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研究报告:中国宏观经济七月关注问题-060703

研报作者:GS 来自:GS 时间:2006-07-03 09:18:56
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" " The Goldman Sachs Group, Inc. July 3,2006 China STAAG (June issue): A belated but healthy correction, June 2 China Strategy: Olympics 12000 odyssey, May 15 China Stance-at-a-Glance July 2006 issue Awaiting 2H2006 catalysts. Interim results, tax reform, accelerating renminbi appreciation, and normalization of risk appetite could be near-term market catalysts that are currently being overshadowed by macro uncertainties. We think investors should start accumulating strategic positions in anticipation of potential 2H2006 strength. Waiting for 2H2006 catalysts to blossom Solid year-to-date (ytd) industrial profit growth has led us to believe that Chinese companies could deliver upside surprises in the upcoming interim results, despite conservative consensus estimates. This, together with positive development in corporate tax reform, the potential acceleration of currency revaluation, and a likely mean-reversion of low risk appetite, could carry Chinese stocks through a choppy summer to possible 2H2006 strength. Marketing feedback from Asia-based investors Investors whom we met during our Asia marketing trip generally remained structurally positive on Chinese stocks but were concerned about a potential global macro slowdown and policy risks for China. Implementation ideas and performance update New ideas on the long side: China Shipping Development (CSD), Mengniu Dairy. New additions on funding side: China COSCO, China Resources Land, Wumart Stores. Our long/short ideas have accumulated a positive spread of 48.6 pp (equal weighted) and 110.1 pp (market cap-weighted), respectively, since inception on April 26,2005. In June, the two baskets gained a net positive spread of 2.2 pp on an equal-weighted basis. July recommendations: Four pair trades, four pure long ideas Price Stock Quoted Jun 29 Mkt cap Ticker Company name rating currency (quoted) (US$mn) 763 HKZTECorporation Buy HKD 24.45303918.91.010.82.1 Pure long 000002 CHChina Vanke (A) Buy CNY 5.65249911.03.617.246.6 Pure long 358 HKJiangxi Copper Buy HKD 6.7524984.88.433.3126.3 Pure long 1138 HKChina Shipping Development Buy HKD 5.4522916.56.221.27.2 Pair with COSCO 323 HKMaanshan Iron & Steel Buy HKD 2.4820365.96.013.2 (4.3) Pure long 2319 HKMengniu Dairy Buy HKD 9.65170923.11.117.631.9 Pair with Wumart 1068 HKChina Yurun Food Group Neutral HKD 5.75106615.51.921.056.1 Pair with Dynasty 2337 HKShanghai Forte Land Neutral HKD 3.009128.44.716.155.1 Pair with CRL 1919 HKChina COSCOHoldings Neutral HKD 3.8529455.34.714.9 (16.8) Pair with CSD 1109 HKChina Resources Land Neutral HKD 3.83153216.31.67.082.6 Pair with Forte 8277 HKWumart Stores Neutral HKD 27.80109234.40.612.756.6 Pair with Mengniu 828 HKDynasty Fine Wines Group Sell HKD 2.7544118.32.312.74.7 Pair with Yurun Funding basket Long basket Type of trade CY2006 Valuation P/E (X) Div. yield ROE (%) EPS growth (%) Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research estimates. Market overview Sector analysis and allocation Stock picks China Strategy Team Thomas Deng, CFA Goldman Sachs (Asia) L.L.C. thomas.deng@gs.com Hong Kong: 852-2978-1062 Kinger Lau Goldman Sachs (Asia) L.L.C. kinger.lau@gs.com Hong Kong: 852-2978-1224 Analysts employed by non-US affiliates are not required to take the NASD/NYSE analyst exam. Global Strategy Research The Goldman Sachs Group, Inc. 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. Customers of The Goldman Sachs Group, Inc. in the United States can receive independent, third- party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at or can call 1-866-727-7000 to request a copy of this research. For Reg AC certification, see . For other important disclosures, see , go to , or contact your investment representative. C hina Portfolio Strategy Stance-at-a-G lance 2 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 2006 risk analysis for MSCIChina Exhibit 1: Current valuations for Chinese stocks seem favorable, in our view Scenario analysis based on historical 12-month forward EPS growth and 12-month forward P/E multiples, MSCIChina 12-month forward EPS growth EPS growth (change in pp from current) 12-month forward P/E multiples Multiple +/(-) from current Current 9.411.9 Current ex-Energy 12.32.914.118.6 Average 12.43.112.87.7 Average (ex-TMT period) 11.62.211.90.3 Max 33.924.635.0194.0 ABB*(1+A) Min 2.3 (7.1) 6.0 (49.6) EPS growth (change in pp from current) Multiple +/(-) from current Potential +/(-) Median 11.01.611.4 (4.4) 20th percentile 7.2 (2.2) 9.8 (17.2) (2.2) (17.2) (16.8) 80th percentile 17.07.614.723.67.623.625.4 Standard deviation 6.6 (2.8) 4.9 (59.2) Pa st 1 0- ye ar a ve ra ge Current risk/reward ratio of 1 : 1.5, suggesting a favorable risk/reward tradeoff Optimistic scenario Pessimistic scenario Base-case scenario 5 10 15 20 25 30 35 40 Ja n- 96 Ju l-9 6 Ja n- 97 Ju l-9 7 Ja n- 98 Ju l-9 8 Ja n- 99 Ju l-9 9 Ja n- 00 Ju l-0 0 Ja n- 01 Ju l-0 1 Ja n- 02 Ju l-0 2 Ja n- 03 Ju l-0 3 Ja n- 04 Ju l-0 4 Ja n- 05 Ju l-0 5 Ja n- 06 (X) 12-month forward P/E Current=12.7 TMT bubble Min=6 ex-TMT max=24 Max=35 80th percentile 20th percentile Red chips bubble Average: 12.8 0 5 10 15 20 25 30 35 Ja n- 96 Ju l-9 6 Ja n- 97 Ju l-9 7 Ja n- 98 Ju l-9 8 Ja n- 99 Ju l-9 9 Ja n- 00 Ju l-0 0 Ja n- 01 Ju l-0 1 Ja n- 02 Ju l-0 2 Ja n- 03 Ju l-0 3 Ja n- 04 Ju l-0 4 Ja n- 05 Ju l-0 5 Ja n- 06 (%) 12-month forward EPS growth Current=8.4 TMT bubble Min=2.3 ex-TMT max = Max=34 80th percentile 20th percentile Our key assumptions: (1) Base-case scenario: We use the current 12-month consensus forward earnings growth and P/E multiple for our base cases of 9.4% and 11.9X, respectively. (2) Optimistic scenario: We adopt the 80th-percentile values for both earnings growth estimates and forward multiples among the 126 available monthly data points over the past 10 years, implying potential upside of around 25% from our base case. (3) Pessimistic scenario: We adopt the 20th-percentile values for both earnings growth estimates and forward multiples among the 126 available monthly data points over the past 10 years, implying potential downside of around 17% from our base case. Conclusion: Given a favorable risk-reward ratio (1 to 1.5) as suggested by our scenario analysis, we believe the price performance risks for MSCIChina could be biased toward the upside. Source: I/B/E/S, Datastream, MSCI, Goldman Sachs Strategy Research. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,20063 Waiting for 2H2006 catalysts After correcting 11% in May due to global risk reduction, the MSCIChina index traded range-bound in June, closing 2.7% lower on June 29. Investors’ risk appetite is at a historical low but we believe investors continue to hold their positive view on Chinese equities over a longer-term horizon. We think a possible normalization of risk appetite, together with a combination of emerging positive catalysts, could carry Chinese stocks through a choppy summer. To benefit from potential second-half strength, we advise investors to start accumulating strategic positions at current attractive valuations. Risk appetite is rebounding from a historical low after the recent correction Risk appetite could signal market is at a near-term trough. Uncertainties revolving around US rate/growth/inflation and potential further monetary tightening measures from the Chinese central bank have led to a massive risk reduction in the past six weeks in Chinese and other regional markets, resulting in 13.5% price retrenchment for Chinese stocks from the recent local peak in May. However, the market appears to have stabilized after the recent sell-down as we observe risk appetite—which we proxy using our proprietary Goldman Sachs Risk Aversion Index—has started to rebound (risk aversion decreases) from historical low levels (see Exhibit 2). We view the inflection of risk appetite as an effective indicator of changes in market sentiment, and a rebound of that could signal a possible market trough in the near term, suggesting the chances for further significant sell-offs could be limited. Exhibit 2: Risk appetite has started to rebound from a historical low and could signal a near-term trough for the market GSRisk Aversion Index Exhibit 3: Chinese equities have been the best performers in 2006—despite the recent correction— reflecting the resilience of their strong fundamentals Regional indexes performance -110 -60 -10 40 90 140 190 Ja n- 00 M ay -0 0 S ep -0 0 Ja n- 01 M ay -0 1 S ep -0 1 Ja n- 02 M ay -0 2 S ep -0 2 Ja n- 03 M ay -0 3 S ep -0 3 Ja n- 04 M ay -0 4 S ep -0 4 Ja n- 05 M ay -0 5 S ep -0 5 Ja n- 06 M ay -0 6 Index High risk appetite Low risk appetite 52.3 41.2 21.7 16.1 13.5 7.8 5.8 0.8 0.1 -0.1 -6.6 -7.4 -10.2 -20 -100102030405060 Shenzhen composite Shanghai composite H-share MSCIChina Red-Chips Sensex Hang Seng KLCI Singapore Strait TWSE SET TOPIX KOSPI (%) YTD gains Chinese equity is the best performing market in a regional context Source: Bloomberg, Goldman Sachs Strategy Research. Source: Datastream, MSCI, Goldman Sachs Strategy Research. Over a longer-term horizon, we maintain our positive structural investment stance on Chinese stocks and reaffirm our H-share index targets—of 8000 by end-2006 and 12000 by end-2008—due to stronger-than-expected macro and micro drivers, attractive valuations and a potential for further currency appreciation (please refer to China China Portfolio Strategy Stance-at-a-Glance 4 Goldman Sachs Global Strategy Research - July 3,2006 Strategy: Olympics 12000 odyssey, May 15,2006, for detailed analysis of our index return framework). In fact, despite the recent correction, Chinese equities have been the best performers on a ytd basis relative to other regional markets, showing the resilience of its solid fundamentals (see Exhibit 3). Although we believe further market downside could be limited from both fundamental and technical perspectives, we nevertheless think the road could be bumpy during the summer as the market seems to have some lingering concerns about US rate/growth/inflation despite the Federal Reserve’s hints of a pause in interest rate hikes. Having said that, we see some near-term positive catalysts emerging and that could steer Chinese stocks through a choppy summer and lead to possible second-half strength. For this reason, we advise investors to start accumulating strategic positions at the current attractive valuations (MSCIChina index is trading at 12.0X 2006EP/E,2.0X 2006EP/B, 3.1% 2006E dividend yield, with 14.5% 2006EEPS growth, according to consensus estimates). Identifying the catalysts We have identified three potential catalysts that we believe could help Chinese stocks weather the near-term macro uncertainties and propel an index uptrend in the latter part of the year: 1. Upside surprises from companies’ interim results due in August/September. Market consensus is forecasting 17.7% EPS growth for aggregate offshore Chinese stocks for 2006. However, given that industrial profits yoy growth (compiled by the National Bureau of Statistics [NBS]) for the first five months of 2006 came in at 26.9%, and the historically high correlation of earnings growth between industrial companies and aggregate offshore-listed companies, we believe that interim results to be disclosed in August/September may, again, surprise the market on the upside and the market may further revise up 2006 earnings estimates (see Exhibit 4). By sector, despite the imperfect sector mapping between NBS industries and Global Industry Classification Standard (GICS), NBS data suggest to us that 1H2006 sector earnings from energy, utilities, and consumer staples might turn out to be higher than market consensus expects (see Exhibit 5). Consensus EPS growth expectations for 2006 for materials and IT, by contrast, are higher than those shown by NBS data, and this is largely due to a mismatch of sample size and the types of companies included in the two universes. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,20065 Exhibit 4: Solid industrial profits growth could mean further upward earnings revisions by the market when companies report interim results in August/September Industrial profits ytd vs. market consensus earnings growth for aggregate offshore Chinese companies for 2006 Exhibit 5: We believe energy, utilities, and consumer staples might report better-than-expected interim earnings according to the data complied by NBS Actual industrial profits vs. consensus earnings expectation for 2006E, by GICS sector ytd 0 5 10 15 20 25 30 35 40 45 50 200120022003200420052006 (%) NBS sample Offshore aggregate First 5 months in 06 industrial profits growth: 26.9% Market consensus for 2006EEPS growth: 17.7% Correlation = 0.94 0 10 20 30 40 50 60 70 80 Energy Materials Utilities Consumer Staples Information Technology (%) Industrial profits first 5 month yoy growth Consensus forecast on 2006 EPS growth for MSCIChina sector Consensus forecast on 2006 EPS growth for aggregate China offshore sector 244% and 303% due to low EPS levels in 2005 and heterogenous data sample Source: NBS, CEIC, MSCI, FactSet, Worldscope, I/B/E/S, Goldman Sachs Strategy Research. 2. Positive developments in the unification of potential enterprise income tax (EIT). Its recent endorsement by the Ministry of Commerce signals that in August the draft of the long-discussed tax reform proposal could be submitted to Standing Committee of the National People’s Congress (NPC) for approval. We expect the revised draft to be submitted to the NPC for final approval in March 2007 and the new taxation law to be implemented in FY2008. According to our previous research, a convergence of the unified effective tax rate (ETR) to 25% would boost aggregate market earnings in 2007 by around 6%, but we believe the market has not factored this potential structural earnings enhancement in the current share prices as it is still employing an ETR of around 30% in its assumptions (see Exhibit 6, and refer to China Strategy/Taxation: Revisiting the EIT reform, March 17,2006, for more details). China Portfolio Strategy Stance-at-a-Glance 6 Goldman Sachs Global Strategy Research - July 3,2006 Exhibit 6: We believe the market still has not factored in potential benefits from a lower corporate tax rate Tax burden (net income/earnings before tax),1995A–2008E based on market consensus 67.8 78.578.4 75.8 73.9 66.5 71.872.1 73.9 75.7 73.773.372.9 71.3 64 66 68 70 72 74 76 78 80 19 95 A 19 96 A 19 97 A 19 98 A 19 99 A 20 00 A 20 01 A 20 02 A 20 03 A 20 04 A 20 05 P 20 06 E 20 07 E 20 08 E (%) Our base case: 25% ETR Source: I/B/E/S, MSCI, Datastream, Goldman Sachs Strategy Research. 3. Potential acceleration of currency appreciation. Swelling FX reserves (US$875 bn as of March 2006), a bulging trade surplus with the US (US$10.9 bn as of May 2006), and recent speeches by government officials regarding further liberalization of the currency mechanism may accelerate the inevitable revaluation of the Chinese currency, in our view. As we have previously indicated, we believe renminbi appreciation is both fundamentally and tactically positive to Chinese stocks, and we expect that either actual or expected further currency revaluation would provide an extra stimulus to the market in the near term. Asia-based investors remain positive on Chinese equities Investors generally concurred with our bullish index targets on Chinese stocks. We met with a large number of Asia-based investors during our marketing trip last week and we noticed that investors had initially thought our calls for the H-share index to reach 8000 by end-2006 and 12000 by end 2008 were aggressive. However, investors became more receptive once we had presented them with the logic behind our returns framework, in which we disaggregate market growth drivers into EPS growth, currency appreciation, and multiple expansion (please see China Strategy: Olympics 12000 odyssey, May 15, for detailed analysis). As regards market growth drivers, we observed divergent reactions from investors about our base-case assumptions. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,20067 EPS growth: Investors thought that our assumptions on index EPS growth of 11% in 2007 and 2008 could be too conservative as they believed that the strong macro and corporate earnings growth could be extended in the next few years. Currency: They concurred that the renminbi is structurally undervalued and they expected a higher and faster currency appreciation process than our forecasts of 3% further appreciation by end-2006 and 5% p.a. thereafter until 2008. Multiple expansion: They were less convinced that the market should reward higher price multiples to Chinese stocks particularly at a time when market volatility for Chinese stocks, as well as emerging markets, is high. Investors’ concerns: Macro, property, and banks. Despite their long-term optimistic view on Chinese stocks, investors nevertheless tended to be concerned about (1) the impact of a global economic slowdown on Chinese stocks; (2) further tightening measures in the property market; and (3) potential asset-quality deterioration in the banking sector. 1. The impact of a global economic slowdown on Chinese stocks. Although we share investors’ concerns, we believe the deepening of interregional trade links and gradual decoupling from the US consumer could mitigate the magnitude of any external dislocations. The bottom line is that listed Chinese companies derive over 80% of their revenue from the domestic market. Related to this topic, some optimistic investors believe that, because of its increasingly strong domestic demand, China could outperform its global peers even if the global economy does slow. 2. Further tightening measures in the property market. With financial conditions remaining loose from a historical perspective and growing market interest in employing real property as inflation hedges, we agree with investors’ views that more tightening measures targeting property/housing sector may soon arrive to curb further speculative activity. We expect the government, to suppress overheating in the sector, may impose higher deposit ratios for non-first-time home buyers and levy higher tax rates on capital gains for properties that are classified as being for investment purposes. However, as housing demand continues to be strong, driven by rapid urbanization, and as affordability ratios remain healthy in most second-tier cities, we maintain our positive view on the sector over a longer time horizon. 3. Potential asset-quality deterioration in the banking sector. We received many queries regarding the valuations and asset quality of the Chinese banking sector during our discussions with Asia-based investors. In general, they believed the Chinese banks were richly valued prior to the market correction and they are worried about asset-quality deterioration (more NPLs) if China’s growth decelerates from the current high level (above mean growth). Our China banking team believes that asset- quality risks in the Chinese banking sector would be manageable if China’s growth moderates as gradually as our China Economics team forecasts in its base-case scenario. Stock ideas for July Adding five new names to our long/funding baskets, we have prepared four pair-trade and four pure long ideas for July China Portfolio Strategy Stance-at-a-Glance 8 Goldman Sachs Global Strategy Research - July 3,2006 Among the transportation shipping companies, we initiate a pair trade of long China Shipping Development (CSD,1138 HK) versus China COSCOHoldings (COSCO,1919 HK). We are bullish on CSD because of the favorable upturn in tanker rates and because of CSD’s potential fixed-margin contracts with Sinopec, but we remain cautious on COSCO due to the volatile and weak freight rates and potential overcapacity at an industry level. In property developers, we are long Shanghai Forte (Forte,2337 HK) funded by China Resources Land (CRL,1109 HK). We remain positive on Shanghai Forte given its attractive valuations and growth prospects (8.4X 2006EP/E,4.7% 2006E dividend yield, and over 55% earnings growth in 2006E). We feel less comfortable with CRL due to its rich valuations and its relatively high exposure to policy risks. In the consumer space, we are long Mengniu Dairy (Mengniu,2319 HK) funded by Wumart Stores (Wumart,8277 HK). We like Mengniu due to its strong branding and its expansion into higher-margin flavored milk beverage and yogurt products. We put Wumart as a funding stock as we believe margin expansion for the company remains challenging and increased foreign competition could possibly threaten its organic growth. In the food and beverages industry, we roll over the trade of buying food processor Yurun Food (Yurun,1068 HK) with wine producer Dynasty Fine Wines (Dynasty,828 HK) as the funding stock. We believe the downward trend of hog prices could benefit Yurun while capacity constraints, rising grape prices and distribution costs could remain a share price overhang for Dynasty in the near-term. Pure long ideas: ZTECorporation (ZTE,763 HK). We remain confident on ZTE’s leverage on potential TD-SCDMA development in China and believe the business could contribute 17% of the company’s revenue and become a key growth driver in 2007, according to our Asia Pacific Technology Research Team’s forecast. China Vanke (A) (Vanke,000002 CH). China Vanke is our top pick among the listed Chinese property developers due to its solid national footprint, its higher exposure in second-tier cities, and its undemanding valuations. Jiangxi Copper (JXC,358 HK). We like JXC for three key reasons: (1) Higher copper prices; (2) supply/demand remains favorable; (3) valuations are attractive. Maanshan Iron & Steel (Magang,343 HK). We continue to believe the key share price driver—the accelerating cyclical upturn—remains intact. Potential downside risk appears limited given its trough valuations, suggesting a potentially high leverage to a cyclical upswing. See Exhibits 13-15 for valuations/price performance summaries for these stocks. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,20069 Sector scorecard Exhibit 7: Sector outlook, GSChina team sector view and longer-term thematic investment ideas at a glance Industry GSChina team view 2006 outlook Key issues/themes Stocks to buy Stocks to avoid Downside risks outweigh potential upside drivers Direction of jet fuel prices Air China (0753.HK) CEA (0670.HK) High fuel cost remains a serious challenge Capacity expansion outpacing demand growth CSA (1055.HK) Further potential Rmb reval could be positive for airlines We expect Chinas airport sector to remain on a fast growth track in 2006 Non-aeronautical revenue growth BCIA (0694.HK) We view Chinas aviation market as a tug-of-war between the large players International and domestic tourism traffic Regulatory risks We expect gradual rise of money/bond rates, which could benefit liquid banks ROE/ROA expansion potential BoCom (3328.HK) Hua Xia Bank (600015.SS) Banks with solid consumer banking franchise/exposure are likely to outperform peers Consumer banking development CMB (600036.SS) CCB (0939.HK) Compensation plan from share unification - unique catalysts for A- share banks SPDB (600000.SS) Unattractive risk/reward balance: higher feedstock costs and weaker demand Higher feedstock costs and lower demand growth Sinochem (0297.HK) Yizheng Chemical (1033.HK) Weakening pricing power leading to margin squeeze Capacity expansion leading to weakening pricing power Working capital constraints may arise if plastic prices rise further We believe China milk consumption will grow at a 20% CAGR in 2005-2008E. Product diversification Mengniu (2319.HK) We expect the leading dairy players, with their improving mix of products and capacity expansion, to outpace the overall industry. Industry consolidation We argue that soft panel prices and robust domestic consumption will stimulate LCDTV demand, hence boost blended ASPs ASP enhancement and margin expansion are the keys TCLM (1070.HK) Skyworth (0751.HK) We estimate that China's LCDTV demand will grow at a CAGR of 61% during 2006-2009 Industry restructuring Sales per store under pressure; inter-format competition intensifying New housing formation growth Parkson (3368.HK) Wumart (8277.HK) M&A activity increasingly likely as fragmented markets come under margin pressure A balance of M&A and market share gains against format competition, rising rentals, and falling sales/store We expect a demand CAGR of 14% over 2004-2007 in the wine industry Demand growth for wine is higher than that for beer COFCO (0506.HK) Dynasty (0828.HK) Foreign players are likely to remain at the high end of the market Wine is a concentrated market, with top-three players accounting for 46% market share Changyu B (200869.SZ) Foreign competition remains weak Valuations/ROE appear more attractive for wine than beer China Merchants (CM) and China Resources (CRE) are our top picks in the sector Solid earnings growth in 2006 for CM on the back of its fast-growing ports network in China China Merchants (0144.HK) Ongoing momentum in CRE's restructuring China Resources (0291.HK) Domestic demand and consumption growth likely to be a key investment theme Beijing Enterprises (0392.HK) Improved investment environment due to a potential upward shift of yield curve and increasing investment channels Investment yield Ping An (2318.HK) China Life (2628.HK) We expect steady sector premium growth at 10% to 15% yoy in 2006 for both life and non-life Strategic issues including potential shareholding changes, introduction of foreign competition, government sell-down, M&A Chemicals Cautious Consumer - Dairy products Neutral Consumer - Wine Conglomerates Insurance Positive / Neutral Neutral Positive / Neutral Consumer - Electronics Neutral Consumer - Retailing Neutral CautiousAirlines Banks Positive Airports Positive / Neutral Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, COFCOInternational, Dynasty Fine Wines Group, Mengniu, Yantai Changyu Pioneer Wine, TCLMultimedia Technology, and Skyworth. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Goldman Sachs Research estimates, Gao Hua Securities Research estimates. China Portfolio Strategy Stance-at-a-Glance 10 Goldman Sachs Global Strategy Research - July 3,2006 Exhibit 8: Sector outlook, GSChina team sector preferences and longer-term thematic investment ideas at a glance Industry GSChina team view 2006 outlook Key issues/themes Stocks to buy Stocks to avoid Aggregate advertising may improve in 2HComputer game market is shifting from 2D to 3DTencent (0700.HK) Baidu (BIDU) Substantial downside risks to Chinese computer operating margins Search-engine market appears attractive but we believe Baidu's valuations seem stretched Sina (SINA) Out-of-home media companies to benefit from increasing advertising growth and taking market share from traditional media channels Introduction of new regulation to allow foreign entities to own 100% of a PRC advertising company, subject to various conditions Beijing Media (1000.HK) Recovery of property and auto advertising Travel and online recruiting markets appear attractive, but we believe company valuations seem full Newspaper advertising to maintain 10% yoy growth Risks of supply response high after 3 years of an upcycle Sustainability of margins is the key theme to watch in 2006 Jiangxi Copper (0358.HK) Yanzhou Coal (1171.HK) We are bearish on coal, see more upside potential for base metals, and are turning less bearish on cement Cyclicality among different commodity sub-sectors Magang (0323.HK) Another good year for oil equities due to continued cyclicality, resilient demand, and luckluster supply growth Potential policy responses to the heavy loss-making refining sector PetroChina (0857.HK) Sinopec (0386.HK) Favorable risk/reward balance The tipping point at which demand suffers due to rising oil prices CNOOC (0883.HK) Domestic margins should improve in 2006 Higher growth of property market in 2nd-tier cities than 1st-tier cities Margin pressure is more imminent for developers expanding in 1st- tier cities China Overseas Land (0688.HK) Guangzhou R&F (2777.HK) Shenzhen could enjoy faster growth among 1st-tier cities Continuing credit tightening China Vanke (A) (000002.SZ) Price correction in Shanghai property market to continue in 2006 Further reinforcement of tax collection A tougher year for container shipping in 2006 due to exceptionally high base in 2005 US/Europe consumer consumption levels which drive container demand Pacific Basin (2343.HK) CSCL (2866.HK) We expect a soft landing for dry bulk shipping Iron ore imports from China CSD (1138.HK) China Cosco (1919.HK) Capital management (dividend/buybacks) Port congestion in China We expect high PC shipment growth in 2006 Growing PC penetration rate implies rapid overall market expansion Lenovo (0992.HK) SMIC (0981.HK) Further price competition due to higher foreign competition in the PC market Lenovo's post merger performance ZTE (0763.HK) Challenging outlook for comm. tech and components owing to uncertainties of China 3G licensing Positive long-term growth potential for ZTE 3G license to be granted in 2H2006 The potential industry restructuring and 3G licensing China Unicom (0762.HK) Either China Telecom or China Mobile has to get a standalone TD- SCDMA license Uncertainty over who will get the 3G license China Unicom has to sell at least one of its two networks Questions about how to break up China Unicom Strong demand growth offset by rapid capacity additions Significant disparity in utilization rate trends between provinces over the next two years Guangdong Electric (000539.SZ) Huaneng Power (0902.HK) Utilization rate outlook for Eastern China appears most negative Introduction of competitive scheme may put downward pressure on tariffs Huadian Power (1071.HK) Competitive bidding system is a potential threat to Chinese IPPs Fall in coal prices on debottlenecking China Power International (2380.HK) Shipping Technology Media Internet Positive Neutral Telecom services Utilities Positive PositiveMetals and mining Oil/Energy Property Cautious Neutral Neutral Neutral Positive / Neutral Note: The following stocks are covered by Gao Hua Securities: China Overseas Land & Investment, China Vanke, China Mobile (HK), China Netcom, China Telecom, China Unicom. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Goldman Sachs Research estimates, Gao Hua Securities Research estimates. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,200611 Our implementation ideas for the month We propose long and funding baskets for investors interested in long-short ideas and absolute returns in the context of Chinese stocks. For long-only-focused investors, please refer to our long basket constituents, which reflect our high conviction ideas in the short term. For our sector preferences and thematic investment ideas, please refer to our Sector Scorecard (see Exhibits 7-8). Exhibit 9: Our buy and funding recommendations for July Price Stock Quoted Jun 29 Mkt cap Ticker Company name rating currency (quoted) (US$mn) 763 HKZTECorporation Buy HKD 24.45303918.91.010.82.1 Pure long 000002 CHChina Vanke (A) Buy CNY 5.65249911.03.617.246.6 Pure long 358 HKJiangxi Copper Buy HKD 6.7524984.88.433.3126.3 Pure long 1138 HKChina Shipping Development Buy HKD 5.4522916.56.221.27.2 Pair with COSCO 323 HKMaanshan Iron & Steel Buy HKD 2.4820365.96.013.2 (4.3) Pure long 2319 HKMengniu Dairy Buy HKD 9.65170923.11.117.631.9 Pair with Wumart 1068 HKChina Yurun Food Group Neutral HKD 5.75106615.51.921.056.1 Pair with Dynasty 2337 HKShanghai Forte Land Neutral HKD 3.009128.44.716.155.1 Pair with CRL 1919 HKChina COSCOHoldings Neutral HKD 3.8529455.34.714.9 (16.8) Pair with CSD 1109 HKChina Resources Land Neutral HKD 3.83153216.31.67.082.6 Pair with Forte 8277 HKWumart Stores Neutral HKD 27.80109234.40.612.756.6 Pair with Mengniu 828 HKDynasty Fine Wines Group Sell HKD 2.7544118.32.312.74.7 Pair with Yurun Funding basket Long basket Type of trade CY2006 Valuation P/E (X) Div. yield ROE (%) EPS growth (%) Note: China Vanke, China Yurun Food Group, China Resources Land, Dynasty Fine Wines, Mengniu Dairy, Shanghai Forte Land are covered by Gao Hua Securities. Source: Bloomberg, Gao Hua Securities Research estimates, Goldman Sachs Research estimates. Exhibit 10: Stocks in and out at a glance Price Price Price 5252 Type Quoted in out change week week Company name (Buy/funding) Ticker Rating Date in Date out Currency (Quoted) (Quoted) (%) high low Stocks in China Shipping Development Buy 1138 HKBuy 6/29/2006 — HKD 5.5 — — 6.65.2 Mengniu Dairy Buy 2319 HKBuy 6/29/2006 — HKD 9.7 — — 9.94.9 China COSCOHoldings Funding 1919 HKNeutral 6/29/2006 — HKD 3.9 — — 4.23.0 China Resources Land Funding 1109 HKNeutral 6/29/2006 — HKD 4.0 — — 6.11.2 Wumart