高盛-工业富联20240605

5June2024|1:46AMHKT

FoxconnIndustrialInternet(601138.SS):Computex2024:Chairman

meetingtakeaway:AIserversstrongrampupwithnon-AIinrecovery

WehostedFIIChairmanatanonsitemeetingonJune4inTaipei.Investorsare

VerenaJeng

+852-2978-1681|verena.jeng@

interestedintheupcomingliquidcoolingAIserverssolution,customers,

GoldmanSachs(Asia)L.L.C.

competition,andmarketenddemand.ManagementremainspositiveonAIservers

AllenChang

+852-2978-2930|

enddemandandhighlighttheirtotalsolutionacrossmodule,baseboard,

allen.k.chang@

GoldmanSachs(Asia)L.L.C.

motherboard,AIservers,liquidcooling,switch,andracksolution,globalproduction

LynnLuo

siteswithhighlyautomatedproductionlines,andcomprehensivecustomerbase

+886(2)2730-4244|lynn.luo@GoldmanSachs(Asia)L.L.C.,Taipei

withstrongworkingcapital.MaintainBuy.

Branch

ChaoWang

Exhibit1:Ingrasys(FII’ssubsidiary)showcasedAIserversduringcomputex

+886(2)2730-4195|kuan-chao.wang@

GoldmanSachs(Asia)L.L.C.,TaipeiBranch

XuanZhang

+852-2978-1478|xuan.zhang@GoldmanSachs(Asia)L.L.C.

TingSong

+852-2978-6466|ting.song@GoldmanSachs(Asia)L.L.C.

Source:Companydata

GoldmanSachsdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,

investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthis

report.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertificationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/research/hedge.html.Analystsemployedbynon-USaffiliatesarenotregistered/qualifiedasresearchanalystswithFINRAintheU.S.

5June20242

GoldmanSachsFoxconnIndustrialInternet(601138.SS)

Exhibit2:USCloudServiceProvidercapextrend

CapexofMicrosoft,Meta,Alphabet,Amazoninaggregate

US$m

250,000

200,000

150,000

100,000

50,000

-

19%

CapexofUSCloudserviceproviders

42%

32%

24%

14%

9%5%

45%40%35%30%25%20%15%10%5%0%

201920202021202220232024E2025E

CapexYoY(RHS)

CapexofMicrosoft,Meta,AlphabetaretotalcapexperGSe;CapexofAmazonareTechspecificcapexperGSe.Source:Companydata,GoldmanSachsGlobalInvestmentResearch

Keytakeaways:

nAIserversoutlook:FIIremainspositiveonAIserversendmarketdemand,and

expectAIproductstocontribute40%ofthecompany’scloudcomputingrevenues,anditsAIserverstohave40%ofglobalmarketsharein2024.WeexpectFII’s

revenuestoenjoysequentialgrowthincomingquarters,drivenbyAIserversrampupunderbetterGPUsupply,generalserversrecovery,andupcomingnewliquid

coolingAIserversracksolution.WeexpectAIproductstocontributeFII’srevenuesat26%/50%/58%in2024-26E(reportlink).

nNetworkingandgeneralserversinstrongergrowthin2024E:DrivenbydemandongenerativeAI,FII’s200G/400Gswitchshipmentwillcontinuethestronggrowthin1Q24through2024,permanagement,andFIIearnedmultiplecustomers’800GswitchNPI(newproductintroduction),whichwillcontributerevenuesin2024.ThegeneralserversmarketdemandisalsoinrecoveringandweseethestrongleadingUSCSPs’capexspending(+42%YoYinaggregate,Exhibit2)willsupportbothAI

serversandgeneralserversinvestments.

nGenerativeAIapplications:Apartfromthehardware,HonHaigroupisalso

workingonplatformsolutionstodrivetheGenAIadoption,includingthreeAI

platforms:smartmanufacturing/AIindustrialrobots,smartcities,andsmartcars.Thecompany’sCityGPTsolutionforKaohsiungcityisplannedtobepoweredby10LLM(largelanguagemodel)modules,andthecompanyisalsoworkingonADASdomaincontrollerpoweredbyNVIDIAOrinX.

