Indochina Research

Market Update
January 10, 2013

Lao Securities Exchange

Strong outlook on LSXs second anniversary The Lao Securities Exchange (LSX) will reach its second anniversary on January 11, 2013. The market has now surpassed US$1bn in market cap, and is gradually growing its domestic and regional investor base. Returns to the market have been strong, and we expect this will continue into 2013, while some key hurdles in the LSXs expansion should be addressed this year. Expecting strong returns to continue We calculate that an investor making a market cap weighted investment in the LSX on the first day of trading, January 11, 2011 would have returned 34.8% as of January 8, 2013, including capital gains and dividends. We forecast that these strong returns will continue this year, with an investor making a market cap weighted investment in the LSX on January 8, 2013 to return 63.9% over the next 18 months. Several key developments coming in 2013 The market is expected to see several key developments in 2013; 1) global custodians are likely to enter the market this year, 2) the exchange plans to move to continuous time trading after a third stock is listed on the market, while 3) liquidity should be improved with several new listings planned. New listings may broaden appeal of the market The LSX reports that 8 firms are planning to list over the next two years, which will create significantly more depth and breadth for the market. They comprise; two telecoms, 1) LTC and 2) ETL, 3) conglomerate Laos World Group, 4) oil distributor Petrotrade, 5) coffee producer and exporter Dao Coffee, 6) cassava producer Laos Indochina Group, 7) Laos Cement Industry and 8) Laos Development Bank. Expecting strong growth for BCEL, EDL-Gen The two listed stocks on the LSX, Bank Pour Le Commerce Exterieur (BCEL) and EDL-Generation (EDLGen) have strong growth prospects for 2013-2014, and are market leaders in their respective fields of commercial banking and energy generation. However, the two still trade at undemanding valuations versus the region in part because of structural issues, including the lack of global custodians and low liquidity in the market. We target over 40% upside for the shares prices of both, while dividend yields remain strong. See the summaries on both companies at the end of this report for more detail. Graeme Cunningham, CFA Head of Indochina Research graemec@ktzmico.com 66 (0) 2695 - 5942 Patcharin Karsemarnuntana Indochina Energy patcharink@ktzmico.com 66 (0) 2695 - 5837 Prapharas Nonthapiboon Indochina Banks prapharasn@ktzmico.com 66 (0) 2695 - 5872
Value BCEL EDL-Gen LSX
Source: Bloomberg

% chg -1.25 0.00 -0.16

7,900 5,900 1,241.2

Valuation BCEL EDL-Gen LSX

P/E 4.3 7.2 6.8

P/B 0.8 1.4 1.3

Source: Bloomberg, KT Zmico estimates

Market Cap (US$mn) BCEL EDL-Gen LSX

Source: Bloomberg

136 915 1,049

REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES

Indochina Research

January 10, 2013

Strong total shareholder returns since inception The Laos Securities Exchange (LSX) will reach its second anniversary on January 11, 2013. Figure 1 shows the strong historical total returns to shareholders for the two stocks in the index, the largest commercial bank, Bank Pour Le Commerce Exterieur Du Laos (BCEL) and the leading electricity generation company, EDL-Gen. EDL-Gen returns 42.3%, BCEL returns 13.9% since first trading day EDL-Gen has enjoyed both strong capital gains and a high dividend payout, with the stock gaining 27.8% since its first trading day and yielding 14.5% from its listing to the most recent H1/12 payout, for a total TSR of 42.3%. BCELs absolute share price performance has been broadly flat over the period, returning negative 1.3% from the first day of trading until January 8, 2013. However, this has been offset somewhat by a strong dividend payout, with the total yield since the first trading day including the last cash payout for H1/12 at 15.2%. Market cap weighted investment returns 34.8% An investor with a market cap weighted portfolio of EDL and BCEL on the first day of trading on the LSX would have seen a total shareholder return of 34.8% as of January 8, 2013.

