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Asia Pacific Equity Research16 July 2010

Astra Agro LestariUnderweightAALI.JK, AALI IJ

2Q results likely to prompt further downgrades -Remain UW, cut PT to Rp14,500

Price: Rp18,550

Price Target: Rp14,500Previous: Rp19,000

IndonesiaPlantations

Aditya Srinath, CFA AC

(62-21) [email protected]

PT J.P. Morgan Securities Indonesia

Simone Yeoh(60-3) [email protected]

JPMorgan Securities (Malaysia) Sdn. Bhd.(18146-X)

Ying-Jian Chan(65) [email protected]

J.P. Morgan Securities Singapore PrivateLimited

16,000

20,000

24,000

Rp

Jul-09 Oct-09 Jan-10 Apr-10 Jul-1

Price Performance

AALI.JK share price (Rp)JCI (rebased)

YTD 1m 3m 12 Abs -22.2% -9.7% -23.3% 10.4%Rel -37.9% -15.0% -26.1% -30.0%

Ast ra Agro Lestar i Tbk PT (Reuters : AALI.JK, B loomberg: AALI IJ)Rp in mn, year-end Dec FY07A FY08A FY09A FY10E FY11E FY12ERevenue (Rp bn) 5,961 8,161 7,424 7,585 8,073 8,811Net Profit (Rp bn) 1,973 2,349 1,660 1,775 1,955 2,163

Asia EPS (Rp) 1,253.17 1,491.48 1,054.31 1,126.90 1,241.42 1,373.42

DPS (Rp) 813 503 658 732 807 893Revenue growth (%) 58.6% 36.9% -9.0% 2.2% 6.4% 9.1%EPS growth (%) 150.7% 19.0% -29.3% 6.9% 10.2% 10.6%ROCE 81.2% 72.7% 45.6% 36.2% 35.6% 35.7%ROE 58.0% 51.0% 29.2% 27.1% 27.2% 27.3%P/E 14.8 12.4 17.6 16.5 14.9 13.5P/BV 7.2 5.7 4.7 4.3 3.9 3.4EV/EBITDA 9.2 8.0 10.0 10.4 9.5 8.5Dividend Yield 4.4% 2.7% 3.5% 3.9% 4.3% 4.8%

Shares O/S (mn) 1,575Market Cap (Rp mn) 29,211,520Market Cap ($ mn) 3,228

Price (Rp) 18,550Date Of Price 15 Jul 10Free float (%) 20.0%

Avg Daily Volume (mn) 0.72 Avg Daily Value (Rp bn) 37.29 Avg Daily Value ($ mn) 4.12JCI 2,98Exchange Rate 9,049Fiscal Year End Dec

Source: Company data, Bloomberg, J.P. Morgan estimates.

See page 7 for analyst certification and important disclosures, including non-US analyst disclosu res.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making theirinvestment decision.

2Q results preview: We expect 2QFY10E net profits (due on 28 aftermarket) of Rp491bn, down about 11% y/y, but up sharply from 1Q.AALI has missed estimates for each of the last three quarters, and riskscould be on the downside. Our 1HFY10E PAT represents 33% ofconsensus FY10E profits, suggesting downside risk to forecasts even if

profits are somewhat higher than we forecast in 2Q.

Cutting forecasts, consensus appears optimistic: AALIs 1HFY10CPO output declined by 5.7% y/y. We are therefore reducing FY10Evolumes by a further 2% (down 6.2% y/y) and building in higher costtrends as seen so far this year. The net impact is a 9% decline in FY10EEPS. Our new EPS forecasts are 23% below consensus.

PT cut to Rp14,500, retain Underweight: 2Q results could precipitatefurther revisions lower, and we therefore recommend selling ahead ofresults. The stock has fallen by 23% over the last three months, but wesee more underperformance ahead, as earnings remain at risk. AALItrades at 12x 12M forward consensus EPS. If we apply the samemultiple to our own lower-than-Street forecasts, we arrive at a pricetarget of Rp14,500, which we set as our new June 2011 PT. This isconsistent with our DCF valuation of AALI, based on a M$2,450 long-term CPO price, 16% cost of equity, and 5% terminal growth rate.

