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Deutsche Bank Group Markets Research

Global

Periodical

DB Today - Global/Macro

Date

7 July 2016

Thursday 7th July 2016

________________________________________________________________________________________________________________

Deutsche Bank Securities Inc.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

Amy Tan

Research Analyst

(+1) 212 250-5574

[email protected]

Mairead Smith

Equity Focus

(+44) 20 754-71054

[email protected]

Mark Braley, ACA

Research Analyst

(+44) 20 754-59904

[email protected]

Tim Pierotti

Quantitative

(+1) 212 250 8143

[email protected]

MACRO HIGHLIGHTS

Credit Strategy - Early Morning Reid - Jim Reid The tally of UK property funds suspending redemptions this week increased to 7 yesterday with Bloomberg suggesting that this covers more than £15bn of assets. The total size of the retail UK commercial property market is around £25bn according to the FT so more than 60% of it has been gated in 3 days this week. The news of the latest fund added to that list came late last night and it generated a few headlines as, alongside a 24 hour redemption freeze being put in place, the fund also announced that it will make a ‘dilution adjustment’ to the fund which lead to a 17% decline in the funds’ dealing price. Details on page 7

US Economics - US Daily Economic Notes - Joseph LaVorgna Yesterday, we learned that the non-manufacturing ISM increased 3.6 points in June to 56.5, which was the highest level since November 2015 (56.6). Within the details of the survey, the improvement was broad based: Business activity (59.5 vs. 55.1), new orders (59.9 vs. 54.2), supplier deliveries (54.0 vs. 52.5) and employment (52.7 vs. 49.7) all showed healthy gains in the month. Arguably, the employment component is the most useful portion of the non-manufacturing ISM because it is related to the trend in private payrolls. This is intuitive given that service-sector jobs account for 84% of the latter. Similarly, the employment component of the manufacturing ISM, which we learned last week edged up 1.2 points to 50.4 in June, is also a leading indicator of the trend in goods-producing hiring, which comprises 16% or private payrolls. While the recent gains in both series are a modest positive, the overall trend in private payroll growth is likely to deteriorate further. Details on page 8

GLOBAL MARKET WRAP

INDEX Close 1D YTD %Chg %Chg

S&P 500 2099.73 0.54 2.73

NASDAQ 4859.16 0.75 -2.96

DOW 17918.62 0.44 2.83

DJ STOXX 50 2794.58 1.20 -14.47

FTSE 100 INDEX 6550.40 1.34 4.94

HANG SENG INDEX 20706.92 1.03 -5.51

MSCI Asia ex Japan 497.95 -1.37 -0.40

BRAZIL BOVESPA 51901.81 0.12 19.73

RTS-2 INDEX 821.94 0.78 29.89

COMMODITY PRICES

COMMODITIES Close 1D YTD %Chg %Chg

West Texas 47.43 1.78 28.05

Brent 47.14 -0.32 31.86

CRB 189.96 0.16 7.84

Copper 213.90 -0.58 0.19

Gold (Spot) 1366.48 0.20 28.74

Alum. (LME) 1653.00 -0.12 9.69

Baltic Dry 694.00 0.29 45.19

FOREIGN EXCHANGE PRICES

FOREX (vs US$) Close 1D YTD %Chg %Chg

HK$ 7.76 0.00 -0.10

EUR 1.11 -0.15 2.09

JPY 101.01 0.31 19.02

GBP 1.30 0.39 -11.90

Source: Bloomberg Finance Lp

DERIVATIVES

Current %-ile Value Rank

SPX 3M Mat ATM-Strike Imp Vol 14.28 29.37

SPX 3M Mat 90%-110% IV Skew 11.26 41.27

SPX 3M Mat Realized Vol 13.61 28.74

Source: Bloomberg Finance Lp,

CREDIT

Credit Close 1D YTD %Chg %Chg

CDX.NA.IG 76.34 -3.35 -13.49

ITRX.Europe 81.15 -0.92 5.32

CDX.NA.HY 103.19 0.33 1.92

ITRAX.XOVER 361.02 1.65 14.82

Source: Bloomberg Finance LP

Distributed on: 07/07/2016 08:54:47GMT

7 July 2016



KEY COMPANY RESEARCH

ASIA China Movies Tallan Zhou : We project a three-stage growth phase for China’s movie industry. We see physical exposure leading to a total market size of RMB81bn (USD12.6bn) by 2020E, a CAGR of 13%. With volume growth, we expect the average ticket price to rise from RMB35 to RMB46 as audiences are increasingly willing to pay for premium products. China’s fragmented movie industry consists of upstream/downstream theater operators and online ticket platforms. With its size and profitability expanding asymmetrically, benefiting only strong players, we expect the pace of consolidation to accelerate. We introduce a scorecard that assesses the M&A backdrop. We see Wanda as the long-term winner. Details on page 9 Thai Telecom Joe Phanich: We think it’s time to take a fresh look at the Thai Telco sector. Despite a series of mishaps that led to a half trillion baht market capitalization loss in 2015, we are starting to see subtle signs of positive developments in the industry, we are starting to see some positive changes. AIS could potentially raise its 2016 EBITDA margin guidance in the near-term, DTAC could acquire new spectrum to operate beyond 2018, and TRUE may taper down its aggressive subsidy campaign next year. We continue to recommend AIS and Intouch as our top picks for their dividend yields (7% and 8%, respectively). Details on page 10 CK Hutchison (0001.HK),HKD82.4 Buy Price Target HKD108 James Wang : With Iliad announcing itself as the definitive remedy taker and a potential fourth mobile operator in Italy, the 3 Italia/Wind JV appears increasingly likely and we may see the deal approved ahead of the 8 Sept EU deadline. While Iliad has been disruptive to the French market, our European telecom analyst believes the impact of its entry in Italy will be less damaging given industry ARPU is already low and competition fierce. We see significant EBITDA (~8%) accretion to CKH from the deal and with the potential market share loss manageable (flat revenue for the next 3 years) and also roaming costs to be received from Iliad, this deal could be a key growth driver for CKH; retain Buy.. Details on page 11 EMERGING EUROPE Russian Metals and Mining George Buzhenitsa: While we remain cautious on industrial metals/bulks, our macro team is turning positive on the ruble ... for a change. This call has meaningful implications for the Russian metals and mining companies, which had enjoyed disproportionate margin expansion in the past 24 months. Our new forecasts for FY17-19E are below those of the Street, and we cut our ratings for Severstal and UC Rusal (Hold to Sell). Alrosa, trading at half Norilsk’s multiples, is the only Buy-rated name in the metals and mining universe. Details on page 12 EUROPE European Airlines Anand Date: Post the Breferendum we believe investor concerns are two-fold: (i) will demand weaken (we think yes) and (ii) will changing regulation materially impinge on currently operated networks and corporate structures (we think no). On the former we assume already weakening consumer and business confidence will impact top-line performance; we cut our sector EBIT forecasts by 18-27% on lower yield expectations. On potential regulatory change however - which in our view could be the more serious impact to medium term corporate value - we think the implications are neither lasting nor severe. In the short-term expect weak sentiment, for the medium term buy IAG/EZJ/RYA. Details on page 13 Nordic Banks Omar Keenan: We are strategically overweight Nordic banks and expect them to be seen as the sector safe haven play in a period of political and economic uncertainty. We would be long Nordea vs SEB over 2Q results, and we would remain long Swedbank vs SHB, and long DNB and Danske vs the sector. We are cautious on SEB given its exposure to weaker capital markets revenues, and we are sidelined on SHB in light of its struggling NII and UK exposure. We shift our most preferred Swedish bank from Swedbank to Nordea. We think concerns on fines and capital are overdone and could lift over the next two quarters. Details on page 14

