GCPC. Target Price: EUR BUY. (in R M B tsd.) E 2014E

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1 Report Equities Retailing China April 30th, 2013 Recommendation: BUY Risk: High Current Price: EUR Fair Value: EUR Reuters Code: Stock Symbol: Fiscal Year End: 49G.DE 49G GR December Homepage: Trading Data: Price High/Low: EUR Market Cap: EUR 23.4m Shares Outst.: 26.6m 25.9m Free Float: 3.5% Price Graph: 1,2 1 0,8 0,6 0,4 0,2 0 4,5 4 3,5 3 2,5 2 1,5 1 0, Financial Calendar: June 28 th 2013 Annual Meeting Sept. 3 rd 2013 Half Year 2013 GCPC 2012 results: very promising Greater China Precision Limited (GCPC) reported very good fiscal year 2012 results. Sales increased by 21.7% to RMB 717.4m (EUR 89.6m) (2011: RMB 589.6m (EUR 73.7m)). Very strong were tablet casing sales, which were responsible for 42% of total sales (GCPC is producing for example the Amazon kindle ebook reader). Handset casings sales in general were strong too. Net profit 2012 came in at a very good RMB 77.1m (EUR 9.6m), which is equal to a profit margin of 10.8%. Profit margins could even be expanded in 2012 (last year s net profit margin was 10.2%). We are happy about this in particular, as subcontracting companies are usually burdened by an enormous pricing pressure. Therefore, GCPC was able to keep costs very much under control and to continue to produce efficiently. Late last year GCPC had a fire breakout in its factory, injuring several people and shortly interrupting the production process. We had the fear that it would have a substantial effect on the results. This was fortunately not the case. The company has decided to pay a dividend of RMB 0.44 per share for the year, which we find positive too and 2014 should be positive We expect a strong operational business for the company in 2013 and GCPC is now very well positioned to receive direct orders from mobile phone companies as well as other clients like Amazon. Due to ongoing pricing pressure we stay somehow conservative and expect a sales growth of 5% to RMB 753m (EUR 94.1m) in 2013 and 5% to RMB 790m (EUR 98.7m) in Margins should decrease slightly. We believe that the company will be able to reduce production costs even further and to gain additionally in efficiency, thus being able to fight successfully against pricing pressure. Target Price: EUR BUY Our target price for GCPC stock is EUR 2.90, which is equal to a total value of EUR 78.3m. Used Currency exchange Rate: EUR/RMB=8.0 We have used a DCF model and combined that with a Peer group analysis. We recommend BUYING. Date and Time of Stock Price April Date and 30th Time 2013, of 1600 Stock CET Price Analyst: April 30th Dipl. 2013, Volkswirt 16:00 CET Raimund Saier, CEFA Analyst: Dipl. Volkswirt Raimund Saier, VEM CEFA Aktienbank AG r.saier@vem-aktienbank.de VEM Aktienbank AG T r.saier@vem-aktienbank.de +49 (0) T +49 (0) Please have a look at the Disclaimer and (in R M B tsd.) E 2014E Sales 305, , , , ,964 Sales Growth 93% 22% 5% 5% EBITDA Margins 18.3% 17.5% 18.0% 16.3% 17.2% EBIT Margin 12.6% 13.0% 13.2% 12.5% 12.5% Net Profit 32, , , , ,693.8 EPS P/Sales P/E P/B

2 Contents Contents 2 SWOT Analysis 3 Short and mid-term Catalysts 3 Valuation 4 DCF Valuation 4 Peer Group Analysis 5 Blended Valuation 5 Facility Impressions Huizhou 6 The Management Team 7 Customers 7 Current Equity Structure 7 The Growth Drivers 8 Ongoing high Demand for Mobile phones in particular smart phones 8 Tablets sales will increase 9 Development of Tablet Sales in m units 9 Competitive Advantage Gain in Market Share 9 New Products New Customers 9 Financials : a very good year 10 Future Growth 11 Profit & Loss Statement 12 Balance Sheet 13 Cash Flow 13 Key Ratios 14 Legal Disclaimer: 15 2

