India Ahead JPM 190310

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Asia Pacific Equity Research19 March 2010

India Ahead of the PackContents

India

Bharat IyerAC

(91-22) 6157-3600

[email protected]

J.P. Morgan India Private Limited

See page 9 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm m

have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making th

investment decision.

Economics

S&P raises outlook on India to stable(Gunjan Gulati)

Sector Research

Cosmetics & Personal Care, Vineet Sharma, CFA / Latika Chopra, CFA

Asia Consumer: HPC Competition Heats Up in Asia

Wireless Services, Nishit Jasani

India Telecom: Tele Talk: 3G auctions to stretch balance sheets amid ongoing

price wars; Remain cautious

J.P. Morgan Daily Valuations
https://mm.jpmorgan.com/servlet/PubServlet/JPM_India_+S&P+raise_2010-03-18_387657.pdf?ss=y&fullDocId=GPS-387657-0https://mm.jpmorgan.com/servlet/PubServlet/JPM_India_+S&P+raise_2010-03-18_387657.pdf?ss=y&fullDocId=GPS-387657-0http://pull.jpmorgan-research.com/p/2-E662/47038377/India0319.xlshttp://pull.jpmorgan-research.com/p/2-E662/47038377/India0319.xlshttps://mm.jpmorgan.com/servlet/PubServlet/JPM_India_+S&P+raise_2010-03-18_387657.pdf?ss=y&fullDocId=GPS-387657-0


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Asia ConsumerHPC Competition Heats Up in Asia

Asia ex Consumer

Vineet Sharma, CFAAC

(852) 2800-8523

[email protected]

J.P. Morgan Securities (Asia Pacific) Limit

India

Latika Chopra, CFAAC

(91-22) 6157-3584

[email protected]


Indonesia

Stevanus JuandaAC

(62-21) 5291 8574

[email protected]

PT J.P. Morgan Securities Indonesia

US HPC

John Faucher

(1-212) 622-6443

[email protected]

J.P. Morgan Securities Inc.

Europe HPC

Celine Pannuti, CFA

(44-20) 7325-9276

[email protected]

J.P. Morgan Securities Ltd.




In the wake of heightened competitive activity in the Household/Personal Carespace in India & Indonesia, JPM Consumer Team hosted an investor call todiscuss the implications and strategies of the key global players. Key takeaways:

Why is P&G getting aggressive? We believe P&G is strategically tryingto expand its presence in emerging markets in order to achieve its statedtarget of acquiring one billion new consumers over the next five years.P&G would need to capture a wider audience in mass segment to do soand hence is trying to introduce low price points (like Tide Naturalsdetergent in India) and reducing prices across shampoos and skin creamsin Indonesia. We believe this is not a short term volume grab strategy forP&G but is more consistent with its long term strategy of gaining share inemerging markets.

Unilever is more vulnerable in India and Indonesia. While India andIndonesia together account for low single digit share of P&Gs profits, forUnilever these countries account for 12% of EBIT. Hence these marketsare much more important to Unilever which will continue to defend itsmarket share in response to any competitive challenge and in the processrisk its margins in these markets.

Emerging modern retailers and urbanization erode distributionadvantage: The emergence of modern retailers and rapid urbanizationwill erode the competitive advantage of Unilevers distribution. A new

product launching will need only be offered to a couple of key retailers tohave sizable overnight presence in the market: in Indonesia 35% of theFMCG market is sold through modern channels. A new product will only

need to be launched in first and second tier cities as the population ofthese cities encompasses 50% of the population.

Unilever guiding for price decline in 1H10; P&G lowers long termEPS growth target. P&G has indicated preference for topline growth overmargins and even Unilever in India has mentioned defending market shareas a top priority. With consumer opportunity lying in emerging markets,the market is likely to be increasingly competitive.

Maintain UW on Hindustan Unilever and Unilever Indonesia. Wewould expect lower price growth (high inflation further hurting price/mixgrowth), high competitive spends and rising input costs to weigh onmargins for Unilever in India and Indonesia in coming quarters.

