高盛-比亞迪-提高銷量預期 Raising volume target to 4mn with improving margins ahead;Buy09032024

3September2024|8:14AMCST

BYDCo.(002594.SZ/1211.HK)

Raisingvolumetargetto4mnwithimprovingmarginsahead;Buy

WeseecontinuedsequentialgrowthinBYD’ssalesvolume,withAugreachinganall

timehighat371k(+35%yoy,+9%qoq),drivenbythedeliveryramp-upofnew

modellaunchescarriedoutsinceMay2024.Lookingahead,weseeatleast6newmodellaunchedanddeliverykick-offintotheremaining4monthsoftheyear,

supportingafurtherincreaseinmonthlydelivery,andleadingustoraiseour2024volumeestimatesto4mn(vs.3.8mnbefore).Webelievethegrowingscale,

togetherwithvehiclevolumemixshiftingtonewDM5.0technologyandpremium

brandmodels,willcontinuetotranslateintobettermargineconomicsandunitpro?tforBYD.

Lookingahead,1)weexpectvolumetogrow10%qoqto1,090kin3Q24,andgrossmargintorecoverfrom18.7%in2Q24to19.7%in3Q24andunitpro?ttofurther

expandfromRmb9.2ktoRmb9.9k.Posttheresult,weraiseour2024E-2026Enetpro?testimatesby1%-6%onhighersalesvolume.Our12-monthDCF-basedtargetpriceincreasesby+5%/+5%forA/HsharetoRmb325/HK$310,implying30%/29%upside.WemaintainourBuyrating.

ManagementNDRcalltakeaways

nVolume:BYDsold2.3mnunits(+30%yoy)ofvehiclesin8M24.Management

showedcon?denceinachievingtotalsalesof3.8mnunitsandwouldwork

_

towardsevenhighervolumein2024full-year,implyingatleast26%yoyvolumegrowth,highervs.20%yoytargetmentionedduring2023conferencemeeting.BYDsold37kunitsofvehiclesinAug2024,hittingrecordhighthankstorampingupofnewlylaunchedmodels.Thecompanyexported264kunits(+125%yoy)in8M24,andtargetstodeliver100%yoygrowthin2024fullyearthoughthere

mightbe?uctuationinmonthlyexports,implyingannualexportvolumeof486kunits.Intermsofpowertrainmix,BYD’sPHEVmodelsaccountedfor60%of

totalvolumeinAug2024(vs.48%in2023),andmanagementexpecttheratiotobemaintainedat60%+goingforward,givencontinuedvolumegrowthofDM-i5.0models.

nNewmodellaunches:Lookinginto2H24,BYDwillhavemultiplenewmodellaunchesunderdifferentsub-brands:1)BYDOceanseriespre-launchedSeal06

Research|Equity

TinaHou

+86(21)2401-8694|

tina.hou@

GoldmanSachs(China)SecuritiesCompanyLimited

OliviaXu

+86(21)2411-8018|

olivia.xu@

GoldmanSachs(China)SecuritiesCompanyLimited

SylviaHu

+86(21)2401-8792|

sylvia.hu@

GoldmanSachs(China)SecuritiesCompanyLimited

GoldmanSachsdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,

investorsshouldbeawarethatthe?rmmayhaveacon?ictofinterestthatcouldaffecttheobjectivityofthis

report.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcerti?cationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/research/hedge.html.Analystsemployedbynon-USaf?liatesarenotregistered/quali?edasresearchanalystswithFINRAintheU.S.