7 July 2016



KEY COMPANY RESEARCH

Global Cement Watch Glynis Johnson : With cement data and company updates supporting the view of a robust Q2 16 in developed markets (emerging markets still a mixed bag - scope for upside surprise in India potentially offset by lacklustre demand elsewhere), we believe the sector may see some glimmer of improving sentiment in the coming months. We remain selective in the sector, continuing to prefer stocks with greater US and France/ Germany exposure (Saint Gobain, Heidelberg), and those supported by cheaper valuations (LafargeHolcim). Details on page 15 Margin Monitor July 2016 David Lock: With data for April & May now reported, it is clear that 2Q16 spreads have continued to fall on both front & back books: tracking -4-5bps vs 1Q16, driven by continued falls in loan pricing not offset in deposits. We are 2% below consensus for 2017 NII / total income in our coverage universe. We see margin compression as a key risk for earnings outlook. Since Jan-10, loans in Eurozone have grown 0.5%, but margins have now fallen 14%. If the YTD pace continues for the rest of 2016 (May declined, though not as fast as April), we see risks of -18bps (c.8%) spread compression in 2016. 'Safest' countries from a relative margin perspective are Sweden & Netherlands (+ UK in short-term). Details on page 16 NORTH AMERICA US Banks Matt O-Connor: As a reminder, Bank Tear Sheets is a 19 page report that includes a one-page earnings template for each bank we cover. The worksheets include key metrics from the income statement, balance sheet, and credit. They have a consistent layout and feel, but are customized to highlight key items for each bank (e.g. fee revenue breakout, lumpy gains/losses, etc). We’ve also included earnings prep pages from Cheat Sheets—incl mgmt outlook comments, 2Q EPS estimates (DB & consensus), reporting dates (and conference call times and dial in details), etc.. Details on page 17

7 July 2016



TODAY’S HEADLINES

Markets: European equities continue to unwind post-Brexit rebound, US equities erase early losses to close firmer as non-manufacturing ISM up solidly, oil rebounds.

USA: FOMC minutes note labour market/Brexit uncertainty as reasons to delay hikes.

USA: Fed's Tarullo says better to wait for more convincing evidence of sustained inflation.

USA: ISM non-manufacturing composite index up 3.6pts to 56.5 in June, above mkt.

USA: Markit services PMI revised up 0.1pt to 51.4 in May, down from 51.3 in May.

USA: MBA new purchase mortgage applications index up 4.3% last week.

USA: Trade deficit widens USD3.7bn to USD41.1bn in May, narrower than expected.

CAN: Trade deficit narrows CAD0.04bn to CAD3.28bn in May, below mkt.

EMU: Retail PMI down 2.1pts to 48.5 in June.

DEU: Factory orders flat in May, down 0.2%yoy, below mkt.

ESP: Industrial output rises 1.0%yoy (sa) in May, below mkt.

SWE: Unemployment rate up 0.2pp to 3.8% in June.

SWE: Riksbank leaves policy rate at -0.5%, at mkt, says hikes not likely until H2 ’17.

THE DAY AHEAD.

USA: ADP employment report (Jun), Initial jobless claims, Bloomberg consumer

comfort, Challenger job cuts (Jun); CAN: Building permits (May), Ivey PMI (Jun); EMU:

ECB’s minutes, ECB’s Lautenschlaeger, Constancio speaks; UK: Lloyds business

barometer (Jun), Halifax house prices (Jun), IP (May); DEU: IP (May); FRA: Current

account (May) ; CHE: CPI (Jun); DNK: IP (May); NOR: IP (May); JPN: BoJ's Kuroda

speaks, Tokyo Avg office vacancies (Jun), Leading index (May P); CHN: FX reserves

(Jun); NZL: RBNZ’s Spencer speaks, ANZ Truckometer (Jun)

Source: Extract from DB Daily published on 07 July 2016

7 July 2016



Forecast G7 Quarterly GDP growth

% qoq saar/annual: % yoy

Q1 15 Q2 15 Q3 15 Q4 15F Q1 16 Q2 16F Q3 16F Q4 16F 2015 2016F 2017F

US 2.9 2.7 2.1 2.0 2.1 1.4 1.2 1.3 2.4 1.5 2.2

Japan 5.2 -1.7 1.7 -1.8 1.9 -0.8 1.2 1.2 0.6 0.3 1.3

Euroland 2.2 1.5 1.3 1.7 2.2 1.4 1.8 1.8 1.6 1.5 1.5

Germany 1.6 1.6 1.1 1.1 2.7 0.4 2.1 2.1 1.7 1.7 1.6

France 2.6 -0.4 1.5 1.7 2.6 1.1 1.4 1.8 1.2 1.2 1.5

Italy 1.5 1.3 0.8 0.7 1.0 1.3 1.4 1.0 0.8 1.1 1.1

UK 1.8 2.4 1.8 2.4 1.4 2.4 2.4 2.4 2.3 1.7 2.1

Canada -1.0 -0.5 2.2 0.5 2.4 -0.6 2.3 2.1 1.1 1.3 2.0

G7 1.6 2.1 1.8 0.9 1.4 0.8 1.5 2.1 1.8 1.3 1.9 a) Euroland forecasts as at the last forecast round on 01/04/16. Bold figures signal upward revisions, bold, underlined figures signal downward revisions. (b)GDP figures refer to working day adjusted data, except Germany. (c) HICP figures for euro-zone countries and the UK (d) Current account figures for Euro area countries include intra regional transactions. e) The world aggregate has been calculated based on the IMF weights released in October 2015. Sources: National authorities, Deutsche Bank Research Data updated from Global Economics Perspective note published on 16 June 2016

Commodities: Energy Commodities & Precious Metals Price Forecasts

USD Q4 15 2015 Q1 16 Q2 16 Q3 16 Q4 16 2016 Q1 17 Q2 17 Q3 17 Q4 17 2017 2018

WTI (bbl) 43.6 49.2 33.6 45.6 47.0 48.0 43.6 51.0 51.0 55.0 55.0 53.0 65.0

Brent (bbl) 46.5 54.2 35.2 47.0 49.0 50.0 45.4 53.0 53.0 57.0 57.0 55.0 70.0

US Natural Gas (mmBtu) 2.30 2.66 1.96 2.14 2.73 2.88 2.41 3.03 3.11 2.99 3.39 3.13 3.01