Replay for the Call through 3/24: 800-944-1519 (US); +1- 203-369-3420 (outside US);Passcode: 6827

Table 1: Revenue and EBIT contribution of emerging markets for global HPC majorsCompany Revenue Contribution Operating Profit Contribution

Beiersdorf 38% 17%L'Oreal 33% 30%Unilever 47% 42%P&G 27% NAColgate 57% 61%

Source: Company, J.P. Morgan estimates.


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Vineet Sharma, CFA(852) [email protected]

Latika Chopra, CFA(91-22) [email protected]

Figure 1: Price Cuts undertaken in detergent powder segment recently in India

Source: Companies and J.P.Morgan

Figure 2: Price Cuts undertaken in shampoo and skin care segment recently in Indonesia

Source: Companies

Over the past 2-3 months we

have seen, in particular, P&Gupping the ante here. What

started as P&Gs foray into

discount segment which

accounts for over 70% of

laundry market in India with

launch of low price Tide

Naturals, has now led to a

series of price reductions by

both Unilever and P&G. While

Unilever has cut prices for its

Rin brand by 30%, P&G has

reduced prices for Tide by 20-

45%.

Indonesia Price War

Started in sachet shampoo and

then extended into bottled

shampoo followed by skin care

the most profitable segment.Price reductions ranged between

20-40%.


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India TelecomTele Talk: 3G auctions to stretch balance sheets amidongoing price wars; Remain cautious

India

Wireless Services

Nishit JasaniAC

(91-22) 6157-3578

[email protected]


Gourav Vijayvergiya

(91-22) 6157-3278

[email protected]


Tim Storey

(852) [email protected]

J.P. Morgan Securities (Asia Pacific) Limit




Price Performance: Absolute

In % 3M 6M 12M

Bharti (7.9) (30.9) 4.5Idea 9.8 (16.2) 42.9RCOM (7.2) (48.4) 2.0Sensex 3.4 4.5 97.1

Source: Bloomberg.

Share price returns relative to Sensex

In % 3M 6M 12M

Bharti (11.3) (35.4) (92.6)Idea 6.4 (20.7) (54.2)RCOM (10.6) (52.9) (95.1)

Source: Bloomberg.

Tele Talk is our product that looks at regular newsflow in the Indian

Telecom sector.

3G spectrum auctions: Current focus is on the 3G auctions whereinterested entities have to submit their applications by end of this week(19 March) auctions are scheduled for 9th April. We expect intensecompetition for the 3 available spectrum slots as 3 incumbents (Bharti,Vodafone, RCOM) potentially compete with Idea, Tata Teleservices,Aircel. New operators like Etisalat and Uninor are not likely to bid for 3Gin our view. We expect the auction price for pan-India spectrum toexceed Rs55Bn (vs. base price of Rs35Bn). BWA spectrum auctionwould be an equally competitive affair with TCOM, Qualcomm, Orangein the fray and RCOM, Google said to be interested.

Tata DoCoMo slashes rates again competition extends to non-voice:The companyhas started offering daily packs at effective rates of Rs0.17 /Rs0.40 / Rs0.47 per minute for on-net / off-net / STD. The company hasalso slashed international calling rates (more details on page 2). Moreimportantly, the company has also launched very competitive pricing onnon-voice plans GPRS, music and cricket alerts. Tata Docomo hasalso launched 'Rollover Plan' where enterprise customers pay by monthand enjoy the facility of carrying forward their unused free talk time andSMS for a period of three months (for 8 such 3-month cycles).

Tata-Quippo is buying 2535 towers from TTML for Rs 13Bn (EV ofRs 5.2mn per tower) making it Indias largest independent tower player.

Bharti-Zain deal: Bharti is in exclusive talks with Zain until 25 March -media reports indicate that management have not faced any hurdles so farin due diligence for Zain Africa and Bharti is confident of closing the deal.According to media reports (Livemint), Bharti has already issued a termsheet to raise US$8.5Bn debt at 176 bps to 179 bps over Libor.

