ITC Ltd (XBOM)

Transcription

1 Morningstar Equity Analyst Report Pricing: 28 Oct 2013 Rating: 28 Oct 2013 Trading Currency: INR Page 1 of 8 Morningstar Pillars Analyst Quantitative Economic Moat Narrow Narrow Valuation QQQ Fairly Valued Uncertainty Medium Medium Financial Health Strong Quantitative Valuation Current 5-Yr Avg Sector Country Price/Intrinsic Value Price/Earnings Forward P/E Price/Cash Flow Price/Free Cash Flow Dividend Yield % Bulls Say ONinety percent of ITC's top line is derived from India, a growing market moving to premium products, which provides the perfect environment for exerting its pricing power. OMandatory pictorial warnings on cigarette boxes do not impact consumption patterns in India, as a majority smokers buy loose cigarettes sticks and do not get exposed to the packaging. OITC s latest cigarette launch, the 64mm variant which is taxed at a lower rate, has helped the company counter volume losses that have resulted from increased taxes. Bears Say IND s Undervalued Fairly Valued Overvalued ODiscretionary tax increases by the Indian government could hinder volume growth, as these tax increases are usually passed on to consumers in the form of higher prices. OITC faces a threat from unorganized tobacco products, which are less expensive and easily available. Converting these tobacco-consumers to cigarette users will take a long time. OThe company has expanded beyond its moatworthy cigarette business into other operations--which possess little to no competitive advantages--and is in no hurry to divest its less profitable businesses. The Cigarette Business Continues to Drive Profitability at ITC; Shares Fairly Valued Investment Thesis Suruchi Jain 10 October 2013 We believe ITC Limited enjoys a narrow economic moat, owing to its brand strength, pricing power, and the addictive nature of its core product. ITC holds a greater than majority share of the organized cigarette market in India and has been able to raise prices while maintaining volume growth. As most smokers remain brand loyal for a long time and are addicted not only to smoking but also to the taste of their particular brand, we assign the company a stable moat trend rating. We contend that ITC maintains sustainable competitive advantages, and from our perspective, its cigarette business (which accounts for 56.2% of consolidated net sales and 87.1% of operating income) is the firm s most moatworthy business, resulting from its popular brands and the addictive nature of its product set. ITC is the largest cigarette manufacturer in India by revenue and has garnered leading market share through its well-known Wills and Gold Flake brands. While the firm is not without its share of challenges (including competitive pressures from cheaper substitutes such as chewing tobacco and bidis (leaf-rolled tobacco) as well as the potential for further government intervention (like with the passage of higher taxes), ITC has defended its turf for several years by continuously investing in product innovation and marketing its core brands. In addition, the firm has also recently expanded its product set to include lower-priced products (which are subject to a lower tax rate) to expand its customer reach. This move has allowed the firm to continue posting solid sales growth and further operating margin expansion in its cigarette business, despite rising cigarette taxes. We believe ITC will continue to hold a dominant position in the Indian cigarette market for many years to come, and ultimately think that Indian smokers will trade up to more premium brands as the incidence of smoking rises (unlike in developed economies where it is on the decline). The cigarette business throws off a substantial amount of cash, which ITC has utilized to expand its platform to include consumer products (14.6%), agricultural produce (14.9%), paper-related products (9.3%), and hotels (2.4%) among others. In our view, bulk of these businesses fail to exhibit competitive advantages, and are not profitable or only modestly so in comparison to cigarettes--which doesn t strike us as a wise use of cash. Management has hinted at the possibility of divesting its consumer products business at some point in the future once this division is profitable (which would be a good move, in our view). At first blush, we think the consumer business could garner an EV/EBITDA multiple of about 16 times (implying a discount to Godrej Consumer Product, which is trading at 21 times, and leading consumer product firm Hindustan Unilever, which is trading at 24 times), but may well vary from our expectations depending on how the business performs and the state of market conditions when the company chooses to take such an action. While we believe divesting its less-profitable businesses and focusing solely on its core capabilities in cigarettes would be favorable, we recognize that management could continue to unwisely allocate its substantial cash flows as it has done in the past. In our view, the strength of the firm s competitive advantages is evident in the fact that ITC has earned in excess of our 11.3% cost of capital estimate each of the