Gold 1104 1161 1184 1255 1330 1350 1280 1350 1320 1280 1360 1328 1310

Silver 14.8 15.7 14.9 16.6 18.3 18.7 17.1 18.8 18.0 17.4 18.5 18.2 18.0

Aluminium

USc/lb 67.8 75.5 68.7 71.2 69.4 70.3 69.9 69.9 69.4 69.9 69.4 69.4 71.2

USD/t 1494 1664 1515 1570 1530 1550 1541 1540 1530 1540 1530 1535 1570

Copper

USc/lb 221.9 250.1 212.3 213.2 199.6 208.7 208.5 199.6 195.1 204.2 213.2 203.0 227.9

USD/t 4890 5512 4678 4700 4400 4600 4595 4400 4300 4500 4700 4475 5023 Source: Deutsche Bank, Figures are period averages Data updated from Commodities Digest note published on 6 July 2016

CENTRAL BANK POLICY (%)

Current Q4-16F Q2 17F Q4-17F

US 0.375 0.625 0.875 1.125

Eurozone 0.00 0.00 0.00 0.00

Japan -0.10 -0.20 -0.20 -0.20

UK 0.50 0.50 0.75 1.00

China 1.50 1.25 1.25 1.25 Source: The House View published on 21 June 2016 * Updated from the House View published on 21 June 2016

7 July 2016



FORECAST FOREIGN EXCHANGE RATES

Vs US Dollar vs. Euro

Countries Current Dec 16 Jun 17 Dec 17 Current Dec 16 Jun 17 Dec 17

United States - - - - 1.11 1.05 0.98 0.90

Japan 101.01 105 109 113 111.72 110 107 102

Euroland 0.90 0.95 1.03 1.11 - - -

United Kingdom 0.77 0.87 0.87 0.87 0.85 0.91 0.85 0.78

Switzerland 0.98 1.09 1.19 1.33 1.08 1.14 1.17 1.20

Canada 1.29 1.34 1.37 1.40 1.43 1.41 1.34 1.26

China 6.68 7.00 7.00 7.00 7.40 7.35 6.86 6.30

India 67.43 68 69 69 74.62 71 67 62 * Sources: Deutsche Bank, Bloomberg, Datastream. Data last updated form ‘Macro Forecasts’ report published on 28June 2016 Current rates taken from Bloomberg Finance Lp

GOVERNMENT RATES Current Q4-16F Q2-17F Q4-17F

US 10Y yield 1.38 1.75 1.75 1.75

EUR 10Y yield -0.11 0.40 0.60 1.10 Source: The House View published on 21 June 2016 *Current Rates taken from Bloomberg Finance Lp

INDEX FORECASTS Current* 2016

DJ Stoxx 600 323.80 380

FTSE 100 6562.34 NA

Dax 600 9472.22 NA

MSCI AC World 395.84 NA

S&P 500 2099.73 2200 Source: : The Equity View published on 5 May 2016 *Current Rates taken from Bloomberg Finance Lp

CORPORATE ACCESS

UPCOMING CONFERENCES/TRIPS/EVENTS

Date Conferences

July 8, 2016 dbAccess China Consumer and Media Corporate Day

September 5 – 6, 2016 dbAccess Philippines Corporate Day @ London September 6 – 7, 2016 Aircraft Finance and Leasing Conference @ New York

September 7 – 8, 2016 15th Annual Global Emerging Markets One-on-One Conference @ New York

September 8, 2016 Airline One on One Day @ New York

September 14, 2016 dbAccess Metals & Mining Conference @ London Source: Deutsche Bank For more details log on to www.conferences.db.com

7 July 2016



Early Morning Reid Macro Strategy

The tally of UK property funds suspending redemptions this week increased to 7 yesterday with Bloomberg

suggesting that this covers more than £15bn of assets. The total size of the retail UK commercial property market is

around £25bn according to the FT so more than 60% of it has been gated in 3 days this week. The news of the

latest fund added to that list came late last night and it generated a few headlines as, alongside a 24 hour

redemption freeze being put in place, the fund also announced that it will make a ‘dilution adjustment’ to the fund

which lead to a 17% decline in the funds’ dealing price.

Property is an illiquid asset and this week shows what can happen to illiquid assets when the fundamentals/facts

change. Given the illiquidity of many other financial markets these days due to post crisis regulations this is perhaps

a glimpse of what the future might hold in the next recession for other assets. That's a story for another day but it's

been another tricky 24 hours for UK property related assets, Sterling and European bank shares. Indeed despite

holding in relatively well on Tuesday the FTSE 100 was down -1.25% yesterday which was only a slight

outperformance relative to the performance of other European bourses. The Stoxx 600 was -1.67%, DAX -1.67%

and FTSE MIB -2.26%. Lloyds, Aviva and RBS were all down over 6% to lead losses while Standard Life (-3.50%),

L&G (-3.86%) and Prudential (-4.32%) all stood out too. Sterling (-0.70%) took its post-Brexit losses to nearly 14%

and has held below 1.30 this morning (currently hovering around 1.2945). It's worth highlighting that yesterday DB

reaffirmed their longstanding $1.15 call for cable by year end (along with 0.90 versus the Euro) although they also

highlight that these aggressive forecasts may even be still understating the level of weakness required in Sterling.

Meanwhile the Euro Stoxx Banks index fell -2.38% and is now down over 6% alone this week and -24% versus pre-

Brexit.

One of the many reasons for concern over the continued weakness in European bank shares is the possible impact

it might have on lending. We've republished a chart we've used a few times before in today's PDF showing Euro

bank equity versus bank lending 12 months later. History since 2000 suggests that the former is a very good lead

indicator of the latter. So the authorities must surely be worried about this recent poor performance.

Jim Reid (+44) 20 754-72943

[email protected]

7 July 2016



US Daily Economic Notes What do the ISM employment components imply?

Commentary for Today: Yesterday, we learned that the non-manufacturing ISM increased 3.6 points in June to 56.5,

which was the highest level since November 2015 (56.6). Within the details of the survey, the improvement was

broad based: Business activity (59.5 vs. 55.1), new orders (59.9 vs. 54.2), supplier deliveries (54.0 vs. 52.5) and

employment (52.7 vs. 49.7) all showed healthy gains in the month. Arguably, the employment component is the most

useful portion of the non-manufacturing ISM because it is related to the trend in private payrolls. This is intuitive given

that service-sector jobs account for 84% of the latter. Similarly, the employment component of the manufacturing

ISM, which we learned last week edged up 1.2 points to 50.4 in June, is also a leading indicator of the trend in goods-

producing hiring, which comprises 16% or private payrolls. While the recent gains in both series are a modest

positive, the overall trend in private payroll growth is likely to deteriorate further.

In the chart below, we take the three-month trailing average of the employment components of the manufacturing

and non-manufacturing ISM surveys and weight them by the share of their respective sectors within private

employment. We then compare this blended employment component to the three-month trailing average of private

payroll gains. As we can see, the two series are highly correlated (0.92). (We would like to acknowledge our colleague

Jerome Saragoussi in Strategy, who has done a similar analysis of the aforementioned series). As of June, the three-

month average of the blended-ISM employment series was 51.4, which points to only a modest expansion in private-

sector hiring. In fact, a simple linear regression of the three-month average gain of private payrolls on our weighted-

ISM employment component points to an average gain of just 97k in the former. As of May, the three-month trailing

average of private payroll gains was 107k. Thus, our weighted-ISM employment model implies a slightly lower

private-payroll print in June than our current 150k projection.