Wireless subscriber base and monthly net-adds (MM)

10 11

15 1412 12

1518 18 18

1215 1715

13109 10999

180240300360

420480540600

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Jan-10

0.03.06.09.0

12.015.018.021.0

Subscriber base (L) Net monthly adds (R)

Source: COAI, AUSPI and J.P. Morgan, Note: Wireless subs do not include BSNLs CDMA-FWLL subs (~4.6 MM)

Volume 5


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Nishit Jasani(91-22) [email protected]

TariffsTata DoCoMo launches new Daily plans for prepaid

Table 2: Tata DoCoMos daily plans for prepaid customersPlans Details

Talkathon 30 local minutes @ Rs.5 on Tata DOCOMO Network30 local minutes @Rs.12 across Networks30 local/National minutes @Rs.1410 local minutes @Rs.5

Night Birds 60 Free Local Night minutes on Tata DOCOMO Network

World Calling 10 minutes to USA/Canada @ Rs.205 minutes to USA/Canada @ Rs.103 minutes to Gulf @ Rs.20

GPRS 10MB Free Browsing @Rs.5 only

Entertainment 15 minutes FREE music @Rs.5

Cricket alerts @ Rs.5/day

Source: company

Table 3: Comparison with other operators offerings

Tata DoCoMo daily plan Bharti Airtel Vodafone RCOM simply reliance Idea

Local Tariffs0.28paise per sec (on-net)0.67paise per sec (off-net)

1paise per second (on-net)1.2paise per second (off-net)

1paise per second (on-net)1.2 paise per second (off-net)

1 p per sec/ Rs 0.5 per min/Rs 1 per 3 min/ 1p per second

STD Tariffs 0.78 paise per sec1paise per second (on-net)1.2paise per second (off-net)

1paise per second (on-net)1.2 paise per second (off-net)

1 p per sec/ Rs 0.5 per min/Rs 1 per 3 min/ 1p per second

InternationalCalls (Rs/min)

Rs 2 per min USA/CanadaRs 6.7 per min to Gulf

Rs 6.4 per min USA/CanadaRs 9.2 per min Gulf

Rs 6 per min USA/CanadaRs 11 per min to Gulf

Rs 2.5 per min USA/CanadaRs 8.5 per min to Gulf

11p per sec USA/Canada18p per sec to Gulf

One timecharge &Validity

Till 12 midnight on thesame day Rs 90-100 for lifetime validity Rs 90-100 for lifetime validity Rs 48 for lifetime validity Rs 40 for 12 months

Source: Companies' websites

Tata DoCoMo offers unused talktime rollover for 3 months

Tata Docomo, the GSM brand of Tata Teleservices Ltd, launched a tariff plan for its

enterprise customers, which carries unused free talk time and SMS forward for a

period of three months. Under the 'Rollover Plan' (RO Plan), customers pay by

month and enjoy the facility of carrying forward their unused free talk time and SMS

for a period of three months, TTSL said in a statement. Under the offer, there are

four variants of plans available -- RO 500, RO 799, RO 1,000 and RO 1,099. For

example, under RO 1099, the user is offered 1.5 lakh seconds of free local calls and

72,000 seconds of free STD calls per month. The customers can carry forward the

accumulated unused free talk time and SMS each month for a period of three

consecutive months. The roll over benefit will be applicable for 8 consecutive cycles

with each cycle comprising of 3 months. (ET)


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India Wireless

TTML to sell telecom towers to Tata Quippo for Rs 13.18 Bn

Tata Teleservices Maharashtra (TTML), the listed subsidiary of telecom services

operator Tata Teleservices, has agreed to sell its telecom towers for an enterprise

value of Rs 13,180 mn to Wireless-TT Info Services (WTTIL), popularly known as

Tata Quippo. As part of the deal, TTML (offers services in Mumbai, Maharashtra

and Goa circles) will give its 2,535 towers and will receive net cash of about Rs 9 Bn

from the transaction. WTTIL will now have over 38,000 towers making it the

largest independent tower company in India.