Figure 1: Historical return

LAK Share price at January 11, 2011 Share price at January 8, 2013 Capital Gain Dividend/share 2011 Dividend/share H1/12 Total dividends Dividend Yield Total Shareholder Return (TSR) Market cap at January 11, 2011 (LAK BN) Weighting Market cap weighted TSR Source: Lao Securities Exchange, KT Zmico estimates EDL 4,615 5,900 27.8% 498 170 668 14.5% 42.3% 3,061,809 73.7% BCEL 8,000 7,900 -1.3% 777 436 1,213 15.2% 13.9% 1,092,621 26.3% 4,154,430 100.0% 34.8% LSX

REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES

Indochina Research

January 10, 2013

Figure 2: Expected return

LAK Share price at January 8, 2013 12 month target share price Capital gain at target price Dividend/share 2H/12 Dividend/share 2013 Total dividends Forecast Yield Total Forecast Shareholder Return Market cap at January 8, 2012 (LAK BN) Weighting Market cap weighted return EDL 5,900 8,825 49.6% 295 529 824 14.0% 63.5% 7,237,040 86.9% BCEL 7,900 11,400 44.3% 463 1,297 1,760 22.3% 66.6% 1,078,966 13.1% 63.9% 8,316,007 LSX

Source: Lao Securities Exchange, KT Zmico estimates

Expecting strong returns to continue in 2013 We expect that strong market returns will continue in 2013, as shown in Figure 2. We forecast a strong gain in EDL-Gen this year, with an implied capital gain of 49.6% to our target price of LAK8,825, and a yield of 14.0% including the H2/12 dividend, for a total shareholder return of 63.5%. Forecasting TSR of 63.9% for a market cap weighted portfolio Our target price for BCEL of LAK11,400, implies a capital gain of 44.3%. We also expect the company will maintain a strong dividend payout; investors can still get the H2/12 cash dividend, and adding the full year 2013 dividend, we forecast a yield of 22.3%, for a total shareholder return of 66.6%. Weighting the returns to the two stocks by market capitalization as of January 8, 2013, we forecast the total expected return to the market to be 63.9%. Eight major new listings expected over next 24 months Although both BCEL and EDL-Gen are expected to remain strong in 2013, having just two listings on the LSX leaves the market with a considerable lack of breadth. This problem is expected to be alleviated with the expected listing of up to eight companies in the next 24 months, including: 1) coffee producer and exporter Dao Coffee, 2) telecom ETL, 3) Laos Cement Industry, 4) Laos Development Bank, 5) cassava producer Laos Indochina Group, 6) Laos Telecom 7) diversified conglomerate Laos World Group, and 8) oil distributor Petrotrade. A brief summary of each of the companies is shown in Figure 3.

REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES

Indochina Research

January 10, 2013

Figure 3: Potential listings on the LSX, 2013-2014

Company Dao Coffee Sector Consumer Detail Dao Coffee is the coffee production and export business of diversified conglomerate Dao Heuang Group. The company sells ground and instant coffees, as well as fresh sealed coffee beans. Enterprise of Telecommunications Lao (ETL) is a wholly government-owned telecom, with the third largest mobile subscriber base in the country (560k subscribers as of end 2011), and it also operates a small fixed line (18k subscribers) and internet (3.5k subscribers) service. Laos Airlines is the countrys government-owned national airline, with domestic and regional flights, reaching as far as South Korea, China and Singapore. The airline currently has a fleet of over 12 aircraft, has additional planes on order and continues to expand its routes to meet growing demand. Lao Cement Industry is the largest cement producer in Laos, with an output of 700k-800k tonnes per year (about half the countrys total 1.5 tonnes in production) from a factory with a total capacity of 1mn tonnes, and currently targets doubling its existing capacity. Laos Development Bank is the countrys second largest commercial bank, with 18 branches and 51 service units, and focusses on lending to small to medium enterprises. The bank had US$500mn in loans and US$600mn in deposits as of end 2011. Lao Indochina Group produces cassava, and has agreements with farmers for 13,000 hectares of land. The company also has a tapioca factory producing 250-320 tons/day (using about 1,000-1,200 tons/day of cassava) with China the main customer for the output. Laos Telecom is a joint venture between the Laos government (holding 51%) and Thaicom (holding 49% through Shenington) The company is estimated to have had the second highest mobile telephone share in the Laos market in 2011 with 1.21mn subscribers. Laos World Group is a diversified conglomerate operating in the agricultural, engineering, construction and hotel and tourism sectors. The company also operates the Laos International Trade Exhibition and Convention Center. Petrotrade distributes fuel and industrial lubricants through its own gas stations and to other industrial users, with Thailand the main supplier of its raw materials.