To be sure, our ISM employment series does not do a good job of predicting the month-over-month change in private

payrolls—nor does any other employment series given that the standard deviation of the latter over the past two years

has been nearly 70k. However, this morning's ADP private employment report has been one of the better predictors

of the trend in private payrolls over broader periods of time. In turn, we will adjust our forecast if there is any outsized

result.

Joseph Lavorgna (+1) 212 250-7329

[email protected]

7 July 2016



China Movies Quantity to quality to consolidation

Companies Mentioned

Wanda Cinema (002739.SZ),CNY75.97 Buy Price Target CNY115.00

IMAX China (1970.HK),HKD37.15 Sell Price Target HKD36.00

10-year staging of China movie industry We project a three-stage growth phase for China’s movie industry. We see physical exposure leading to a total market size of RMB81bn (USD12.6bn) by 2020E, a CAGR of 13%. With volume growth, we expect the average ticket price to rise from RMB35 to RMB46 as audiences are increasingly willing to pay for premium products. China’s fragmented movie industry consists of upstream/downstream theater operators and online ticket platforms. With its size and profitability expanding asymmetrically, benefiting only strong players, we expect the pace of consolidation to accelerate. We introduce a scorecard that assesses the M&A backdrop. We see Wanda as the long-term winner.

Quantity growth till 2020E; likely to be a RMB81bn movie market Aggregate growth rates of the movie industry nationwide do not adequately reflect important regional differences. Although the movie screen penetration of China’s tier 1 cities exceeds other Asian developed markets, i.e. Japan, that of its tier 4-5 cities lags far behind. We break down China’s movie market into 244 cities (tiers 1-5) and forecast screen penetration ratios (movie screens per million people). We forecast average screen penetration of 40 screens per million people by 2020, from the current 23. We expect the country to have 58,000 movie screens by 2020, primarily driven by tier 3-4 cities. We assume screen output (box office per screen) will be unchanged at RMB1.4m. Our RMB81bn box office forecast implies a CAGR of 13% in the period.

Quality growth till 2025E; ticket prices could gradually rise to RMB40 Ticket ASPs are unlikely to rise in 2016-2020E as the supply of movie screens will likely increase significantly to meet increasing demand. Indeed, over the past five years, hikes in the average movie ticket price in China have underperformed CPI growth. In markets where supply is largely static – the US, for example, on which we conduct a case study – ASP has been the main driver in the past 20 years. We believe China should follow the same pattern as the US, and forecast it will likely record a 5.8% CAGR over 2021-2025E, driven by a product mix change as consumers trade up. We expect the penetration of non-conventional theaters (premium, IMAX, 4K, giant screens) to reach 20% in tiers 1 and 2 cities, and 5% in lower tier cities by 2025E.

Consolidation is happening China’s movie industry is evolving at a time when traditional distinctions between studios and theatre owners are being blurred by a strategic purpose by internet and media groups to control content, distribution, and the end consumer. Its industry consolidation should thus develop along different lines from other countries. Our scorecard identifies resourceful downstream cinema operators as the most likely to lead the consolidation, having stronger motivation to expand and stronger negotiation power. Smaller operators of cinemas in prime locations or high-traffic shopping plazas are likely to be acquisition targets.

Wanda Cinema – the potential winner in the long run We derive our target prices based on DCF to capture the long-term growth potential of China’s movie market. We apply our in-house 3.9% risk-free rate and 5.6% equity risk premium. We value Wanda Cinema at RMB111 and IMAX China at HKD36. Key risks: 1) the removal of favorable government policies; 2) increased competition from online media, and 3) a lack of high-quality movies.

This report recommends one or more “pair trades” involving the simultaneous purchase of one or more securities and sale of one or more other securities. As the name implies, this is a trade idea (not fundamental research) that is only recommended to be executed in its entirety. As such, the buy and sell components of the trade might not align with the analyst’s current fundamental research rating on the stocks involved on a stand alone basis.

Tallan Zhou (+852 ) 2203 6464

[email protected]

7 July 2016



Thai Telecom Flickering Hope

Companies Mentioned

Total Access Comm. (DTAC.BK),THB32.25 Buy Price Target THB55.00

True Corporation (TRUE.BK),THB7.60 Hold Price Target THB7.20

Intouch Holdings PCL (INTUCH.BK),THB54.00 Buy Price Target THB62.00

AIS (ADVANC.BK),THB158.50 Buy Price Target THB190.00

Pressure could ease for Thai telcos in 2H16

We think it’s time to take a fresh look at the Thai Telco sector. Despite a series of

mishaps that led to a half trillion baht market capitalization loss in 2015, we are

starting to see subtle signs of positive developments in the industry, we are

starting to see some positive changes. AIS could potentially raise its 2016 EBITDA

margin guidance in the near-term, DTAC could acquire new spectrum to operate

beyond 2018, and TRUE may taper down its aggressive subsidy campaign next

year. We continue to recommend AIS and Intouch as our top picks for their

dividend yields (7% and 8%, respectively).

Increasing 2016-17 earnings for Intouch, AIS, TRUE; decreasing for DTAC

We increased 2016-17 earnings for Intouch and AIS by 3.3%-1.3%, but lower

DTAC’s by 15.4%-6%. Intouch and AIS’s revisions were mainly due to the

deceleration of their pre-paid handset subsidy campaigns, while DTAC’s revision is

due to an acceleration of its prepaid handset subsidy campaign. TRUE’s upward

earnings revision is chiefly due to the successful conversion of its Bt60bn in

tradable securities rights (TSR), which we expect to result a sharp decline in both

net debt and interest expense (albeit at the cost of 33% share dilution).

Potential EBITDA revision means market is off on AIS/Intouch DPS expectation

The Thai telco sector (with the exception of Jasmine) has been battered and

bruised after the disastrous 1800MHz/900MHz spectrum auctions which led to

nearly half a trillion baht decline in market capitalization. The big cap Telcos have

so far underperformed the SET in 2Q16 (-3.8% vs +3.1%). Nonetheless, we believe

its prospects are starting to turn more positive. AIS’s ‘failure’ to close the

2100MHz deal with the TOT and the extended remedy period have become

blessings in disguise, as we now expect an increase in the company's 2016

EBITDA margin guidance by up to 370bps. Combined with our view that AIS will

maintain 100% dividend payout for the next several years, we should see up to an

11% increase in consensus DPS estimates, and thus share price re-rating could be

on the table.

Potential spectrum deal with SOE means the market may be off on DTAC too

At the same time, market concerns about DTAC’s survivability post 2018 (as

reflected in its 3.6x 2017 EV/EBITDA valuation) may be allayed by a potential

spectrum partnership with the SOEs, although we acknowledge that such

agreement will take time. TRUE’s handset subsidy war could subside once AIS

and DTAC show that they can successfully defend their market share in the

coming quarters, resulting in a less competitive environment next year.