3 SWOT Analysis Strengths Production site with state of the art equipment will help to attract new customers and to achieve double digit margins Fully integrated product offering from design to assembly makes the company a one stop shop Close relationship to Original Equipment Manufacturers Opportunities GCPCs market share is still small and the mobile handset as well as tablet market should grow in the coming years. This should support above average sales growth Plant has still room for capacity increases Weaknesses The company has almost no bargaining power with customers which can put pressure on unit prices Contracts are usually short term as product lifecycle is limited. The company is dependent on just a few clients and products Threats India might emerge as a major manufacturing hub which could threat the Chinese industry Labor costs might increase further putting pressure on margins The company will broaden its product portfolio in the short to mid run Short and mid-term Catalysts GCPC plans to increase its talks to potential investors. This could lead to additional interest in the company and consequently in the stock. We expect a positive news flow like the announcement of new clients. 3

4 Valuation We used the Discounted Cash Flow (DCF) and peer group valuation methods to value GCPC. We find the peer group analysis especially adequate in the current stock market environment, as investors tend to compare valuations of companies acting in a similar business. DCF Valuation We applied the Free Cash Flow to Equity (FCFE) to calculate the DCF value of the equity share of GCPC. As a terminal growth rate we used 2.5% in order to calculate the terminal value. We have employed a WACC of 12.0% considering the risk of the company. Using the DCF method the company has a fair value of RMB 456.0m (EUR 57.1m), which is equal to EUR 2,2 per share. DCF Model ( in RMB tsd) E 2014E 2015E 2016E 2017E 2018E 2019E Net Income 32,294 60,410 77,274 75,330 79,096 46,509 48,834 44,439 33,012 34,002 (+) Depreciation and Amortisation 17,444 26,325 88, ,995 79,096 37,373 39,242 40,811 42,444 43,717 (-) Cash flow from working capital ,846 (7,910) (8,305) (8,720) (9,069) (9,432) (9,715) (-) Capital Expenditure - - (88,176) (112,995) (79,096) (41,526) (43,602) (45,346) (47,160) (48,575) (-) Net Debt repayments FCFE 49,738 86,735 77,274 80,176 71,187 34,051 35,754 30,835 18,864 19,430 FCFE adjusted for valuation date 49,738 86,735 77,274 80,176 71,187 34,051 35,754 30,835 18,864 19,430 PV of cash flows 49,738 86,735 77,274 74,314 58,913 25,161 23,588 18,164 9,921 9,124 Sum of PV - First Phase 235, Sum of PV - Second Phase 60, Terminal Value growth Rate 2.5% Terminal Value 209, PV of Terminal Value 98, PV of FCFE 394, (+) Cash 61, Target Value 456, Summary of DCF Valuation Value % of Total PV of Frist Stage 235, % PV Second Stage 60, % PV of Terminal Value 98, % Cash 61, % Target Price 456, % Cost of Equity Cost of Equity 12.00% Beta 1.15 Risk Premium 7.0% Risk Free rate 3.0% 4

5 Peer Group Analysis The peer group includes companies which have a similar business model as GCPC. In order to value the company relative to its peers we have used P/E multiples as well as P/Sales multiples. We have weighted fiscal year 2013 with 50% and % in order to achieve a fair value of the company. Our calculation resulted in a fair value of RMB 763m (EUR 95.3m), equal to a share value of EUR Valuation of the Peer Group 2013E 2014E Country P/Sales P/E P/EBITDA EV/EBITDA P/EBIT EV/EBIT P/Sales P/E P/EBITDA EV/EBITDA P/EBIT EV/EBIT HI-P Intl SING Merry Electronics TW Foxconn Intern US Polyone AG US Ichia Technologies TW Average Median and IBES Estimates Valuation GCPC after Peer-Group Analysis Fair Value Fair Value Per share value Average in RMB tsd in tsd EUR in EUR P/Sales 364, ,326 P/Sales 45,525 44,666 P/Sales P/E 1,237,226 1,096,415 P/E 154, ,052 P/E , , ,089 90, Blended Valuation In order to reach the final target value of GCPC we combined both valuation approaches; the DCF method as well as the peer group analysis (with a ratio of 50/50). Our final target value for the company is EUR 78.3m, which is equal to EUR 2.90 per share. Final Valuation GCPC Blended Valuation in RMB Equity Value tsd Per Share Weight Value through DCF 456, % Value through Peer Group 797, % Target Price 626, Blended Valuation in EUR Equity Value tsd Per Share Weight Value through DCF 57, % Value through Peer Group 99, % Target Price 78,