Medium-term risks - acquisitions or large dividend payouts: Apart

from commodity prices, the medium-term risk we see to our valuationand PT comes from cash flows. AALI operates at a 30% ROE &

ploughs back 35% of profits, implying a sustainable growth rate of10.5%. Clearly, with a terminal growth of 5% as assumed AALI maygenerate substantial surplus cash flows to reinvest, which could result ina higher payout ratio or M&A possibilities. Either of these could provideupside to valuations and, hence, our PT if they materialize.

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Aditya Srinath, CFA(62-21) [email protected]

Company Description P&L sensitivity metrics (FY10E) EBITDA EPSimpact (%) impact (%)

Sales volume growth assumption -0.9%Impact of each 5% 7.20% 7.60%

CPO Average Selling price (Rp/Kg) 6,300Impact of each 1% 1.80% 1.70%

CPO Production Cost (Rp/kg) 3230Impact of each 5% 3.60% 3.80%

Fresh Fruit Bunch Yield (T/Ha) 19.6Impact of each 10% 15.40% 14.60%

Source: J. P. Morgan estimates.

Price target and valuation analysis

Astra Agro Lestari is the largestplantation company listed in Indonesia. AALI grows oil palm in estates acrossIndonesia, and accrues 98% of itsrevenues from Palm Oil and relatedproducts. It accounts for approximately5% of Indonesia's total CPO output. Thecompany is 80% owned by AstraInternational and is part of the JardineMatheson group.

FY09 ex-Factory Cost Structure/TCPO

Our June 2011 price target is set using a DCF methodology. We use a9.5% risk-free rate for Indonesia and assume a 1.23 beta (based on

Bloomberg Data), yielding a 16.3% cost of equity. Our model assumesthat AALI grows its acreage 4% and generates 40% operating marginover the long term with a 25% tax rate. We have changed our terminalgrowth rate to 5% from 13%, reflecting the slower pace of expansion.

Risk free rate: 9.5%Market risk premium: 5.5%Beta: 1.23

Net Debt/equity: -29%Cost of Equity 16.3%Terminal g: 5.0%

Source: Company Data.EPS: J.P. Morgan vs. consensus

J. P. Morgan Consensus

FY10E 1,127 1,462FY11E 1,241 1,653FY12E 1,373 1,758Source: J. P. Morgan, Bloomberg BEST estimates.

At our price target, AALI would trade at 12.6x FY10E PER and a 7.8xFY10E EV/EBITDA. AALI's beta has risen over time, along with CPO

price volatility. Our PT implicitly discounts CPO at M$2,450/T.

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2Q results previewAALI reported that 1H CPO output was lower by 5.7% to 471 kMT. We assume that

2Q output was completely sold (i.e., almost 100 kMT in June compared to 70 kMTin each of the previous two months). Malaysian CPO prices averaged a little overM$2520/MT in 2Q. We also forecast that the increase in volumes q/q should result inlower per unit costs and assume cost per unit of palm product declined by 9% q/q.

With these assumptions, we expect 2QFY10E PAT to be 11% lower y/y but sharplyhigher q/q. We have erred in overestimating profits in each of the last three quarters,and risks could be on the downside.

Table 1: Astra Agro Lestari - 2Q FY10E Results PreviewRp Bn

1QFY10 2QFY10E % y/y % q/q 2QFY09Total revenues 1,633 1,880 -11.7% 15.1% 2,129

Gross prof it (inc Depn) 561 799 -19.9% 42.3% 997Cash Operating Costs 1,132 1,146 -4.1% 1.3% 1,195EBITDA 501 734 -21.5% 46.4% 935Operating prof it 435 668 -23.7% 53.5% 875Interest Expense 4 4 1890.0% 8.1% 0Interest Income 10 9 -38.0% -9.1% 15Operating PBT 441 673 -24.3% 52.5% 889Plasma Related Costs (3) (3) 63.9% 6.1% (2)Other Income/Expense (17) 10 59.5% -160.4% 6Forex Gains/Losses (19) (2) -97.1% -89.0% (71)PBT 403 678 -17.6% 68.3% 822Tax Provision 119 169 -32.2% 42.9% 250Net profit 284 508 -11.2% 78.9% 572Minority Interest (12) (18) -12.6% 45.5% (20)Conso lidated Net Profits 272 491 -11.1% 80.4% 552EBITDA % 30.7% 39.0% 43.9%

