Technology Hardware & 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 IT Hardware; 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 under coverage ex Japan published prior to 30 October 2008:
Stocks: Stock recommendations are based on absolute valuation upside (downside), which is defined as (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 an appropriate valuation methodology such as Discounted Cash Flow or Multiple analysis etc. 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, then the fair value may differ from the intrinsic fair value. In most cases, therefore, our recommendation is an assessment of the difference between current market price and our estimate of current intrinsic fair value. Recommendations are set with a 6-12 month horizon unless

Nomura

18 September 2009

Conviction List | Asia

Sean Darby

specified otherwise. Accordingly, within this horizon, price volatility may cause the actual upside or downside based on the prevailing market price to differ from the upside or downside implied by the recommendation. 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 indicates that upside or downside is less than 10%. A "Reduce" recommendation indicates that downside is between 10% and 20%. A "Sell" recommendation indicates that downside is more than 20%. 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. 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 of the stocks under coverage is) a negative absolute recommendation.

Price targets
Price targets, if discussed, reflect in part the analyst's estimates for the company's earnings. The achievement of any price target may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

DISCLAIMERS
This publication contains material that has been prepared by the Nomura entity identified on the banner at the top or the bottom of page 1 herein and, if applicable, with the contributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or elsewhere identified in the publication. Affiliates and subsidiaries of Nomura Holdings, Inc. (collectively, the "Nomura Group"), include: Nomura Securities Co., Ltd. ("NSC") Tokyo, Japan; Nomura International plc, United Kingdom; Nomura Securities International, Inc. ("NSI"), New York, NY; Nomura International (Hong Kong) Ltd., Hong Kong; Nomura Singapore Ltd., Singapore; Nomura Australia Ltd., Australia; P.T. Nomura Indonesia, Indonesia; Nomura Securities Malaysia Sdn. Bhd., Malaysia; Nomura International (Hong Kong) Ltd., Taipei Branch, Taiwan; Nomura International (Hong Kong) Ltd., Seoul Branch, Korea; Nomura Financial Advisory and Securities (India) Private Limited, Mumbai, India (Registered Address: 2nd Floor, Ballard House, Adi Marzban Path, Ballard Pier, Fort, Mumbai, 400 001; SEBI Registration No:- BSE INB011299030, NSE INB231299034, INF231299034). This material is: (i) for your private information, and we are not soliciting any action based upon it; (ii) not to be construed as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such offer or solicitation would be illegal; and (iii) based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are current opinions as of the original publication date appearing on this material only and the information, including the opinions contained herein, are subject to change without notice. If and as applicable, NSI's investment banking relationships, 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 in disclaimers and related disclosures in this report. In addition, other members of the Nomura Group may from time to time perform investment banking or other services (including acting as advisor, manager or lender) for, or solicit investment banking or other business from, companies mentioned herein. Further, the Nomura Group, and/or its officers, directors and employees, including persons, without limitation, involved in the preparation or issuance of this material may, to the extent permitted by applicable 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, of companies mentioned herein, or related 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 securities of companies mentioned herein. Further, the Nomura Group may buy and sell certain of the securities of companies mentioned herein, as agent for its clients. Investors should consider this report as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. NSC and other non-US members of the Nomura Group (i.e., excluding NSI), their officers, directors and employees may, to the extent it relates to non-US issuers and is permitted by applicable law, have acted upon or used this material prior to, or immediately following, its publication. Foreign currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. The securities described herein may not have been registered under the U.S. Securities Act of 1933, and, in such case, may not be offered or sold in the United States or to U.S. persons unless they have been registered under such Act, or except in compliance with an exemption from the registration requirements of such Act. Unless governing law permits otherwise, you must contact a Nomura entity in your home jurisdiction if you want to use our services in effecting a transaction in the securities mentioned in this material. This publication has been approved for distribution in the United Kingdom and European Union as investment research by Nomura International plc ("NIPlc"), which is authorised and regulated by the U.K. Financial Services Authority ("FSA") and is a member of the London Stock Exchange. It does not constitute a personal recommendation, as defined by the FSA, or take into account the particular

Nomura

10

18 September 2009

Conviction List | Asia

Sean Darby

investment objectives, financial situations, or needs of individual investors. It is intended only for investors who are "eligible counterparties" or "professional clients" as defined by the FSA, and may not, therefore, be redistributed to retail clients as defined by the FSA. This publication may be distributed in Germany via Nomura Bank (Deutschland) GmbH, which is authorised and regulated in Germany by the Federal Financial Supervisory Authority ("BaFin"). This publication has been approved by Nomura International (Hong Kong) Ltd. ("NIHK"), which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. Neither NIPlc nor NIHK hold an Australian financial services licence as both are exempt from the requirement to hold this license in respect of the financial services either provides. This publication has also been approved for distribution in Malaysia by Nomura Securities Malaysia Sdn. Bhd. In Singapore, this publication has been distributed by Nomura Singapore Limited (NSL). NSL accepts legal responsibility for the content of this publication, where it concerns securities, futures and foreign exchange, issued by its foreign affiliate in respect of recipients who are not accredited, expert or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this publication may contact NSL in respect of matters arising from, or in connection with, this publication. NSI accepts responsibility for the contents of this material when distributed in the United States. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of the Nomura Group member identified in the banner on page 1 of this report. Further information on any of the securities mentioned herein may be obtained upon request. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this publication, which may arise as a result of electronic transmission. If verification is required, please request a hard-copy version.

Additional information available upon request.

NIPlc and other Nomura Group entities manage conflicts identified through the following: their Chinese Wall, confidentiality and independence policies, maintenance of a Stop List and a Watch List, personal account dealing rules, policies and procedures for managing conflicts of interest arising from the allocation and pricing of securities and impartial investment research and disclosure to clients via client documentation.

Disclosure information is available at the Nomura Disclosure web page: http://www.nomura.com/research

Nomura International (Hong Kong) Limited 30/F Two International Finance Centre, 8 Finance Street, Central, Hong Kong

Tel: +852 2536 1111 Fax: +852 2536 1820

Caring for the environment: to receive only the electronic versions of our research, please contact your sales representative.

Nomura

11

18 September 2009