May 21, 2013

China Strategy

Reforming China: ‘new’ urbanization, new impacts Portfolio Strategy Research

‘New’ urbanization – not just an FAI story anymore

Helen Zhu

China’s new leadership has emphasized that urbanization will anchor economic growth for years to come. In our discussions with investors, we have found that many assume urbanization means continued predominant reliance on fixed asset investment (FAI). However, we believe the ‘new’ urbanization will aim for a shift in focus, in which incremental benefits will be more likely to accrue to social safety nets / consumption areas, while FAI will become more selective and targeted. In this report, we address several misconceptions about the future for urbanization.

+852-2978-0048 [email protected] Goldman Sachs (Asia) L.L.C.

Detailed policy path to be clarified soon; reforms are a must

Ben Bei

We expect to see a more concrete urbanization blueprint unveiled in the coming months. Premier Li Keqiang has identified top policy issues as geographic strategy, land reform, hukou reform, natural resource support, and environmental issues. Funding source is also a big challenge, in our view. These variables all need to be addressed via policy and reforms.

Timothy Moe, CFA +852-2978-1328 [email protected] Goldman Sachs (Asia) L.L.C.

Jason Sun +86(10)6627-3187 [email protected] Beijing Gao Hua Securities Company Limited

+852-2978-1220 [email protected] Goldman Sachs (Asia) L.L.C.

Chenjie Liu +86(10)6627-3324 [email protected] Beijing Gao Hua Securities Company Limited

Winners likely to shift – hone in on specific sub-sectors and stocks In spite of significant obstacles, we see gradual adjustments towards the new urbanization model over time, and expect demand beneficiary sectors to shift in the medium term. Some areas that may see greater benefits include lower-end consumption and safety nets like healthcare and insurance, while investment sectors, such as coal and metals & mining, may face more margin pressure. We identify stocks that may be poised to benefit. Sector implications for the ‘new urbanization’ may likely differ from before Area Consumption

Investment

Financials

Sector Staples Retail Auto Property Hardware Healthcare Telco Materials Energy Utilities Industrials/ Transport Insurance Banks

Urbanization phase Old New Change √ √ √ √√ √ √ √

√

Depends More rural/mass market; less luxury Depends More energy efficient, smaller size √ More low-end √ √√ √

Greater govt support / coverage

√√ √√ √

√ √ √

More environmental/resource concerns More environmental/resource concerns Shift more towards gas and renewables

√√

√

More environmental/resource concerns

√

X

√√ More demand for insurance products Depends Unclear as to funding model

Source: GS Global ECS Research

Goldman Sachs 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. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

The Goldman Sachs Group, Inc.

Goldman Sachs

May 21, 2013

China

Executive summary China’s new leadership has identified urbanization as ‘a huge engine’ of China’s future economic development. In this report, we explain how upcoming ‘new’ urbanization (not yet well understood by investors, in our view) may differ from the earlier urbanization model of yester years, identify the key policy variables to look for in the coming months, and in turn, analyze how sectors and stock impacts may shift in the China equities space over the medium term.

First, we study what might be different for ‘new urbanization’, and where investors may have oversimplified impressions Based on our investor interaction in the past couple of quarters, we found that investors broadly assume that focusing on urbanization as the engine of growth will mean continuing a predominantly FAI-reliant approach, unchanged from the past. We disagree. In our view, the objective is to shift to a ‘new’ urbanization model that may be quite different from the old version in various respects, recognizing a multitude of new constraints. This will likely spell more targeted/selective FAI investments than before, and the incremental benefits may accrue more to consumption/safety net areas instead.

Four common investor misconceptions, which we address, are that new urbanization: 1)

Will mainly focus on accelerating the quantity of people moving into cities (quantity targets do not imply acceleration; focus is more on quality than quantity).

2)

Must involve significant city building (Premier Li Keqiang clarified that urbanization is not about building more cities; we see more selective/targeted investment in previously under-invested areas as a higher/earlier priority).

3)

Will follow the same economic model as the past few years but at a faster pace (the old model cannot sustain for long; policymakers will want to refocus and realign government officials’ KPIs in order to drive reforms).

4)

Will unilaterally benefit all affected sectors in accelerating demand (we see some likely shifts in winners and losers, favoring consumption areas more than before and resource-intensive / polluting areas less than before).

Second, we identify the policy variables that should be monitored in the coming months. Specifically, Premier Li Keqiang laid out five areas of policy deliberation: geographic strategy, land reform, hukou reform, natural resource support, and environmental issues. These are meant to address and reverse accumulating problems from the old urbanization model, like widening wealth disparity, depletion of resources and other side effects. In addition, we think funding sources remain a big unknown that needs to be resolved through policy/reforms. We may see more specific reforms / policy decisions on these fronts in the coming months to firm up the new urbanization path and priorities.

Finally, we identify medium-term directional impacts on sectors and stocks under our coverage. Clearly, many policy uncertainties abound, and the timeline/prioritization to achieve such targets remains unclear. Vested interests and structural obstacles may also hinder progress in the near term. However, we think the broader direction of new urbanization is clearer – to focus more on safety nets, going green, lifting standards for rural residents, etc. Compared to the ‘old’ urbanization impacts of past years, we see greater benefits for mass market consumption, and a more selective list of investment sector beneficiaries than before. Some key sub-sectors that may benefit include massmarket consumption, low-end auto, generic medicine, concrete machinery, railway and subway construction, etc. We identify a group of stocks that may be levered towards each potential policy direction, and isolate Buy rated names that look positioned to benefit medium term.