ETL

Telecoms

Laos Airlines

Airlines

Lao Cement Industry

Materials

Lao Development Bank Lao Indochina Group

Financials

Agriculture

Laos Telecom

Telecoms

Laos World Group

Real Estate

Petrotrade

Energy

Source: Companies

REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES

Indochina Research

January 10, 2013

Continuous, and block, trading expected for 2013 In addition to the new listings, there are two other smaller changes in the pipeline that will help improve liquidity in the LSX. 1) The LSX already moved from auctions just two times day, to auctions six times per day in October of 2011. The next step is continuous trading, which the LSX plans to implement after the third listing on the stock market, and could happen by H2/13. 2) The LSX also plans to introduce block trading to the exchange, with a Q3/12 launch date targeted. Global custodians visit Laos in recent months One major constraint for some large institutions when considering investing in Laos is an absence of global custodians, which prevents them from entering the market due to internal compliance issues. However, two major global custodians have visited the country in recent months, and are expected to establish a presence in Laos as early as 2013. Combined with the planned new listings, we expect that we could see much more interest in the market, especially from foreign institutions. Figure 4: LSX number of securities accounts
10,000 7,500 5,000 2,500
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
6,209 6,443 7,249 8,210 8,260 8,688 8,756 8,910

15% 10% 5% 0%

Securities Accounts (LS)

% chg yoy (RS)

Source: Lao Securities Exchange

Figure 5: LSX number of investors

2011 Domestic Institution Domestic Individual Foreign Institution Foreign Individual Total Source: Lao Securities Exchange 32 6,854 24 1,249 8,159 2012 33 7,305 39 1,533 8,910 % chg 3% 7% 63% 23% 9%

REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES

Indochina Research

January 10, 2013

Growth in trading accounts may pick up with more listings The qoq growth in trading accounts in Laos remained relatively low, but steady in 2012, at an average under 5%, after over 10% qoq growth in account openings over H2/11 (Figure 4). Domestic individual accounts make up the bulk of the accounts, comprising 7,305 (or 82%) of the 8,910 total at end-2012, although growth was quicker for foreign individual accounts, up 23% yoy to 1,533 accounts (Figure 5). Number of foreign institutions grew rapidly in 2012 There are marginally more foreign institutional investors in the market, at 39, than domestic institutional investors, but the former is growing much more quickly, and we expect to see more interest from foreign institutions once global custodians start operating in Laos. Foreign institutions appear to be relatively widely dispersed geographically; the country with the highest concentration is Thailand, with 20%, but countries with between 1 to 3 institutions make up 80% of the total, suggesting potential exists for a growing foreign institutional presence from many other countries (Figure 6).

Figure 6: LSX foreign investors by country

Individual Thailand China Japan Vietnam Republic of Korea United States Source: Lao Securities Exchange 516 403 235 78 70 45 Institutional 8 3 1 1 1 3 Total 524 406 236 79 71 48

Indochina Research

January 10, 2013

Figure 2: Relative performance

125

Figure 3: Price to earnings

8.0

116

6.8

108

5.5

99

4.3

01/05

19/05

06/06

24/06

12/07

30/07

17/08

04/09

22/09

10/10

28/10

15/11

03/12

21/12

08/01

1/5

6/6

4/9

19/5

24/6

12/7

30/7

17/8

22/9

10/10

28/10

15/11

3/12

Laos Source: Bloomberg, KT Zmico estimates

BCEL

EDL-Gen

Figure 4: Price to book

1.4

Figure 5: Currency
8,100 270

1.2

8,050

1.0

8,000

0.8

7,950

1/5

6/6

4/9

19/5

24/6

12/7

30/7

17/8

22/9

10/10

28/10

15/11

3/12

21/12

8/1

Laos

BCEL

EDL-Gen

Source: Bloomberg, KT Zmico estimates

1/5 19/5 6/6 24/6 12/7 30/7 17/8 4/9 22/9 10/10 28/10 15/11 3/12 21/12 8/1

0.6

7,900

USD:LAK

THB:LAK

21/12

265

260

255

250

8/1

90

3.0

Indochina Research

January 10, 2013

BCEL
Market leader to benefit from strong economy
We maintain our BUY rating on BCEL with a 2013E target price of LAK11,400/share, implying a target P/BV of 1.2x. This is underpinned by the banks number one position in the market with a 29% loan share, making it a likely prime beneficiary of Laos solid expected GDP growth (7.6% average growth for 2012-2016 based on IMF forecasts).