past nine years, and we expect that it will continue generating excess returns. We ve been particularly impressed with the company s ability to improve its cigarette segment operating margins and reduce the losses on its consumer business. However, we believe the company would ultimately be more profitable if it had been solely focused on the cigarettes business rather than diversifying into other no-moat businesses. We forecast operating margins to approximate 33.7% by fiscal 2018 (110 basis points above the level generated in fiscal 2013) as the company further leverages its scale and new product introductions. Overall, we believe ITC will continue to lead the Indian cigarette market and generate a substantial amount of cash for shareholders, despite competitive and regulatory pressures. Analyst Note Suruchi Jain 29 October 2013 The Cigarette Business Continues to Drive Profitability at ITC; Shares Fairly Valued During 2014's second quarter, ITC s revenue growth continued to be subdued at 9% over the prior comparable period, as competition from cheaper tobacco substitutes and high excise taxes continued to pressure cigarette

2 Morningstar Equity Analyst Report Page 2 of 8 Close Competitors Currency (Mil) Market Cap TTM Sales Operating Margin TTM/PE Philip Morris International, Inc. PM USD 145,507 77, British American Tobacco PLC BTI USD 105,178 28, Altria Group Inc. MO USD 73,621 17, Imperial Tobacco Group PLC ITYBY USD 36,832 44, sales (up 11%, 58% of gross sales). While the company was able to divert some tax incidence on this business by introducing a 65 mm cigarette variant, subject to lower taxes, it continues to face substitute threats from unbranded and illicit products. Despite this, we believe ITC s brands and products exhibit pricing power, and the addictive nature of its product will allow it to continue holding leading share in the Indian cigarette market, confirming our narrow economic moat rating. ITC's consumer business (16% of gross sales) registered stronger growth of 16% over the last year, which is still significantly behind our full-year estimate of 23%. However, we believe sales from new products launched in the first half of the year will take some time to be fully reflected in the company s top line. We continue to watch growth carefully, and anticipate sales will pick up considerably in the later part of the year. As such, we're staying with our INR 332 fair value estimate, and believe the stock is fairly valued at its current trading price. Similar to other consumer firms, lower commodity costs during the quarter drove gross margin expansion at ITC, up 175 basis points, to 62.1%. The company s operating margins also improved by a drastic 300 basis points, to 37.6%, as it begins to reap the benefits of scale in the form of operating leverage. From a segment contribution perspective, however, the cigarette business continues to be the main profit-earner, with quarterly margins at 36.2%, whereas the consumer products division nears closer to break-even. We anticipate that the consumer division will make a meager positive profit at the end of Overall, we continue to hold our positive outlook on the stock. Economic Moat 10 October 2013 We believe ITC has a narrow economic moat due to is its intangible assets of well-known brands, unique taste, and manufacturing licenses in its cigarettes business. ITC holds close to 70% of the Indian cigarette market, and was the first company to get a license to manufacture and begin selling cigarettes in India. Since cigarette consumption is addictive and most smokers are brand loyal, ITC has a moat by virtue of this addictive habit. The reason we don t give it a wide economic moat is due to the regulatory environment in India, which may change the pricing and competitive dynamics of the industry overnight. For example, a percentage increase in taxes levied on cigarettes actually reduces overall cigarette volumes in India. Furthermore, if the government issues more manufacturing licenses, or allows foreign direct investment, or FDI, into the sector, ITC will have to compete with newer competitors who may threaten to break its near-monopoly. Other large competitors of ITC Limited include Godfrey Philips and VST Industries which, combined, hold approximately 20% share of the Indian cigarette market. Less than 5% of the total market by value, but 48% by volume is served by over 300 unorganized cigarette and bidi (leaf-rolled tobacco) manufacturers--which pose a low-threat substitute to the company's branded offering. By launching branded products at lower price points, ITC has been able to effectively compete with these unbranded tobacco producers, and improve its market share over time. This data provides further credence to our take that the company possesses a defensible narrow economic moat. Valuation 23 May 2013 After reviewing ITC s fiscal 2013 results and the assumptions underlying our discounted cash flow model, we are raising our fair value estimate to INR 332 per share, up from INR 309, which implies a forward fiscal-year 2014 price/adjusted earnings of 35 times, an enterprise value/adjusted EBITDA of 