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First Light Asia, ,

Whats Changed, Research Focus, Todays EventsTicker Company Rating was Currency Target was EPS '13e EPS '14e Price Price At Close

Down 8046 TT Nanya PCB UW N TWD 21.00 41.00 -1.02 -0.47 41.20 14 Jun

COAL IN Coal India Limited OW INR 400.00 410.00 27.47(a) 29.27 298.90 13 JunSource: Bloomberg, HSBC estimates

Click on title to open reports Research Focus

Nanya PCB (8046 TT) - Downgrade to UW: Intels supply chain getting crowded Tse-yong Yao* Leading European PCB supplier AT&S entering Intels IC substrate supply chain

suggests Nanya PCB is not a part of Intels long-term plans Downgrade to UW from N; 2013 are estimates unchanged but we lower our target price to TWD21 (from TWD41), whichis now based on net working capital minus long-term debt

S-Oil (010950 KS) - UW: Potential for a de-rating; need a breakthrough Dennis H C Yoo* Concerns on PX oversupply risk and disadvantages in crude cost weigh on investor sentiment Ex-growth and lower dividend yield could lead to a de-rating Retain Underweight and TP at KRW60,000

Coal India Limited (COAL IN) - OW: Continues to provide stable earnings growth Arun Kumar Singh* We conservatively forecast a stable 10% CAGR earnings growth outlook along with good dividend yield (5%) Expect sales volume and e-auction outlook to remain stable despite approvals issue and softer international prices

We cut our estimates and target marginally from INR410 to INR400, accounting for FY13 shortfall, but maintain our OW

17 June 2013

Ticker Event Rating Target Price Ticker Event NI Bbg

L'Occitane International SA 973 HK Y UW 22.00 22.7 Empire Manufacturing US Jun -Singapore Non-Oil DomesticExports

May 4.2% NAHB Housing Market Index US Jun 45

India Repo Rate 17-Jun 7%India Cash Reserve Ratio 17-Jun 4%Philippines Overseas Remittances Apr 7%

Source: Bloomberg, HSBC estimates

Colin Davis* Head of Research Marketing Asia +852 2996 6635 colindavis@hsbc.com.hk

*Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations

Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: http://www.research.hsbc.com

Disclaimer & DisclosuresThis report must be read with the disclosures in the Disclosure appendix, and the Disclaimer, which forms part of itDisclosures for companies can be accessed via the hyperlinks to the original published research, which can befound in the title

https://www.research.hsbc.com/R/20/fLTZhwAhttps://www.research.hsbc.com/R/20/Q0WpnTYhttps://www.research.hsbc.com/R/20/885L6Nshttp://www.research.hsbc.com/https://www.research.hsbc.com/R/20/885L6Nshttps://www.research.hsbc.com/R/20/Q0WpnTYhttps://www.research.hsbc.com/R/20/fLTZhwAhttp://www.research.hsbc.com/

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First Light Asia17 June 2013

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RegionalMine & Dime - POSCO: Impact of power-shortage warning to be limited Simon Francis*

Korea issued a preliminary power-shortage warning after a corruption scandal forced the suspension of two nuclear reactors. In response, the nations major steel mills have agreed to participate in the governments move to save electricity bycurtailing usage during the peak season.

The Korea Iron & Steel Association announced on 9 June that its members will reduce their daily electricity consumption by 1.1m KW in August when the demand for electricity tends to spike due to air conditioning usage.

China & Hong KongFrom the horses mouth - The latest on local government debt in China Qu Hongbin

In its latest report, the State Audit Office estimates local debt has grown 6% pa since 2011, implying the local governmentdebt-GDP ratio has fallen from 26% to 23%

HSBC estimates that total local government debt topped RMB12trn, of which 78% are bank loans Issuing municipal bonds and selling assets could be feasible ways to mitigate the liquidity risk

IndiaIndia - Still moderating: May WPI inflation eased to 4.7% y-o-y Leif Eskesen

May WPI inflation eased to 43-month low of 4.7% y-o-y (vs. 4.9% in April) led by energy, minerals and manufactured goods. However, food inflation picked up and inflation rose slightly on a sequential basis. Inflation is likely to remain relatively benign in coming months as commodity prices remain low and domestic demandremains soft.

Shunning India and Indonesia bonds - Foreign flows compass Andr de Silva EM bond funds recorded weekly outflows of USD2.5bn, the largest amount since September 2011 India and Indonesia countries, which run a current account deficit observed the largest foreign selling of bonds in Asia

GlobalHSBC Steel Weekly - EU to the rescue Thorsten Zimmermann*

EU has published its Steel Action Plan Interest and support is positive but the political process will likely take time that the industry might not have

Platinum Group Metals Outlook - Supply squeezes to drive rallies James Steel We lower our 2013 and 2014 platinum price forecasts, but expect a growing supply squeeze to be price supportive We expect the platinum supply/demand deficit to reach record levels on static supply and rising ETF and physical demand We maintain our 2013 palladium price forecast; eroding Russian stockpiles and weak production are price supportive

Market dataMarkets HSBC Last 5d % Forecast GDP (%Yr) Int Rate USD vs CCY HSBC Last 5d % Commodities HSBC Last 5d %

HSI 24,000 20,969 -3.98 US 1.7 0-0.25 EUR 1.35 1.33 0.93 Oil 106.6 97.9 1.92

SHCOMP 2,500 2,162 -4.86 China 8.6 6.00 CNY 6.18 6.13 0.04 Gold 1,700 1389 0.41

TAIEX 8,300 7,938 -1.96 Taiw an 4.2 2.375 TWD 29.2 29.86 -0.33 Coal (Thermal) 90 86 -0.46

KOSPI 2,300 1,889 -1.80 Korea 3.8 3.25 KRW 1,090.0 1126 -0.84 Steel (HRC Asia) 711TOPIX 780 1,056 -0.05 Japan 1.2 0-0.10 JPY 78.0 94.5 3.25 Aluminium 2,150 1813 -5.94

BSE 30 21,700 19,178 -1.29 India 5.5 7.25 INR 52.0 57.53 -0.81 Copper 7,500 7058 -3.47

Source: Bloomberg

https://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=1tPRaII20K&n=375409.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Mv2WYqd7yt&n=375435.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=tsMnGKuYB9&n=375473.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=8CS0VFLpsb&n=375430.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=nVpsvm0YWY&n=375236.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=WnxAg5bwIw&n=375128.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=WnxAg5bwIw&n=375128.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=nVpsvm0YWY&n=375236.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=8CS0VFLpsb&n=375430.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=tsMnGKuYB9&n=375473.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Mv2WYqd7yt&n=375435.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=1tPRaII20K&n=375409.PDF

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Nanya PCB (8046 TT)Electronic Equipment17 June 2013

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Financials & valuationFinancial statements

Year to 12/2012a 12/2013e 12/2014e 12/2015e

Profit & loss summary (TWDm)

