Global Equity Themes: Appetite For Disruption

24 January 2017
Global/Europe
Equity Research
Thematic Research
Global Equity Themes

The Credit Suisse Connections Series leverages our
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Research Analysts
Appetite for disruption
Eugene Klerk In this report, we expand on our original Age of Disruption analysis, with
44 20 7883 4678 input from our analysts now allowing us to rank c2,700 stocks globally based
eugene.klerk@credit-suisse.com
on the disruptive risk they face from Competition, Regulation and
Richard Kersley
Technological Innovation. Disruption has already impacted many companies.
44 20 7888 0313
richard.kersley@credit-suisse.com However, Credit Suisse HOLT's conditional probability framework enables us
Brandon Vair to identify where disruptive risk still appears mispriced.
44 20 7888 6381
Disruptive forces: CompetitionChina remains key, not least with R&D
brandon.vair@credit-suisse.com
spend of cUS$370bn annually (more than Japan, Germany and South
Maria Bhatti
44 20 7888 1503 Korea combined). Regulation touches every sector and region.
maria.bhatti@credit-suisse.com Technology materially reduces barriers to disrupt as it levels the playing
field both globally and across public and private markets (the number of
'unicorn' companies has risen sevenfold since 2011, with a valuation of
cUS$653bn).
A multipolar world is more likely with Brexit and President Trump,
increasing disruptive risk owing to heightened supply chain challenges. We
use Credit Suisse's PEERs supply chain tool to highlight stocks in the US
and UK that are most at risk from this.
Disruptive risk appears higher in Europe and for Pharma, Autos, Energy,
Retail and Insurance; we think it is lower in NJ-Asia and for Staples and
Real Estate. We identify and discuss regional outliers by sector.
Cheap 'Undisruptables' with high quality and momentum: We find 25
Outperform-rated companies globally including Reckitt Benckiser, Orange,
UnitedHealth, Vantiv, China Resources Gas, Murata and Sekisui House.
Expensive, with a risk of disruption and low quality: We highlight 20
companies globally, including AstraZeneca, Smith & Nephew, Netflix,
Falabella, Global Logistic Properties, Cathay Pacific, Eisai and Nomura.
Figure 1: Our analysts ranked c2,700 stocks (90% of Figure 2: We expect the outperformance of our new
coverage) on degree of disruptive exposure list of 25 'Undisruptable' stocks to continue
900 1.5 Our 25 Undisruptable, Cheap, High quality & momentum stocks
773
800 713 Not undisruptable, Cheap, High quality & momentum stocks 38%
1.4
700 Our 20 Disruptable, Expensive, Low quality stocks
Number of Companies
600
1.3 MSCI AC World
466
500
421
1.2 15%
400
13%
300
213 1.1 5%
200
100
99 1.0
46
0
9 8 7 6 5 4 3 0.9
Disruptable Undisruptable Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
Source: Thomson Reuters, Credit Suisse research Source: Credit Suisse research, Credit Suisse HOLT
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit
Suisse 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.
24 January 2017
Table of contents
Disruption: key factors 3
Executive summary 4
Globalization: a changing landscape 7

China to be the biggest global R&D spender by 2020 .............................................7
Globalization running out of steam?.......................................................................11
What are the early warnings signs for stocks?.......................................................15
Technological innovation remains central 17

1 New, cheaper and more efficient products replace existing ones.......................17
2 Technological innovation increases competitive pressures globally ...................18
3 Lower investment hurdles boost private companies ...........................................19
Who's most at risk and who's not? 21

Disruptive risk higher in Europe, lower in NJ-Asia .................................................21
Disruptive risk highest for Pharma, Energy, Autos and Retail; lowest for Staples .23
Disruption: is it reflected in expectations? 29
Disruption: is it priced in? 31

Share-price-implied HOLT CFROI .........................................................................31
Conditional probability vs risk by region.................................................................32
Conditional probability vs risk by sector .................................................................33
Key stocks 36
Global stock screens 37

Key stocks to own ..................................................................................................37
Key stocks where we are cautious.........................................................................38
Key stocks by region 40

Europe....................................................................................................................40
Americas ................................................................................................................41
Non-Japan Asia......................................................................................................42
Japan .....................................................................................................................43
Appendix A: Small-cap screens 44
Appendix B: Conditional probability 48
Appendix C: PEERsMapping supply chains 49
Global Equity Themes 2

24 January 2017
Disruption: key factors

Figure 3: The threat from the East: China's spending Figure 4: Number of first degrees in science &
on R&D reached cUS$370bn in 2015 engineering: China dominates
4.0 1,400
(% of GDP) ('000)
1,200
3.5
1,000
3.0
800
2.5 600
2.0 400
200
1.5
0
1.0 2000 2002 2004 2006 2008 2010 2012
0.5 China United States

2000 2005 2010 2015E 2020E Japan Germany
China US Japan EU15 South Korea United Kingdom
Source: OECD, "2016 Global R&D Funding Forecast" Source: OECD

Figure 5: The impact of technology: Amazon's Figure 6: Technology has expanded the threat from
market cap is now bigger than the combined total of disruption to include private companies: the rise of
the largest 8 traditional retailers in the US (US$bn) the 'unicorns'
500 700 200
400 180
400 371 600
160
295 500 140
300
400 120
200 100
300 80
100 200 60
18 40
0 100
20
2006 today
Best Buy JCPenny Kohl's 0 0
Macy's Nordstrom Sears 2009 2010 2011 2012 2013 2014 2015 2016
Target Walmart Amazon Valuation ($bn, lhs) Number (rhs)
Source: Thomson Reuters, Credit Suisse research Source: CB Insights, Credit Suisse Research
Figure 7: GDP is becoming less concentrated. Multi Figure 8: Specifically, we watch out for companies
polarity increases risk, in our view with a high share of global suppliers
110 GDP Non-US Total
%of Non-
US Company Name Sector Country
Suppliers Suppliers
Suppliers
22 26 85% Apple Techh Hardware & Equip US
100 11 13 85% Avis Budget Group Transportation US
10 12 83% Herc Holdings Transportation US
8 10 80% NVIDIA Corporation Semi & Semi Equip US
8 10 80% QUALCOMM Semi & Semi Equip US
90
27 39 69% Hewlett Packard Technology Hardware & Equip US
9 14 64% Eli Lilly & Co. Pharma, Biotech & Life Sciences US
5 8 63% Amkor Technology Semi & Semi Equip US
80 19 31 61% KBR Inc. Capital Goods US
11 18 61% Microsoft Software & Services US
6 10 60% Bristol Myers Squibb Pharma, Biotech & Life Sciences US
70 6 10 60% Micron Technology Semi & Semi Equip US
7 12 58% GameStop Retailing US
9 16 56% General Electric Capital Goods US
17 31 55% International Business Machines Software & Services US
60
4 8 50% Cobalt International Energy Energy US
22 44 50% ExxonMobil Corporation Energy US
4 8 50% Honeywell International Capital Goods US
50 4 8 50% Morgan Stanley Diversified Financials US
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 6 12 50% Nexeo Solutions Capital Goods US
7 14 50% Ulta Salon Retailing US
GDP concentration 5 10 50% Wesco International Capital Goods US
Source: Credit Suisse Research Institute Source: Credit Suisse research

24 January 2017
Executive summary
Although disruption has been a constant factor through time, we note that the topic has
gained importance with investors as technology has allowed a range of new business
models to develop that threaten a wide range of incumbent industries and companies.
Figure 9: Examples of some disruptive technologies/services and impacted

industries
Disruptive Technology Old technology Period Comments
Steam engines Animal power 1698-1781 In 1698, the first steam engine had 1 horsepower (750W). First piston engine had 5
horsepower (3,700W) in 1712. In 1781, Rotary motion steam engine had nearly 10
horsepower (7,500W)
Railroads Canals 1810-50 Rail freight was around 60 times more efficient than canals in ton miles per day when
it became available
Light bulb Gas and oil lamps, 1879 Thomas Edison invented the first commercially practical incandescent lamp
candles
Assembly line Handicrafting 1913-14 Henry Ford introduced the assembly line. The introduction reduced Ford Model T
assembly time from 12 hours to about 90 minutes.
Photocopier Handwritting copy, 1959 Xerox 914, launched in 1959, could reproduce documents up to 9 inches by 14 inches
carbon paper, in size. It took about 15 seconds for the first copy to come out, and 7 seconds for
mimeograph each additional copy
Personal computer Typewriter 1975-1995 Personal computers started to become available to the public by late '70s to early
'80s. Household adoption rates in the US changed from 8.2% in 1984 to 22.8% in 1993.
DVD VHS/UMD 1995-2007 VHS/UMD represented 88% of home video sales in the US in 1999, compared to 8%
DVD sales. It took only 6 years for the share of DVD and VHS/UMD to nearly reverse,
with DVDs representing 87% and VHS/UMD 10% of home video sales in the US.
Online Video / Streaming DVDs/Blu-Ray 2004-Today In a similar way that DVDs took market share from old VHS technology, online video
and streaming are taking market share from physical home video sales. Digital media
represented only 5% of total home video sales in the US in 2005 vs. nearly 50% in 2015
Digital cameras Film cameras 1999-2010 Although not directly comparable, 35mm films have the equivalent pixel quality
somewhere between 4MP to 16MP. To put this in perspective, basic digital single-
lens reflex camera resolution starts at 24MP nowadays.
Smartphones Digital cameras 2007-Today The first built-in cell phone digital camera launched in 2000 was capable of taking 20
photos at 0.35 megapixels. The original iPhone was launched in 2007 and had a 2MP
camera, this compares with the current iPhone 6 camera which has 8MP of resolution
Source: Credit Suisse research
The Age of Disruption 2.0

In our original disruption report (The Age of Disruption), we discussed the risk that
Globalization, Regulation and Technological Innovation pose and provided stocks by
region and sector that according to our analysts were most or least exposed to these
factors. In this follow-up report, we re-emphasize the relevance of these disruptive drivers.
In addition, we have expanded the number of companies to c2,700 for which our analysts
have provided their view on disruptive risk to these forces, allowing us to make much more
granular conclusions by region and sector on relative risk.
Using conditional probability to assess where disruptive risk is mispriced
Disruption has already had an impact on many companies and business models; however,
we reapply the HOLT concept of conditional probability in order to assess where the
market continues to misprice disruptive risk. We find that valuation disparity is greatest
among those sectors that face above-average risk from disruption (Figure 12).
We highlight 25 companies globally that are Outperform-rated, have relatively low risk
from disruption and above-average quality and momentum characteristics (Figure 13). We
also list 20 companies we think investors should be cautious of. These are Neutral- or
Underperform-rated, appear have below-average conditional probability and below-
average quality characteristics (Figure 14).
Our analysis of recent performance statistics suggests that the market currently prefers
'undisruptable' cheap companies over expensive companies with high risk from potential
disruption.

24 January 2017
Figure 10: We rank c2,700 stocks from Figure 11: Low disruptive risk comes at a premium,
3 (minimal risk) to 9 (maximum disruptive exposure) especially in Europe and the US
900 80
773
800
713 70 J
700 Undisruptable
and cheap
60 NJ-A
Number of Companies
600
NJ-A
500 466 NJ-A
421 50 J
NJ-A EU
400 AM AM
40 AM EU
300 NJ-A
EU AM
213
200
30 J EU
100
99
Disruptable
EU
46
and expensive
0
20
9 8 7 6 5 4 3 7-9 6 5 4 3
Disruption Score AM EU NJ-A J
Source: Credit Suisse research Source: Credit Suisse research
Figure 12: Average regional valuation score by sector: Pharma most exposed, Staples least
80
J J
70 AM J
EU
NJA
Value in high risk sectors mostly found in NJ-Asia
60 NJA AM J
NJA NJA EU J
NJA EU EU J
J J NJA EU
50 J
EU AM EU AM AM
AM NJA
EU NJA AM NJA NJA
AM AM EU NJA
AM EU AM
AM NJA NJA EU
40 EU AM AM EU EU NJA
NJA EU NJA
AM EU NJA AM AM
NJA AM J
EU NJA EU EU
J AM
30 EU J AM
EU JNJA NJA
Stocks expensive in every region
20
J
Highest risk from disruption Lowest risk from disruption
10
AM EU NJA J
Source: Credit Suisse HOLT, Credit Suisse research, J = Japan, EU = Europe, AM = Americas, NJ-A = Non-Japan Asia. Grey bar reflects global sector conditional probability. Note: Insurance
and Banks not included as no Conditional Probability calculations are available for these sectors
Figure 13: Our preferred 25 cheap stocks with low Figure 14: We are cautious on 20 expensive stocks
disruptive risk, high quality and momentum with high disruptive risk and low quality
Total Risk Cond. Total Risk Cond.
Ticker Com pany Rating Quality Mom entum Valuation
Score Prob. Ticker Company Rating Quality Momentum Valuation
Score Prob.
Europe
DLGS.DE 4 Dialog Semiconductor O 96 78 79 87 Europe
RB.L 3 Reckitt Benckiser O 56 81 86 45 SN.L 7 Smith & Nephew N 9 44 14 18
JE.L 4 Just Eat O 50 87 70 51 AZN.L 7 AstraZeneca U 34 18 26 38
LSE.L 4 London Stock Exchange O 51 71 68 32 WLN.PA 7 Worldline N 25 21 46 25
ORAN.PA 4 Orange O 62 52 74 81
SPMI.MI 8 Saipem N 34 6 22 25
North America
AJG.N 4 Arthur J. Gallagher & Co. O 83 95 70 88
PSON.L 8 Pearson U 30 38 43 55
LUN.TO 3 Lundin M ining O 82 57 95 88 Americas
CELG.OQ 4 Celgene O 76 86 77 83 NFLX.OQ 7 Netflix N 3 30 85 0
VNTV.N 4 Vantiv O 73 77 76 43 SGEN.OQ 9 Seattle Genetics N 3 19 94 4
AET.N 4 Aetna O 72 62 52 98
FAL.SN 7 Falabella U 9 30 46 14
COMM.OQ 4 CommScope O 69 73 90 84
ANET.N 4
CCU.SN 7 Compaia Cervecerias Unidas U 47 40 11 75
Arista Networks O 67 87 86 66
UNH.N 4 UnitedHealth O 55 90 95 78 VET.TO 8 Vermilion Energy N 11 49 31 29
Non-Japan Asia NJ-Asia
600066.SS 4 Zhengzhou Yutong Bus O 98 99 35 99 GLPL.SI 7 Global Logistic Properties U na 46 44 6
PPL.KA 4 Pakistan Petroleum O 90 84 79 85 0981.HK 7 Semiconductor Manufacturing Intl N na 0 93 16
0338.HK 4 Sinopec Shanghai Petrochemical O 79 82 76 87
035720.KQ 7 Kakao U 12 33 0 2
002508.SZ 4 Hangzhou Robam Appliances O 62 98 98 70
0914.HK 3
0293.HK 7 Cathay Pacific U 32 33 4 12
Anhui Conch Cement O 69 67 72 91
0014.HK 3 Hysan Development O 100 78 87 0991.HK 7 Datang International Power Generation U 35 2 11 8
1193.HK 3 China Resources Gas O 59 98 53 51 MINT.BK 9 Minor International N 29 39 37 26
Japan Japan
1928.T 4 Sekisui House O 69 65 66 90
8729.T 7 Sony Financial N na 10 52 24
1801.T 4 Taisei O 60 82 77 80
4217.T 4
4523.T 9 Eisai U 29 14 68 33
Hitachi Chemical O 70 62 75 25
6981.T 3 M urata M anufacturing O 54 75 56 56 8604.T 7 Nomura N na 36 98 30
8303.T 3 Shinsei Bank O 69 51 60 8570.T 7 Aeon Financial Service N na 49 4 36
O=Outperform-rated U=Underperform-rated; N=Neutral-rated

Source: Credit Suisse HOLT, Credit Suisse research Source: Credit Suisse HOLT, Credit Suisse research

24 January 2017
Which factors impact different sectors

In Figure 15, we summarise the key disruptive developments that our analysts believe are
likely to impact their sector going forward. While a relatively wide range of factors can be
observed, we do find that competition, technological innovation and regulation are
common denominators as far as disruptive risk is concerned.
Figure 15: Key disruptive developments by sector

Industry Sector Disruptive forces Sector Disruptive forces
Industrials
Autos Aerospace & Defense
Regulation: Energy Efficiency Energy Efficiency related investment/R&D requirements
Electrification vs ICE-focussed supply chain Competition: China, longer term a potential threat
Driverless vehicles impacts CAPEX and competition
Sharing reduces overall fleet sales, esp. in DM
Capital goods Business Services

China: increasing competition higher up the value curve Online/eCommerce impacts logistics/distribution firms
3D printing impacts manufacturing supply chain Sharing to impact car rental, staffing companies and serviced offices
Renewables/Storage vs power generation equipment Increasing data collection and analysis impacts credit bureaux and staffing
Connectivity impacts testing companies and security firms
Financials
Banks Insurance
Tightening regulation reduces returns Development of insurance linked securities
Technology/Fintech allows for increased competition Growth of online insurance offerings
Crowdfunding/P2P lending Sharing and driverless vehicle development
Growth of passive investments impacts investment banks Greater disclosure lowers fees
Diversified financials Real estate

Growth in ETFs impacts active asset managers eCommerce impacts retail real estate values
Emergence of Robo-advisors Flexible office and demographics impacts office real estate
Ageing impacts demand for single homes
Energy and Materials

Chemicals Oil and Gas
Competition from Chinese chemical companies Increasing share of renewables
Energy efficiency in transport
Metals and Mining

China: demand related and competition from local suppliers
Environmental legislation, especially in relation to coal
Development of advanced materials impacts steel producers
Technology
Hardware Software
Competition from China/Taiwan Among the key beneficiaries of industry 4.0, big data, cyber security
Software-defined network technology Cloud technology: slows revenue growth through increased deferral
Cloud technology impacts hardware demand
New technologies: e.g. LCD to OLED displays
Telecoms and Utilities

Telecoms Utilities
Regulatory tightening a risk to the telco recovery Renewable energy development coupled with storage
Introduction of new technologies (eg 5G) Regulation
Consumer durables and services

Staples Home builders and Materials
Among the least disrupted sectors Business model has hardly changed. Few disruptive forces.
Key "threat" relates to increasing competition from niche brands Political motivation might impact competition but with low chance
Regulation aimed at healthy living impacts F&B companies
Luxury goods Media

Strong brandvalue limits degree of disruptive threats Internet and online growth impacts all traditional forms of media
Smartwatches (Apple watch) vs traditional watch manufacturers Owners of content over distributors
Online and sharing of second hand products
Synthetic diamonds
Retail Travel & Leisure

Move to online impacts all brick and mortar retailers Regulation vs gaming companies
Growth of discounters impacts traditional retailers Sharing vs hotels and OTAs
Higher wages through regulation or otherwise Online: OTAs vs hotel companies
A move to healthy food impacts restaurants
Airlines
Competition: growth in low cost and more global carriers
Energy efficiency/oil price impact fleet renewal requirements
Health care
Pharmaceuticals Med-tech
Payer consolidation and impact on pricing Industry consolidation and impact of new technologies
Increasing competition from EM-based generic manufacturing Competition from low cost countries: China in particular

24 January 2017
Globalization: a changing landscape

In our initial report, under the heading of globalization and associated risks, we highlighted
China's development as a key source of "macro disruption". We met with some skepticism
amongst investors, with a typical response often being "Intellectual Property is developed
in the West, especially the US, and it is unlikely that companies in China or other emerging
markets will be able to replicate this any time soon."
We think that this view remains too complacent. The following developments demonstrate
that China's competitive threat in particular is likely to become greater going forward. (We
also refer to a publication from our Chinese research team published in October:
Ecosystem of Innovation and Technology in China.)
However, an added question to this story does need to be considered and with it brings a
potentially new source of disruption to consider. While China and emerging markets as a
whole were seen purely as a source of growth for Western economies and companies to
exploit, the benefits of the globalization it reflected were not being questioned. With the
tables being turned, the political climate is clearly changing. While not a central view, we
do have to flag the growing risks stemming from the anti-trade rhetoric now growing,
particularly in the US.
China to be the biggest global R&D spender by 2020

In 2015 China spent cUS$373bn on R&D. While 25% less than total R&D spending in the
US, it actually means that China already spends more on R&D than Japan, Germany and
South Korea (3rd, 4th and 5th largest spenders globally) combined.
China's total spending on R&D as a share of GDP has increased from 1% in 2000 to more
than 2% in 2015. The government's target for R&D spending is to reach 2.5% of GDP by
2020. Assuming nominal GDP growth of 7.5% for 2016-2020, this implies that China's
R&D spending is set to increase by c73% and likely to surpass the US by 2020.
Figure 16: Total R&D as a % of GDP vs OECD Figure 17: Total business R&D as a % of GDP vs
OECD
4.0 3.0
(% of GDP) (% of GDP)
3.5 2.5
3.0
2.0
2.5
1.5
2.0
1.5 1.0
1.0 0.5
0.5
0.0
2000 2005 2010 2015E 2020E
2000 2002 2004 2006 2008 2010 2012 2014
China US Japan EU15 China US Japan EU15
* OECD data for 2014 or before. IRI data for 2015 & 2016. Source: OECD
Source: OECD, "2016 Global R&D Funding Forecast" published by
US IRI and R&D Magazine.

24 January 2017
Funding and focus of Chinese R&D is government-driven

Although overall R&D spending is set to continue to grow strongly in China, we do note
that the potential threat that China poses for Western companies is likely to be limited
mostly to the longer-term focus areas chosen by the Chinese government. This can be
seen for example by the fact that China's academic research footprint has been much
more geared towards engineering than towards medical publications (a focus area of
many Western countries).
Figure 18: Share of Science & Engineering articles Figure 19: Number of first university degrees in
(2013) Science and Engineering
1,400
US ('000)
19% 1,200
Others 1,000
33% 800
600
400
China 200
18% 0
Canada 2000 2002 2004 2006 2008 2010 2012
3%
Korea Italy China United States
Japan
3% 3% 5%
India UK Germany
Japan Germany
France
3% 4% 4% 5% South Korea United Kingdom
Source: Science and Engineering Indicators 2016, National Science Foundation Source: Science and Engineering Indicators 2016, National Science Foundation
Figure 20: Breakdown of academic articles by area (2013)

Field World US EU China Japan India
All articles (n) 2,199,704 412,542 605,536 401,435 103,377 93,349
Engineering 19.8% 12.4% 13.9% 37.7% 19.3% 20.6%
Astronomy 0.6% 0.9% 0.9% 0.2% 0.5% 0.4%
Chemistry 7.9% 5.6% 7.0% 10.6% 9.7% 12.5%
Physics 9.2% 7.9% 9.4% 9.9% 14.0% 8.5%
Geosciences 5.3% 4.8% 5.3% 6.1% 3.7% 4.7%
Mathematics 2.5% 2.0% 2.7% 2.5% 1.7% 2.1%
Computer sciences 8.1% 6.2% 8.8% 9.3% 8.0% 10.4%
Agricultural sciences 2.2% 1.2% 2.0% 1.9% 1.7% 2.9%
Biological sciences 15.8% 19.2% 15.4% 12.1% 14.8% 19.6%
Medical sciences 21.2% 27.2% 24.2% 8.7% 24.5% 16.4%
Other life sciences 1.2% 2.3% 1.2% 0.1% 0.3% 0.2%
Psychology 1.7% 3.5% 2.1% 0.2% 0.5% 0.1%
Social sciences 4.5% 6.7% 6.9% 0.7% 1.2% 1.5%
Source: Science and Engineering Indicators 2016, National Science Foundation
Another factor worth considering when assessing the potential competitive or innovative
threat from developing countries is the fact that their focus tends to be more on applied
sciences rather than more fundamental research. In the case of China for example we
note that its investment into basic research as a share of total R&D spending is roughly a
third of that of the US, UK, France and Korea.