Each of TTMLs towers has been valued at Rs 5.2mn, close to the Rs 4.8mn per

tower paid by GTL Infrastructure for acquiring Aircel Cellulars towers earlier this

year. The acquisition will strengthen Tata-Quippos current tenancy ratio, which is in

excess of 2 (ET).

Qualcomm applies to bid broadband spectrum

Qualcomm has filed an application with the Indian government to bid for upcoming

Broadband Wireless Access (BWA) spectrum in India. Qualcomm and its partners

intend to demonstrate TD-LTE technology with the goal of creating a TD-LTE

infrastructure in concert with 3G (Third Generation) networks and devices. It will

also enable a broadband experience for consumers within India and while roaming

globally. However, the move by Qualcomm has not gone down well with some

Wimax players. "Qualcomm belongs to the anti-Wimax lobby, by bidding in for

Wimax spectrum they are trying to spoil the case of the Wimax players by

unnecessarily hiking the base price," one of the players said. (ET)

Bharti very confident of completing Zain deal

Bharti Enterprisess Vice-Chairman and MD, Rajan Mittal said the company is

confident of closing its proposed acquisition of Zains African stake though the time

frame within which the deal will be completed remains vague as of now. The two

companies are in talks till March 25. Bharti has offered to pay $9 billion to Zain

towards acquiring the latters stake in African market. (ET)

Bharti issues term sheet for debt of US$8.5Bn

Bharti Airtel has issued a term sheet to banks to raise up to $8.5 billion in offshore

loans to fund the deal, banking sources said. The six-year offshore facility has four

tranches and carries a blended average life of 4.75 years, with a margin ranging from

176 bps to 179 bps over Libor, the sources said. A banker familiar with the deal said

that Bharti opted to drop the onshore tranche of its loan due to the strong responsefrom offshore lenders. By raising the facility all in US dollars, the borrower also

minimises execution risks and the time needed to complete the financing, the same

banker said. Barclays Capital, Citigroup, Standard Chartered Bank and State Bank of

India are expected to underwrite larger amounts than other banks. Banks have until

Wednesday to respond to the borrower, while documentation is expected to be

completed by Friday (ET)

BSNL board approves Pitroda panel reports on 30% stake sale

The board of state-owned telco BSNL on Wednesday gave an in-principle approval

to the Sam Pitroda committee report that called for a 30% stake sale in the PSU, but


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said that the government should take the final call on the quantum of stake to be

divested. This marks the third instance of the BSNL board clearing the stake sale.

Since 2007, BSNL has twice approved the proposal to divest 10% stake in thecompany but has been unable to go ahead with the same due to stiff opposition from

its employee unions. (ET)

Uninor to raise Rs 9,400 Cr debt

Telecom operator Uninor, which offers its services in eight of the 22 circles in the

country, will soon start the exercise of raising debt to the tune of Rs 9,400 crore. The

company expects to launch its services across India soon and that would require an

investment of Rs 15,500 crore. Its immediate plans are to launch in the Mumbai,

Maharashtra, Gujarat and Goa circles, which the company hopes to achieve in the

second quarter of the calendar year. They are looking for foreign and Indian banks,

both public and private sector, for project financing. Uninor is currently operating on

a bridge loan of Rs 5,000 crore which will be repaid after project financing.

(Business Standard)

Bharti Airtel integrates all telecom, satellite infrastructure to save costs

In a bid to achieve operational and cost efficiency on the network side, Bharti Airtel

has decided to integrate its entire telecom and satellite infrastructure under a single

unit to be called Network Services Group (NSG). The creation of this umbrella group

will also mean that Bharti's equipment and managed services deals to vendors for the

entire range of network. Until now, Bharti Airtel managed its mobile, fixed line and

broadband; enterprise, domestic and international long distance; and satellite

networks separately. Therefore, network deals were also given separately. For

example, Nokia Siemens and Ericsson manage its mobile network while the fixed

line network is being managed by Alcatel-Lucent. All this could change for future

deals allowing Airtel to leverage on synergies and avoid overlapping. Bharti

currently has 1.2 lakh mobile towers and an optical fibre network of 118, 337 routekm. (Business Line)

