Sound Global Limited. Neutral. Resumption of trading and PT revision

Sound Global Limited Resumption of trading and PT revision Neutral 0967.HK, 967 HK Price: HK$7.00 Price Target: HK$4.00 Previous: HK$7.10 Sound Global will resume trading on Monday, 25 January, after a one-year suspension due to a cash discrepancy issue. We believe the shares may trade at a distressed level in the near term, given the water sector s recent underperformance and investors potential loss of confidence in SGL. We reduce our PT to HK$4 (1.1x last reported book value as of Jun-15). We recommend buying the shares at the replacement cost value of HK$3 per share, all else equal, for 33% potential upside to our PT. Potential support for the shares may come from purchases by the company s chairman. Revised PT of HK$4. We have revised our PT methodology to use a P/B multiple of 1.1x, or -1sd from the stock s historical average of 1.7x, to reflect the stock s value based on current shareholders equity, given the circumstances. This is a change from our previous method of using a P/E multiple, which was driven more by fundamentals. We will revisit our methodology if we see improvement in investor confidence or a change in shareholder structure. Replacement cost at HK$3/share. SGL had 1.7M tons/day of water treatment capacity in operation as of Jun-15. The implied replacement cost value is HK$3/share if we assume a cost of Rmb2,000/ton for its municipal sewage treatment capacity. If we include the capacity not in operation, SGL has total treatment capacity of 3.5M tons/day. Potential share purchases by chairman. We believe Chairman Wen Yibo, who owns ~50% of SGL shares, may purchase shares in the market if the stock drops after trading resumes. Mr. Wen sold part of his stake in A-share company Tus-Sound Environmental for Rmb7B in 2015 to a consortium led by Tsinghua Holdings. EPS revisions. We lower our 2015-16 EPS estimates by 21-31% after factoring in the 2014 and 1H15 results. We now assume slower new capacity additions of 500k tons/day pa. Sound Global Limited (Reuters: 0967.HK, Bloomberg: 967 HK) Rmb in mn, year-end Dec FY13A FY14A FY15E FY16E FY17E Revenue (Rmb mn) 3,140 3,558 3,689 3,822 3,964 Net Profit (Rmb mn) 424 503 621 680 703 EPS (Rmb) 0.33 0.36 0.41 0.45 0.47 DPS (Rmb) 0.00 0.00 0.00 0.00 0.00 Revenue growth (%) 18.4% 13.3% 3.7% 3.6% 3.7% EPS growth (%) (1.0%) 9.8% 14.6% 9.3% 3.3% ROCE 10.3% 9.8% 9.8% 8.7% 7.7% ROE 14.8% 13.8% 13.7% 13.1% 11.9% P/E (x) 17.9 16.3 14.3 13.0 12.6 P/BV (x) 2.5 1.9 1.8 1.6 1.4 EV/EBITDA (x) 10.7 11.1 8.7 8.4 7.8 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0% Source: Company data, Bloomberg, J.P. Morgan estimates. China Water Elaine Wu AC Bloomberg JPMA EWU <GO> Yi Du (852) 2800-8524 yi.du@jpmorgan.com Boris Kan (852) 2800-8573 boris.cw.kan@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited Price Performance 0967.HK share price (HK$) HSCEI (rebased) YTD 1m 3m 12m Abs 0.0% 0.0% 0.0% -11.9% Rel 13.0% 16.7% 23.5% 20.8% Company Data Shares O/S (mn) 1,506 Market Cap (Rmb mn) 8,874 Market Cap ($ mn) 1,349 Price (HK$) 7.00 Date Of Price 22 Jan 16 Free Float(%) 30.0% 3M - Avg daily vol (mn) 0.00 3M - Avg daily val (HK$ mn) - 3M - Avg daily val ($ mn) - HSCEI 8104.98 Exchange Rate 7.82 Price Target End Date 31-Dec-16 See page 10 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 may 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 their investment decision. HK$ 10 9 8 7 6 5 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Figure 1: Implied share price at various P/B multiples (HK$) 7.00 6.15 6.00 5.00 3.98 4.00 3.00 1.81 2.00 1.00 - At P/B At P/B -1sd At P/B -2sd average Source: J.P. Morgan estimates. www.jpmorganmarkets.com