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‘Old’ vs. ‘new’ urbanization – it’s not just about the investment or the size anymore The investment community has been intensely focused on the theme of urbanization in recent quarters. Premier Li Keqiang had identified urbanization as a ‘huge engine’ of China’s future economic development1, and the NDRC has promised to unveil an urbanization blueprint by the middle of 20132. With many details of the new urbanization still to be determined, we find that many investors we speak to have already formed broad assumptions about urbanization - based largely on how things have been developing in the recent past (what we call ‘old urbanization’). We identify several misconceptions and believe that what will ultimately be unveiled will be different as the new leadership targets a ‘new urbanization’ path. In short, to a greater extent than before, quality has to take priority over quantity, with new constraints and structural objectives. We expect the incremental benefits to accrue more to safety net and consumption areas going forward. In contrast, demand lift for investment, which has been prominent in the past and assumed to be the main beneficiary going forward, may actually be more selective / targeted than before.

How does urbanization drive growth? Our economics team looks at the economic benefits of urbanization on growth in general in two ways: 1)

A shift in resources from primary to secondary and tertiary industries, as the latter have higher productivity, which helps to enhance overall factor productivity. Such benefits have been experienced in many developing countries, and have been China’s primary channel of urbanization driving growth in the recent past. Our economics team estimates population migration into urban areas as being responsible for more than 2ppts of total factor productivity gains over 2004-07, but a diminishing benefit post the financial crisis at only around 1ppt per year.

2)

In addition to the first and more obvious route, through city agglomeration, there is also evidence that urban population tends to be more productive through technology spillover and knowledge sharing permitted by close proximity. Such effects may help business productivity as well as create more consumption demands via positive income effects, for example. Our economics team feels that such benefits have been largely absent in China in the past, but will need to play a bigger role going forward given easy productivity gains are declining in scope. For more details on our economics team’s growth quantification analysis by various scenarios, please see their latest report titled, Global Economics Paper: 218 China: More efficient cities key to a brighter growth path, dated May 21, 2013.

Broadly, we think the shift from mainly focusing on population migration towards the previously absent areas is what will underscore the differences for new urbanization. But what precisely is to come with the new leadership’s new urbanization agenda? A lot is still to be determined and we are not certain how fast or how dramatically things may progress. However, based on the information and broad framework provided so far, we see a number of misconceptions already forming in the investment community.

1

Premier Li Keqiang comments at the 18th Party Congress, November 21, 2012 (Sohu.com)

2

NDRC head Zhang Ping comments at the National People’s Congress; March 7th, 2013 (Sina.com)

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Misconception #1: China’s urbanization plan will primarily aim to accelerate the quantity of migration into cities The backdrop: Certainly, urbanization is defined by the number of persons who live in urban areas, and it is by this metric that China remains far behind most of its developed market counterparts. As of end 2012, China’s urbanization rate stood at 53%, comparable to levels achieved by the US in the 1920s and Japan in the 1950s. The government’s longerterm goal is indeed to migrate more of China’s population into urban areas and, in turn, enjoy the associated benefits of consumption boost, productivity gains, etc. Exhibit 2: Migration is the main force of incremental urban population in recent decade

Exhibit 1: China’s urban vs. rural population shows 53% urbanization ratio mn

Urban population

Rural population

(person mn)

Urbanization rate (%, RHS) 60

1,400

Urban population growth - natural growth Urban population growth - migration

30

88%

Migration as % of total urbanization population growth (RHS) 87%

1,200

50

25 86%

1,000

20 85%

40 800

15

84%

30

83% 600

10 82%

20 400

5 81% 10

200

80%

0 2003

0

0 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

2004

2005

2006

2007

2008

2009

2010

2011

2012

Note: Natural growth of urban population is calculated using national population natural growth rate, as urban data is not available.

Source: CEIC, GS Global ECS Research.

Source: CEIC, NBS, GS Global ECS Research.

Exhibit 3: Urban populations have far higher disposable income than rural; the gap has widened over the past two decades

Exhibit 4: China’s non agriculture value-add per capita has been rising rapidly

Disposable income per capita-Urban Rmb

Net income per capita-Rural

Rural/Urban ratio (RHS)

30,000

50% 45%

25,000

40%

Rmb 70,000

Value-add per capita-nonagriculture

Value-add per capita-agriculture

60,000 50,000

35%

20,000

30% 15,000

25% 20%

10,000

40,000 30,000 20,000

15% 10%

5,000

5% 0

0%

Source: NBS, CEIC, GS Global ECS Research.

10,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: CEIC, GS Global ECS Research.

However, the targets do not seem to necessitate further acceleration. China’s continued urbanization push may not necessarily result in a much faster pace of population shift to cities. For example, during the 18th Party Congress, various media cited that the

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2020 urbanization rate target would be set at 60%3. While this figure is not yet confirmed to be the official target, and official targets often tend to be conservative, we note that: 1)

60% urbanization implies an incremental yearly urbanization gain of only 1ppt; vs. on average 1.3ppt in the past five years, indicating a deceleration. Furthermore, considering the urban organic birth rate should not meaningfully decline (in fact, in our view, the birth rate may see some uptick, with potential adjustment to single child policy), the population gain from rural to urban migration may not necessarily be larger than what we have witnessed in the past few years.

2)

60% urbanization target by 2020E is already lower than the United Nations’ official forecast for China by 2020E of 61% (UN World Urbanization Prospects: The 2011 Revision), made prior to any official announcement of new urbanization policies or targets.

Exhibit 5: UN urbanization outlook / forecast

%

Urbanization Ratio

100

80

60

China 2012: 52.6%

China 40

China 2020: 61%

Japan Korea

20

Germany USA

0

Source: Population Division of the Department of Economic and Social Affairs of the United Nations.