GoldmanSachsBYDCo.(002594.SZ/1211.HK)

GT,aB-segmentBEVsedanwithpre-salepricestartingatRmb150konAug30duringChengduAutoShow,whichwillkickoffdeliveryinmid/lateSep;2)BYDDynastyseriespre-launchedXia,amid-to-largesizeMPVwithpre-salespriceatRmb300konAug30,whichwillbeequippedwithDM-i5.0technologiesand

of?ciallylaunchedbyend-2024;3)Denzapre-launchedZ9&Z9GTonAug20andwillkickoffdeliveryforZ9GTinSepandZ9in4Q24;4)FangchengbaowilllaunchBAO8equippedwithHUAWEI’sQiankunADS3.0ADASsystemin3Q24;5)YangwanghaskickedoffdeliveryofU9andwilllaunchU7in2H24.

nADASprogress:BYDcurrentlyhastwoADASsolutions,HanEV/SeaLion07

EV/SongLEV“TianshenZhiyan”versionsareusingMomentasoftwareandNVIDIAOrinchip;FangchangbaoBAO8willuseHUAWEI’sADASsolutions.Goingforward,BYDwillkeepthe2solutionsandstayopen-mindedtootherapproachesaswell,

incl.self-development,permanagement.

nOperatingcash?owandinventory:BYDreportedRmb4.0bnofoperatingcash?owin2Q24,-94%yoy/-61%qoq,mainlyonincreaseofinventories,per

management.Thecompanyproduced1,016kunitsofvehiclesin2Q24,+33kvs.983kunitsofsalesvolumein2Q24.WithsalesoutpacingproductioninJul/Aug(318k/341kproduction/wholesalesinJuland365k/370kproduction/wholesalesinAug),managementexpectsthecompany’sinventorytocomedownin3Q24,

leadingtoimprovementinoperatingcash?ow.

_

3September20242

GoldmanSachsBYDCo.(002594.SZ/1211.HK)

InvestmentThesis

BYDisaleadingNEVmakerbothinChinaandglobally.Webelievethecompanyiswellpositionedbothathomeandabroad,capturingthelargestmass-marketdemandand

buildinguppremiumbrandswithsupportiveNEVpoliciesinthedomesticmarket.Atthesametime,BYDisstartingtotapintotheoverseasmarketwithcompellingproducts,

whichweexpectcouldbecomeasecondgrowthdriverforthecompany,contributing

31%ofincrementalvehiclesalesvolumeover2022-2030E.Withacomprehensive

productportfolioandstrongin-housecapabilitiesenablingcontinuedvehicletechnologyinnovation,weexpectBYDtogrowitstotalvehiclesalesvolumefrom3.0mnin2023to8.0mnin2030E,capturing1/3ofChina’sNEVwholesaledemand.BYDA/Hsharesare

tradingatbelowhistoricalaverage12mforwardP/E.WeareBuy-rated.Catalystsincludestrongsalesnumber,newsupportivepoliciesfortheNEVindustry,breakthroughin

overseasmarkets,andquarterlyresults.Risks:(1)Intensifyingelectricvehiclecompetition;(2)Slower-than-expectedoverseasexpansionprogress;(3)

Lower-than-expectedexternalbatterysales.

PriceTargetRisks&Methodology

WeareBuy-ratedwith12mDCF-based(WACC10.8%,TGR2.0%)TPsof

Rmb325/HK$310ontheA/Hshares(applyinga14%discounttotheH-share).Risks:(1)Intensifyingelectricvehiclecompetition;(2)Slower-than-expectedoverseasexpansionprogress;(3)Lower-than-expectedexternalbatterysales.

_

3September20243

GoldmanSachsBYDCo.(002594.SZ/1211.HK)

DisclosureAppendix

RegAC

We,TinaHou,OliviaXuandSylviaHu,herebycertifythatalloftheviewsexpressedinthisreportaccuratelyre?ectourpersonalviewsaboutthesubjectcompanyorcompaniesanditsortheirsecurities.Wealsocertifythatnopartofourcompensationwas,isorwillbe,directlyorindirectly,relatedtothespeci?crecommendationsorviewsexpressedinthisreport.

