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					                                                                                                      1QCY2012 Result Update | FMCG
                                                                                                                                 May 11, 2012



 GSK Consumer                                                                                     NEUTRAL
                                                                                                  CMP                               `2,773
 Performance Highlights                                                                           Target Price                           -
  (` cr)                       1QCY12         1QCY11         % yoy       Angel Est      % Diff    Investment Period                         -
  Revenue                           813             710       14.5              840      (3.2)
                                                                                                  Stock Info
  EBITDA                            162             145       11.3              169      (4.2)
                                                                                                  Sector                                FMCG
  OPM (%)                           19.9            20.5     (58)bp              20     (21)bp
                                                                                                  Market Cap (` cr)                     11,661
  PAT                               132             111       19.3              129        2.4
 Source: Company, Angel Research                                                                  Beta                                     0.3
                                                                                                  52 Week High / Low              2940/2136
 For 1QCY2012 GSK Consumer posted a 14.5 yoy growth in its net sales, aided                       Avg. Daily Volume                      5,899
 by a 7% volume growth and 8% value growth. The company’s major brands                            Face Value (`)                           10
 in malted food drink (MFD) division Horlicks and Boost posted volume growth                      BSE Sensex                            16,293
 of 9.4% and 2.1% respectively. During the quarter sales was to an extent                         Nifty                                  4,929
 affected by stoppage of orders from Canteen Sales Division (CSD) during                          Reuters Code                     GLSM.BO
 February and March, which contributes around 8% of overall sales. Adjusted                       Bloomberg Code                     SKB@IN
 for lower CSD sales implied volume growth stands at 9.5%. We maintain our
 Neutral view on the stock.
                                                                                                  Shareholding Pattern (%)
 Key highlights of the quarter: GSK consumer recorded an 58bp yoy decrease in                     Promoters                              43.2
 its operating margin to 19.9% due to inventory pipeline and higher input costs.                  MF / Banks / Indian Fls                16.5
 However, lower advertising costs (down 120bp yoy) propped up the company’s                       FII / NRIs / OCBs                      15.7

 margins to a considerable extent. The company’s advertising expenditure in                       Indian Public / Others                 24.6

 1QCY2011 included spends on now discontinued brands such as Nutribar.
 Earnings for the quarter grew by 19.3% yoy to `132cr (`111cr) aided by higher                    Abs. (%)                3m      1yr      3yr
 other income (up 40.8% yoy), business auxiliary income and lower tax rate.                       Sensex               (8.2) (12.3)      39.5
                                                                                                  SKB                   5.7      24.8 246.6
 Outlook and valuation: We expect the company’s MFD division to continue to
 post double digit growth, aided by the company’s effort to strengthen its
 distribution network. At the CMP, the stock is trading at 22.5x CY2013E EPS of
 `123.2. We continue to remain neutral on the stock.

 Key Financials
  Y/E March (` cr)                      CY2010        CY2011          CY2012E         CY2013E
  Net Sales                                2,306           2,686        3,124           3,663
  % chg                                     20.0            16.5         16.3            17.3
  Net Profit                                 300            362           433             518
  % chg                                     30.1            20.8         19.6            19.7
  EBITDA (%)                                16.3            15.8         17.1            17.6
  EPS (`)                                   71.2            86.0        102.9           123.2
  P/E (x)                                   38.9            32.2         26.9            22.5    V Srinivasan
  P/BV (x)                                  12.1            10.2          8.3             6.7    022-39357800 Ext: 6831
  RoE (%)                                   32.2            33.8         34.0            32.8    v.srinivasan@angelbroking.com
  RoCE (%)                                  36.9            37.2         39.1            38.0
                                                                                                 Amit Patil
  EV/Sales (x)                                4.6            3.9          3.4              2.8
                                                                                                 022-39357800 Ext: 6503
  EV/EBITDA (x)                             28.4            24.9         19.9            16.1
                                                                                                 amit.patil@angelbroking.com
 Source: Company, Angel Research



Please refer to important disclosures at the end of this report                                                                             1
                                                       GSK Consumer | 1QCY2012 Result Update