24 January 2017
Industries that are likely to see greatest government support

In trying to identify those industries that are most likely to be impacted by Chinese
innovation, we highlight two sets of government targets.
In its 'Made in China 2025' plan, the Chinese government has outlined clear goals that
suggest a move from low skill to smart manufacturing.
In addition, the 'Made in China 2025' plan also highlights a number of key end markets
on which the Chinese government is focused. It is likely that companies and industries
related to these will receive strong support and research funding in the short to medium
term in order to meet the 2025 targets.
Figure 21: Manufacturing improvement targets for Figure 22: Key end markets identified in 'Made in
'Made in China 2025' China 2025'
Target Indicator 2015 2020 2025 Sector Target and focus areas Existing capability
R&D intensity (as % of sales) 0.95 1.26 1.68 Limited but key focus sector for creating
Information technology Technological innovation, particularly semiconductors
leadership in technology
Innovation
Patents per 100m of core business revenues 0.44 0.7 1.1 Low and medium level automation capability. Focus on
Already a leader in low and medium level
Numerical control tools and robotics NC tool capability to improve manufacturing quality
NC tools
and productivity
Manufacturing quality competitiveness index 83.5 84.5 85.5
Focus on satellite capabilities and passenger jet One passenger jet C9192,400 planes
Aerospace equipment
Quality efficiency Manufacturing value added growth rate NA 2% > 2015 4%>2015 transportation including aircraft engines possible by 2045
Existing investment and capabilities in South
+/-7.5% (13th 5YP +/-6.5% (13th 5YP Marine engineering Offshore infrastructure and high-tech ships
Manufacturing labour productivity growth rate NA China Seas infrastructure
CAGR) CAGR) High speed rail equipment sales to Russia
Broadband penetration (%) 50 70 82 Existing high speed train production. "One Belt, One and Malaysia. In discussions with over 20
Railway equipment
Road" projects to improve competitiveness countries for potential high speed railway
Integration of equipment sales including US
R&D digital design tool penetration (%) 58 72 84 Existing environment clean-up and emission
Industrialisation
and IT Energy efficiency and electric Domestic environmental clean-up priorities and long reduction targets should support this
Utilisation rate for numerical controls in critical vehicles established domestic car manufacturing aspirations segment. Visibility of innovation new fuel
33 50 64
processes (%) vehicles limited
Core priorities of smart grid and smart city Currently exporter of power equipment to
Power equipment
Energy consumption per unit of industrial value technologies India
NA 18%<2015 34%<2015 Key government focus on "invention" and "innovation"
added New materials Research into new materials in its infancy
in materials
CO2 emissions per unit of industrial value added NA 22%<2015 40%<2015 Rapid growth in medical equipment market
Environmental Existing success in low tech medical devices.
of 20% pa since 2009 from small base.
improvements Biopharma and medical devices Likelihood of success in biopharma and medicines
Medical device capability currently small, low
Water consumption per unit of industrial value less certain
NA 23%<2015 41%<2015 technology equipment and supplies
added
Focus on improving quality in current manufacturing Domestic industry concentrated on low
Agricultural machinery and potential export sector. Potential for international power tractors and small to medium
Utilisation rate of solid industrial waste (%) 65 73 79 demand less clear machinery. Exports predominantly from JVs.
Source: State Council, People's Republic of China Source: State Council, People's Republic of China, Credit Suisse research
Against the background of these government targets, it is not surprising to find that
academic focus in terms of programmes and projects is set to remain geared towards
relevant related areas until 2030. This clearly suggests that China if anything is likely to
become a more significant competitor to Western firms in the future.
Figure 23: Technology Innovation 2030major programmes

Major S&E programmes Major projects
1 Aero-engines & Gas turbines 1 Independent innovation in seed industry
2 Deep-water station 2 Clear and efficient coal utilisation
3 Quantum communication & quantum computer 3 Smart grid
4 Brain science & brain-related research 4 Space-ground information network
5 National cyberspace security 5 Big data
6 Deep space exploration & spacecraft on-orbit-serving and 6 Intelligent manufacturing & robotics
maintenance system
7 Key new material research and application
8 Beijing-Tianjin-Hebei comprehensive environmental
treatment
9 Health protection
Source: 13th Five-Year-Plan document
Key industries that China might eventually dominate

In addition to the more top-down-driven Chinese sectors that are likely to become global
leaders through increased innovation and R&D (Figure 22), we also highlight the global
end markets that our Chinese Equity Research team believes will be dominated by
Chinese companies in the medium to long term.

24 January 2017
These are:
Biotech: Our analysts believe that China's large domestic market, favourable
regulatory environment and strong government support provide the necessary
framework for further development.
Big Data / Artificial Intelligence: China's strong growth and development of internet
and mobile usage and applications provides the backdrop for strong growth in
investments related to IT areas such as Big Data and AI.
IoT: The reasons for our China analysts' positive view as a potentially dominant force
in Internet of Things related products and services include the fact that China is the
world's largest internet hardware manufacturing hub and internet usage base.
New Energy: Strong government support including subsidies has allowed R&D into
Electric Vehicles to grow strongly. Our analysts expect this to continue, not least owing
to environmental and energy supply/demand challenges faced by China.
Nuclear: China's need to balance its growing demand for energy with incremental
sources has allowed it to become the larger developer of nuclear facilities globally.
The table below highlights the Chinese companies that our local analysts believe appear
well placed to drive development and innovation in each of these end markets.
Figure 24: Leading Chinese companies active in industries that China can dominate
Area Subsector Company Area Subsector Company
Big Data / AI Big Data Tencent Biotech Pharma Hengrui Pharma

Alibaba BeiGene
Weibo Fosun Pharma
BJ TRS Info 3S Bio
Gridsum
Cloud Kingsoft Electric vehicles Car manufacturers BYD
Wangsu Yutong
21Vianet Automation Inovance
Comprehensive Baidu
LETV Nuclear Operator CGN
Image and Speech recognition PCI-Suntek China National Nuclear Power
Synthesis Electronic State Power Investment Corp
Wisesoft Technology CGN Group
Hanvon China National Nuclear corp
iFLYTEK Equipment & forging Dongfang electric
Hikvision Harbin electric
Sohu China first Heavy Industries
Meiya Pico Dailian Huarui Heavy Industries
Qihoo Uranium CNNC Intl
Beijing Venustech CGN Mining
Westone Valves Jiangsu Shentong Valve
Sufa Tech Industry
IoT Connected cars (CC), Smart City (SC) Sunny Neway Valve
Wearables, CC, Smart home (SH) Truly Turbine Nanfeng Ventilator
Wearables, CC Luxshare Zhejing Dun'an
Wearables, SH Goertek Zi'an Shaangu Power
SH, SC, Smart manufacturing Hikvision Yantai Moon
SH, SC Dahua Zhejiang Shangfeng
SC Digital China Pressure vessel Sichuan Kexin
SH, SC Wangsu Suzhou Haily Heavy
SH Dr Peng Pipe Zhejiang Jiuli Hi-Tech
CC NavInfo Kiangsu Changbao Steettube
Waterpump Xiangtan Electric

24 January 2017
Globalization running out of steam?

To some extent, the "macro-disruptor" that China represents is a natural progression up
the value curve for a developing economy. It has its own huge end market to help it build
scale for its investment. However, we think it would be incorrect to suggest that it's playing
and trading on an equal playing field in every respect, as we have highlighted in our
previous research on the topic. Regulatory goal posts have been shifted for overseas
companies operating in China, with explicit state support for local businesses and ring-
fenced national champions coinciding with often ad hoc interventions into foreign
companies. Pricing has often been aggressive to build market share abroad or simply to
export excess capacity.
While by no means the only factor at work, this has provided plenty of ammunition for the
anti-trade and anti-globalization mood that has driven the electoral success of newly
elected US President Trump and the vote in the UK to leave the European Union. Will we
see disruption of a different nature emerge as the other positives of globalization are
thrown into question by a response to the development of the likes of China?
In this context, the Credit Suisse Research Institute (CSRI) has just published its latest
update on globalization (see Getting over Globalization) which argues that the world is
leaving globalization behind and is moving to a more distinct multipolar setting. This might
cause some to believe that disruptive risk is less of a worry going forward; however, we do
not view it that way. In fact, we believe that disruptive risk only increases, as the move to a
multipolar world is likely to result in incremental supply chain challenges as regulatory
pressures increase. Regulation as a disruptive force therefore is set to become a more
dominant factor if the world indeed does slowly become multipolar and less global.
A number of points support our view that globalization is running out of steam.
The CSRI globalization index (using flows of trade, finance, services and people) has
been slipping backwards over the course of the past three years. Global trade as a
share of GDP for the largest 10 economies of the world has been declining during the
past few years and is at levels last seen in the early 2000s.
When reviewing the aggregate activity of the world's most open globalized economies
(typically small countries such as Singapore, Switzerland, Ireland, Belgium and the
Netherlands) we see a slowdown in growth to below trend levels. We view these
economies as potential early indicators for a move away from globalization.
Cross border flows of financial trade (relative to GDP) have continued to go down from
their pre-financial-crisis peak.
Trade liberalization, as measured by the Fraser Institute's economic freedom of the
world indices, has been slowly declining since its peak in 2000.

24 January 2017
Figure 25: Global GDP has become less

concentrated especially during the past 15 years. Figure 26: Global trade has declined (as % of GDP)
110 GDP
65 Global trade (% of GDP) Peak 2008

level: 61%
100
60
55 2015 level:
90 58%
50
80 45
40
70
35
60 30
25
50
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
GDP concentration
World trade (% of GDP)
Source: Credit Suisse Research Institute Source: Credit Suisse Research Institute
The falter of trade agreements and an increasing reluctance to accept new or support
existing trade deals. For example, the Trans-Pacific Partnership (TPP) between the
US, Japan and a group of Asian countries collapsed. The same happened with the
Transatlantic Trade and Investment Partnership (TTIP).
Inequality has become a major issue on the political agenda across the developed
world, which in turn fuels 'protectionist' policies, in our view. The Credit Suisse
Research Institute highlights that in the US the number of people with average income
outweighed the combined number of low and high income groups by c60% in 1971.
Today they are in the minority. Oxfam in its most recent report (An economy for the
99%) pointed out that the world's richest eight men have a combined wealth of
cUS$426bn which is equal to the poorest 50% of the world.
Migration has added to the anti-open border debate. One trend that has been
associated with globalization is migration; however, it now appears to have reached
levels that have started to breed significant resistance across many developed
markets. The 'Brexit' vote and the US presidential election appear to be clear examples
of this skepticism towards migration.

24 January 2017
The world might be moving to a multipolar one

If the world is indeed set to move away from globalization, the question for investors then
is what the most likely scenario going forward will be. We explore two here.
One scenario is for a complete reversal of globalization. Drivers behind an 'End of
globalization' development include a continued slowdown in economic growth, rising
indebtedness, inequality and immigration, and a rise in protectionism.
Protectionism in general is definitely on the rise. For example, the CSRI authors note
that the US has implemented the greatest number of protectionist measures globally
(outnumbering the number of trade liberalization measures by a factor of nearly 9-to-1).
The CSRI also note that the UK, Spain, Germany and France have each implemented
more trade protection measures than China.
The second scenario assumes the that world economy will increasingly rest on three
pillars the Americas, Europe and Asia (China-led). This is likely to imply the
development of regional champions and institutions, the rise of regionalized versions of
the rule of law and trade. Other areas where multipolarity can develop include military
power, financial sector growth and technological sophistication. We view this scenario
as most likely because its implications are far less dramatic, with current developments
already suggesting that the world is moving towards a multipolar economy.
Figure 27: Multipolarity has increased across all key Figure 28: The share of mega buildings by region as
variables during the past few years an indication of region building
GDP 100
0.90
80
0.85
60
FDI inflows 0.80 Trade 40

1980-1983
0.75 20
2012-2015
0
1930 1940 1950 1960 1970 1980 1990 2000 2010 2015
N.Am Asia M.East

Budget size Population Europe South America Australia
Central America Africa
Source: Credit Suisse research Source: CTBUH, Credit Suisse research

24 January 2017
Figure 29 summarises the potential implications of various globalization scenarios.
Figure 29: Potential implications of different scenarios for globalization

Globalization scenarios
Globalization continues A multipolar world The end of globalization
Heading
Trade and financial flows Strong upward trend; increased Rises at a slower pace, regional Protectionism and barriers to
integration and interdependency. in nature. Regional and bilateral trade increase.
Few interruptions from trade agreements.
protectionism.
Markets Low cost of capital; global shocks The rise of regional financial Fragmentation of global financial
more frequent. centers. markets; a rise in the cost of
capital.
Currency Dollar dominates. The rise of new anchor Currency wars and growing
currencies. protectionist tendencies.
Economic growth Increasingly driven by trade Lower growth; some regions Domestic; slower. Tough
growth. Low macro-economic thrive while others fall back. times/recessions confined to
volatility, except in times of crisis Regional setbacks in response to centers of origin. Shocks from
when risk of contagion is higher. economic crisis. Emerging debt, inequality, climate and
market consumer grows. geopolitics.
Corporations Multinationals become more Regional champions. EU thrives. National champions dominate.
powerful. Anti-multinational corporation
sentiment rises.
Global governance Collaborative; supranational Competitive; regional hegemons; Open conflicts. Geopolitical
institutions dominate; US a covert conflicts; spheres of military clashes. Climate events.
dominant force. Governance influence. New institutions with
rules established by global exclusive memberships.
regulators.
Forms of government Spread of democracy. Managed democracies more Reversals in transitions to

entrenched. Governments focus democracy. Power consolidation
on nationalism, nativism, among a few key countries.
promotion of local content.
People flows Open-door policy for immigrants. Increased restrictions on Breakdown of migration. Social
immigrants. Selective skill-based exclusion of migrant population.
movement of labor. Rural-urban
migration to dominate
cross-country movement.
Social and human Greater convergence in living Living standards become more Increased poverty and civil strife.
development standards, but less globalized unequal. Local economies Rise of anti-globalization
regions fall back. Human become wealthier in aggregate. sociopolitical movements.
development improves. In emerging market economies
rising consumer (incomes,
consumption and wealth).
Source: Credit Suisse Research Institute

24 January 2017
What are the early warnings signs for stocks?

It is hard to provide a list of stocks at risk with precision given much depends on (a) the
pace with which the trends in globalization reverse and (b) the nature of policies that typify
it. However, we are seeing in the case of the US and the UK, both explicit and implicit risks
emerging within the narrative around trade. The debate about a border tax in the US or
penalties for offshore sourcing throws a focus on companies that have a supply chain that
is international by nature. They are potential losers depending on how the policy is framed
and how it co-exists with cuts in planned corporation taxes more broadly. In the case of
the UK, a potential self-imposed exit from the European single market and customs union
poses similar such question marks and potential costs.
Credit Suisse PEERs allows us to map supply chain risk
With the above in mind, we can analyse which companies have a more international
supply chain risk as we stand today using Credit Suisse's supply chain tool PEERs, (see A
chain reaction: Supply chain strategies, 14 Nov 2016). In Figure 30 below, we show US
companies with at least eight suppliers and where 50% or more of them are non-US in
nature. In our database our analysts rank suppliers as to their importance high,
moderate and low. Here we have shown all suppliers with equal weight. It is highly
simplistic of course. It doesn't capture indirect sensitivities that always exist. For example,
companies may be sourcing locally (e.g. retailers) though from distributors who
themselves may face taxes they seek to pass on. However, it serves as a rough guide as
to where risks may lie.
Figure 30: US companies and international supply chains (total suppliers >=8, % of Non-US >=50% of total)
%of Non-
Non-US Total
US Company Name Sector Country
Suppliers Suppliers
Suppliers
22 26 85% Apple Techh Hardware & Equip US
11 13 85% Avis Budget Group Transportation US
10 12 83% Herc Holdings Transportation US
8 10 80% NVIDIA Corporation Semi & Semi Equip US
8 10 80% QUALCOMM Semi & Semi Equip US
27 39 69% Hewlett Packard Technology Hardware & Equip US
9 14 64% Eli Lilly & Co. Pharma, Biotech & Life Sciences US
5 8 63% Amkor Technology Semi & Semi Equip US
19 31 61% KBR Inc. Capital Goods US
11 18 61% Microsoft Software & Services US
6 10 60% Bristol Myers Squibb Pharma, Biotech & Life Sciences US
6 10 60% Micron Technology Semi & Semi Equip US
9 16 56% General Electric Capital Goods US
17 31 55% International Business Machines Software & Services US
4 8 50% Cobalt International Energy Energy US
22 44 50% ExxonMobil Corporation Energy US
4 8 50% Honeywell International Capital Goods US
4 8 50% Morgan Stanley Diversified Financials US
6 12 50% Nexeo Solutions Capital Goods US
7 14 50% Ulta Salon Retailing US
5 10 50% Wesco International Capital Goods US
Source: Company data, Credit Suisse estimates, PEERs

24 January 2017
Figure 31: US retailers with notable international supply chains

Non-US Total %of Non-US
Company Name Sector Country
Suppliers Suppliers Suppliers
23 48 48% Best Buy Retailing US
15 39 38% Costco Wholesale Food & Staples Retailing US
21 56 38% CVS Health Food & Staples Retailing US
12 33 36% Nordstrom Retailing US
15 42 36% Rite Aid Food & Staples Retailing US
46 133 35% Wal-Mart Stores Food & Staples Retailing US
3 9 33% L Brands, Inc. Retailing US
4 14 29% The Gap, Inc. Retailing US
13 47 28% Kroger Co. Food & Staples Retailing US
3 12 25% Dollar General Retailing US
9 45 20% Target Corporation Retailing US
In Figure 32, we conduct a similar exercise for the UK by looking at companies with a
more European supply chain. We show companies with at least three suppliers in their
supply chain and where 15% of them are European in nature. This also comes with health
warnings given the lack of clarity on how trade negotiations will play out, though we are of
course already seeing pressure on companies with non-UK supply chains via sterling's
weakness
Figure 32: UK companies and international supply chains (total West European suppliers >=3, % of
W.European suppliers >=15% of total)
Western %of
UK Total
Europe W.Europe Company Name Sector Country
Suppliers Suppliers
Suppliers Suppliers
3 0 3 100% RPC Group PLC Materials UK
7 1 8 88% WPP Media UK
7 1 10 70% EasyJet Transportation UK
4 0 6 67% Royal Bank of Scotland Banks UK
5 3 10 50% ASOS Plc Retailing UK
6 0 12 50% Subsea 7 S.A. Energy UK
8 2 16 50% Vodafone Group Telecommunication Services UK
6 1 13 46% IAG Transportation UK
6 7 16 38% Wm Morrison Food & Staples Retailing UK
5 4 15 33% BT Group Telecom UK
5 6 15 33% Ocado Plc Retailing UK
5 7 16 31% J Sainsbury Food & Staples Retailing UK
5 9 18 28% Tesco Food & Staples Retailing UK
5 7 20 25% Next Retailing UK
4 0 17 24% Inchcape Retailing UK
5 4 33 15% Dixons Carphone Plc Retailing UK

24 January 2017
Technological innovation remains central

This report highlights the degree of risk faced by public companies to several broader
disruptive forces. Of these, we view the disruptive potential of technological development
as most significant. We see three different reasons for this:
1 New, cheaper and more efficient products replace

existing ones
The main threat of globalization is through the launch of products similar to those in
existence albeit at cheaper prices. Its disruptive impact therefore is typically via price
competition. Technological development on the other hand can be far more disruptive as it
allows for completely new (and often cheaper) products and services to be introduced that
threaten to replace existing ones (e.g. Uber vs taxis, AirBnB vs Hotels or mobile phones vs
fixed landlines). It therefore forces incumbent companies to substantially change
investment processes and increase R&D spending to improve their offering, too. The
ability for larger, often established, companies to implement such changes is obviously not
a given. In the table below we highlight some of the technologies that we believe have
substantial disruptive potential.
Figure 33: Some key disruptive technologies likely to disrupt end-markets

Key disruptive technologies Key proposition Sectors negatively exposed Expected time frame
(Mobile) Internet Improves and unlocks delivery and productivity of services including: banking, Retail, Banking, Education, Travel, Ongoing
retail, education, health care. Provides the backbone for all sharing economy Payment/Credit Cards, Real Estate.
services through mobile app development.
Automation/Artificial Intelligence Computers to perform complex analysis and problem solving exercises through Common business functions (sales, 5-10 years
machine-learning and neural networks. This would impact a wide range of administrative, customer service),
different (mostly support) functions. Total FTEs at risk according to McKinsey technical professions, professional
from further automation could be 140m or c50% of the total workforce across the services (legal, financial).
exposed end markets.
Advanced robotics Advances in artificial intelligence, machine vision, sensors, motors and hydraulics Labor intensive manufacturing 5-10 years
allow for more advanced robots who increasingly replace human labor. McKinsey industrials.
estimates that 60m FTEs might be at risk by 2025. Falling robot costs (typically by
10% per annum) and China's rapidly growing robotic-capabilities imply that
robotic-growth globally is likely to remain strong.
Car technology: driverless, car Autonomous vehicles offer substantial benefits in terms of emission reduction, Entire auto supply chain, car insurance 5-10 years
sharing and electric vehicles fuel efficiency, the reduction of traffic accidents. In combination with the rapid exposed companies, Oil companies
increase in car sharing this development has the potential to substantially reduce
car sales (every car shared typically replaces c10 privately owned cars). Finally we
note that the electrification of vehicles adds further pressure on the current,
largely combustion-engine focussed, car industry.
Energy Storage The ability to store energy (largely through batteries) generated from renewable Utilities and Oil & Gas producers 10 years
sources (i.e. solar) has the potential to allow residential and corporates to
become selfsufficient. This in turn would be highly disruptive for the utility
sector (generation and distribution). If consumers were to switch from gas-fired
heating to electrical-based heating this would also negatively impact gas
suppliers.
3D Printing 3D printing capabilities are rapidly expanding although full disruption is likely a Medical device manufacturers, 10 years
few years away owing to currently higher production costs. Longer term, consumer products, engine
however, we believe that layer-based printing will allow for widespread manufacturers, suppliers into these
disruption across various consumer end markets. The ability to produce goods end markets including logistics firms
more locally and with minimal waste is also set to impact the supply chain may also be impacted
including delivery. The ability to produce low volume, high value items might
also support the on-shoring of certain manufacturing activities.
Renewable energy Increasing cost competitiveness should allow renewable energy sources such as Utilities and Oil & Gas producers 10 years
solar and wind to become disruptive on a 10 year horizon in our view. Demand for
renewable energy solutions is likely to be strong across the emerging world
owing to climate conditions and relative absence of incumbent energy supply
networks. Key for the timespan of disruption are a) the continued speed with
which production costs are falling and efficiency ratios are rising and b) whether
or not renewable subsidies remain.

24 January 2017
It's difficult to overstate the implications of technological progress on existing companies,

in our view. Below we list just two examples of the exponential growth seen by disrupting
technology-based services.
AirBnB in December 2016 reported that more than 2m guests were staying in its listings
over New Year, a growth of more than 1400x from the 1,400 that used its service in 2009
(Figure 34). In other words, these were 2m guests that did not stay in traditional hotels.
The disruptive impact of e-commerce is also striking. Amazon's market cap was less than
5% of that of the traditional US retail space in 2006. Today the company's value is larger
than the combined value of the largest eight traditional retailers in the US (Figure 35).
Figure 34: The number of guests staying at an Figure 35: E-retail disruption: Amazon's market cap
AirBnB over New Year has grown more than 1400- is now bigger than the combined total of the largest
fold since 2009 indicating disruption eight traditional retailers in the US (US$bn)
2,500 500
Thousands
400
400 371
2,000
295
300
1,500
200
1,000
100
18
500 0
2006 today
Best Buy JCPenny Kohl's
0 Macy's Nordstrom Sears
2009 2010 2011 2012 2013 2014 2015 2016
Target Walmart Amazon
Source: AirBnB Source: Thomson Reuters, Credit Suisse research
2 Technological innovation increases competitive

pressures globally
Technological innovation not only allows for the launch of new products and services but
these products and services can be developed by companies largely irrespective of their
location. In other words, technological innovations supports competitive pressure on a
more global scale as more countries, especially developing nations, seize the benefits
from them.
Examples of this can be seen in the growth of the industrial robot industry or indeed
renewable energy investments. In both cases we find that countries such as China but
also India have taken a very active role in developing these services, thereby impacting
companies elsewhere.

24 January 2017
Figure 36: Global investment in industrial robots is Figure 37: Investment into renewable capacity in
let by India and China 2015: GEM dominates
Europe
India
17%
China
Spain
China
United States
36%
United Kingdom
Germany US
Forecast 2015: 3.8%
France Forecast 2014: 3.3% 15%
Japan
Italy
Brazil
Russia MENA
ASOC, ex 4%
-6% -4% -2% 0% 2% 4% 6% 8% 10% China/India RoLatam
Brazil India
17% 4%
Forecast 2015 Forecast 2014 3% 4%
Source: IFR Source: UNEP, Bloomberg New Energy Finance
3 Lower investment hurdles boost private companies

Finally, we note that technological progress allows for the development of disruptive
services that are asset-light in nature. This has at least two implications for incumbent
companies:
Firstly, it suggests that funding or investment needs for companies that aim to offer
these new services are relatively low compared to examples of previous disruption
cycles (). For example, the investment requirements for railroad companies (disrupting
canals) were arguably far greater than those for companies developing online retail
websites (disrupting traditional retail companies). As such technological progress
lowers the barriers to entry for new disruptors, thereby further raising competitive
dynamics on incumbent operators.
Secondly, we note that the relatively low capital requirements for especially web-based
services enables more companies to stay private while becoming disruptors as the
need to be a publicly listed company in order to secure access to funding is relatively
low. This suggests that equity investors may not be able to gain exposure to some of
the high growth successful disruptors.
The growing relevance of private technology-driven disruptors can be seen in the rapid
increase of 'unicorns' (private companies with a market-based valuation of US$1bn or
more). During the past five years the number of unicorns has increased approximately
sevenfold to 184 whereas the combined valuation of the group increased to US$653bn
in 2016 from US$153bn in 2011, according to CB Insights (Figure 38).