GSFactorPro?le

TheGoldmanSachsFactorPro?leprovidesinvestmentcontextforastockbycomparingkeyattributestothemarket(i.e.ourcoverageuniverse)anditssectorpeers.Thefourkeyattributesdepictedare:Growth,FinancialReturns,Multiple(e.g.valuation)andIntegrated(acompositeofGrowth,FinancialReturnsandMultiple).Growth,FinancialReturnsandMultiplearecalculatedbyusingnormalizedranksforspeci?cmetricsforeachstock.The

normalizedranksforthemetricsarethenaveragedandconvertedintopercentilesfortherelevantattribute.Theprecisecalculationofeachmetricmayvarydependingonthe?scalyear,industryandregion,butthestandardapproachisasfollows:

Growthisbasedonastock’sforward-lookingsalesgrowth,EBITDAgrowthandEPSgrowth(for?nancialstocks,onlyEPSandsalesgrowth),withahigherpercentileindicatingahighergrowthcompany.FinancialReturnsisbasedonastock’sforward-lookingROE,ROCEandCROCI(for?nancial

stocks,onlyROE),withahigherpercentileindicatingacompanywithhigher?nancialreturns.Multipleisbasedonastock’sforward-lookingP/E,P/B,price/dividend(P/D),EV/EBITDA,EV/FCFandEV/DebtAdjustedCashFlow(DACF)(for?nancialstocks,onlyP/E,P/BandP/D),withahigherpercentileindicatingastocktradingatahighermultiple.TheIntegratedpercentileiscalculatedastheaverageoftheGrowthpercentile,FinancialReturns

percentileand(100%-Multiplepercentile).

FinancialReturnsandMultipleusetheGoldmanSachsanalystforecastsatthe?scalyear-endatleastthreequartersinthefuture.Growthusesinputsforthe?scalyearatleastsevenquartersinthefuturecomparedwiththeyearatleastthreequartersinthefuture(onaper-sharebasisforallmetrics).

ForamoredetaileddescriptionofhowwecalculatetheGSFactorPro?le,pleasecontactyourGSrepresentative.

M&ARank

Acrossourglobalcoverage,weexaminestocksusinganM&Aframework,consideringbothqualitativefactorsandquantitativefactors(whichmayvaryacrosssectorsandregions)toincorporatethepotentialthatcertaincompaniescouldbeacquired.WethenassignaM&Arankasameansofscoring

companiesunderourratedcoveragefrom1to3,with1representinghigh(30%-50%)probabilityofthecompanybecominganacquisitiontarget,2representingmedium(15%-30%)probabilityand3representinglow(0%-15%)probability.Forcompaniesranked1or2,inlinewithourstandard

departmentalguidelinesweincorporateanM&Acomponentintoourtargetprice.M&Arankof3isconsideredimmaterialandthereforedoesnotfactorintoourpricetarget,andmayormaynotbediscussedinresearch.

Quantum

QuantumisGoldmanSachs’proprietarydatabaseprovidingaccesstodetailed?nancialstatementhistories,forecastsandratios.Itcanbeusedforin-depthanalysisofasinglecompany,ortomakecomparisonsbetweencompaniesindifferentsectorsandmarkets.

Disclosures

Therating(s)forBYDCo.(A)andBYDCo.(H)is/arerelativetotheothercompaniesinits/theircoverageuniverse:BYDCo.(A),BYDCo.(H),

FuyaoGlassIndustryGroup(A),FuyaoGlassIndustryGroup(H),GuangzhouAutomobileGroup(A),GuangzhouAutomobileGroup(H),HesaiGroup,

HuayuAutomotiveSystems,LiAutoInc.(ADR),LiAutoInc.(H),MeiDongAuto,MinthGroup,NIOInc.(ADR),NIOInc.(H),NingboTuopuGroup,SAICMotor,XPengInc.(ADR),XPengInc.(H),YongdaAuto,ZEEKRIntelligentTechnologyHolding,ZhongshengGroup

Company-speci?cregulatorydisclosures

ThefollowingdisclosuresrelatetorelationshipsbetweenTheGoldmanSachsGroup,Inc.(withitsaf?liates,“GoldmanSachs”)andcompaniescoveredbyGoldmanSachsGlobalInvestmentResearchandreferredtointhisresearch.