The reality: More emphasis on quality rather than just quantity. As Premier Li Keqiang mentioned in a recent speech4, the key is to elevate the quality of urbanization, with the goal of benefitting citizens and enriching farmers. Recognizing and addressing the widening wealth disparity issues that have been exacerbated will be important for economic structural adjustments. In our view, the emphasis on the quality rather than quantity of urbanization is a very important distinction. This means tapping new urbanization benefits (agglomeration impacts) rather than just the old (labor migration from the countryside) to unlock new growth benefits not tapped in the old urbanization model. For example, quality enhancement is likely to mean accelerating the pace of hukou reform (allowing urban residents with rural hukou to enjoy urban safety nets) to grow the urban hukou population (currently at only 35%, 17% lower than the urbanization rate, and rising by only around 5% 3

People’s Daily, November 12, 2012

4

January 15th, 2013 Li Keqiang’s visit to the National Agricultural Science Research Center; New Beijing Daily

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ppt per year) at a much faster pace than before, even if overall urban population growth remains unchanged. Such distinctions between quality and quantity have a multitude of implications for economic and capital markets. We will discuss many of these later on in this report. Exhibit 7: Migrant workers population residing in urban areas has been rising towards 200m

Exhibit 6: China’s urban hukou population growth has been much slower than its urbanization pace mn

Urban Hukou population

% of urban Hukou (RHS)

Urban population Migrant workers Rural population Migrant workers as % of population (RHS)

urbanization rate (RHS)

600

60%

mn 1,400

500

50%

400

40%

300

30%

200

20%

100

10%

0

0% 2000

2010

2012

Source: CEIC, GS Global ECS Research.

12.5%

1,200

12.0%

1,000

11.5%

800

11.0%

600

10.5%

400

10.0%

200

9.5%

0

9.0% 2006

2007

2008

2009

2010

2011

2012

Source: CEIC, NBS, GS Global ECS Research.

Misconception #2: Urbanization will involve significant city building The backdrop: Naturally, along the lines of assuming that the urbanization push will draw a much bigger influx of new population into the cities, many investors we speak to assume that this will require the building out of many existing cities as well as new cities to host this new population. The implication is that the policymakers are planning to adopt a blanket approach of city building near term, in order to pave the way for population inflow acceleration in the subsequent years.

But urbanization is not just about expanding square footage. Premier Li Keqiang has said that urbanization ‘is not simply increasing urban population ratio, nor expanding urban square footage5,’ and that we should not simply ‘build more cities6.’ The reality: investment is certainly needed but only in targeted areas. A blanket approach is neither necessary nor beneficial, in our view. This is particularly important when considering factors such as:

-

Land scarcity: Land is a scarce resource in China and the government has already been struggling to maintain its minimum commitment of 1.8bn mu of arable agricultural land. Simply building many more cities may not be feasible.

-

Environmental and other limitations: Some of China’s largest and most popular cities (such as Beijing) are facing clear bottlenecks not resolvable by simply more investment. For example, more roads and subways could possibly alleviate traffic congestion. However, other issues such as nature degradation, pollution, etc. are difficult to overcome in a short period of time, limiting the capacity for such cities to take in a faster pace of population inflow.

5

November 21, 2012, Li Keqiang’s People’s Daily article

6

January 15th, 2013 Li Keqiang’s visit to the National Agricultural Science Research Center; New Beijing Daily

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-

Existing capacity and uneven distribution: On the other hand, building more cities may also not be needed in many areas. China’s urbanization has been uneven in the past and while some areas are congested and at overcapacity, other different tier cities may already have high quality infrastructure and ample supply of resources such as land, housing, etc. but limited (or even negative) population growth. Certainly not all of these cities will be beneficiaries of urbanization, but some of the existing capacity could be put to use. As NDRC officials recently emphasized7, China’s 700 mn urban population is distributed not just in municipalities and cities (600+ in total) but also in almost 20,000 townships averaging less than 10,000 persons each. We believe it is important that urbanization does not leave these townships behind; their proximity to rural areas make them a natural migration target for farmers nearby.

Exhibit 8: China’s total arable land is close to the minimum level set by government

Exhibit 9: China has huge potential for urbanization at the township level

China's arable land area Total arable land (bn mu)

1.94

Provincial

34

# of administrations in each level in China (2011 data)

1.92 1.90

City

1.88 1.86

332

Chinese government minimum food security threshold

1.84

.

County

2,853

1.82 1.80

Town

1.78

40,466

1.76 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: MLR, GS Global ECS Research.

0

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

Source: NBS, GS Global ECS Research.

In short, urbanization will inevitably involve continued investment. However we believe this will be selective and targeted towards areas that are truly at under-capacity or have been under-invested in the past, and areas that help to enhance sustainability. Total scale may not necessarily require upwards revisions to the market’s investment forecasts. Our economics team’s latest report titled Global Economics Paper: 218 - China: More efficient cities key to a brighter growth path, dated May 21, 2013, discusses in greater detail some of the constraints in further city construction, and the implications on growth of various potential approaches such as concentrated city clusters vs. disbursed development of smaller cities (described in the next section of this report). In the more likely scenario of following the agglomeration model, we believe investment intensity is likely to lessen over time.

Some of the areas that we believe will see significant investment focus going forward include water irrigation, environmental conservation, inter-city rail links/subways, and social housing, among others. Note that these tend to be more niche areas that were historically under-invested.

7

March 12, 2013; NDRC City and Township Development Reform Center Chief Li Tie; Sina.com

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Misconception #3: More of the same economic model, only faster The backdrop: In recent years, China’s urbanization model has been a familiar one of ‘land economics’ incentivized by GDP as a major key performance indicator (KPI): 1)

Local governments aim for GDP growth by investing in local infrastructure and industrial parks, borrowing traditionally from banks (and more recently from shadow banking, corporate bonds and other channels), often with land as the key collateral.

2)

Local governments attract enterprises and associated employment/ population to boost local economic development.

3)

4)

Greater investment, activity and population allows local governments to: a.

raise more tax revenue;

b.

sell residential land to developers at high prices; and

c.

benefit officials personally through corruption, given their close and direct control of resources (construction contracts, land sales, etc).

To close the loop, greater tax and land revenue are used to repay borrowings, and to circle back to (1) above. This creates a seemingly ‘virtuous’ cycle of faster urbanization and industrialization, from which many have indeed benefitted (be it enterprises, governments or individuals).