Gross Margin % 34.4% 42.5% 46.8%Source: Company data, J.P. Morgan estimates.

Downside risks to full-year earnings if results are as we expectIf 2Q pans out as we expect, 1HFY10E net profits would stand at 33% of consensusFY10E EPS, suggesting substantial risk to estimates, unless we see a significantramp up in either output or CPO prices in 2H. We expect CPO to remain range

bound, with some risk of minor near-term downside.

Figure 1: CPO Near Month Futures PricesM$/T

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Earnings revised lower, we expect the Street to followWe adjust our earnings forecasts for Astra Agro incorporating the slightly worse-

than-expected drip in volumes (cut by 2%). We also adjust our cost estimates foroperating leverage, and incorporating trends that we expect to see in 1H results.Overall, the impact is a 9-12% downward revision to FY10E/FY11E EPS

Table 2: Revisions to Earnings EstimatesRp Bn (except EPS)

FY10E FY11EJPM New JPM old % Var JPM New JPM old % var

Revenues 7,585 7,737 -2.0% 8,073 8,515 -5.2%EBITDA 2,649 2,892 -8.4% 2,868 3,245 -11.6%Pretax profit 2,498 2,743 -8.9% 2,752 3,136 -12.3%Net profit (adj) 1,775 1,949 -8.9% 1,955 2,228 -12.3%EPS 1,127 1,238 -8.9% 1,241 1,415 -12.3%Source: J.P. Morgan estimates.

Further downside to the stock price likelyOur new forecasts are 23% below consensus, and we believe that Street earningsestimates, which have been drifting lower, could see further cuts after 2Q results arereleased (probably after market close on 28 July).

AALI, which has declined by 23% over the last three months, trades at 12x 12-monthforward consensus earnings but at over 15x JPME EPS. If the market accepts ourview on earnings, and the stock continues to trade at 12x forward earnings, we see adownside risk to the stock price to about Rp14,500 or so.

Figure 2: AALI 12M forward P/E band (on JPM Forecasts)Rp

05,000

10,00015,00020,00025,00030,00035,00040,000

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Figure 3: AALI 12M forward P/E band (on Consensus Forecasts)Rp

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JPM Q-ProfileAstra Agro Lestari (INDONESIA / Consumer Staples)As Of: 09-Jul-2010 [email protected]

Local Share Price Current: 18600.00 12 Mth Forward EPS Current : 16 34 .5 6

Earnings Yield (& local bond Yield) Current: 9% Implied Value Of Growth* Current: 33.25%

PE (1Yr Forward) Current: 11.4x Price/Book Value Current: 4.5x

ROE (Trailing) Current: 28.89 Dividend Yield (Trailing) Current: 1.94

Summary

Astra Agro Lestari 3239.82 As Of:INDONESIA 3.155578 SEDOL 6092498 Local Price: 18,600.00Consumer Staples Food Products EPS: 1634.56

Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg12mth Forward PE 11.38x 3.09 21.24 8.16 9.66 17.59 1.72 -73% 87% -28% -15%P/BV (Trailing) 4.51x 0.69 12.25 2.91 3.75 8.63 -1.12 -85% 172% -35% -17%Dividend Yield (Trailing) 1.94 0.00 16.12 2.88 3.04 7.98 -1.90 -100% 732% 48% 57%ROE (Trailing) 28.89 5.82 74.61 25.33 27.83 61.38 -5.71 -80% 158% -12% -4%Implied Value of Growth 33.3% -0.88 0.69 0.30 0.28 0.84 -0.29 -366% 106% -11% -16%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