_

GoldmanSachshasreceivedcompensationforinvestmentbankingservicesinthepast12months:BYDCo.(A)(Rmb241.10)andBYDCo.(H)(HK$235.00)

GoldmanSachsexpectstoreceiveorintendstoseekcompensationforinvestmentbankingservicesinthenext3months:BYDCo.(A)(Rmb241.10)andBYDCo.(H)(HK$235.00)

GoldmanSachshadaninvestmentbankingservicesclientrelationshipduringthepast12monthswith:BYDCo.(A)(Rmb241.10)andBYDCo.(H)(HK$235.00)

GoldmanSachshadanon-investmentbankingsecurities-relatedservicesclientrelationshipduringthepast12monthswith:BYDCo.(A)(Rmb241.10)andBYDCo.(H)(HK$235.00)

GoldmanSachsmakesamarketinthesecuritiesorderivativesthereof:BYDCo.(A)(Rmb241.10)andBYDCo.(H)(HK$235.00)

Distributionofratings/investmentbankingrelationships

GoldmanSachsInvestmentResearchglobalEquitycoverageuniverse

RatingDistributionInvestmentBankingRelationships

Buy64%

Sell17%

Sell41%

Hold57%

Hold35%

Global

Buy48%

AsofJuly1,2024,GoldmanSachsGlobalInvestmentResearchhadinvestmentratingson2,925equitysecurities.GoldmanSachsassignsstocksas

BuysandSellsonvariousregionalInvestmentLists;stocksnotsoassignedaredeemedNeutral.SuchassignmentsequatetoBuy,HoldandSellforthepurposesoftheabovedisclosurerequiredbytheFINRARules.See‘Ratings,Coverageuniverseandrelatedde?nitions’below.TheInvestmentBankingRelationshipschartre?ectsthepercentageofsubjectcompanieswithineachratingcategoryforwhomGoldmanSachshasprovided

investmentbankingserviceswithintheprevioustwelvemonths.

3September20244

GoldmanSachsBYDCo.(002594.SZ/1211.HK)

Pricetargetandratinghistorychart(s)

Regulatorydisclosures

DisclosuresrequiredbyUnitedStateslawsandregulations

Seecompany-speci?cregulatorydisclosuresaboveforanyofthefollowingdisclosuresrequiredastocompaniesreferredtointhisreport:managerorco-managerinapendingtransaction;1%orotherownership;compensationforcertainservices;typesofclientrelationships;managed/co-managedpublicofferingsinpriorperiods;directorships;forequitysecurities,marketmakingand/orspecialistrole.GoldmanSachstradesormaytradeasa

principalindebtsecurities(orinrelatedderivatives)ofissuersdiscussedinthisreport.

Thefollowingareadditionalrequireddisclosures:Ownershipandmaterialcon?ictsofinterest:GoldmanSachspolicyprohibitsitsanalysts,professionalsreportingtoanalystsandmembersoftheirhouseholdsfromowningsecuritiesofanycompanyintheanalyst’sareaofcoverage.

Analystcompensation:Analystsarepaidinpartbasedonthepro?tabilityofGoldmanSachs,whichincludesinvestmentbankingrevenues.Analystasof?cerordirector:GoldmanSachspolicygenerallyprohibitsitsanalysts,personsreportingtoanalystsormembersoftheirhouseholdsfrom

servingasanof?cer,directororadvisorofanycompanyintheanalyst’sareaofcoverage.Non-U.S.Analysts:Non-U.S.analystsmaynotbeassociatedpersonsofGoldmanSachs&Co.LLCandthereforemaynotbesubjecttoFINRARule2241orFINRARule2242restrictionsoncommunicationswithsubjectcompany,publicappearancesandtradingsecuritiesheldbytheanalysts.

Distributionofratings:Seethedistributionofratingsdisclosureabove.Pricechart:Seethepricechart,withchangesofratingsandpricetargetsinpriorperiods,above,or,ifelectronicformatorifwithrespecttomultiplecompanieswhicharethesubjectofthisreport,ontheGoldmanSachs

websiteat

/research/hedge.html

.