24 January 2017
Figure 39: Unicorn valuations are geared to

Figure 38: The rise of private disruptors: 'unicorns' disrupting end markets (US$bn, 2016)
700 200
On-Demand 128
180 eCommerce/Marketplace 127
600
160 Fintech 69
500 Hardware 66
140
Internet Software & Services 62
400 120 Big Data 40
100 Social 37
300 Healthcare 25
80
Facilities 18
200 60 Other Transportation 12
40 Mobile Software & Services 11
100 Cybersecurity 10
20
Media 7
0 0 Computer Hardware & 6
2009 2010 2011 2012 2013 2014 2015 2016 VR/AR 6
Valuation ($bn, lhs) Number (rhs) 0 50 100 150
Source: CB Insights, Credit Suisse research Source: CB Insights, Credit Suisse research
Not only do we observe strong growth in the number of unicorns and their valuation levels
but a sector analysis of them also reveals their focus on 'disruptive' services. Cumulative
unicorn valuation levels are mostly geared to disruptive sectors including on-demand
services (e.g. Uber and Didi), eCommerce (e.g. AirBnB and Flipkart), Fintech (e.g. Lu.com
and Stripe), Internet services (e.g. Spotify) and facilities (e.g. WeWork). Below we list the
largest 30 unicorns based on the most recent valuation data as per CB Insights.
Figure 40: The largest 30 unicorns based on implied valuation: most offer a capital-light disruptive service
Valuation ($bn) Company Country Service Valuation ($bn) Company Country Service
68.0 Uber United States On-Demand 9.2 Stripe United States Fintech
46.0 Xiaomi China Hardware 8.5 Spotify Sweden Internet Software & Services
33.8 Didi Chuxing China On-Demand 8.0 Zhong An Insurance China Fintech
30.0 Airbnb United States eCommerce/Marketplace 7.0 Snapdeal India eCommerce/Marketplace
20.0 Palantir Technologies United States Big Data 6.2 Lianjia China eCommerce/Marketplace
18.5 Lu.com China Fintech 6.0 Global Switch United Kingdom Computer Hardware & Services
18.0 China Internet Plus Holding China eCommerce/Marketplace 5.5 Intarcia Therapeutics United States Healthcare
18.0 Snapchat United States Social 5.5 Lyft United States On-Demand
16.9 WeWork United States Facilities 5.0 Coupang South Korea eCommerce/Marketplace
16.0 Flipkart India eCommerce/Marketplace 5.0 Olacabs India On-Demand
12.0 SpaceX United States Other Transportation 4.8 One97 Communications (Paytm) India Fintech
11.0 Pinterest United States Social 4.5 Ele.me China On-Demand
10.0 DJI Innovations China Hardware 4.5 Magic Leap United States VR/AR
10.0 Dropbox United States Internet Software & Services 4.1 Cloudera United States Big Data
10.0 Infor United States Internet Software & Services 4.0 Social Finance United States Fintech
Source: CB Insights, Credit Suisse research

24 January 2017
Who's most at risk and who's not?

Against the background of these disruptive megatrends, we decided to expand our
bottom-up analysis on disruptive risk faced by companies across the globe. Some 225 of
our analysts globally have provided their views on the potential risk that their companies
face from competition (both local and global), technological development and regulation.
Scope of our analysis
In order to assess a company's risk from disruption we asked our analysts a simple
question: What risk does your company face from globalization, regulation and
technological innovation? We asked them specifically to rank each of these three factors
from 1 (=minimal risk) to 3 (=maximum risk). We calculate a cumulative risk by company
which therefore runs from 3 to 9.
The result of this analysis is that we have now calculated disruptive risk scores for almost
2,700 stocks globally, which represents c90% of Credit Suisse's equity research coverage.
All of the 24 key sectors globally are covered in our analysis. The expansion over our
original report shows that we now have far greater depth on a sector level as far as
disruptive risk is concerned, allowing us to draw more meaningful conclusions.
Figure 41: Breakdown of responses by region Figure 42: Breakdown of responses by market cap
Responses on companies by region Breakdown of companies by market cap
247, 9% 348, 13%
515, 19% 1008, 423, 15% 1,052,

37% 39%
961, 35% 908, 33%
Under US$3bn US$3bn -10bn

Americas Asia Pacific Europe Japan
US$10bn -25bn Over US$25bn
Risk distribution, globally and by region

The distribution of companies by risk scoring is as per Figure 43. It shows that 421
companies are deemed by our analysts to carry minimal risk from disruption, at least
during the next five years. This represents c15% of the total universe. We view a score of
7 or higher as high risk from disruption. A total of 358 companies are perceived by our
analysts to be at high risk from disruption globally, with 46 being maximum exposed
across all 3 factors.
Disruptive risk higher in Europe, lower in NJ-Asia

Companies in Figure 44 shows the degree of disruptive risk by region. It suggests that NJ-Asia has the
developed markets face lowest share of companies with high risk from disruption. On the other hand, the share of
greater risk from European firms that are perceived to be relatively immune to disruption is less than half of
disruption than those the share in other regions, indicating that risk is greater in Europe. A rough conclusion
located in emerging
economies
24 January 2017
appears to be that disruptive risk faced by companies located in developed markets is

higher than for those located in emerging economies.
Figure 43: Number of stocks by risk scoring Figure 44: Share of by risk scoring by region
9 = maximum risk, 3 = minimum risk 9 = maximum risk, 3 = minimum risk
Americas Asia Pacific Europe Japan
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
High Disruption score Low 0%
3 4 5 6 7 8 9
Figure 45: Low disruptive exposure (score of 3-4): Figure 46: NJ-Asia has relatively speaking the
Europe is underrepresented lowest high/low risk ratio. Not so for Europe/Japan
Low risk by Region High risk by Region

Japan, 13%
Japan, 8%
Europe,
17% Americas, Americas,
38% Europe, 44%
22%
Asia
Pacific, Asia
37% Pacific,
21%
When breaking down our low and high risk companies by region, we find that relative to
the total number of stocks included in our database Europe is indeed underrepresented in
the low risk category (17% share vs 19% share of overall universe) and overrepresented
in the high risk group (22% share vs 19% overall share).
The opposite applies to companies in NJ-Asia. They make up 35% of our universe, have a
37% share of the low risk group and just 21% of the high risk group.
In the case of the US, we find a slight skew towards high risk (44% share of high risk
group vs a 37% share of the overall universe).

24 January 2017
Disruptive risk highest for Pharma, Energy, Autos

and Retail; lowest for Staples
Sectors most at risk: In our original report, we also ranked disruptive risk by sector. It indicated that companies
Pharma, Energy, in the Energy, Autos, Pharmaceutical and Financials space carried above-average risk.
Autos, Retail Sectors with below-average risk from disruption were staples, telecoms and transport.
Figure 47: Stocks with low disruptive risk by sector Figure 48: Stocks with high disruptive risk by sector
4% 1% 6% 1% 1% 3% 2% 4%
4% Autos 4% Autos
4% 4% 0%
8% Banks 3% Banks
4% 8%
4%
Capital Goods Capital Goods
5% 3%
Comm & Prof Svs 3% Comm & Prof Svs
4% 8%
2% Cons Durables & Apparel Cons Durables & Apparel
6%
3% 2% Consumer Svc
Consumer Svc
4% 1%
Diversified Financials Diversified Financials
9% Energy Energy
7% 10%
Food & Staples Retailing Food & Staples Retailing
4% 1% Food, Bev & Tobacco 1% 26% Food, Bev & Tobacco
2% 7% 5%
HC Equipment & Svc 3% HC Equipment & Svc
8% 2% 2% 3% 0% 3%1% 0%
Our updated analysis shows broadly similar results, with Pharma, Energy and Auto stocks
ranked highest on disruptive exposure. Other sectors deemed at risk include Retail and
Financials (mainly Insurance and Diversified Financials). Sectors with below-average risk
from disruption are now found in Consumer Staples and Business Services but also Real
Estate.
Figure 49: Cumulative disruptive risk by sector: a higher score implies more risk
Global Competition Technology / Industry 4.0 Tightening Regulation
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Figure 50: Disruptive score by sector: global vs by region

J = Japan, EU = Europe, AM = Americas, NJ-A = Non-Japan Asia. Grey bar reflects global sector score for disruptive risk
9
7
J AM
EU J
6 EU J
J NJ-A EU J EU
AM NJ-A
EU J NJ-A
AM
AM NJ-A EU J
AM NJ-A J
NJ-A EU AM
EU EU EU EU AM
5 EU AM NJ-A NJ-A AM NJ-A AM EU
AM EU EU
NJ-A AM EU NJ-A AM NJ-A NJ-A EU
NJ-A NJ-A NJ-A EU
J AM AM EU
NJ-A J NJ-A
NJ-A AM NJ-A EU AM
AM EU
EU J EU NJ-A J
4 AM AM J AM
J J NJ-A
NJ-A
J AM
NJ-A
EU
3
J
2
Pharma Energy Autos Consumer Retailing Insurance Diversified Food, Bev HC Software & Media Semis Tech Utilities Telecom Banks Transports Capital Materials Cons Food & Comm & Real Estate Household
Svc Financials & Tobacco Equipment Services Hardware Goods Durables & Staples Prof Svs & Personal
& Svc Apparel Retailing
AM EU NJ-A J Outlier
24 January 2017
24
24 January 2017
Disruptive risk by sector: a regional comparison

Figure 49 shows the average risk by sector globally; however, this does mask regional
differences. Figure 50 on page 24 shows a more granular view on sector risk from
disruption by summarising our analysts' responses on a regional basis. The following
pages analyse some of the key regional-sector combinations that stand out.
Sectors where disruptive risk is fairly similar across regions include Food & Staples
Retail, Utilities, Consumer Services, Capital Goods, Transport, Autos and Energy. The
degree of disruption faced by these sectors is not dependent on the region in which the
company is located.
Sectors where disruptive exposure differs most between regions include Pharma,
Semis, Telecom, Insurance, Media, Diversified Financials and Banks. These spreads are
worth analyzing in order to identify which regional-specific reasons explain the different
disruptive risk.
Pharmaceuticals: The difference between disruptive exposure by region is largely due
to a high score on Japanese pharmaceutical stocks and a low score for those located
elsewhere in Asia. Reasons for this include:
Japan Pharma scores high on disruption: Our analyst, Fumiyoshi Sakai,
sees a myriad of potential reforms with unknown timeframes including initiatives
to improve the transparency of the drug pricing formulas and methodology for
the foreign price adjustment rule, R&D support for innovative biologics and
biosimilars and promoting competition among generic drug makers. See the
Outlook for 2017 many challenges ahead section from the team's Japan
Major Pharma review.
NJA Pharma scores low on disruption: Analyst Iris Wang believes that with
the ongoing implementation of drug tenders, clinical data self-inspection and the
two-invoice system and reimbursement budget control, there will unlikely be any
additional negative policy changes in 2017. Moreover, the long-awaited
expansion of the National Reimbursement Drug Listlikely to be announced in
1H17could be a sector tailwind. She expects the sector to consolidate further
and big pharma companies with rich pipelines, solid clinical trial records and
strong in-house sales capabilities to benefit. See the China Pharma Sector
Headwinds turning into tailwinds section from our team's China-HK Chronicles
Outlook 2017.
Semiconductors: US semi stocks appear to carry above sector-average disruptive
risk. The key reason for this relates to the fact that some of the solar stocks are
classified as semiconductor companies. The solar space in general ranks high for
disruption, especially through competition but also technological innovation and its
impact on market share and or profit margins. For the remainder of the semi space, our
analysts are broadly positive owing to rising barriers to entry, consolidation and
diversifying demand drivers (see Semiconductors: 2017 Outlook).
Telecoms: Telecoms in Asia score higher than those in Europe and the US on
disruptive risk. The key drivers behind this are:
NJA Telcos: Amongst the divergent regional views in telecoms, our Asia-ex
Japan teams underweight sector view is underpinned by several factors
including several 'problem markets', namely India, Singapore, Malaysia and the
Philippines, where rising competition, new entrant threats and cannibalization by
OTT (Over the Top) services are weighing on the space. However, Chinese
telecoms are an exception as the market looks structurally better positioned,
given 1) no new entrants in the cellular space; and 2) China telcos have avoided
unlimited data plans which ensures that the economics of consumer behaviour

24 January 2017
matches the cost structure of the operators, and drives revenue. The team also
sees a reduced probability of further regulatory interference for China. While
investors remain concerned over the potential for other regulatory moves, there
have been strong 4G net additions with a more even share, reducing the need
for further measures. Furthermore, the data pricing curve is such that customers
are enjoying volume discounts. See our Asia Pacific/HK Outlook 2017 from 11
January 2017 for more details.
European telcos: The European telco sector has for two decades been driven
by common regulatory themes emerging from the EU, starting with liberalisation
in the mid-1990s, licensing of mobile spectrum to new operators (1995-2002),
disruptive fixed line access regulation (ULL) from 2002 and more recently
BULRIC MTRs (2007-2013) and roaming regulation (2007-2016+). These EU
initiatives have been sector wide, generally deflationary and disruptive to telco
sector returns. The EU is now reviewing its telecoms regulation and discussing
a wide range of options. Few if any of these have the potential to disrupt the
sector in the way previous initiatives have done. Some options even involve
reducing regulation. International exposure remains a decisive factor for
European relative performance. Many of the world's telecoms markets are
suffering the same trend of increasing regulation and competition that Europe
has suffered from, so International stopped being a driver of outperformance
some years ago. However exposure varies by market, and by market position.
See Outlook 2017 from 8 December 2016.
Media: The above-average regional risk difference in media is largely due to a low
reading for US media companies. The reason for this according to our US media
analysts is the election of a Republican administration which has had a significant
positive impact on the regulatory outlook for US ISPs. The team expects Congress and
the FCC to work together to replace the 2015 Open Internet Order. This order enforces
the principles of net neutrality including that ISPs must enable access to all content
without favouring or blocking specific websites, and under Title II of the
Telecommunications Act created the possibility of direct price regulation. See US
Media & Cable: Themes for 2017 from 10 January.
Banks: Finally, we note that the disruptive risk spread for banks is because of the high
readings for European banks. Our analysts note that risk from fintech and regulation
are the key drivers for this.
Diversified financials: Our diversified financial analysts in the US and Europe (Craig
Siegenthaler, Tom Mills and Martin Price) highlight the ETF vehicle as a global
disruptor within the financial sector. See Reiterate preference for market infrastructure
vs. asset managers on active-passive theme. Specifically they highlight the following
developments:
ETFs vs. Mutual Funds: They believe there are four clear advantages of the
ETF structure to the mutual fund: (1) tax efficiency (only in US), (2) cost, (3)
liquidity, and (4) transparency. However, underperformance of actives versus
passives (after fees) over the last decade has also tilted the demand from active
to passive, and this has benefited ETFs as passive exists in the ETF vehicle,
while actives do not (active funds tend to have less transparency).
Global ETF wave accelerating: Our team expects increased investor

education on the ETF model, continued migration from commission-based
accounts to advisory/fee-based in the brokerage industry, new regulations in the
US (DOL Rule) and outside the US (CRM2-Canada, MiFID2-Europe, RDR-UK)
will cause a large share shift in industry AuM from funds to ETFs over the next
five years. ETF share in the US is 17% today, but they think it could eventually

24 January 2017
reach over 40% over the next 10 years. So the question for many CEOs is
how can active, traditional, benchmark-relative managers fight back? We think a
non-transparent ETF solution, or a new mutual fund structure with a variable
management fee offer two future options for active managers (both models are
currently seeking approval from the SEC in the US).
Stocks: BlackRock (BLK, Outperform), WisdomTree (WETF, Outperform), and

Flow Traders (FLOW.AS, Outperform) are three stocks that our team believes
will benefit from additional share gains from the ETF structure. Firms with very
large passive/ETF businesses, like State Street (Neutral), could also benefit.
Timing of disruption: within five years
As part of our bottom-up assessment of disruptive risk, we also asked our analysts to
indicate whether they think their companies are at risk within the next five years or not.
With a few exceptions, we found that where disruptive risk exists, our analysts
overwhelmingly think that this risk is likely to materialize within a five-year time frame.
Changes between current and original analysis
We have also compared the sector scores for disruptive risk between our original report
and the current update.
Stocks where ranking have change most notably are highlighted in Figure 51.
Figure 51: Stocks where rankings moved notably higher or lower since our initial publication in March 2016
Technology Technology
Total Global Tightening Global Tightening
Ticker Com pany Sector / Industry / Industry
Change Com petition Regulation Com petition Regulation
4.0 4.0
2016 2017
MYPK3.SA Iochpe-Maxion Capital Goods 3 2 1 1 2 2 3
WMH.L William Hill Consumer Services 3 1 1 2 2 2 3
8572.T ACOM Diversified Financials 3 1 2 1 2 3 2
DG.N Dollar General Retailing 3 1 1 1 1 2 3
DLTR.OQ Dollar Tree Retailing 3 1 1 1 1 2 3
FIVE.OQ Five Below , Inc. Retailing 3 1 1 1 1 2 3
BAES.L BAE Systems Capital Goods -3 2 3 2 1 1 2
002008.SZ Han's Laser Capital Goods -3 3 1 3 2 1 1
CVA.N Covanta Commercial & Prof Svc -3 1 3 3 1 1 2
YUM.N Yum! Brands Consumer Services -3 3 3 1 1 2 1
AIG.N American International Group Insurance -3 3 3 3 2 1 3
DD.N DuPont de Nemours Materials -3 3 2 2 1 1 2
4043.T Tokuyama Materials -3 3 3 2 2 2 1
6239.TW Pow ertech Technology Semi & Semi Equip -3 3 3 2 2 1 2
Source: Company data, Credit Suisse estimates, colour indicates level of change

24 January 2017
Sectors where on average we now see greater risk than before include: Retail,
Software, Media and Telcos.
Sector where on average risk is now deemed lower include Semis, Real Estate and
Banks. Notably, lower risk from regulation appears to be a key driver behind these
reduced risk readings. This is partly owing to the inclusion of more NJ-Asia companies
but we would also highlight reduced regulatory concerns from our US banks team.
Figure 52: Cumulative disruptive score by sector: current results vs. our 2016 report
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Pharma Energy Autos Con. Retail Insurance Div. Fin. Staples H/C Eq. Software Media Semis Tech Utilities Telcos Banks Transport Cap. Materials Durables FB&T Bus. Serv. Real H&PG
Serv. Goods Estate

24 January 2017
Disruption: is it reflected in expectations?

The degree of exposure to disruptive risk is only one side of the equation for investors.
The other relevant factor is obviously whether this risk is properly reflected in a company's
share price.
Cash flow returns reflect relative risk
Consensus estimates As far as corporate performance is concerned, using Credit Suisse HOLT, we find that
are weakest for relative cash flow returns largely appear to properly reflect disruptive risk. For example, on
companies with higher an aggregate basis we find that CFROI for companies with a risk score of 3 (i.e. minimal
disruptive risk risk) have started to increase relative to those for companies with a risk score of 7 or
higher. Figure 53 shows that 12m forward CFROI expectations indicate a marked
deterioration for companies with high risk exposure, whereas this is far less the case for
those with minimal perceived risk from disruption.
Analyst expectations are in line with relative risk exposure
Reviewing recent earnings revision activity for our universe of c2,700 stocks also indicates
that sentiment is already more negative for companies with a higher exposure to
disruption. Figure 54 shows that CFROI revisions for companies with a risk score of 7-9 is
substantially more negative than for those with a score of 3.
Figure 53: CFROI grouped by exposure to Figure 54: Recent earnings revision activity: higher
disruption: higher risk score = lower CFROI risk score = more substantial CFROI downgrades
14 10Y Median CFROI 2015 CFROI 12m fwd CFROI 26wk CFROI Revisions 13wk CFROI revisions 4wk CFROI revisions
12 0.0
10 -0.1
8 -0.2
6 -0.3
4 -0.4
2 -0.5
0 -0.6
3 4 5 6 7-9 3 4 5 6 7-9
Return expectations by sector show a more diverse picture

We have also calculated the average cash flow return statistics by sector and plotted the
changes relative to the average risk scoring for each of the sectors.
Figure 55 shows that the volatility of cash flow returns broadly speaking increases with the
exposure to disruption. CFROI expectations for pharmaceutical companies for example
suggest a more than 20% increase in returns during the next 12 months. In the case of
energy companies, we note a decline in CFROI of c40%.
Although this analysis does not say anything about valuation, we do find it interesting that
some sectors with perceived high risk from disruption still have consensus earnings
estimates that suggest returns will improve. This is not something that we deem likely on a
medium-term view considering the potential impact of disruption. Sectors that stand out in
this regard include Autos and Pharmaceuticals. In case of our autos reading we do point
out that this is primarily related to our Asian auto analysts' views, as we currently do not
cover European or US autos.

24 January 2017
Figure 55: Disruptive risk exposure by sector relative to the % change in expected cash flow returns
30%
CFROI: 12mF vs FY0
Above average risk from
disruption, yet CFROIs are
expected to increase Materials
Pharma
20%
Transport
10% Media
Autos Utilities H/C Eq.
Tech Durables H&PG
Con. Serv. Semis Bus. Serv.
0%
Insurance Telcos FB&T Real Estate
Staples
-10% Retail Cap. Goods
Div. Fin. Software
-20%
-30%
Falling CFROI
Energy expectations appear in
-40% line with above average
risk from disruption
-50% Disruption score

6.00 5.50 5.00 4.50 4.00 3.50 3.00
Source: Credit Suisse HOLT, Credit Suisse research

24 January 2017
Disruption: is it priced in?

The previous section showed that earnings expectations in general appear to be reflecting
the potential relative impact from disruption on stocks globally. According to HOLT, returns
and revision activity for companies with higher disruptive risk are weaker than for those
with lower risk from disruption. On a sector basis, we found some with above-average
disruptive risk are already experiencing declining returns (e.g. retail, diversified financials
and energy) while others have yet to see this happen (e.g. pharma and autos). All of these
changes, however, do not provide sufficient information needed to assess whether a
company is indeed fairly valued at this point.
Where is the market mispricing disruptive exposure?
In Global Equity Themes: Disruption: where is it not priced in?, we analysed the degree
to which disruptive risk as perceived by our analysts was appropriately reflected in share
prices. We used a HOLT-based valuation tool ('conditional probability') for this as it
indicates the likelihood that a company will be able to generate cash flow returns that are
implied by the current share price. For an explanation of this methodology, please see
Appendix B on page 44.
In this update, we reapply the conditional probability concept to the c2,700 stocks for
which we have disruptive rankings. More specifically, we provide, on a sector basis, four
sets of stock screens. These are based on the degree of disruptive risk (high or low) and
whether this risk is under- or over-appreciated by the market (Figure 56 provides a
schematic summary of this analysis).
Figure 56: Stock screens depending on risk from disruption and degree to
which this risk is reflected in current share prices
Disruptive risk
High Low
We are most cautious on:
Pull-back risk: Low risk from
high risk from disruption is
Too optimistic disruption has already resulted
not reflected in future
in valuation premium.
returns
Stocks to Own: share price

Rebound potential: High risk
implied future cash flow
Too pessimistic from disruption already
returns too low given low risk
priced-in.
from disruption
Source: Credit Suisse Equity Research
Share-price-implied HOLT CFROI

By using a company's current share price and consensus estimates for FY1 and FY2 the
HOLT model is able to solve for the implied cash flow return profile in year 5 (i.e. T+5).
This approach provides an indication of the degree to which the cash flow return profile for
a company is expected to change using the current share price and therefore allows us to
benchmark this change against the historical CFROI profile achieved by the company.
Such an analysis provides a ceteris paribus valuation assessment but obviously takes no
account of potential future changes to a company's business model such as those brought
about from disruption.