Revenue 29,723 31,294 33,574 33,375EBITDA 543 1,524 1,745 2,633Depreciation & amortisation -3,388 -3,147 -2,882 -2,807Operating profit/EBIT -2,845 -1,623 -1,137 -174Net interest 550 844 772 768PBT -2,295 -779 -365 594HSBC PBT -2,295 -779 -365 594Taxation 231 114 55 -89Net profit -2,064 -665 -310 505HSBC net profit -2,064 -665 -310 505

Cash flow summary (TWDm)

Cash flow from operations 2,948 -46 2,450 3,690Capex -2,279 -1,668 -1,700 -1,600Cash flow from investment -1,605 -2,037 -1,700 -1,600Dividends -1,299 0 0 0Change in net debt 1,889 1,711 -1,044 -1,937FCF equity 456 405 834 1,906

Balance sheet summary (TWDm)

Tangible fixed assets 17,951 19,154 17,988 16,777Current assets 20,320 19,510 20,659 22,531Cash & others 9,802 8,110 9,154 11,316Total assets 38,930 39,354 39,365 40,055Operating liabilities 5,057 3,853 4,134 4,279Gross debt 2,946 2,965 2,965 3,190Net debt -6,856 -5,146 -6,189 -8,127Shareholders funds 30,927 32,392 32,081 32,586Invested capital 23,412 26,701 25,358 23,712

Ratio, growth and per share analysis

Year to 12/2012a 12/2013e 12/2014e 12/2015e

Y-o-y % change

Revenue -23.4 5.3 7.3 -0.6EBITDA -91.1 180.7 14.5 50.9Operating profit -196.0 - - -PBT -156.2 - - -

HSBC EPS -164.9 - - -Ratios (%)

Revenue/IC (x) 1.2 1.2 1.3 1.4ROIC -10.5 -5.5 -3.7 -0.6ROE -6.3 -2.1 -1.0 1.6ROA -6.1 -3.5 -2.5 -0.4EBITDA margin 1.8 4.9 5.2 7.9Operating profit margin -9.6 -5.2 -3.4 -0.5Net debt/equity -22.2 -15.9 -19.3 -24.9Net debt/EBITDA (x) -12.6 -3.4 -3.5 -3.1Per share data (TWD)

EPS reported (fully diluted) -3.19 -1.02 -0.47 0.77HSBC EPS (fully diluted) -3.19 -1.02 -0.47 0.77DPS 2.01 0.00 0.00 0.00

Book value 47.78 49.79 49.07 49.59

Valuation data

Year to 12/2012a 12/2013e 12/2014e 12/2015e

EV/sales 0.6 0.7 0.6 0.5EV/EBITDA 35.2 13.6 11.3 6.7EV/IC 0.8 0.8 0.8 0.7PE* NM NM NM 53.6P/Book value 0.9 0.8 0.8 0.8FCF yield (%) 1.8 1.6 3.2 7.4Dividend yield (%) 4.9 0.0 0.0 0.0

Note: * = Based on HSBC EPS (fully diluted)

Price relative

18

38

58

78

98

118

138

2011 2012 2013 2014

18

38

58

78

98

118

138

Nanya PCB Rel to TAIWAN WEIGHTED INDEX

Source: HSBC

Note: price at close of 14 Jun 2013

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Concerns on PX oversupply risk and disadvantages in crudecost weigh on investor sentiment

Ex-growth and lower dividend yield could lead to a de-rating

Retain Underweight and TP at KRW60,000

Continuing underperformance: Despite a rebound in benchmark refining margins fromUSD4.8/bbl to USD7.8/bbl in the past 7 weeks, S-Oils share price has dipped by c10% inthe past 10 days, extending ytd losses to -23% vs KOSPIs -5%. A weak 2Q13 earningsoutlook has partly contributed to this underperformance, but we believe our concerns onthe medium-term business outlook have started to play out.

Disadvantaged crude cost: As we have anticipated, ME crude is becoming unattractively priced compared with international benchmarks on tightened OPEC supply. The Brent-Dubaicrude differential has narrowed from USD3-5/bbl in 2011-12 to USD2/bbl in 2Q13 qtd,making S-Oil who relies solely on Arabian crude less competitive. As Dubai crude has already

become more expensive, the recent cut in Aramco OSP (Official Selling Price, a price premium that S-Oil pays over Dubai crude) has little positive impact. It may become more pronounced if OPEC cuts crude output in response to higher non-OPEC production.

PX golden age likely over: PX the largest earnings contributor to S-Oil (c45% in 2011-13e) has been in a sweet spot in the past three years thanks to a surge in Chinas imports asa result of downstream PTA expansions in the country. New PTA plants in China have beendisplacing PTA imports and consuming more PX during the period, but as PTA self-sufficiency has risen (from 79% in 1Q11 to 131% in 4Q12 in terms of capacity) Chinas PXimports will likely decelerate while regional PX capacity grows by 47% in 2013-15e. Thedownturn has started already, evidenced by a cUSD200/t fall in PX-gasoline spread ytd.

Lower dividend yield and ex-growth may lead to a de-rating: Well-disciplined high pay-out ratio (40-50%) has attracted investor interest to S-Oil, but a weak earningsoutlook suggests the dividend yield (4.1% in 2013e) will be far lower than in the past(7.2% in the past 10 years). The viability of the refinery upgrade project is still vague, soex-growth concerns may lead to a de-rating until the company draw a clearer blueprint.

We maintain our UW and target price at KRW60,000. We have cut our 2013e DPSforecast from KRW4,500 to KRW 3,250 as we believe the company will likely retainmore cash for future maintenance and capex. Our target price is derived from applyingtarget PE multiple of 9.1x (unchanged), which is the Korean refining sectors historicalaverage, to our 12 months forward EPS. 2013e consensus EPS have fallen by 25% during

the last 6 months, but its still 21% higher than our estimate. Key upside risk to our call isa sudden rise in crude oil price that may cause unexpected inventory gains.

UnderweightTarget price (KRW) 60,000Share price (KRW) 79,000Forecast dividend yield (%) 4.1Potential return (%) -20.4

Note: Potential return equals the percentagedifference between the current share price andthe target price, plus the forecast dividend yieldPerformance 1M 3M 12MAbsolute (%) -9.2 -16.1 -14.3Relative^ (%) -6.1 -10.9 -15.4

Index^ KOSPI INDEX

RIC 010950.KSBloomberg 010950 KS

Market cap (USDm) 8,122Market cap (KRWb) 9,186

Enterprise value (KRWb) 11,399Free float (%) 36

Note: (V) = volatile (please see disclosure appendix)

S-Oil (010950 KS)

UW: Potential for a de-rating; need a breakthrough

Nat Resources & EnergyOil & Gas

Equity Korea

17 June 2013

Dennis H C Yoo *, CFAAnalystThe Hongkong and Shanghai BankingCorporation Limited+852 2996 6917dennishcyoo@hsbc.com.hk

Thomas C Hilboldt *, CFAHead of Oil, Gas & PetrochemicalsResearch, Asia-PacificThe Hongkong and Shanghai BankingCorporation Limited+852 2822 2922

homaschilboldt@hsbc.com.hk

View HSBC Global Research at:http://www.research.hsbc.com

*Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is notregistered/qualified pursuant to FINRAregulations