PriceTargetRisksandMethodology-FoxconnIndustrialInternet

WeareBuyratedonFIIandour12mtargetpriceofRmb36.54isbasedon16.0x2025EP/E,setinlinewithpeers’regressionofP/Eandforwardyearearningsgrowthandis

5June20243

GoldmanSachsFoxconnIndustrialInternet(601138.SS)

consistentwithitspeeraveragefor2025EP/EwhohassimilarforwardyearnetincomegrowthandOPM.WearepositiveonFIIgivenitsgrowingexposuretoAIservers,and

itstotalsolution,globalproductionsites,strongbalancesheetandcomprehensiveclientbasetobetterbenefitfromtheAIserverstrend.Keydownsiderisks:(1)

Worse-than-expecteddemandandprofitfromtheAIserverbusiness;(2)

Worse-than-expectediPhonecomponentbusinessexpansionduetostrongcompetition;(3)Slower-than-expectedcapacityramp-upinthenewfactory;(4)Lower-than-expectediPhoneshipmentgivenFIIprovidescomponentsforiPhone.

601138.SS12mpriceTarget:Rmb36.54price:Rmb23.79upside:53.6%

BuyGSForecast

Market。cap:Rmb471.9bn。/。$65.1bn

Enterprise。value: Rmb435.2bn。/。$60.1b3m。ADTV:。Rmb4.9bn。/。$683.6m

chinaGreater。china。Technology

M&A。Rank:。L。debt。&。EV?

Revenue(Rmbmn)EBITDA(Rmbmn)EPS(Rmb)

P/E(X)P/B(X)

Dividendyield(%)

Ndebt/EBITDA(exlease,X)CROCI(%)

FCFyield(%)

EPS(Rmb)

12/23

476,340.1

26,383.11.0615.9 2.43.5(1.3)18.010.1

12/23

0.38

12/24E

640,899.3

39,735.71.6314.6 3.1 3.8(0.9)21.54.3

3/24E

0.21

12/25E

967,627.1

56,386.32.2810.4 2.7 5.3(0.3)26.51.5

6/24E

0.21

12/26E

1,080,190.4

63,088.52.53 9.4 2.4 5.8(1.1)25.816.0

9/24E

0.54

Source:Companydata,GoldmanSachsResearchestimates,FactSet.Priceasof4Jun2024close.

GoldmanSachsFoxconnIndustrialInternet(601138.SS)

5June20244

DisclosureAppendix

RegAC

We,VerenaJeng,AllenChang,LynnLuo,ChaoWang,XuanZhangandTingSong,herebycertifythatalloftheviewsexpressedinthisreportaccuratelyreflectourpersonalviewsaboutthesubjectcompanyorcompaniesanditsortheirsecurities.Wealsocertifythatnopartofourcompensationwas,isorwillbe,directlyorindirectly,relatedtothespecificrecommendationsorviewsexpressedinthisreport.

Unlessotherwisestated,theindividualslistedonthecoverpageofthisreportareanalystsinGoldmanSachs’GlobalInvestmentResearchdivision.

GSFactorProfile

TheGoldmanSachsFactorProfileprovidesinvestmentcontextforastockbycomparingkeyattributestothemarket(i.e.ourcoverageuniverse)anditssectorpeers.Thefourkeyattributesdepictedare:Growth,FinancialReturns,Multiple(e.g.valuation)andIntegrated(acompositeofGrowth,FinancialReturnsandMultiple).Growth,FinancialReturnsandMultiplearecalculatedbyusingnormalizedranksforspecificmetricsforeachstock.The

normalizedranksforthemetricsarethenaveragedandconvertedintopercentilesfortherelevantattribute.Theprecisecalculationofeachmetricmayvarydependingonthefiscalyear,industryandregion,butthestandardapproachisasfollows:

Growthisbasedonastock’sforward-lookingsalesgrowth,EBITDAgrowthandEPSgrowth(forfinancialstocks,onlyEPSandsalesgrowth),withahigherpercentileindicatingahighergrowthcompany.FinancialReturnsisbasedonastock’sforward-lookingROE,ROCEandCROCI(forfinancial

stocks,onlyROE),withahigherpercentileindicatingacompanywithhigherfinancialreturns.Multipleisbasedonastock’sforward-lookingP/E,P/B,price/dividend(P/D),EV/EBITDA,EV/FCFandEV/DebtAdjustedCashFlow(DACF)(forfinancialstocks,onlyP/E,P/BandP/D),withahigherpercentileindicatingastocktradingatahighermultiple.TheIntegratedpercentileiscalculatedastheaverageoftheGrowthpercentile,FinancialReturns

percentileand(100%-Multiplepercentile).

FinancialReturnsandMultipleusetheGoldmanSachsanalystforecastsatthefiscalyear-endatleastthreequartersinthefuture.Growthusesinputs

forthefiscalyearatleastsevenquartersinthefuturecomparedwiththeyearatleastthreequartersinthefuture(onaper-sharebasisforallmetrics).ForamoredetaileddescriptionofhowwecalculatetheGSFactorProfile,pleasecontactyourGSrepresentative.

M&ARank

Acrossourglobalcoverage,weexaminestocksusinganM&Aframework,consideringbothqualitativefactorsandquantitativefactors(whichmayvaryacrosssectorsandregions)toincorporatethepotentialthatcertaincompaniescouldbeacquired.WethenassignaM&Arankasameansofscoringcompaniesunderourratedcoveragefrom1to3,with1representinghigh(30%-50%)probabilityofthecompanybecominganacquisitiontarget,2

representingmedium(15%-30%)probabilityand3representinglow(0%-15%)probability.Forcompaniesranked1or2,inlinewithourstandarddepartmentalguidelinesweincorporateanM&Acomponentintoourtargetprice.M&Arankof3isconsideredimmaterialandthereforedoesnotfactorintoourpricetarget,andmayormaynotbediscussedinresearch.

Quantum

QuantumisGoldmanSachs’proprietarydatabaseprovidingaccesstodetailedfinancialstatementhistories,forecastsandratios.Itcanbeusedforin-depthanalysisofasinglecompany,ortomakecomparisonsbetweencompaniesindifferentsectorsandmarkets.

Disclosures

Ratingandpricinginformation

HonHai(Buy,NT$171.00)

Therating(s)forFoxconnIndustrialInternetis/arerelativetotheothercompaniesinits/theircoverageuniverse:AAC,ACMResearch,AMEC,ASMPT,AVC,AccoTest,AnjiMicro,Anlogic,Arcsoft,Asus,Auras,Awinic,BOE,BYDE,Bestechnic,CFME,CRMicro,Cambricon,ChinaMobile(HK),

ChinaTelecom,ChinaTowerCorp.,ChinaUnicom,ChinaUnitedNetworkComm,ChinasoftIntl,Compal,Dahua,DesaySV,EInk,EHang,Empyrean,

Eoptolink,Espressif,Etek,EverbrightPhotonics,Fiberhome,Fositek,FoxconnIndustrialInternet,GalaxyCore,Gigabyte,Gigadevice,GlodonCo.,

Goodix,HGTech,HTCCorp.,Hengtong,Hikvision,Hirain,HonHai,HuaHong,ISoftStone,Innolight,Inventec,JCET,Jingce,KFMI,KingSlide,Kingdee,Kingsemi,KingsoftOffice,Largan,Lenovo,Longsys,Luxshare,Maxscend,Montage,NAURA,NSIG,Novosense,O-film,Pegatron,Primarius,Quanta,Ruijie,SGMicro,SICC,SMIC(A),SMIC(H),Sanan,Sangfor,ShennanCircuits,Silan,SinoWealth,StarPower,SunnyOptical,TFCOptical,Thundersoft,Thunisoft,Tongfu,Transsion,USI,Vanchip,Venustech,VeriSilicon,WillSemi,Wistron,Wiwynn,YJSemitech,YJK,YOFC(A),YOFC(H),Yonyou,ZTE(A),ZTE(H),ZWSOFT,iFlytek