24 January 2017
Market-implied CFROI by risk score

Averaging the share-price-implied CFROI per company by the disruptive score shows that
on average the market is already pricing that returns will fade more aggressively for
companies with a higher risk from disruption (Figure 57).
When we run this analysis on a sector level, we get broadly speaking similar results.
Figure 58 shows that share-price-implied returns for the sectors most at risk from
disruption (to the left of the chart) tend to be below recent returns and/or longer term
medians, whereas this is less the case for those sectors with a lower risk scoring.
Figure 57: Market-implied CFROI in line with relative risk scoring. Higher risk
score = lower returns
14 10Y Median CFROI 2015 CFROI 12m fwd CFROI Mkt implied CFROI (T+5)
12
10
0
3 4 5 6 7-9
Figure 58: Share-price-implied CFROI by sector also seems to reflect relative risk
Conditional probability vs risk by region

Cheap and low risk is Finally, in order to identify whether a company is mispriced, we want to understand
mostly found in whether the share-price-implied CFROI profile is realistic or not. For example, a company
NJ-Asia. Expensive, may be deemed at risk from disruption and the current share price may be implying a
disruptable stocks are decline in future returns; however, if this fade is not aggressive enough, it still means that
mostly in Europe the company has further downside risk.
and the US

24 January 2017
Low disruptive exposure is awarded with a valuation premium

A company's conditional probability of below 50% means that there is a less than one in
two chance that it will achieve the cash flow return implied by the current share price. We
use this 50% as a benchmark for over- and undervaluation.
When grouping the conditional probability scoring for our universe, we find that those
companies that have the lowest perceived risk from disruption are most expensively
valued (Figure 59). However, Figure 60 shows that this is not the case for all regions.
Undisruptable companies in NJ-Asia are (on average) slightly undervalued.
Among the most disruptable companies, we find that those located in Europe and Japan
tend to have the most aggressive valuations.
Figure 59: Average conditional probability score Figure 60: Regional conditional probability scores
grouped by disruptive exposure per risk score
50 80
Conditional Probaility
48 J
Companies with the lowest 70
46 perceived risk from disruption Undisruptable
have the biggest valuation and cheap
44 premium 60 NJ-A
42 NJ-A
NJ-A
50 J
40 NJ-A
AM EU AM
38 AM
40 NJ-A EU
36 EU AM
34 30 J EU
Disruptable
EU
32
and expensive
20
30
7-9 6 5 4 3 7-9 6 5 4 3
Disruption Score AM EU NJ-A J
Conditional probability vs risk by sector

Staples and business We have also calculated conditional probability scores by sector and mapped these
services: Low risk but against the perceived risk from disruption. This analysis provides the following
expensive. Valuation observations.
too high for high-
disruptive-risk sectors: Sectors least at risk are expensive: The sectors that our analysts deem to have least
Pharma, Energy and risk from disruption (Food Beverage & Tobacco, Business Services, and Household &
Consumer Services. Personal Goods) have on average a less than 35% chance of meeting the current
Autos valuation levels share-price-implied CFROI. In other words, current expectations for future cash flow
may have become too returns are too aggressive despite the lack of 'disruptive risk'.
depressed
Some of the sectors most at risk still have downside potential: Some deemed to
be at relatively high risk from disruption are still trading at a valuation premium (e.g.
Pharma, Energy and Consumer Services). In the case of Energy stocks, we noted
previously that CFROI expectations were falling (FY1 vs FY0); however, based on
share prices this appears to have been insufficient to justify current share prices for
these companies. The improvement in CFROI expectations for Pharma and Consumer
Services (see also Figure 55) also leaves these sectors overvalued, albeit most in the
case of the latter.
Autos appears to be an exception: The Autos sector faces a high risk of disruption,
however, its conditional probability is almost 65%. This suggests that (all else being
equal) the market is pricing in a too negative scenario for future CFROI. In previous
meetings with investors, we have observed an almost uniformly negative view on the
outlook for the auto industry owing to developments such as regulatory pressures,
driverless vehicles, electrification and behavioral changes towards driving. Conditional
probability calculations seem to indicate that this may have gone too far.

24 January 2017
Figure 61: Conditional probability by sector relative to their disruptive ranking score
Conditional Probability
70 The market appears too negative
on the future outlook for autos
65
Autos Tech
60
Semis
Materials
55
Utilities
Durables
50
Pharma Telcos
Div. Fin. Transport
45 Energy
Retail Software
These sectors have low
Cap. Goods
40 Staples risk from disruption but
Media that has already been
Con. Serv.
FB&T more than priced into their
35 H/C Eq. share prices
Bus. Serv.
30 Sectors whose share price

implied CFROIs are too H&PG
optimistic especially given
25 the above average risk
from disruption
Disruption score
20
6.00 5.50 5.00 4.50 4.00 3.50 3.00
Conditional probability by sector: regional differences

Figure 62 on page 35 shows the results for the sector-based conditional probability scores
broken down by region. A few conclusions can be drawn:
Low-risk sectors are expensive everywhere: The sectors deemed least at risk from
disruption (Household & Personal goods, Business Services and Food, Beverages &
Tobacco) are expensive in every region.
Companies in high-risk sectors that are overvalued are largely in Europe and the
Americas. Risk appears more than priced in for Pharmaceuticals, Energy and Auto
stocks located in NJ-Asia.
Technology discrepancies:
European tech appears too cheap in semis but too expensive in hardware.
Software stocks carry average risk from disruption, however, the market appears to
be taking a too optimistic view on US software returns. US semi and hardware
stocks, on the other hand, appear cheap.
Retail risk is most underappreciated in the case of European and Japanese retail
stocks.
Capital Goods is a sector ranked below-average on disruptive risk by our analysts
(although this may change long term on account of the threat posed by Chinese firms
in particular). Stocks that appear too conservatively priced against the background of
our analysts' view on disruption are mostly located in the US.

Figure 62: Regional conditional probability by sector

80
J
J
70
AM J
EU
Value in high risk sectors mostly found in NJ-Asia
NJA
60 AM J
NJA
NJA EU J
NJA
NJA EU
EU J
J J
J NJA AM
50 EU
AM EU AM NJA
EU
AM NJA
NJA AM NJA NJA
EU AM
AM AM EU
EU EU AM
AM NJA NJA EU
AM AM EU EU NJA
40
NJA EU NJA
AM EU NJA
AM AM
NJA J
EU NJA AM
EU EU
AM
J
30 EU J AM
JNJA NJA
EU
20 Stocks expensive in every region

10
Pharma Energy Autos Consumer Retailing Div.Fin Food & HC Software & Media Semis Tech Utilities Telecom Transports Capital Materials Cons Food, Bev & Comm & Household
Svc Staples Equipment Services Hardware Goods Durables & Tobacco Prof Svs & Personal
Retailing & Svc Apparel
AM EU NJA J
Source: Company data, Credit Suisse estimates. Note: Insurance and Banks not included as no Conditional Probability calculations are available for these sectors
24 January 2017
35
24 January 2017
Key stocks
Finally, we determine by sector and region the key stocks that we would recommend
owning and avoiding against the background of both exposure to disruption and current
valuation levels. More specifically, the following pages highlight stocks that fall in one of
the following four categories:
Figure 63: Filtering our universe of 'Undisruptables' and 'Disruptables'

Disruptive Conditional
score Probability CFROI Fade Comment
Undisruptables
Undisruptables to own 3-4 > 50% Negative Cheap & Undisruptable
Beware:
- Pull Back Risk 3-4 < 50% Positive Undisruptable but already too expensive
Disruptables
Disruptables to avoid 7-9 < 50% Positive At high risk from disruption and expensive
Beware:
- Rebound potential 7-9 > 50% Negative High risk from disruption already more than priced in
'Undisruptable' companies
Of the companies with a low disruptive score (3 or 4), we would recommend owning those
that have a conditional probability of more than 50% and a moderate to negative fade in
CFROI implied by the current share price (i.e. future returns are expected to fall relative to
history which, given the low risk from disruption, appears too negative).
Stocks with low risk from disruption to avoid are those where the market is already pricing
in a too aggressive improvement in CFROI. These stocks may have little to fear from
disruption, but their share prices carry a risk of a pull-back.
'Disruptable' companies
Of the companies with a high risk from disruption (score of 7 to 9) we would be most
cautious on those where the market is pricing in a too optimistic CFROI profile. In other
words, those with a conditional probability of less than 50% and a positive CFROI fade.
Investors should be careful about reducing exposure to all companies with high risk from
disruption as share prices for those that have a high conditional probability and too
negative fade in CFROI priced in already may rebound.
Figure 64: Stock opportunities by region: 'Undisruptables' vs 'Disruptables'
Europe Americas Japan NJ-Asia

Undisruptables
Undisruptables to own 10 24 5 22
Beware:
- Pull Back Risk 13 21 10 26
Disruptables
Disruptables to avoid 7 13 4 6
Beware:
- Rebound potential 1 11 2 4

24 January 2017
Global stock screens

Key stocks to own
Finally, we derive a global group of Outperform-rated companies that in our view face
below-average risk from disruption.
Using our regional stock lists (see the next section for more details), we screen for
companies with a market cap of US$3bn or higher that not only have a low score on
disruptive risk (i.e. 3-4) and a conditional probability of more than 50 (i.e. are undervalued)
but that also have above-average quality and momentum scores as per Credit Suisse
HOLT and that have an Outperform rating from Credit Suisse Equity Research.
This filter of the overall universe provides us with a list of 25 companies across the four
regions.
Figure 65: Our 25 'Undisruptables': Low disruption, high conditional probability and above-average quality
and momentum stocks
Technology Market CFROI 10
Total Risk Global Tightening CFROI 5 yr Fw d Cond.
Ticker / Industry Com pany Cap (USD Country Industry (shortened) Rating year Quality Mom entum Valuation
Score Com petition Regulation 12m Fw d CFROI Prob.
4.0 bn) m edian
Europe
DLGS.DE 4 2 1 1 Dialog Semiconductor 3.4 DE Semis O 13.71 14.46 6.41 96 78 79 87
RB.L 3 1 1 1 Reckitt Benckiser 57.7 GB Household & Personal O 49.88 56.72 43.56 56 81 86 45
JE.L 4 2 1 1 Just Eat 4.5 GB Software & Services O 0.00 41.79 23.49 50 87 70 51
LSE.L 4 1 2 1 London Stock Exchange 12.5 GB Diversified Financials O 46.03 24.60 17.62 51 71 68 32
ORAN.PA 4 1 1 2 Orange 41.3 FR Telecom O 8.44 5.84 4.95 62 52 74 81
North America
AJG.N 4 1 1 2 Arthur J. Gallagher & Co. 9.3 US Insurance O 23.70 26.98 10.75 83 95 70 88
LUN.TO 3 1 1 1 Lundin Mining 4.3 CA Materials O 4.37 6.12 0.31 82 57 95 88
CELG.OQ 4 2 1 1 Celgene 90.9 US Pharma O 20.53 21.74 9.14 76 86 77 83
VNTV.N 4 2 1 1 Vantiv 12.2 US Software & Services O 0.00 48.72 28.40 73 77 76 43
AET.N 4 1 1 2 Aetna 43.0 US HC Equipment & Svc O 23.72 20.72 10.54 72 62 52 98
COMM.OQ 4 2 1 1 CommScope 7.2 US Tech Hardware O 18.78 25.16 12.61 69 73 90 84
ANET.N 4 2 1 1 Arista Networks 7.0 US Tech Hardware O 0.00 17.37 8.27 67 87 86 66
UNH.N 4 1 1 2 UnitedHealth 154.1 US HC Equipment & Svc O 30.62 32.26 21.29 55 90 95 78
Non-Japan Asia
600066.SS 4 1 1 2 Zhengzhou Yutong Bus 6.1 CN Capital Goods O 15.10 17.92 3.21 98 99 35 99
PPL.KA 4 1 1 2 Pakistan Petroleum 3.4 PK Energy O 16.05 7.31 1.33 90 84 79 85
0338.HK 4 1 1 2 Sinopec Shanghai Petrochemical 9.2 CN Materials O -0.20 7.71 4.55 79 82 76 87
002508.SZ 4 1 2 1 Hangzhou Robam Appliances 4.0 CN Cons Durables & Apparel O 0.00 28.72 16.44 62 98 98 70
0914.HK 3 1 1 1 Anhui Conch Cement 14.1 CN Materials O 11.18 8.96 5.15 69 67 72 91
0014.HK 3 1 1 1 Hysan Development 4.7 HK Real Estate O 2.87 3.20 2.33 100 78 87
1193.HK 3 1 1 1 China Resources Gas 7.2 CN Utilities O 9.16 14.30 10.30 59 98 53 51
Japan
1928.T 4 1 1 2 Sekisui House 11.7 JP Cons Durables & Apparel O 4.82 6.16 3.79 69 65 66 90
1801.T 4 1 1 2 Taisei 8.3 JP Capital Goods O 3.49 8.67 5.89 60 82 77 80
4217.T 4 2 1 1 Hitachi Chemical 5.5 JP Materials O 2.83 2.65 2.16 70 62 75 25
6981.T 3 1 1 1 Murata Manufacturing 28.1 JP Tech Hardware O 4.45 7.61 5.94 54 75 56 56
8303.T 3 1 1 1 Shinsei Bank 4.5 JP Banks O 5.81 5.12 4.87 69 51 60
O=Outperform; Source: Credit Suisse research, Credit Suisse HOLT
Figure 67: Quality and Momentum score for

Figure 66: Disruptive scoring vs conditional low-disruptive-risk and above-average conditional
probability probability stocks
Source: Credit Suisse research, Credit Suisse HOLT Source: Credit Suisse research, Credit Suisse HOLT

24 January 2017
Key stocks where we are cautious

We have also filtered our regional screens further to arrive at our global stock list of
companies with high risk where we believe investors should be cautious.
In doing so, we not only screen for companies with a high risk score (i.e. 7-9) and
conditional probability of less than 50 (i.e. expensive) but also for those that score below-
average on quality and are Neutral- or Underperform-rated.
This filter of the overall universe provides us with a list of 20 companies across the four
regions; 10 of these carry an Underperform rating. Although the list consists of some
companies with above-average momentum, we note that this is probably an additional risk
to share prices considering the above-average exposure to disruption and the already
stretched valuation levels as per HOLT's conditional probability model. With quality below
average, we would expect momentum for these stocks to deteriorate.
Figure 68: Our 20 'Disruptables': High disruption, low conditional probability and below-average-quality
stocks
4.0 bn) m edian
Europe
SN.L 7 3 2 2 Smith & Nephew 13.1 GB HC Equipment & Svc N 12.51 7.28 14.10 9 44 14 18
AZN.L 7 3 2 2 AstraZeneca 70.6 GB Pharma U 13.53 2.46 6.44 34 18 26 38
WLN.PA 7 2 2 3 Worldline 3.6 FR Software & Services N na 13.40 14.91 25 21 46 25
SPMI.MI 8 2 3 3 Saipem 5.6 IT Energy N 6.70 1.87 4.63 34 6 22 25
PSON.L 8 2 3 3 Pearson 8.2 GB Media U 12.92 9.34 11.21 30 38 43 55
Americas
NFLX.OQ 7 3 3 1 Netflix 56.0 US Retailing N 13.32 6.80 13.98 3 30 85 0
SGEN.OQ 9 3 3 3 Seattle Genetics 7.9 US Pharma N 3.83 4.44 10.29 3 19 94 4
FAL.SN 7 3 3 1 Falabella 19.0 CL Retailing U 9.41 6.92 11.14 9 30 46 14
CCU.SN 7 3 1 3 Compaia Cervecerias Unidas 3.9 CL Food, Bev & Tobacco U 10.70 7.97 8.46 47 40 11 75
VET.TO 8 3 3 2 Vermilion Energy 5.0 CA Energy N na na na 11 49 31 29
NJ-Asia
GLPL.SI 7 3 1 3 Global Logistic Properties 8.9 SG Real Estate U na 3.29 6.20 46 44 6
0981.HK 7 3 1 3 5.9
Semiconductor Manufacturing International Corp. CN Semis N na na na 0 93 16
035720.KQ 7 2 3 2 Kakao 4.7 KR Software & Services U 0.00 20.13 20.19 12 33 0 2
0293.HK 7 3 2 2 Cathay Pacific 5.3 HK Transports U 4.20 1.16 5.16 32 33 4 12
0991.HK 7 1 3 3 Datang International Power Generation 6.6 CN Utilities U 2.51 1.94 5.07 35 2 11 8
MINT.BK 9 3 3 3 Minor International 4.5 TH Consumer Svc N 7.00 6.53 7.20 29 39 37 26
Japan
8729.T 7 2 2 3 Sony Financial 6.9 JP Insurance N 11.70 7.92 13.37 10 52 24
4523.T 9 3 3 3 Eisai 16.4 JP Pharma U 9.08 0.79 5.38 29 14 68 33
8604.T 7 3 2 2 Nomura 21.2 JP Diversified Financials N 3.13 5.87 8.73 36 98 30
8570.T 7 2 3 2 Aeon Financial Service 3.9 JP Diversified Financials N 9.01 10.19 12.05 49 4 36
N=Neutral; U=Underperform; Source: Credit Suisse research, Credit Suisse HOLT
Figure 69: Disruptive scoring vs conditional Figure 70: Quality and Momentum score for high-
probability risk and below-average conditional probability
50
CCU.SN
45
Conditional Probability
40
0991.HK
8570.T
35 SPMI.MI AZN.L
0293.HK
MINT.BK PSON.L
30 8604.T
4523.T
25 WLN.PA
8729.T
20
0981.HK
15
VET.TO 035720.KQ
10 FAL.SN
SN.L
GLPL.SI
5
SGEN.OQ NFLX.OQ
0
9 8.8 8.6 8.4 8.2 8 7.8 7.6 7.4 7.2 7
Disruptable
Source: Credit Suisse research, Credit Suisse HOLT Source: Credit Suisse research, Credit Suisse HOLT

24 January 2017
Performance overview
We have been tracking the performance of the stocks that were selected as part of our
disruption work to date (e.g. Disruption and share price performance). This suggests
the market has rewarded cheap companies with low risk from disruption relative to those
that are at above-average risk and appear expensive (Figure 71 and Figure 72).
Figure 71: Cheap 'Undisruptables' have Figure 72: Expensive 'Disruptables' have
outperformed MSCI AC World by c320bps since underperformed MSCI AC World by c660bps since
April 2016 April 2016
Return profile of 10 most attractive 'Undisruptables' as reported in Return profile of 10 least attractive 'Disruptables' as reported in
previous publications previous publications
115 110
Cheap undisruptable MSCI World 111.5 Expensive disruptable MSCI World
108 108.3
110 106
104
108.3
105 102 101.7
100
100 98
96
95 94
92
90 90
Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17
Past performance should not be taken as an indication or guarantee of future performance. Past performance should not be taken as an indication or guarantee of future performance.
Source: Thomson Reuters, Credit Suisse research Source: Thomson Reuters, Credit Suisse research
In this report, we have not only expanded our universe to c2,700 stocks but have also
tightened our filtering criteria in order to keep our most and least preferred stocks to a
manageable number. While historical returns obviously provide no guarantee whatsoever
as regards to future returns, Figure 73 indicates that our new list of 25 'Undisruptables' has
recently outperformed our screen of 20 'Disruptables'. The former also outperformed
cheap, high quality & momentum non-undisruptables, suggesting that the degree of
disruption has become a relevant factor.
Figure 73: Recent performance of our new list of 25 'Undisruptables' and

20 'Disruptables'
1.5 Our 25 Undisruptable, Cheap, High quality & momentum stocks
Not undisruptable, Cheap, High quality & momentum stocks 38%
1.4
Our 20 Disruptable, Expensive, Low quality stocks
1.3 MSCI AC World
1.2 15%
13%
1.1 5%
1.0
0.9
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
Source: Thomson Reuters, Credit Suisse research

24 January 2017
Key stocks by region

Europe
Figure 74: Key stocks within Europe
4.0 bn) m edian
Undisruptable & Cheap

DLGS.DE 4 2 1 1 Dialog Semiconductor 3.4 DE Semis O 13.71 14.46 6.41 96 78 79 87
G24n.DE 3 1 1 1 Scout24 3.9 DE Software & Services O 0.00 59.53 19.18 84 90 44 56
SNHG.F 4 2 1 1 Steinhoff Intlnl 21.3 DE Cons Durables & Apparel O 10.58 10.06 7.43 79 76 44 81
ENX.PA 3 1 1 1 Euronext NV 3.0 FR Diversified Financials O 0.00 41.12 27.63 62 64 4 39
MNDI.L 3 1 1 1 Mondi 9.8 GB Materials O 5.65 9.34 6.14 68 79 37 80
RB.L 3 1 1 1 Reckitt Benckiser 57.7 GB Household & Personal O 49.88 56.72 43.56 56 81 86 45
JE.L 4 2 1 1 Just Eat 4.5 GB Software & Services O 0.00 41.79 23.49 50 87 70 51
LSE.L 4 1 2 1 London Stock Exchange 12.5 GB Diversified Financials O 46.03 24.60 17.62 51 71 68 32
ORAN.PA 4 1 1 2 Orange 41.3 FR Telecom O 8.44 5.84 4.95 62 52 74 81
DKSH.S 4 1 2 1 DKSH Holdings 4.7 CH Comm & Prof Svs O 0.00 10.59 9.77 54 59 43 50
Undisruptable & Expensive
UU.L 4 1 1 2 United Utilities 7.4 GB Utilities O 2.82 2.69 5.60 2 10 33 0
SHB.L 4 1 2 1 Shaftesbury 3.1 GB Real Estate U 3.03 1.64 6.15 38 65 5
DUFN.S 4 2 1 1 Dufry 7.1 CH Retailing N 7.55 5.40 7.83 17 11 47 7
TEL2b.ST 4 2 1 1 Elior 3.9 SE Consumer Svc U 0.00 14.71 16.71 21 46 82 21
ELIOR.PA 4 2 1 1 Hapag-Lloyd AG 3.2 FR Transports N 0.00 4.09 7.53 28 10 53 9
HLAG.DE 4 1 1 2 Eutelsat Communications 4.4 DE Media N 10.57 6.47 8.72 24 24 23 38
ETL.PA 4 1 1 2 KPN 12.7 FR Telecom N 10.43 7.34 9.82 27 42 48 39
KPN.AS 4 1 2 1 Merlin Entertainments 5.8 NL Consumer Svc N 0.00 10.73 12.53 33 29 34 21
MERL.L 4 1 1 2 Tele2 AB 4.0 GB Telecom N 6.76 3.65 6.31 39 29 94 19
CARLb.CO 4 1 1 2 Carlsberg 13.2 DK Food, Bev & Tobacco U 13.11 13.63 15.12 35 35 43 9
SVT.L 4 1 1 2 Severn Trent 6.3 GB Utilities N 3.41 4.13 4.20 34 24 67 29
O2Dn.DE 4 1 1 2 Telefonica Deutschland 13.0 DE Telecom N 0.00 2.80 4.64 48 6 16 32
SCMN.S 4 1 1 2 Swisscom 23.6 CH Telecom U 7.27 5.91 6.67 43 48 61 26
Disruptable & Expensive
SN.L 7 3 2 2 Smith & Nephew 13.1 GB HC Equipment & Svc N 12.51 7.28 14.10 9 44 14 18
VONN.S 7 3 2 2 Vontobel 3.1 CH Diversified Financials N 11.82 15.03 17.84 40 63 16
AZN.L 7 3 2 2 AstraZeneca 70.6 GB Pharma U 13.53 2.46 6.44 34 18 26 38
WLN.PA 7 2 2 3 Worldline 3.6 FR Software & Services N 0.00 13.40 14.91 25 21 46 25
SPMI.MI 8 2 3 3 Saipem 5.6 IT Energy N 6.70 1.87 4.63 34 6 22 25
PSON.L 8 2 3 3 Pearson 8.2 GB Media U 12.92 9.34 11.21 30 38 43 55
AKERBP.OL 7 2 3 2 Aker BP 6.0 NO Energy N 0.00 0.00 0.00 19 8 78 0
Disruptable & Cheap
AXAF.PA 7 2 3 2 AXA 59.8 FR Insurance O 9.97 9.18 7.16 59 41 78
O=Outperform; N=Neutral; U=Underperform