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Astra Agro Lestari: Summary of FinancialsIncome Statement Cash flow statementRp in bi ll ions, year end Dec FY08 FY09 FY10E FY11E FY12E Rp in bi ll ions, year end Dec FY08 FY09 FY10E FY11E FY Revenues 8,161 7,424 7,585 8,073 8,811 EBIT 3,354 2,596 2,367 2,562 2,825

% change Y/Y 36.9% (9.0%) 2.2% 6.4% 9.1% Depr. & amortization 214 250 270 292 316EBITDA 3,562 2,839 2,630 2,847 3,134 Change in working capital -480 105 359 -31 -46

% change Y/Y 16.1% -20.3% -7.4% 8.3% 10.1% Taxes -1115 -796 -649 -715 -792EBIT 3,354 2,596 2,367 2,562 2,825 Cash flow from operations 2,407 2,016 2,397 2,210 2,426

% change Y/Y 16.7% NM NM 8.2% 10.3%EBIT Margin 41.1% 35.0% 31.2% 31.7% 32.1% Capex -1,101 -1,362 -212 -502 -671Net Interest 129 27 103 160 189 Disposal/(purchase) - - - - -Earnings before tax 3,546 2,500 2,498 2,752 3,044 Net Interest 129 27 103 160 189

% change Y/Y 21.7% -29.5% -0.1% 10.2% 10.6% Other 51 -163 -70 -70 -70Tax -1,113 -771 -649 -715 -792 Free cash flow 1,306 654 2,184 1,708 1,755

as % of EBT 31.4% 30.8% 26.0% 26.0% 26.0%Net income (reported) 2,349 1,660 1,775 1,955 2,163 Equity raised/(repaid) 0 0 0 0 0

% change Y/Y 19.0% -29.3% 6.9% 10.2% 10.6% Debt raised/(repaid) -5 0 0 0 0Shares outstanding 2 2 2 2 2 Other -704 466 45 45 45EPS (reported) 1,491.48 1,054.31 1,126.90 1,241.42 1,373.42 Dividends paid -793 -1,036 -1,153 -1,271 -1,406

% change Y/Y 19.0% (29.3%) 6.9% 10.2% 10.6% Beginning cash 1,013 868 789 1,794 2,206 Ending cash 868 789 1,794 2,206 2,530 DPS 503 658 732 807 893

Balance sheet Ratio AnalysisRp in bi ll ions, year end Dec FY08 FY09 FY10E FY11E FY12E Rp in bi ll ions, year end Dec FY08 FY09 FY10E FY11E FY Cash and cash equivalents 868 789 1,794 2,206 2,530 EBITDA margin 43.6% 38.2% 34.7% 35.3% 35.6%

Accounts receivable 16 150 42 44 48 Operating margin 41.10% 34.96% 31.21% 31.73% 32.06%Inventories 781 610 623 664 724 Net margin 28.8% 22.4% 23.4% 24.2% 24.5%Others 310 166 312 332 362

Current assets 1,976 1,714 2,771 3,246 3,664 Sales per share growth 36.9% (9.0%) 2.2% 6.4% 9.1%LT investments - - - - - Sales growth 36.9% (9.0%) 2.2% 6.4% 9.1%Net fixed assets 4,124 5,242 5,192 5,408 5,770 Net profit growth 19.0% -29.3% 6.9% 10.2% 10.6%Total Assets 6,520 7,571 8,647 9,409 10,259 EPS growth 19.0% (29.3%) 6.9% 10.2% 10.6% Liabilities Interest coverage (x) - - - - -Short-term loans 0 0 0 0 0Payables 291 238 291 310 338 Net debt to equity -16.8% -12.7% -26.2% -29.3% -30.5%Others 725 701 1,058 1,071 1,091 Sales/assets 1.37 1.05 0.94 0.89 0.90Total current liabilities 1,016 939 1,349 1,381 1,429 Assets/equity 1.26 1.29 1.28 1.25 1.23Long-term debt 0 0 0 0 0 ROE 51.0% 29.2% 27.1% 27.2% 27.3%Other liabilities 167 206 206 206 206 ROCE 72.7% 45.6% 36.2% 35.6% 35.7%Total Liabilities 1,183 1,145 1,555 1,587 1,635Shareholders' equity 5,156 6,226 6,847 7,532 8,289BVPS 3,274 3,954 4,348 4,783 5,416Source: Company reports and J.P. Morgan estimates.