Stores Funding 8277 HKNeutral 6/29/2006 — HKD 27.0 — — 30.112.5 Stocks out TCLMultimedia Technology Buy 1070 HKBuy 5/2/20066/29/2006 HKD 1.20.8 (31.9) 1.50.7 Yanzhou Coal Mining Funding 1171 HKSell 5/30/20066/29/2006 HKD 5.65.6 (0.9) 7.44.6 Guangzhou R&FProperties Funding 2777 HKSell 5/30/20066/29/2006 HKD 43.633.4 (23.4) 48.911.0 Lianhua Supermarket Funding 980 HKNeutral 5/30/20066/29/2006 HKD 9.28.1 (11.5) 10.56.9 Note: Mengniu Dairy, China Resources Land, TCLMultimedia and Guangzhou R&FProperties are covered by Gao Hua Securities. Source: Bloomberg, Gao Hua Securities Research estimates, Goldman Sachs Research estimates. China Portfolio Strategy Stance-at-a-Glance 12 Goldman Sachs Global Strategy Research - July 3,2006 Performance update: Buy/funding baskets offer high-conviction ideas Equal-weighted: Our China buy/funding baskets have accumulated a positive spread of 48.6 pp and 33.8 pp since inception in April 2005 and year-to-date, respectively (see Exhibit 11). Market-cap-weighted: They have also achieved a positive spread of 110.1 pp and 51.9 pp since launch and year-to-date, respectively (see Exhibit 12). Exhibit 11: Positive spread of 48.6pp if we equally weight basket constituents Exhibit 12: On a market-cap-weighted basis, performance looks even better at 106.3pp 80 90 100 110 120 130 140 150 160 170 26 -A pr 26 -M ay 26 -J un 26 -J ul 26 -A ug 26 -S ep 26 -O ct 26 -N ov 26 -D ec 26 -J an 26 -F eb 26 -M ar 26 -A pr 26 -M ay 26 -J un (Indexed perf) Long basket (EW) Short basket (EW) MSCIChina 48.6 60 80 100 120 140 160 180 200 220 26 -A pr 26 -M ay 26 -J un 26 -J ul 26 -A ug 26 -S ep 26 -O ct 26 -N ov 26 -D ec 26 -J an 26 -F eb 26 -M ar 26 -A pr 26 -M ay 26 -J un (Indexed perf) Long basket (MV) Short basket (MV) MSCIChina 110.1 Source: Datastream, Worldscope, Goldman Sachs Strategy Research. Investment horizon: 30 to 90 days We select stocks that we expect to achieve absolute positive (buy) or negative (funding) returns over a 30- to 90-day period. Stock selection criteria: Blending fundamental and technical factors Criteria we may consider in evaluating investments include: (1) identifiable near-term catalysts; (2) company fundamentals consistent with our investment view; (3) favorable relative and absolute valuations; and (4) good technical entry point/exit point. See Exhibits 12-14 for a snapshot of the constituents in each basket. Stock universe: Goldman Sachs China and Gao Hua Securities coverage Our investment universe is Goldman Sachs’s and Gao Hua China coverage (see Exhibits 24-29). In our buy recommendations we include stocks rated either Buy or Neutral by our China Investment Research analysts. Our sell recommendations come from stocks rated Sell or Neutral. Stance-at-a-G lance C hina Portfolio Strategy G oldm an Sachs G lobal Strategy R esearch - July 3,2006 13 Exhibit 13: Buy basket constituents (1) ZTECorporation 763 HK 1-year performance Rating B/NMarket cap (US$mn) 3039 29/6/2006 closing price (HKD) 24.5 12M target price (HKD) 34.052-week high 32.85 Potential valuation +/(-) (%) 39.152-week low 21.30 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 18.91.012.0 CY06E 18.91.010.8 Analyst: Donald Lu 20 25 30 35 May-05 Sep-05 Jan-06 May-06 Riding on 3G Why we are positive on this stock 1. Recent price weakness could offer attractive entry points. 2. We believe the market could start looking at its leverage on domestic 3G development as its potential TD-SCDMA business could contribute 17% of the company’s revenue and become a key growth driver in 2007, according to our Asia Pacific Technology Research Team’s forecast. Key risks 1. Lack of overseas expense control. 2. Intensifying competition. Target price basis: P/E. China Vanke (A) 000002 CH 1-year performance Rating B/NMarket cap (US$mn) 2499 29/6/2006 closing price (CNY) 5.7 12M target price (CNY) 9.8152-week high 6.98 Potential valuation +/(-) (%) 73.652-week low 3.14 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 12.73.215.7 CY06E 11.03.617.2 Analyst: Yi Wang, CFA 3.00 6.00 9.00 May-05 Sep-05 Jan-06 May-06 Growing faster during industry consolidation Why we are positive on this stock 1. The Gao Hua Property analyst believes the company's fundamentals should remain intact given Vanke's solid national footprint and higher exposure in second-tier cities. 2 She thinks any industry consolidation should provide opportunities for Vanke to accelerate its growth, and any share price correction due to uncertainty surrounding new policies may create an attractive entry point for investors. 3. Valuations also appear attractive relative to peers. Key risks 1. Policy risks 2. Unexpected price movement in Shenzhen. Target price basis: NAV. Jiangxi Copper 358 HK 1-year performance Rating B/NMarket cap (US$mn) 2498 29/6/2006 closing price (HKD) 6.8 12M target price (HKD) 10.352-week high 9.55 Potential valuation +/(-) (%) 52.652-week low 3.63 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 10.32.821.5 CY06E 4.88.433.3 Analyst: Song Shen 3 6 9 May-05 Sep-05 Jan-06 May-06 Fundamentals strong, three more reasons to buy Why we are positive on this stock 1. High copper prices, a key market concern, are in fact way below historical highs in real terms. 2. Speculative length has reached a ytd low while global copper fundamentals remain tight. 3. Lower risk convergence trade becomes more appealing. Key risks 1. A sharp macro slowdown. Target price basis: P/B. China Shipping Development 1138 HK 1-year performance Rating B/AMarket cap (US$mn) 2291 29/6/2006 closing price (HKD) 5.5 12M target price (HKD) 7.5052-week high 6.60 Potential valuation +/(-) (%) 37.652-week low 5.15 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 6.85.416.0 CY06E 6.56.221.0 Analyst: Julie Lim 5 6 7 May-05 Sep-05 Jan-06 May-06 Secular drivers, numerous catalysts; valuations close to trough Why we are positive on this stock 1. CSD potentially signing a fixed margin contract with Sinopec on international tankers in 2H06. 2. Pickup in tanker rates post seasonally weak 2Q 3. Hurricane season in US potentially driving up tanker rates. 4. Trough valuations. Key risks 1. Hard landing in China. Target price basis: P/B. Note: China Vanke (A) is covered by Gao Hua Securities. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Research estimates. C hina Portfolio Strategy Stance-at-a-G lance 14 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Exhibit 14: Buy basket constituents (2) Maanshan Iron & Steel 323 HK 1-year performance Rating B/NMarket cap (US$mn) 2036 29/6/2006 closing price (HKD) 2.5 12M target price (HKD) 4.2552-week high 3.28 Potential valuation +/(-) (%) 71.752-week low 2.25 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 5.66.416.5 CY06E 5.96.017.6 Analyst: Song Shen 2 3 4 May-05 Sep-05 Jan-06 May-06 Still attractive risk/reward tradeoff Why we are positive on this stock 1. Better pricing power to enable it to pass on higher ore cost pressure. 2. On a relative basis, less affected by a potential cut in export VAT rebates. 3. On an absolute basis due to trough valuation and high leverage to potential cyclical upturn. New data points continue to show subdued spot domestic iron ore costs and recovering long product prices, suggesting the return of pricing power for an oversupplied sector. Key risks 1. Unexpectedly large macro pullback. Target price basis: P/B. Mengniu Dairy 2337 HK 1-year performance Rating B/NMarket cap (US$mn) 1709 29/6/2006 closing price (HKD) 9.7 12M target price (HKD) 11.0052-week high 9.90 Potential valuation +/(-) (%) 14.052-week low 4.88 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 27.30.716.5 CY06E 23.11.117.6 Analyst: Yifan Deng 5 8 10 May-05 Sep-05 Jan-06 May-06 Value cow Why we are positive on this stock 1. Mengniu has expanded its market share the fastest among the top-three players (to 28.6% in 2005 from 17% in 2003), due to its strong branding and the execution of its management team. 2. Mengniu is quickly expanding into higher-margin flavored milk beverage and yogurt products (34% of 2008E revenue, up from 26% in 2005). 3. Inexpensive valuations. Key risks 1. Demand slowdown and unexpected shortage of raw milk supply. 12-month target price basis: P/E. China Yurun Food Group 1070 HK 1-year performance Rating N/NMarket cap (US$mn) 1066 29/6/2006 closing price (HKD) 5.8 12M target price (HKD) 6.7052-week high 6.70 Potential valuation +/(-) (%) 16.552-week low 3.33 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 17.11.616.0 CY06E 15.51.921.0 Analyst: Yifan Deng 3 5 6 May-05 Sep-05 Jan-06 May-06 Piggyback ride Why we are positive on this stock 1. The Gao Hua analyst believes that declining hog prices are positive for Yurun as it helps downstream margins with lower costs. 2. The analyst is positive on Yurun's growth outlook given its aggressive expansion plan (target to double capacity by end-2007) and leverage on the fast-growing modern retail channels (which contribute 38% of total revenue in 2005). 3. Less demanding valuations than our proposed trading pair, Dynasty Fine Wines Key risks 1. Unexpected volatility in hog prices. Target price basis: SOTP. Shanghai Forte Land 1070 HK 1-year performance Rating N/NMarket cap (US$mn) 912 29/6/2006 closing price (HKD) 3.0 12M target price (HKD) 4.4652-week high 4.35 Potential valuation +/(-) (%) 48.752-week low 1.95 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 12.03.814.9 CY06E 8.44.716.1 Analyst: Yi Wang, CFA 2 3 5 May-05 Sep-05 Jan-06 May-06 Attractive valuations; good growth prospects Why we are positive on this stock 1. Valuations appear attractive relative to listed peers. 2. We remain positive on this stock in a longer-term horizon as Shanghai property prices could rebound in 2H2006. 3. Valuations/growth mix appears attractive: 8.4X 06EP/E with over 50% of EPS growth in 2006E. Key risks 1. Unexpected price movement in Shanghai. 12-month target price basis: NAV. Note: Mengniu Dairy, Shanghai Forte, and China Yurun Food are covered by Gao Hua Securities. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Research estimates. Stance-at-a-G lance C hina Portfolio Strategy G oldm an Sachs G lobal Strategy R esearch - July 3,2006 15 Exhibit 15: Funding basket constituents China COSCOHoldings 1919 HK 1-year performance Rating N/AMarket cap (US$mn) 2945 29/6/2006 closing price (HKD) 3.9 12M target price (HKD) 4.252-week high 4.23 Potential valuation +/(-) (%) 9.152-week low 3.03 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 3.53.421.0 CY06E 5.34.714.9 Analyst: Julie Lim 3 4 5 May-05 Sep-05 Jan-06 May-06 Remains under water Why we are negative on this stock 1. Container shipping freight rates have been very volatile and weak year-to-date. 2. Industry overcapacity is a key concern. Key risks 1. A severe global recession. Target price basis: P/B. China Resources Land 1109 HK 1-year performance Rating N/NMarket cap (US$mn) 1532 29/6/2006 closing price (HKD) 4.0 12M target price (HKD) 5.8952-week high 6.10 Potential valuation +/(-) (%) 48.252-week low 1.21 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 15.41.74.6 CY06E 16.31.67.0 Analyst: Yi Wang, CFA 1 3 5 7 May-05 Sep-05 Jan-06 May-06 Out of the boundary Why we are negative on this stock 1. Unattractive valuations comparing to listed peers. 