Issuer of report: The Hongkong andShanghai BankingCorporation Limited

Disclaimer &DisclosuresThis report must be readwith the disclosures andthe analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it

Flashnote

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S-Oil (010950 KS)Oil & Gas17 June 2013

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Reuters SG-Dubai Benchmark Gross Refining Margins(USD/bbl)

Brent-Dubai crude differential vs Singapore-Dubai 2:1:1crack spread (USD/bbl)

Source: Reuters, HSBC Source: Bloomberg, HSBC

Saudi Aramco OSP applied for S-Oil (USD/bbl) PX-Gasoline and PX-Naphtha price spread (USD/t)

Source: Bloomberg, HSBC Source: Thomson Reuters Datastream, Reuters, HSBC

Chinas PTA and PX net imports (000 tonnes per month) Chinas PTA self-sufficiency (capacity to domestic demand)

Source: CEIC, HSBC Source: IHS Chemical, HSBC

-6-4-202468

10121416

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SG-Dubai Complex GRM SG-Dubai Simple GRM

-5-3-113579111315

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Singapore 2-1-1 Crack spread Brent - Dubai spread (RHS)

-3.0-2.0-1.00.0

1.02.03.04.0

J a n

F e

b M a r

A p r

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2007 2008 2009 2010 2011 2012 2013 2014

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/ m o n

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PTA PX

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60%70%80%90%100%110%120%130%140%

3,000

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Capacity (a) Demand (b) (a)/(b) (RHS)

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Coal India Limited (COAL IN)Metals & Mining17 June 2013

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Financials & valuationFinancial statements

Year to 03/2013a 03/2014e 03/2015e 03/2016e

Profit & loss summary (INRm)

Revenue 683,027 738,561 794,409 853,108EBITDA 180,836 203,310 230,536 259,225Depreciation & amortisation -18,130 -19,925 -21,775 -23,517Operating profit/EBIT 162,707 183,385 208,761 235,708Net interest 63,255 57,644 61,893 67,483PBT 249,790 266,083 297,244 331,395HSBC PBT 249,722 266,083 297,244 331,395Taxation -76,227 -81,221 -90,733 -101,157Net profit 173,564 184,862 206,511 230,238HSBC net profit 173,495 184,862 206,511 230,238

Cash flow summary (INRm)

Cash flow from operations 170,315 231,343 258,235 286,938Capex -39,310 -45,000 -37,222 -40,200Cash flow from investment -43,445 -45,000 -37,222 -40,200Dividends -104,999 -119,999 -134,999 -149,999Change in net debt -42,887 -66,344 -86,014 -96,740FCF equity 64,549 126,160 155,697 176,044

Balance sheet summary (INRm)

Intangible fixed assets 0 0 0 0Tangible fixed assets 169,617 194,692 210,139 226,822Current assets 999,531 1,078,964 1,178,140 1,288,715Cash & others 622,360 688,704 774,718 871,458

Total assets 1,215,648 1,320,156 1,434,779 1,562,037Operating liabilities 555,486 595,131 638,242 685,261Gross debt 10,778 10,778 10,778 10,778Net debt -611,582 -677,926 -763,941 -860,681Shareholders funds 484,720 549,583 621,096 701,335Invested capital -8,699 -10,180 -24,681 -41,183

Ratio, growth and per share analysis

Year to 03/2013a 03/2014e 03/2015e 03/2016e

Y-o-y % change

Revenue 9.4 8.1 7.6 7.4EBITDA 15.4 12.4 13.4 12.4Operating profit 18.8 12.7 13.8 12.9

PBT 17.4 6.5 11.7 11.5HSBC EPS 18.1 6.6 11.7 11.5

Ratios (%)

Revenue/IC (x) -17.9 -78.2 -45.6 -25.9ROIC -296.4 -1349.8 -832.1 -497.3ROE 39.0 35.7 35.3 34.8ROA 15.2 14.6 15.0 15.4EBITDA margin 26.5 27.5 29.0 30.4Operating profit margin 23.8 24.8 26.3 27.6EBITDA/net interest (x)Net debt/equity -126.0 -123.2 -122.9 -122.6Net debt/EBITDA (x) -3.4 -3.3 -3.3 -3.3CF from operations/net debt

Per share data (INR)

EPS reported (fully diluted) 27.48 29.27 32.69 36.45HSBC EPS (fully diluted) 27.47 29.27 32.69 36.45DPS 14.00 16.00 18.00 20.00Book value 76.74 87.01 98.33 111.03

Key forecast drivers

Year to 03/2013a 03/2014e 03/2015e 03/2016e

Production (MT) 452 477 506 534Sales (MT) 465 490 515 540 ASP (INR/t) 1,468 1,507 1,543 1,580

Valuation data

Year to 03/2013a 03/2014e 03/2015e 03/2016e

EV/sales 1.8 1.6 1.4 1.2

EV/EBITDA 6.9 5.8 4.8 3.9EV/ICPE* 10.9 10.2 9.1 8.2P/Book value 3.9 3.4 3.0 2.7FCF yield (%) 3.5 6.8 8.3 9.4Dividend yield (%) 4.7 5.4 6.0 6.7

Note: * = Based on HSBC EPS (fully diluted)

Price relative

266

316

366

416

466

516

2011 2012 2013 2014

266

316

366

416

466

516

Coal India Limited Rel to BOMBAY SE SENSITIVE INDEX

Source: HSBC

Note: price at close of 13 Jun 2013

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POSCO: Impact of power-shortage warning to be limitedPOSCO announces plans to cut energy use after shortage warning

Korea issued a preliminary power-shortage warning after a corruption scandalforced the suspension of two nuclear reactors. In response, the nations major steelmills have agreed to participate in the governments move to save electricity bycurtailing usage during the peak season. The Korea Iron & Steel Associationannounced on 9 June that its members will reduce their daily electricityconsumption by 1.1m KW in August when the demand for electricity tends to

spike due to air conditioning usage. In particular, POSCO plans to reduce its electricity consumption by 380,000 KW.This will be achieved by lowering the capacity utilization rates of its electric-arcfurnaces (including its stainless plant), as well as reducing working hours during

peak electricity usage hours. The company and its subsidiary POSCO SpecialtySteel will also adjust revamp schedules to August from the original plans set for later this year.

From a full-year perspective, impact on earnings to be minimal

We believe these measures will have a limited impact on POSCOs annualshipments, with the recent completion of Gwangyang Blast Furnace #1. Followingthe revamp, the blast furnaces annual capacity increased from 3.28mt to 5.65mt,which should more than offset any volume declines from lower utilization rates atthe electric-arc furnaces.

This shift should also allow POSCO better energy efficiency. Not only does the blast furnace have lower electricity costs relative to electric-arc furnaces, but BF#1 has been designed to enhance the energy recovery ratio and thus shouldtranslate into better margins. Also we note that POSCO already generates morethan 70 % of its own energy requirements, which should minimize any further risks on the downside.