Key catalysts for the stock price: Upside risks to our view: Downside risks to our view: Awards of new wastewater treatment BOT projects Supportive government policies for the water sector Refinancing of expensive debt Lower-than-expected finance cost Stronger-than-expected operation revenue Stronger pipeline of EPC and BOT projects Lower-than-expected new project wins Lower-than-expected margins from rural wastewater treatment projects Accumulation of accounts receivable Key financial metrics FY13 FY14 FY15E FY16E Valuation and price target basis Revenues (LC M) 3,140 3,558 3,689 3,822 Our Dec-16 PT is based P/B multiple of 1.1x on Jun-15 book value, which is -1sd from the historical average P/B of 1.7x. Our PT implies a 33% premium to the replacement cost value of HK$3/share. Revenue growth (%) 18.4% 13.3% 3.7% 3.6% EBITDA (LC M) 857 949 1,074 1,130 EBITDA margin (%) 27.3% 26.7% 29.1% 29.6% Tax rate (%) 24.9% 22.6% 24.9% 24.9% Net profit (LC M) 424 503 621 680 EPS (LC) 0.33 0.36 0.41 0.45 EPS growth (%) -1.0% 9.8% 14.6% 9.3% Revenue breakdown (2014) DPS (LC) - - - - BVPS (LC) 2.38 3.04 3.23 3.68 Operating cash flow (LC M) 117 390 1,470 36 Free cash flow (LC M) 111 381 1,463 31 Interest cover (x) 3 3 5 5 Net margin (%) 13.5% 14.1% 16.8% 17.8% Sales/assets (X) 0.40 0.38 0.36 0.32 Debt/equity (%) 122.1% 85.4% 69.9% 97.9% Net debt/equity (%) 7.1% 39.1% 8.7% 10.9% ROE (%) 15% 14% 14% 13% Key model assumptions FY13 FY14 FY15E FY16E Interest cost (%) 12.0% 7.0% 6.5% 6.5% Gross margin 31% 31% 31% 31% New BOT capacity add (M tons/day) 0.5 0.9 0.8 0.5 Source: Company and J.P. Morgan estimates. Source: Bloomberg, Company and J.P. Morgan estimates. Sensitivity analysis EPS EBITDA JPMe vs. consensus, change in estimates Sensitivity to FY14E FY15E FY14E FY15E EPS (LC) FY15E FY16E 1% chg. in finance cost 6% 4% 5% 4% JPMe old 0.52 0.65 1% chg. in EPC margin 5% 4% 4% 3% JPMe new 0.41 0.45 RMB100MM chg. in BOT inv 2% 2% 2% 2% % chg. -21% -31% Consensus 0.54 0.67 Source: J.P. Morgan estimates. Source: Bloomberg, J.P. Morgan estimates. Comparative metrics Mkt cap P/E (x) EV/EBITDA (x) P/BV (x) YTD Ticker ($M) FY15E FY16E FY15E FY16E FY15E FY16E stock perf. BJE Water 371 HK 4,780 15.4 12.1 12.6 11.0 2.2 1.9-25% China Everbright Int'l 257 HK 4,678 16.7 13.1 12.3 10.3 2.0 1.8-21% Guangdong Investment 270 HK 7,385 14.9 13.7 8.8 8.6 1.8 1.7-19% Sound Global 967 HK 1,353 14.0 12.7 10.0 9.5 1.8 1.6 0% China Water Affairs 855 HK* 2,828 25.8 24.4 17.3 17.6 2.1 2.1-25% CT Environmental 1363 HK* 1,431 24.1 19.6 12.4 9.9 2.1 2.0-25% Tianjin Capital 1065 HK* 1,710 19.5 14.8 15.1 23.3 3.8 3.1-19% China Everbright Water CEWL SP* 765 14.9 10.7 12.7 7.4 0.8 0.8-33% SIIC Environment SIIC SP* 1,028 17.8 13.4 14.1 8.2 1.3 1.1-20% Citic Envirotech CEL SP* 1,102 35.8 21.5 19.3 8.4 1.9 1.8 NA Source: J.P. Morgan estimates for covered companies, Bloomberg consensus for Not Covered(*) companies. Prices are as of last closing. Operation and mgt 9% EPC 90% Sale of goods 1% 2