6 Facility Impressions Huizhou 6

7 The Management Team The brothers Wu Baofa and Wu Baoyu founded the company in 2002 and are mainly responsible for the success of the company. Through their visionary thoughts, management capabilities as well as their sense of responsibility they have been able to grow GCPC from a small firm to a sizable fast growing company. Wu Bayou acts as the CEO of the company. Wu Baofa is the non-executive chairman. He is a member of the Municipal Committee of the Chinese People s Political Consultant Group and Member of the Senior Executive Officers collaborative Program co-organized by the State Council of China and Stanford University. Both hold a substantial amount of GCPC shares, which should guaranty high interest in leading the company to a success. Additionally, the two founders are supported by a well educated and experienced management team in the segments of Finance, Research & Development, Sales & Marketing as well as Controlling. In the last years the management got increasingly international. There are now quite a few English speaking people, which we find important and very beneficial to gain additional international clients. Customers The customer structure of GCPC has changed over the years. Historically, it consisted mainly of Original Design Manufacturers (ODM) like, who were delivering its products to companies like Nokia etc.. Now more and more Original Equipment Manufacturers (OEMs) belong to the clientele of GCPC. Today, the company s biggest customer is Amazon. Other big clients are among others Alcatel as well as Lenovo. Overall the top 5 customers of GCPC are responsible for 85% of total orders, making the company somewhat dependent on single clients, but this is not very unusual in this industry. The dependence goes both ways. Current Equity Structure Of the 26.6m outstanding shares, 76.9% are owned by the management, 23.1% can be considered as free float. GCPC Equity Structure 23,10% 36,40% Wu Baofa Wu Baoyu Zang Zuchun 2,50% 4,20% 4,60% Zhao Jiacheng Ma Zhaoyang Ang Khen Hui 5,40% Source: GCPC 23,80% Fee Float 7

8 The Growth Drivers The future success of GCPC is dependent on the development of several factors. Growth drivers are of macro-economic, political as well as company-specific nature. We believe that the optimal combination of the growth drivers will lead to an above-average sales growth as well as high earnings margins in the coming years. We have identified the following drivers for the future company success of GCPC: Ongoing high Demand for Mobile phones in particular smart phones Mobile phone sales were 1.75bn units in 2112 a decline of 1.7% according to the Gartner Group. For 2013 the highly reputed group predicts total mobile phone sales of 1.9m units (+8.5%). Smart phones will be responsible for roughly 1bn units and will be growing strongly. In 2014 smart phone sales should reach 1.28bn units, a plus of 20% compared to 2012, so the Gartner group. Shipments of smart phones from China will have the highest growth rates. In m units will be produced in China, in 2014 it will be 690m units. Consequently, market share of smart phones built in China will grow from 9.6% in 2009 to 53.5% in Mobile Phone Development in m units E 2011E 2012E 2013E Source: Gartner Group Smart Phone Sales Development in m units 1400,0 1200,0 1000,0 800,0 600,0 World China 400,0 200,0 0, E 2014E Source: Gartner Group 8