BUY
Share data

TP: LAK 11,400/US$ 1.44 Price: LAK 7,900/US$ 1.00

LSX code/Bloomberg Sector Closing Price (US$, Kip) Paid-up shares (mn) Par (US$, Kip) Mkt cap (Kip bn/US$mn) Foreign limit/actual (%) 52 week High/Low (Kip) Avg. daily T/O (000 shrs) Estimated free float

BCEL.LS/BCEL LS Banks 0.98/7,900 136.60 0.63/5,000 1,079/136 5%/5% 8,000/6,000 21.83 20.00

Riding secular long term growth trend in loans/GDP

Beyond the cyclical upswing in Laos the bank has also been riding a strong secular long-term trend of growth in the credit/ GDP ratio as the economy expands. Regional comparables suggest a peak average ratio for loans/GDP around 130%; the ratio for Laos stood at just 29% as of 2011.

Projected earnings growth of 44% for 2013E

We project strong EPS growth of 24% for 2012E and 44% for 2013E, driven by; 1) rising net interest income growth boosted by rapid loan growth (+40% for 2012E and +30% for 2013E), and expanding NIM; and 2) strong growth in fee income (especially trade finance) and trading income.

Major Shareholders Regulatory and regional macro risks

BCEL faces some regulatory risk as the country eventually shifts to BIS regulatory standards. It also faces regional macro risks given the countrys export-led growth strategy with large energy and mining exports to Thailand and China. Declines in demand for Laos exports from these countries could slow economic growth, and affect loan and trade financing demand.

Laos government Public Cofibred BCEL staff Company Profile

70% 15% 10% 5%

Inexpensive on P/E and P/B, with high yield

BCEL trades on a 2013E PER and PBV of just 3.98x and 0.79x, respectively, below regional peers, and yields around 6% for 2H12E (we expect a DPS of LAK463/share for 2H12E) and ~16% for 2013E.

Financials and Valuation

FY Ended 31 Dec PPOP (US$mn) Net profit (US$mn) EPS (US$) EPS growth (%) BVPS (US$) DPS (US$) PER (X) PBV (X) Div. Yield (%) ROE (%) 2010 15.3 13.6 0.10 30% 0.71 n.a. 9.88 1.37 n.a. 18.2% 2011 19.6 18.9 0.14 40% 0.86 0.10 7.11 1.15 9.8% 17.6% 2012E 30.8 23.4 0.17 24% 1.01 0.11 5.75 0.97 11.4% 18.3% 2013E 42.2 33.8 0.25 44% 1.25 0.16 3.98 0.79 16.4% 21.9%

State-owned Banque Pour Le Commerce Exterieur du Laos (BCEL) is the largest commercial bank in Laos by loan share. BCEL accepts deposits, runs the most extensive branch network in the country, lends to large corporates and SMEs and has t h e c o u n t r y s l a r g e s t t ra d e f i n a n c e business.

Prapharas Nonthapiboon Indochina Banks prapharasn@ktzmico.com 66 (0) 2695 - 5872 8

Indochina Research

January 10, 2013

BCEL Income Statement (US$mn)

FY ended 31 Dec Interest income Interest expense Net interest income Fee & service income Total non-interest income Operating income Operating expenses Operating profit before provision Provision expense Operating profit after provision Exceptional items Profit before income tax Income tax Minority interest Net profit Reported EPS Fully diluted EPS 2010 33.7 -18.3 15.4 12.3 21.2 43.8 -21.1 22.7 -2.4 20.3 20.3 -6.7 13.6 0.1 0.1 2011 55.2 -32.9 22.2 17.7 29.4 58.0 -32.5 25.6 0.9 26.5 26.5 -7.6 18.9 0.1 0.1 2012E 76.8 -44.6 32.2 19.8 34.5 74.4 -35.9 38.5 -7.8 30.6 30.6 -7.2 23.4 0.2 0.2 2013E 96.7 -53.9 42.8 23.8 42.2 94.1 -42.8 51.4 -7.1 44.2 44.2 -10.4 33.8 0.3 0.3

Indochina Research

January 10, 2013

BCEL Balance Sheet (US$mn)