Scenario analysis based on historical P/B Table 1: Scenario analysis based on historical P/B multiples Dec-14 Jun-15 Book value (Rmb M) 4,246 4,580 Book value (HK$ M) 5,053 5,451 BVPS (HK$) 3.35 3.62 No of shares outstanding (M) 1,506 1,506 Historical valuation P/B average (x) 1.7 1.7 P/B -1sd (x) 1.1 1.1 P/B -2sd (x) 0.5 0.5 Implied share price (HK$) At P/B average 5.70 6.15 At P/B -1sd 3.69 3.98 At P/B -2sd 1.68 1.81 Source: J.P. Morgan estimates, Company data. Please see below for Sound Global s historical valuation band charts over 2009-2013, when the shares were traded in Singapore. We believe this is more representative than the HK traded shares, which were not very liquid until the Singapore shares were delisted and moved to HK in Jan-14. Figure 2: One-year forward P/E band chart w/sd 25.0 20.0 15.0 10.0 5.0 0.0 +2sd +1sd Avg -1sd -2sd Figure 3: One-year forward P/E band chart 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 17x 14x 10x 7x 4x Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Source: J.P. Morgan calculations, Bloomberg. Source: J.P. Morgan calculations, Bloomberg. Figure 4: P/B band chart w/sd 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 +2sd +1sd Avg -1sd -2sd Figure 5: P/B band chart 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2.8x 2.2x 1.7x 1.1x 0.5x Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Source: J.P. Morgan calculations, Bloomberg. Source: J.P. Morgan calculations, Bloomberg. 3

Replacement cost analysis based on projects in operation Sound Global had 3.47M tons/day of water treatment capacity as of 30 June 2015, of which 1.75M tons were in operation. If we assume a replacement cost of Rmb2,000-4,500/ton of water treatment capacity, the implied value per share would be HK$3. Please see our detailed analysis below. Table 2: Replacement cost analysis, based on projects in operation as of Jun-15 Capacity in operation ('000 tons/day) Replacement cost/ton (Rmb) Valuation (Rmb M) Valuation (HK$ M) Project type Wastewater treatment Municipal 1,540 2,000 3,080 3,665 Industrial and Industrial Parks 100 2,500 250 298 Rural Villages and Townships 90 4,500 405 482 Water Supply Municipal 20 2,000 40 48 Total 1,750 NA 3,775 4,492 Value per share (Rmb) 2.51 Value per share (HK$) 2.98 Source: J.P. Morgan estimates, Company data. 4

Figure 6: Project locations Source: Company reports. 5

1H15 results Table 3: P&L Rmb in millions 1H15 1H14 yoy chg. Revenue 1,854.8 1,647.4 13% EPC 1,638.5 1,498.3 9% Equipment 27.0 7.9 243% O&M 189.3 141.2 34% COS (1,278.3) (1,144.6) 12% Gross profit 576.6 502.7 15% Other operating income 87.3 64.1 36% Other gains and losses 2.1 (13.0) -116% Distribution expenses (24.0) (14.8) 63% R&D expenses (15.5) (9.3) 66% Administrative expenses (86.0) (74.3) 16% Finance costs (141.8) (145.8) -3% Profit before tax 398.7 309.6 29% Tax expenses (80.1) (66.6) 20% Profit for the period 318.6 243.0 31% Profit attributable to Owners of the company 317.4 242.5 31% Minority interest 1.2 0.5 133% EPS (in Rmb cents) Basic 21.1 17.5 20% Diluted 21.0 17.2 22% Gross margin 31.1% 30.5% 0.6 ppts PBT margin 21.5% 18.8% 2.7 ppts Net margin 17.2% 14.8% 2.4 ppts Effective tax rate -20.1% -21.5% 1.4 ppts Loan interest rate 4.3% 4.5% -0.2 ppts Source: Company reports, J.P. Morgan. Table 4: Revenue and profit breakdown by segment Rmb in millions EPC 1H15 1H14 yoy chg. Revenue 1,638.5 1,498.3 9% Segment results 353.9 354.2 0% Margin 21.6% 23.6% -2 ppts Equipment Fabrication Revenue 27.0 7.9 243% Segment results 17.1 2.9 482% Margin 63.1% 37.2% 25.9 ppts Operation and Management Revenue 189.3 141.2 34% Segment results 142.9 74.9 91% Margin 75.5% 53.0% 22.5 ppts Source: Company reports, J.P. Morgan. 6