Regulatory Bytes

DoT announces 3G DetailsTable 4: India Telecom: 3G Auction Time Table

Activity Date

Final date for Applications 19-Mar-10Publication of ownership details of Applicants 23-Mar-10Bidder Ownership Compliance Certificate 26-Mar-10Pre-qualification of Bidders 30-Mar-10

Mock Auction 5th - 6th April, 2010Start of the 3G Auction 9-Apr-10Start of the BWA Auction 2 days from the day of close of the 3G,AuctionPayment of the successful bid amount Within 10 calendar days of close of relevant auctions

Source: DoT


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Table 5: India Telecom: Details of 3G and BWA blocks to be auctioned Circle wise (excludingone block reserved for MTNL/BSNL)

Service area Category 3GReserveprice

(Rs. Cr)

No. of blocksof 2x5 MHzavailable for

3G auction

BWAReserveprice (Rs.

Cr)

No. of blocks of20 MHzavailable for

BWA auction

Delhi Metro 320 3 160 2Mumbai Metro 320 3 160 2Kolkata Metro 120 3 60 2Maharashtra A 320 3 160 2Gujarat A 320 3 160 2

Andhra Pradesh A 320 3 160Karnataka A 320 3 160 2Tamil Nadu A 320 3 160 2Kerala B 120 3 60 2Punjab B 120 4 60 2Haryana B 120 3 60 2Uttar Pradesh (E) B 120 3 60 2Uttar Pradesh (W) B 120 3 60 2

Rajasthan B 120 3 60 2Madhya Pradesh B 120 3 60 2West Bengal B 120 4 60 2Himachal Pradesh C 30 4 15 2Bihar C 30 4 15 2Orissa C 30 3 15 2

Assam C 30 3 15 North East C 30 3 15 2Jammu & Kashmir C 30 4 15 2

Total Reserve Price 3,500 10,830 1,750 3,500

Source: DoT (Chennai Included in Tamil Nadu)

MNP to be delayed by at least 3 months

Mobile number portability is likely to be delayed by at least another three months till

July as a system is not yet in place to roll out the service. This was decided at an

internal meeting of the Department of Telecom (DoT) today, highly placed sourcessaid, adding the service may see light of the day earliest by July this year. (ET)

Vodafone wants higher 3G levies on Tata Tele, RCOM

Vodafone Essar has now alleged that Reliance Communications and Tata

Teleservices have already launched third generation (3G) services and, therefore,

should be charged higher levies that are applicable to 3G operators. In the case of

CDMA operators, both second generation (2G) and 3G services are offered using the

same airwaves or spectrum. (ET)

Telcos oppose Trai move to charge for new numbers

Telecom operators, including BSNL and MTNL, have opposed the Trai move to

charge a price for allocating new numbers, saying an additional levy is totally

unwarranted. Sectoral regulator Trais main reason behind suggesting a price on

allocating new numbers is that the numbers are not being efficiently utilized and it

feels a price can make the operators not to dole out numbers to lure more customers.

Telcos argue that new block of numbers are alloted only after demonstrating 60 and

80% utilisation stringently for mobile and fixed line respectively. (ET)


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Bharat Iyer(91-22) [email protected]

Analyst Certification:

The research analyst who is primarily responsible for this research and whose name is listed first on the front cover certifies (or in a casewhere multiple research analysts are primarily responsible for this research, the research analyst named first in each group on the front

cover or named within the document individually certifies, with respect to each security or issuer that the research analyst covered in thisresearch) that: (1) all of the views expressed in this research accurately reflect his or her personal views about any and all of the subjectsecurities or issuers; and (2) no part of any of the research analysts compensation was, is, or will be directly or indirectly related to thespecific recommendations or views expressed by the research analyst in this research.

Important Disclosures

Lead or Co-manager: JPMSI or its affiliates acted as lead or co-manager in a public offering of equity and/or debt securities forUnilever Indonesia Tbk within the past 12 months.

Beneficial Ownership (1% or more): JPMSI or its affiliates beneficially own 1% or more of a class of common equity securities ofHindustan Unilever Limited, Unilever Indonesia Tbk.