               Exhibit 1: Quarterly performance
                




                   Y/E Dec. (` cr)           1QCY12        1QCY11   % yoy   CY11    CY10    % chg
                   Net Sales                     813          710   14.5    2,686   2,306    16.5
                   Consumption of RM             330          270   22.3    1,022    865     18.2
                   (% of Sales)                  40.6        38.1            38.1    37.5
                   Staff Costs                       66        62     5.8    258     230     12.5
                   (% of Sales)                      8.1      8.8             9.6    10.0
                   Advertising                   109          104     5.4    437     371     18.0
                   (% of Sales)                  13.4        14.6            16.3    16.1
                   Other Expenses                146          129   13.4     542     464     16.8
                   (% of Sales)                  17.9        18.1            20.2    20.1
                   Total Expenditure             651          565   15.3    2,260   1,929    17.1
                   Operating Profit              162          145   11.3     426     377     13.0
                   OPM (%)                       19.9        20.5            15.9    16.3
                   Interest                          1.2      0.7   78.8      3.5     2.6    33.5
                   Depreciation                      12        11     9.1     46      40     15.8
                   Other Income                      48        34   40.8     164     117     39.9
                   PBT (excl. Extr. Items)       196          168   17.1     540     452     19.6
                   Extr. Income/(Expense)              -        -               -       -
                   PBT (incl. Extr. Items)       196          168   17.1     540     452     19.6
                   (% of Sales)                  24.2        23.6            20.1    19.6
                   Provision for Taxation            64        57   12.9     185     152     21.8
                   (% of PBT)                    32.8        34.0            34.2    33.6
                   Reported PAT                  132          111   19.3     355     300     18.5
                   PATM                          16.2        15.6            13.2    13.0
                   Equity shares (cr)                4.2      4.2             4.2     4.2
                   Reported EPS (`)              31.3        26.3   19.3      84      71     18.4

                   Source: Company, Angel Research


               Lower CSD orders affects sales growth: GSK Consumer posted top-line growth of
               14.5% yoy to `813cr (`710cr), led by 7% volume growth and ~8% value growth.
               During the quarter sales was to an extent affected by lower orders from CSD
               (contributes around 8% of overall sales), adjusting for which volume growth
               would be 9.5%. During the quarter, CSD placed no orders in February and
               March due to budget constraints. However, GSK Consumer said that normalcy
               has been restored in April.

               During the quarter, the major brands in the MFD category Horlicks and Boost
               posted volume growth of 9.4% and 2.1% respectively. Horlicks and Boost have
               market share of 47% and 14% respectively. Horlicks Oats has been extended to
               the whole of South India and has a market share of ~12%. Currently, Horlicks
               Oats occupy the third spot in the Oats category in South India behind Saffola Oats
               and Quaker Oats. The biscuits division grew by ~21% yoy. The company has
               discontinued the sale of Nutribar.

               GSK Consumer has added 1,00,000 outlets over the last one year and
               currents has ~7,00,000 outlets across the country. The company is looking to
               strengthen its distribution chain by adding add another 20,000 outlets in this
               quarter.



May 11, 2012                                                                                    2
                                                       GSK Consumer | 1QCY2012 Result Update



               Exhibit 2: Top-line growth at 14.5% yoy
                        900                                                                               25.0
                        800
                        700                                                                               20.0

                        600
                                                                                                          15.0




                                                                                                                 (yoy %)
                        500




               (` cr)
                        400
                                                                                                          10.0
                        300
                        200                                                                               5.0
                        100
                            -                                                                             -



                                 1Q10


                                        2Q10


                                               3Q10


                                                       4Q10


                                                                1Q11


                                                                       2Q11


                                                                                  3Q11


                                                                                            4Q11


                                                                                                   1Q12
                                               Top-line (LHS)             yoy growth (RHS)

               Source: Company, Angel Research


               Exhibit 3: Muted volume growth in 1QCY2012
                        25                                                                                9.0
                                                                                                          8.0
                        20                                                                                7.0
                                                                                                          6.0
                        15




                                                                                                                 (yoy %)
                                                                                                          5.0
                (%)




                                                                                                          4.0
                        10
                                                                                                          3.0