AdditionaldisclosuresrequiredunderthelawsandregulationsofjurisdictionsotherthantheUnitedStates

Thefollowingdisclosuresarethoserequiredbythejurisdictionindicated,excepttotheextentalreadymadeabovepursuanttoUnitedStateslawsandregulations.Australia:GoldmanSachsAustraliaPtyLtdanditsaf?liatesarenotauthoriseddeposit-takinginstitutions(asthattermisde?nedinthe

BankingAct1959(Cth))inAustraliaanddonotprovidebankingservices,norcarryonabankingbusiness,inAustralia.Thisresearch,andanyaccesstoit,isintendedonlyfor“wholesaleclients”withinthemeaningoftheAustralianCorporationsAct,unlessotherwiseagreedbyGoldmanSachs.In

producingresearchreports,membersofGlobalInvestmentResearchofGoldmanSachsAustraliamayattendsitevisitsandothermeetingshostedbythecompaniesandotherentitieswhicharethesubjectofitsresearchreports.InsomeinstancesthecostsofsuchsitevisitsormeetingsmaybemetinpartorinwholebytheissuersconcernedifGoldmanSachsAustraliaconsidersitisappropriateandreasonableinthespeci?ccircumstancesrelatingtothesitevisitormeeting.Totheextentthatthecontentsofthisdocumentcontainsany?nancialproductadvice,itisgeneraladviceonlyandhas

_

beenpreparedbyGoldmanSachswithouttakingintoaccountaclient’sobjectives,?nancialsituationorneeds.Aclientshould,beforeactingonany

suchadvice,considertheappropriatenessoftheadvicehavingregardtotheclient’sownobjectives,?nancialsituationandneeds.Acopyofcertain

GoldmanSachsAustraliaandNewZealanddisclosureofinterestsandacopyofGoldmanSachs’AustralianSell-SideResearchIndependencePolicy

Statementareavailableat:

/disclosures/australia-new-zealand/index.html

.Brazil:DisclosureinformationinrelationtoCVMResolutionn.20isavailableat

/worldwide/brazil/area/gir/index.html.Where

applicable,theBrazil-registeredanalystprimarilyresponsibleforthecontentofthisresearchreport,asde?nedinArticle20ofCVMResolutionn.20,isthe?rstauthornamedatthebeginningofthisreport,unlessindicatedotherwiseattheendofthetext.Canada:Thisinformationisbeingprovidedtoyouforinformationpurposesonlyandisnot,andundernocircumstancesshouldbeconstruedas,anadvertisement,offeringorsolicitationbyGoldmanSachs&Co.LLCforpurchasersof

securitiesinCanadatotradeinanyCanadiansecurity.GoldmanSachs&Co.LLCisnotregisteredasadealerinanyjurisdictioninCanadaunder

applicableCanadiansecuritieslawsandgenerallyisnotpermittedtotradeinCanadiansecuritiesandmaybeprohibitedfromsellingcertainsecuritiesandproductsincertainjurisdictionsinCanada.IfyouwishtotradeinanyCanadiansecuritiesorotherproductsinCanadapleasecontactGoldman

SachsCanadaInc.,anaf?liateofTheGoldmanSachsGroupInc.,oranotherregisteredCanadiandealer.HongKong:Furtherinformationonthe

securitiesofcoveredcompaniesreferredtointhisresearchmaybeobtainedonrequestfromGoldmanSachs(Asia)L.L.C.India:FurtherinformationonthesubjectcompanyorcompaniesreferredtointhisresearchmaybeobtainedfromGoldmanSachs(India)SecuritiesPrivateLimited,Research