Valuation and risks for POSCO: Our target price of KRW420,000 is based on a2013e PB of 0.8x, given our 2013-15e ROE forecast of 7.1%. Key downside risksinclude: 1) an unexpected cut in product prices; 2) a sharp increase in raw material

prices; and 3) a steep depreciation in the KRW.

Mine & Dime Asia Pacific Metals and Mining

Commodities and indices

LME 3 months prices USD/t Daily chg

Aluminium 1,857 -0.4%Copper 7,050 -1.0%Zinc 1,803 -1.4%

SHFE RMB/t Daily chg

Aluminium 14,730 -1.4%Copper 52,030 -2.2%Zinc 14,565 -1.6%

Other metals USD/oz Daily chg

Gold 1,385 0.2%

China steel (ex-VAT) USD/t Wkly chg

Wire and rods 502 -0.9%Rebar 499 -1.0% Angle steel 520 -1.2%Medium plate 515 -1.4%HR coil 517 -1.6%CR sheet 642 -1.1%Galvanised steel 697 -1.1%Seamless pipe 668 -0.6%

Coal USD/t Wkly chg

Qinhuangdao 5,800kcal, fob 107 0.8%Newcastle 6,700kcal, fob 86 -0.5%

Indices Index Daily chg

HSI Index 20,887 -2.2%HSCEI Index 9,688 -2.7%Shanghai Comp 2,148 -2.8%KOSPI 1,890 0.4%Baltic freight 873 3.1%

Source: Bloomberg, HSBC

14 June 2013

Simon Francis* Regional Head of Metals and Mining, ASP

The Hongkong and Shanghai Banking Corporation Limited +852 2996 6620 simonfrancis@hsbc.com.hk

Thomas Zhu* Analyst The Hongkong and Shanghai Banking Corporation Limited +852 2822 4325 thomasjzhu@hsbc.com.hk

Chris Chen * Analyst The Hongkong and Shanghai Banking Corporation Limited +852 2822 4277 chrislchen@hsbc.com.hk

Jeff Yuan* Analyst The Hongkong and Shanghai Banking Corporation Limited +852 3941 7010 jeffsyuan@hsbc.com.hk

Brian Cho* Analyst The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities +822 3706 8750 briancho@kr.hsbc.com

Jigar Mistry* Analyst HSBC Securities and Capital Markets (India) Private Limited +91 22 2268 1079 jigarmistry@hsbc.co.in

Jena Han* Analyst The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities +822 3706 8772 jenahan@kr.hsbc.com

*Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations

Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: http://www.research.hsbc.com

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in theDisclosure appendix, and with the Disclaimer, which forms part of it Disclosures for companies can be accessed via the hyperlinks to the original published research, which can befound in the title

http://www.research.hsbc.com/http://www.research.hsbc.com/

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Mine & DimeMetals and Mining14 June 2013

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A note on our stock ratingsUnder HSBCs equity research model, the Neutral rating band equals the local hurdle rate (9.5% for China and Mongolia, 9%

for Taiwan, 11% for India and 10% for Korea), plus or minus 10ppt for volatile stocks or 5ppt for non-volatile stocks. At the

time we set our target prices for the stocks discussed above, they implied potential returns above, below, or within this band;

accordingly, we rate the stocks Overweight, Underweight, or Neutral, with a (V) if they are volatile (see disclosure appendix

for HSBCs definition of volatility). Potential return equals the percentage difference between the current share price and the

target price, including the forecast dividend yield when indicated.

Figure 1: Valuation comparison

Close price as of 27 Jun Bberg Rating Mkt cap Target Current Potential _________ PE __________ _____ EV/EBITDA ______ ____ PB ______ USDbn Price Price Return* 2012 2013e 2014e 2012 2013e 2014e 2012 2013e

China, Taiwan, MongoliaCoalChina Coal Energy 1898 HK UW 11.6 6.80 4.60 52% 5.4 6.6 6.1 3.9 3.9 3.2 0.6 0.5China Shenhua 1088 HK OW 62.3 36.88 23.85 60% 7.7 7.7 7.4 4.3 4.5 4.3 1.5 1.3Shougang Fushan 639 HK UW(V) 2.0 2.90 2.86 6% 8.4 9.4 8.9 3.6 3.3 2.8 0.8 0.7Mongolian Mining 975 HK UW 0.9 3.00 1.80 67% n.a. 25.0 9.0 26.4 12.6 8.0 1.1 1.1Yanzhou Coal 1171 HK UW 7.9 9.85 6.81 48% 4.3 7.7 5.9 4.6 5.6 4.7 0.6 0.6 GoldZhaojin Mining 1818 HK OW(V) 2.5 11.74 6.76 77% 8.1 9.7 8.7 6.3 6.8 6.1 1.9 1.7Zijin Mining 2899 HK OW 9.0 3.17 1.87 73% 6.2 6.5 5.9 3.8 3.9 3.6 1.1 1.0 Non-ferrous metalsChalco 2600 HK UW 7.3 2.20 2.81 -22% n.a. n.a. n.a. 68.6 20.4 17.0 0.7 0.8Chinalco Mining 3668 HK N(V) 1.9 1.39 1.24 12% n.a. 38.2 7.7 n.a. n.a. n.a. 4.5 2.2Jiangxi Copper 358 HK OW 9.2 18.87 15.12 27% 8.0 8.8 7.9 6.7 5.6 4.8 1.0 0.9 Steel Angang Steel 347 HK UW(V) 3.5 4.10 3.86 8% n.a. 34.3 14.5 30.4 7.6 7.0 0.5 0.5Baoshan 600019 CH UW 12.2 4.80 4.53 10% 7.7 10.3 11.0 4.6 4.8 4.4 0.7 0.7CH Metal Recycling 773 HK OW(V) 1.4 14.00 9.43 53% 5.7 4.9 4.4 7.2 5.9 4.9 1.4 1.1China Steel 2002 TT UW 12.4 25.25 24.25 5% 64.0 28.9 33.0 22.7 16.6 16.3 1.5 1.4Maanshan I&S 323 HK UW(V) 2.1 1.52 1.74 -12% n.a. 57.8 18.5 9.3 5.3 4.9 0.5 0.5 IndiaHindalco HNDL IN OW 3.2 120 97 26% 8.0 9.0 7.4 8.4 8.2 7.4 0.5 0.5Hindustan Zinc HZ IN OW 7.8 150 108 43% 7.5 6.6 6.7 6.0 4.6 4.1 1.4 1.2Jindal Steel & Power JSP IN OW(V) 3.8 460 237 95% 5.7 6.5 5.1 6.4 6.3 5.0 1.0 0.9JSW Steel JSTL IN N(V) 2.6 840 671 26% 12.8 9.7 7.6 5.8 5.5 4.6 0.9 0.8National Aluminium Company NACL IN N 1.3 51 29 77% 15.2 8.4 8.4 4.9 2.3 2.2 0.6 0.6NMDC NMDC IN OW 7.3 177 107 69% 6.6 6.7 7.1 2.7 2.6 2.5 1.5 1.2Sesa Sterlite SESA IN N 2.1 194 140 39% 4.3 4.3 4.2 2.5 1.9 1.2 0.5 0.5

Tata Steel TATA IN N 4.5 400 266 55% 17.1 6.3 4.9 7.8 5.9 5.3 0.6 0.6 KoreaDongkuk Steel Mils 001230 KS UW 0.6 10,000 11,600 -14% n.a. -6.4 -15.3 23.5 15.5 14.1 0.3 0.3Hyundai Steel 004020 KS OW(V) 5.3 100,000 70,000 44% 10.9 9.1 7.7 9.1 8.4 7.8 0.6 0.6POSCO 005490 KS OW 24.1 420,000 312,000 38% 11.1 9.6 8.8 6.8 6.4 5.9 0.7 0.6

* Potential return equals the percentage difference bet ween the current share price and the target price, plus the forecast dividend yield.*India reports earnings on a March ending basis so 2012e corresponds to FY13e

Source: HSBC estimates, Bloomberg.