21 times, and a free cash flow yield of 2.3%. Our revised fair value is driven by a higher terminal value for our five-year explicit forecast as we roll the model to account for the company s fiscal 2013 results. We forecast that the company s revenues will grow at a 14.8% CAGR through fiscal 2018 (slightly below the 16.6% CAGR realized over the last five years) as the company is able to raise the prices of its premium cigarette offerings, and simultaneously drive volumes through its lower-priced product launches (which are subject to a lower tax rate than its core cigarette business). In the absence of a major fluctuation in commodity and operating costs, we believe the company will be able to maintain and further expand its operating margins to about 33.7% by fiscal 2018, up from 32.6% in fiscal However, our current outlook

3 Morningstar Equity Analyst Report Page 3 of 8 is slightly below our prior forecast (which called for operating margins to move north of 34%) as we now think that the consumer business will take another year to reach break-even and reflects the fact that the paper-products business is on the decline versus a growth trajectory as we had earlier envisaged. returns on invested capital well above our estimate of its cost of capital, and we expect it will continue to do so over the next decade. Overall, we believe ITC's stewardship of shareholders' capital is standard. Overall, we expect ITC to register adjusted earnings of INR per share in 2014, and we see its adjusted earnings per share expanding at an average of 15.3% through fiscal 2018 (owing to double-digit topline growth and further improvement in its cigarette and consumer segment margins). Returns on invested capital will also continue to remain significantly above our 11.3% cost of capital estimate, supporting our take that ITC maintains a narrow economic moat. Risk 10 October 2013 The major risks facing ITC stem from potential changes in government regulations related to taxation, manufacturing licenses, as well as advertising or distribution bans. More specifically, if the government drastically increases the excise tax rate on cigarettes (similar to past actions), the company's production volumes and profitability could suffer. Apart from regulatory risks, we also believe there is a risk that ITC management may expand further into less profitable businesses--and away from its core competencies in cigarettes--which would not be in the best interest of its shareholders. Overall, we rate ITC as having medium uncertainty, reflecting that the firm derives more than half of its sales from the cigarette business (which isn t cyclical) and operates with minimal financial leverage. Management Suruchi Jain 13 February 2013 CEO Mr. Y.C. Deveshwar joined ITC in 1968 and has been on the board since At more than 64 years old, though, he is paving the way for his successor, who will likely be one of the three executive directors heading different businesses at ITC (K.N. Grant, head of ITC's consumer business, Nakul Anand, head of the hospitality, travel and tourism business, and P.V. Dhobale, head of the paper-related products business). Deveshwar has been instrumental in ITC's diversification into other businesses, which began in fiscal While we believe this diversification strategy into no-moat businesses was not the best use of cash, the company has consistently earned

4 Morningstar Equity Analyst Report Page 4 of 8 Analyst Notes Archive Despite Tax Increase, ITC Ends Year Relatively Unscathed; Shares Not a Bargain Suruchi Jain 20 May 2013 ITC Limited still faces challenges following the implementation of a cigarette tax hike that's lighting a fire under illicit trade practices. Still, we still think fiscal 2013's results support our take that ITC's brand strength and pricing power remain intact, with the addictive nature of its core product underpinning its narrow economic moat rating. Sales growth ended the year up 19.4%, slightly ahead of our forecast of 15.5%. Even so, adjusted earnings per share came in exactly in line with our INR 8.85 per-share estimate. Top-line growth was driven by sales of agricultural produce (14.0% of consolidated net sales, up 26.4%), other consumer products (14.6% of net sales, up 26.5%) and cigarettes (56.2% of net sales, up 16.8%). The firm also managed to squeeze out a 70 basis-point operating margin improvement, ending the year at 32.6%, as increased cost pressures for commodities such as wood and coal were offset by savings from the firm's efficiency initiatives. From a segment perspective, improvements in its cigarette segment drove margins 110 basis points wider, to 32%, even with the tax headwind. Its consumer products division reached closer to break-even, where operating margins were -1.3% versus -3.9% last year. Beyond increased government intervention via rising cigarettes taxes, the firm is facing competitive pressures from cheaper substitutes, such as chewing tobacco and bidis (leaf-rolled tobacco). Despite this, ITC has defended its turf for several years by continuously investing in product innovation, and by marketing its core brands. We think