                         5                                                                                2.0
                                                                                                          1.0
                        -                                                                                 -
                                1Q10


                                        2Q10


                                               3Q10


                                                       4Q10


                                                                1Q11


                                                                       2Q11


                                                                                  3Q11


                                                                                            4Q11


                                                                                                   1Q12
                                               Volume (LHS)                   Value (RHS)

               Source: Company, Angel Research



               Higher input costs and inventory pipeline results in margin contraction: During
               4QFY2012 GSK consumer recorded an 58bp yoy decrease in its operating margin
               to 19.9%. The current quarter witnessed a significant reduction in the inventory of
               semi finished and finished goods on account of plant shutdown due to the
               expansion activity. OPMs were under pressure also on account of higher cost of
               inputs. However, lower advertising costs (down 120bp yoy) propped up the
               company’s margins to a considerable extent. During 1QCY2011 the company’s
               advertising expenditure included spends on now discontinued brands such as
               Nutribar.

               Earnings growth aided by higher other income: Earnings for the quarter grew by
               19.3% yoy to `132cr (`111cr) aided by higher other income (up 40.8% yoy),
               business auxiliary income and lower tax rate.




May 11, 2012                                                                                                          3
                                                                                                                         GSK Consumer | 1QCY2012 Result Update



Exhibit 4: PAT grows by 19.3% yoy                                                                 Exhibit 5: Gross margin and OPM
         150                                                                     70.0                    70.0             62.1      62.8    64.9      61.9               62.1      64.4
                                                                                                                  59.4                                       59.4                              59.4
         130                                                                     60.0                    60.0

         110                                                                     50.0                    50.0

         90                                                                      40.0                    40.0
(` cr)




                                                                                                   (%)
                                                                                        (yoy %)
         70                                                                      30.0                    30.0                                         20.5                                     19.9
                                                                                                                  15.1    16.4      15.5                     15.1        16.4
         50                                                                      20.0                    20.0                               11.5                                   10.2
         30                                                                      10.0                    10.0

         10                                                                      -                         -
               1Q10


                      2Q10


                             3Q10


                                    4Q10


                                           1Q11


                                                  2Q11


                                                         3Q11


                                                                4Q11


                                                                          1Q12




                                                                                                                  1Q10


                                                                                                                           2Q10


                                                                                                                                    3Q10


                                                                                                                                             4Q10


                                                                                                                                                      1Q11


                                                                                                                                                               2Q11


                                                                                                                                                                          3Q11


                                                                                                                                                                                       4Q11


                                                                                                                                                                                               1Q12
                             PAT (LHS)              yoy growth (RHS)                                                                  OPM                             Gross margin

Source: Company, Angel Research                                                                    Source: Company, Angel Research



                                                                   Investment rationale
                                                                           Anchor brands to perform well coupled with new launches: We expect
                                                                           GSK Consumer to perform well with its anchor brands Horlicks and Boost.
                                                                           Also, with the launch of innovative and premium products, the company tends
                                                                           to maintain its margins and market share. In the MFD category, we expect
                                                                           Horlicks and Boost to maintain double digit growth. Though the company has
                                                                           pricing power, innovative launches such as small pack sizes will help the
                                                                           company garner a market share in rural markets and penetrate new areas.

                                                                           Margins to improve going ahead: GSK Consumer’s margins declined in
                                                                           CY2011 due to the increase in input costs. However, we expect margins to
                                                                           expand by 180bps over CY2011-13E.



                                                                   Outlook and valuation

                                                                   We expect the company’s MFD division to continue to post double digit growth,
                                                                   aided by the company’s effort to strengthen its distribution network. At the CMP,
                                                                   the stock is trading at 22.5x CY2013E EPS of `123.2. We continue to remain
                                                                   neutral on the stock.