2. High exposure to further property market tightening measures. Key risks 1. Unexpected asset injection from parent. Target price basis: NAV. Wumart Stores 8277 HK 1-year performance Rating N/NMarket cap (US$mn) 1092 29/6/2006 closing price (HKD) 27.0 12M target price (HKD) 29.0052-week high 30.05 Potential valuation +/(-) (%) 7.452-week low 12.50 Valuations P/E (X) Div. yield (%) ROCE (%) CY05E 49.40.712.6 CY06E 34.40.612.7 Analyst: Manning Doherty 10 20 30 May-05 Sep-05 Jan-06 May-06 Uphill ahead Why we are negative on this stock 1. ROE expansion came from falling effective tax rates and a low asset base, advantages which no longer exist. 2. Margin expansion has been challenging. As a result, we premise our Neutral stance on potential increased foreign competition possibly challenging organic growth. 3. Valuations appear unappealing. Key risks 1. Value-creative M&A Target price basis: P/E. Dynasty Fine Wines Group 828 HK 1-year performance Rating S/NMarket cap (US$mn) 441 29/6/2006 closing price (HKD) 2.8 12M target price (HKD) 3.052-week high 3.65 Potential valuation +/(-) (%) 8.152-week low 2.55 Valuations P/E (X) Div. yield (%) ROCE (%) CY05ENM 2.113.4 CY06E 18.32.312.7 Analyst: Yifan Deng 2 3 4 May-05 Sep-05 Jan-06 May-06 Outlook remains dull Why we are negative on this stock 1. Capacity constraint should continue to limit top-line growth 2. Rising grape costs likely to pressure gross margins 3. Selling expenses are rising fast; further potential operating margin squeeze likely Key risks 1. Lower-than-expected selling expense Target price basis: P/E. China Resources Land, Dynasty Fine Wines Group and Wumart Stores are covered by Gao Hua Securities. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Research estimates. China Portfolio Strategy Stance-at-a-Glance 16 Goldman Sachs Global Strategy Research - July 3,2006 Pulse check of consensus earnings (MSCIChina) Exhibit 16: Sector/industry group/industry earnings momentum at a glance GICSSector/Industry Group/Industry Price index as of 6/28 Ytd (%) Last 4 weeks (%) 2006E 2007E 2006E 2007E Energy 390.318.1 (4.9) 11.114.30.42.8 Materials 665.630.0 (7.4) 41.239.6 (1.1) 2.2 Chemicals 387.210.31.3 (39.2) (40.3) 3.0 (16.6) Construction Materials 120.425.4 (24.2) 24.428.10.50.1 Metals & Mining 1217.335.0 (7.7) 60.764.14.14.9 Industrials 110.77.5 (3.0) (3.8) (8.0) 2.0 (0.4) Capital Goods 67.35.7 (5.4) 9.0 (5.8) 9.54.9 Electrical Equipment 55.02.7 (6.8) 1.3 (1.2) 2.62.2 Industrial Conglomerates 87.5 (1.2) (5.4) 18.4 (8.7) 8.9 (0.6) Machinery 94.056.8 (4.2) (14.3) 1.519.929.9 Transportation 342.78.5 (1.7) (10.5) (9.0) (2.4) (3.2) Air Freight & Logistics 104.9 (25.5) (5.2) (8.0) (7.5) (4.7) (4.3) Airlines 319.33.8 (6.4) (63.8) (26.9) (56.3) (28.8) Marine 703.6 (7.4) (2.1) (15.0) (17.8) (1.1) 1.0 Road & Rail 376.719.1 (4.5) (8.6) 18.92.21.3 Transportation Infrastructure 294.117.4 (0.3) (0.8) (2.3) 1.9 (0.6) Consumer Discretionary 140.04.8 (4.8) 0.10.1 (0.6) (2.3) Automobiles & Components 603.47.8 (4.9) 5.39.60.4 (0.7) Consumer Durables & Apparel 51.2 (2.0) (8.4) (8.3) (9.6) (0.9) (0.6) Consumer Services 113.8 (5.1) (5.6) (10.8) (18.3) (10.8) (18.2) Retailing 179.07.1 (2.7) (1.0) (1.2) 1.1 (0.9) Consumer Staples 453.323.2 (2.9) 10.311.33.71.4 Food Beverage & Tobacco 392.423.2 (2.9) 10.311.33.71.4 Health Care N/AN/AN/A (51.9) (48.9) (40.6) (41.2) Financials 249.437.8 (1.0) 6.611.10.60.4 Diversified Financials 68.530.7 (6.9) 10.2 (0.3) (0.1) (0.1) Insurance 157.363.14.32.84.71.22.2 Real Estate 408.222.8 (12.3) 15.326.10.4 (1.4) Information Technology 60.6 (12.6) (3.0) (17.5) (24.3) (4.2) (10.4) Software & Services 33.220.1 (7.2) 16.830.40.3 (0.4) Technology Hardware & Equipment 76.6 (17.6) (0.4) (15.8) (21.2) (5.3) (13.2) Telecommunication Services 68.59.92.84.08.0 (1.1) 0.6 Diversified Telecommunication Services 163.4 (15.1) (4.1) (17.2) (10.7) (0.0) 0.7 Wireless Telecommunication Services 72.915.24.010.913.7 (1.3) 0.6 Utilities 277.10.1 (3.5) (4.9) (0.4) (0.4) 0.9 MSCIChina 33.916.1 (2.5) 6.77.50.10.3 Earnings revisions - ytd (%) Earnings revisions - last 4 weeks (%)Price performance Exhibit 17: CY2006 momentum in the past four weeks (%) Exhibit 18: 12-month consensus forward earnings revision index -10 -8 -6 -4 -20246 Consumer Staples Industrials Financials Energy Utilities Consumer Discretionary Materials Telecommunication Services Information Technology Health Care (%) (-) Negative momentum (+) Positive momentum -20 -15 -10 -50510 Telecommunication Services Industrials Financials Energy Materials Utilities Information Technology Consumer Discretionary Consumer Staples Health Care (Earnings revisions index) (+) Positive revisions(-) Negative revisions Source: MSCI, I/B/E/S, Datastream, Goldman Sachs Strategy Research. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,200617 Exhibit 19: Chinese equities appear inexpensive compared with regional counterparts Index US$ bn US$ mn Close Index Avg daily Number Market/region/sector 6/28/2006 cap turnover of stocks 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E MSCI market (local currency) Australia 998568.017998816.614.012.921.619.28.43.32.62.3 China 34168.611488013.712.011.017.114.58.92.42.01.7 Hong Kong 8126179.05614215.315.014.716.23.21.91.91.51.5 India 407107.83006817.319.014.226.318.414.33.55.13.0 Indonesia 175027.0902414.711.39.81.129.815.93.32.72.4 Japan 9412606.31244538320.017.916.235.711.810.62.01.71.6 Korea 349318.61608919.910.28.747.1 (3.3) 16.51.51.41.3 Malaysia 33650.1926016.413.812.45.917.611.92.01.81.6 New Zealand 12515.7501213.014.013.58.50.04.34.03.02.9 Pakistan 3163.82751510.510.29.027.93.712.93.52.42.2 Philippines 4217.7141712.711.910.426.07.714.22.01.71.6 Singapore Free 28089.03003815.414.013.0 (2.3) 10.07.52.11.71.6 Sri Lanka 3160.81914.4 - - 28.8 - - 2.1 - - Taiwan 272249.2138010317.812.410.5 (16.4) 37.819.12.01.91.7 Thailand 26529.1114409.89.48.93.54.64.92.21.81.6 Price/earnings (X) EPS growth (%) Price/book (X) 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E 10.89.28.43.94.24.518.620.618.9 6.55.85.32.53.13.318.518.216.9 9.412.310.73.43.43.611.911.410.2 11.512.710.11.41.21.722.726.127.0 6.85.85.12.83.54.122.925.126.1 8.98.47.91.11.21.310.510.310.3 7.57.46.41.82.22.420.714.415.5 8.98.37.34.14.14.312.213.513.7 6.97.27.46.35.95.629.027.922.5 6.56.66.03.95.45.938.028.525.4 6.46.76.33.03.64.316.215.815.8 10.910.59.84.13.84.012.813.512.7 59.8 - - 2.5 - - 16.2 - - 8.18.36.94.13.74.312.715.416.8 6.36.25.84.54.54.822.721.119.2 Return on average equity (%)Dividend yield (%)EV/EBITDA (X) Source: Datastream, I/B/E/S, MSCI, Goldman Sachs Research estimates. Exhibit 20: China has one of the highest implied equity risk premiums in a regional context Difference Potential Potential +/(-) if implied Index US$ implied US 10Y govt. US$ implied US$ implied Standard from monthly avg. Fair equity risk premium reverts close cost of equity bond yield risk premium risk premium deviation since Dec.1994 Index to historical average Market/ region 6/28/2006 (%) (1) (%) (2) (%) (1) - (2) (%) (%) (SD) (X) Level (%) Australia 655.3 10.5 5.2 5.3 4.9 1.1 0.4 726.8 10.9 China 33.1 13.2 5.2 8.0 7.5 2.6 0.2 36.6 10.6 Hong Kong 5851.7 9.6 5.2 4.4 4.6 1.2 (0.2) 6329.2 8.2 India 279.3 8.5 5.2 3.3 5.1 1.4 (1.3) 185.3 (33.7) Indonesia 312.5 11.3 5.2 6.1 7.3 3.5 (0.4) 259.5 (17.0) Korea 285.9 11.5 5.2 6.3 6.1 2.4 0.1 316.2 10.6 Malaysia 227.0 10.9 5.2 5.7 4.7 1.6 0.6 330.8 45.7 Philippines 168.5 10.2 5.2 5.0 3.9 1.3 0.8 207.9 23.3 Singapore 349.0 10.8 5.2 5.6 4.8 1.5 0.5 466.0 33.5 Taiwan 235.5 13.0 5.2 7.8 4.6 1.8 1.7 471.3 100.1 Thailand 170.1 12.2 5.2 7.0 5.6 2.4 0.6 225.8 32.7 APxJ 314.1 11.4 5.2 6.2 5.3 1.6 0.6 384.4 22.4 AEJ/ NJA 352.6 11.2 5.2 6.0 5.1 1.7 0.5 454.7 29.0 FExJ 333.7 11.7 5.2 6.5 5.2 1.9 0.7 492.1 47.5 DMAPxJ 942.8 10.4 5.2 5.2 4.7 1.1 0.4 1105.1 17.2 EMAsia 288.4 11.4 5.2 6.2 5.2 1.9 0.5 373.3 29.4 Now Monthly average since Dec.1994 Source: Consensus Economics, I/B/E/S, MSCI, Goldman Sachs Research estimates. Exhibit 21: Price performance for MSCI standard market indexes (local currency) Exhibit 22: Price performance for local market indexes -15 -10 -5 0 5 10 15 20 C hi na S in ga po re Fr ee Au st ra lia M al ay si a H on g K on g Ta iw an Ja pa n In do ne si a Ko re a In di a Th ai la nd P hi lip pi ne s (%) 1 Month Year-to-date -20 -10 0 10 20 30 40 50 60 SZ C O M P H SC C I SH C O M P S TI H SI AS 51 H SM FC I H SC EI N ZS E kl ci TP X S EN S EX TW S E KO S PIJC I SE T PC O M P (%) 1 Month Year-to-date Source: Bloomberg, Goldman Sachs Strategy Research. C hina Portfolio Strategy Stance-at-a-G lance 18 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Index/sector valuation update Exhibit 23: Valuation summary for local Chinese equity indexes Index US$ bn US$ mn Close Index Avg daily Number M arket Index 6/28/2006 cap turnover of stocks 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E Local m arket indexes (local currency) HK/China HSComp 2103.91053.701904.6420013.613.212.423.62.76.82.11.81.6 HSFFloat Comp 2228.1495.391904.6420013.713.012.221.75.06.32.11.81.6 China HSH share 6485.599.82656.363813.612.111.217.512.47.82.42.01.8 HSCEI ex oils 67.32475.053315.213.712.513.210.69.72.42.01.8 HSCEI ex oils ex telcos 62.99449.583216.314.313.015.614.59.62.62.21.9 HSRed chip 2195.3207.93306.723113.812.311.332.412.08.72.62.11.8 HSCCI ex oils 172.34222.192915.213.511.922.712.813.82.52.01.8 HSCCI ex oils ex telcos 41.72103.722614.814.111.715.65.021.11.91.51.4 HSMLFFloat 3621.7202.691041.989814.112.611.417.812.69.92.42.01.8 HSMFCI ex oils 152.62771.579015.914.212.410.112.214.12.42.01.8 HSMFCI ex oils ex telco 115.26627.238516.814.812.87.113.515.12.32.01.8 FXChina 2510834.90.000.000 - - - - - - - - - FXA505226.649.22649.655015.614.512.47.69.617.42.42.11.8 FX 2003943.596.321410.9119918.415.212.913.416.217.42.42.01.8 FX 6003497.4153.472383.7859426.015.913.3 (2.4) 20.918.52.32.01.8 Price/earnings (X) EPS growth (%) Price/book (X) 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E 7.47.87.03.03.43.715.914.7313.90 7.58.07.23.13.43.715.414.6513.74 5.95.34.92.22.93.119.318.1816.86 5.95.14.71.82.42.717.015.8315.06 6.85.55.01.72.42.717.116.4615.61 5.85.44.92.53.13.519.719.1017.25 5.95.54.92.42.93.516.916.9216.17 9.212.09.22.42.63.112.412.1712.84 6.35.75.22.22.93.118.317.6716.68 6.55.95.21.92.52.915.615.3515.20 8.07.16.21.62.32.714.814.7414.88 - - - - - - - - - 8.07.66.42.62.53.014.915.1015.84 10.08.37.02.42.53.012.314.7115.09 12.99.07.61.92.42.98.114.5615.05 Dividend yield (%) Return on average equity (%)EV/EBITDA (X) Source: FactSet, I/B/E/S, Worldscope, Goldman Sachs Strategy Research. Exhibit 24: Valuation summary for MSCIChina In d ex US$ b n US$ m n C lose Ind ex A vg d aily N u m ber M arket/reg ion /sector 6 /28 /2006 cap tu rn over o f s