Company-specificregulatorydisclosures

ThefollowingdisclosuresrelatetorelationshipsbetweenTheGoldmanSachsGroup,Inc.(withitsaffiliates,“GoldmanSachs”)andcompaniescoveredbyGoldmanSachsGlobalInvestmentResearchandreferredtointhisresearch.

GoldmanSachsexpectstoreceiveorintendstoseekcompensationforinvestmentbankingservicesinthenext3months:FoxconnIndustrialInternet(Rmb23.79)

GoldmanSachshasreceivedcompensationfornon-investmentbankingservicesduringthepast12months:FoxconnIndustrialInternet(Rmb23.79)GoldmanSachshadaninvestmentbankingservicesclientrelationshipduringthepast12monthswith:FoxconnIndustrialInternet(Rmb23.79)

GoldmanSachshadanon-investmentbankingsecurities-relatedservicesclientrelationshipduringthepast12monthswith:FoxconnIndustrialInternet(Rmb23.79)

GoldmanSachshadanon-securitiesservicesclientrelationshipduringthepast12monthswith:FoxconnIndustrialInternet(Rmb23.79)

Distributionofratings/investmentbankingrelationships

GoldmanSachsInvestmentResearchglobalEquitycoverageuniverse

5June20245

GoldmanSachsFoxconnIndustrialInternet(601138.SS)

RatingDistributionInvestmentBankingRelationships

Global

Buy48%

Hold36%

Sell16%

Buy64%

Hold56%

Sell41%

AsofApril1,2024,GoldmanSachsGlobalInvestmentResearchhadinvestmentratingson2,885equitysecurities.GoldmanSachsassignsstocksasBuysandSellsonvariousregionalInvestmentLists;stocksnotsoassignedaredeemedNeutral.SuchassignmentsequatetoBuy,HoldandSellfor

thepurposesoftheabovedisclosurerequiredbytheFINRARules.See‘Ratings,Coverageuniverseandrelateddefinitions’below.TheInvestmentBankingRelationshipschartreflectsthepercentageofsubjectcompanieswithineachratingcategoryforwhomGoldmanSachshasprovided

investmentbankingserviceswithintheprevioustwelvemonths.

Pricetargetandratinghistorychart(s)

Regulatorydisclosures

DisclosuresrequiredbyUnitedStateslawsandregulations

Seecompany-specificregulatorydisclosuresaboveforanyofthefollowingdisclosuresrequiredastocompaniesreferredtointhisreport:managerorco-managerinapendingtransaction;1%orotherownership;compensationforcertainservices;typesofclientrelationships;managed/co-managedpublicofferingsinpriorperiods;directorships;forequitysecurities,marketmakingand/orspecialistrole.GoldmanSachstradesormaytradeasa

principalindebtsecurities(orinrelatedderivatives)ofissuersdiscussedinthisreport.

Thefollowingareadditionalrequireddisclosures:Ownershipandmaterialconflictsofinterest:GoldmanSachspolicyprohibitsitsanalysts,professionalsreportingtoanalystsandmembersoftheirhouseholdsfromowningsecuritiesofanycompanyintheanalyst’sareaofcoverage.

Analystcompensation:AnalystsarepaidinpartbasedontheprofitabilityofGoldmanSachs,whichincludesinvestmentbankingrevenues.Analystasofficerordirector:GoldmanSachspolicygenerallyprohibitsitsanalysts,personsreportingtoanalystsormembersoftheirhouseholdsfrom

servingasanofficer,directororadvisorofanycompanyintheanalyst’sareaofcoverage.Non-U.S.Analysts:Non-U.S.analystsmaynotbeassociatedpersonsofGoldmanSachs&Co.LLCandthereforemaynotbesubjecttoFINRARule2241orFINRARule2242restrictionson

communicationswithsubjectcompany,publicappearancesandtradingsecuritiesheldbytheanalysts.