Many investors we speak to appear to assume that the new urbanization plan will naturally rely on more of the same going forward, only at a faster pace and on a bigger scale. As such, many assume that the winners and losers will be identical to those already seen in the past. Exhibit 10: The ‘old’ economic model was built on the foundation of some prerequisites, which may not always be available Abundant access to  financing from various channels Cheap labor 1) Local govts compete to build and  industrialize

Abundant land

2) Activity picks up and enterprises as well as population flow in

3) Benefits to the govt through more tax revenue, more land sales, and to the official directly through corruption

Low environmental costs Govt KPIs focused on short term GDP

Source: GS Global ECS Research.

But that is the old urbanization model, not the new one. A problem with the old model is that it may not work for much longer. For example, it: 1)

Relies on a variety of prerequisites that may not be sustainable: As the above exhibit illustrates, cheap labor, abundant land, low environmental costs, easy funding are all necessary to keep this virtuous loop going. Most, if not all, of these are under severe pressure already, to varying degrees depending on location.

2)

Is partially dependent on minimal disruption: For example, a significant resetting in property prices could challenge a local government’s ability to fund investment and industrialization. Any structural issues with local government

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borrowing in one location could have knock-on effects to funding availability/cost for others. 3)

Has resulted in a variety of problems. To name a few: we have witnessed excessive reliance on investment and insufficient support and nurturing of consumption. Leverage has risen dramatically, much of which is backed by land collaterals. The wealth disparity between regions and between different groups has worsened over past decade.

The reality: a more sustainable model with different emphasis is the new goal. We believe the emphasis of new urbanization will be to attempt to reverse some of the unwanted side effects of the old model and shift urbanization onto a more sustainable path. Some of the key focus factors will include reducing disparities between regions, encouraging consumption through enhancement of safety nets (hukou reform, land reform), investing in an environmentally aware manner, minimizing resource depletion, as well as relevant financial reforms needed to support the aforementioned. We believe the starting point will need to incorporate a re-definition of government officials’ KPIs away from short term GDP generation towards proper alignment with the right objectives. This is a long, arduous road fraught with obstacles and vested interests, but one that must be travelled. Clearly, a revised set of objectives and a new urbanization model are likely to mean different impacts on the economy and sectors/companies, in our view.

Misconception #4: All related sectors will benefit The backdrop: Very few investors would argue against urbanization. It’s fair to say that this is a path that every major economy travels down at some point in its development, typically with positive results for economic growth and consumption. In the past, urbanization has brought significant benefits and earnings growth to a variety of areas, ranging from consumer products to investment to financials. We find that investors generally view urbanization as a pure positive for sectors and stock performance, with the only differences being related to the magnitude/extent/order of the benefit. But that was under the old model, and we think it’s not actually the full story. Not only were the impacts of the old model not necessarily applicable to the new model, we believe there is a tendency to overlook that there were ‘losers’ in the model as well.

-

For example, the banking sector took responsibility for funding significant portions of local government infrastructure investment in the late 2000s, resulting in high risk exposure to potentially unviable loans. Earnings impacts have yet to show through meaningfully, but the restructuring process and associated risks have certainly been painful to witness, resulting in sharp de-rating of the banking sector (12-month forward P/E dropped from high teens in 2007 to the current 5.8X).

-

More directly, one could argue that all sectors were actually losers under the old model. Although most saw positive earnings impact, China equities in general de-rated significantly on an absolute and relative basis since mid-2010, largely due to the investment community’s concern with lack of the economic model’s sustainability (see our August 13, 2012 report Surfing the waves of China’s reform for more details).

The reality: a) Winners and losers are likely to shift. Not all sectors will emerge as winners on the earnings front, as new constraints such as resources and environment may negatively affect demand or impose higher costs. Many sectors’ fates remain unclear depending on policy leanings, as we will discuss in the next section of this report. However, we do feel that any degree of success in transformation from the old urbanization model to

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the new urbanization model can create ‘winners’ across the board in a broader China equities re-rating, if investors regain confidence in China’s economic sustainability.

b) Structural re-rating is possible. Although the fundamental impact on many sectors is still difficult to quantify precisely, we believe a quality-focused urbanization model could alleviate some structural concerns about China. Less reliance on investment and more progress towards consumption via reforms is likely to fortify investor confidence and market valuations. Exhibit 11: Winners and losers of the ‘new urbanization’ model may shift, in our view

Area Consumption

Investment

Financials

Sector Staples Retail Auto Property Hardware Healthcare Telco Materials Energy Utilities Industrials/ Transport Insurance Banks

Urbanization phase Old New Change √ √ √ √√ √ √ √

√

Depends More rural/mass market; less luxury Depends More energy efficient, smaller size √ More low-end √ √√ √

Greater govt support / coverage

√√ √√ √

√ √ √

More environmental/resource concerns More environmental/resource concerns Shift more towards gas and renewables

√√

√

More environmental/resource concerns

√

X

√√ More demand for insurance products Depends Unclear as to funding model

Source: GS Global ECS Research estimates.

Investment will continue, but don’t underestimate the consumption boost Less emphasis on quantity and on city building, more emphasis on reversing structural issues and sustainability – contrary to common investor views, we think the new leadership targets for ‘new urbanization’ will incrementally benefit safety nets and consumption areas at the margin. Certainly we believe FAI will remain a part of urbanization, but its demand acceleration is not assured if quantity and city building are not the key priorities. Instead, we expect FAI to continue to shift in focus to be more selective and targeted. In our view, areas that were previously under-invested and at undercapacity are likely to take on a new priority. As an example, water and environmental projects, utilities/new energy, etc. have started to post high growth rates, particularly off an earlier lower base. For more details on the past underinvestment and potential ramp-up of areas like water irrigation, see our February 24, 2011 report titled China: Rural irrigation construction to speed up. Of course, the precise focus of investment may still depend on the details of the urbanization strategy, which is yet to be unveiled.