Source: Credit Suisse research, Credit Suisse HOLT, Thomson Reuters

24 January 2017
Americas
Figure 75: Key stocks in the Americas: ranked within category by z-score
4.0 bn) m edian

EVR.N 3 1 1 1 Evercore Partners 3.1 US Diversified Financials O 21.58 31.37 12.20 86 92 98 88
AJG.N 4 1 1 2 Arthur J. Gallagher 9.3 US Insurance O 23.70 26.98 10.75 83 95 70 88
LUN.TO 3 1 1 1 Lundin Mining 4.3 CA Materials O 4.37 6.12 0.31 82 57 95 88
CELG.OQ 4 2 1 1 Celgene 90.9 US Pharma O 20.53 21.74 9.14 76 86 77 83
VNTV.N 4 2 1 1 Vantiv 12.2 US Software & Services O 0.00 48.72 28.40 73 77 76 43
AET.N 4 1 1 2 Aetna 43.0 US HC Equipment & Svc O 23.72 20.72 10.54 72 62 52 98
ABC.N 4 2 1 1 AmerisourceBergn 17.9 US HC Equipment & Svc O 34.16 53.75 43.09 70 99 27 63
COMM.OQ 4 2 1 1 CommScope 7.2 US Tech Hardware O 18.78 25.16 12.61 69 73 90 84
REGN.OQ 3 1 1 1 Regeneron Pharmaceuticals 38.4 US Pharma O -1.45 24.91 11.03 67 91 15 76
ANET.N 4 2 1 1 Arista Networks 7.0 US Tech Hardware O 0.00 17.37 8.27 67 87 86 66
ALXN.OQ 4 2 1 1 Alexion Pharmaceuticals 30.6 US Pharma O 11.47 24.22 14.47 57 89 16 69
WCC.N 4 1 2 1 Wesco International 3.4 US Capital Goods O 21.01 13.60 9.98 65 75 41 75
HFC.N 4 1 2 1 Holly Frontier 5.4 US Energy O 13.77 6.36 4.02 69 97 25 93
UNH.N 4 1 1 2 UnitedHealth 154.1 US HC Equipment & Svc O 30.62 32.26 21.29 55 90 95 78
CAH.N 4 2 1 1 Cardinal Health 23.6 US HC Equipment & Svc O 17.62 18.82 14.59 61 77 23 81
SERV.N 4 2 1 1 ServiceMaster Global 5.0 US Consumer Svc O 37.02 55.76 42.96 53 64 6 38
AAP.N 4 1 2 1 Advance Auto 12.8 US Retailing O 12.49 10.95 7.87 63 61 35 55
MPC.N 4 1 2 1 Marathon 26.2 US Energy O 0.00 5.57 3.66 68 100 10 94
FDC.N 4 2 1 1 First Data Corporation 14.0 US Software & Services O 38.96 42.47 33.15 51 78 9 16
TSO.N 4 1 2 1 Tesoro Corp. 9.6 US Energy O 6.99 5.92 3.87 64 99 26 97
LALAB.MX 4 2 1 1 Grupo Lala 3.2 MX Food, Bev & Tobacco O 0.00 10.63 7.91 57 54 1 85
JBHT.OQ 3 1 1 1 JB Hunt Transport Services 11.1 US Transports O 12.23 13.11 10.38 57 73 32 61
PPG.N 4 1 2 1 PPG Industries 25.5 US Materials O 9.55 12.74 11.58 59 77 8 78
LREN3.SA 4 1 2 1 Lojas Renner S.A. 4.6 BR Retailing O 12.63 11.06 9.21 51 58 40 49
RSG.N 4 1 1 2 Republic Services 19.3 US Comm & Prof Svs N 11.45 11.75 17.61 15 33 44 6
CAG.N 3 1 1 1 Conagra Brands 17.2 US Food, Bev & Tobacco N 12.31 9.47 16.60 17 26 23 5
SANB11.SA 3 1 1 1 Santander Brasil 35.3 BR Banks N 6.17 4.44 12.29 13 96 17
KO.N 4 1 1 2 The Coca-Cola Co. 177.0 US Food, Bev & Tobacco N 18.50 14.78 19.58 17 48 31 21
WRB.N 3 1 1 1 W.R. Berkley 8.2 US Insurance U 9.37 6.45 9.60 25 41 11
BURL.N 4 1 2 1 Burlington Stores 6.0 US Retailing O 0.00 8.82 11.28 14 25 98 13
RGC.N 4 1 2 1 Regal Entertainment Group 3.5 US Media N 6.84 6.89 10.50 19 33 64 25
K.N 3 1 1 1 Kellogg Company 25.4 US Food, Bev & Tobacco N 14.82 12.56 16.26 20 11 40 15
HII.N 3 1 1 1 Huntington Ingalls 8.8 US Capital Goods N 0.00 10.20 13.58 20 25 90 12
PNR.N 4 2 1 1 Pentair 10.4 US Capital Goods N 17.12 17.93 21.11 23 44 9 42
CNK.N 4 1 2 1 Cinemark Holdings 4.6 US Media N 8.23 7.90 10.74 25 17 80 34
DD.N 4 1 1 2 DuPont de Nemours 64.4 US Materials N 7.90 7.43 9.72 27 30 61 28
DISH.OQ 4 1 2 1 DISH Network 28.8 US Media N 9.65 5.03 6.75 31 9 36 19
WWD.OQ 4 2 1 1 Woodward Inc 4.3 US Capital Goods N 12.18 8.71 9.39 25 42 55 37
FNV.N 4 1 1 2 Franco Nevada 11.2 CA Materials O 0.00 3.90 5.35 32 6 14 5
DOV.N 4 2 1 1 Dover 12.3 US Capital Goods N 17.61 18.11 19.65 37 35 37 53
OXY.N 4 2 1 1 Occidental Petroleum 53.1 US Energy N 8.56 0.35 3.22 46 38 29 51
UPS.N 4 1 2 1 United Parcel Service 99.6 US Transports N 9.83 10.14 11.22 38 32 54 40
CEN.SN 4 1 2 1 Cencosud SA 7.8 CL Food & Staples Retailing N 8.27 6.95 7.71 37 23 80 71
VMI.N 4 2 1 1 Valmont Industries 3.1 US Capital Goods U 10.61 9.38 9.71 41 24 54 54
PCAR4.SA 4 1 2 1 Brasileira de Distribuicao 4.4 BR Food & Staples Retailing N 5.73 4.35 5.81 49 9 64 72
NFLX.OQ 7 3 3 1 Netflix 56.0 US Retailing N 13.32 6.80 13.98 3 30 85 0
SGEN.OQ 9 3 3 3 Seattle Genetics 7.9 US Pharma N 3.83 4.44 10.29 3 19 94 4
FAL.SN 7 3 3 1 Falabella 19.0 CL Retailing U 9.41 6.92 11.14 9 30 46 14
EOG.N 8 2 3 3 EOG Resources 60.5 US Energy N 5.13 -0.01 6.69 14 7 65 10
YHOO.OQ 7 3 3 1 Yahoo Inc. 40.6 US Software & Services N 7.76 1.64 8.50 34 3 87 14
OAS.N 8 2 3 3 Oasis Petroleum 3.6 US Energy N 0.00 0.94 3.73 39 33 93 42
DKS.N 7 2 3 2 Dick's Sporting Goods 6.1 US Retailing N 8.86 7.13 7.34 33 24 96 48
PVH.N 9 3 3 3 Phillips-Van Heusen 7.3 US Cons Durables & Apparel N 15.36 13.11 13.73 39 37 70 45
LPI.N 8 2 3 3 Laredo Petroleum 3.5 US Energy U 0.00 0.76 1.82 43 12 80 50
PBR.N 8 2 3 3 Petrobras 42.9 BR Energy N 3.15 2.61 2.86 11 56 49
CCU.SN 7 3 1 3 Cervecerias Unidas 3.9 CL Food, Bev & Tobacco U 10.70 7.97 8.46 47 40 11 75
SWN.N 7 1 3 3 Southwestern Energy 5.1 US Energy N 7.45 3.32 3.57 46 47 72 86
VET.TO 8 3 3 2 Vermilion Energy 5.0 CA Energy N 0.00 0.00 0.00 11 49 31 29
Disruptable & Cheap
TDG.N 7 2 3 2 Cognizant 34.6 US Software & Services O 20.06 18.14 8.43 84 84 24 80
HBI.N 7 2 2 3 Hanesbrands 8.3 US Cons Durables & Apparel O 10.13 16.60 9.65 76 86 12 93
BLK.N 8 3 3 2 Imperial Oil 29.4 US Energy O 8.31 4.10 0.39 75 57 46 99
GPOR.OQ 8 2 3 3 BlackRock 61.7 US Diversified Financials O 39.69 36.53 24.77 63 91 19 70
IMO.TO 7 3 3 1 TransDigm 13.5 CA Capital Goods O 41.92 33.82 22.84 60 99 2 89
ECA.N 7 2 3 2 Visa 190.3 CA Software & Services O 39.85 45.68 36.59 60 99 5 39
PCLN.OQ 7 2 3 2 MasterCard 117.5 US Software & Services O 38.55 44.39 34.09 57 98 70 42
AMZN.OQ 8 3 3 2 Encana 12.7 US Energy O 1.38 0.47 -0.82 74 56 62 89
CTSH.OQ 7 3 3 1 The Priceline Group 75.8 US Retailing O 32.44 25.33 17.16 54 99 23 52
V.N 7 3 3 1 Amazon com 379.7 US Retailing O 17.64 14.91 9.33 52 86 22 36
MA.N 7 1 3 3 Gulfport Energy 3.2 US Energy O 4.23 0.16 -0.36 60 52 72 64

Source: Credit Suisse research, Credit Suisse HOLT

24 January 2017
Non-Japan Asia
Figure 76: Non-Japan Asian stocks by category: ranked by z-score
4.0 bn) m edian

600066.SS 4 1 1 2 Zhengzhou Yutong Bus 6.1 CN Capital Goods O 15.10 17.92 3.21 98 99 35 99
HZNC.BO 4 2 1 1 Hindustan Zinc 17.1 IN Materials O 15.91 13.21 5.19 92
PPL.KA 4 1 1 2 Pakistan Petroleu 3.4 PK Energy O 16.05 7.31 1.33 90 84 79 85
0338.HK 4 1 1 2 Sinopec Shanghai Petrochemical 9.2 CN Materials O -0.20 7.71 4.55 79 82 76 87
EMAM.BO 3 1 1 1 Emami 3.5 IN Household & Personal O 33.04 47.61 30.14 66
3008.TW 4 2 1 1 Largan Precision 17.9 TW Tech Hardware O 26.06 29.00 17.32 65 97 38 58
002563.SZ 4 2 1 1 Zhejiang Semir Garment 4.0 CN Cons Durables & Apparel O 0.00 14.88 8.33 67 79 43 84
002508.SZ 4 1 2 1 Hangzhou Robam Appliances 4.0 CN Cons Durables & Apparel O 0.00 28.72 16.44 62 98 98 70
2688.HK 3 1 1 1 ENN Energy 5.0 CN Utilities O 9.74 11.10 7.31 71 92 36 66
0914.HK 3 1 1 1 Anhui Conch Cement 14.1 CN Materials O 11.18 8.96 5.15 69 67 72 91
300017.SZ 4 1 2 1 Wangsu Science & Tech 6.1 CN Software & Services O 0.00 19.78 11.34 57 99 32 48
MFG.AX 4 2 1 1 Magellan Financial Group 3.1 AU Diversified Financials O 9.27 36.47 30.50 59 95 73 9
002304.SZ 4 1 1 2 Jiangsu Yanghe Brewery 15.0 CN Food, Bev & Tobacco O 0.00 20.26 13.39 57 93 50 91
0014.HK 3 1 1 1 Hysan Development 4.7 HK Real Estate O 2.87 3.20 2.33 100 78 87
1193.HK 3 1 1 1 China Resources Gas 7.2 CN Utilities O 9.16 14.30 10.30 59 98 53 51
033780.KS 4 1 1 2 KT&G Corp 11.3 KR Food, Bev & Tobacco O 12.89 11.21 8.22 61 63 31 100
600009.SS 4 1 1 2 Shanghai International Airport 7.5 CN Transports O 5.33 7.69 6.25 59 57 26 64
1109.HK 3 1 1 1 China Resources Land 16.9 CN Real Estate O 5.40 8.54 7.52 74 14 67
2314.HK 3 1 1 1 Lee & Man Paper 3.8 HK Materials O 8.03 8.10 6.97 56 76 39 81
NAB.AX 3 1 1 1 National Australia Bank 62.8 AU Banks O 10.32 10.98 9.88 69 21 54
1114.HK 4 1 2 1 Brilliance China Automotive 6.9 CN Autos N -6.76 -0.01 18.59 0 1 93 3
NEST.BO 4 2 1 1 Nestle India 8.3 IN Food, Bev & Tobacco U 22.15 16.60 22.81 11 46 30 2
2912.TW 4 1 2 1 President Chain Store 7.6 TW Food & Staples Retailing N 11.48 12.53 17.31 16 29 67 26
002153.SZ 3 1 1 1 Beijing Shiji Information Tech 3.6 CN Software & Services N 0.00 10.60 13.10 10 34 57 3
3333.HK 3 1 1 1 Evergrande 9.3 CN Real Estate U 4.69 3.02 7.31 5 69 17
2600.HK 4 1 1 2 Aluminum Corporation of China 8.8 CN Materials U -0.91 1.77 6.64 19 48 74 13
1299.HK 4 1 1 2 AIA Group 71.9 HK Insurance N 13.49 14.21 16.42 40 36 9
SUNT.SI 4 1 2 1 Suntec REIT 3.0 SG Real Estate U 3.55 2.19 5.25 11 88 19
018260.KS 3 1 1 1 Samsung SDS 9.0 KR Software & Services N 13.17 8.79 10.65 16 23 45 29
PUBM.KL 4 1 1 2 Public Bank 17.5 MY Banks U 18.25 12.87 15.20 48 58 21
2007.HK 3 1 1 1 Country Garden 12.0 CN Real Estate U 8.99 5.20 8.03 31 100 24
1033.HK 4 1 2 1 Sinopec SSC 7.8 CN Energy U 0.00 -0.01 4.80 31 22 59 10
3377.HK 3 1 1 1 Sino-Ocean 3.4 CN Real Estate U 4.11 2.87 5.44 19 7 26
HSO.AX 4 1 1 2 Healthscope 3.0 AU HC Equipment & Svc N 10.51 6.96 8.38 21 29 17 21
TWE.AX 4 2 1 1 Treasury Wine 5.8 AU Food, Bev & Tobacco N 4.28 5.79 7.61 24 29 71 26
0358.HK 4 1 1 2 Jiangxi Copper Company 7.4 CN Materials U 6.64 1.71 4.68 31 29 83 32
001800.KS 3 1 1 1 Orion Corp. 3.2 KR Food, Bev & Tobacco N 10.56 9.15 10.29 24 34 10 69
CACT.SI 4 2 1 1 Capitaland Commercial Trust 3.2 SG Real Estate U 3.87 4.63 6.07 26 97 29
CBA.AX 3 1 1 1 Commonwealth Bank Australia 109.3 AU Banks N 19.08 15.00 15.96 23 77 28
1918.HK 3 1 1 1 Sunac China 3.5 CN Real Estate U 0.00 6.75 6.93 17 50 24
HLBB.KL 4 1 1 2 Hong Leong Bank 6.5 MY Banks N 11.04 8.24 10.48 46 48 40
2777.HK 3 1 1 1 Guangzhou R&F 4.2 CN Real Estate N 9.24 5.00 6.10 17 81 33
0817.HK 3 1 1 1 China Jinmao 3.1 CN Real Estate N 4.69 4.21 5.45 26 29 37
1898.HK 4 1 1 2 China Coal Energy 9.6 CN Energy U 6.55 2.67 3.83 43 0 87 22
2778.HK 3 1 1 1 Champion REIT 3.2 HK Real Estate U 2.17 2.45 3.45 25 59 48
600588.SS 4 2 1 1 Yonyou Network Tech 4.4 CN Software & Services U 0.00 0.00 0.00 5 13 34 4
GLPL.SI 7 3 1 3 Global Logistic Properties 8.9 SG Real Estate U 0.00 3.29 6.20 46 44 6
036570.KS 7 2 3 2 NCSOFT 5.1 KR Software & Services O 11.73 12.32 13.80 15 21 33 34
035720.KQ 7 2 3 2 Kakao Corp 4.7 KR Software & Services U 0.00 20.13 20.19 12 33 0 2
0293.HK 7 3 2 2 Cathay Pacific 5.3 HK Transports U 4.20 1.16 5.16 32 33 4 12
0991.HK 7 1 3 3 Datang Intl Power Generation 6.6 CN Utilities U 2.51 1.94 5.07 35 2 11 8
MINT.BK 9 3 3 3 Minor International PCL 4.5 TH Consumer Svc N 7.00 6.53 7.20 29 39 37 26
0981.HK 7 3 1 3 Semiconductor Manufacturing 5.9 CN Semis N 0 93 16
Disruptable & Cheap
000651.SZ 7 2 3 2 Gree Electric Appliances 21.2 CN Cons Durables & Apparel O 13.65 20.34 6.32 92 76 97 97
CAIL.BO 9 3 3 3 Cairn India 7.4 IN Energy O 9.97 2.14 -1.79 86
GLOW.BK 7 2 2 3 Glow Energy 3.3 TH Utilities O 6.02 8.45 4.67 76 58 64 83
000333.SZ 7 2 3 2 Midea Group 26.2 CN Cons Durables & Apparel O 0.00 17.08 10.76 62 84 91 83


24 January 2017
Japan
Figure 77: Japanese stocks by category: ranked by z-score
4.0 bn) m edian

1928.T 4 1 1 2 Sekisui House 11.7 JP Cons Durables & Apparel O 4.82 6.16 3.79 69 65 66 90
1801.T 4 1 1 2 Taisei 8.3 JP Capital Goods O 3.49 8.67 5.89 60 82 77 80
4217.T 4 2 1 1 Hitachi Chemical 5.5 JP Materials O 2.83 2.65 2.16 70 62 75 25
6981.T 3 1 1 1 Murata Manufacturing 28.1 JP Tech Hardware O 4.45 7.61 5.94 54 75 56 56
8303.T 3 1 1 1 Shinsei Bank 4.5 JP Banks O 5.81 5.12 4.87 69 51 60
2801.T 3 1 1 1 Kikkoman 6.2 JP Food, Bev & Tobacco N 2.91 4.74 11.07 8 42 51 6
4912.T 3 1 1 1 Lion 4.4 JP Household & Personal N 2.50 4.21 9.59 7 26 100 2
2875.T 4 1 1 2 Tokyu Fudosan 3.7 JP Real Estate N 3.06 2.50 5.00 2 15 2
2802.T 3 1 1 1 Ajinomoto 11.4 JP Food, Bev & Tobacco N 3.33 3.43 6.64 24 49 12 25
8951.T 4 1 1 2 Nippon Building Fund 8.0 JP Real Estate N 3.93 3.60 4.69 45 48 25
2897.T 3 1 1 1 Nissin Foods 5.5 JP Food, Bev & Tobacco N 4.80 4.86 6.15 30 37 66 55
6806.T 3 1 1 1 Hirose Electric 4.4 JP Tech Hardware N 5.14 3.83 5.77 37 36 51 31
8355.T 4 2 1 1 Shizuoka Bank 5.2 JP Banks U 5.51 3.77 5.17 40 13 43
3289.T 3 1 1 1 Toyo Suisan 3.6 JP Food, Bev & Tobacco N 6.55 4.09 4.85 45 35 38 77
8729.T 7 2 2 3 Sony Financial 6.9 JP Insurance N 11.70 7.92 13.37 10 52 24
4523.T 9 3 3 3 Eisai 16.4 JP Pharma U 9.08 0.79 5.38 29 14 68 33
8604.T 7 3 2 2 Nomura Holdings 21.2 JP Diversified Financials N 3.13 5.87 8.73 36 98 30
8570.T 7 2 3 2 Aeon Financial Service 3.9 JP Diversified Financials N 9.01 10.19 12.05 49 4 36
Disruptable & Cheap
8750.T 7 2 2 3 Dai-ichi Life 20.4 JP Insurance O 10.29 9.93 0.56 58 60 91
8591.T 7 3 2 2 Orix 20.9 JP Diversified Financials O 8.74 11.69 10.37 68 62 70


24 January 2017
Appendix A: Small-cap screens

We have screened our global coverage universe for stocks with a market cap of US$3bn
or below for those companies that fit various disruption and valuation, quality and
momentum characteristics. Below we highlight our small caps across all regions, while on
the following pages we highlight all small caps by region that fall into one of the four
quadrants as per Figure 63 on page 36.
Figure 78: Small-cap global stocks with relatively low disruptive risk, high conditional probability, high
quality and high momentum
Technolo Tighteni
Total Global Market CFROI 10
gy / ng CFROI 5 yr Fwd Cond. Momentu
Ticker Risk Competit Company Cap Country Industry (shortened) Rating year Quality Valuation
Industry Regulati 12mFwd CFROI Prob. m
Score ion (USD bn) median
4.0 on
Europe
ZPLAZ.L 4 2 1 1 Zoopla Property 1.7 GB Software & Services O 0.00 60.96 31.88 73 98 86 6
Americas
INCR.OQ 4 2 1 1 INC Research 2.7 US Pharma O 0.00 46.00 25.10 77 75 82 77
FII.N 4 2 1 1 Federated Investors 2.8 US Diversified Financials N 58.79 40.30 22.56 73 89 50 75
ALRM.OQ 3 1 1 1 Alarm.com Holdings Inc. 1.3 US Software & Services O 0.00 13.04 7.75 52 94 86 50
ALJ.N 4 1 2 1 Alon USA Energy, Inc. 0.8 US Energy O 7.71 4.85 4.42 70 88 55 87
RENT3.SA 3 1 1 1 Localiza 2.4 BR Transports N 13.13 11.00 9.24 62 68 94 70
MEGACPO.MX 3 1 1 1 Megacable 2.5 MX Media O 14.16 11.37 8.23 54 74 79 69
NJ-Asia
2186.HK 4 1 1 2 Luye Pharma Group Ltd. 2.1 CN Pharma O 0.00 0.00 0.00 64 65 65 88
CYOU.OQ 4 2 1 1 Changyou 1.3 CN Software & Services N 35.73 6.70 -2.27 87 67 90 95
AQZ.AX 3 1 1 1 Alliance Aviation 0.1 AU Transports O 0.00 6.87 1.38 89 66 72 100
PDNI.KL 4 2 1 1 Padini Holdings Berhad 0.4 MY Retailing O 12.60 12.57 6.71 84 87 63 86
SDF.AX 3 1 1 1 Steadfast 1.3 AU Insurance O 0.00 35.30 22.32 71 100 61 68
TEDU.OQ 4 1 2 1 Tarena International, Inc. 0.9 CN Consumer Svc O 0.00 13.91 5.58 69 82 99 75
CBPO.OQ 3 1 1 1 CN Biologic Prod 2.9 CN Pharma O 27.22 21.43 12.23 56 99 74 68
012630.KS 4 1 1 2 Hyundai Development 2.9 KR Capital Goods O 3.93 9.67 7.52 58 56 86 77
3669.HK 4 1 2 1 China Yongda Automobiles Svc
1.0 CN Retailing O 0.00 9.47 7.10 54 57 68 90
Japan
6256.T 3 1 1 1 NuFlare Technology 0.8 JP Semis N 0.00 9.58 3.26 90 77 58 98
7729.T 3 1 1 1 Tokyo Seimitsu 1.3 JP Semis N 9.20 8.24 6.21 67 67 78 83
6920.T 4 2 1 1 Lasertec 0.5 JP Semis N 9.11 11.89 9.91 53 88 53 66

Source: Company data, Credit Suisse estimates
Figure 79: Small-cap global stocks with relatively high disruptive risk, low conditional probability and low
quality
Technolog
Global Market CFROI 10
Total Risk y/ Tightening CFROI 5 yr Fw d
Ticker Com petiti Com pany Cap (USD Country Industry (shortened) Rating year Cond. Prob. Quality Mom entum Valuation e-Cap Z-score
Score Industry Regulation 12m Fw d CFROI
on bn) m edian
4.0
Americas
CSOD.OQ 7 3 2 2 Cornerstone OnDemand 2.3 US Software & Services N 0.00 6.32 16.06 1 12 49 4 0 -1.8
P.N 7 3 3 1 Pandora Media 3.0 US Software & Services N 0.00 -0.01 10.73 2 21 18 3 0 -1.8
REXX.OQ 7 1 3 3 Rex Energy 0.1 US Energy U 0.62 -0.01 7.15 11 7 29 5 0 -1.6
ZOES.N 7 3 2 2 Zoe's Kitchen 0.4 US Consumer Svc U 0.00 4.26 7.35 14 30 34 4 0 -1.3
NDLS.OQ 7 3 2 2 Noodles & Company 0.1 US Consumer Svc N 0.00 1.26 5.88 23 6 9 3 0 -1.2
SPWR.OQ 8 3 3 2 SunPower 1.0 US Semis N 6.08 -0.01 5.28 32 5 8 14 0 -1.0
YGE.N 8 3 3 2 Yingli Green 0.1 US Semis U 7.78 3.62 7.97 35 22 8 14 0 -0.8
PPY.TO 8 3 3 2 Painted Pony Petroleum 0.6 CA Energy N 0.00 2.39 3.71 26 12 32 38 0 -0.8
GFAMSAA.MX 7 3 3 1 Grupo Famsa 0.2 MX Retailing N 6.76 5.84 6.33 36 38 5 51 0 -0.4
Europe
GEPH.PA 8 3 2 3 CGG 0.2 FR Energy U 3.40 -0.01 3.69 42 42 12 31 0 -0.6
Japan
4552.T 9 3 3 3 JCR Pharma 0.8 JP Pharma N 4.57 5.85 9.05 14 35 49 24 0 -1.3