Distributionofratings:Seethedistributionofratingsdisclosureabove.Pricechart:Seethepricechart,withchangesofratingsandpricetargetsinpriorperiods,above,or,ifelectronicformatorifwithrespecttomultiplecompanieswhicharethesubjectofthisreport,ontheGoldmanSachs

websiteat/research/hedge.html.

AdditionaldisclosuresrequiredunderthelawsandregulationsofjurisdictionsotherthantheUnitedStates

Thefollowingdisclosuresarethoserequiredbythejurisdictionindicated,excepttotheextentalreadymadeabovepursuanttoUnitedStateslawsandregulations.Australia:GoldmanSachsAustraliaPtyLtdanditsaffiliatesarenotauthoriseddeposit-takinginstitutions(asthattermisdefinedinthe

BankingAct1959(Cth))inAustraliaanddonotprovidebankingservices,norcarryonabankingbusiness,inAustralia.Thisresearch,andanyaccesstoit,isintendedonlyfor“wholesaleclients”withinthemeaningoftheAustralianCorporationsAct,unlessotherwiseagreedbyGoldmanSachs.In

producingresearchreports,membersofGlobalInvestmentResearchofGoldmanSachsAustraliamayattendsitevisitsandothermeetingshostedbythecompaniesandotherentitieswhicharethesubjectofitsresearchreports.InsomeinstancesthecostsofsuchsitevisitsormeetingsmaybemetinpartorinwholebytheissuersconcernedifGoldmanSachsAustraliaconsidersitisappropriateandreasonableinthespecificcircumstancesrelatingtothesitevisitormeeting.Totheextentthatthecontentsofthisdocumentcontainsanyfinancialproductadvice,itisgeneraladviceonlyandhas

beenpreparedbyGoldmanSachswithouttakingintoaccountaclient’sobjectives,financialsituationorneeds.Aclientshould,beforeactingonanysuchadvice,considertheappropriatenessoftheadvicehavingregardtotheclient’sownobjectives,financialsituationandneeds.Acopyofcertain

GoldmanSachsAustraliaandNewZealanddisclosureofinterestsandacopyofGoldmanSachs’AustralianSell-SideResearchIndependencePolicy

Statementareavailableat:/disclosures/australia-new-zealand/index.html.Brazil:DisclosureinformationinrelationtoCVMResolutionn.20isavailableat/worldwide/brazil/area/gir/index.html.Whereapplicable,theBrazil-registeredanalystprimarilyresponsibleforthecontentofthisresearchreport,asdefinedinArticle20ofCVMResolutionn.20,isthefirstauthornamedatthebeginningofthisreport,unlessindicatedotherwiseattheendofthetext.Canada:Thisinformationisbeingprovidedtoyouforinformationpurposesonlyandisnot,andundernocircumstancesshouldbeconstruedas,anadvertisement,offeringorsolicitationbyGoldmanSachs&Co.LLCforpurchasersof

securitiesinCanadatotradeinanyCanadiansecurity.GoldmanSachs&Co.LLCisnotregisteredasadealerinanyjurisdictioninCanadaunder

applicableCanadiansecuritieslawsandgenerallyisnotpermittedtotradeinCanadiansecuritiesandmaybeprohibitedfromsellingcertainsecuritiesandproductsincertainjurisdictionsinCanada.IfyouwishtotradeinanyCanadiansecuritiesorotherproductsinCanadapleasecontactGoldman