Analyst-SEBIRegistrationNumberINH000001493,951-A,RationalHouse,AppasahebMaratheMarg,Prabhadevi,Mumbai400025,India,CorporateIdentityNumberU74140MH2006FTC160634,Phone+912266169000,Fax+912266169001.GoldmanSachsmaybene?ciallyown1%ormoreofthesecurities(assuchtermisde?nedinclause2(h)theIndianSecuritiesContracts(Regulation)Act,1956)ofthesubjectcompanyorcompanies

referredtointhisresearchreport.Investmentinsecuritiesmarketaresubjecttomarketrisks.Readalltherelateddocumentscarefullybefore

investing.RegistrationgrantedbySEBIandcerti?cationfromNISMinnowayguaranteeperformanceoftheintermediaryorprovideanyassuranceofreturnstoinvestors.GoldmanSachs(India)SecuritiesPrivateLimitedInvestorGrievanceE-mail:india-client-support@.ComplianceOf?cer:AnilRajput|Tel:+912266169000|Email:anil.m.rajput@.Japan:Seebelow.Korea:Thisresearch,andanyaccesstoit,isintendedonlyfor

“professionalinvestors”withinthemeaningoftheFinancialServicesandCapitalMarketsAct,unlessotherwiseagreedbyGoldmanSachs.Further

informationonthesubjectcompanyorcompaniesreferredtointhisresearchmaybeobtainedfromGoldmanSachs(Asia)L.L.C.,SeoulBranch.NewZealand:GoldmanSachsNewZealandLimitedanditsaf?liatesareneither“registeredbanks”nor“deposittakers”(asde?nedintheReserveBankofNewZealandAct1989)inNewZealand.Thisresearch,andanyaccesstoit,isintendedfor“wholesaleclients”(asde?nedintheFinancialAdvisersAct2008)unlessotherwiseagreedbyGoldmanSachs.AcopyofcertainGoldmanSachsAustraliaandNewZealanddisclosureofinterestsisavailableat:

/disclosures/australia-new-zealand/index.html

.Russia:ResearchreportsdistributedintheRussianFederationarenot

3September20245

GoldmanSachsBYDCo.(002594.SZ/1211.HK)

advertisingasde?nedintheRussianlegislation,butareinformationandanalysisnothavingproductpromotionastheirmainpurposeanddonot

provideappraisalwithinthemeaningoftheRussianlegislationonappraisalactivity.Researchreportsdonotconstituteapersonalizedinvestment

recommendationasde?nedinRussianlawsandregulations,arenotaddressedtoaspeci?cclient,andarepreparedwithoutanalyzingthe?nancial

circumstances,investmentpro?lesorriskpro?lesofclients.GoldmanSachsassumesnoresponsibilityforanyinvestmentdecisionsthatmaybetakenbyaclientoranyotherpersonbasedonthisresearchreport.Singapore:GoldmanSachs(Singapore)Pte.(CompanyNumber:198602165W),whichisregulatedbytheMonetaryAuthorityofSingapore,acceptslegalresponsibilityforthisresearch,andshouldbecontactedwithrespecttoanymatters

arisingfrom,orinconnectionwith,thisresearch.Taiwan:Thismaterialisforreferenceonlyandmustnotbereprintedwithoutpermission.Investorsshouldcarefullyconsidertheirowninvestmentrisk.Investmentresultsaretheresponsibilityoftheindividualinvestor.UnitedKingdom:PersonswhowouldbecategorizedasretailclientsintheUnitedKingdom,assuchtermisde?nedintherulesoftheFinancialConductAuthority,shouldreadthis

researchinconjunctionwithpriorGoldmanSachsresearchonthecoveredcompaniesreferredtohereinandshouldrefertotheriskwarningsthathavebeensenttothembyGoldmanSachsInternational.Acopyoftheseriskswarnings,andaglossaryofcertain?nancialtermsusedinthisreport,are

availablefromGoldmanSachsInternationalonrequest.