FY ended 31 Dec Amounts due from other banks Investment in securities - net Loans & accrued interest receivable-net Other assets Total assets Deposits Amounts due to other banks Total liabilities Chartered capital Retained earnings Shareholders equity Total liab.& shareholders' equity Key financial ratios Operating income growth PPOP growth EPS growth Net loan growth Provision expense to loans Net interest margin (NIM) Cost to income ratio Non interest income/total income Effective tax rate ROA ROE Loan to deposit ratio NPLs/loans Loan loss reserve/NPLs Loan loss reserve/Loans 25.8% 28.1% 22.4% 42.2% 0.7% 2.3% 48.2% 64.9% 33.2% 1.4% 18.2% 34.5% 2.5% 86.3% 2.1% 32.4% 12.6% 39.0% 90.0% -0.1% 2.5% 56.0% 61.7% 28.7% 1.4% 17.6% 48.8% 0.9% 157.6% 1.5% 27.7% 50.0% 23.6% 40.0% 0.9% 2.4% 48.3% 56.7% 23.6% 1.3% 18.3% 53.9% 2.1% 143.8% 3.1% 26.6% 33.5% 44.3% 30.0% 0.6% 2.7% 45.4% 54.5% 23.6% 1.5% 21.9% 57.6% 2.9% 144.7% 4.2% 2010 215.1 177.8 336.5 449.0 1,191.2 974.8 84.9 1,093.6 71.6 3.0 97.6 1,191.2 2011 246.1 266.7 639.4 426.6 1,593.6 1309.2 144.6 1,477.1 80.1 12.4 116.5 1,593.6 2012E 295.4 307.9 898.6 454.7 1,975.6 1,667.5 144.8 1,837.0 80.1 22.0 138.6 1,975.6 2013E 354.4 338.7 1,168.2 517.8 2,401.8 2,028.6 173.5 2,231.6 80.1 39.4 170.2 2,401.8

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Indochina Research

January 10, 2013

EDL Generation
Undemanding valuation
We rate EDL-Generation Pcl. (EDL-GEN) a BUY, with a 2013 target price of LAK8,825/share (US$1.1/share). Despite strong forecast earnings growth, underpinned by a 128% increase in power capacity to 881 MW, EDL trades at undemanding 2013E valuations below regional peers, even while its 9% projected 2013E yield and ROE is above comparables.

BUY
Share data

TP: LAK 8,825/US$ 1.12 Price: LAK 5,900/US$ 0.75

LSX code/Bloomberg Sector Closing Price (US$, Kip) Paid-up shares (mn) Par (US$, Kip) Markt cap (Kip bn/US$mn) Foreign limit/actual (%) 52 week High/Low (Kip) Avg. daily T/O (000 shrs) Estimated free float (%) Beta

EDL-GEN/ EDL LS

Power 0.75/5,900 1,226.22 0.51 / 4,000 7,237/914 20%/14% 5,950/4,150 75.84 25.00 1.21

Entering the earnings growth cycle until 2014E

We forecast a 146% hoh rise in EDL-Gens 2H12E net profit to US$59mn (on seasonally high 2H power generation and the five month consolidation of four transferred IPPs), to a FY profit USD84mn, up 19% yoy. We expect continued earnings momentum with a 16% 2013-14E CAGR growth to US$113mn by 2014E. EDL-Gens 7 existing 100%-owned hydropower plants (totalling 387 MW) and the FY contribution of 4 hydropower plants (equity capacity: 494 MW) will drive growth. EDL-Gens long-term growth will be driven by acquisitions from state-owned EDL, which has sizeable hydropower generation assets under construction and in development. These include 218MW from EDLs 100%-owned assets - Huauy Lampan Ngai and Nam Khan 2 (set to start COD in 2014-2015E), and 1,289 MW in hydropower assets from EDLs 100%-owned assets and EDLs equity share in IPPs over the next eight years. Upside from these projects are not included in our projections. With the four transferred IPPs with the THPC project to be 60% proportionately consolidated, as well as the recent capital raising of US$200mn to fund the four IPPs, we expect EdLGens interest-bearing debt to equity ratio to rise from an abnormally low 0.33x in 2011 to 0.78x in 2013E, well below the companys policy of a 1.5x ceiling.