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Analyst Certification:The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarilyresponsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, withrespect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this reportaccurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the researchanalysts compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by theresearch analyst(s) in this report.

Important Disclosures

Client of the Firm: Astra Agro Lestari is or was in the past 12 months a client of JPMSI.

0

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Price(Rp)

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Astra Agro Lestari (AALI.JK) Price Chart

OW Rp16,700 OW Rp30,000 OW Rp31,500 N Rp9,000 OW Rp25,000

Rp12,700 OW Rp18,500 OW Rp33,200 OW Rp9,000 OW Rp21,500 UW Rp19,000

Rp10,000OW Rp16,200 OW Rp17,000OW Rp36,300 OW Rp22,000 N Rp15,000 OW Rp26,700 OW Rp26,000

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.Break in coverage Feb 28, 2005 - Sep 08, 2005. This chart shows J.P. Morgan's continuing coverage of this stock; thecurrent analyst may or may not have covered it over the entire period.

J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.

Date Rating Share Price(Rp)

Price Target(Rp)

02-Oct-06 OW 8900 10000

24-Nov-06 OW 10600 12700

08-Jan-07 OW 12250 16700

06-Mar-07 OW 12050 16200

28-Aug-07 OW 14250 17000

20-Sep-07 OW 15800 18500

14-Nov-07 OW 22900 30000

01-Feb-08 OW 30200 36300

24-Apr-08 OW 25100 33200

06-May-08 OW 23900 31500

12-Aug-08 OW 17600 22000

12-Nov-08 OW 8100 9000

12-Dec-08 N 9100 9000

23-Apr-09 N 15050 15000

12-Jun-09 OW 18700 21500

12-Aug-09 OW 22150 25000

04-Dec-09 OW 23850 26700

16-Apr-10 OW 24200 26000

28-Apr-10 UW 22650 19000

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analysts (or the analysts teams) coverage universe.] J.P. Morgan Cazenoves UK Small/Mid-Cap dedicated researchanalysts use the same rating categories; however, each stocks expected total return is compared to the expected total return of the FTSEAll Share Index, not to those analysts coverage universe. A list of these analysts is available on request. The analyst or analysts teamscoverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying

analyst(s) coverage universe.

Coverage Universe: Aditya Srinath, CFA: Astra Agro Lestari (AALI.JK), Astra International (ASII.JK), Bank CentralAsia (BCA) (BBCA.JK), Bank Danamon (BDMN.JK), Bank Niaga (BNGA.JK), Bank Pan Indonesia (Panin) (PNBN.JK),Bank Rakyat Indonesia (BBRI.JK), London Sumatra Indonesia (LSIP.JK), PT Bakrie & Brothers, Tbk (BNBR.JK), PTBank Internasional Indonesia (BNII.JK), PT Bank Mandiri Tbk. (BMRI.JK), United Tractors (UNTR.JK)

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J.P. Morgan Equity Research Ratings Distribution, as of June 30, 2010

Overweight(buy)

Neutral(hold)

Underweight(sell)

JPM Global Equity Research Coverage 46% 42% 12%IB clients* 49% 46% 31%

JPMSI Equity Research Coverage 44% 48% 9%IB clients* 68% 61% 53%

*Percentage of investment banking clients in each rating category.For purposes only of NASD/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category.

Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks onany securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named onthe front of this note or your J.P. Morgan representative.

Analysts Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon

various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, whichinclude revenues from, among other business units, Institutional Equities and Investment Banking.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates of JPMSI, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMSI,and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, publicappearances, and trading securities held by a research analyst account.