Client of the Firm: Hindustan Unilever Limited is or was in the past 12 months a client of JPMSI. Unilever Indonesia Tbk is or wasin the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to the company investment banking services.

Investment Banking (past 12 months): JPMSI or its affiliates received in the past 12 months compensation for investment bankingservices from Unilever Indonesia Tbk.

Investment Banking (next 3 months): JPMSI or its affiliates expect to receive, or intend to seek, compensation for investmentbanking services in the next three months from Unilever Indonesia Tbk.

Non-Investment Banking Compensation: An affiliate of JPMSI has received compensation in the past 12 months for products orservices other than investment banking from Unilever Indonesia Tbk.

MSCI: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without priorwritten permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated orused to create any financial products, including any indices. This information is provided on an 'as is' basis. The user assumes theentire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing orcompiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitnessfor a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any ofits affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damagesof any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.

Important Disclosures for Equity Research Compendium Reports: Important disclosures, including price charts for all companies

under coverage for at least one year, are available through the search function on J.P. Morgans websitehttps://mm.jpmorgan.com/disclosures/company or by calling this U.S. toll-free number (1-800-477-0406)

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Price(Rs)

Oct

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Hindustan Unilever Limited (HLL.BO) Price Chart

UW Rs225

N Rs275 UW Rs220

N Rs220 N Rs230 N Rs250 UW Rs230 UW Rs21

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Break in coverage Mar 03, 2004 - Jun 07, 2004. This chart shows J.P. Morgan's continuing coverage of this stock; the

current analyst may or may not have covered it over the entire period.

J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Date Rating Share Price(Rs)

Price Target(Rs)

20-Feb-07 N 205.10 220.00

01-Nov-07 N 207.60 230.00

02-Mar-08 N 227.35 250.00

28-Apr-08 N 249.75 275.00

04-Mar-09 UW 241.50 230.00

12-May-09 UW 226.05 220.00

30-Jul-09 UW 268.05 225.00

16-Mar-10 UW 225.55 210.00
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/company


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0

2,869

5,738

8,607

11,476

14,345

17,214

20,083

Price(Rp)

Sep

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Jun

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Mar

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Dec

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Sep

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Unilever Indonesia Tbk (UNVR.JK) Price Chart

N Rp7,100

N Rp7,000 UW Rp9,700

N Rp4,750N Rp5,100N Rp6,400 N Rp7,000 N Rp7,400 UW Rp7,000UW Rp9,750UW Rp10,000

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Break in coverage Sep 26, 2004 - Jan 23, 2006. This chart shows J.P. Morgan's continuing coverage of this stock; the

current analyst may or may not have covered it over the entire period.

J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Date Rating Share Price

(Rp)

Price Target

(Rp)

01-Nov-06 N 4800 4750

07-Mar-07 N 5550 5100

03-Jul-07 N 6750 6400

01-Aug-07 N 7550 7000

08-Nov-07 N 6650 7100

01-Feb-08 N 6900 7000

13-Aug-08 N 6800 7400

26-Mar-09 UW 7900 7000

22-Jul-09 UW 10750 9750

20-Aug-09 UW 11000 9700

08-Dec-09 UW 11300 10000

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analysts (or the analysts teams) coverage universe.] J.P. Morgan Cazenoves UK Small/Mid-Cap dedicated researchanalysts use the same rating categories; however, each stocks expected total return is compared to the expected total return of the FTSEAll Share Index, not to those analysts coverage universe. A list of these analysts is available on request. The analyst or analysts teamscoverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying

analyst(s) coverage universe.

J.P. Morgan Equity Research Ratings Distribution, as of December 31, 2009

Overweight

(buy)Neutral

(hold)Underweight

(sell)

JPM Global Equity Research Coverage 42% 44% 14%IB clients* 58% 57% 42%

JPMSI Equity Research Coverage 41% 49% 10%IB clients* 78% 73% 57%

*Percentage of investment banking clients in each rating category.

For purposes only of NASD/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category.

Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks onany securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named onthe front of this note or your J.P. Morgan representative.