                                                                   Exhibit 6: Change in estimates
                                                                                                  Old estimates                     New estimates                                 % chg
                                                                       (` cr)               CY2012E             CY2013E           CY2012E           CY2013E           CY2012E                 CY2013E
                                                                       Revenue                    3,111           3,648             3,124             3,663                      0.4                  0.4
                                                                       OPM (%)                     16.9            17.1               17.1              17.6               20bp                  50bp
                                                                       EPS (`)                    100.6           117.9             102.9             123.2                      2.3                  4.5
                                                                       Source: Company, Angel Research




May 11, 2012                                                                                                                                                                                            4
                                                                                                                                    GSK Consumer | 1QCY2012 Result Update



                                                    Exhibit 7: One-year forward P/E chart
                                                          35.0

                                                          30.0

                                                          25.0

                                                          20.0




                                                    (x)
                                                          15.0

                                                          10.0

                                                              5.0

                                                               -



                                                                              Mar-07




                                                                                                                  Mar-08




                                                                                                                                                      Mar-09




                                                                                                                                                                                          Mar-10




                                                                                                                                                                                                                              Mar-11




                                                                                                                                                                                                                                                                  Mar-12
                                                                                       Jun-07




                                                                                                                           Jun-08




                                                                                                                                                               Jun-09
                                                                     Dec-06




                                                                                                Sep-07
                                                                                                         Dec-07




                                                                                                                                    Sep-08
                                                                                                                                             Dec-08




                                                                                                                                                                        Sep-09




                                                                                                                                                                                                   Jun-10
                                                                                                                                                                                 Dec-09




                                                                                                                                                                                                            Sep-10



                                                                                                                                                                                                                                       Jun-11
                                                                                                                                                                                                                     Dec-10




                                                                                                                                                                                                                                                Sep-11
                                                                                                                                                                                                                                                         Dec-11
                                                    Source: Company, Angel Research, Note: Blue line indicates 5-year average



Exhibit 8: Peer valuation
 Company         Reco.            Mcap      CMP       TP            Upside                           P/E (x)                                   EV/Sales (x)                                         RoE (%)                                      CAGR #
                                  (` cr)      (`)     (`)                 (%)            CY12E                    CY13E                 CY12E                   CY13E                     CY12E                 CY13E                     Sales                    PAT
 Asian Paints    Neutral        34,709     3,619          -                     -               30.2                  25.5                      3.1                     2.6                  36.9                    34.7                  16.1                   18.2
 Britannia       Buy             6,444      540      650                      20                25.6                  20.2                      1.1                      1.0                 45.2                    44.1                  17.0                   34.3
 Colgate         Neutral        16,087     1,183          -                     -               28.8                  25.5                      4.8                     4.2               129.4                  120.1                     14.3                   13.8
 Dabur India     Neutral        18,239      105           -                     -               25.4                  21.5                      3.2                      2.8                 39.3                    42.0                  13.4                   15.1
 Godrej Con      Neutral        17,561      519           -                     -               22.9                  19.2                      3.0                      2.5                 31.2                    38.4                  20.1                   26.7
 GSK Con*        Neutral        11,661     2,773          -                     -               26.9                  22.5                      3.4                     2.8                  34.0                    32.8                  16.8                   20.8
 HUL             Neutral        93,128      431           -                     -               30.8                  26.5                      3.6                      3.0                 82.7                    76.2                  16.1                   17.3
 ITC             Accumulate    182,275      234      252                       8                27.2                  23.7                      6.4                     5.5                  34.8                    33.1                  16.8                   16.0
 Marico          Neutral        10,958      178           -                     -               26.9                  22.0                      2.5                      2.1                 30.0                    28.8                  16.5                   25.1
 Nestle*         Neutral        43,818     4,545          -                     -               38.2                  30.8                      5.0                      4.1                 73.0                    61.6                  18.6                   18.3
 TGBL            Buy             6,697      108      136                      26                18.5                  15.4                      0.9                     0.8                        8.9               10.2                       8.7                 8.8
Source: Company, Angel Research; Note: #Denotes CAGR for FY2012-14E;*December year ending




May 11, 2012                                                                                                                                                                                                                                                               5
                                                   GSK Consumer | 1QCY2012 Result Update