24 January 2017
Figure 80: Small-cap Americas

Technolog
Total Risk y/ Tightening CFROI 5 yr Fw d Cond. Mom entu
Ticker Com petiti Com pany Cap (USD Country Industry (shortened) Rating year Quality Valuation
Score Industry Regulation 12m Fw d CFROI Prob. m
on bn) m edian
4.0
PARC3.SA 3 1 1 1 FPC Par Corretora 0.7 BR Insurance N 0.00 72.04 28.08 81 78 22 22
INCR.OQ 4 2 1 1 INC Research 2.7 US Pharma O 0.00 46.00 25.10 77 75 82 77
FII.N 4 2 1 1 Federated Investors 2.8 US Diversified Financials N 58.79 40.30 22.56 73 89 50 75
SNCR.OQ 3 1 1 1 Synchronoss Tech 1.7 US Software & Services O 12.36 16.75 6.83 71 83 24 90
PBF.N 4 1 2 1 PBF ENERGY 2.7 US Energy N 0.00 5.89 3.51 63 96 28 96
ALRM.OQ 3 1 1 1 Alarm.com 1.3 US Software & Services O 0.00 13.04 7.75 52 94 86 50
ALJ.N 4 1 2 1 Alon USA Energy 0.8 US Energy O 7.71 4.85 4.42 70 88 55 87
RENT3.SA 3 1 1 1 Localiza 2.4 BR Transports N 13.13 11.00 9.24 62 68 94 70
MEGACPO.MX 3 1 1 1 Megacable 2.5 MX Media O 14.16 11.37 8.23 54 74 79 69
DK.N 4 1 2 1 Delek US 1.4 US Energy O 10.37 4.26 4.07 58 79 20 82
CTAX3.SA 3 1 1 1 Contax Participacoes 0.0 BR Comm & Prof Svs N 8.38 -0.01 11.27 1 13 37 2
ICPT.OQ 4 2 1 1 Intercept Pharma 2.9 US Pharma O 0.00 -0.01 9.74 5 23 13 7
WIFI.OQ 3 1 1 1 Boingo Wireless 0.5 US Telecom O 0.00 -0.01 7.96 6 11 100 16
GOLF.N 3 1 1 1 Acushnet 1.4 US Cons Durables & Apparel N 0.00 6.75 11.17 10 42 84 4
HBOR3.SA 3 1 1 1 Helbor 0.2 BR Cons Durables & Apparel N 8.91 2.70 8.30 14 19 57 26
CVA.N 4 1 1 2 Covanta 2.1 US Comm & Prof Svs N 4.88 3.00 8.02 15 43 43 22
PEGI 4 1 1 2 Pattern Energy 1.7 US Utilities O 0.00 1.22 5.90 15 22 74 30
MB.OQ 4 2 1 1 Mindbody Inc. 1.0 US Software & Services O 0.00 4.23 9.12 22 6 84 9
SRPT.OQ 3 1 1 1 Sarepta Therapeutics 2.0 US Pharma O -14.84 -0.01 6.35 27 4 15 24
HBM.TO 3 1 1 1 HudBay Minerals 1.6 CA Materials N -1.86 2.37 5.12 22 28 94 13
RLOG3.SA 4 1 1 2 Cosan Logstica 0.6 BR Transports O 0.00 1.76 5.85 27 3 83 25
RAPT4.SA 4 1 2 1 Randon 0.4 BR Capital Goods N 7.52 3.87 6.57 26 15 74 41
TCSA3.SA 3 1 1 1 Tecnisa 0.2 BR Cons Durables & Apparel N 6.35 -0.01 5.18 37 40 21 21
ELEMENT.MX 4 2 1 1 Elementia SAB de CV 1.1 MX Capital Goods O 0.00 3.96 5.62 28 5 34 28
OIBR4.SA 4 1 1 2 Oi SA 0.5 BR Telecom N 1.08 1.50 3.86 39 27 67 12
TUES.OQ 4 1 2 1 Tuesday Morning 0.2 US Retailing N 3.96 2.61 5.02 41 8 21 12
SLCE3.SA 4 1 1 2 SLC Agricola 0.5 BR Food, Bev & Tobacco O 2.67 2.78 4.21 36 8 29 58
MILS3.SA 3 1 1 1 Mills Estruturas 0.2 BR Capital Goods O 10.36 0.01 3.58 49 17 38 44
IMI.CN 4 1 2 1 Almacenes Exito 2.3 MX Food & Staples Retailing N 8.93 5.52 7.07 41 47 77 63
MOGa.N 4 2 1 1 Moog 2.3 US Capital Goods N 8.96 6.19 7.01 37 41 33 37
CNV.OQ 7 3 3 1 Cnova 2.4 US Retailing U 0.00 -0.01 24.54 0 16 76 0
CSOD.OQ 7 3 2 2 Cornerstone OnDemand 2.3 US Software & Services N 0.00 6.32 16.06 1 12 49 4
P.N 7 3 3 1 Pandora Media 3.0 US Software & Services N 0.00 -0.01 10.73 2 21 18 3
REXX.OQ 7 1 3 3 Rex Energy 0.1 US Energy U 0.62 -0.01 7.15 11 7 29 5
SN.N 8 2 3 3 Sanchez Energy 0.9 US Energy N 0.00 -0.01 5.85 19 10 84 4
ZOES.N 7 3 2 2 Zoe's Kitchen 0.4 US Consumer Svc U 0.00 4.26 7.35 14 30 34 4
NDLS.OQ 7 3 2 2 Noodles & Company 0.1 US Consumer Svc N 0.00 1.26 5.88 23 6 9 3
CRZO.OQ 8 2 3 3 Carrizo Oil & Gas 2.3 US Energy N 4.02 -0.01 4.49 24 3 79 14
SOL.N 8 3 3 2 ReneSola 0.1 US Semis U 1.46 -0.01 5.75 30 28 65 3
SPWR.OQ 8 3 3 2 SunPower 1.0 US Semis N 6.08 -0.01 5.28 32 5 8 14
CR.TO 8 3 3 2 Crew Energy 0.7 CA Energy N -0.84 -0.01 2.91 29 2 87 27
YGE.N 8 3 3 2 Yingli Green 0.1 US Semis U 7.78 3.62 7.97 35 22 8 14
PPY.TO 8 3 3 2 Painted Pony Petroleum 0.6 CA Energy N 0.00 2.39 3.71 26 12 32 38
BIR.TO 8 3 3 2 Birchcliff Energy 1.6 CA Energy N 2.44 3.31 4.67 27 42 71 43
BTE.TO 8 3 3 2 Baytex Energy 0.9 CA Energy N 4.90 -0.01 3.65 37 5 52 54
BNP.TO 8 3 3 2 Bonavista Energy 0.8 CA Energy N 2.76 -0.01 2.56 44 21 64 48
GFAMSAA.MX 7 3 3 1 Grupo Famsa 0.2 MX Retailing N 6.76 5.84 6.33 36 38 5 51
BCEI.N 8 2 3 3 Bonanza Creek Energy 0.1 US Energy N 0.00 -0.01 2.73 48 13 62 55
TET.TO 8 3 3 2 Trilogy Energy 0.7 CA Energy N 1.77 -0.01 2.39 48 18 66 25
POU.TO 8 3 3 2 Paramount Resources 1.3 CA Energy N -5.49 4.13 5.05 46 20 90 70
EPE.N 8 2 3 3 EP Energy 1.5 US Energy N 0.00 5.17 5.71 50 7 67 85
Disruptable & Cheap
VRNT.OQ 8 3 2 3 Verint Systems 2.3 US Software & Services U 25.10 18.61 7.86 89 84 15 86
WDR.N 8 2 3 3 Waddell & Reed Financial 1.6 US Diversified Financials U 29.16 14.67 7.56 79 78 17 89
DECK.N 7 2 2 3 Deckers Brands 2.0 US Cons Durables & Apparel N 22.10 10.45 4.81 76 74 46 86
KALU.OQ 7 2 3 2 Kaiser Aluminum 1.4 US Materials N 7.60 9.18 5.85 71 82 18 85
PAY.N 7 3 3 1 VeriFone Systems 2.1 US Tech Hardware N 16.48 12.57 10.79 78 74 15 60
AB.N 8 2 3 3 AllianceBernstein 2.2 US Diversified Financials N 23.03 20.32 14.15 58 83 36 73
PETS.OQ 7 3 2 2 PetMed Express 0.5 US Retailing U 23.58 21.65 16.40 57 93 41 54


24 January 2017
Figure 81: Small-cap Europe

Technolog
on bn) m edian
4.0
ZPLAZ.L 4 2 1 1 Zoopla Property 1.7 GB Software & Services O 0.00 60.96 31.88 73 98 86 6
FLOW.AS 4 2 1 1 Flow Traders NV 1.6 NL Diversified Financials O 0.00 25.34 18.12 55 86 0 68
OCDO.L 4 2 1 1 Ocado 2.0 GB Retailing O -4.31 2.96 12.02 4 11 4 2
SRP.L 3 1 1 1 Serco 2.0 GB Comm & Prof Svs N 13.60 5.71 15.37 5 11 87 0
AVV.L 4 2 1 1 AVEVA 1.5 GB Software & Services O 13.72 13.92 21.19 7 3 38 5
INWT.MI 4 1 1 2 INWIT 2.9 IT Telecom O 0.00 3.80 9.94 9 16 71 6
MANU.N 3 1 1 1 Manchester United 2.6 US Media O 0.00 3.59 11.53 11 36 52 2
VALN.S 3 1 1 1 Valora 1.1 CH Retailing O 4.96 5.45 10.05 13 25 76 9
MTLS.OQ 4 2 1 1 Materialise 0.4 US Software & Services O 0.00 2.96 7.11 12 14 13 7
APPS.MC 3 1 1 1 Applus 1.4 ES Comm & Prof Svs O 0.00 7.12 10.23 13 46 42 8
KORI.PA 4 1 1 2 Korian 2.2 FR HC Equipment & Svc N 4.97 3.35 7.23 15 11 32 29
SKS.L 4 1 1 2 Shanks Group 0.7 GB Comm & Prof Svs O 5.60 5.16 8.74 18 25 85 19
AGL.MI 4 2 1 1 Autogrill 2.3 IT Consumer Svc N 5.72 3.91 7.77 20 3 48 11
NOS.LS 4 1 1 2 NOS 2.9 PT Media O 4.70 4.45 6.12 34 2 3 40
PMO.L 7 2 3 2 Premier Oil 0.6 GB Energy U 8.08 -0.01 5.64 24 20 83 8
ECM.L 7 3 3 1 Electrocomponents 2.6 GB Tech Hardware U 9.41 10.66 13.51 23 8 98 19
GEPH.PA 8 3 2 3 CGG 0.2 FR Energy U 3.40 -0.01 3.69 42 42 12 31
Disruptable & Cheap
HDFr.AT 7 3 2 2 Folli Follie 1.3 GR Retailing N 9.13 8.00 1.02 92 61 59 91
CWD.L 8 3 3 2 Countrywide 0.5 GB Real Estate N 0.00 17.40 11.52 76 71 6 87
JUP.L 7 3 1 3 Jupiter Fund Management 2.3 GB Diversified Financials U 52.08 51.90 33.22 68 89 93 79

Figure 82: Small-cap: Japan

Technolog
on bn) m edian
4.0
6256.T 3 1 1 1 NuFlare Technology 0.8 JP Semis N 0.00 9.58 3.26 90 77 58 98
6773.T 3 1 1 1 Pioneer 0.8 JP Cons Durables & Apparel N 0.32 2.84 0.42 81 62 35 84
7729.T 3 1 1 1 Tokyo Seimitsu 1.3 JP Semis N 9.20 8.24 6.21 67 67 78 83
8283.T 3 1 1 1 PALTAC 1.6 JP Retailing O 5.38 5.12 4.87 64 57 48 65
6920.T 4 2 1 1 Lasertec 0.5 JP Semis N 9.11 11.89 9.91 53 88 53 66
2201.T 3 1 1 1 Morinaga & Co 2.1 JP Food, Bev & Tobacco O 0.11 4.54 8.02 16 20 98 32
6756.T 4 2 1 1 Hitachi Kokusai Electric 2.3 JP Tech Hardware O 3.66 4.95 8.78 20 28 85 16
6951.T 4 2 1 1 JEOL 0.5 JP HC Equipment & Svc O 1.69 1.87 5.25 39 43 70 25
6315.T 4 2 1 1 TOWA 0.3 JP Semis O 2.09 5.17 6.52 35 12 97 28
2264.T 3 1 1 1 Morinaga Milk 1.7 JP Food, Bev & Tobacco O -0.74 -0.01 3.30 44 11 91 37
4552.T 9 3 3 3 JCR Pharma 0.8 JP Pharma N 4.57 5.85 9.05 14 35 49 24
4540.T 7 1 3 3 Tsumura & Co 2.0 JP Pharma N 5.79 3.39 4.74 47 25 62 57
Disruptable & Cheap
4555.T 9 3 3 3 Sawai Pharmaceutical 2.0 JP Pharma N 8.71 9.24 4.58 77 84 17 94
3668.T 7 3 2 2 COLOPL Inc 1.1 JP Software & Services N 0.00 8.53 7.45 88 97 1 43
5714.T 7 3 2 2 DOWA Holdings 2.4 JP Materials N 5.28 3.29 2.11 68 87 91 43


24 January 2017
Figure 83: Small-cap: NJ-Asia

Technolog
on bn) m edian
4.0
LEJU.N 3 1 1 1 Leju Holdings 0.5 CN Software & Services O 0.00 4.55 -1.78 95 60 2 86
600004.SS 4 1 1 2 Guangzhou Baiyun Intl Airport 2.3 CN Transports O 6.08 6.74 0.11 92 53 47 90
YAZG.SI 4 2 1 1 Yangzijiang Shipbuilding 2.2 SG Capital Goods N 18.12 5.98 -0.17 91 58 25 99
CYOU.OQ 4 2 1 1 Changyou 1.3 CN Software & Services N 35.73 6.70 -2.27 87 67 90 95
002242.SZ 4 1 2 1 Joyoung 2.0 CN Cons Durables & Apparel N 19.43 19.26 8.83 85 91 37 76
AQZ.AX 3 1 1 1 Alliance Aviation 0.1 AU Transports O 0.00 6.87 1.38 89 66 72 100
PDNI.KL 4 2 1 1 Padini Holdings Berhad 0.4 MY Retailing O 12.60 12.57 6.71 84 87 63 86
2348.HK 3 1 1 1 Dawnrays Pharmaceutical 0.5 CN Pharma O 0.00 16.84 7.68 75 74 24 98
SDF.AX 3 1 1 1 Steadfast 1.3 AU Insurance O 0.00 35.30 22.32 71 100 61 68
SOHU.OQ 3 1 1 1 Sohu.Com 1.5 CN Software & Services N 19.36 1.50 -0.33 84 73 19 63
TEDU.OQ 4 1 2 1 Tarena Intl 0.9 CN Consumer Svc O 0.00 13.91 5.58 69 82 99 75
1368.HK 4 2 1 1 Xtep International 1.0 CN Cons Durables & Apparel N 16.05 9.84 5.10 70 56 48 96
SIQ.AX 4 1 1 2 SmartGroup 0.6 AU Comm & Prof Svs O 0.00 46.17 30.07 58 80 25 54
0182.HK 3 1 1 1 Concord New Energy 0.4 CN Capital Goods O 6.74 9.43 4.60 65 65 46 98
VATE.BO 3 1 1 1 VA Tech Wabag 0.4 IN Utilities O 0.00 9.63 5.28 65 81 6 58
MMS.AX 4 1 1 2 McMillan Shakespeare 0.7 AU Comm & Prof Svs O 21.82 16.35 12.15 63 93 35 90
CBPO.OQ 3 1 1 1 CN Biologic Prod 2.9 CN Pharma O 27.22 21.43 12.23 56 99 74 68
3836.HK 4 1 2 1 China Harmony New Energy Auto 0.7 CN Retailing O 0.00 7.13 3.76 64 59 17 98
SIIC.SI 3 1 1 1 SIIC Environment 0.9 CN Utilities O 6.52 6.69 3.55 64 65 26 66
0934.HK 4 1 1 2 Sinopec Kantons 1.1 CN Energy O 6.10 6.02 3.87 63 89 15 80
0968.HK 3 1 1 1 Xinyi Solar Holdings 2.3 CN Semis O 0.00 14.35 8.68 51 81 39 70
1330.HK 3 1 1 1 Dynagreen Environmental Protection 0.5 CN Comm & Prof Svs O 0.00 9.81 6.66 56 61 24 89
3034.TW 4 2 1 1 Novatek Microelectronics 2.1 TW Semis O 16.86 11.43 9.19 58 72 28 68
012630.KS 4 1 1 2 Hyundai Development 2.9 KR Capital Goods O 3.93 9.67 7.52 58 56 86 77
1363.HK 3 1 1 1 CT Environment 1.4 CN Utilities O 0.00 11.85 8.57 51 100 35 36
3669.HK 4 1 2 1 China Yongda Automobiles 1.0 CN Retailing O 0.00 9.47 7.10 54 57 68 90
ICHI.BK 4 1 1 2 Ichitan Group PCL 0.4 TH Food, Bev & Tobacco O 0.00 8.05 6.37 55 72 5 57
SILO.JK 4 1 1 2 Siloam International Hospitals 1.2 ID HC Equipment & Svc O 0.00 6.05 12.05 5 6 81 4
0268.HK 4 2 1 1 Kingdee International Software 1.1 CN Software & Services N 2.44 1.27 8.43 7 4 51 5
KEPL.SI 4 1 1 2 Keppel Infrastructure Trust 1.3 SG Utilities O 3.38 1.53 8.77 8 2 45 13
CK.BK 4 1 1 2 Ch Karnchang 1.4 TH Capital Goods O 2.80 2.20 8.55 7 8 68 7
5903.TWO 4 1 2 1 Taiwan FamilyMart 1.5 TW Food & Staples Retailing N 7.57 7.92 12.80 9 39 56 14
WSKT.JK 4 1 1 2 Waskita Karya 2.7 ID Capital Goods O 0.00 7.10 9.87 13 36 71 11
0853.HK 3 1 1 1 MicroPort Scientific 1.0 CN HC Equipment & Svc O 11.87 7.44 9.53 12 17 88 29
0956.HK 3 1 1 1 China Suntien Green Energy 0.6 CN Energy N 5.08 2.95 6.43 21 26 23 24
0451.HK 3 1 1 1 GCL New Energy Holdings 1.0 CN Tech Hardware N 0.68 4.13 9.58 26 17 51 14
0861.HK 4 2 1 1 Digital China 1.0 CN Tech Hardware N 11.28 3.83 7.71 23 28 28 24
2360.TW 3 1 1 1 Chroma 1.0 TW Tech Hardware O 12.95 9.34 11.31 17 42 75 30
2347.TW 4 1 2 1 Synnex Technology 1.7 TW Tech Hardware N 6.99 5.81 8.00 21 14 53 39
2331.HK 4 2 1 1 Li Ning 1.3 CN Cons Durables & Apparel O 10.59 7.09 8.14 15 18 60 21
5347.TWO 3 1 1 1 Vanguard Intl Semiconductor 2.9 TW Semis N 4.44 6.07 8.47 24 17 80 38
3702.TW 3 1 1 1 WPG Holdings 2.0 TW Tech Hardware N 8.54 5.97 7.63 22 22 77 29
1065.HK 3 1 1 1 Tianjin Capital Environmental Protection 2.0 CN Comm & Prof Svs N 4.62 7.89 9.35 25 49 64 53
SFUN.N 4 1 1 2 Fang 1.7 CN Software & Services O 0.00 2.68 7.08 35 24 60 28
SSI.PS 4 2 1 1 SSI Group 0.2 PH Retailing N 0.00 3.79 6.18 33 45 34 15
1136.HK 3 1 1 1 TCC International 1.2 CN Materials N 4.12 -0.01 4.14 41 7 19 17
GAMU.KL 3 1 1 1 Gamuda 2.7 MY Capital Goods O 3.38 2.90 5.29 39 21 39 29
0152.HK 3 1 1 1 Shenzhen Intl 2.8 CN Transports O 6.54 4.63 6.07 39 40 41 48
1293.HK 4 1 2 1 Baoxin Auto 0.9 CN Retailing O 0.00 6.23 6.57 32 27 24 43
0636.HK 3 1 1 1 Kerry Logistics 2.1 HK Transports O 0.00 5.57 5.96 36 42 75 49
3673.TW 4 2 1 1 TPK Holdings 0.6 TW Tech Hardware N 18.08 0.64 2.52 49 4 48 65
0881.HK 4 1 2 1 Zhongsheng Group 2.6 CN Retailing O 9.83 7.66 7.71 40 32 87 54
1798.HK 3 1 1 1 China Datang Renewables Power 0.7 CN Utilities O 3.33 4.06 4.63 44 23 29 30
046890.KQ 7 3 3 1 Seoul Semiconductor 0.7 KR Semis N 4.03 2.93 4.49 38 14 58 33
Disruptable & Cheap
BIRD.JK 8 3 3 2 PT Blue Bird 0.5 ID Transports N 0.00 8.55 3.89 74 70 41 92
600578.SS 7 1 3 3 Beijing Jingneng Power 2.9 CN Utilities N 1.69 5.14 3.00 74 79 36 51


24 January 2017
Appendix B: Conditional probability

HOLT's conditional probability measures the probability of the T+5 CFROI for a company
occurring given the most recent achieved value. It is based on the three central
determinants of future cash flow returns: CFROI level, CFROI volatility and asset growth.
Using these variables, as well as the subject company's stage in the competitive life cycle,
we can filter within the HOLT universe to identify a peer group of companies that exhibit
comparable characteristics with the subject company for which the conditional probability
is calculated. This peer group allows us to understand the probability of future operating
performance outcomes for the subject company.
Within this peer group, the HOLT conditional probability uses linking to quantify the
associations of the three determinants of return persistence. This results in a distribution
within which it is possible to understand the likelihood of achieving the 5-year forward
CFROI given the most recent achieved value, past volatility, asset growth rate and
company size. This process uses 90,000 company lifecycles within the HOLT database.
Example 1: Market-implied CFROI is too negative
Figure 84 below shows a confidence band for the T+5 CFROI. The light blue triangle
represents the 25th and 75th percentile bounds of a company's likely return on capital. The
light grey areas represent the 5th and 95th percentile bounds. The company's current share
price implies a CFROI in five years' time (represented by the green dot) that is
substantially below even the 95th percentile bound (the lower light grey bar). We conclude
that the market is currently too pessimistic on the company's future cash flow return.
Figure 84: Credit Suisse HOLT and conditional probability
Source: Credit Suisse HOLT
Example 2: Market-implied CFROI is too optimistic

Figure 85 below shows an example of a company where the share price-implied CFROI
appears far too optimistic based on HOLT's conditional probability. The most likely path for
the company's CFROI is depicted by the dark blue area; however, the current share price
implies a CFROI that is substantially above the 5th percentile upper light grey area. We
believe that the market-implied cash flow forecasts are too optimistic.
Figure 85: Credit Suisse HOLT and conditional probability
Source: Credit Suisse HOLT

24 January 2017
Appendix C: PEERsMapping supply chains

The PEERs map
Credit Suisse PEERs maps out the relationships between companies and competitors,
customers, suppliers, joint ventures and partnerships for over 3,400 listed firms globally
and hence makes the concept of an industry map stock-specific and, importantly, dynamic,
as explained below. This mapping of over 110,000 relationships is built by Credit Suisse
analysts.
We show below an illustration for Marathon. The relationships here are mapped from
Marathon's perspective, though the mirrored images viewed through the eyes of its
suppliers can be displayed and are far more extensive than reflected here. Analysts
classify the materiality of relationships (high, moderate and low), but only focus on
relationships that are genuinely relevant to an investor.
Our dataset allows us to examine the supply chain of any given company in a dynamic
fashion, given we have approximately 10 years of time series data for the relationships
concerned. We acknowledge there are other sources of supply chain data available.
However, in our view, having such data built by the analysts who cover and speak to the
companies concerned provides added quality relative to other data available in terms of
insights and longevity, particularly in emerging markets.
PEERs is accessible through Credit Suisse's research portal, CS Plus, or via HOLT
Lens. Please contact your Credit Suisse sales representative for further details.
Figure 86: PEERs map example Marathon Oil Corp
Source: Credit Suisse PEERs