Other Disclosures

J.P. Morgan is the global brand name for J.P. Morgan Securities Inc. (JPMSI) and its non-US affiliates worldwide. J.P. Morgan Cazenove is a brand name for equity research produced by J.P. Morgan Securities Ltd.; J.P. Morgan Equities Limited; JPMorgan Chase Bank, N.A., DubaiBranch; and J.P. Morgan Bank International LLC.

Options related research: If the information contained herein regards options related research, such information is available only to persons who

have received the proper option risk disclosure documents. For a copy of the Option Clearing Corporations Characteristics and Risks ofStandardized Options, please contact your J.P. Morgan Representative or visit the OCCs website athttp://www.optionsclearing.com/publications/risks/riskstoc.pdf.

Legal Entities DisclosuresU.S.: JPMSI is a member of NYSE, FINRA and SIPC. J.P. Morgan Futures Inc. is a member of the NFA. JPMorgan Chase Bank, N.A. is amember of FDIC and is authorized and regulated in the UK by the Financial Services Authority. U.K.: J.P. Morgan Securities Ltd. (JPMSL) is amember of the London Stock Exchange and is authorised and regulated by the Financial Services Authority. Registered in England & Wales No.2711006. Registered Office 125 London Wall, London EC2Y 5AJ. South Africa: J.P. Morgan Equities Limited is a member of the JohannesburgSecurities Exchange and is regulated by the FSB. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated

by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong. Korea: J.P. Morgan Securities (Far East) Ltd,Seoul Branch, is regulated by the Korea Financial Supervisory Service. Australia: J.P. Morgan Australia Limited (ABN 52 002 888 011/AFSLicence No: 238188) is regulated by ASIC and J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066) is aMarket Participant with the ASX and regulated by ASIC. Taiwan: J.P.Morgan Securities (Taiwan) Limited is a participant of the Taiwan StockExchange (company-type) and regulated by the Taiwan Securities and Futures Bureau. India: J.P. Morgan India Private Limited is a member ofthe National Stock Exchange of India Limited and Bombay Stock Exchange Limited and is regulated by the Securities and Exchange Board of

India. Thailand: JPMorgan Securities (Thailand) Limited is a member of the Stock Exchange of Thailand and is regulated by the Ministry ofFinance and the Securities and Exchange Commission. Indonesia: PT J.P. Morgan Securities Indonesia is a member of the Indonesia StockExchange and is regulated by the BAPEPAM LK. Philippines: J.P. Morgan Securities Philippines Inc. is a member of the Philippine StockExchange and is regulated by the Securities and Exchange Commission. Brazil: Banco J.P. Morgan S.A. is regulated by the Comissao de ValoresMobiliarios (CVM) and by the Central Bank of Brazil. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P. Morgan Grupo Financiero is amember of the Mexican Stock Exchange and authorized to act as a broker dealer by the National Banking and Securities Exchange Commission.Singapore: This material is issued and distributed in Singapore by J.P. Morgan Securities Singapore Private Limited (JPMSS) [MICA (P)020/01/2010 and Co. Reg. No.: 199405335R] which is a member of the Singapore Exchange Securities Trading Limited and is regulated by theMonetary Authority of Singapore (MAS) and/or JPMorgan Chase Bank, N.A., Singapore branch (JPMCB Singapore) which is regulated by theMAS. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-X) which is aParticipating Organization of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission inMalaysia. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities andExchange Commission of Pakistan. Saudi Arabia: J.P. Morgan Saudi Arabia Ltd. is authorised by the Capital Market Authority of the Kingdomof Saudi Arabia (CMA) to carry out dealing as an agent, arranging, advising and custody, with respect to securities business under licence number
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35-07079 and its registered address is at 8th Floor, Al-Faisaliyah Tower, King Fahad Road, P.O. Box 51907, Riyadh 11553, Kingdom of SaudiArabia. Dubai: JPMorgan Chase Bank, N.A., Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registeredaddress is Dubai International Financial Centre - Building 3, Level 7, PO Box 506551, Dubai, UAE.