               Profit & Loss Statement
               Y/E Dec (` cr)                      CY08    CY09     CY10     CY11     CY12E   CY13E
               Gross sales                         1,700   2,025    2,431    2,832    3,328   3,903
               Less: Excise duty                    159     104      125      147       204     240
               Net Sales                           1,542   1,922    2,306    2,686    3,124   3,663
               Total operating income              1,542   1,922    2,306    2,686    3,124   3,663
               % chg                                20.6    24.6     20.0     16.5     16.3    36.4
               Total Expenditure                   1,304   1,611    1,818    2,261    2,589   3,019
               Cost of Materials                    586     714      865     1,023    1,199   1,400
               Advertising Exp                      194     302      371      437       447     513
               Personnel                            172     201      230      258       303     355
               Others                               352     394      352      542       640     751
               EBITDA                               238     311      489      425       535     644
               % chg                                 5.7    30.8     57.3    (13.0)    72.1    51.6
               (% of Net Sales)                     15.4    16.2     21.2     15.8     17.1    17.6
               Depreciation & Amortisation           42       42       40       46       52      60
               EBIT                                 196     269      449      379       483     584
               % chg                                 7.9    37.3     67.1    (15.6)    27.4    54.2
               (% of Net Sales)                     12.7    14.0     19.5     14.1     15.5    16.0
               Interest & other Charges               5        4        3        3       4        4
               Other Income                          95       89         -    165       172     199
               (% of PBT)                           33.4    25.2      0.0     30.5     26.5    25.5
               Share in profit of Associates           -        -        -        -       -    2.00
               Recurring PBT                        286     354      446      540       651     779
               % chg                                16.6    23.9     26.1     21.1     20.5    44.3
               Prior Period & Extra. Exp./(Inc.)    1.63   (2.61)   (0.29)    6.65        -       -
               PBT (reported)                       284     356      447      534       651     779
               Tax                                   96     124      152      178       218     261
               (% of PBT)                           33.5    35.0     34.1     33.0     33.5    33.5
               PAT (reported)                       188     233      294      355       433     518
               Add: Share of earnings of asso.         -        -        -        -       -       -
               Less: Minority interest (MI)            -        -        -        -       -       -
               PAT after MI (reported)              188     233      294      355       433     518
               ADJ. PAT                             190     230      294      362       433     518
               % chg                                16.8    21.2     27.7     23.1     19.6    43.2
               (% of Net Sales)                     12.3    12.0     12.7     13.5     13.9    14.1
               Basic EPS (`)                        45.2    54.7     71.2     86.0    102.9   123.2
               Fully Diluted EPS (`)                45.2    54.7     71.2     86.0    102.9   123.2
               % chg                                28.2    16.8     21.2     30.2     16.1    18.9




May 11, 2012                                                                                     6
                                                 GSK Consumer | 1QCY2012 Result Update



               Balance Sheet
               Y/E Dec (` cr)                 CY08       CY09        CY10     CY11    CY12E    CY13E
               SOURCES OF FUNDS
               Equity Share Capital             42         42          42       42       42       42
               Reserves& Surplus               719        863         918     1,102   1,363    1,709
               Shareholders’ Funds             761        905         960     1,144   1,405    1,751
               Total Loans                       -           -           -        -        -        -
               Deferred Tax Liability            7        (11)        (27)     (40)     (40)     (40)
               Total Liabilities               767        894         933     1,104   1,365    1,711
               APPLICATION OF FUNDS
               Gross Block                     473        492         533      570      893    1,032
               Less: Acc. Depreciation         329        364         397      436      488      548
               Net Block                       144        128         136      134      405      484
               Capital Work-in-Progress         16         38         108      171      116      134
               Goodwill                         66         66          66       66       66       66
               Investments                       -           -           -        -        -        -
               Current Assets                  853       1,173       1,423    1,670   1,669    1,999
               Cash                            471        820         976     1,080   1,046    1,281
               Loans & Advances                 62         56          84      121      119      139
               Other                           320        297         363      469      505      579
               Current liabilities             312        511         800      938      891      973
               Net Current Assets              541        662         623      733      778    1,026
               Misc Exp                          -           -           -        -        -        -
               Total Assets                    767        894         933     1,104   1,365    1,711