to cks 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E C hin a ex o ils 127.01919.477615.5213.6512.0411.0413.7013.332.371.951.74 C hin a ex o ils ex te lco s 95.78007416.113.912.27.915.913.72.21.91.7 MSCIC h in a (lo cal cu rrency) GICS secto r an d ind u stry En erg y 38941.6229410.49.08.930.415.90.82.62.11.8 M ateria ls 6679.51311013.89.08.9 (10.0) 53.01.92.21.81.5 C h em ica ls 3882.028327.419.416.4 (80.3) 41.518.51.71.51.4 C o n stru ctio n m ateria ls 1200.73140.719.214.3 (59.1) 112.034.32.92.62.3 M etals an d m in in g 12216.899611.47.57.616.752.8 (1.2) 2.41.81.5 In d ustria ls 11119.2832112.512.111.89.03.02.71.61.51.4 C apita l g o od s 676.629712.410.611.43.417.2 (6.7) 1.41.21.2 Transpo rta tio n 34412.6541412.513.112.112.1 (4.5) 8.71.81.61.5 C on su m er d iscretio n ary 1407.8401017.013.211.4 (21.4) 28.116.51.91.71.5 A u tom o biles and co m p on en ts 6023.118316.110.99.5 (37.8) 47.714.11.91.71.5 C o n su m er du rab les an d app are l 511.25324.413.210.1 (35.3) 85.330.11.51.51.4 H o tels res tauran ts an d le isure 1131.04217.515.313.2 (24.5) 14.016.51.61.41.3 R eta iling 1782.612215.516.714.827.2 (7.1) 12.62.62.01.8 C on su m er stap les 4543.312514.912.310.21.321.221.12.62.01.7 Fo o d beverag e and tob acco 3933.312514.912.310.21.321.221.12.62.01.7 F in anc ia ls 24945.24841518.918.014.645.35.122.93.22.62.3 B anks 16524.4301316.416.914.814.3 (3.0) 13.92.72.52.3 D ivers ified financ ia ls 680.45121.821.720.6 - 0.55.31.3 - - In su rance 15714.4124334.224.720.742.038.419.26.23.42.9 R eal es tate 4086.055811.011.88.3141.3 (7.1) 42.91.91.81.6 In fo rm ation tech n olog y 604.520571.520.813.8 (73.8) 243.750.91.61.21.2 Tech no lo g y h ard w are an d eq u ip m en t 762.714316.414.310.8 (9.2) 14.332.22.81.81.7 Sem ico n du cto rs an d sem ico n du cto r eq u - 1.661 (13.2) 128.826.4 (357.6 ) - 387.50.90.80.8 T elecom m u nication se rv ices 6831.3119214.113.011.619.38.312.42.82.21.9 D ivers ified te leco m m un ica tio n serv ices 1634.32517.58.98.0 (0.8) (15.9) 10.81.11.00.9 W ireless te lecom m u nication se rv ices 72.7027.0193.58116.4414.0812.4828.3816.8012.793.782.782.39 U tilities 277.156.1130.03812.4512.1210.6911.762.6913.412.001.401.28 Price /ea rn in g s (X ) EPS g ro w th (% ) Price /b o ok (X ) 2005P 2006E 2007E 2005P 2006E 2007E 2005P 2006E 2007E 6.976.305.512.172.683.1015.8115.7615.32 8.17.36.32.12.52.914.414.714.5 5.64.94.83.54.14.027.225.621.3 7.84.74.62.63.74.116.521.818.5 10.27.58.51.41.62.33.08.08.6 12.28.06.40.61.01.47.314.216.8 7.04.03.93.24.64.923.027.822.0 8.28.97.83.33.53.613.712.711.9 8.38.77.93.53.63.711.712.510.6 8.28.97.73.23.43.615.112.812.8 8.79.37.82.82.42.811.713.714.2 8.712.410.23.92.42.712.216.416.4 9.16.55.41.72.33.16.911.414.3 11.610.48.22.42.73.68.99.810.5 7.98.77.62.32.32.516.113.512.9 9.48.16.61.51.92.317.318.318.1 9.48.16.61.51.92.317.318.318.1 8.58.76.11.01.72.218.116.116.9 - - - 0.72.22.619.415.416.1 - - - - 1.01.06.4 - - - - - 0.60.81.015.117.715.2 8.58.76.12.43.04.220.315.820.5 5.84.64.01.51.51.92.26.18.4 8.37.45.42.22.32.918.519.018.7 4.23.52.90.00.00.0 (6.2) 0.73.0 5.34.84.32.53.13.620.819.117.8 3.83.83.63.13.23.516.211.811.5 5.975.214.612.383.053.6423.0822.7720.62 8.577.576.233.263.764.1915.2813.9613.10 Return on average equ ity (% )EV/EBITDA (X) D ividend yield (% ) Source: FactSet, I/B/E/S, Worldscope, Goldman Sachs Strategy Research. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,200619 M acroeconom ic indicators, G S/G H C hina coverage China Portfolio Strategy Stance-at-a-Glance 20 Goldman Sachs Global Strategy Research - July 3,2006 Key macroeconomic indicators (monthly) 20062004 GDP 1Q 4Q 3Q 2Q 1Q 4Q % change yoy 10.29.99.810.19.910.1 % qoq (sa) 3.12.92.01.82.92.8 April Mar Feb Jan Dec Nov Oct Activity Indicators Industrial Production yoy 16.617.816.216.216.516.616.1 qoq (sa, ann) 20.822.418.917.516.216.015.0 Retail Sales yoy 13.613.59.415.512.512.412.8 qoq (sa, ann) 5.012.711.816.212.713.113.1 Fixed Asset Investment yoy 29.332.726.626.624.129.326.9 qoq (sa, ann) 41.448.746.736.626.522.424.0 Price Indicators Consumer Price Index yoy 1.20.80.91.91.61.31.2 qoq (sa, ann) 0.90.90.60.90.50.0 -0.2 Producer Price Index yoy 1.92.53.03.13.23.24.0 qoq (sa, ann) 0.60.00.00.31.62.93.4 Trade Indicators Exports yoy 23.928.322.328.118.218.629.6 qoq (sa, ann) 21.338.633.529.922.612.022.1 Imports yoy 15.321.129.625.422.221.023.4 qoq (sa, ann) 11.024.128.025.137.430.638.4 Trade Balance (USD bn) 10.511.22.59.511.010.512.0 Financial Indicators M2 yoy 18.918.818.819.217.618.318.0 qoq (sa, ann) 15.819.818.121.416.720.219.5 Total Loans yoy 14.814.013.413.112.813.813.7 qoq (sa, ann) 18.817.613.413.513.116.114.4 FXReserves (USD bn) - 875.1853.7845.2818.9794.2784.9 2005 Leading and coincident indicators GSCA and FCI index 90 95 100 105 110 115 19911993199519971999200120032005 Coincident Indicator Leading Indicator Index 1996=100 0 2 4 6 8 10 12 14 16 97989900010203040506 96 98 100 102 104 106 108 Goldman Sachs China Activity Index (GSCA) GSChina FCI (RHS) Index means tightening financial conditions (RHS) % chg yoy Source: NBS, CEMAC, PBOC, CEIC, Goldman Sachs Research estimates. Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,200621 Key macroeconomic indicators (annual) 19981999200020012002200320042005F 2006F 2007F REALSECTOR GDP by expenditure (at 1990 prices) GDP 7.87.68.48.39.110.010.19.99.69.1 Private consumption 9.912.211.06.87.97.56.69.39.89.9 Government consumption 9.712.811.87.84.92.82.24.04.55.0 Fixed investment 10.69.19.510.111.418.512.110.610.09.0 Domestic demand 7.910.18.98.98.510.88.57.69.09.2 Net exports (contribution to growth) 0.5 -1.80.0 -0.21.0 -0.31.92.81.30.6 Exports (G&S) 0.08.226.24.324.531.025.324.915.010.2 Imports (G&S) -2.823.633.66.124.537.922.120.614.510.8 GDP by Industry Agriculture & resources 3.52.82.42.82.92.56.35.25.54.0 Industry 8.98.19.48.49.812.711.111.410.610.2 Manufacturing 8.98.59.88.710.012.811.511.410.810.5 Construction 9.04.35.76.88.812.18.17.18.56.0 Services 8.39.39.710.210.49.510.09.69.39.0 Goldman Sachs China Activity Index (GSCA) 4.45.07.66.49.212.112.6 — — — PRICES CPI inflation (period average) -0.8 -1.40.40.7 -0.81.23.91.82.22.0 CPI inflation (period end) -1.0 -1.01.5 -0.3 -0.43.22.41.63.02.0 GDP deflator (period average) -0.9 -1.32.12.10.62.66.95.74.23.5 EXTERNALSECTOR (USD bn unless otherwise indicated) Current account balance 29.315.720.517.435.445.968.7155.9163.5154.3 (as percent of GDP) 2.91.41.71.32.42.83.67.06.24.9 Exports 21823429931838852070191110641171 Imports 1892192783013524746327559001017 Capital and financial account -6.37.61.934.832.352.7110.763.276.565.7 Foreign direct investment 41.137.037.537.446.847.253.145.544.840.9 Portfolio, net -3.7 -11.2 -4.0 -19.4 -10.311.419.715.020.020.0 Other capital flow -43.7 -18.1 -31.516.9 -4.1 -5.937.82.711.74.8 Net errors and omissons -16.6 -14.8 -11.9 -4.97.818.427.00.00.00.0 Overall balance (as percent of GDP) 0.60.80.93.65.27.110.79.89.16.9 MONETARY & FINANCIALSECTORLatest in bold Money Supply M214.814.712.317.616.919.614.917.6 (Dec) Domestic Credit 20.012.110.87.137.519.58.810.9 (Nov) Stock price index (Shanghai composite) 7.88.237.34.8 -20.2 -6.11.2 -13.6 (Dec) Lending rate (3m) 6.444.073.513.513.022.973.503.60 (Dec) Deposit rate 1.581.180.990.990.740.720.720.72 (Dec) Memo items Forex reserves (USD bn) 145155166212286403610819 (Dec) months of imports 12.411.28.810.511.611.713.015.7 (Dec) Exchange rate (eop) 8.288.288.288.288.288.288.288.077.34 Per capita GDP (2004): USD 1269 Total population at 2004 (eop): 1.3 bn Source: NBS, CEMAC, PBOC, CEIC, Goldman Sachs Research estimates. C hina Portfolio Strategy Stance-at-a-G lance 22 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Goldman Sachs and Gao Hua China coverage (111 in total,18 A-share companies) Exhibit 25: Company basics Airlines 753 HKAir China 1055 HKChina Southern Airlines 670 HKChina Eastern Airlines Airports 694 HKBeijing Capital International Airport 000089 CHShenzhen Airport 600009 CHShanghai International Airport 600004 CHGuangzhou Baiyun International Airport Banks HK-listed 3328 HKBank of Communications 939 HKChina Construction Bank 183 HKCITICInternational Financial Holdings 349 HKICBC (Asia) A-shares 600000 CHShanghai Pudong Development Bank 600036 CHChina Merchants Bank 000001 CHShenzhen Development Bank 600015 CHHua Xia Bank Conglomerates 1199 HKCOSCOPacific 144 HKChina Merchants Holdings 363 HKShanghai Industrial 392 HKBeijing Enterprises Holdings 267 HKCITICPacific 291 HKChina Resources Enterprise Consumer Electronics 1070 HKTCLMultimedia Technology 751 HKSkyworth Digital 600839 CHSichuan Changhong Food and Beverage 1068 HKChina Yurun Food Group 2319 HKMengniu Dairy 600887 CHYili Industrial PFHSPPeople's Food Holdings 506 HKCOFCOInternational 828 HKDynasty Fine Wines Group 200869 CHYantai Changyu Pioneer Wine Health care equipment 233 HKMingyuan Medicare Development CMEDUSChina Medical Technologies Insurance 2328 HKPICCProperty and Casualty Company 2628 HKChina Life Insurance Company 2318 HKPing An Insurance Group Internet SINAUSSINACorporation SOHUUSSohu.com SNDAUSShanda Interactive Entertainment NTESUSNetease KONGUSKongzhong Corp. TOMOUSTom Online (ADR) IT services 696 HKTravelSky Technology Media 1000 HKBeijing Media FMCNUSFocus Media 700 HKTencent Holdings 8002 HKPhoenix Satellite Television BIDUUSBaidu.com, Inc. CTRPUSCtrip.com International JOBSUS 51job, Inc. 100 HKClear Media Ticker Company B/CJulie Lim HKD 3.1024.29.53.72.34,23521.5 N/CJulie Lim HKD 1.7537.11.52.61.798526.8 N/CJulie Lim HKD 1.0723.41.11.41.067032.2 B/NBingchao Cao HKD 4.709.64.95.53.02,32735.0 N/NBingchao Cao CNY 5.55 (21.9) 17.15.63.499936.0 N/NBingchao Cao CNY 14.12 (16.4) 43.017.611.43,40239.3 N/NBingchao Cao CNY 6.91 (1.6) 10.58.75.986445.1 N/ANing Ma HKD 5.004.471.05.22.829,48311.8 N/ANing Ma HKD 3.53 (4.0) 155.73.82.3101,96211.4 N/ADarwin Lam, CFAHKD 4.2817.06.34.92.81,76046.2 N/ADarwin Lam, CFAHKD 11.456.61.712.49.51,65342.5 B/ANing Ma CNY 9.8817.562.412.27.24,83623.0 B/ANing Ma CNY 7.713.7115.17.75.411,83638.3 S/ANing Ma CNY 7.47 (5.9) 36.68.85.51,81772.0 S/ANing Ma CNY 4.41 (20.8) NA 6.13.62,31628.6 N/NMike Warren HKD 16.608.49.818.512.34,74048.4 N/NMike Warren HKD 22.307.618.927.814.66,54544.6 N/NEdward Chan HKD 14.4021.52.818.213.51,79443.3 B/NEdward Chan HKD 13.2028.89.017.610.31,05848.0 N/NMike Warren HKD 22.4511.413.628.619.76,33745.9 B/NMike Warren HKD 15.2025.012.917.911.44,36945.1 B/NCheryl Tang HKD 0.8180.20.91.50.740731.4 S/NCheryl Tang HKD 0.7230.60.92.70.721159.7 N/NCheryl Tang CNY 3.64 (18.4) 11.84.53.186465.2 N/NYifan Deng HKD 5.7516.57.66.73.31,07532.3 B/NYifan Deng HKD 9.6514.06.39.94.91,70059.9 N/NYifan Deng CNY 23.12 (29.5) 19.924.49.61,49371.8 N/NYifan Deng SGD 1.0131.71.41.40.871442.4 N/NYifan Deng HKD 4.3315.61.95.22.897931.5 S/NYifan Deng HKD 2.788.10.63.72.544531.3 N/NYifan Deng HKD 22.70 (12.9) 2.624.77.92,21446.2 B/NJoy Yuan HKD 0.7042.90.60.90.524251.9 N/NJoy Yuan USD 18.5356.514.443.515.1566 NA B/APhilippa Rogers, CFAHKD 2.7815.317.03.51.73,98021.1 N/APhilippa