24 January 2017
Companies Mentioned (Price as of 20-Jan-2017)

3SBio Inc. (1530.HK, HK$7.57) Conagra Brands (CAG.N, $39.13)
ACOM (8572.T, 481) Concord New Energy (0182.HK, HK$0.4)
AIA Group (1299.HK, HK$47.45) Contax Participacoes (CTAX3.SA, R$9.66)
ASOS Plc (ASOS.L, 5170.0p) Cornerstone OnDemand, Inc. (CSOD.OQ, $40.95)
AVEVA (AVV.L, 1895.0p) Cosan Logstica (RLOG3.SA, R$5.95)
AXA (AXAF.PA, 23.1) Costco Wholesale Corporation (COST.OQ, $164.24)
Acushnet Holdings Corp. (GOLF.N, $19.32) Country Garden (2007.HK, HK$4.44)
Advance Auto Parts, Inc. (AAP.N, $171.5) Countrywide (CWD.L, 170.0p)
Aeon Financial Service (8570.T, 2,003) Covanta Holding Corp (CVA.N, $15.9)
Aetna Inc. (AET.N, $122.53) Crew Energy Inc (CR.TO, C$6.09)
Ajinomoto (2802.T, 2,264) DHHI (002204.SZ, Rmb4.5)
Aker BP (AKERBP.OL, Nkr160.8) DISH Network Corporation (DISH.OQ, $60.14)
Alarm.com Holdings Inc. (ALRM.OQ, $28.34) DKSH Holdings (DKSH.S, SFr72.55)
Alexion Pharmaceuticals Incorporated (ALXN.OQ, $131.97) DOWA (5714.T, 955)
Alliance Aviation Services Limited (AQZ.AX, A$0.76) DR.PENG (600804.SS, Rmb21.9)
AllianceBernstein (AB.N, $23.1) Dai-ichi Life (8750.T, 2,064)
Almacenes Exito (IMI.CN, peso14620.0) Datang International Power Generation (0991.HK, HK$2.01)
Alon USA Energy, Inc. (ALJ.N, $11.59) Dawnrays Pharmaceutical (Holdings) Limited (2348.HK, HK$4.6)
Aluminum Corporation of China (2600.HK, HK$3.45) Deckers Brands (DECK.N, $59.68)
Amazon com Inc. (AMZN.OQ, $808.33) Delek US Holdings, Inc. (DK.N, $23.21)
American International Group Inc. (AIG.N, $66.54) Dialog Semiconductor (DLGS.DE, 42.06)
AmerisourceBergen (ABC.N, $83.75) Dick's Sporting Goods (DKS.N, $52.41)
Amkor Technology Inc. (AMKR.OQ, $9.69) Digital China Holdings Limited (0861.HK, HK$6.6)
Anhui Conch Cement Co. Ltd. (0914.HK, HK$24.25) Dixons Carphone Plc (DC.L, 345.0p)
Apple Inc (AAPL.OQ, $120.0) Dollar General (DG.N, $71.0)
Applus (APPS.MC, 10.24) Dollar Tree (DLTR.OQ, $76.56)
Arista Networks (ANET.N, $89.8) Dominion Resources (D.N, $75.79)
Arthur J. Gallagher & Co. (AJG.N, $52.84) Dongfang Electric Corporation Limited (1072.HK, HK$7.66)
AstraZeneca (AZN.L, 4318.5p) Dover Corporation (DOV.N, $79.02)
Autogrill (AGL.MI, 8.34) DuPont de Nemours and Co. (DD.N, $73.03)
Avis Budget Group, Inc. (CAR.OQ, $36.09) Dufry (DUFN.S, SFr138.4)
BAE Systems (BAES.L, 600.5p) DunAnEnvironment (002011.SZ, Rmb9.22)
BT Group (BT.L, 387.15p) Dynagreen Environmental Protection (1330.HK, HK$3.55)
BYD Co Ltd (1211.HK, HK$43.15) ENN Energy Holdings Ltd (2688.HK, HK$37.3)
Baidu (BIDU.C, $175.06) EOG Resources (EOG.N, $105.47)
Baoxin Auto Group Ltd (1293.HK, HK$2.78) EP Energy Corp. (EPE.N, $5.84)
Baytex Energy Corp. (BTE.TO, C$5.41) EasyJet (EZJ.L, 1044.0p)
BeiGene (BGNE.OQ, $32.01) Eisai (4523.T, 6,476)
Beijing Jingneng Power Co Ltd (600578.SS, Rmb4.29) Electrocomponents (ECM.L, 479.9p)
Beijing Shiji Information Technology Co., Ltd (002153.SZ, Rmb22.87) Elementia SAB de CV (ELEMENT.MX, MXN21.77)
Birchcliff Energy (BIR.TO, C$8.63) Eli Lilly & Co. (LLY.N, $76.81)
BlackRock (BLK.N, $381.4) Elior (ELIOR.PA, 20.84)
Boingo Wireless (WIFI.OQ, $12.08) Emami Ltd (EMAM.BO, Rs997.7)
Bonanza Creek Energy Inc. (BCEI.N, $3.01) Encana Corp. (ECA.N, $13.22)
Bonavista Energy Corporation (BNP.TO, C$4.65) Euronext NV (ENX.PA, 41.84)
Brilliance China Automotive Holdings Limited (1114.HK, HK$11.48) Eutelsat Communications (ETL.PA, 17.69)
Bristol Myers Squibb Co. (BMY.N, $49.23) Evercore Partners Inc. (EVR.N, $72.9)
Burlington Stores, Inc. (BURL.N, $83.17) Evergrande (3333.HK, HK$5.26)
CFHI (601106.SS, Rmb5.11) ExxonMobil Corporation (XOM.N, $85.89)
CGG (GEPH.PA, 10.61) FPC Par Corretora de Seguros S.A. (PARC3.SA, R$14.28)
CGN Mining (1164.HK, HK$0.73) Falabella (FAL.SN, CLP$5265.7)
CGN Power Co., Ltd. (1816.HK, HK$2.19) Federated Investors (FII.N, $27.27)
CNNC (601985.SS, Rmb7.01) First Data Corporation (FDC.N, $15.79)
CNNC Intl (2302.HK, HK$2.87) Five Below, Inc. (FIVE.OQ, $39.76)
COLOPL Inc (3668.T, 994) Flow Traders NV (FLOW.AS, 31.58)
CT Environment (1363.HK, HK$1.71) Folli Follie (HDFr.AT, 18.0)
CVS Health (CVS.N, $81.56) Franco Nevada Corporation (FNV.N, $63.88)
Cairn India Ltd (CAIL.BO, Rs263.3) GCL New Energy Holdings (0451.HK, HK$0.4)
Capitaland Commercial Trust (CACT.SI, S$1.56) GameStop Corp. (GME.N, $23.58)
Cardinal Health (CAH.N, $75.03) Gamuda (GAMU.KL, RM4.89)
Carlsberg (CARLb.CO, Dkr615.5) General Electric (GE.N, $30.53)
Carrizo Oil & Gas Inc. (CRZO.OQ, $36.36) Global Logistic Properties (GLPL.SI, S$2.63)
Cathay Pacific (0293.HK, HK$10.48) Glow Energy PCL (GLOW.BK, Bt78.75)
Celgene Corporation (CELG.OQ, $112.66) GoerTek Inc. (002241.SZ, Rmb27.53)
Cencosud SA (CEN.SN, CLP$1876.4) Gree Electric Appliances Inc of Zhuhai (000651.SZ, Rmb25.37)
Ch Karnchang (CK.BK, Bt29.75) Gridsum Holding (GSUM.OQ, $11.75)
Champion REIT (2778.HK, HK$4.19) Grupo Famsa (GFAMSAA.MX, MXN6.29)
Changbao Steel (002478.SZ, Rmb12.76) Grupo Lala (LALAB.MX, MXN28.94)
Changyou.com Ltd (CYOU.OQ, $24.4) Guangzhou Baiyun International Airport Co (600004.SS, Rmb14.17)
China Biologic Products, Inc. (CBPO.OQ, $107.32) Guangzhou R&F (2777.HK, HK$9.8)
China Coal Energy Company Limited (1898.HK, HK$3.8) Gulfport Energy (GPOR.OQ, $21.7)
China Datang Renewables Power (1798.HK, HK$0.7) Han's Laser Technology Co., Ltd (002008.SZ, Rmb22.25)
China Harmony New Energy Auto Holding Limited (3836.HK, HK$3.39) Hanesbrands Inc. (HBI.N, $22.37)
China Jinmao (0817.HK, HK$2.21) Hangzhou Hikvision Digital Technology Co., Ltd. (002415.SZ, Rmb25.12)
China Resources Gas (1193.HK, HK$24.35) Hangzhou Robam Appliances Co Ltd (002508.SZ, Rmb38.13)
China Resources Land (1109.HK, HK$18.76) Hanvon (002362.SZ, Rmb20.7)
China Suntien Green Energy Corporation (0956.HK, HK$1.22) Hapag-Lloyd AG (HLAG.DE, 28.26)
China Yongda Automobiles Services Holding limited (3669.HK, HK$5.14) Harbin Electric Company Limited (1133.HK, HK$3.7)
Chroma (2360.TW, NT$81.9) Healthscope (HSO.AX, A$2.29)
Cinemark Holdings, Inc (CNK.N, $40.26) Heilan Home Co Ltd (600398.SS, Rmb10.73)
Cnova N.V. (CNV.OQ, $5.49) Helbor (HBOR3.SA, R$2.21)
Cobalt International Energy (CIE.N, $1.11) Herc Holdings (HRI.N, $43.12)
Cognizant Technology Solutions Corp. (CTSH.OQ, $56.85) Hewlett Packard Enterprise (HPE.N, $22.88)
CommScope (COMM.OQ, $36.2) Hindustan Zinc Limited (HZNC.BO, Rs287.9)
Commonwealth Bank Australia (CBA.AX, A$81.58) Hirose Electric (6806.T, 14,480)
Companhia Brasileira de Distribuicao (PCAR4.SA, R$57.21) Hitachi Chemical (4217.T, 3,035)
Compaia Cervecerias Unidas (CCU.SN, CLP$7245.1) Hitachi Kokusai Electric (6756.T, 2,608)
24 January 2017
Holly Frontier Corp. (HFC.N, $29.98) Netflix, Inc. (NFLX.OQ, $138.6)

Honeywell International Inc. (HON.N, $117.82) Neway (603699.SS, Rmb16.43)
Hong Leong Bank (HLBB.KL, RM13.16) Nexeo Solutions (NXEO.OQ, $9.23)
Hub Power Company (HPWR.KA, PRs130.61) Next (NXT.L, 3920.0p)
HudBay Minerals Inc. (HBM.TO, C$9.2) Nippon Building Fund (8951.T, 637,000)
Huntington Ingalls (HII.N, $195.71) Nissin Foods Holdings (2897.T, 6,080)
Hysan Development (0014.HK, HK$34.95) Nomura Holdings (8604.T, 701)
Hyundai Development (012630.KS, W43,750) Noodles & Company (NDLS.OQ, $4.1)
INC Research Holdings Inc (INCR.OQ, $50.1) Novatek Microelectronics Corp Ltd (3034.TW, NT$108.5)
INWIT (INWT.MI, 4.5) NuFlare Technology (6256.T, 8,080)
Ichitan Group PCL (ICHI.BK, Bt10.8) Oasis Petroleum (OAS.N, $14.46)
Iflytek (002230.SZ, Rmb26.75) Ocado Plc (OCDO.L, 261.9p)
Imperial Oil Ltd (IMO.TO, C$44.46) Occidental Petroleum (OXY.N, $68.59)
Inchcape (INCH.L, 712.0p) Oi SA (OIBR4.SA, R$2.53)
Infore Enviro (000967.SZ, Rmb14.4) Orange (ORAN.PA, 14.86)
Intercept Pharmaceuticals, Incorporated (ICPT.OQ, $110.14) Orion Corp. (001800.KS, W638,000)
International Airlines Group (ICAG.L, 493.4p) Orix (8591.T, 1,845)
International Business Machines Corp. (IBM.N, $170.55) PALTAC (8283.T, 2,843)
Iochpe-Maxion (MYPK3.SA, R$12.88) PBF ENERGY INC (PBF.N, $24.28)
J Sainsbury (SBRY.L, 262.7p) PCI-STCL (600728.SS, Rmb8.42)
JB Hunt Transport Services (JBHT.OQ, $94.52) PPG Industries, Inc (PPG.N, $99.0)
JCR Pharma (4552.T, 2,813) PT Blue Bird (BIRD.JK, Rp2,750)
JEOL (6951.T, 582) Padini Holdings Berhad (PDNI.KL, RM2.42)
JIULI Hi-tech (002318.SZ, Rmb9.79) Painted Pony Petroleum Ltd (PPY.TO, C$7.94)
JS Shentong (002438.SZ, Rmb19.18) Pak Elektron (PKEL.KA, PRs81.85)
Jiangsu Hengrui Medicine Co. Ltd (600276.SS, Rmb47.0) Pakistan Petroleum Limited (PPL.KA, PRs177.05)
Jiangsu Yanghe Brewery Joint-stock Co., Ltd (002304.SZ, Rmb69.82) Pandora Media (P.N, $13.25)
Jiangxi Copper Company Ltd (0358.HK, HK$12.0) Paramount Resources Ltd (POU.TO, C$17.11)
Joyoung Co Ltd (002242.SZ, Rmb17.8) Pattern Energy (PEGI.OQ, $19.71)
Jupiter Fund Management (JUP.L, 403.0p) Pearson (PSON.L, 589.0p)
Just Eat (JE.L, 524.0p) Pentair Plc (PNR.N, $58.8)
KBR Inc. (KBR.N, $16.43) PetMed Express (PETS.OQ, $22.2)
KPN (KPN.AS, 2.82) Petrobras (PBR.N, $11.2)
KT&G Corp (033780.KS, W99,000) Phillips-Van Heusen (PVH.N, $92.82)
Kaiser Aluminum Corp. (KALU.OQ, $79.9) Pioneer (6773.T, 254)
Kakao Corp (035720.KQ, W80,400) Powertech Technology (6239.TW, NT$84.0)
Kellogg Company (K.N, $72.21) Premier Oil (PMO.L, 96.0p)
Keppel Infrastructure Trust (KEPL.SI, S$0.49) President Chain Store (2912.TW, NT$227.5)
Kerry Logistics (0636.HK, HK$9.7) Public Bank (PUBM.KL, RM20.1)
Kikkoman (2801.T, 3,585) QUALCOMM Inc. (QCOM.OQ, $62.88)
Kingdee International Software Group Co. Ltd (0268.HK, HK$2.96) Qube Holdings Limited (QUB.AX, A$2.42)
Kingsoft Corporation Limited (3888.HK, HK$16.04) RPC Group PLC (RPC.L, 1056.0p)
Korian (KORI.PA, 25.31) Randon (RAPT4.SA, R$4.21)
Kroger Co. (KR.N, $34.09) Reckitt Benckiser (RB.L, 6825.0p)
Laredo Petroleum (LPI.N, $13.56) Regal Entertainment Group (RGC.N, $22.32)
Largan Precision (3008.TW, NT$4390.0) Regeneron Pharmaceuticals, Inc. (REGN.OQ, $362.56)
Lasertec (6920.T, 2,203) ReneSola Ltd (SOL.N, $0.65)
Lear Corporation (LEA.N, $142.0) Republic Services, Inc. (RSG.N, $57.36)
Lee & Man Paper (2314.HK, HK$6.55) Rex Energy Corp. (REXX.OQ, $0.79)
Leju Holdings Limited (LEJU.N, $4.02) Rite Aid (RAD.N, $7.46)
Leshi (300104.SZ, Rmb39.35) Royal Bank of Scotland (RBS.L, 220.9p)
Li Ning Co Ltd (2331.HK, HK$4.91) SIIC Environment Holdings (SIIC.SI, S$0.57)
Lion (4912.T, 1,911) SLC Agricola (SLCE3.SA, R$16.35)
Localiza (RENT3.SA, R$36.85) SOHU.COM INC. (SOHU.OQ, $39.1)
Lojas Renner S.A. (LREN3.SA, R$24.01) SSI Group, Inc. (SSI.PS, P2.57)
London Stock Exchange (LSE.L, 3049.0p) SUFA (000777.SZ, Rmb21.17)
Lundin Mining Corp. (LUN.TO, C$7.58) SZHL (002255.SZ, Rmb8.84)
Luxshare Precision Industry Co., Ltd (002475.SZ, Rmb19.85) Saipem (SPMI.MI, 0.5)
Luye Pharma Group Ltd. (2186.HK, HK$5.08) Samsung SDS (018260.KS, W133,500)
Magellan Financial Group (MFG.AX, A$23.72) Sanchez Energy Corp. (SN.N, $13.21)
Manchester United Plc (MANU.N, $15.85) Santander Brasil (SANB11.SA, R$30.84)
Marathon (MPC.N, $48.76) Sarepta Therapeutics, Inc. (SRPT.OQ, $32.66)
MasterCard Inc. (MA.N, $109.96) Sawai Pharmaceutical (4555.T, 6,110)
Materialise (MTLS.OQ, $8.13) Scout24 (G24n.DE, 33.98)
McMillan Shakespeare (MMS.AX, A$11.08) Seattle Genetics, Inc (SGEN.OQ, $58.79)
Megacable Holdings, S.A.B. De C.V. (MEGACPO.MX, MXN66.04) Sekisui House (1928.T, 1,914)
Meiya Pico (300188.SZ, Rmb19.38) Semiconductor Manufacturing International Corp. (0981.HK, HK$10.8)
Merlin Entertainments (MERL.L, 481.4p) Seoul Semiconductor Co Ltd (046890.KQ, W15,200)
MicroPort Scientific (0853.HK, HK$5.48) Serco (SRP.L, 146.5p)
Micron Technology Inc. (MU.OQ, $21.96) ServiceMaster Global Holdings Inc (SERV.N, $37.58)
Microsoft Corporation (MSFT.OQ, $62.74) Severn Trent (SVT.L, 2210.0p)
Midea Group Co Ltd (000333.SZ, Rmb29.22) ShaanGu (601369.SS, Rmb6.64)
Mills Estruturas e Servicos de Engenharia S.A. (MILS3.SA, R$3.94) Shaftesbury (SHB.L, 888.0p)
Mindbody Inc. (MB.OQ, $25.15) Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (2196.HK, HK$25.9)
Minor International PCL (MINT.BK, Bt34.0) Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (600196.SS, Rmb24.86)
Mondi (MNDI.L, 1789.0p) Shanghai International Airport Co (600009.SS, Rmb27.16)
Moog (MOGa.N, $64.07) Shanks Group PLC (SKS.L, 93.25p)
Morgan Stanley (MS.N, $42.59) Shenzhen Inovance Technology Co., Ltd (300124.SZ, Rmb20.02)
Morinaga & Co (2201.T, 4,640) Shenzhen International (0152.HK, HK$11.1)
Morinaga Milk (2264.T, 788) Shinsei Bank (8303.T, 197)
Murata Manufacturing (6981.T, 15,095) Shizuoka Bank (8355.T, 991)
NCSOFT (036570.KS, W314,000) Sigma Pharmaceuticals (SIP.AX, A$1.19)
NOS (NOS.LS, 5.21) Siloam International Hospitals (SILO.JK, Rp12,100)
NVIDIA Corporation (NVDA.OQ, $104.01) Sino-Ocean (3377.HK, HK$3.38)
Nanfeng Corp (300004.SZ, Rmb13.55) Sinopec Kantons (0934.HK, HK$3.46)
National Australia Bank (NAB.AX, A$30.16) Sinopec SSC (1033.HK, HK$1.49)
NavInfo (002405.SZ, Rmb18.59) Sinopec Shanghai Petrochemical (0338.HK, HK$4.65)
Nestle India (NEST.BO, Rs5891.4) SmartGroup Corporation Ltd (SIQ.AX, A$6.15)

24 January 2017
Smith & Nephew (SN.L, 1205.0p) VA Tech Wabag (VATE.BO, Rs487.8)

Sony Financial (8729.T, 1,914) Valmont Industries (VMI.N, $140.5)
SouFun (SFUN.N, $3.52) Valora (VALN.S, SFr317.5)
Southwestern Energy Co. (SWN.N, $9.41) Vanguard International Semiconductor (5347.TWO, NT$55.5)
Steadfast (SDF.AX, A$2.36) Vantiv, Inc. (VNTV.N, $62.69)
Steinhoff International Holdings (SNHG.F, 4.87) Venustech (002439.SZ, Rmb20.5)
Subsea 7 S.A. (SUBC.OL, Nkr113.1) VeriFone Systems, Inc. (PAY.N, $18.29)
SunPower Corp. (SPWR.OQ, $6.99) Verint Systems Inc. (VRNT.OQ, $37.3)
Sunac China (1918.HK, HK$6.68) Vermilion Energy Inc. (VET.TO, C$55.17)
Sunny Optical Technology Group Co.Limited (2382.HK, HK$41.4) Virgin Australia (VAH.AX, A$0.22)
Suntec REIT (SUNT.SI, S$1.7) Visa Inc. (V.N, $81.84)
Swisscom (SCMN.S, SFr441.8) Vodafone Group (VOD.L, 206.05p)
Synchronoss Technologies, Inc. (SNCR.OQ, $39.18) Vontobel (VONN.S, SFr54.85)
Synnex Technology International Corp (2347.TW, NT$32.35) W.R. Berkley Corporation (WRB.N, $66.81)
Synthesis Elec (300479.SZ, Rmb25.57) WPG Holdings Ltd (3702.TW, NT$37.25)
TCC International Holdings Limited (1136.HK, HK$1.87) WPP (WPP.L, 1843.0p)
TOWA (6315.T, 1,606) Waddell & Reed Financial (WDR.N, $18.69)
TPK Holdings (3673.TW, NT$58.4) Wal-Mart Stores, Inc. (WMT.N, $67.18)
TRS (300229.SZ, Rmb16.71) Wangsu Science & Technology Co. Ltd (300017.SZ, Rmb47.31)
Taisei Corp (1801.T, 818) Waskita Karya (WSKT.JK, Rp2,620)
Taiwan FamilyMart.Co.,Ltd. (5903.TWO, NT$207.5) Weibo Corporation (WB.OQ, $46.91)
Tarena International, Inc. (TEDU.OQ, $15.17) Wesco International (WCC.N, $70.35)
Target Corporation (TGT.N, $64.1) Westone (002268.SZ, Rmb30.53)
Tecnisa (TCSA3.SA, R$2.72) William Hill (WMH.L, 280.4p)
Tele2 AB (TEL2b.ST, Skr73.75) WisdomTree Investments (WETF.OQ, $10.64)
Telefonica Deutschland (O2Dn.DE, 4.17) Wisesoft (002253.SZ, Rmb30.09)
Tencent Holdings (0700.HK, HK$197.7) Wm Morrison (MRW.L, 240.0p)
Tesco (TSCO.L, 198.3p) Woodward Inc (WWD.OQ, $67.6)
Tesoro Corp. (TSO.N, $80.48) Worldline (WLN.PA, 25.38)
The Coca-Cola Company (KO.N, $41.32) Xiangtan Elec (600416.SS, Rmb14.4)
The Priceline Group Inc (PCLN.OQ, $1545.01) Xinyi Solar Holdings (0968.HK, HK$2.62)
Tianjin Capital Environmental Protection (1065.HK, HK$4.04) Xtep International Holdings Ltd (1368.HK, HK$3.2)
Tokuyama (4043.T, 479) Yahoo Inc. (YHOO.OQ, $42.05)
Tokyo Seimitsu (7729.T, 3,565) Yangzijiang Shipbuilding (Holdings) Ltd (YAZG.SI, S$0.82)
Tokyu Fudosan Holdings (3289.T, 694) Yantai Moon (000811.SZ, Rmb14.55)
Toyo Suisan (2875.T, 4,055) Yingli Green Energy Holding (YGE.N, $2.8)
TransDigm (TDG.N, $226.9) Yonyou Network Technology Co., Ltd (600588.SS, Rmb19.3)
Treasury Wine (TWE.AX, A$11.11) Yum! Brands, Inc. (YUM.N, $64.58)
Trilogy Energy Corp (TET.TO, C$7.02) Zhejiang Dahua Technology Co., Ltd (002236.SZ, Rmb13.81)
Truly International (0732.HK, HK$3.27) Zhejiang Semir Garment Co Ltd (002563.SZ, Rmb9.64)
Tsumura & Co (4540.T, 3,305) Zhengzhou Yutong Bus Co., Ltd (600066.SS, Rmb19.82)
Tuesday Morning Corporation (TUES.OQ, $4.5) Zhongsheng Group Holding limited (0881.HK, HK$9.18)
Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA.OQ, $266.22) Zoe's Kitchen, Inc (ZOES.N, $21.69)
United Parcel Service Inc. (UPS.N, $114.96) Zoopla Property Group Plc (ZPLAZ.L, 343.6p)
United Utilities (UU.L, 895.0p) kxjd (300092.SZ, Rmb12.42)
UnitedHealth Group Incorporated (UNH.N, $158.66)
Disclosure Appendix
Analyst Certification
The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views
expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for Hyundai Development (012630.KS)
012630.KS Closing Price Target Price Target Price Closing Price 012630.KS
Date (W) (W) Rating 95,000
04-Feb-14 23,650 30,000 O
23-Apr-14 30,500 35,000
25-Jul-14 37,100 45,000 70,000
23-Sep-14 45,400 52,000

09-Apr-15 56,900 70,000 45,000
10-Jul-15 70,200 87,000
26-Oct-15 53,500 70,000
20,000
27-Apr-16 46,150 65,000
01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
26-Jul-16 44,000 62,000
29-Nov-16 41,850 54,000 O U T PERFO RM
* Asterisk signifies initiation or assumption of coverage.