9 Chinese Market Share Smart Phone Development in % 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% E 2014E Source: Gartner Group Tablets sales will increase Additionally to mobile phones, GCPC is producing tablet casings. They are characterized by strong future growth. The Gartner group estimates unit sales to reach 149m units in 2013 a growth of 39% compared to Development of Tablet Sales in m units E Source: Gartner Group GCPC should benefit from the ongoing growing demand in mobile phones as well as tablets. Competitive Advantage Gain in Market Share The market share of GCPC is still very low (around 1%). We expect the company will be able to gain in market share in the short to mid run. An increasing amount of national as well as international mobile phone as well as tablet companies is placing orders and trusts the expertise of Greater China Precision Components. Years ago clients were mainly Chinesse and the company was acting very locally. Now, the staff is multinational and able to meet the needs of an international client base. New Products New Customers We expect the company to produce new products in the near future. GCPC invests substantially in Research & Development. 9

10 Financials 2012: a very good year Again, 2012 was a very successful year. We are very pleased with the strong 2012 sales growth of 21.7% which resulted in total sales of RMB 717.4m (EUR 89.7m). Strong unit demand from new customers and an ongoing growing demand from existing clients were responsible for the growth. We find this in particular strong when taking into account how much pricing pressure exists in this segment and how competitors are struggling. Foxconn s sales for example (the biggest producer of tablets and phone casings in China) grew by around 14%, which is still good, but lower than the sales growth rate of GCPC. Margins came down a bid in the last years, mainly due to pricing pressure. But nevertheless GCPC was again able to achieve double digit net margins in In ficscal year 2012 net margins were a very good 10.8% resulting in a net profit of RMB 77.1m (EUR 9.6m). The company was able to generate a positive cash flow of RMB 141.6m (EUR 17.7m), making it possible to expand its net cash position to a very good RMB 61.4m (EUR 7.6m), which is the highest cash position since Sales Growth GCPC till ,00% 80,00% 60,00% 40,00% 20,00% 0,00% -20,00% ,00% Source: GCPC EBIT Margins Development till ,00% 20,00% 15,00% 10,00% 5,00% 0,00% Source: GCPC 10

11 Cash Development till , , , , , , ,0 0, Source: GCPC Future Growth We expect the company to continue its growth story. GCPC is perfectly positioned to benefit from an increasing demand in smart phones as well as tablets and ebook readers. We expect that GCPC will announce new clients in the coming months. The company has already signed a contract with Samsung from South Korea. To meet the growing demand the company plans to expand its production capacity and will build a new production line for a value between RMB 100m and RMB 150m. But as pricing pressure will persist, we stay conservative in regards to our sales growth prediction. For fiscal year 2013 we calculate with a sales growth of 5% to RMB 753.3m. Main drivers will be a combination of new client gains plus an increasing demand from existing clients. Although pricing will be challenging we stay positive on the profit side. Margins should just slightly came down. We believe that GCPC will be able to keep costs very well under control. They are constantly working on efficiency improvements through an increase in automation and tight cost control. Consequently, we believe the company will successfully master pricing pressure from new and existing clients. For 2013 we have calculated an EBIT margin of 12.5% and a net profit margin of 10.0%. For 2014 margins should remain stable. The company will spend between RMB 100m to RMB 150m for a new production site. This will lead to an increase in capital expenditure and consequently to a decrease in cash, which we do not see as a problem. The company is investing in the future. 11