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Exhibit 12: Infra FAI breakdown – share of utilities/railway transport gradually declined

Exhibit 13: Water conservancy and environment also enjoyed the highest growth within FAI spending YTD

Railway transport

Transport (ex railway)

Utilities production and supply

Water conservancy & environment

Total infrastructure Railway transport Water conservancy & environment

Monthly yoy growth

Utilities production and supply Transport (ex railway) Education/healthcare/sports

Education/healthcare/sports 100% 90%

90% 80%

70%

70% 50%

60% 30%

50% 40%

10%

30% -10%

20% 10%

-30%

0% 2010

2011

2012

2013 ytd

Source: NBS, CEIC, GS Global ECS Research.

-50% Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Source: NBS, CEIC, GS Global ECS Research.

Still a lot to be decided – policy variables to watch for Not surprisingly, a radical shift from the old urbanization model to the new urbanization model takes a great deal of planning and strategy. With the leadership transition just completed in March 2013, the NDRC’s outgoing chairman8 recently commented that various ministries are currently closely coordinating on the new urbanization blueprint, with an unveiling targeted by mid year. We also expect more details on necessary supportive reforms to come in October at the Third Plenary Session. What is there to be decided? Plenty. We cite Premier Li Keqiang’s recent editorial9 titled ‘Advancing urbanization requires deep analysis of major issues’ to identify the key five areas of policy and direction for discussion: 1)

Geographic strategy

2)

Land reform

3)

Hukou reform

4)

Resource support

5)

Environmental issues

Last, but not least, we believe funding for urbanization also remains a big question mark. Certainly, significant variables remain outstanding and should continue to be monitored to better gauge exact pace and priorities of new urbanization.

8

NDRC head Zhang Ping comments at the National People’s Congress; March 7th, 2013 (Sina.com)

9

February 19, 2013; People’s Daily

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Exhibit 14: Top five urbanization-related policy issues identified by Premier Li Keqiang Key issues

Problem

Objective

1)

Geographic strategy

Uneven development

Better develop central/western provinces Duplicate successful city cluster models Capture the potential of the small/mid sized cities and townships

2)

Land use and reform

Limited supply Low agricultural efficiency Obstacles to maximizing land use

Improve technology; arable land, irrigated land areas Enable fair land rights protection / transition Establish land market place

3)

Hukou reform

Barriers to free migration Wealth and safety net disparities Uneven migration patterns Limited capacity in some places

Reduce barriers to migration Incentivize migration to certain destinations Alleviate congestion in large city areas Equalize safety nets over time

4)

Resource support

Insufficient natural resources Need to transport resources

Achieve green / energy efficient development Eventually achieve self sufficiency Plan properly to match resource supply and need locations / related transport

5)

Environmental issues

Worsening pollution Rising living standard demands

Instill sustainable living habits for consumption Advance energy savings/environmental protection

Source: People.com.cn, GS Global ECS Research.

Issue #1: Geographic strategy – China is big, what to prioritize? The crux of the geographic strategy issue is how to make urbanization and economic development more even. The status of China’s various regions are starkly different. While the Pearl River Delta and Yangtze River Delta areas may have been proven to be successful models of city clusters in the Eastern regions, Premier Li Keqiang feels that the Central and Western provinces’ development is lagging. Meanwhile, small cities and townships are also getting left behind while the largest cities are overpopulated. How to resolve this conundrum? NDRC’s Li Tie observed that population migration has not just followed the creation of employment opportunities, but rather has been highly linked to the availability of attractive safety nets. Beijing, for example, may enjoy the best utilities, social services, healthcare and education offerings, as well as the lowest food and vegetable prices. Policy can make a meaningful impact on dictating the development of different geographies over time. A more detailed analysis of different economic impacts of various geographic strategies can be found in our economics team’s recent note titled Global Economics Paper: 218 China: More efficient cities key to a brighter growth path, dated May 21, 2013. Our economists feel that there is a larger scope for efficiency gains through city agglomeration (city clusters) vs. from a small cities approach – which may lead to lower investment/GDP share and higher consumption growth vs. current baseline trends.

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Issue #2: Land use and reform – maximizing farmers’ value and efficiency Land is a scarce resource in China, particularly considering that for a similar size of arable land as the United States, China needs to feed 5-6x the population. The process of migrating productivity away from the primary industries into the cities must be built on the foundation of sufficient food supply. In this regard, we believe more advancements in technology and investment in water irrigation are vital (see our report of February 24, 2011 Rural irrigation construction to speed up for data on water irrigation). With proper advancements, agricultural productivity can be meaningfully enhanced with significant benefits to rural consumption. In addition, farmers’ rights must be protected to avoid infringements and compulsory land sales/forfeitures. At the same time, those that do wish to forfeit their land rights (say, to fund the purchase of a car or a home in the city) should have sufficient avenues to freely trade or monetize such rights. China has trialed various options in land rights transactions (Exhibit 15) but has yet to identify a firm path forward.

Exhibit 15: Chongqing land coupon mechanism considered both the needs of land for development and maintaining arable land size farmers

government compensation

rural construction land

request land rehabilitation applicants

land coupon land price (land auction) pass investigation

reclamation rural construction land

arable land

urban land

coupon price (coupon auction) coupon holder

Land exchange land coupon

Source: Various media reports (Xinhua Net, Sina.com etc), GS Global ECS Research.

Issue #3: Hukou reform – a noble goal, but who first? In our view the direction of hukou reform – unifying household registrations to reduce safety net disparities – is clear cut. However, with daunting costs (up to Rmb 100,000 per head, as estimated by China Development Research Foundation) and resource limitations, a balanced hukou reform approach must be decided upon. Some of the similar constraints as issue #1 apply – congestion and limitations in large cities, vs. under-development in certain regions or lower tier cities. Yet, these less well off regions are short of funding to advance hukou reform on their own. For more details on hukou reform, please see our February 10, 2011 report titled Hukou reform: a mid to longer term goal, picking up pace. In February 2012, the State Council issued a decree titled ‘Proactively and stably advancing hukou reform’ which indicated that hukou reform should take a three-pronged approach:

1) In county level townships: those with stable jobs and accommodation (including tenants) qualify to apply for urban hukou for themselves and dependents (spouses, unwed children, parents);

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2) In small cities (<1m population): those with stable jobs/accommodation for at least three years and at least one year of social security contribution qualify (the duration requirements can vary depending on the city’s need and ability to support more population; guidelines to be set by the provincial government);

3) In large cities: the population should remain restricted due to congestion/infrastructure capacity issues.