SachsCanadaInc.,anaffiliateofTheGoldmanSachsGroupInc.,oranotherregisteredCanadiandealer.HongKong:Furtherinformationonthe

securitiesofcoveredcompaniesreferredtointhisresearchmaybeobtainedonrequestfromGoldmanSachs(Asia)L.L.C.India:FurtherinformationonthesubjectcompanyorcompaniesreferredtointhisresearchmaybeobtainedfromGoldmanSachs(India)SecuritiesPrivateLimited,Research

5June20246

GoldmanSachsFoxconnIndustrialInternet(601138.SS)

Analyst-SEBIRegistrationNumberINH000001493,951-A,RationalHouse,AppasahebMaratheMarg,Prabhadevi,Mumbai400025,India,CorporateIdentityNumberU74140MH2006FTC160634,Phone+912266169000,Fax+912266169001.GoldmanSachsmaybeneficiallyown1%ormoreofthesecurities(assuchtermisdefinedinclause2(h)theIndianSecuritiesContracts(Regulation)Act,1956)ofthesubjectcompanyorcompanies

referredtointhisresearchreport.Investmentinsecuritiesmarketaresubjecttomarketrisks.Readalltherelateddocumentscarefullybefore

investing.RegistrationgrantedbySEBIandcertificationfromNISMinnowayguaranteeperformanceoftheintermediaryorprovideanyassuranceofreturnstoinvestors.GoldmanSachs(India)SecuritiesPrivateLimitedInvestorGrievanceE-mail:india-client-support@.ComplianceOfficer:AnilRajput|Tel:+912266169000|Email:anil.m.rajput@.Japan:Seebelow.Korea:Thisresearch,andanyaccesstoit,isintendedonlyfor

“professionalinvestors”withinthemeaningoftheFinancialServicesandCapitalMarketsAct,unlessotherwiseagreedbyGoldmanSachs.Further

informationonthesubjectcompanyorcompaniesreferredtointhisresearchmaybeobtainedfromGoldmanSachs(Asia)L.L.C.,SeoulBranch.NewZealand:GoldmanSachsNewZealandLimitedanditsaffiliatesareneither“registeredbanks”nor“deposittakers”(asdefinedintheReserveBankofNewZealandAct1989)inNewZealand.Thisresearch,andanyaccesstoit,isintendedfor“wholesaleclients”(asdefinedintheFinancialAdvisersAct2008)unlessotherwiseagreedbyGoldmanSachs.AcopyofcertainGoldmanSachsAustraliaandNewZealanddisclosureofinterestsisavailableat:

/disclosures/australia-new-zealand/index.html

.Russia:ResearchreportsdistributedintheRussianFederationarenotadvertisingasdefinedintheRussianlegislation,butareinformationandanalysisnothavingproductpromotionastheirmainpurposeanddonot

provideappraisalwithinthemeaningoftheRussianlegislationonappraisalactivity.ResearchreportsdonotconstituteapersonalizedinvestmentrecommendationasdefinedinRussianlawsandregulations,arenotaddressedtoaspecificclient,andarepreparedwithoutanalyzingthefinancial

circumstances,investmentprofilesorriskprofilesofclients.GoldmanSachsassumesnoresponsibilityforanyinvestmentdecisionsthatmaybetakenbyaclientoranyotherpersonbasedonthisresearchreport.Singapore:GoldmanSachs(Singapore)Pte.(CompanyNumber:198602165W),whichisregulatedbytheMonetaryAuthorityofSingapore,acceptslegalresponsibilityforthisresearch,andshouldbecontactedwithrespecttoanymatters

arisingfrom,orinconnectionwith,thisresearch.Taiwan:Thismaterialisforreferenceonlyandmustnotbereprintedwithoutpermission.Investorsshouldcarefullyconsidertheirowninvestmentrisk.Investmentresultsaretheresponsibilityoftheindividualinvestor.UnitedKingdom:PersonswhowouldbecategorizedasretailclientsintheUnitedKingdom,assuchtermisdefinedintherulesoftheFinancialConductAuthority,shouldreadthis

researchinconjunctionwithpriorGoldmanSachsresearchonthecoveredcompaniesreferredtohereinandshouldrefertotheriskwarningsthathavebeensenttothembyGoldmanSachsInternational.Acopyoftheseriskswarnings,andaglossaryofcertainfinancialtermsusedinthisreport,are

availablefromGoldmanSachsInternationalonrequest.