Table 5: Balance sheet Rmb in millions 30/06/2015 31/12/2014 yoy chg. NON-CURRENT ASSETS Property, plant and equipment 56.3 52.1 8% Intangible assets 59.2 61.2-3% Land use rights 40.2 40.8-1% Goodwill 41.4 41.4 0% Service concession receivables 3,788.5 2,917.5 30% Deferred tax assets 7.7 7.7 0% 3,993.3 3,120.7 28% CURRENT ASSETS Inventories 81.1 34.9 133% Trade and other receivables 2,671.8 3,692.7-28% Land use rights 1.2 1.2 0% Amounts due from customers for contract work 1,061.8 1,157.6-8% Derivative financial instruments 18.0 Restricted bank balances 1,689.2 112.9 1397% Bank balances and cash 599.3 1,968.2-70% 6,104.4 6,985.4-13% CURRENT LIABILITIES Trade and other payables 2,307.0 1,821.5 27% Tax payables 72.8 100.0-27% Borrowings 935.4 1,448.3-35% Senior notes 902.3 907.1 Amounts due to customers for contract work 0.1 101.1-100% 4,217.6 4,377.9-4% NON-CURRENT LIABILITIES Deferred tax liabilities 175.3 162.6 8% Borrowings 1,075.2 1,272.7-16% Derivative financial instruments 40.9 47.0-13% 1,291.5 1,482.2-13% CAPITAL AND RESERVES Issued capital 1,720.3 1,690.6 2% Reserves 2,859.9 2,549.2 12% Equity attributable to owners of the Company 4,580.3 4,239.7 8% Non-controlling interest 8.5 6.2 35% 4,588.7 4,246.0 8% Total debt 2,912.8 3,628.0-20% Total debt to equity ratio 0.64 0.86-22 ppts Source: Company reports, J.P. Morgan. 7

Investment Thesis, Valuation and Risks Sound Global Limited (Neutral; Price Target: HK$4.00) Investment Thesis Sound Global (SGL) constructs and operates wastewater treatment and water recycling plants. It has an equipment manufacturing arm and an R&D division capable of customizing products for customers. The company was founded by Wen Yibo, a former Tsinghua University lecturer of environmental engineering and water industry veteran, who started his first water equipment company with his wife in 1993. Mr. Wen is also the majority shareholder of Sound Environmental (000826 CH), a China-listed company involved in waste-to-energy and wastewater treatment business. Valuation Our Dec-16 PT of HK$4 is based on a P/B multiple of 1.1x Jun-15 BVPS, which is -1sd from the historical average P/B of 1.7x. Our PT implies a 33% premium to the replacement cost value of HK$3/share. Risks to Rating and Price Target Downside risks to our Neutral rating and price target include fewer-than-expected new project wins, lower-than-expected margins from rural wastewater treatment projects and the accumulation of accounts receivable. Upside risks include a stronger-than-expected recovery in investor confidence in the name and a higher-than-expected number of new project wins. 8

Sound Global Limited: Summary of Financials Income Statement Cash flow statement Rmb in millions, year end Dec FY13 FY14 FY15E FY16E FY17E Rmb in millions, year end Dec FY13 FY14 FY15E FY16E FY17E Revenues 3,140 3,558 3,689 3,822 3,964 Pre-tax profit 566 652 828 907 938 % change Y/Y 18.4% 13.3% 3.7% 3.6% 3.7% Depr. & amortization 17 22 17 14 11 EBITDA 857 949 1,074 1,130 1,202 Change in working capital (621) (357) 592 (880) (574) % change Y/Y 25.4% 10.7% 13.2% 5.3% 6.4% Taxes (97) (155) (196) (214) (223) EBIT 840 927 1,056 1,116 1,191 Others 297 223 239 222 266 % change Y/Y 25.9% 10.3% 13.9% 5.7% 6.7% Cash flow from operations 117 390 1,470 36 405 EBIT Margin 26.8% 26.1% 28.6% 29.2% 30.0% Net Interest (274) (276) (228) (210) (253) Capex (6) (10) (7) (5) (4) Associates - - - - - Disposal/(purchase) - - - - - Other Income 0 0 0 0 0 Free cash flow 111 381 1,463 31 401 Earnings before tax 566 652 828 907 938 Other (143) (2,039) 8 12 19 % change Y/Y 12.5% 15.0% 27.1% 9.5% 3.5% Cash flow from investing (150) (2,048) 1 6 15 Tax (141) (148) (206) (225) (235) as % of EBT 24.9% 22.6% 24.9% 24.9% 25.0% Equity raised/(repaid) 0 0 0 0 0 Exceptional items - - - - - Debt raised/(repaid) 924 407 (1,216) 679 168 Net income (reported) 424 503 621 680 703 Other (264) (313) 755 1,128 62 % change Y/Y (1.0%) 18.8% 23.5% 9.5% 3.3% Dividends paid 0 0 0 0 0 Shares outstanding 1,290 1,500 1,506 1,506 1,506 Cash flow from financing 660 93 (461) 1,807 230 EPS (reported) 0.33 0.36 0.41 0.45 0.47 % change Y/Y (1.0%) 9.8% 14.6% 9.3% 3.3% Beginning cash 2,912 3,534 1,968 2,978 4,827 Ending cash 3,534 1,968 2,978 4,827 5,477 DPS 0.00 0.00 0.00 0.00 0.00 Balance sheet Ratio Analysis Rmb in millions, year end Dec FY13 FY14 FY15E FY16E FY17E Rmb in millions, year end Dec FY13 FY14 FY15E FY16E FY17E Cash and cash equivalents 3,534 1,968 2,978 4,827 5,477 EBITDA margin 27.3% 26.7% 29.1% 29.6% 30.3% Accounts receivable 1,569 3,693 1,844 1,910 1,981 Net profit margin 13.5% 14.1% 16.8% 17.8% 17.7% Inventories 28 35 33 34 35 Others 1,207 1,290 1,549 1,866 1,901 Current assets 6,338 6,985 6,404 8,638 9,395 Sales per share growth 18.4% 4.8% (3.8%) 3.4% 3.7% Sales growth 18.4% 13.3% 3.7% 3.6% 3.7% LT investments 0 0 0 0 0 Net profit growth (1.0%) 18.8% 23.5% 9.5% 3.3% Net fixed assets 50 52 41 33 26 EPS growth (1.0%) 9.8% 14.6% 9.3% 3.3% Others 2,410 3,069 4,073 4,606 5,114 Interest coverage (x) 3.1 3.4 4.7 5.4 4.8 Total Assets 8,797 10,106 10,518 13,277 14,535 Liabilities Net debt to equity 7.1% 39.1% 8.7% 10.9% 7.3% Short-term loans 764 2,355 1,139 1,818 1,986 Sales/assets 0.4 0.4 0.4 0.3 0.3 Payables 1,654 1,821 1,878 1,916 1,954 Assets/equity 2.7 2.6 2.3 2.3 2.4 Others 151 201 159 171 185 ROE 14.8% 13.8% 13.7% 13.1% 11.9% Total current liabilities 2,569 4,378 3,176 3,905 4,125 ROCE 10.3% 9.8% 9.8% 8.7% 7.7% Long-term debt 2,989 1,273 2,264 3,613 3,946 ROA 5.4% 5.3% 6.0% 5.7% 5.1% Other liabilities 165 210 210 210 210 Total Liabilities 5,723 5,860 5,649 7,728 8,281 Shareholder's equity 3,070 4,240 4,861 5,541 6,244 BVPS 2.38 3.04 3.23 3.68 4.15 Source: Company reports and J.P. Morgan estimates. 9

Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures Market Maker/ Liquidity Provider: J.P. Morgan Securities plc and/or an affiliate is a market maker and/or liquidity provider in Sound Global Limited. Other Significant Financial Interests: J.P. Morgan owns a position of 1 million USD or more in the debt securities of Sound Global Limited. Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium reports and all J.P. Morgan covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. J.P. Morgan s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail research.disclosure.inquiries@jpmorgan.com. Sound Global Limited (0967.HK, 967 HK) Price Chart 18 OW HK$9OW HK$11 Price(HK$) 12 6 N HK$9 OW HK$9.9N HK$7.1 Date Rating Share Price (HK$) 11-Feb-14 N 7.69 9.00 25-Apr-14 OW 7.38 9.00 20-Aug-14 OW 8.00 9.90 09-Oct-14 OW 8.21 11.00 15-Feb-15 N 7.58 7.10 Price Target (HK$) 0 Jan 11 Oct 11 Jul 12 Apr 13 Jan 14 Oct 14 Jul 15 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Feb 11, 2014. The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations 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 the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-australia) and U.K. small- and mid-cap equity research, each stock s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear 10

in the Important Disclosures section of this report, the certifying analyst s coverage universe can be found on J.P. Morgan s research website, www.jpmorganmarkets.com. Coverage Universe: Wu, Elaine: Beijing Capital Co Ltd - A (600008.SS), Beijing Enterprises Holdings Limited (0392.HK), Beijing Enterprises Water (0371.HK), CLP Holdings (0002.HK), Cheung Kong Infrastructure (1038.HK), China Everbright International (0257.HK), China Gas Holdings Limited (0384.HK), China Resources Gas Group Limited (1193.HK), ENN Energy Holdings Limited (2688.HK), Grandblue Environment Co Ltd - A (600323.SS), Guangdong Investment Limited (0270.HK), HK Electric Investments (2638.HK), Hong Kong & China Gas (0003.HK), Kunlun Energy Company Limited (0135.HK), Power Assets Holdings Ltd (0006.HK), Sound Global Limited (0967.HK), Towngas China Company Limited (1083.HK) J.P. Morgan Equity Research Ratings Distribution, as of December 31, 2015 Overweight (buy) Neutral (hold) Underweight (sell) J.P. 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