24 January 2017
3-Year Price and Rating History for KT&G Corp (033780.KS)
17-Apr-14 81,100 72,000 U
17-Jul-14 94,500 88,000 130,000
22-Jan-15 78,400 88,000 N
24-Apr-15 94,900 100,000 110,000
28-Mar-16 108,500 107,000
21-Apr-16 119,000 143,000 O 90,000

70,000
01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
U N D ERPERFO RM
N EU T RA L
O U T PERFO RM
3-Year Price and Rating History for Kakao Corp (035720.KQ)
035720.KQ Closing Price Target Price Target Price Closing Price 035720.KQ
20-Jun-14 101,300 125,000 O
30-Jul-14 130,800 150,000 210,000
06-Oct-14 154,800 220,000
10-Nov-14 139,300 200,000 160,000
13-Feb-15 141,200 175,000
20-Mar-15 121,000 110,000 N 110,000
14-May-15 105,900 105,000

60,000
17-Aug-15 137,100 120,000 *
01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
13-Jan-16 119,800 R
21-Mar-16 112,200 120,000 N O U T PERFO RM
N EU T RA L
12-May-16 106,300 * REST RI C T ED
07-Jun-16 98,200 69,000 U U N D ERPERFO RM
21-Jul-16 92,700 73,000

11-Oct-16 81,500 63,000
3-Year Price and Rating History for NCSOFT (036570.KS)
21-Jan-14 210,500 300,000 O
14-Mar-14 215,000 290,000 320,000
19-May-14 186,500 240,000 270,000

03-Jul-14 186,000 220,000
220,000
14-Aug-14 155,500 190,000
25-Aug-14 142,000 155,000 N 170,000
13-Nov-14 165,500 185,000
120,000
11-Feb-15 209,500 200,000
01- Jan- 2014 01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
31-Jul-15 219,500 210,000
04-Nov-15 210,000 220,000 * O U T PERFO RM
N EU T RA L
28-Jan-16 237,000 170,000 U* U N D ERPERFO RM
12-Feb-16 237,000 182,000
16-May-16 240,500 186,000
13-Jul-16 255,500 199,000
11-Aug-16 252,500 203,000
30-Nov-16 272,000 184,000
16-Jan-17 287,000 350,000 O

24 January 2017
3-Year Price and Rating History for Orion Corp. (001800.KS)
Date (W) (W) Rating 1,860,000
13-Mar-14 881,000 1,140,000 O
18-May-15 1,311,000 1,650,000 1,610,000
18-Aug-15 917,000 1,340,000 1,360,000

11-Feb-16 981,000 1,180,000
1,110,000
05-Jul-16 931,000 1,140,000
17-Aug-16 783,000 815,000 N 860,000
14-Nov-16 705,000 801,000
610,000
* Asterisk signifies initiation or assumption of coverage. 01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
O U T PERFO RM
N EU T RA L
3-Year Price and Rating History for Samsung SDS (018260.KS)
25-Nov-14 428,000 470,000 O*
27-Jan-15 242,000 270,000 N 420,000
01-May-15 256,000 220,000 U
29-Oct-15 275,000 200,000 320,000
22-Jan-16 259,500 180,000
28-Apr-16 168,000 130,000 220,000
06-Dec-16 127,500 125,000 N

120,000
* Asterisk signifies initiation or assumption of coverage. 01- Jan- 2015 01- Jul- 2015 01- Jan- 2016 01- Jul- 2016 01- Jan- 2017
O U T PERFO RM
N EU T RA L
U N D ERPERFO RM
3-Year Price and Rating History for Seoul Semiconductor Co Ltd (046890.KQ)
046890.KQ Closing Price Target Price Target Price Closing Price 046890.KQ
13-Feb-14 44,550 53,000 O
30-Jul-14 34,000 37,000 N 50,000
03-Nov-14 16,200 21,000 40,000

11-Feb-15 17,400 13,000 U
30,000
27-Jul-15 16,000 12,800
26-Oct-15 16,350 15,400 N 20,000
24-Nov-15 18,800 16,800
10,000
02-Feb-16 15,650 16,600
01- Jan- 2015 01- Jan- 2016 01- Jan- 2017
25-Apr-16 15,500 14,300
* Asterisk signifies initiation or assumption of coverage. O U T PERFO RM
N EU T RA L
U N D ERPERFO RM
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts stock rating are defined as follows:
Outperform (O) : The stocks total return is expected to outperform the relevant benchmark* over the next 12 months.
Neutral (N) : The stocks total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stocks total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stocks total return relative to the analyst's coverage universe which
consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and
Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stocks total
return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the
most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings
are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian
ratings were based on (1) a stocks absolute total return potential to its current share price and (2) the relative attractiveness of a stocks total return potential within

24 January 2017
an analysts coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An
Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned
where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18
May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July
2011.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the
company at this time.
Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment
view on the equity security of the company or related products.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamentals and/or
valuation of the sector* relative to the groups historic fundamentals and/or valuation:
Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating Versus universe (%) Of which banking clients (%)
Outperform/Buy* 45% (64% banking clients)
Neutral/Hold* 38% (60% banking clients)
Underperform/Sell* 15% (54% banking clients)
Restricted 3%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Important Global Disclosures
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manner, please contact your sales representative or go to https://plus.credit-suisse.com .
Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-
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Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research:
See the Companies Mentioned section for full company names
The subject company (000333.SZ, LALAB.MX, WLN.PA, VMI.N, 0451.HK, PNR.N, EMAM.BO, UNH.N, 0293.HK, CACT.SI, RLOG3.SA, ICPT.OQ,
LPI.N, CBPO.OQ, HLBB.KL, 1798.HK, HFC.N, SNCR.OQ, 0817.HK, DKS.N, APPS.MC, GFAMSAA.MX, ALXN.OQ, DOV.N, NEST.BO, AXAF.PA,
MA.N, BCEI.N, 8303.T, 1033.HK, SNHG.F, RGC.N, 0152.HK, 1299.HK, ECA.N, CTAX3.SA, COMM.OQ, FNV.N, HBOR3.SA, 6951.T, VAH.AX,
PPL.KA, PARC3.SA, INCR.OQ, 2778.HK, AET.N, KPN.AS, WCC.N, GPOR.OQ, ANET.N, 2777.HK, ELEMENT.MX, 4217.T, TEDU.OQ, SVT.L,
RB.L, CCU.SN, WDR.N, 0853.HK, LSE.L, CARLb.CO, 0991.HK, EVR.N, CR.TO, SN.N, SN.L, MERL.L, LEJU.N, ALRM.OQ, BIRD.JK, K.N,
SPWR.OQ, SPMI.MI, DD.N, KO.N, PBR.N, CTSH.OQ, PMO.L, AGL.MI, SGEN.OQ, CWD.L, VATE.BO, KALU.OQ, 7729.T, SFUN.N, 018260.KS,
DUFN.S, 1136.HK, CSOD.OQ, SOHU.OQ, MB.OQ, IMI.CN, 0338.HK, 6756.T, 1918.HK, GLPL.SI, BURL.N, MNDI.L, JUP.L, ORAN.PA, 2600.HK,
VONN.S, 8591.T, ZPLAZ.L, OIBR4.SA, ABC.N, NAB.AX, TSO.N, VNTV.N, HBM.TO, O2Dn.DE, GOLF.N, MOGa.N, CYOU.OQ, CNK.N, 8604.T,
WRB.N, REXX.OQ, IMO.TO, 001800.KS, KEPL.SI, CAIL.BO, PCLN.OQ, GLOW.BK, HDFr.AT, SERV.N, SANB11.SA, CBA.AX, FLOW.AS,
HLAG.DE, VALN.S, AZN.L, 1109.HK, 6315.T, PSON.L, OXY.N, PVH.N, 046890.KQ, SILO.JK, 012630.KS, VRNT.OQ, SKS.L, 1114.HK, MANU.N,
8750.T, MEGACPO.MX, QUB.AX, 0861.HK, PAY.N, PEGI.OQ, DISH.OQ, LUN.TO, EOG.N, 2186.HK, TCSA3.SA, REGN.OQ, ELIOR.PA, MINT.BK,
AB.N, GEPH.PA, 3836.HK, MMS.AX, SRPT.OQ, SIIC.SI, TDG.N, CEN.SN, 0268.HK, CNV.OQ, 2007.HK, HSO.AX, 3673.TW, YGE.N, PBF.N,
3034.TW, SRP.L, POU.TO, AMZN.OQ, CRZO.OQ, WSKT.JK, RSG.N, SUNT.SI, BNP.TO, 1363.HK, BLK.N, G24n.DE, 0182.HK, 8729.T, OAS.N,
MTLS.OQ, CK.BK, HII.N, WWD.OQ, CELG.OQ, 1898.HK, SWN.N, 1065.HK, 0636.HK, 2801.T, 2897.T, 3333.HK, 4555.T, CAH.N, EPE.N, ETL.PA,
FDC.N, PPG.N, SCMN.S, SOL.N, WB.OQ, 0700.HK, 3888.HK, 1530.HK, 1816.HK, 2196.HK, 600196.SS, NVDA.OQ, BMY.N, LLY.N, AMKR.OQ,
GE.N, CAR.OQ, HON.N, MS.N, XOM.N, NXEO.OQ, KBR.N, CIE.N, GME.N, HPE.N, IBM.N, AAPL.OQ, MU.OQ, QCOM.OQ, WMT.N, TGT.N,
ICAG.L, VOD.L, WPP.L, SUBC.OL, EZJ.L, RBS.L, ASOS.L, BT.L, RPC.L, DC.L, BAES.L, WMH.L, D.N, AIG.N, 8572.T, FIVE.OQ) currently is, or
was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

24 January 2017
Credit Suisse provided investment banking services to the subject company (EMAM.BO, UNH.N, CACT.SI, ICPT.OQ, LPI.N, 1798.HK, SNCR.OQ,
0817.HK, APPS.MC, DOV.N, NEST.BO, AXAF.PA, RGC.N, 1299.HK, ECA.N, COMM.OQ, FNV.N, VAH.AX, PPL.KA, PARC3.SA, INCR.OQ, AET.N,
KPN.AS, WCC.N, GPOR.OQ, TEDU.OQ, MERL.L, LEJU.N, BIRD.JK, K.N, SPWR.OQ, SPMI.MI, DD.N, KO.N, CTSH.OQ, VATE.BO, SFUN.N,
DUFN.S, 1136.HK, MB.OQ, IMI.CN, BURL.N, ZPLAZ.L, ABC.N, NAB.AX, TSO.N, VNTV.N, GOLF.N, WRB.N, IMO.TO, GLOW.BK, SERV.N,
SANB11.SA, CBA.AX, HLAG.DE, VALN.S, OXY.N, SILO.JK, 012630.KS, 1114.HK, 0861.HK, DISH.OQ, 2186.HK, MINT.BK, AB.N, GEPH.PA,
3836.HK, SRPT.OQ, SIIC.SI, TDG.N, CNV.OQ, YGE.N, PBF.N, CRZO.OQ, 1363.HK, BLK.N, G24n.DE, 0182.HK, OAS.N, HII.N, CELG.OQ,
1898.HK, SWN.N, 1065.HK, 2897.T, 3333.HK, EPE.N, FDC.N, PPG.N, SCMN.S, WB.OQ, 3888.HK, BMY.N, LLY.N, GE.N, CAR.OQ, MS.N, XOM.N,
HPE.N, IBM.N, AAPL.OQ, MU.OQ, QCOM.OQ, WMT.N, RBS.L, ASOS.L, DC.L, D.N, AIG.N, 8572.T, FIVE.OQ) within the past 12 months.
Credit Suisse provided non-investment banking services to the subject company (000333.SZ, UNH.N, AXAF.PA, 8303.T, AET.N, WDR.N, KO.N,
ABC.N, NAB.AX, VNTV.N, 8604.T, 001800.KS, CBA.AX, 8750.T, REGN.OQ, AB.N, RSG.N, BLK.N, CELG.OQ, FDC.N, PPG.N, GE.N, MS.N,
XOM.N, IBM.N, RBS.L) within the past 12 months
Credit Suisse has managed or co-managed a public offering of securities for the subject company (UNH.N, ICPT.OQ, LPI.N, 1798.HK, APPS.MC,
NEST.BO, 1299.HK, ECA.N, COMM.OQ, FNV.N, INCR.OQ, AET.N, KPN.AS, WCC.N, GPOR.OQ, MERL.L, SPWR.OQ, KO.N, BURL.N, NAB.AX,
GOLF.N, WRB.N, IMO.TO, SANB11.SA, CBA.AX, HLAG.DE, SILO.JK, 2186.HK, GEPH.PA, SRPT.OQ, TDG.N, PBF.N, BLK.N, OAS.N, HII.N,
SWN.N, FDC.N, SCMN.S, LLY.N, GE.N, MS.N, XOM.N, MU.OQ, RBS.L, DC.L, D.N) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (EMAM.BO, UNH.N, CACT.SI, ICPT.OQ, LPI.N,
1798.HK, SNCR.OQ, 0817.HK, APPS.MC, DOV.N, NEST.BO, AXAF.PA, RGC.N, 1299.HK, ECA.N, COMM.OQ, FNV.N, VAH.AX, PPL.KA,
PARC3.SA, INCR.OQ, AET.N, KPN.AS, WCC.N, GPOR.OQ, TEDU.OQ, MERL.L, LEJU.N, BIRD.JK, K.N, SPWR.OQ, SPMI.MI, DD.N, KO.N,
CTSH.OQ, VATE.BO, SFUN.N, DUFN.S, 1136.HK, MB.OQ, IMI.CN, BURL.N, ZPLAZ.L, ABC.N, NAB.AX, TSO.N, VNTV.N, GOLF.N, WRB.N,
IMO.TO, GLOW.BK, SERV.N, SANB11.SA, CBA.AX, HLAG.DE, VALN.S, OXY.N, SILO.JK, 012630.KS, 1114.HK, 0861.HK, DISH.OQ, 2186.HK,
MINT.BK, AB.N, GEPH.PA, 3836.HK, SRPT.OQ, SIIC.SI, TDG.N, CNV.OQ, YGE.N, PBF.N, CRZO.OQ, 1363.HK, BLK.N, G24n.DE, 0182.HK,
OAS.N, HII.N, CELG.OQ, 1898.HK, SWN.N, 1065.HK, 2897.T, 3333.HK, EPE.N, FDC.N, PPG.N, SCMN.S, WB.OQ, 3888.HK, BMY.N, LLY.N,
GE.N, CAR.OQ, MS.N, XOM.N, HPE.N, IBM.N, AAPL.OQ, MU.OQ, QCOM.OQ, WMT.N, RBS.L, ASOS.L, DC.L, D.N, AIG.N, 8572.T, FIVE.OQ)
within the past 12 months
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (000333.SZ, LALAB.MX,
033780.KS, WLN.PA, VMI.N, 0451.HK, PNR.N, EMAM.BO, UNH.N, 0293.HK, CACT.SI, PDNI.KL, RLOG3.SA, ICPT.OQ, LPI.N, CBPO.OQ,
BIR.TO, HLBB.KL, 1798.HK, HFC.N, SNCR.OQ, 0817.HK, YHOO.OQ, DKS.N, 6773.T, APPS.MC, GFAMSAA.MX, ALXN.OQ, DOV.N, NEST.BO,
AXAF.PA, MA.N, BCEI.N, SLCE3.SA, 8303.T, 1033.HK, HZNC.BO, SNHG.F, 2912.TW, RGC.N, 0152.HK, 1299.HK, YAZG.SI, ECA.N, CTAX3.SA,
COMM.OQ, FNV.N, HBOR3.SA, VAH.AX, PPL.KA, PARC3.SA, INCR.OQ, 2778.HK, AET.N, KPN.AS, WCC.N, GPOR.OQ, 4540.T, ANET.N,
2777.HK, ELEMENT.MX, 4217.T, TEDU.OQ, SVT.L, RB.L, LREN3.SA, PPY.TO, HPWR.KA, CCU.SN, WDR.N, 0853.HK, LSE.L, CARLb.CO,
0991.HK, EVR.N, 1928.T, CR.TO, SN.N, 0358.HK, 0014.HK, 1293.HK, SN.L, MERL.L, LEJU.N, ALRM.OQ, BIRD.JK, K.N, SPWR.OQ, SPMI.MI,
1193.HK, 036570.KS, DD.N, KO.N, PBR.N, CTSH.OQ, PMO.L, 2314.HK, AGL.MI, SGEN.OQ, CWD.L, VATE.BO, 2348.HK, KALU.OQ, SFUN.N,
018260.KS, FAL.SN, DUFN.S, TWE.AX, 1136.HK, CSOD.OQ, SOHU.OQ, MB.OQ, 0914.HK, IMI.CN, 0338.HK, 6756.T, 1918.HK, BURL.N, MNDI.L,
JUP.L, HBI.N, ORAN.PA, 2688.HK, 2600.HK, VONN.S, 8591.T, ZPLAZ.L, OIBR4.SA, ABC.N, NAB.AX, TSO.N, VNTV.N, 3668.T, HBM.TO,
O2Dn.DE, PUBM.KL, RENT3.SA, GOLF.N, MOGa.N, CYOU.OQ, 6981.T, CNK.N, PETS.OQ, 8604.T, WRB.N, REXX.OQ, SSI.PS, IMO.TO,
KEPL.SI, CAIL.BO, PCLN.OQ, GLOW.BK, HDFr.AT, 0981.HK, SERV.N, SANB11.SA, CBA.AX, P.N, FLOW.AS, HLAG.DE, 0934.HK, VALN.S,
AZN.L, CVA.N, 1109.HK, PSON.L, OXY.N, PVH.N, 046890.KQ, SILO.JK, 2802.T, 012630.KS, UPS.N, VRNT.OQ, 1114.HK, MANU.N, 8750.T,
MEGACPO.MX, QUB.AX, CAG.N, 0861.HK, PAY.N, SHB.L, PEGI.OQ, DISH.OQ, LUN.TO, EOG.N, 2186.HK, TCSA3.SA, 035720.KQ, REGN.OQ,
ELIOR.PA, MINT.BK, AB.N, GEPH.PA, 3836.HK, MMS.AX, SRPT.OQ, SIIC.SI, TDG.N, CEN.SN, 0268.HK, 002242.SZ, CNV.OQ, TET.TO,
2007.HK, HSO.AX, 3673.TW, YGE.N, PBF.N, 3034.TW, SRP.L, POU.TO, AMZN.OQ, ALJ.N, TEL2b.ST, 3008.TW, CRZO.OQ, WSKT.JK, RSG.N,
JBHT.OQ, SUNT.SI, BNP.TO, 1363.HK, BLK.N, G24n.DE, 0182.HK, 8729.T, OAS.N, MTLS.OQ, CK.BK, HII.N, WWD.OQ, CELG.OQ, 1898.HK,
SWN.N, 1065.HK, 0636.HK, 2801.T, 2897.T, 3333.HK, 3289.T, 4523.T, 4912.T, 4555.T, CAH.N, EPE.N, ETL.PA, FDC.N, PCAR4.SA, PPG.N,
SCMN.S, SOL.N, V.N, LEA.N, WB.OQ, 0700.HK, 2382.HK, 3888.HK, 300124.SZ, 1530.HK, 1816.HK, 2196.HK, 002415.SZ, 0732.HK, 1072.HK,
600196.SS, 1211.HK, NVDA.OQ, BMY.N, LLY.N, AMKR.OQ, GE.N, CAR.OQ, HON.N, MS.N, XOM.N, NXEO.OQ, KBR.N, CIE.N, GME.N, HPE.N,
IBM.N, AAPL.OQ, MU.OQ, QCOM.OQ, WMT.N, KR.N, RAD.N, CVS.N, TGT.N, COST.OQ, DG.N, SBRY.L, ICAG.L, VOD.L, WPP.L, EZJ.L,
TSCO.L, RBS.L, ASOS.L, BT.L, RPC.L, DC.L, 002008.SZ, BAES.L, MYPK3.SA, WMH.L, YUM.N, D.N, AIG.N, 4043.T, 8572.T, FIVE.OQ, 6239.TW)
within the next 3 months.
Credit Suisse has received compensation for products and services other than investment banking services from the subject company (000333.SZ,
UNH.N, AXAF.PA, 8303.T, AET.N, WDR.N, KO.N, ABC.N, NAB.AX, VNTV.N, 8604.T, 001800.KS, CBA.AX, 8750.T, REGN.OQ, AB.N, RSG.N,
BLK.N, CELG.OQ, FDC.N, PPG.N, GE.N, MS.N, XOM.N, IBM.N, RBS.L) within the past 12 months
As of the date of this report, Credit Suisse makes a market in the following subject companies (GPOR.OQ, TSO.N, P.N, SRPT.OQ, D.N).
Credit Suisse may have interest in (PDNI.KL, HLBB.KL, PUBM.KL, GAMU.KL)
Please visit https://credit-suisse.com/in/researchdisclosure for additional disclosures mandated vide Securities And Exchange Board of India
(Research Analysts) Regulations, 2014
Credit Suisse may have interest in (EMAM.BO, NEST.BO, HZNC.BO, VATE.BO, CAIL.BO)
As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (UNH.N, RLOG3.SA,
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24 January 2017
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Global Equity Themes: Appetite For Disruption

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Global Equity Themes

Globalization: a changing landscape 7

Technological innovation remains central 17

Who's most at risk and who's not? 21

Disruption: is it reflected in expectations? 29

Disruption: is it priced in? 31

Global stock screens 37

Key stocks by region 40

Appendix A: Small-cap screens 44

Appendix B: Conditional probability 48

Appendix C: PEERsMapping supply chains 49

Global Equity Themes 2

Disruption: key factors

0.5 China United States

Source: OECD, "2016 Global R&D Funding Forecast" Source: OECD

Source: Credit Suisse Research Institute Source: Credit Suisse research

Global Equity Themes 3

Figure 9: Examples of some disruptive technologies/services and impacted

Source: Credit Suisse research

The Age of Disruption 2.0

Global Equity Themes 4

O=Outperform-rated U=Underperform-rated; N=Neutral-rated

Global Equity Themes 5

Which factors impact different sectors

Figure 15: Key disruptive developments by sector

Capital goods Business Services

Diversified financials Real estate

Energy and Materials

Metals and Mining

Telecoms and Utilities

Consumer durables and services

Luxury goods Media

Retail Travel & Leisure

Source: Credit Suisse research

Global Equity Themes 6

Globalization: a changing landscape

China to be the biggest global R&D spender by 2020

Global Equity Themes 7

Funding and focus of Chinese R&D is government-driven

Figure 20: Breakdown of academic articles by area (2013)

Global Equity Themes 8

Industries that are likely to see greatest government support

Figure 23: Technology Innovation 2030major programmes

Key industries that China might eventually dominate

Global Equity Themes 9

Big Data / AI Big Data Tencent Biotech Pharma Hengrui Pharma

Global Equity Themes 10

Globalization running out of steam?

Global Equity Themes 11

Figure 25: Global GDP has become less

65 Global trade (% of GDP) Peak 2008

Global Equity Themes 12

The world might be moving to a multipolar one

FDI inflows 0.80 Trade 40

N.Am Asia M.East

Source: Credit Suisse research Source: CTBUH, Credit Suisse research

Global Equity Themes 13

Figure 29 summarises the potential implications of various globalization scenarios.

Figure 29: Potential implications of different scenarios for globalization

Forms of government Spread of democracy. Managed democracies more Reversals in transitions to

Source: Credit Suisse Research Institute

Global Equity Themes 14