In spite of the decree, progress in the past couple of years has been limited. In our view, this has been due to a) lack of clear follow up and enforcement by the central government; b) lack of funding and economic incentive by most local governments (exceptions being areas like Guangdong, where fiscal resources are robust and reliance on migrant labor is unusually high). However, focus should return going forward. Hukou reform was included in the State Council’s 2013 reform targets announced earlier this month. Deputy NDRC head Xu Xianping recently commented that the strategic task of urbanization going forward is to resolve the issue of migrated population, which means gradually loosening the Hukou restriction in medium/small cities/townships. This suggests an ambitious migration path and cooperation far beyond just the areas that have their own economic incentives/funding already, in our view. How will hukou reform policies be finalized? We do not yet know. Presumably, the decision will be closely linked to the geographic urbanization strategy as well. Some academics and experts (such as Hu Xingdou, professor at Beijing Industrial University), believe that urbanization eventually needs more central government funding and oversight. We believe local governments may favor converting subsets of urban non-hukou residents first, such as those whose whole families have demonstrated a long period of being fully and permanently situated in an urban city, ahead of the more mobile groups where dependents remain in the countryside.

Exhibit 16: Participation rates in various social insurance schemes for migrant workers are low across industries... %

Pension

Labor injury

Medical

Unemployment

Childbearing

35 30 25

Exhibit 17: ... as well as regions

%

Pension

Labor injury

Medical

Unemployment

Childbearing

30 25

20 15

20

10 5

15

0 10 5 0 Nationwide

Source: NBS, GS Global ECS Research.

Goldman Sachs Global Economics, Commodities and Strategy Research

Eastern region

Central region

Western region

Source: NBS, GS Global ECS Research.

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Exhibit 18: Healthcare coverage and benefits vary significantly for different types of hukou holders

Category Urban hukou, employed Urban hukou, unemployed (elderly, kids, etc.) Rural hukou

Year Population Coverage launched (mn) rate (2011) 1998 252 100% 2008 2004

221 832

Per Capita Premium (Rmb, 2011) 1,960

Per Capita payout (Rmb, 2011) 1,593

Per Capita Premiums (Rmb, 2012E) n.a.

Gov/Companies payment ratio to whole premiums 50%

269 246

187 206

n.a. ~300

80% 80%

95% 98%

Source: MOH, GS Global ECS Research.

Exhibit 19: Expenditure structures for urban and rural citizens differ (2011 data) Food

Clothes

Housing

Capital goods/Services

Healthcare

Transportation/communication

Education/ entertainment

Others

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Urban citizen

Rural citizen

Source: CEIC, GS Global ECS Research.

Issue #4: Resource support – simply put, there are not enough resources Premier Li Keqiang mentions that China is witnessing resource shortages across a variety of areas. For example, China is a net importer of many commodities and import dependency for oil is over 54%. As a population urbanizes, inevitably the demand for resources (basics such as electricity) will rise. The question is: How will China meet such demands? In addition, even where China is able to supply a certain proportion of its own resources, there are still planning challenges with regards to transport and procurement – Goldman Sachs Global Economics, Commodities and Strategy Research

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such as moving water from the South to the North. Urbanization can only move at the pace at which China’s resource planning can support it. We believe better conservation of resources will be key to ensuring the continuation of urbanization down the line.

Issue #5: Environmental issues – a revolutionary approach is needed In our view China has ignored or de-prioritized the environment for far too long. Pollution has meaningfully worsened as a result of aggressive industrialization; while at the same time, demands for a better environment continue to rise. We think urbanization can only advance if China’s policies can properly incentivize and enforce energy conservation and environmental protection, from industry down to average households.

And last, but certainly not least – funding remains an enigma Separate from the policy issues identified by Premier Li Keqiang, we highlight that another very important question remains unanswered: How will China obtain the necessary funding to carry out these agendas? Clearly, everything from investment to safety nets will be costly. A few key issues:

-

How will the bill be split between the central government, local governments, and the private sector (corporates, individuals, etc.)?

-

What kind of funding channels will be relied upon – traditional bank lending, the shadow banking system, emerging channels of direct financing, or others?

-

How will different types of spending be prioritized – considering that they are directly competing for funding? If local governments need to accelerate hukou reform, for example, it may leave fewer funds available for infrastructure investments.

This is a complex issue deserving of further discussion. We believe that funding is likely to be jump-started by the central and local governments – particularly central, which we see as having ample capacity to be more proactive and run a bigger deficit. However, in our opinion, much more emphasis will be placed on viability and return on investment than before. We hope to see significant advancements in fiscal reforms to bring new funding models like municipal bonds and corporate bonds to maturity.

Positioning for many uncertainties – be more targeted Undoubtedly, many policy uncertainties remain. Over the coming months, relevant agencies (NDRC, Ministry of Finance, Ministry of Land and Resources, Ministry of Housing and Rural Urban Development, China Banking Regulatory Commission, among others) will hash out the priority focus for each of the major issues, and any necessary policy supports to advance the agenda. Huge challenges stand in the way of achieving new urbanization goals and, given various constraints, we cannot expect immediate results. Nonetheless, we think the direction for the medium term is fairly clear, and identify key sub-sectors that are likely to be favored (or hurt) by various policy priorities, as well as key related stocks. It is important to keep in mind that a targeted policy focus will result in a targeted equities impact – different names within a sector could see varying impacts, possibly even in opposite directions.