Key risks: further escalation of handset subsidies, price war

Our target prices are based on SOTP and DCF. Key risks to the sector include:

more intense handset subsidy and tariff cuts, resulting in additional losses from

handset sales and lower-than-expected ARPU; spectrum license

auction/partnership outcomes and marketing expenses; an unfavorable economic

environment resulting in poor service revenue growth for mobile data.

Joe Phanich (+66) 2 633 6472

[email protected]

7 July 2016



CK Hutchison Buy Reuters: 0001.HK Exchange: HSI Ticker: 0001

One step closer to an Italian matrimony

Price (HKD) 82.40

Price target (HKD) 108.00

52-week range (HKD) 115.90 - 82.00

Market cap (USDm) 40,993

Shares outstanding (m) 3,859.7

Net debt/equity (%) 31.0

Book value/share (HKD) 116.26

Price/book (x) 0.7

FYE 12/31 2015A 2016E 2017E

Sales (HKDm) 166,760 279,758 284,273

Net Profit (HKDm)

38,189.0 30,369.4 33,953.9

DB EPS (HKD) 11.89 7.87 8.80

PER (x) 10.6 10.5 9.4

Yield (net)(%) 2.0 3.2 3.9

Iliad emerges as the remedy taker

With Iliad announcing itself as the definitive remedy taker and a potential fourth

mobile operator in Italy, the 3 Italia/Wind JV appears increasingly likely and we may

see the deal approved ahead of the 8 Sept EU deadline. While Iliad has been

disruptive to the French market, our European telecom analyst believes the impact

of its entry in Italy will be less damaging given industry ARPU is already low and

competition fierce. We see significant EBITDA (~8%) accretion to CKH from the deal

and with the potential market share loss manageable (flat revenue for the next 3

years) and also roaming costs to be received from Iliad, this deal could be a key

growth driver for CKH; retain Buy.

Something for everyone

Under the remedy package, Iliad will receive 2x35MHz of spectrum for €450m,

several thousand macro sites in densely populated areas, a potential network

sharing agreement covering rural areas and a roaming agreement with the merged

entity. Wind/3 Italia, on the other hand, can offload excess network assets at a

reasonable price, receive roaming fees from Iliad and emerge with the highest

amount of 4G spectrum in the market. While the Wind/3 Italia JV will lose

subscribers to the new entrant (as it will take time to consolidate and build up its

network to catch up to the market leaders), our European team expects that it can

keep revenue flat for the next 3 years given a majority of the churn will be at the low

end prepaid customer segment.

Potential earnings and valuation impact from the deal

We estimate an 8% EBITDA accretion and 4% equity valuation uplift to CKH from

the deal (due to additional debt taken on) and almost a tripling of the FCF of the JV.

Furthermore, at the currently depressed valuation and lackluster growth

environment, we think the deal could result in a re-rating of the stock as synergy

benefits come through and CKH’s earnings and FCF start to grow. We have not

included the JV in our forecasts yet given uncertainty around the D&A, interest

costs, the roaming arrangement and the impact of asset sales.

Valuation and risks

We value CKH using a combination of SOTP and DCF. Key downside risks include:

HKD appreciation, higher borrowing costs and economic slowdown.

James Wang (+852 ) 2203 6145

[email protected]

7 July 2016



Russian Metals and Mining 3Q16 Commodity update: no change to fundamental view , but RUB

Sticking to our guns on metals but turning positive on RUB While we remain cautious on industrial metals/bulks, our macro team is turning positive on the ruble ... for a change. This call has meaningful implications for the Russian metals and mining companies, which had enjoyed disproportionate margin expansion in the past 24 months. Our new forecasts for FY17-19E are below those of the Street, and we cut our ratings for Severstal and UC Rusal (Hold to Sell). Alrosa, trading at half Norilsk’s multiples, is the only Buy-rated name in the metals and mining universe.

Trimming 2017E-19E commodity prices; expecting RUB to strengthen In the near term, global financial and economic conditions continue to be favorable for the metals complex. A benign USD, with the falling probability of a Fed hike this year, is supportive. Although some of the headline Chinese macro data have begun to ease lower, specific “metals demand” indicators such as Property Starts remain sound. The outlook for 2017 is, however, far more challenging, in our view. Most industrial metals, with the exception of zinc and nickel, remain oversupplied. Latent capacity in the industry should restart and rapidly fill any temporary deficits, as we have already seen over the past quarter. These actions will cap prices on the upside, shortening the duration of future cycles. Steel consumption in China appears to have peaked, and we expect low-single-digit demand declines. We reduce metal/bulks price forecasts by 2-8% on average for 2017E-19E while leaving LT prices intact. In steels, we raise our 2016E-17E forecasts to reflect the 2Q16 spike. On a relative basis, we prefer zinc and nickel over copper, aluminium and iron ore. Importantly, our macro team now calls for a stronger ruble (YE16 USDRUB = 61.50, YE17 USDRUB = 57.50).

Buy Alrosa; cutting Severstal and UC Rusal to Sell Our new earnings forecasts are universally lower than the Street’s estimates, which is likely attributable to our contrarian view on the ruble. For Norilsk (Hold; 12-month target price [TP] of USD12.0/GDR), we remain cautious on the stock’s valuation, which discounts ~20% growth in underlying metal prices to bring it on par with mid-cycle multiples. Alrosa (Buy, 12-month TP of RUB85.0/share), trading at half Norilsk’s multiples, and offering a similar yield profile (at 50% net income payout), is our only Buy-rated name in the metals and mining universe. We cut UC Rusal to Sell (12-month TP of HD1.94/share) as de-leveraging turns more remote, given our view on Al/RUB. Our restrained view on raw material/steel prices urges us to downgrade Severstal to Sell (12-month TP of USD8.50/GDR). The stock trades at a premium to peers despite offering a similar yield profile. The capital position is solid, while cash flows continue to cover capex/dividend; however, exposure to relatively high-cost mining operations may hurt margins given an appreciating ruble, implying earnings risk. Our Sell rating on Evraz (12-month TP of GBp73.0/share) is backed by a suboptimal capital structure and muted earnings growth. We maintain Hold ratings on NLMK (12-month TP of USD11.3/GDR) and MMK (12-month TP of USD5.73/GDR, which offer cheaper exposure to the sector, along with some scope for value unlocking (further cost-outs, asset disposal). Our expectations of a strengthening ruble and recovering oil price bode well for TMK’s earnings/cash flows (Buy; 12-month TP of USD4.0/GDR).

Valuation and risks We value the Russian metals and mining universe using a DCF methodology. Our new target prices incorporate revised macro/commodity price forecasts. Commodity prices represent the main upside/downside risks to our valuations. Exchange rate volatility also affects our CF forecasts.

In this report, we change ratings, target prices, and estimates for several companies under coverage.

George Buzhenitsa (+971) 4 361-1734

[email protected]

7 July 2016



European Airlines Brexit Implications; Separating earnings risk from regulatory risk

Earnings risk - yes; regulatory risk - no

Post the Breferendum we believe investor concerns are two-fold: (i) will demand weaken (we think yes) and (ii) will

changing regulation materially impinge on currently operated networks and corporate structures (we think no). On

the former we assume already weakening consumer and business confidence will impact top-line performance;

we cut our sector EBIT forecasts by 18-27% on lower yield expectations. On potential regulatory change however -

which in our view could be the more serious impact to medium term corporate value - we think the implications

are neither lasting nor severe. In the short-term expect weak sentiment, for the medium term buy IAG/EZJ/RYA.