12 Appendix Profit & Loss Statement in RMB m E 2014E Sales 244, , , , , , , ,964 Growth in % -17.1% 21.6% 24.1% 93.3% 21.7% 5.0% 5.0% Others 2,520 10,612 4,565 10, ,588 Growth in % 321.1% -57.0% 125.9% Total 246, , , , , , , ,964 Growth in % -13.7% 17.7% 25.9% 86.7% 23.8% 3.3% 5.0% Costs of Goods Sold -160, , , , , , , ,449 in % of Sales 65.9% 69.9% 73.7% 78.4% 72.7% 72.9% 72.5% 72.5% Gross Profit 85,798 71,482 69,345 76, , , , ,515 Gross Margins 34.8% 35.3% 28.2% 25.0% 27.2% 28.8% 27.5% 27.5% Personnel Expenses -3,870-3,557-4,589-4,211-16,440-29,924-26,365-27,684 in % of Sales 1.6% 1.8% 1.9% 1.4% 2.8% 4.2% 3.5% 3.5% -16,365-25,061-28,007-33,599-66,855-81,726-86,629-90, % 12.4% 11.4% 11.0% 11.3% 11.4% 11.5% 11.5% EBITDA 69,284 54,175 49,449 55, , , , ,218 EBITDA Margins 28.4% 26.8% 20.1% 18.3% 17.5% 18.0% 16.3% 17.2% Depreciation 3,721 11,311 12,700 17,444 26,325 34,496 28,942 37,347 EBIT 65,563 42,864 36,749 38,407 76,901 94,668 94,162 98,871 EBIT Margins 26.9% 21.2% 14.9% 12.6% 13.0% 13.2% 12.5% 12.5% Financial Income -1, EBT 64,411 42,022 36,565 38,170 76,254 94,252 93,705 98, % 20.8% 14.9% 12.5% 12.9% 13.1% 12.4% 12.4% Taxes 0 0-5,189-5,876-15,844-17,318-18,741-19,673 Tax Rate 0.0% 14.2% 15.4% 20.8% 18.4% 20.0% 20.0% Other taxes Net Profit 64,411 42,022 31,376 32,294 60,410 77,147 74,964 78,694 Net Margins 26.1% 20.8% 12.8% 10.6% 10.2% 10.8% 10.0% 9.9% Dividends 22,000 5,500 5,500 7,823 7,146 11,396 11,396 11,396 86,411 47,522 36,876 32,294 60,410 77,147 74,964 78,694 86,411 47,522 36,876 32,294 60,410 77,147 74,964 78,694 EPS Number of Shares 21,233 27,500 26,400 26,302 25,903 25,903 25,903 25,903 12

13 Balance Sheet (in RMB tsd) E 2014E Assets Fixed Assets 67, , , , , , , ,220 Intangible Assets Financials Others 25,017 34,380 45,782 25,383 33,934 26,435 26,435 26,435 Long Term Assets 92, , , , , , , ,655 Inventories 21,773 31,556 65,949 54, , , , ,687 short term financial Assets 22,256 18,705 10,038 1,465 1,465 1,465 Trade Receivables from Operations 86, , , , , , , ,054 other Receivables 4,609 84,588 4,694 5,594 11,860 16,195 16,195 16,195 Others Restricted Cash 6,941 38,118 42,463 42,463 42,463 Cash 277,300 92,912 45,670 42,970 20,652 61,140 45,500 60,059 Current Assets 390, , , , , , , ,923 TOTAL 483, , , , , , ,807 1,012,579 Liabilities and Stockholder s Equity Equity 353, , , , , , , ,848 Subscribed Capital 340, , , , , , , ,368 Capital Reserves + Accumulated Profits 12,903 47,851 78,674 99, , , , ,480 Provisions Other Provisions Pension Provisions Liabilities Long-term Liabilities from Companies 20, Long-term Trade Liabilities 45,738 79,347 85,153 65, , , , ,953 Others 64,727 30,448 29,975 20, , , , ,778 TOTAL 483, , , , , , ,807 1,012,579 Cash Flow (in RMB tsd) E 2014E Net Income 74, ,693.8 Depreciation 28, ,347.1 Changes in Provisions Changes in Receivables and other assets 1, ,463.9 Changes in Liabilities and others 2, ,474.0 Cash flow from Operating Activities -34, , , , , , ,051.0 Purchase of intangible Assets and Fixed Assets -88, , ,096.4 Cash flow from investing Activities -145, , , , , , ,096.4 Cash Proceeds from equity sources Dividends -11, ,396.0 Changes of Bank Liabilities Cash flow from Financing Activities -36, , , , , , ,396.0 Cash flow for the Year -216, , , , , , ,558.5 Cash Balance at the Beginning of the Year 277, , , , , , ,500.5 Cash Balance at the End of the Year 56, , , , , , ,