EuropeanUnionandUnitedKingdom:DisclosureinformationinrelationtoArticle6(2)oftheEuropeanCommissionDelegatedRegulation(EU)

(2016/958)supplementingRegulation(EU)No596/2014oftheEuropeanParliamentandoftheCouncil(includingasthatDelegatedRegulationis

implementedintoUnitedKingdomdomesticlawandregulationfollowingtheUnitedKingdom’sdeparturefromtheEuropeanUnionandtheEuropeanEconomicArea)withregardtoregulatorytechnicalstandardsforthetechnicalarrangementsforobjectivepresentationofinvestment

recommendationsorotherinformationrecommendingorsuggestinganinvestmentstrategyandfordisclosureofparticularinterestsorindicationsofconflictsofinterestisavailableat/disclosures/europeanpolicy.htmlwhichstatestheEuropeanPolicyforManagingConflictsof

InterestinConnectionwithInvestmentResearch.

Japan:GoldmanSachsJapanCo.,Ltd.isaFinancialInstrumentDealerregisteredwiththeKantoFinancialBureauunderregistrationnumberKinsho69,andamemberofJapanSecuritiesDealersAssociation,FinancialFuturesAssociationofJapanTypeIIFinancialInstrumentsFirmsAssociation,The

InvestmentTrustsAssociation,Japan,andJapanInvestmentAdvisersAssociation.Salesandpurchaseofequitiesaresubjecttocommission

pre-determinedwithclientsplusconsumptiontax.Seecompany-specificdisclosuresastoanyapplicabledisclosuresrequiredbyJapanesestockexchanges,theJapaneseSecuritiesDealersAssociationortheJapaneseSecuritiesFinanceCompany.

Ratings,coverageuniverseandrelateddefinitions

Buy(B),Neutral(N),Sell(S)AnalystsrecommendstocksasBuysorSellsforinclusiononvariousregionalInvestmentLists.BeingassignedaBuyorSellonanInvestmentListisdeterminedbyastock’stotalreturnpotentialrelativetoitscoverageuniverse.AnystocknotassignedasaBuyoraSellonanInvestmentListwithanactiverating(i.e.,astockthatisnotRatingSuspended,NotRated,CoverageSuspendedorNotCovered),isdeemed

Neutral.EachregionmanagesRegionalConvictionlists,whichareselectedfromBuyratedstocksontherespectiveregion’sInvestmentlistsand

representinvestmentrecommendationsfocusedonthesizeofthetotalreturnpotentialand/orthelikelihoodoftherealizationofthereturnacrosstheirrespectiveareasofcoverage.TheadditionorremovalofstocksfromsuchConvictionlistsaremanagedbytheInvestmentReviewCommitteeorotherdesignatedcommitteeineachrespectiveregionanddonotrepresentachangeintheanalysts’investmentratingforsuchstocks.

Totalreturnpotentialrepresentstheupsideordownsidedifferentialbetweenthecurrentsharepriceandthepricetarget,includingallpaidor

anticipateddividends,expectedduringthetimehorizonassociatedwiththepricetarget.Pricetargetsarerequiredforallcoveredstocks.Thetotalreturnpotential,pricetargetandassociatedtimehorizonarestatedineachreportaddingorreiteratinganInvestmentListmembership.

CoverageUniverse:Alistofallstocksineachcoverageuniverseisavailablebyprimaryanalyst,stockandcoverageuniverseat

/research/hedge.html

.

NotRated(NR).Theinvestmentrating,targetpriceandearningsestimates(whererelevant)arenotprovidedorhavebeensuspendedpursuantto

GoldmanSachspolicywhenGoldmanSachsisactinginanadvisorycapacity