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ab cGlobal Research

The State Audit Office has published a report on its investigation of provincial and

municipal government debt. In this issue of From the horses mouth, we summarise the

results and key messages from the report.

On 10 June, the State Audit Office (SAO) published the results of its latest investigation

of local debt, covering 36 provincial/prefecture governments. It shows outstanding localdebt grew 12.9% from 2010 to 2012 (annual rate of 6.3%). Based on this report, we

estimate that total local government debt is likely to have topped RMB12.1trn in 2012, or

around 23.3% of 2012 GDP (down from 26.6% in 2010).

The debt structure of the 36 local governments suggests that bank loans remain the largest

source of funding, representing 78.1%. This number was 79% in 2010 when the SAO

published its last audit report on local debt. Bond issuance is playing an increasingly

important role in funding local government spending, accounting for 12.1% of the total at

the end of 2012, up from the 7.1% in 2010. It has considerable potential to grow further.

As for usage of the fund, 92% of these borrowing are channelled into transportation, cityinfrastructure, land reserve, medical and culture, agriculture and water conservancy,

environmental protection and public housing construction. This paints a relatively similar

picture to 2010, when more than 90% of local debt was used to fund similar long-term

infrastructure projects. Therefore, there is no material change in the composition (and

possibly also quality) of local government balance sheets.

The 36 local governments are responsible for repayment or guaranteeing repayment of

71.5% of the RMB3,848bn outstanding debt in 2012, down from the 84.4% in 2010.

14 June 2013 MacroEconomics

Qu HongbinEconomistThe Hongkong and Shanghai BankingCorporation Limited (HK)+852 2822 2025hongbinqu@hsbc.com.hk

Ma XiaopingEconomistThe Hongkong and Shanghai BankingCorporation Limited (HK)+86 10 5999 8232xiaopingma@hsbc.com.cn

View HSBC Global Research at:http://www.research.hsbc.com

Issuer of report: The Hongkong andShanghai BankingCorporation Limited

Disclaimer &Disclosures

This report must be readwith the disclosures andthe analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it

From the horses mouth

The latest on local government debt in China

In its latest report, the State Audit Office estimates local debthas grown 6% pa since 2011, implying the local governmentdebt-GDP ratio has fallen from 26% to 23%

HSBC estimates that total local government debt toppedRMB12trn, of which 78% are bank loans

Issuing municipal bonds and selling assets could be feasibleways to mitigate the liquidity risk

http://www.research.hsbc.com/http://www.research.hsbc.com/

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Macro

Economics

14 June 2013

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Although the overall local government debt level is still manageable and there is no material deteriorationin local government balance sheets, the SAO indicates there are some warning signs that justify the

central government taking pre-emptive policy measures to curb local government solvency risk through

debt restructuring.

Firstly, the debt-to-income ratio measured by outstanding debt as a percentage of local revenuegeneration capacity exceeds 100% in 10 out of the 36 local governments surveyed. This number increases to 16, or 44% of the local governments surveyed, if we include local-government-guaranteedcorporate debt. In addition, when local-government-guaranteed corporate debt is included in thecalculation, 20 out of 36 local governments have a debt-service ratio of above 20% (the highest being67%). The average overdue debt ratio measured by overdue debt as a percentage of outstanding debt also rose by 0.48ppts to 0.75%.

Secondly, outstanding debt raised via local government financial vehicles (LGFVs) increased by 11.3% pa and accounted for 45.7% of total debt in 2012, down from 46.4% in 2010. The report claims 151 out of the 223 LGFV financing platforms that were surveyed had difficulties meeting principal and interest

payments in 2012, while 37 recorded a book loss in 2012. Illiquid assets and a lack of transparencyremain the main challenges facing most LGFVs.

Thirdly, the report claims some local governments are heavily reliant on land sales for revenue. Of the 36local governments surveyed, 21 were committed to repaying 54.6% of their debt in 2012, just as incomefrom land sales contracted by 2.8%. Debt principal plus interest payments amounted to 1.25x of their land

sales revenue in 2012.

Fourthly, funding through trust loans, finance leases, sale-and-leaseback agreements, wealth management products and build-transfer contracts, with an implied interest rate of as high as 15-20%, increased byRMB215bn between 2011 and 2012. Given that total local debt increased by RMB300m in 2011, most of the 12.9% increase in outstanding debt should have occurred in 2012, in line with the strong growth intrust loans and bond issuance for the purpose of local government financing.

Conclusion

The SAO report confirms that Chinas overall local government debt level is still manageable, but withover 70% of the debt funded by bank loans, there is a liquidity problem. This is because there is a

mismatch between the maturity structure of the debt used to finance long-term projects and the projectsexpected payback period. The good news is that local government debt is being closely monitored byBeijing. Given that the amount of debt maturing in the next two to three years is about 70% of total localdebt, we believe the authorities need to take decisive action to restructure local debt in order to avoiddisorderly defaults.

HSBC believes Beijing has three options for restructuring local debt (see China Inside Out: Local debt:

Three options , published on 1 August 2011.)

Municipal bonds for loans swap. Local governments could issue municipal bonds and use the proceeds

to pay back bank loans. In the near term, this would mitigate the risk of a maturity mismatch, as it would

enable local governments to roll over old debt (short-term loans) into new debt (long-term bonds). In thelong run, as urbanisation continues in China, bond issuance opens a channel for local governments to raise

funds needed for infrastructure investment in a more transparent and market-based fashion.

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Economics - Data Reactions14 June 2013

Leif Eskesen | +6566588962 | LEIFESKESEN@HSBC.COM.SG

View HSBC Global Research at: http://www.research.hsbc.com

Issuer of report: The Hongkong and Shanghai BankingCorporation Limited Singapore Branch

IndiaStill moderating: May WPI inflation eased to 4.7% y-o-yMay WPI inflation eased to 43-month low of 4.7% y-o-y (vs. 4.9% in April) led by energy, minerals and manufactured

goods. However, food inflation picked up and inflation rose slightly on a sequential basis. Inflation is likely to remain

relatively benign in coming months as commodity prices remain low and domestic demand remains soft. Good

monsoon rains may also be in the cards and help lower inflation. However, if the weakness of the INR persists and leads

to higher imported inflation, this may partly counter the other moderating trends.