Examining the risks – earnings forecasts on demand

We believe it is reasonable to think demand and therefore pricing is going to weaken. Consumer and business

confidence indices are already declining, our channel checks suggest premium traffic is weakening, and EZJ and

IAG have already commented on soft current trading. There is little certainty to be had in forecasting airline top-

lines, but we now assume sector yields of between -4% to -8%. These numbers will clearly change as more data

comes in; our FY16 EBIT forecast sensitivity to a 1ppt further cut to yields ranges from 17% at AFKLM to 3% at

RYA. In the medium term we think GBP/EUR depreciation versus the dollar will also lead to dollar capex cuts and

higher operating costs albeit such moves are unlikely in the near term. Whereas the flag carriers’ dollar revenue

hedges offer some offset the LCCs are more exposed.

Examining the risks – networks and ownership on potential regulatory change

In our view the bigger driver of medium term valuation is whether the UK leaves the European Common Aviation

Area (we believe not) and/or whether corporate structures are resilient to potential ownership restrictions (IAG is;

we believe EZJ and RYA can find a low cost solution if required). Even if the UK was to leave the ECAA we believe

industry stakeholder interests (including governments) would be aligned in agreeing solutions that closely replicate

the current operating environment.

Current thoughts

The sector is currently trading at multiyear multiple lows (PE, per our new forecasts, AFKLM 3.5x, EZJ 8.2x, IAG

4.7x, LHA 3.8x and RYA 10.8x) we think predominantly driven by macro/demand/regulatory concern and forecasts

that are not close to “recession” lows. Our sense therefore is that consensus forecasts need to fall near-term (we

are below consensus on every stock bar Lufthansa) and that any share performance is more likely from a re-rating

as this happens. In the short-term, following commentary from easyJet and IAG, we expect Ryanair to also guide

below consensus which is unlikely to help sentiment. AFKLM and LHA meanwhile should be more insulated in the

short-term. Our sense however is that once consensus forecasts begin materially adjusting downwards the market

may consider re-rating the sector, but particularly those stocks that are proven winners; RYA/IAG/EZJ.

Valuation & Risks

We primarily use EV/EBITDAR to value the airline stocks. Key risks include: unexpected regulatory change, severe

demand weakness, FX/Oil price volatility and/or force majeure closure of airspace.

Anand Date (+44) 20 754-78906

[email protected]

7 July 2016



Nordic Banks Safe harbour in a storm?

Nordic banks resilience - but sidelined on SEB and SHB

We are strategically overweight Nordic banks and expect them to be seen as the sector safe haven play in a period

of political and economic uncertainty. We would be long Nordea vs SEB over 2Q results, and we would remain

long Swedbank vs SHB, and long DNB and Danske vs the sector. We are cautious on SEB given its exposure to

weaker capital markets revenues, and we are sidelined on SHB in light of its struggling NII and UK exposure. We

shift our most preferred Swedish bank from Swedbank to Nordea. We think concerns on fines and capital are

overdone and could lift over the next two quarters.

Nordea – we think the market’s concerns are overdone

While Nordea has outperformed the sector by 7% this year, it has underperformed Nordic banks by 10%. This

reflects earnings downgrades, potential fines and capital. We expect i) the downgrades to more or less end relative

to peers; ii) the internal review outcome on the Panama cases with 2Q results, and iii) corporate risk weight

decisions in 3Q. We think these are likelier than not to provide reassurance. While we assume a flat dividend this

year, ultimately we believe a stated payout target of c70% from 2017 is more appropriate than a progressive

dividend policy where earnings are clearly cyclical. At 1.04x PTBV and 8.2x 2017E PE, we think the shares look too

cheap, where Nordea should be seen as diversified Nordic exposure. We would also welcome a move by

management toward interim dividends.

Sweden and Denmark mortgage margins are increasing

While we see banking margins declining 20-25% in Europe, we see more evidence of asset re-pricing in the

Nordics leading to a much better margin outlook. We outline in this report that 2Q saw a further increase in

Sweden mortgage margins on the front book, which we think Swedbank is best placed to capture. We also saw

both Nordea and Danske Bank increase mortgage margins in Denmark. We see this as a start of a multi-year

process, as discussed in our report from 7 February, “Nykredit developments a positive for Denmark returns”.

Watering down from Basel would reduce overhang on the shares

In this report we update our year-end core tier 1 ratio forecasts, adjusted for what we expect from the Swedish

regulator on higher corporate risk weights. We expect that all banks will still have buffers of 0.6-3.8% above their

regulatory requirements. The uncertainty is capital floors from Basel over the next few years, though recent events

suggest more watering down is likely. We see Swedbank, DNB and Danske as relatively secure for a low capital

floor. We think the risk for Nordea is a c60% rather than c70% payout ratio in the next few years. We see most risk

at SEB and SHB.

Valuation and risk

Nordic banks trade at a 9.5x 2017E PE versus European banks at 8.1x. Key upside risks include a better macro

environment, capital markets, and mortgage re-pricing. Downside risks include tougher-than-anticipated

regulations, the impact of lower interest rates on retail margins, and emerging market risks in the Baltics and

Russia.

Omar Keenan (+44) 20 754-14647

[email protected]

7 July 2016



Global Cement Watch Core developed markets remain drivers of growth

Companies Mentioned

Saint Gobain (SGOB.PA),EUR32.54 Buy Price Target EUR45.10

LafargeHolcim (LHN.S),CHF38.79 Buy Price Target CHF68.00

HeidelbergCement (HEIG.DE),EUR65.86 Buy Price Target EUR87.00

Buzzi Unicem (BZU.MI),EUR15.28 Hold Price Target EUR17.70

Top picks: Saint Gobain and Heidelberg

With cement data and company updates supporting the view of a robust Q2 16 in

developed markets (emerging markets still a mixed bag - scope for upside surprise

in India potentially offset by lacklustre demand elsewhere), we believe the sector

may see some glimmer of improving sentiment in the coming months. We remain

selective in the sector, continuing to prefer stocks with greater US and France/

Germany exposure (Saint Gobain, Heidelberg), and those supported by cheaper

valuations (LafargeHolcim).

Europe: Cement volumes supported by France & Germany; peripheral weaker

Benefiting from an increased number of trading days, we anticipate robust volume

growth for Q2 16 in Europe. This is supported by April data from Germany

(volumes +4.1%, pricing slightly positive) with Buzzi indicating May was also

robust. We are yet to see volume data from France where the number of days

benefit is likely to be the greatest, although imports into the region were said to be

strong reflecting a pick-up in demand from infra and resi (pricing remains slightly

negative YoY in April and May). Poland also had a strong start to the Q2 16

(volumes +11.7% April, +1.4% May). However Italy, Spain and Russia appear

weak, with an average of high single digit declines in volumes in April & May (Italy

reflecting significant delays in public projects reflecting reassessment of the

contractors in the light of new regulation; demand from Russian oil well cement

now starting to dip). No volume data is released for the UK and despite a weaker

PMI, most of the larger housebuilders report little change to their build

programmes; cement pricing in April and May was +0.4-0.5%.