this will continue to sustain its competitive advantages, and promote excess shareholder returns over the longer term. In addition, the firm has recently expanded its product set to include lower-priced products, which are subject to a lower tax rate. This will allow it to increase its customer reach, which we view favorably. We intend to review the assumptions underlying our discounted cash flow model, and will likely raise our fair value slightly to account for the additional cash generated since our last update. However, even with a slightly higher fair value estimate, we think these shares are fairly valued at current trading levels. Higher Cigarette Excise Taxes Continue to Stub ITC Limited s Sales; Shares a Little Inflated Suruchi Jain 26 July 2013 ITC Limited reported muted revenue growth in its fiscal 2014 first quarter, as higher excise taxes continued to hinder cigarette sales--a situation that we expect to persist. First-quarter gross sales ticked up just north of 13%, which is down from more than 19% top-line growth in fiscal 2013, while cigarette sales (64% of gross sales) rose just 13.5% in the first quarter, as consumers sought out products through illicit trade. However, the brand strength of the company's products and subsequent pricing power form the basis of our narrow Morningstar Economic Moat Rating, which remains intact. While we aren't adjusting our full-year forecast (which calls for 15% revenue growth based on one quarter), we intend to continue to monitor the trajectory of sales, and may adjust our expectations if sales fail to bounce back over next quarter. As such, we are holding the line on our INR 332 fair value estimate, and believe the stock is modestly overvalued at its current price. Beyond challenges within the cigarette segment, the consumer goods (up 18%, 16% of gross sales) and agricultural produce (up 29%, 20% of gross sales) segments posted more robust top-line performance--partly reflecting the successful launch of new products within the consumer goods and personal care categories. In terms of profitability, higher input costs (for wood and coal) contributed to a 40-basis-point decline in gross margin, to 48.7%. However, the firm's cost savings initiatives led to a 90-basis-point improvement in the operating margin, to 24.0% of net sales (improvement in margins as a percent of net sales was more pronounced with a 270-basis-point improvement to 34.8%). Margins from cigarettes continued to remain buoyant, at 32.6% (up 130 basis points relative to the year ago period), and generally consistent with our full-year forecast, while consumer goods business came closer to break-even (which we expect it will achieve before year-end) with negative 1.1% operating margin compared to negative 2.6% in last year's first quarter. We maintain our positive outlook on the firm s ability to combat tax hikes through

5 Morningstar Equity Analyst Report Page 5 of 8 product innovations as it has in the past, and we continue to think that consumption of premium brands will continue to garner share over the longer term in India. The Cigarette Business Continues to Drive Profitability at ITC; Shares Fairly Valued Suruchi Jain 29 October 2013 During 2014's second quarter, ITC s revenue growth continued to be subdued at 9% over the prior comparable period, as competition from cheaper tobacco substitutes and high excise taxes continued to pressure cigarette sales (up 11%, 58% of gross sales). While the company was able to divert some tax incidence on this business by introducing a 65 mm cigarette variant, subject to lower taxes, it continues to face substitute threats from unbranded and illicit products. Despite this, we believe ITC s brands and products exhibit pricing power, and the addictive nature of its product will allow it to continue holding leading share in the Indian cigarette market, confirming our narrow economic moat rating. ITC's consumer business (16% of gross sales) registered stronger growth of 16% over the last year, which is still significantly behind our full-year estimate of 23%. However, we believe sales from new products launched in the first half of the year will take some time to be fully reflected in the company s top line. We continue to watch growth carefully, and anticipate sales will pick up considerably in the later part of the year. As such, we're staying with our INR 332 fair value estimate, and believe the stock is fairly valued at its current trading price. Similar to other consumer firms, lower commodity costs during the quarter drove gross margin expansion at ITC, up 175 basis points, to 62.1%. The company s operating margins also improved by a drastic 300 basis points, to 37.6%, as it begins to reap the benefits of scale in the form of operating leverage. From a segment contribution perspective, however, the cigarette business continues to be the main profit-earner, with quarterly margins at 36.2%, whereas the consumer products division nears closer to break-even. We anticipate that the consumer division will make a meager positive profit at the end of Overall, we continue to hold our positive outlook on the stock.