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Changes are likely to be gradual, implications more medium term Before discussing the implications of new urbanization on sectors and stocks, we preface by stating that we fully recognize the overwhelming challenges of the shift from the old model to the new model. Structural incentives are deeply embedded, vested interests are everywhere, and nothing short of dramatic reforms can do the job. At the same time, policymakers are looking to strike a difficult balance between keeping the cyclical aspects of the economy stable while attempting to tweak or adjust the structural aspects, all amidst an uncertain global environment and complex domestic social and political dynamics. It is no wonder that many are skeptical about the prospect of any changes. However, we believe constraints are getting tighter and China’s options are running out. We believe that the new leadership is more committed to making structural changes and adopting the new urbanization agenda as the crux of their growth policy for the coming 510 years. As such, we believe new urbanization will be realized in the medium term, even if near-term impacts and prioritization remain murky at the moment.

We identify sub-sectors that may be better positioned in the medium term... We divided those sectors we see as likely to be affected by the new urbanization model into three broader categories – consumption, investment, and financials – and excluded some areas that are unlikely to be meaningfully affected (such as brokers, software, etc). We then worked with our China research sector team members to identify areas that are positively or negatively exposed to certain trends or reforms. Note that: a)

We grouped some of the reforms into different outcome scenarios, as policy focus and priorities are not yet finalized;

b)

Most of the positively or negatively impacted areas are sub-sectors rather than whole sectors – with other areas within the sector either not affected or even potentially negatively affected. For example, a better program in rural/land reform could enhance income and affordability for farmers and entry level migrants into cities; this may enhance demand for mass market products and mini vans, but may not benefit the luxury consumer segment in any way.

Overall, we feel: -

The most obvious and under-appreciated winners of new urbanization will be in the low-end consumption and safety net sectors. This may surprise some, as many investors we speak to believe that commodities and capital goods are the obvious ways to gain exposure to the urbanization theme (largely based on the concepts within the ‘old urbanization’ framework).

-

Investment-related sectors will also benefit, but with some offsetting factors related to greater energy and environmental conservation efforts than before. Some niche areas to benefit include gas, alternative energy, rail/subway and intercity links, while other areas with overcapacity and selective metals may be negatively affected or benefit less.

-

There will be ad hoc potential implications on financials as well, particularly agri insurance and rural banks. For example, awareness of agriculture products insurance is relatively low in rural areas in China. We believe industrial farming

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would become a trend during the urbanization process, and therefore agriculture insurance has the potential to grow. Exhibit 20: We still believe the majority of relevant sectors will benefit from the new urbanization trend but some subsectors may see a negative impact Consumption Theme

Sub-theme

Staples

Retail

Auto

√

√ (super market)

√ (low end)

Mid/western China focus

City strategy

City clusters focus √ Low tier cities focus √ Industrialized farming

Rural/land reform

Hukou reform/ safety net

Rural consumption Mid/small cities focus Labor shortage areas focus

√ (dept store)

√ (low end)

√ (mass mkt)

Property

Hardware

√

√ (upgrade)

√

√ (low end)

√ (upgrade)

√ (upgrade)

Healthcare Telco

√

√

√ (generic, √ TCM)

Commodities

√

√

√

√ (dairy/ pork)

Investment Energy/ chemicals Utilities

√

√

√

√

√

√ (mass mkt/ ecommerce)

√ (mini van)

√

√

√

√

√

√ (foreign brands); X (local brands)

Environment conservation

√ (environme nt focus)

Banks

√ (concrete machinery, rail/subway, intercity links) √

√

√ (gas distributor)

√ (rail/subway, intercity links) √

√

√ (gas distributor)

√ (concrete machinery, rail/subway, intercity links) √

√

√ (agri machinery)

√ (agri √ (rural insurance) banks) √ (rural banks)

√ (Generic) √

√ (new power auto); X (high energy consuming X (high end) auto)

Energy/resources consumption

Insurance

√ (gas distributor)

√ (Oil, fertilizer) √ (mass mkt/ ecommerce)

Financials Industrials/ transport

√

X (but mkt leader can gain mkt share)

√ (Natural gas); X (coal)

X (copper, gold)

X (higher cost but leader may √ (alt energy, gain market environment √ (subway, share) co) X (IPP) intercity links)

√ (alt energy; IPP on lower coal price)

Source: Goldman Sachs Research estimates, Gao Hua Securities Research estimates, GS Global ECS Research

.... then, we translate these into stock-specific lists We surveyed our sector teams to compile a list of stocks that may be affected in the medium to long term if and when ‘new’ urbanization takes hold (Exhibit 21). Most of these stocks share the following characteristics: 1)

Meaningful exposures to inland China/small cities/rural areas, such as Daphne, CRE, Great Wall, Jiang Huai, Chang An, CNBM, PICC, ABC.

2)

Ability to serve fast-growing mass-market demand, like Daphne, BoSideng, BYD, Chang An, Shineway, Sany, Zoomlion, China Life, PICC, ABC.

3)

Better environmental capabilities than peers: Conch, Baosteel, ENN, Sinopec.

We also highlight that, given urbanization is a long-term gradual trend, the earnings impact to listed companies may not be reflected in one day. China’s macro economy and company management will still account for a stock’s short term profitability. Nevertheless we believe these names are well positioned for the long term new urbanization trend.

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Exhibit 21: Potential stock beneficiaries of new urbanization Consumption Theme

Sub-theme

Staples Retail China Daphne foods, CRE

Mid/western China focus

City strategy

Property Longfor, COGO, Shui On, Poly

Hardware

Healthcare Telco E Jiao, Baiyao, Hengrui

Great Wall, Geely, BYD, Jiang Huai, SAIC, Changan

City clusters focus

Daphne, Bosideng Low tier cities focus

Auto Great Wall, Geely, BYD, Jiang Huai, SAIC, Changan

Commodities CRC (Yun Gui region), CNBC (Sichuan, Hunan), Hidli

Investment Energy/ chemicals Utilities Sinopec

BBMG, Jidong (Bejing-Tianjin cluster), CRC (Guangdong cluster)

Great Wall, Geely, BYD, Jiang Huai, SAIC, Changan

Shineway

Mini VanSAIC, Changan

Shineway

Sinopec

Financials Industrials/ transport Sany, Zoomlion, CSR, CNR

ENN, China Gas

CSR, CNR

ENN, China Gas

Sany, Zoomlion, CSR, CNR

Industrialized farming Rural/land reform

Hukou reform/ safety net

Rural consumption

Insurance Banks China Life, ABC PICC

Ping An, PICC

ICBC, CCB, Industrial, Minsheng, Nanjing

ABC

CPIC, PICC ABC, CQRCB

Country Garden, Evergrande

Mid/small cities focus

ABC, CQRCB

Shineway, GZ Pharm

Country Garden, R&F, KWG

Labor shortage areas focus Energy/resources consumption

SAIC, GAC, BYD, Jianghuai

Environment conservation

SAIC, GAC, BYD, Jianghuai

CSR, CNR

Conch, Angang, Baosteel

CSR, CNR, Sany

Source: Goldman Sachs Research estimates, Gao Hua Securities Research estimates, GS Global ECS Research.