N. America: Metrics in key states remain constructive

Industry data suggests US volumes flattened in April (+0.2% YoY) although there

remained significant regional trends (strong growth in the Southern states such as

Alabama and Georgia, as well as in Florida and the Carolinas; weaker in California

and Texas). Reflecting its footprint, Buzzi indicates volume growth closer to mid-

single digits for April and May with similar trends in pricing. Canadian volume data

for April suggests a strong YoY uptick (+15.2%).

Emerging markets: A mixed bag

Q2 data from LatAm continues to be weak – volumes in Brazil, Argentina and

Colombia were down significantly in April/ May (Brazil & Argentina >10% YoY).

While no volume or pricing data is available at an industry level for Mexico, Buzzi

indicates price rises of high single digit YoY and continued market growth.

Indonesia’s industry data shows momentum in May (volumes +6% YoY), with

Semen Indonesia gaining share to a greater extent and benefiting from

infrastructure demand in its key states. India has also shown a strong start to Q2 –

market data shows volumes +8.5% in April, but companies report strong demand

into May and June due to the delayed monsoon season (DB’s India cement analyst

forecasts +7% volumes/ +5% prices YoY in Q2 16). Elsewhere, China’s April &

May data shows low single-digit volume growth, and MoM price improvements

(although still down YoY). Meanwhile, Malaysia & the Philippines started Q2 16 a

little weaker (April volumes -1.1% & -1.7% respectively).

Valuation and risks

We value the sector based on DCF models. Key risks: changes in construction

demand and cost inflation (fuel, power and labour costs), cost savings and M&A.

Glynis Johnson (+44) 20 754-74030

[email protected]

7 July 2016



Margin Monitor July 2016

Eurozone margins contract 8bps YTD, pressure continues

Companies Mentioned

Swedbank AB (SWEDa.ST),SEK164.90 Buy Price Target SEK196.00

BNP Paribas (BNPP.PA),EUR38.36 Buy Price Target EUR50.00

KBC Group (KBC.BR),EUR40.01 Buy Price Target EUR51.00

Nordea (NDA1V.HE),EUR7.10 Buy Price Target EUR9.00

Danske Bank (DANSKE.CO),DKK162.70 Buy Price Target DKK200.00

July 2016: Eurozone bank customer margins down 8bps since 4Q15

With data for April & May now reported, it is clear that 2Q16 spreads have

continued to fall on both front & back books: tracking -4-5bps vs 1Q16, driven by

continued falls in loan pricing not offset in deposits. We are 2% below consensus

for 2017 NII / total income in our coverage universe. We see margin compression

as a key risk for earnings outlook. Since Jan-10, loans in Eurozone have grown

0.5%, but margins have now fallen 14%. If the YTD pace continues for the rest of

2016 (May declined, though not as fast as April), we see risks of -18bps (c.8%)

spread compression in 2016. 'Safest' countries from a relative margin perspective

are Sweden & Netherlands (+ UK in short-term).

Italy, UK, France & Sweden – countries to watch this month Italy: there has been a sharp contraction in back book loan pricing in the

quarter, both in mortgages and NFC (down 9-12bps QoQ). Deposit pricing

(which now includes retail bonds) was down just 5bps QoQ, so margins are

tracking down 7bps. We continue to see margin pressure as a potential

downside risk, though it may be partly offset by recent take up of TLTRO.

France we have published a report separately on the Livret-A decision (due

in coming days) and French deposits. Full note is available here.

UK: back book margins have continued to be stable (+1bps in the quarter so

far and unchanged since 3Q15). However, post-Brexit further monetary

easing is possible. This may be positive in the short term (deposit costs fall

faster), but lower for even longer is negative for NIM outlook. More details

available here.

Swedish back book margins are positive, in line with our view &

management comments at 1Q16. We see Swedbank as best placed to

capture trends.

Sector valuation & risks

We value banks using DDM and SOTP methodologies. Our top picks focus on

banks with upfront and growing capital return as well as more defensive margin

outlook: BNP Paribas, KBC, ING, Nordea and Danske. Key upside risks for the

sector include higher interest rates; better credit growth; dilution of regulation. Key

downside risks include continued low inflation & QE extension; weak economic

recovery & credit growth.

David Lock (+44) 20 754-11521

[email protected]

7 July 2016



US Banks Bank Tear Sheets: 2Q16 Earnings Edition

Companies Mentioned

BB&T (BBT.N),USD34.46 Buy Price Target USD39.00

JPMorgan Chase (JPM.N),USD60.19 Buy Price Target USD70.00

PNC (PNC.N),USD79.38 Buy Price Target USD99.00

Wells Fargo (WFC.N),USD46.65 Buy Price Target USD59.00

What are Tear Sheets?

As a reminder, Bank Tear Sheets is a 19 page report that includes a one-page

earnings template for each bank we cover. The worksheets include key metrics

from the income statement, balance sheet, and credit. They have a consistent

layout and feel, but are customized to highlight key items for each bank (e.g. fee

revenue breakout, lumpy gains/losses, etc). We’ve also included earnings prep

pages from Cheat Sheets—incl mgmt outlook comments, 2Q EPS estimates (DB &

consensus), reporting dates (and conference call times and dial in details), etc.

Our key regular products

Bank Cheat Sheets: Weekly product highlighting important near and longer term

topics. The 44 page deck includes earnings and model assumptions, CCAR results,

comp pages, credit underwriting standards, capital markets revenue trends, mgmt

outlook comments, an M&A scorecard, etc.

Question Bank: Quarterly product with a page of key questions for each bank we

cover and several pages of relevant industry questions.

Banking 101 series: We’ve published five editions: 101 (intro to banking), 201

(everything interest rates), 301 (a long term outlook on expenses), 401 (everything

lending) and 501 (everything M&A).

Where we stand on bank stocks

Even with bank stocks down 9% since the Brexit vote we continue to prefer high

quality Large Regionals. In addition to our view that economic growth will remain

sluggish and the regulatory environment won’t be conducive to a lasting recovery

in capital markets revenues, we now need to account for more political risk than

we previously thought. Taken together with likely lower-for-longer rates, we have

a preference for high quality banks at a reasonable price. We have BUY ratings on

BBT, JPM, PNC and WFC.

Valuation/Risks

We base our TPs on a target group multiple (of ~13x our 2016E) which assumes

banks stocks trade at ~75% of the S&P—about in line with historical levels.

Primary downside risks include declines in real estate prices and economic

weakness. Upside risks include faster-than-expected economic recovery and rising

home prices.

Matt O-Connor (+1) 212 250-8489

[email protected]

7 July 2016



Appendix 1

Important Disclosures

Additional information available upon request *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification

This report covers more than one security and was contributed to by more than one analyst. The views expressed in this report accurately reflect the views of each contributor to this compendium report. In addition, each contributor has not and will not receive any compensation for providing a specific recommendation or view in this compendium report.

Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.

Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock

Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.

Newly issued research recommendations and target prices supersede previously published research.

45 %49 %

7 %34 % 29 %

19 %0

200

400

600

800

1000

1200

1400

1600

Buy Hold Sell

Global Universe

Companies Covered Cos. w/ Banking Relationship

Regulatory Disclosures

1.Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the

"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

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consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the

SOLAR link at http://gm.db.com.

7 July 2016



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in the Federal Republic of Germany with its principal office in Frankfurt am Main. Deutsche Bank AG is authorized under

German Banking Law and is subject to supervision by the European Central Bank and by BaFin, Germany’s Federal

Financial Supervisory Authority.

United Kingdom: Approved and/or distributed by Deutsche Bank AG acting through its London Branch at Winchester

House, 1 Great Winchester Street, London EC2N 2DB. Deutsche Bank AG in the United Kingdom is authorised by the

Prudential Regulation Authority and is subject to limited regulation by the Prudential Regulation Authority and Financial

Conduct Authority. Details about the extent of our authorisation and regulation are available on request.

Hong Kong: Distributed by Deutsche Bank AG, Hong Kong Branch.

India: Prepared by Deutsche Equities India Pvt Ltd, which is registered by the Securities and Exchange Board of India

(SEBI) as a stock broker. Research Analyst SEBI Registration Number is INH000001741. DEIPL may have received

7 July 2016



administrative warnings from the SEBI for breaches of Indian regulations.

Japan: Approved and/or distributed by Deutsche Securities Inc.(DSI). Registration number - Registered as a financial

instruments dealer by the Head of the Kanto Local Finance Bureau (Kinsho) No. 117. Member of associations: JSDA,

Type II Financial Instruments Firms Association and The Financial Futures Association of Japan. Commissions and risks

involved in stock transactions - for stock transactions, we charge stock commissions and consumption tax by

multiplying the transaction amount by the commission rate agreed with each customer. Stock transactions can lead to

losses as a result of share price fluctuations and other factors. Transactions in foreign stocks can lead to additional

losses stemming from foreign exchange fluctuations. We may also charge commissions and fees for certain categories

of investment advice, products and services. Recommended investment strategies, products and services carry the risk

of losses to principal and other losses as a result of changes in market and/or economic trends, and/or fluctuations in

market value. Before deciding on the purchase of financial products and/or services, customers should carefully read the

relevant disclosures, prospectuses and other documentation. "Moody's", "Standard & Poor's", and "Fitch" mentioned in

this report are not registered credit rating agencies in Japan unless Japan or "Nippon" is specifically designated in the

name of the entity. Reports on Japanese listed companies not written by analysts of DSI are written by Deutsche Bank

Group's analysts with the coverage companies specified by DSI. Some of the foreign securities stated on this report are

not disclosed according to the Financial Instruments and Exchange Law of Japan.

Korea: Distributed by Deutsche Securities Korea Co.

South Africa: Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register

Number in South Africa: 1998/003298/10).

Singapore: by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles

Quay #18-00 South Tower Singapore 048583, +65 6423 8001), which may be contacted in respect of any matters

arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who

is not an accredited investor, expert investor or institutional investor (as defined in the applicable Singapore laws and

regulations), they accept legal responsibility to such person for its contents.

Taiwan: Information on securities/investments that trade in Taiwan is for your reference only. Readers should

independently evaluate investment risks and are solely responsible for their investment decisions. Deutsche Bank

research may not be distributed to the Taiwan public media or quoted or used by the Taiwan public media without

written consent. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and

is not to be construed as a recommendation to trade in such securities/instruments. Deutsche Securities Asia Limited,

Taipei Branch may not execute transactions for clients in these securities/instruments.

Qatar: Deutsche Bank AG in the Qatar Financial Centre (registered no. 00032) is regulated by the Qatar Financial Centre

Regulatory Authority. Deutsche Bank AG - QFC Branch may only undertake the financial services activities that fall

within the scope of its existing QFCRA license. Principal place of business in the QFC: Qatar Financial Centre, Tower,

West Bay, Level 5, PO Box 14928, Doha, Qatar. This information has been distributed by Deutsche Bank AG. Related

financial products or services are only available to Business Customers, as defined by the Qatar Financial Centre

Regulatory Authority.

Russia: This information, interpretation and opinions submitted herein are not in the context of, and do not constitute,

any appraisal or evaluation activity requiring a license in the Russian Federation.

Kingdom of Saudi Arabia: Deutsche Securities Saudi Arabia LLC Company, (registered no. 07073-37) is regulated by the

Capital Market Authority. Deutsche Securities Saudi Arabia may only undertake the financial services activities that fall

within the scope of its existing CMA license. Principal place of business in Saudi Arabia: King Fahad Road, Al Olaya

District, P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.

United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated

by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services

activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai

International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been

7 July 2016



distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as

defined by the Dubai Financial Services Authority.

Australia: Retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product

referred to in this report and consider the PDS before making any decision about whether to acquire the product. Please

refer to Australian specific research disclosures and related information at

https://australia.db.com/australia/content/research-information.html

Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the

meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively.

Additional information relative to securities, other financial products or issuers discussed in this report is available upon

request. This report may not be reproduced, distributed or published without Deutsche Bank's prior written consent.

Copyright © 2016 Deutsche Bank AG

David Folkerts-Landau Group Chief Economist and Global Head of Research

Raj Hindocha Global Chief Operating Officer

Research

Michael Spencer Head of APAC Research

Global Head of Economics

Steve Pollard Head of Americas Research

Global Head of Equity Research

Anthony Klarman Global Head of Debt Research

Paul Reynolds Head of EMEA

Equity Research

Dave Clark Head of APAC

Equity Research

Pam Finelli Global Head of

Equity Derivatives Research

Anthony Klarman

Global Head of Debt Research


Equity Research


Equity Research



Anthony Klarman



Equity Research


Equity Research



Anthony Klarman



Equity Research


Equity Research



Anthony Klarman



Equity Research


Equity Research



Anthony Klarman



Equity Research


Equity Research



Andreas Neubauer Head of Research - Germany

Stuart Kirk Head of Thematic Research

International locations

Deutsche Bank AG

Deutsche Bank Place

Level 16

Corner of Hunter & Phillip Streets

Sydney, NSW 2000

Australia

Tel: (61) 2 8258 1234

Deutsche Bank AG

Große Gallusstraße 10-14

60272 Frankfurt am Main

Germany

Tel: (49) 69 910 00

Deutsche Bank AG

Filiale Hongkong

International Commerce Centre,

1 Austin Road West,Kowloon,

Hong Kong

Tel: (852) 2203 8888

Deutsche Securities Inc.

2-11-1 Nagatacho

Sanno Park Tower

Chiyoda-ku, Tokyo 100-6171

Japan

Tel: (81) 3 5156 6770

Deutsche Bank AG London

1 Great Winchester Street

London EC2N 2EQ

United Kingdom

Tel: (44) 20 7545 8000


60 Wall Street

New York, NY 10005

United States of America

Tel: (1) 212 250 2500

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