Country and Region Specific DisclosuresU.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA byJPMSL. Investment research issued by JPMSL has been prepared in accordance with JPMSL's policies for managing conflicts of interest arisingas a result of publication and distribution of investment research. Many European regulators require that a firm to establish, implement andmaintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article 19 (5), 38, 47 and 49 of the FinancialServices and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document mustnot be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is onlyavailable to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to personsregarded as professional investors (or equivalent) in their home jurisdiction. Australia: This material is issued and distributed by JPMSAL inAustralia to wholesale clients only. JPMSAL does not issue or distribute this material to retail clients. The recipient of this material must notdistribute it to any third party or outside Australia without the prior written consent of JPMSAL. For the purposes of this paragraph the termswholesale client and retail client have the meanings given to them in section 761G of the Corporations Act 2001. Germany: This material isdistributed in Germany by J.P. Morgan Securities Ltd., Frankfurt Branch and J.P.Morgan Chase Bank, N.A., Frankfurt Branch which areregulated by the Bundesanstalt fr Finanzdienstleistungsaufsicht. Hong Kong: The 1% ownership disclosure as of the previous month endsatisfies the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities

and Futures Commission. (For research published within the first ten days of the month, the disclosure may be based on the month end data fromtwo months prior.) J.P. Morgan Broking (Hong Kong) Limited is the liquidity provider for derivative warrants issued by J.P. Morgan StructuredProducts B.V. and listed on the Stock Exchange of Hong Kong Limited. An updated list can be found on HKEx website:http://www.hkex.com.hk/prod/dw/Lp.htm. Japan: There is a risk that a loss may occur due to a change in the price of the shares in the case ofshare trading, and that a loss may occur due to the exchange rate in the case of foreign share trading. In the case of share trading, JPMorganSecurities Japan Co., Ltd., will be receiving a brokerage fee and consumption tax (shouhizei) calculated by multiplying the executed price by thecommission rate which was individually agreed between JPMorgan Securities Japan Co., Ltd., and the customer in advance. Financial InstrumentsFirms: JPMorgan Securities Japan Co., Ltd., Kanto Local Finance Bureau (kinsho) No. 82 Participating Association / Japan Securities DealersAssociation, The Financial Futures Association of Japan. Korea: This report may have been edited or contributed to from time to time byaffiliates of J.P. Morgan Securities (Far East) Ltd, Seoul Branch. Singapore: JPMSS and/or its affiliates may have a holding in any of thesecurities discussed in this report; for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosuressection above. India: For private circulation only, not for sale. Pakistan: For private circulation only, not for sale. New Zealand: Thismaterial is issued and distributed by JPMSAL in New Zealand only to persons whose principal business is the investment of money or who, in thecourse of and for the purposes of their business, habitually invest money. JPMSAL does not issue or distribute this material to members of "the

public" as determined in accordance with section 3 of the Securities Act 1978. The recipient of this material must not distribute it to any third party or outside New Zealand without the prior written consent of JPMSAL. Canada: The information contained herein is not, and under nocircumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation ofan offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein inCanada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only

by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirementin the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to

be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that theinformation contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territoryof Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatoryauthority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of thesecurities described herein, and any representation to the contrary is an offence. Dubai: This report has been issued to persons regarded as

professional clients as defined under the DFSA rules.

General: Additional information is available upon request. Information has been obtained from sources believed to be reliable but JPMorganChase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy except with respect to anydisclosures relative to JPMSI and/or its affiliates and the analysts involvement with the issuer that is the subject of the research. All pricing is asof the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of thismaterial and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer orsolicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individualclient circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to

particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instrumentsmentioned herein. JPMSI distributes in the U.S. research published by non-U.S. affiliates and accepts responsibility for its contents. Periodicupdates may be provided on companies/industries based on company specific developments or announcements, market conditions or any other

publicly available information. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.

Other Disclosures last revised March 1, 2010.

Copyright 2010 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold orredistributed without the written consent of J.P. Morgan.

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