Facts

- WPI inflation eased to 4.7% y-o-y in May (vs. 4.9% in April), which is a shade below market expectations of 4.9% and our

4.8% estimate.

- On a sequential seasonally adjusted (sa) basis, WPI inflation rose 0.3% m-o-m (vs. -0.1% in April)- Core inflation (non-food manufactured goods) slowed to 2.4% y-o-y (vs. 2.7% in April). On a sequential basis, core inflation

rose 0.1% m-o-m sa vs. -0.4% in April

- The deceleration was driven by energy (7.3% y-o-y vs. 8.8% in April) and manufactured goods (3.1% y-o-y vs. 3.4% in

April)

- Meanwhile, primary articles rose 6.7% y-o-y (vs. 5.8% in April) led by primary food (8.2% y-o-y vs. 6.1% in April). The

uptick in food was the result of cereals, vegetables, and protein-rich foods. However, non-food primary articles (4.9% y-o-y vs.

7.6% in April) and minerals (0.6% y-o-y vs. 0.9% in April) continued to slow

Implications

Inflation continues to moderate on the back of the weaker global commodity cycle and softer domestic demand. However, theuptick in food inflation was a bit of a surprise, which may, in part, have reflected temporary weather-related factors.

Looking ahead, inflation is expected moderate a bit further in coming months as commodity prices and domestic demand

remains soft. Moreover, preliminary weather forecasts suggest we may get a normal monsoon, which would help lower food

inflation, including when you consider last year's relatively high base following the below-normal monsoons. Of course, if the

depreciation of the INR persists, it may partly counter these moderating trends by adding to imported inflation.

However, as we head into the second half of the fiscal year we expect a gradual rise in inflation as commodity prices find a

floor as the global economy regains its footing. Moreover, the gradual recovery expected in India during the second half of the

fiscal year should also slowly build up inflation.

In the meantime, however, we believe that the RBI will deliver a few more cuts (50bps in total) in light of the lingering

economic softness and the moderation in inflation. The next cut (25bps) will likely come on Monday June 17, although the

recent weakness in the INR may delay it.

Bottom line: WPI inflation eased as expected led by weaker commodity prices and softer domestic demand conditions.

However, food inflation firmed. The RBI is likely to ease monetary policy a bit further in light of this.

Leif Lybecker Eskesen, Chief Economist for India & ASEAN

http://www.research.hsbc.com/

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HSBC Global Research

Economics - Data Reactions

14 June 2013

2

Prithviraj Srinivas, Economics Associate

Chart 1. Headline and core inflation continues to slow in annual terms, but.

Chart 2. inflation picked up on a sequential basis

Chart 3. However, core inflation is still falling on a 3m/3m seasonally adjusted basis

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First Light Asia17 June 2013

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Research Last Week

Ticker Company Rating was Currency Target was EPS '13e EPS '14e Price Price At Close

New GNP IN Glenmark Pharmaceuticals OW INR 710.00 22.86(a) 29.62 554.35 10 JunMNCN IJ Media Nusantara Citra OW IDR 4500.00 144.42 178.88 2900.00 10 JunMSKY IJ MNC Sky Vision N(V) IDR 2700.00 46.63 76.22 2400.00 10 Jun

Up 3 HK Hong Kong & China Gas OW N HKD 23.00 22.70 0.79 0.80 18.76 12 Jun

OINL IN Oil India Limited OW N INR 750.00 550.00 59.71(a) 67.76 556.90 12 Jun ASTRO MK Astro Malaysia Holdings OW(V) MYR 3.60 3.50 0.08(a) 0.09 3.00 11 Jun8039 TT Taiflex Scientific OW(V) TWD 52.00 50.50 4.33 5.30 43.50 07 Jun

1112 HK Biostime OW HKD 62.00 43.00 1.67 2.22 43.10 07 Jun

044490 KS Taewoong Co Ltd N(V) KRW 24,000 22,000 847.76 975.94 21,950 07 JunDown 2357 TT Asustek N OW TWD 307.00 382.00 29.08 30.84 314.00 11 Jun

PBK MK Public Bank UW N MYR 16.60 1.14 1.27 17.02 12 JunTCM MK TAN Chong Motor Holdings UW N MYR 6.20 4.60 0.54 0.62 6.60 06 Jun

UMWH MK UMW Holdings UW N MYR 14.30 12.50 0.84 0.88 14.64 06 JunTTAN IN Titan Industries Ltd OW INR 285.00 330.00 8.17(a) 8.82 237.20 11 Jun1038 HK Cheung Kong Infra N HKD 54.00 55.00 4.17 4.08 51.30 12 Jun

2 HK CLP Holdings Ltd N HKD 69.00 73.00 4.02 4.43 63.10 12 Jun

6 HK Power Assets Holding N HKD 72.00 74.00 5.08 5.04 67.00 12 Jun

DFI SP Dairy Farm Intl Holdings UW USD 11.10 11.60 0.38 0.43 12.50 06 Jun

386 HK Sinopec UW HKD 5.40 7.10 0.55 0.60 5.69 10 JunSource: Bloomberg, HSBC estimates

Click on title to open reportsResearch Focus

14 Jun Malaysia Banks - Margins to remain structurally depressed Loo Kar Weng Hong Kong utilities - Close but not yet buying territory Jenny CosgroveHong Kong & China Gas (3 HK) - Upgrade to OW: Raise TP to HKD23.0 from HKD22.7 Jenny CosgrovePrada SPA (1913 HK) - OW(V): Shares victim of market short-termism? Erwan Rambourg

13 Jun India Pharmaceuticals - Generics are evolving Girish BakhruIndonesia Media - Prime time for free-to-air: initiating coverage Rajesh RamanGlenmark Pharmaceuticals (GNP IN) - Initiate OW: Attractive mix of specialtygenerics & innovation Girish BakhruAsustek (2357 TT) - Downgrade to N: Share gain to pause in 2H13 Jenny Lai

11 Jun Honghua Group (196 HK) - OW(V): Site visit - patience needed before next breakthrough Kevin LianBiostime (1112 HK) - OW: Formula for success Christopher K Leung Doosan Corp (000150 KS) - OW: Attractive in many aspects Brian ChoAsia Container Shipping - Whos most exposed? Parash Jain

10 Jun Malaysian Autos - Time to hit the brakes Tarun Bhatnagar Huaneng Power International (902 HK) - OW: No sharp, sudden tariff cut Jenny CosgroveDairy Farm Intl Holdings (DFI SP) - UW: Lacklustre outlook remains Mark WebbTaiflex Scientific (8039 TT) - OW(V): 2Q13 revenue higher on project win Tse-yong Yao

Regional

14 Jun Australian labour market steady - Less urgency for another RBA cut Paul BloxhamRBNZ Observer Update - Steady for now, but inflation risks rising Adam RichardsonAsian FX - The "carry-teristics" of the sell off Paul Mackel Asia Investor Forum - London: 17-18 June 2013, Boston: 19 June 2013, New York:20 June 2013 Carrie Liu