6 Quantitative Equity Report Release Date: 29 October 2013 Reporting Currency: INR Trading Currency: INR Page Page 6 of 1 8of 1 ITC Ltd Last Close Quantitative Fair Value Estimate Market Cap (Bil) Sector Industry Country of Domicile ,589.0 s Consumer Defensive Tobacco IND India ITC Ltd. is an Indian private sector company. The Company is the largest cigarette manufacturer by revenue in India and is also engaged in different segments such as FMCG, Hotels, Paperboards, Paper and Packing, Agri-Exports and Information Technology. Quantitative Scores Scores All Rel Sector Rel Country Quantitative Moat Narrow Valuation Fairly Valued Quantitative Uncertainty Medium Financial Health Strong IND s Undervalued Fairly Valued Overvalued Valuation Current 5-Yr Avg Sector Country Price/Quant Fair Value Price/Earnings Forward P/E Price/Cash Flow Price/Free Cash Flow Dividend Yield % Price/Book Price/Sales Profitability Current 5-Yr Avg Sector Country Return on Equity % Return on Assets % Revenue/Employee (Mil) Quantitative Moat Financial Health Current 5-Yr Avg Sector Score Country Distance to Default Solvency Score Assets/Equity Long-Term Debt/Equity Price Versus Quantitative Fair Value Quantitative Fair Value Estimate Total Return Sales/Share Forecast Range Forcasted Price Dividend Split Momentum: Standard Deviation: Wk Yr Total Return % / Market (Morningstar World Index) Dividend Yield % Price/Earnings Price/Revenue Undervalued Fairly Valued Overvalued 4,612 Monthly Volume (Thousand Shares) Liquidity: High TTM Financials (Fiscal Year in Mil) 163, , , , , ,234 Revenue % Change -32,329 62,457 74,349 93, , ,854 Operating Income % Change 33,655 42,108 50,694 63,337 76,081 76,081 Net Income 35,335 44,430 54,536 59,771 71,018 71,018 Operating Cash Flow -17,609-12,534-14,295-24,678-26,443-26,443 Capital Spending 17,726 31,896 40,241 35,093 44,576 44,576 Free Cash Flow % Sales EPS % Change Free Cash Flow/Share Dividends/Share Book Value/Share 7,549 7,636 7,738 7,818 7,902 7,902 Shares Outstanding (Mil) Profitability Return on Equity % Return on Assets % Net Margin % Asset Turnover Financial Leverage Gross Margin % Operating Margin % 1,867 1,108 1,246 1, Long-Term Debt 141, , , , ,378 Total Equity Fixed Asset Turns Growth Per Share 1-Year 3-Year 5-Year 10-Year Revenue % Operating Income % Earnings % Dividends % Book Value % Stock Total Return % Annual Revenue & EPS Revenue (Bil) Jun Sep Dec Mar Total Earnings Per Share Revenue Growth Year On Year % Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without ß

7 Morningstar Equity Analyst Report Page 7 of 8 Morningstar Equity & Credit Research Methodology Fundamental Analysis At Morningstar, we believe buying shares of superior businesses at a discount and allowing them to compound over time is the surest way to create wealth in the stock market. The long-term fundamentals of businesses, such as cash flow, competition, economic cycles, and stewardship, are our primary focus. Occasionally, this approach causes our recommendations to appear out of step with the market, but willingness to be contrarian is an important source of outperformance and a benefit of Morningstar s independence. Our analysts conduct primary research to inform our views on each firm s moat, fair value and uncertainty. Fundamental Analysis Economic Moat Rating Economic Moat Fair Value Estimate Uncertainty Assessment QQQQQ QQQQ QQQ QQ Q Star Rating The economic moat concept is a cornerstone of Morningstar s investment philosophy and is used to distinguish high-quality companies with sustainable competitive advantages. An economic moat is a structural feature that allows a firm to sustain excess returns over a long period of time. Without a moat, a company s profits are more susceptible to competition. Companies with narrow moats are likely to achieve normalized excess returns beyond 10 years while wide-moat companies are likely to sustain excess returns beyond 20 years. The longer a firm generates economic profits, the higher its intrinsic value. We believe lower-quality no-moat companies will see their returns gravitate toward the firm s cost of capital more quickly than companies with moats will. We have identified five sources of economic moats: intangible assets, switching costs, network effect, cost advantage, and efficient scale. Fair Value Estimate Our analyst-driven fair value estimate is based primarily on Morningstar s proprietary three-stage discounted cash flow model. We also use a variety of supplementary fundamental methods to triangulate a company s worth, such as sum-of-the-parts, multiples, and yields, among others. We re looking well beyond next quarter to determine the