Soaring capacity growth in long-term

Major Shareholders Electricite Du Laos Ratch-Laos Service RH International BCEL Company Profile EDL-Gen owns/operates all power plant assets separated and privatized from EDL. 75.00% 6.46% 2.88% 2.68%

D/E well below ceiling policy

Financials and Valuation

FY Ended 31 Dec Revenues (US$mn) Net Profit (US$mn) EPS (USD) - Diluted EPS growth (%) DPS (USD) BV (USD) FY Ended 31 Dec PER (x) PBV (x) EV/EBITDA (x) Dividend Yield (%) ROE (%) Net Gearing (%) 2011 111 70 0.08 !"# 0.06 0.56 2011 9.1 1.3 7.7 8.4 17.2 24.0 2012E 135 84 0.07 (15.6) 0.06 0.52 2012E 10.8 1.4 10.5 7.9 14.9 52.1 2013E 208 108 0.09 28.8 0.07 0.54 2013E 8.4 1.4 6.9 9.0 16.6 49.2 2014E 212 113 0.09 4.2 0.07 0.57 2014E 8.0 1.3 6.4 9.3 16.6 39.1

Patcharin Karsemarnuntana Indochina Energy patcharink@ktzmico.com 66 (0) 2695 - 5837 11

Indochina Research

January 10, 2013

EDL Income Statement (US$mn)

FY ended 31 Dec Sales Cost of sales Gross profit Share of profit from associates Dividend income Other income Currency exchange gains Total revenue Gain before expenses Administrative expenses Profit before financial costs and tax Finance costs Income tax Net profit for the year Balance Sheet Cash and cash equivalents Current assets Property, plant and equipment-Net Investment in Joint ventures Non-current assets Total assets Current liabilities Long term loans Non-current liabilities Total liabilities Paid up capital Retained earnings Total equities 43.0 106.0 492.0 54.0 653.0 31.0 133.0 164.0 433.0 46.0 488.0 206.0 259.0 873.0 64.0 23.0 1,218.0 36.0 516.0 27.0 579.0 613.0 53.0 639.0 191.0 253.0 879.0 72.0 23.0 1,226.0 60.0 472.0 27.0 560.0 613.0 74.0 666.0 200.0 262.0 842.0 80.0 23.0 1,207.0 54.0 431.0 27.0 512.0 613.0 96.0 695.0 2011 110.0 -26.0 85.0 0.0 0.0 1.0 0.0 111.0 85.0 -6.0 79.0 -5.0 -4.0 70.0 2012E 126.0 -30.0 96.0 7.0 0.0 0.0 1.0 135.0 104.0 -9.0 96.0 -7.0 -5.0 84.0 2013E 195.0 -55.0 140.0 14.0 0.0 1.0 -3.0 208.0 152.0 -10.0 142.0 -25.0 -9.0 108.0 2014E 196.0 -56.0 140.0 15.0 0.0 1.0 0.0 212.0 156.0 -10.0 146.0 -23.0 -10.0 113.0

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Indochina Research

January 10, 2013

EDL Financial Ratios

Growth (%) Sales Growth Net Profit Growth EPS growth (%) EBITDA Growth Profitability Ratios (%) EBIT margin EBITDA margin Net profit margin ROE ROA ROCE Asset Utilization Days receivable (days) Days Inventory (days) Days payable (days) Leverage, Solvency Ratios Total debt/Equity ratio Interest coverage ratio Asset/Equity (Equity multiplier) Net debt/Equity 0.3 15.4 1.3 0.2 0.9 14.4 1.9 0.5 0.8 5.7 1.8 0.5 0.7 6.3 1.7 0.4 166.7 41.8 5.8 79.7 31.9 33.9 67.3 15.8 25.8 67.4 16.3 26.3 71.5 88.9 63.5 17.2 11.0 12.6 70.7 87.5 62.4 14.9 9.0 9.3 68.5 85.8 52.0 16.6 8.9 9.2 68.6 86.3 53.1 16.6 9.3 9.7 2011 n/a n/a n/a n/a 2012E 14.7 19.1 -15.6 19.3 2013E 54.3 28.9 28.9 51.6 2014E 0.5 4.3 4.3 2.7

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KT ZMICO RESEARCH - RECOMMENDATION DEFINITIONS

This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.

Disclaimer
STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months TRADING BUY: Expecting positive total returns of 10% or more over the next 3 months SELL INTO STRENGTH: Expecting total returns of not more than 10% over the next 3 months; share price has largely priced in fundamentals BUY ON WEAKNESS: Expecting negative total returns of not more than -10% over the next 3 months, while expecting positive developments in the medium to longer term SELL: Expecting negative total returns of 15% or more over the next 12 months SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analysts coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analysts coverage universe, is expected to perform in-line relevant primary market index by at least 10% over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.

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