Finally, we identify names whose fundamentals are currently favored by our sector teams Out of the list of affected stocks, we filter out a subset of those under our coverage, which we currently rate Buy. These are names that our sector analysts prefer relative to their coverage universe on current bottom-up fundamentals, independent of the urbanizationrelated, longer-term demand benefits. We would advise investors to take a medium to longer-term view and to regard any new urbanization demand lift as “icing on the cake”, rather than the only thesis on a stock, given still significant outstanding policy direction, timing and execution uncertainties.

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Exhibit 22: Potential stock beneficiaries of new urbanization

Ticker

Name

Sector

210 HK 2333 HK 600418 CH 600104 CH 960 HK 2007 HK 3333 HK 1813 HK 3323 HK 914 HK 347 HK 600019 CH 386 HK 1157 HK 601766 CH 601299 CH 2318 HK 1288 HK 939 HK 1398 HK 601166 CH 1988 HK

Daphne International Holdings Great Wall Motor Co. Anhui Jianghuai Automobile Co. SAIC Motor Longfor Properties Co. Country Garden Holdings Company Evergrande Real Estate Group KWG Property Holding China National Building Material Anhui Conch Cement (H) Angang Steel (H) Baoshan Iron & Steel China Petroleum and Chemical (H) Zoomlion (H) China South Locomotive & Rolling Stock (A) China CNR Corporation Ping An Insurance Group Agricultural Bank of China (H) China Construction Bank (H) Industrial and Commercial Bank of China (H) Industrial Bank China Minsheng Banking (H)

Consumer discretionary Consumer discretionary Consumer discretionary Consumer discretionary Real Estate Real Estate Real Estate Real Estate Materials Materials Materials Materials Energy Industrials Industrials Industrials Insurance Banks Banks Banks Banks Banks

Market cap (US$mn)

1,775 12,493 1,820 21,975 9,296 10,714 6,545 2,103 6,610 19,465 4,690 13,750 96,658 8,253 9,208 7,103 64,631 160,324 211,698 251,473 32,055 38,898

Price (Pricing currency) GS Rating

8.41 35.4 8.66 15.82 13.94 4.56 3.41 5.64 9.5 28.5 5.03 4.95 8.65 8.31 4.09 4.22 63.35 3.83 6.57 5.59 18.22 10.64

Buy Buy Buy Buy* Buy* Buy Buy Buy Buy Buy* Buy* Buy Buy Buy Buy Buy* Buy Buy Buy Buy Buy* Buy

6M/12M target Price (Pricing currency)

10.70 35.09 8.70 20.91 20.90 5.20 4.70 6.60 10.70 34.70 7.00 6.00 10.90 13.30 6.10 5.50 80.00 4.60 7.60 6.60 24.90 12.10

Upside/downside to target price

27.2% (0.9%) 0.5% 32.2% 49.9% 14.0% 37.8% 17.0% 12.6% 21.8% 39.2% 21.2% 26.0% 60.0% 49.1% 30.3% 26.3% 20.1% 15.7% 18.1% 36.7% 13.7%

CY2013 P/E

15.7 11.3 12.8 7.8 9.4 8.4 5.3 5.9 5.9 14.6 36.4 10.6 7.7 5.8 11.0 9.5 11.3 5.9 6.3 6.2 6.0 5.6

CY2014 P/E

12.3 8.8 9.6 7.7 7.6 7.6 4.5 5.0 4.6 11.8 9.6 6.2 7.0 4.9 8.5 7.5 10.1 5.2 5.6 5.5 5.1 4.9

CY2013 P/B

2.5 3.2 1.7 1.3 1.7 1.5 0.9 0.8 1.1 2.2 0.6 0.7 1.1 1.0 1.5 1.1 2.1 1.2 1.3 1.2 1.2 1.2

CY2014 P/B

2.2 2.5 1.5 1.1 1.4 1.3 0.8 0.7 0.9 1.9 0.6 0.7 1.0 0.9 1.3 1.0 1.8 1.0 1.1 1.0 1.0 1.0

Note: Prices are as at May 13, 2013. * denotes stock is on regional Conviction List. Source: Bloomberg, GS Research estimates, Gao Hua Securities Research estimates, GS Global ECS Research.

Financial advisory disclosure Goldman Sachs is acting as a financial advisor in connection with an announced strategic matter involving the following company or one of its affiliates: Guangzhou Pharmaceutical Company Limited

Special disclosure Goldman Sachs owns approximately 1% of the total issued share capital of Industrial & Commercial Bank of China. Goldman Sachs may have other business relationships with the Company.

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Disclosure Appendix Reg AC We, Helen Zhu, Timothy Moe, CFA, Jason Sun, Ben Bei and Chenjie Liu, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures Distribution of ratings/investment banking relationships Goldman Sachs Investment Research global coverage universe Rating Distribution

Buy

Hold

Investment Banking Relationships

Sell

Buy

Hold

Sell

Global 31% 54% 15% 49% 42% 36% As of April 1, 2013, Goldman Sachs Global Investment Research had investment ratings on 3,492 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.

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a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return. Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership. Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman

Sachs Research has suspended the investment rating and price target for this stock, because there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

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