14 Key Ratios E 2014E Growth Sales -17.1% 21.6% 24.1% 93.3% 21.7% 5.0% 5.0% EBITDA -21.8% -8.7% 12.9% 84.8% 25.1% -4.7% 10.7% EBIT -34.6% -14.3% 4.5% 100.2% 23.1% -0.5% 5.0% EBT -34.8% -13.0% 4.4% 99.8% 23.6% -0.6% 5.0% Net Income -34.8% -25.3% 2.9% 87.1% 27.7% -2.8% 5.0% Margins Gross Margin 35.3% 28.2% 25.0% 27.2% 28.8% 27.5% 27.5% EBITDA Margin 26.8% 20.1% 18.3% 17.5% 18.0% 16.3% 17.2% EBIT Margin 21.2% 14.9% 12.6% 13.0% 13.2% 12.5% 12.5% EBT Margin 20.8% 14.9% 12.5% 12.9% 13.1% 12.4% 12.4% Net Margin 20.8% 12.8% 10.6% 10.2% 10.8% 10.0% 9.9% Balance Sheet Ratios ROE 10.8% 7.5% 7.3% 12.3% 13.8% 12.0% 11.4% ROIC 8.4% 5.9% 6.1% 7.3% 8.9% 8.0% 7.8% ROCE 10.6% 7.6% 8.0% 9.5% 11.7% 10.6% 10.4% Debt Ratio 19.3% 7.3% 6.7% 4.5% 17.6% 15.5% 14.2% Equity Ratio 80.7% 92.7% 93.3% 95.5% 82.4% 84.5% 85.8% Asset Turnover Ratio 246.2% 216.2% 172.2% 140.2% 121.0% 124.1% 128.0% Per Share EPS EPS growth -22.2% 3.3% 89.9% 27.7% -2.8% 5.0% DPS DPS growth 10.9% 10.8% Book Value Market Measures P/Sales P/Earnings P/Book value Dividend Yield 0.0% 0.0% 1.4% 0.0% 4.6% 5.1% 5.7% 14

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Summary of VEM s recommendations over the last 12 month concerning the securities of the company being subject of this analysis Date of publication Share Price at this date Recommendation New Fair Value (at date of publication) IPO Buy EUR EUR 2.14 Buy EUR EUR 1.39 Buy EUR EUR 0.78 Hold EUR EUR 0.50 Buy EUR EUR 0.80 Buy EUR EUR 0.71 Buy EUR EUR 0.66 Hold EUR EUR 0.46 Buy EUR EUR 0.44 Buy EUR EUR 0.70 Buy EUR EUR 0.70 Buy EUR 1.50 Disclosure of potential conflicts of interests according to Section 34b of the German Securities Trading Act (WpHG) in combination with the German Ordinance on the Analysis of Financial Instruments (FinAnV) at the date of publication of the analysis: Section 34b of the WpHG in combination with the FinAnV requires credit institutions preparing and publishing financial analyses to point out possible conflicts of interest with respect to the companies that are the subjects of the analyses. Possible conflicts of interest of the employees of VEM, that have been involved in the preparation of this analysis, of VEM as the enterprise, beeing responsible for the preparation of this analysis, of VEM's 15