13 JunAsias best in class - The companies that have what it takes to generate sustainable highreturns Herald van der Linde

https://www.research.hsbc.com/R/20/0qGfwJlhttps://www.research.hsbc.com/R/20/yJTwetwhttps://www.research.hsbc.com/R/20/rR5fL8yhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Yr020LHgi0&n=375238.PDFhttps://www.research.hsbc.com/R/20/S0eV7kghttps://www.research.hsbc.com/R/20/HbRX0yghttps://www.research.hsbc.com/R/20/2Dlq9hphttps://www.research.hsbc.com/R/20/2Dlq9hphttps://www.research.hsbc.com/R/20/aNS2l17https://www.research.hsbc.com/R/20/nUDam9Ehttps://www.research.hsbc.com/R/20/A4tsVaqhttps://www.research.hsbc.com/R/20/stVyuEJhttps://www.research.hsbc.com/R/20/q4bHEX0https://www.research.hsbc.com/R/20/sQh5UeWhttps://www.research.hsbc.com/R/20/hCEspbYhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=2H2wF0DN1I&n=374570.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=ur2Z62Llmn&n=374590.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=bma5z0hASI&n=375223.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Q4YY4LiHQN&n=375206.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=xuxXGs8CDD&n=375229.PDFhttps://www.research.hsbc.com/R/20/4M3MzDqhttps://www.research.hsbc.com/R/20/4M3MzDqhttps://www.research.hsbc.com/R/20/qcuaccGhttps://www.research.hsbc.com/R/20/qcuaccGhttps://www.research.hsbc.com/R/20/qcuaccGhttps://www.research.hsbc.com/R/20/qcuaccGhttps://www.research.hsbc.com/R/20/4M3MzDqhttps://www.research.hsbc.com/R/20/4M3MzDqhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=xuxXGs8CDD&n=375229.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Q4YY4LiHQN&n=375206.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=bma5z0hASI&n=375223.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=ur2Z62Llmn&n=374590.PDFhttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=2H2wF0DN1I&n=374570.PDFhttps://www.research.hsbc.com/R/20/hCEspbYhttps://www.research.hsbc.com/R/20/sQh5UeWhttps://www.research.hsbc.com/R/20/q4bHEX0https://www.research.hsbc.com/R/20/stVyuEJhttps://www.research.hsbc.com/R/20/A4tsVaqhttps://www.research.hsbc.com/R/20/nUDam9Ehttps://www.research.hsbc.com/R/20/aNS2l17https://www.research.hsbc.com/R/20/2Dlq9hphttps://www.research.hsbc.com/R/20/2Dlq9hphttps://www.research.hsbc.com/R/20/HbRX0yghttps://www.research.hsbc.com/R/20/S0eV7kghttps://www.research.hsbc.com/midas/Res/RDV?p=pdf&key=Yr020LHgi0&n=375238.PDFhttps://www.research.hsbc.com/R/20/rR5fL8yhttps://www.research.hsbc.com/R/20/yJTwetwhttps://www.research.hsbc.com/R/20/0qGfwJl

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Asian FX - Lower stop on short THB-JPY Paul Mackel Asia-Pac Rates: Mindful of FX risks - Trades: Reduce duration Andr de SilvaAustralia's rebalancing slower than expected - Paul Bloxham's Oped in today's Australian

Financial Review Paul BloxhamBoJ Watch Update - Sticking to its guns--policy on hold Izumi Devalier Mine & Dime - Chinese copper wirerod fabricators expect flat June orders Simon Francis

11 Jun Asia's 11 trillion dollar opportunity - Ronald Man's article in The Korea Times Ronald ManAsian FX - RMB: All present to correct Paul Mackel Japan: Public pensions taking a new tack - Increased allocation to foreign bonds aswell as equities Andr de SilvaMine & Dime - Jiangxi Copper - OW: Attractive valuation but near-term risks looming;Baoshan cuts prices for July deliveries Simon Francis

10 Jun Bank of Japan Watch - Better safe than sorry Izumi Devalier Sri Lanka - Wait-and-see mode: Central bank on hold Leif EskesenThe RBNZ Observer - On hold, despite housing sectors rapid rise Paul BloxhamAsian FX: - Sell THB-JPY (corrected) Paul Mackel Mine & Dime - Chalco - Tinkering away; China Steel brings forward blast furnacemaintenance Simon Francis

China & Hong Kong

14 Jun Moving China - Infrastructure and Industrials Research Focus and Key News Anderson ChowSpreadtrum Communications (SPRD US) - N(V): Positive 2Q13 preannouncement Yolanda Wang Cheung Kong Infra (1038 HK) - N: Not yet buying territory Jenny CosgroveCLP Holdings Ltd (2 HK) - N: Cut TP on Australia, India and currency downgrades Jenny CosgrovePower Assets Holding (6 HK) - N: Remain Neutral despite share price fall Jenny Cosgrove

13 Jun Li & Fung (494 HK) - OW(V): Laggard exporter on US recovery Chris Zee11 Jun Upside of a Fall - Donna Kwok's latest op-ed in the SCMP Donna Kwok

China: The sharp money market squeeze - Liquidity tightness is here to stay Andr de SilvaGreat Wall Motor (2333 HK) - OW(V): Overall sales volume +32% y-o-y in May Carson Ng Jiangxi Copper (358 HK) - OW: Attractive valuation but near-term risks looming Thomas ZhuSinopec (386 HK) - UW: Bonus share revisions; cutting EPS and Target Thomas Hilboldt

10 Jun Aluminum Corp of China (2600 HK) - UW: Tinkering away Simon FrancisKorea

14 Jun Korea - Rates unchanged at 2.50% Ronald ManDoosan Heavy (034020 KS) - OW: 2H outlook remains bright Yeon Lee

13 Jun Korea Consumer - In search of value Karen Choi NHN Corp - OW(V): LINEs strong growth to continue in 2Q Hongsik Jo

11 Jun Taewoong Co Ltd (044490 KS) - N(V): First year of recovery, but still needs time Yeon Lee

10 Jun Korea central bank watch - More risks on the radar Ronald ManKorea E&C - Still too early to call a recovery Brian ChoTaiwan

13 Jun Epistar Corp (2448 TT) - OW(V): Robust margin recovery ahead Jerry Tsai11 Jun Lite-On (2301 TT) - Favourable mix shift and margin expansion Jenny LaiASEAN

14 Jun Indonesia - BI unexpectedly lifts reference rate too Su Sian LimThe Philippines - Steady in the storm: Rates on hold Trinh NguyenAyala Land (ALI PM) - OW: Roadshow feedback Pratik Burman RayOverseas Union Enterprise (OUE SP) - OW: Getting closer to hotel spin-off David Choo

13 JunAuction Preview: New Issue of 15-year Malaysian Government Securities - First 15-year MGS auction this year Andr de Silva