               Cash Flow Statement
               Y/E Dec (` cr)                  CY08        CY09      CY10     CY11    CY12E    CY13E
               Profit before tax                286         354        452     540      651      779
               Depreciation                      42          42         40      46       52       60
               Change in Working Capital        (58)        211        169     (39)     (44)      (9)
               Interest/ Dividend(Net)          (31)        (20)       (41)    (67)     (59)     (67)
               Direct taxes paid                 96         124        152     178      218      261
               Others                           (10)         (5)         4        6     (35)      (4)
               Cash Flow from Operations        133         458        472     308      347      498
               Inc./ (Dec.) in Fixed Assets      29          41        111     100      267      158
               Inc./ (Dec.) in Investments      298              -        -       -        -        -
               Cash Flow from Investing         269         (41)      (111)   (100)    (267)    (158)
               Issue of Equity                       -           -   (0.00)       -        -        -
               Inc./(Dec.) in loans                  -           -        -       -        -        -
               Dividend Paid (Incl. Tax)         31          89        245     171      172      172
               Interest / Dividend (Net)         (7)        (20)       (41)    (67)     (59)     (67)
               Cash Flow from Financing         (24)        (68)      (204)   (104)    (113)    (105)
               Inc./(Dec.) in Cash              377         349        156     104      (34)     235
               Opening Cash balances             94         471        820     976    1,080    1,046
               Closing Cash balances            471         820        976    1,080   1,046    1,281




May 11, 2012                                                                                       7
                                               GSK Consumer | 1QCY2012 Result Update



               Key Ratios
               Y/E Dec                      CY08    CY09      CY10    CY11    CY12E    CY13E
               Valuation Ratio (x)
               P/E (on FDEPS)                61.4    50.7     38.9     32.2    26.9     22.5
               P/CEPS                        50.3    42.4     34.3     29.1    24.1     20.2
               P/BV                          15.3    12.9     12.1     10.2     8.3      6.7
               Dividend yield (%)             0.5     0.6       1.8     1.3     1.3      1.3
               EV/Sales                       7.3     5.6       4.6     3.9     3.4      2.8
               EV/EBITDA                     47.1    34.9     28.4     24.9    19.9     16.1
               EV / Total Assets             14.6    12.1     11.4      9.6     7.8      6.1
               Per Share Data (`)
               EPS (Basic)                   45.2    54.7     71.2     86.0   102.9    123.2
               EPS (fully diluted)           45.2    54.7     71.2     86.0   102.9    123.2
               Cash EPS                      55.1    65.3     80.7     95.4   115.3    137.5
               DPS                           15.0    18.0     50.0     35.0    35.0     35.0
               Book Value                   180.9   215.2    228.3    272.1   334.1    416.4
               Returns (%)
               RoCE                          27.3    32.3     36.9     37.2    39.1     38.0
               Angel RoIC (Pre-tax)          45.7    94.2   1,418.7       -   186.7    103.7
               RoE                           27.0    27.9     32.2     33.8    34.0     32.8
               Turnover ratios (x)
               Asset Turnover                 3.3     4.3       3.9     4.7     3.5      3.6
               Inventory / Sales (days)       66      51        49      50       49       49
               Receivables (days)             10       6         8      13       10        9
               Payables (days)                59      71        74      91       73       70
               Net working capital (days)     17     (30)      (56)    (47)     (31)     (25)




May 11, 2012                                                                               8
                                                                                     GSK Consumer | 1QCY2012 Result Update




 Research Team Tel: 022 - 39357800                   E-mail: research@angelbroking.com                    Website: www.angelbroking.com

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 nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
 Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
 compliance, or other reasons that prevent us from doing so.

 This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
 redistributed or passed on, directly or indirectly.

 Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
 other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
 the past.

 Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
 connection with the use of this information.

  Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
  latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
  investment positions in the stocks recommended in this report.




 Disclosure of Interest Statement                                            GSK Consumer
 1. Analyst ownership of the stock                                                  No
 2. Angel and its Group companies ownership of the stock                            No
 3. Angel and its Group companies' Directors ownership of the stock                 No
 4. Broking relationship with company covered                                       No

 Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors


 Ratings (Returns):             Buy (> 15%)                            Accumulate (5% to 15%)                     Neutral (-5 to 5%)
                                Reduce (-5% to 15%)                    Sell (< -15%)

May 11, 2012                                                                                                                               9