Analysts Compensation: The equity research analysts responsible for the preparation of this report receive compensation based uponvarious factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, whichinclude revenues from, among other business units, Institutional Equities and Investment Banking.

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brand name for equity research produced by J.P. Morgan Securities Ltd.; J.P. Morgan Equities Limited; JPMorgan Chase Bank, N.A., DubaiBranch; and J.P. Morgan Bank International LLC.

Options related research: If the information contained herein regards options related research, such information is available only to persons whohave received the proper option risk disclosure documents. For a copy of the Option Clearing Corporations Characteristics and Risks ofStandardized Options, please contact your J.P. Morgan Representative or visit the OCCs website athttp://www.optionsclearing.com/publications/risks/riskstoc.pdf.

Legal Entities DisclosuresU.S.: JPMSI is a member of NYSE, FINRA and SIPC. J.P. Morgan Futures Inc. is a member of the NFA. JPMorgan Chase Bank, N.A. is amember of FDIC and is authorized and regulated in the UK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is amember of the London Stock Exchange and is authorised and regulated by the Financial Services Authority. Registered in England & Wales No.2711006. Registered Office 125 London Wall, London EC2Y 5AJ. South Africa: J.P. Morgan Equities Limited is a member of the JohannesburgSecurities Exchange and is regulated by the FSB. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated

by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd,Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan Australia Limited (ABN 52 002 888 011/AFS

Licence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066) is aMarket Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan StockExchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited is a member ofthe National Stock Exchange of India Limited and Bombay Stock Exchange Limited and is regulated by the Securities and Exchange Board ofIndia. Thailand: JPMorgan Securities (Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry ofFinance and the Securities and Exchange Commission. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia StockExchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines Inc. is a member of the Philippine StockExchange and is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de ValoresMobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is amember of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission.Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MICA (P)020/01/2010 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by theMonetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by theMAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is aParticipating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission inMalaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and

Exchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorised by the Capital Market Authority of the Kingdomof Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of SaudiArabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registeredaddress is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific DisclosuresU.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA byJPMSL. Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arisingas a result of publication and distribution of investment research. Many European regulators require that a firm to establish, implement andmaintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the FinancialServices and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document mustnot be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is onlyavailable to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to personsregarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL inAustralia to wholesale clients only. JPMSAL does not issue or distribute this material to retail clients. The recipient of this material must not

distribute it to any third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the termswholesale client and retail client have the meanings given to them in section 761G of the Corporations Act 2001. Germany: This material isdistributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which areregulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month endsatisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securitiesand Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end data fromtwo months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider for derivative warrants issued by J.P. Morgan StructuredProducts B.V. and listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website:http://www.hkex.com.hk/prod/dw/Lp.htm. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case ofshare trading, and that a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorganSecurities Japan Co., Ltd., will be receiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by thecommission rate which was individually agreed between JPMorgan Securities Japan Co., Ltd., and the customer in advance. Financial InstrumentsFirms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau (kinsho) No. 82 Participating Association / Japan Securities DealersAssociation, The Financial Futures Association of Japan. Korea: This report may have been edited or contributed to from time to time by


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affiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of thesecurities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosuressection above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: This

material is issued and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in thecourse of and for the purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the

public" as determined in accordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any thirdparty or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under nocircumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation ofan offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein inCanada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only

by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirementin the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to

be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that theinformation contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territoryof Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatoryauthority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of thesecurities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded as

professional clients as defined under the DFSA rules.

General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorganChase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to anydisclosures relative to JPMSI and/or its affiliates and the analysts involvement with the issuer that is the subject of the research. All pricing is asof the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of thismaterial and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer orsolicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individualclient circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to

particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instrumentsmentioned herein. JPMSI distributes in the U.S. research published by non-U.S. affiliates and accepts responsibility for its contents. Periodicupdates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other

publicly available information. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their homejurisdiction unless governing law permits otherwise.

Other Disclosures last revised March 1, 2010.

Copyright 2010 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or

redistributed without the written consent of J.P. Morgan.

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