Indonesia - BI lifts FASBI ahead of policy meeting Su Sian LimIndonesia bonds: reason to breathe, but not yet to cheer - Maintain neutral stance on IndoGBs Andr de SilvaAstro Malaysia Holdings (ASTRO MK) - OW(V): 1QFY14 results - Pay TV momentumcontinues Rajesh Raman

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Bank Central Asia (BBCA IJ) - OW: FASBI rate hike catalyst materializing Kar Weng Loo11 Jun Philippines central bank watch - Some protection needed: one more SDA rate cut Trinh D Nguyen10 Jun Indonesia Central Bank Watch - No moves yet Su Sian Lim

Malaysia bonds: Strong comeback of foreign demand - Foreign flows compass Andr de SilvaIndia

14 Jun India Central Bank Watch - Another cut in the pipeline Leif EskesenIndia Equity Insights - INR weakness: Mixed bag for corporate India Jitendra SriramOil India Limited (OINL IN) - Upgrade to OW: Better placed than downstream Kumar ManishInfosys Technologies (INFO IN) - N: Wage hike announcement by Infosys Yogesh Aggarwal

13 Jun India - Industrial production slows in April Leif EskesenIndia - Slower reform, delayed recovery Leif EskesenSun Pharma (SUNP IN) - OW: Sun files DJ on blockbuster Gleevec Girish BakhruTitan Industries Ltd (TTAN IN) - OW: Gold loans now banned, but stock correction overdone Amit Sachdeva

10 Jun TCS (TCS IN) - OW: Takeaways from the investor meetings Yogesh Aggarwal

Global14 Jun GEMs and MENA bottom-up databases - 13 June 2013 John Lomax

USDA June2013 summary - Bearish for corn and soybean Alexandre Falcao13 Jun Climate Football anyone? - IEA proposes a 4-4-2C Nick Robins

GEMs equity strategy - Clarity on US monetary policy and China required for GEMsequities to progress John LomaxGlobal Chartbook - Mid-year jitters Madhur Jha

10 Jun HSBC Steel Weekly - Troughed Thorsten Zimmermann

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Disclosure appendixImportant disclosuresEquities: Stock ratings and basis for financial analysisHSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, whichdepend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities

based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon;and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative,technical or event-driven techniques on a 0-3 month time horizon and which may differ from our long-term investment rating.HSBC has assigned ratings for its long-term investment opportunities as described below.

This report addresses only the long-term investment opportunities of the companies referred to in the report. As and whenHSBC publishes a short-term trading idea the stocks to which these relate are identified on the website atwww.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of thiswebsite.

HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor'sexisting holdings and other considerations. Different securities firms use a variety of ratings terms as well as different ratingsystems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each researchreport. In addition, because research reports contain more complete information concerning the analysts' views, investorsshould carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not

be used or relied on in isolation as investment advice.

Rating definitions for long-term investment opportunitiesStock ratingsHSBC assigns ratings to its stocks in this sector on the following basis:

For each stock we set a required rate of return calculated from the cost of equity for that stocks domestic or, as appropriate,regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the

potential return, which equals the percentage difference between the current share price and the target price, including theforecast dividend yield when indicated, must exceed the required return by at least 5 percentage points over the next 12 months(or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must beexpected to underperform its required return by at least 5 percentage points over the next 12 months (or 10 percentage pointsfor a stock classified as Volatile*). Stocks between these bands are classified as Neutral.

Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatilitystatus or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review,expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarilytriggering a rating change.

*A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the pastmonth's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating,however, volatility has to move 2.5 percentage points past the 40% benchmark in either direction for a stock's status to change.

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Rating distribution for long-term investment opportunitiesAs of 14 June 2013, the distribution of all ratings published is as follows:Overweight (Buy) 45% (35% of these provided with Investment Banking Services)

Neutral (Hold) 37% (34% of these provided with Investment Banking Services)

Underweight (Sell) 18% (28% of these provided with Investment Banking Services)

HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments (including derivatives)of companies covered in HSBC Research on a principal or agency basis.

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenues.

For disclosures in respect of any company mentioned in this report, please see the most recently published report on thatcompany available at www.hsbcnet.com/research.

* HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures1 This report is dated as at 17 June 2013.2 All market data included in this report are dated as at close 14 June 2013, unless otherwise indicated in the report.3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its

Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Researchoperate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier

procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

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Disclaimer * Legal entities as at 8 August 2012UAE HSBC Bank Middle East Limited, Dubai; HK The Hongkong and Shanghai Banking Corporation

Limited, Hong Kong; TW HSBC Securities (Taiwan) Corporation Limited; 'CA' HSBC Bank Canada,Toronto; HSBC Bank, Paris Branch; HSBC France; DE HSBC Trinkaus & Burkhardt AG, Dsseldorf; 000

HSBC Bank (RR), Moscow; IN HSBC Securities and Capital Markets (India) Private Limited, Mumbai; JP HSBC Securities ( Japan) Limited, Tokyo; EG HSBC Securities Egypt SAE, Cairo; CN HSBC Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv; US HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC Mxico, SA, Institucinde Banca Mltiple, Grupo Financiero HSBC; HSBC Bank Brasil SA Banco Mltiplo; HSBC Bank Australia

Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch incorporated in Hong Kong SAR

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This document has been issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC) in the conduct of its Hong Kong regulated businessfor the information of its institutional and professional investor (as defined by Securities and Future Ordinance (Chapter 571)) customers; it is not intended for and should not be distributed to retail customers in Hong Kong. The Hongkong and Shanghai Banking Corporation Limited is regulated by the Hong KongMonetary Authority. All enquires by recipients in Hong Kong must be directed to your HSBC contact in Hong Kong. If it is received by a customer of anaffiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. This document is not andshould not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document oninformation obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warrantyand accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the Research Division of HSBC only and aresubject to change without notice. HSBC and its affiliates and/or their officers, directors and employees may have positions in any securities mentioned in thisdocument (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). HSBC and its affiliates may act asmarket maker or have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sellthem to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relatingto those companies.HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. All U.S. persons receivingand/or accessing this report and wishing to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the UnitedStates and not with its non-US foreign affiliate, the issuer of this report.In the UK this report may only be distributed to persons of a kind described in Article 19(5) of the Financial Services and Markets Act 2000 (FinancialPromotion) Order 2005. The protections afforded by the UK regulatory regime are available only to those dealing with a representative of HSBC Bank plc inthe UK. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the generalinformation of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (SFA) andaccredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus asdefined in the SFA. It may not be further distributed in whole or in part for any purpose. The Hongkong and Shanghai Banking Corporation Limited SingaporeBranch is regulated by the Monetary Authority of Singapore. Recipients in Singapore should contact a "Hongkong and Shanghai Banking CorporationLimited, Singapore Branch" representative in respect of any matters arising from, or in connection with this report. In Australia, this publication has beendistributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of itswholesale customers (as defined in the Corporations Act 2001). Where distributed to retail customers, this research is distributed by HSBC Bank AustraliaLimited (AFSL No. 232595). These respective entities make no representations that the products or services mentioned in this document are available to

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