cash-generating ability of a company s assets because we believe the market price of a security will migrate toward the firm s intrinsic value over time. Economic moats are not only an important sorting mechanism for quality in our framework, but the designation also directly contributes to our estimate of a company s intrinsic value through sustained excess returns on invested capital. Uncertainty Rating The Morningstar Uncertainty Rating demonstrates our assessment of a firm s cash flow predictability, or valuation risk. From this rating, we determine appropriate margins of safety: The higher the uncertainty, the wider the margin of safety around our fair value estimate before our recommendations are triggered. Our uncertainty ratings are low, medium, high, very high, and extreme. With each uncertainty rating is a corresponding set of price/fair value ratios that drive our recommendations: Lower price/fair value ratios (<1.0) lead to positive recommendations, while higher price/fair value Economic Moat C O M PETITIVE FORCES WIDE NARROW NONE COMPANY PROFITABILITY Moat Sources: Intangible Assets Switching Costs Network Effect Cost Advantage Efficient Scale 2013 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without

8 Morningstar Equity Analyst Report Page 8 of 8 Morningstar Equity & Credit Research Methodology ratios (>1.0) lead to negative recommendations. In very rare cases, the fair value estimate for a firm is so unpredictable that a margin of safety cannot be properly estimated. For these firms, we use a rating of extreme. Very high and extreme uncertainty companies tend to have higher risk and volatility. Credit Rating The Morningstar Corporate Credit Rating measures the ability of a firm to satisfy its debt and debtlike obligations. The higher the rating, the less likely we think the company is to default on these obligations. Quantitatively Driven Valuations To complement our analysts work, we produce Quantitative Ratings for a much larger universe of companies. These ratings are generated by statistical models that are meant to divine the relationships between Morningstar s analyst-driven ratings and key financial data points. Consequently, our quantitative ratings are directly analogous to our analyst-driven ratings. Quantitative Fair Value Estimate (QFVE): The QFVE is analogous to Morningstar s fair value estimate for stocks. It represents the per-share value of the equity of a company. The QFVE is displayed in the same currency as the company s last close price. Valuation: The valuation is based on the ratio of a company s quantitative fair value estimate to its last close price. Quantitative Uncertainty: This rating describes our level of uncertainty about the accuracy of our quantitative fair value estimate. In this way it is analogous to Morningstar s fair value uncertainty ratings. Quantitative Economic Moat: The quantitative moat rating is analogous to Morningstar s analyst-driven economic moat rating in that both are meant to describe the strength of a firm s competitive position. Financial Health: Financial health is based on Morningstar s proprietary Distance to Default calculation. Understanding Differences Between Analyst and Quantitative Valuations If our analyst-driven ratings did not sometimes differ from our quantitative ratings, there would be little value in producing both. Differences occur because our quantitative ratings are essentially a highly sophisticated analysis of the analyst-driven ratings of comparable companies. If a company is unique and has few comparable companies, the quantitative model will have more trouble assigning correct ratings, while an analyst will have an easier time recognizing the true characteristics of the company. On the other hand, the quantitative models incorporate new data efficiently and consistently. Empirically, we find quantitative ratings and analyst-driven ratings to be equally powerful predictors of future performance. When the analystdriven rating and the quantitative rating agree, we find the ratings to be much more predictive than when they differ. In this way, they provide an excellent second opinion for each other. When the ratings differ, it may be wise to follow the analyst s rating for a truly unique company with its own special situation, and follow the quantitative rating when a company has several reasonable comparable companies and relevant information is flowing at a rapid pace. Uncertainty Rating Price/Fair Value % Q % 95% 135% 105% 110% 80% 90% 70% 155% 85% 115% 60% 80% 125% 50% QQ QQQ QQQQ 0.25 QQQQQ Low Medium High Very High Uncertainty Rating 2013 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without