16 affiliated companies, or of any other persons or enterprises acting on behalf of VEM or VEM's affiliates and beeing involved in the preparation of this analysis, may exist with the following company being part of the analysis: Company Disclosure Greater China Precision Components Ltd. (GCPC) There is a major shareholding (a shareholding exceeding 5 percent of the share capital) between persons and/or enterprises mentioned above and the issuer that is, or whose financial instruments are, the subject of this financial analysis. 2. The remuneration of the persons and/or enterprises mentioned above is dependent on investment banking transactions of the responsible enterprise or an undertaking associated with it. 3. The persons and/or enterprises mentioned above regularly hold shares of the issuer that is, or whose financial instruments are, the subject of this financial analysis, in its trading portfolio. 4. The persons and/or enterprises mentioned above own a short position in shares of the issuer that is, or whose financial instruments are, the subject of this f inancial analysis, of at least 1 percent of the share capital. 5. The persons and/or enterprises mentioned above manage the financial instruments of the issuer that is, or whose financial instruments are, the subject of this financial analysis, on a market by placing buy or sell orders (Market Making/Designated Sponsoring). 6. The persons and/or enterprises mentioned above act as Corporate Broker for the issuer that is, or whose financial instruments are, the subject of this financial analysis. 7. The persons and/or enterprises mentioned above have, within the past 12 month, been part of a consortium for the issue of shares of the issuer that is, or whose financial instruments are, the subject of this financial analysis, in the way of a public offering. 8. The persons and/or enterprises mentioned above have acted as investment bank or selling agent in connection with initial public offering of the issuer that is, or whose financial instruments are, the subject of this financial analysis, in the way of a public offering. 9. The persons and/or enterprises mentioned above have, within the past 12 month, been party to an agreement on provision of investment banking services with the issuer that is, or whose financial instruments are, the subject of this financial analysis, or have received services or a promise to perform under the terms of such an agreement during the same period. 10. The persons and/or enterprises mentioned above expect or aim, within the next 3 month, for fees, allowances or payments of any other kind for investment banking services from the issuer that is, or whose financial instruments are, the subject of this financial analysis. 11. The persons and/or enterprises mentioned above have entered into an agreement on the preparation of this financial agreement with the issuer that is, or whose financial instruments are, the subject of this financial analysis. 12. Prior to its first publication, this financial analysis has been made available to the issuer that is, or whose financial instruments are, the subject of this financial analysis. 13. The persons and/or members of the management board of the enterprises mentioned above are members of the management or supervisory board of the issuer that is, or whose financial instruments are, the subject of this financial analysis. 14. The persons and/or enterprises mentioned above have any other significant economic interests relating to the issuer that is, or whose financial instruments are, the subject of this financial analysis. VEM has made internal organisational arrangements, e.g. in the way of Chinese Walls or by keeping watch- and restricted lists, so as to prevent as far as possible any conflicts of interest in preparing and publishing analyses. VEM will disclose conflicts of interests if they occur. Authors of this financial analysis: Raimund Saier, Diplom Volkswirt, CEFA, M.A. Company responsible for the preparation and communication of this financial analysis: VEM Aktienbank AG, Prannerstr. 8, Munich ( VEM ) VEM is registered as Credit Institution at the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin ), Marie-Curie-Str , D Frankfurt, Germany and is subject to supervision by the BaFin. Details of material sources of information: This financial analysis is based on public available information (Company presentations, Annual Reports, Quarterly Reports, Press Information, prospectus, ad-hoc announcements etc.). Moreover, management interviews for more detailed information about the current business development were held with the company. 16

17 Summary of the valuation methods and principles applied in the preparation of the financial analysis: The valuations underlying the ratings of the securities analysed by VEM are based on generally accepted and widely used methods of fundamental valuation, such as DCF model, Peer group comparison, NAV valuation and - where applicable - a Sumof-the-parts model. VEM applies an absolute equity rating system with 3 grades. Each grade complies with following expectations (Ratings refer to time period of 6 months): BUY: The expected return (composed of the projected change of the share price and the anticipated dividend yield) is at least + 10 %. HOLD: The expected return (composed of the projected change of the share price and the anticipated dividend yield) ranges from 10 % and + 10 %. SELL: The expected return (composed of the projected change of the share price and the anticipated dividend yield) is worse than 10 %. For further important details concerning the valuation methods applied in the preparation of this analysis, the meaning of the specific investment recommendation (including the recommended investment period, the risks associated with the investment and the sensitivity of the valuation parameters) please see the Section Valuation in this analysis. Quarterly summary: VEM is evaluating its ratings on a quarterly basis. The evaluation for the last quarter compares VEM s recommendations Buy, Hold, and Sell in total with VEM s recommendations Buy, Hold, and Sell for companies to which VEM has delivered significant investment banking services during the last 12 month. To view this evaluation, please visit Additional important information: Date of first publication of this analysis by VEM : Date and Time of relevant Share Price (see first page): A schedule for an update of this Analysis is not appointed yet. VEM reserves the right to update any individual analysis without prior notice. 17