EuropeanUnionandUnitedKingdom:DisclosureinformationinrelationtoArticle6(2)oftheEuropeanCommissionDelegatedRegulation(EU)

(2016/958)supplementingRegulation(EU)No596/2014oftheEuropeanParliamentandoftheCouncil(includingasthatDelegatedRegulationis

implementedintoUnitedKingdomdomesticlawandregulationfollowingtheUnitedKingdom’sdeparturefromtheEuropeanUnionandtheEuropeanEconomicArea)withregardtoregulatorytechnicalstandardsforthetechnicalarrangementsforobjectivepresentationofinvestment

recommendationsorotherinformationrecommendingorsuggestinganinvestmentstrategyandfordisclosureofparticularinterestsorindicationsofcon?ictsofinterestisavailableat

/disclosures/europeanpolicy.html

whichstatestheEuropeanPolicyforManagingCon?ictsof

InterestinConnectionwithInvestmentResearch.

Japan:GoldmanSachsJapanCo.,Ltd.isaFinancialInstrumentDealerregisteredwiththeKantoFinancialBureauunderregistrationnumberKinsho69,andamemberofJapanSecuritiesDealersAssociation,FinancialFuturesAssociationofJapanTypeIIFinancialInstrumentsFirmsAssociation,The

InvestmentTrustsAssociation,Japan,andJapanInvestmentAdvisersAssociation.Salesandpurchaseofequitiesaresubjecttocommission

pre-determinedwithclientsplusconsumptiontax.Seecompany-speci?cdisclosuresastoanyapplicabledisclosuresrequiredbyJapanesestockexchanges,theJapaneseSecuritiesDealersAssociationortheJapaneseSecuritiesFinanceCompany.

Ratings,coverageuniverseandrelatedde?nitions

Buy(B),Neutral(N),Sell(S)AnalystsrecommendstocksasBuysorSellsforinclusiononvariousregionalInvestmentLists.BeingassignedaBuyorSellonanInvestmentListisdeterminedbyastock’stotalreturnpotentialrelativetoitscoverageuniverse.AnystocknotassignedasaBuyoraSellonanInvestmentListwithanactiverating(i.e.,astockthatisnotRatingSuspended,NotRated,CoverageSuspendedorNotCovered),isdeemed

Neutral.EachregionmanagesRegionalConvictionlists,whichareselectedfromBuyratedstocksontherespectiveregion’sInvestmentlistsand

representinvestmentrecommendationsfocusedonthesizeofthetotalreturnpotentialand/orthelikelihoodoftherealizationofthereturnacrosstheirrespectiveareasofcoverage.TheadditionorremovalofstocksfromsuchConvictionlistsaremanagedbytheInvestmentReviewCommitteeorotherdesignatedcommitteeineachrespectiveregionanddonotrepresentachangeintheanalysts’investmentratingforsuchstocks.

Totalreturnpotentialrepresentstheupsideordownsidedifferentialbetweenthecurrentsharepriceandthepricetarget,includingallpaidor

anticipateddividends,expectedduringthetimehorizonassociatedwiththepricetarget.Pricetargetsarerequiredforallcoveredstocks.Thetotalreturnpotential,pricetargetandassociatedtimehorizonarestatedineachreportaddingorreiteratinganInvestmentListmembership.

CoverageUniverse:Alistofallstocksineachcoverageuniverseisavailablebyprimaryanalyst,stockandcoverageuniverseat

/research/hedge.html

.

NotRated(NR).Theinvestmentrating,targetpriceandearningsestimates(whererelevant)arenotprovidedorhavebeensuspendedpursuantto

GoldmanSachspolicywhenGoldmanSachsisactinginanadvisorycapacityinamergerorinastrategictransactioninvolvingthiscompany,when

therearelegal,regulatoryorpolicyconstraintsduetoGoldmanSachs’involvementinatransaction,whenthecompanyisanearly-stagebiotechnologycompany,andincertainothercircumstances.RatingSuspended(RS).GoldmanSachsResearchhassuspendedtheinvestmentratingandprice

targetforthisstock,becausethereisnotasuf?cientfundamentalbasisfordetermininganinvestmentratingortargetprice.Thepreviousinvestmentratingandtargetprice,ifany,arenolongerineffectforthisstockandshouldnotbereliedupon.CoverageSuspended(CS).GoldmanSachshas

suspendedcoverageofthiscompany.NotCovered(NC).GoldmanSachsdoesnotcoverthis