Rogers, CFAHKD 11.90 (13.5) 169.312.95.241,002 NA N/APhilippa Rogers, CFAHKD 22.605.025.423.912.218,02421.4 B/NJames Mitchell, CFAUSD 24.1828.241.829.821.81,30758.2 N/NJames Mitchell, CFAUSD 24.9016.519.328.615.193837.7 N/NJames Mitchell, CFAUSD 13.0330.511.839.312.492224.0 N/NJames Mitchell, CFAUSD 21.90 (21.2) 61.624.813.72,94148.8 N/NKit Low USD 8.5440.56.615.08.22827.2 N/NKit Low USD 19.21 (6.3) 12.028.312.71,02434.1 B/NBingchao Cao HKD 8.6536.40.810.46.598965.0 N/NKit Low HKD 8.8535.60.318.48.022517.9 B/NKit Low USD 63.1423.530.769.217.83,15955.7 B/NJames Mitchell, CFAHKD 15.6521.49.418.05.93,37542.0 NRKit Low HKD 1.25 NA 0.61.50.979516.5 S/AAnthony Noto USD 80.05 (16.3) 288.3122.545.22,881 NA N/NKit Low USD 50.50 (10.9) 29.851.325.31,60661.4 N/NKit Low USD 19.816.011.931.210.757923.8 N/NKit Low HKD 8.800.01.210.56.157836.8 Market cap. (US$mn) Free float (%) 20D avg. value traded (US$mn) Quoted currencyAnalyst Rating/ coverage view 52 wk high Last Price as of 06/29/2006 Potential valuation upside/ (down-side) 52 wk low Absolute price change (%) 1W change 1M change 3M change 1Y change YTD change 1W change 1M change 3M change 1Y change YTD change 3.4 (5.5) 1.714.321.2 (0.2) (3.1) 5.6 (15.6) 5.1 4.2 (9.4) (24.0) (31.5) (22.2) 0.6 (7.0) (20.1) (61.3) (38.4) 1.9 (5.4) (15.9) (22.6) (13.8) (1.7) (2.9) (12.0) (52.5) (30.0) 2.8 (6.1) 0.544.929.6 (0.8) (3.7) 4.4 15.0 13.4 6.417.942.117.953.42.8 20.4 45.9 (11.9) 37.2 1.98.620.5 (16.9) (2.1) (1.8) 11.1 24.3 (46.8) (18.2) (2.3) 5.78.0 (14.9) 1.3 (5.9) 8.2 11.9 (44.8) (14.8) 5.4 (0.5) (0.5) NA 39.01.7 1.9 3.4 NA 22.9 5.34.5 (4.8) NA 27.81.7 7.0 (1.0) NA 11.6 4.2 (1.1) 23.742.149.60.6 1.3 27.6 12.3 33.4 (1.3) 3.2 (2.6) 16.518.9 (4.9) 5.7 1.3 (13.4) 2.8 3.6 (4.7) (10.3) 27.2 (0.1) (0.0) (2.2) (6.5) (2.7) (16.2) 4.51.415.931.823.60.8 3.8 19.8 2.0 7.5 1.8 (16.7) 14.417.019.1 (1.8) (14.3) 18.3 (12.9) 2.9 1.7 (24.1) (28.8) 11.1 (9.1) (2.0) (21.7) (24.9) (18.8) (25.2) 0.36.14.58.615.5 (3.3) 8.6 8.3 (21.2) (0.7) 4.3 (3.3) 1.239.528.80.7 (0.9) 5.0 9.7 12.6 (5.1) (10.2) (14.3) (4.1) (13.0) (8.7) (7.8) (10.5) (34.0) (29.1) 2.9 (6.8) (16.5) 14.8 (5.3) (0.7) (4.3) (12.6) (15.0) (21.5) (0.7) (3.7) (6.4) (2.2) 3.0 (4.3) (1.2) (2.5) (32.1) (13.1) (2.7) (3.6) (11.6) 21.85.1 (6.3) (1.2) (7.7) (8.1) (11.1) 6.5 (18.8) (31.7) (43.8) (26.8) 2.9 (16.4) (27.8) (73.7) (42.9) 4.5 (24.2) (43.0) (74.7) (74.7) 0.9 (21.7) (39.1) (104.5) (90.8) 2.32.0 (17.6) (13.4) (6.3) (1.3) 4.5 (13.8) (43.3) (22.5) 3.66.5 (0.9) NA 31.80.0 9.0 3.0 NA 15.6 2.67.213.5 NA 47.0 (1.0) 9.6 17.3 NA 30.8 (2.2) 23.670.8 NA 106.9 (5.9) 26.1 74.7 NA 90.7 0.5 (11.5) (18.7) 12.4 (6.5) (3.1) (9.0) (14.8) (17.5) (22.7) 7.5 (2.8) (2.8) 18.624.63.9 (0.4) 1.0 (11.2) 8.5 5.8 (8.3) (15.4) (0.9) (4.3) 2.1 (5.9) (11.5) (30.8) (20.5) 1.814.523.5150.5116.4 (1.9) 16.9 27.4 120.6 100.3 4.6 (4.2) (2.9) (18.1) 37.41.0 (1.8) 1.0 (47.9) 21.2 (6.6) (25.7) (39.6) NA (41.7) (10.3) (23.3) (35.8) NA (57.8) 4.910.23.835.721.31.2 12.7 7.7 5.8 5.2 9.34.915.8119.671.55.7 7.4 19.6 89.8 55.4 9.21.49.574.953.55.6 3.8 13.3 45.0 37.4 0.5 (1.7) (9.9) (16.0) 0.1 (3.1) 0.8 (6.0) (45.8) (16.1) (3.0) (4.5) 0.212.035.8 (6.6) (2.0) 4.0 (17.9) 19.6 0.5 (13.4) (7.7) (65.0) (14.5) (3.1) (11.0) (3.9) (94.8) (30.6) 2.70.3 (5.4) 51.156.0 (0.9) 2.8 (1.5) 21.3 39.8 (14.6) (25.3) (30.6) (8.6) (31.7) (18.2) (22.8) (26.8) (38.4) (47.8) 1.1 (17.4) (16.1) 48.9 (3.1) (2.5) (14.9) (12.3) 19.1 (19.2) 1.2 (7.0) 3.032.320.3 (2.5) (4.6) 6.9 2.5 4.1 6.04.7 (30.0) (51.5) (16.9) 2.4 7.2 (26.2) (81.4) (33.0) (2.1) 1.117.8 NA 87.0 (5.7) 3.5 21.7 NA 70.8 (2.9) (14.0) 20.3147.581.9 (6.5) (11.5) 24.2 117.7 65.8 0.0 (3.9) (16.2) (8.8) 33.3 (3.6) (1.4) (12.4) (38.7) 17.2 (5.2) 0.856.7 NA 27.2 (8.8) 3.2 60.5 NA 11.1 3.02.924.996.474.9 (0.6) 5.3 28.8 66.6 58.7 (5.0) (27.8) 30.253.734.8 (8.6) (25.3) 34.1 23.8 18.6 (1.1) (9.3) 6.031.339.7 (4.8) (6.8) 9.9 1.5 23.5 Relative to MSCIChina (%) Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research. Stance-at-a-G lance C hina Portfolio Strategy G oldm an Sachs G lobal Strategy R esearch - July 3,2006 23 Exhibit 26: Company basics CompanyTicker Market cap. (US$mn) Free float (%) 20D avg. value traded (US$mn) Quoted currencyAnalyst Rating/ coverage view 52 wk high Last Price as of 05/31/2006 Potential valuation upside/ (down-side) 52 wk low Absolute price change (%) 1W change 1M change 3M change 1Y change YTD change 1W change 1M change 3M change 1Y change YTD change Relative to MSCIChina (%) Metals and mining 1088 HKChina Shenhua Energy 600019 CHBaoshan Iron & Steel 600005 CHWuhan Iron and Steel 1171 HKYanzhou Coal Mining 2600 HKAluminum Corporation of China 347 HKAngang New Steel 323 HKMaanshan Iron & Steel 914 HKAnhui Conch Cement 358 HKJiangxi Copper Oil and chemicals 857 HKPetroChina 883 HKCNOOC 386 HKChina Petroleum and Chemical 1033 HKSinopec Yizheng Chemical Fibre 338 HKSinopec Shanghai Petrochemical 297 HKSinochem Hong Kong Holdings 2883 HKChina Oilfield Services Limited Property 688 HKChina Overseas Land & Investment 2337 HKShanghai Forte Land 1109 HKChina Resources Land 2868 HKBeijing Capital Land 69 HKShangri-La 000002 CHChina Vanke (A) 2777 HKGuangzhou R&FProperties Retailing 589 HKPorts Design 980 HKLianhua Supermarket 8277 HKWumart Stores 3368 HKParkson Retail Group 503 HKChina Paradise Utilities HK-listed 991 HKDatang International Power Generation 1071 HKHuadian Power International 902 HKHuaneng Power International 836 HKChina Resources Power 2688 HKXinao Gas Holdings 2380 HKChina Power International 1065 HKTianjin Capital Environmental Protection 270 HKGuangdong Investment A-shares 000539 CHGuangdong Electric Power Development 600795 CHGDPower Development 600649 CHShanghai Municipal Raw Water 600642 CHShenergy 600900 CHChina Yangtze Power 600008 CHBeijing Capital Technology 981 HKSMIC 903 HKTPVTechnology 2038 HKFoxconn International Holdings 992 HKLenovo Group 763 HKZTECorporation 3355 HKAdvanced Semiconductor Manufacturing Telecom services 941 HKChina Mobile (HK) 762 HKChina Unicom 728 HKChina Telecom 906 HKChina Netcom Transportation 1138 HKChina Shipping Development 1919 HKChina COSCOHoldings 2866 HKChina Shipping Container Lines 000039 CHChina International Marine Containers 716 HKSingamas Container Holdings 2343 HKPacific Basin Shipping 316 HKOrient Overseas International Water Treatment Systems SINOSPSinomem Technology N/NSong Shen HKD 13.30 (0.8) 32.015.97.330,97918.8 B/NSong Shen CNY 4.2541.249.95.23.89,30570.8 N/NSong Shen CNY 2.7217.622.43.92.52,66524.2 S/NSong Shen HKD 5.55 (25.0) 20.87.44.63,51535.5 N/NSong Shen HKD 5.7024.655.08.74.18,11022.3 N/NSong Shen HKD 6.855.19.37.93.55,23361.9 B/NSong Shen HKD 2.4573.513.23.32.32,03636.8 N/NSong Shen HKD 12.0020.85.616.56.81,94050.4 B/NSong Shen HKD 6.7053.744.59.63.62,49843.4 B/AKelvin Koh, CFAHKD 7.9512.6132.99.65.7183,25310.0 B/AKelvin Koh, CFAHKD 5.9519.394.56.94.631,46529.4 N/AKelvin Koh, CFAHKD 4.23 (3.0) 96.45.53.047,16722.6 N/CKelvin Koh, CFAHKD 1.62 (1.2) 11.42.31.083435.0 N/CKelvin Koh, CFAHKD 3.65 (16.4) 20.45.02.33,38430.9 B/CKelvin Koh, CFAHKD 2.7339.49.83.61.22,03825.8 S/AKelvin Koh, CFAHKD 3.63 (17.2) 2.44.82.71,86538.4 B/NYi Wang, CFAHKD 4.2851.123.35.91.43,51140.0 N/NYi Wang, CFAHKD 2.8059.32.84.42.091234.8 N/NYi Wang, CFAHKD 3.8354.09.06.11.21,53234.5 N/NYi Wang, CFAHKD 2.2842.42.54.21.650639.5 B/ACarmen Tang, CFAHKD 14.0030.06.515.910.34,55656.9 B/NYi Wang, CFACNY 5.3782.770.97.03.12,49984.3 S/NYi Wang, CFAHKD 32.3045.512.648.911.03,17428.0 N/NManning Doherty HKD 11.500.01.613.35.780438.0 N/NManning Doherty HKD 8.1518.51.110.56.965332.8 N/NManning Doherty HKD 27.804.31.730.112.51,09237.2 N/NManning Doherty HKD 21.1522.92.827.012.01,50324.6 N/NManning Doherty HKD 1.84112.08.14.31.851448.2 N/NStephen Oldfield HKD 5.1019.67.76.24.83,39027.7 B/NStephen Oldfield HKD 2.1028.61.92.41.91,62833.2 S/NStephen Oldfield HKD 4.980.524.76.04.77,72225.0 N/NStephen Oldfield HKD 5.752.64.36.64.22,81927.8 N/NStephen Oldfield HKD 6.7511.11.68.15.085957.1 B/NStephen Oldfield HKD 2.8526.33.43.02.41,15036.3 N/NFranklin Chow, CFAHKD 1.7420.70.53.11.658034.0 N/NFranklin Chow, CFAHKD 2.8522.84.03.72.22,04137.4 B/NFranklin Chow, CFACNY 4.4913.68.65.63.81,43444.3 N/NFranklin Chow, CFACNY 7.60 (7.9) 22.59.05.22,15526.0 N/NFranklin Chow, CFACNY 5.67 (10.1) 13.06.14.21,33629.8 S/NFranklin Chow, CFACNY 6.09 (8.0) 37.57.84.82,20030.3 N/NStephen Oldfield CNY 6.6716.984.48.76.46,82733.0 N/NFranklin Chow, CFACNY 5.047.128.15.83.11,38635.5 N/NDonald Lu HKD 1.0331.18.41.81.02,424 NA N/NHelen Huang HKD 6.80 (11.8) 4.29.85.11,23843.9 N/NHenry King HKD 15.8515.526.820.85.614,13626.2 N/NHenry King HKD 2.63 (14.3) 11.83.92.22,97941.9 B/NDonald Lu HKD 24.6038.24.632.921.33,03952.0 N/NDonald Lu HKD 1.4555.20.92.11.428630.5 N/NHao Fei Chen HKD 42.35 (5.5) 139.146.827.5107,60421.4 B/NHao Fei Chen HKD 6.8017.624.27.85.911,00922.5 N/NHao Fei Chen HKD 2.4317.539.93.22.425,27110.5 N/NHao Fei Chen HKD 13.205.320.815.511.211,20718.2 B/AJulie Lim HKD 5.3540.27.46.65.22,29149.0 N/AJulie Lim HKD 3.7312.86.64.23.02,94536.5 N/AJulie Lim HKD 2.0522.04.43.51.81,592 NA N/NBingchao Cao CNY 15.67 (9.4) 59.115.87.23,952 NA B/NBingchao Cao HKD 5.2042.32.16.83.7409 NA B/AJean-Louis Morisot HKD 3.3036.42.84.13.153864.0 B/AJean-Louis Morisot HKD 27.3024.56.038.123.72,20032.2 B/NChristina Hee, CFASGD 0.7938.01.11.10.622930.0 8.10.41.5 NA 55.64.5 2.8 5.4 NA 39.4 2.7 (5.1) 0.5 (13.1) 3.2 (1.0) (2.7) 4.3 (42.9) (13.0) 3.8 (9.9) (1.8) (26.7) 0.40.2 (7.5) 2.1 (56.5) (15.8) 7.8 (4.3) (15.9) (8.3) 11.64.1 (1.9) (12.0) (38.1) (4.6) 7.5 (9.5) (31.3) 33.3 (3.4) 3.9 (7.1) (27.5) 3.5 (19.5) 13.2 (1.4) 0.781.564.19.6 1.0 4.6 51.6 47.9 6.5 (12.5) (11.7) (3.9) 2.12.9 (10.0) (7.9) (33.8) (14.1) 4.3 (24.1) 5.361.125.70.7 (21.6) 9.1 31.2 9.5 9.8 (6.3) 10.772.982.36.2 (3.8) 14.6 43.0 66.2 4.6 (5.4) (0.6) 35.925.21.0 (2.9) 3.2 6.0 9.1 3.5 (0.8) (0.8) 29.313.3 (0.2) 1.6 3.0 (0.5) (2.8) 3.0 (8.2) (7.1) 37.49.7 (0.6) (5.7) (3.3) 7.5 (6.4) (2.4) 6.6 (22.9) 28.6 (3.6) (6.0) 9.0 (19.0) (1.3) (19.7) 0.76.6 (18.4) 36.422.7 (2.9) 9.0 (14.6) 6.6 6.5 3.80.912.4 NA 89.20.2 3.4 16.2 NA 73.1 5.1 (11.0) (8.2) 17.916.01.4 (8.6) (4.4) (12.0) (0.1) 9.6 (6.6) (14.1) 194.828.66.0 (4.1) (10.2) 165.0 12.4 6.7 (5.9) (26.3) 31.85.73.0 (3.4) (22.5) 1.9 (10.5) 9.3 (7.3) (28.5) 196.518.65.7 (4.8) (24.6) 166.7 2.5 0.0 (9.9) (28.3) 26.40.0 (3.6) (7.4) (24.5) (3.5) (16.1) (0.4) (1.4) 12.414.38.1 (4.0) 1.0 16.3 (15.6) (8.0) (0.6) (9.6) (17.5) 58.924.6 (4.2) (7.1) (13.7) 29.0 8.4 1.9 (20.4) (16.0) NA 19.6 (1.7) (18.0) (12.1) NA 3.5 8.52.70.0103.527.84.9 5.1 3.9 73.7 11.6 (3.6) (6.9) (7.4) (6.9) 12.4 (7.2) (4.4) (3.5) (36.7) (3.7) 4.119.33.7122.474.60.5 21.8 7.6 92.5 58.4 (0.7) (13.5) (9.2) NA 51.1 (4.3) (11.0) (5.4) NA 34.9 (0.5) (20.0) (47.4) NA (33.1) (4.2) (17.5) (43.6) NA (49.2) 2.5 (1.0) 2.0 (13.6) (10.5) (1.1) 1.5 5.9 (43.4) (26.7) 5.0 (1.2) 1.2 (5.6) 6.11.4 1.3 5.1 (35.5) (10.1) 2.1 (1.5) (2.5) (12.7) (2.5) (1.6) 1.0 1.4 (42.6) (18.6) 0.9 (0.9) (1.7) 36.131.4 (2.8) 1.6 2.2 6.2 15.3 0.0 (11.2) (3.6) 26.29.8 (3.6) (8.7) 0.3 (3.7) (6.4) 6.50.04.66.511.82.9 2.5 8.4 (23.3) (4.4) 6.7 (0.6) (16.1) (35.0) (4.9) 3.1 1.9 (12.3) (64.8) (21.1) 6.5 (1.7) (18.0) 22.6 (1.7) 2.9 0.7 (14.1) (7.3) (17.9) 0.42.518.8 (5.7) (6.1) (3.2) 5.0 22.6 (35.5) (22.2) (2.1) (2.9) 32.610.322.0 (5.7) (0.5) 36.5 (19.6) 5.8 13.610.1 (4.7) 8.66.810.0 12.6 (0.8) (21.2) (9.4) 1.0 (6.0) 18.0 (21.5) 9.9 (2.6) (3.6) 21.9 (51.4) (6.2) 0.6 (5.8) 3.4 (18.4) (3.6) (3.0) (3.3) 7.3 (48.2) (19.8) 2.0 (3.8) 9.045.617.2 (1.6) (1.4) 12.9 15.7 1.1 3.0 (4.6) (13.4) (36.0) (1.9) (0.6) (2.2) (9.6) (65.9) (18.0) (0.7) (9.3) (22.3) 28.3 (10.5) (4.4) (6.9) (18.4) (1.6) (26.7) 8.6 (13.4) 12.8188.225.34.9 (10.9) 16.7 158.3 9.2 6.115.4 (16.0) 14.1 (26.6) 2.4 17.8 (12.1) (15.7) (42.7) 5.1 (9.2) (16.6) 4.2 (5.7) 1.5 (6.8) (12.8) (25.6) (21.9) 0.7 (20.8) NANA (31.8) (2.9) (18.3) NANA (47.9) 2.04.23.944.015.4 (1.6) 6.6 7.8 14.2 (0.7) (0.7) (1.4) 7.94.67.9 (4.4) 1.0 11.8 (25.2) (8.2) 0.0 (4.0) (10.2) (13.4) (14.9) (3.6) (1.5) (6.3) (43.2) (31.1) 4.83.1 (2.2) 15.85.21.1 5.6 1.6 (14.1) (11.0) 0.9 (4.5) (11.6) (10.1) (6.1) (2.7) (2.0) (7.7) (39.9) (22.3) 2.83.54.9 NA 8.8 (0.9) 5.9 8.8 NA (7.4) 5.7 (4.7) (18.8) (38.8) (24.1) 2.0 (2.2) (15.0) (68.7) (40.2) 7.46.371.156.285.73.8 8.8 74.9 26.4 69.5 (1.0) (16.1) 1.0 (8.0) 32.5 (4.6) (13.7) 4.8 (37.8) 16.3 0.8 (5.7) (14.3) (10.2) (8.3) (2.9) (3.3) (10.4) (40.1) (24.5) 0.6 (7.5) 3.8 (19.9) 3.8 (3.1) (5.0) 7.7 (49.8) (12.3) 2.65.3 (14.6) 23.412.1 (1.0) 7.8 (10.7) (6.4) (4.1) Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research. C hina Portfolio Strategy Stance-at-a-G lance 24 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Exhibit 27: Forecast summary Airlines 753 HKAir China 1055 HKChina Southern Airlines 670 HKChina Eastern Airlines Airports 694 HKBeijing Capital International Airport 000089 CHShenzhen Airport 600009 CHShanghai International Airport 600004 CHGuangzhou Baiyun International Airport Banks HK-listed 3328 HKBank of Communications 939 HKChina Construction Bank 183 HKCITICInternational Financial Holdings 349 HKICBC (Asia) A-shares 600000 CHShanghai Pudong Development Bank 600036 CHChina Merchants Bank 000001 CHShenzhen Development Bank 600015 CHHua Xia Bank Conglomerates 1199 HKCOSCOPacific 144 HKChina Merchants Holdings 363 HKShanghai Industrial 392 HKBeijing Enterprises Holdings 267 HKCITICPacific 291 HKChina Resources Enterprise Consumer Electronics 1070 HKTCLMultimedia Technology 751 HKSkyworth Digital 600839 CHSichuan Changhong Food and Beverage 1068 HKChina Yurun Food Group 2319 HKMengniu Dairy 600887 CHYili Industrial PFHSPPeople's Food Holdings 506 HKCOFCOInternational 828 HKDynasty Fine Wines Group 200869 CHYantai Changyu Pioneer Wine Health care equipment 233 HKMingyuan Medicare Development CMEDUSChina Medical Technologies Insurance 2328 HKPICCProperty and Casualty Company 2628 HKChina Life Insurance Company 2318 HKPing An Insurance Group Internet SINAUSSINACorporation SOHUUSSohu.com SNDAUSShanda Interactive Entertainment NTESUSNetease KONGUSKongzhong Corp. TOMOUSTom Online (ADR) IT services 696 HKTravelSky Technology Media 1000 HKBeijing Media FMCNUSFocus Media 700 HKTencent Holdings 8002 HKPhoenix Satellite Television BIDUUSBaidu.com, Inc. CTRPUSCtrip.com International JOBSUS 51job, Inc. 100 HKClear Media Ticker Company 20052006E 2007E 04-07 CAGR 20052006E 2007E 20052006E 2007E 04-07 CAGR 20052006E 2007E 04-07 CAGR 20052006E 2007E 04-07 CAGR 20052006E 2007E 04-07 CAGR 0.25 0.24 0.29 (0.09) 0.020.050.0637,18142,17748,847 NA 2,336 2,410 3,096 NA 7,949 7,680 10,481 NA 30,016 33,457 37,854 NA (0.20) (0.02) 0.04 NM 0.000.000.0037,60443,71950,7940.5 (885) (82) 154 NM 3,650 4,811 7,655 0.5 40,597 53,591 62,512 0.4 0.01 (0.03) 0.06 (0.26) 0.000.000.0025,65029,85534,8550.3 47 (130) 273 (0.3) 2,832 3,113 5,164 0.2 30,474 44,923 52,552 0.5 0.23 0.25 0.30 0.26 0.080.090.113,0053,0573,3920.1 851 975 1,155 0.3 1,780 1,948 2,303 0.2 236 (793) 1,036 NM 0.25 0.26 0.29 0.27 0.150.130.151,0131,0691,1820.1 362 377 420 0.3 530 550 606 0.1 (725) (824) (1,000) NM 0.72 0.83 0.91 0.17 0.000.210.232,6813,3073,7800.3 1,389 1,603 1,754 0.2 1,729 2,133 2,447 0.3 (492) 4,815 10,100 NM 0.25 0.31 0.39 0.17 0.100.090.102,1492,4272,6620.3 252 310 388 0.2 867 1,054 1,203 0.4 2,552 3,408 3,967 NM 0.21 0.27 0.35 1.47 0.090.110.14 NANANANA 9,137 12,518 15,973 2.2 NANANANANANANANA 0.23 0.21 0.22 (0.05) 0.030.080.09 NANANANA 46,916 47,117 49,583 0.0 NANANANANANANANA 0.35 0.28 0.34 0.09 0.170.140.171,9712,1502,3350.0 1,103 1,005 1,623 0.3 NANANANANANANANA 0.91 0.95 1.03 0.17 0.530.570.622,0332,3932,6730.3 981 1,060 1,155 0.2 NANANANANANANANA 0.65 0.93 1.14 0.51 0.130.190.23 NANANANA 2,558 3,628 4,458 0.5 NANANANANANANANA 0.36 0.44 0.58 0.34 0.080.090.16 NANANANA 3,749 5,436 7,087 0.5 NANANANANANANANA 0.15 0.30 0.46 0.64 0.000.000.00 NANANANA 286 580 886 0.6 NANANANANANANANA 0.33 0.41 0.51 0.44 0.110.070.10 NANANANA 1,401 1,734 2,145 0.4 NANANANANANANANA 1.19 1.24 1.22 0.28 0.670.710.692,3032,0792,6350.1 2,609 2,752 2,704 0.3 2,237 2,189 2,139 0.0 4,464 1,823 3,104 (0.1) 1.08 1.16 1.35 0.19 0.500.540.632,9723,4504,3250.4 2,364 2,655 3,084 0.2 634 988 1,409 1.0 6,852 10,161 10,135 NM 1.07 1.05 1.25 (0.07) 0.420.410.496,0256,7117,2330.5 1,028 1,015 1,210 (0.1) 1,411 1,434 1,547 0.3 (3,747) (3,010) (1,105) NM 0.92 0.61 0.82 0.01 0.300.300.3011,0019,7917,797 (0.1) 570 382 512 0.0 1,543 1,597 1,655 0.0 (81) (1,075) (1,842) NA 1.82 3.37 1.56 (0.02) 1.101.101.1026,56428,57429,3590.1 3,989 7,391 3,413 (0.0) 3,092 3,628 3,555 0.1 16,233 13,595 15,446 0.2 1.02 0.87 1.00 0.15 0.380.430.5053,58459,48664,8620.2 2,220 1,934 2,242 0.2 3,644 4,135 4,639 0.2 (1,858) 3,351 2,953 (0.2) (0.19) 0.06 0.10 (0.05) 0.000.010.0134,55641,96055,5190.5 (599) 228 408 0.1 (0) 854 1,162 0.2 2,873 2,346 2,847 0.2 0.18 0.06 0.07 (0.35) 0.060.010.0110,46610,19010,6410.1 403 128 149 (0.3) 182 186 296 (0.2) (116) (365) (516) NM 0.13 0.17 0.22 NM 0.000.000.0015,02820,37022,2640.4 285 334 423 NM 783 872 1,015 NM 56 (473) 107 (0.6) 0.33 0.37 0.44 0.56 0.090.110.134,3255,8507,8510.8 349 534 634 1.0 429 591 815 0.6 (1,037) (797) (642) NA 0.35 0.42 0.52 0.22 0.070.100.1310,51114,13418,2290.6 444 574 711 0.5 906 1,226 1,557 0.6 (424) (395) (664) NM 0.57 0.69 0.77 0.29 0.200.280.2812,17515,95819,7650.5 293 357 445 0.4 684 828 1,038 0.3 (1,244) (845) (1,726) NM 0.13 0.13 0.15 0.18 0.080.070.061,5291,7432,0070.2 147 152 171 0.2 183 222 250 0.2 (29) (131) (163) NM 0.24 0.29 0.34 0.45 0.090.110.1317,58819,41021,0930.1 429 511 599 0.4 889 1,013 1,209 0.3 2,018 2,000 1,677 0.1 0.15 0.15 0.17 (0.05) 0.060.060.079471,1251,3740.3 179 187 208 0.1 231 247 293 0.1 (762) (838) (812) NM 0.58 0.72 0.86 0.60 0.520.610.731,6382,0962,5050.4 304 377 455 0.6 443 563 682 0.5 (1,127) (996) (1,001) NM 0.03 0.03 0.05 0.36 0.000.010.01282203258 (0.3) 70 90 136 0.4 94 110 155 0.4 (229) (256) (554) NM 0.72 0.91 1.16 0.77 0.000.000.002746661.2 15 23 32 1.0 18 27 37 1.1 (2) (101) (136) NM 0.10 0.19 0.24 3.57 0.070.070.10 NANANANA 1,125 1,999 2,592 3.4 NANANANANANANANA 0.34 0.38 0.53 0.47 0.050.060.10 NANANANA 9,224 10,319 14,188 0.4 NANANANANANANANA 0.67 0.85 1.25 0.54 0.200.260.37 NANANANA 4,273 5,297 7,717 0.6 NANANANANANANANA 0.82 0.86 1.21 (0.05) 0.000.000.001942132820.2 43 46 65 (0.0) 54 51 76 (0.0) (201) (242) (296) NM 0.82 0.81 1.07 0.04 NANA 0.321081411740.3 30 30 39 0.1 32 39 49 0.1 (53) (87) (118) NM 0.28 0.39 0.85 (0.10) 0.000.000.002411982400.2 21 29 60 (0.0) 89 38 81 0.0 (118) (120) (207) NM 0.88 1.07 0.96 0.52 NANANA 2022693050.6 117 141 128 0.5 127 167 156 0.6 (316) (463) (603) NM 0.64 0.86 1.01 0.30 NANA 0.00781191440.7 22 30 35 0.3 22 29 46 0.5 (117) (129) (157) NM 0.88 1.08 1.39 0.36 NANA 0.001722173020.6 45 57 74 0.5 49 56 77 0.4 (24) (71) (153) NM 0.58 0.57 0.69 0.18 0.220.230.271,4531,6631,9400.2 514 509 610 0.2 704 793 939 0.3 (832) (2,173) (2,486) NM 0.08 0.39 0.70 (0.26) 0.380.150.288339201,120 (0.0) 16 76 139 (0.1) 49 82 154 (0.2) (249) (53) (127) NM 0.93 1.56 2.75 NMNANANA 682183622.5 24 76 136 NM 27 88 169 2.5 (71) (147) (238) NM 0.25 0.53 0.73 0.65 0.080.370.691,3932,8383,7310.8 474 942 1,248 0.7 527 1,245 1,718 0.9 (2,322) (1,874) (2,600) NM 0.03 0.04 0.05 0.28 0.010.010.021,0351,1131,2650.1 186 200 246 0.3 185 243 305 0.4 (513) (628) (775) NM 0.30 0.80 1.50 2.46 0.000.000.00371001882.7 4 24 49 4.6 13 35 66 2.8 (113) (164) (247) NA 0.87 1.03 1.57 0.73 0.260.350.61661021450.9 28 33 50 0.7 29 36 55 0.8 (92) (125) (167) NM 0.27 0.53 0.70 0.63 NANANA 71901100.4 8 15 19 0.6 10 20 25 0.4 (103) (111) (136) NM 0.21 0.27 0.41 0.52 NANA 0.296758211,0160.4 105 138 203 0.5 280 322 427 0.3 6 (141) (128) NM Net debt (calendarized) DPS (calendarized) (quoted currency) EPS (calendarized) (quoted currency) Sales (calendarized) (mn of quoted currency) Net profit (calendarized) (mn of quoted currency) EBITDA (calendarized) Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research estimates. Stance-at-a-G lance C hina Portfolio Strategy G oldm an Sachs G lobal Strategy R esearch - July 3,2006 25 Exhibit 28: Forecast summary CompanyTicker 20052006E 2007ECAGR 20052006E 2007E 20052006E 2007ECAGR 20052006E 2007ECAGR 20052006E 2007ECAGR 20052006E 2007ECAGR Net debt (calendarized) DPS (calendarized) (quoted currency) EPS (calendarized) (quoted currency) Sales (calendarized) (mn of quoted currency) Net profit (calendarized) (mn of quoted currency) EBITDA (calendarized) Metals and mining 1088 HKChina Shenhua Energy 600019 CHBaoshan Iron & Steel 600005 CHWuhan Iron and Steel 1171 HKYanzhou Coal Mining 2600 HKAluminum Corporation of China 347 HKAngang New Steel 323 HKMaanshan Iron & Steel 914 HKAnhui Conch Cement 358 HKJiangxi Copper Oil and chemicals 857 HKPetroChina 883 HKCNOOC 386 HKChina Petroleum and Chemical 1033 HKSinopec Yizheng Chemical Fibre 338 HKSinopec Shanghai Petrochemical 297 HKSinochem Hong Kong Holdings 2883 HKChina Oilfield Services Limited Property 688 HKChina Overseas Land & Investment 2337 HKShanghai Forte Land 1109 HKChina Resources Land 2868 HKBeijing Capital Land 69 HKShangri-La 000002 CHChina Vanke (A) 2777 HKGuangzhou R&FProperties Retailing 589 HKPorts Design 980 HKLianhua Supermarket 8277 HKWumart Stores 3368 HKParkson Retail Group 503 HKChina Paradise Utilities HK-listed 991 HKDatang International Power Generation 1071 HKHuadian Power International 902 HKHuaneng Power International 836 HKChina Resources Power 2688 HKXinao Gas Holdings 2380 HKChina Power International 1065 HKTianjin Capital Environmental Protection 270 HKGuangdong Investment A-shares 000539 CHGuangdong Electric Power Development 600795 CHGDPower Development 600649 CHShanghai Municipal Raw Water 600642 CHShenergy 600900 CHChina Yangtze Power 600008 CHBeijing Capital Technology 981 HKSMIC 903 HKTPVTechnology 2038 HKFoxconn International Holdings 992 HKLenovo Group 763 HKZTECorporation 3355 HKAdvanced Semiconductor Manufacturing Telecom services 941 HKChina Mobile (HK) 762 HKChina Unicom 728 HKChina Telecom 906 HKChina Netcom Transportation 1138 HKChina Shipping Development 1919 HKChina COSCOHoldings 2866 HKChina Shipping Container Lines 000039 CHChina International Marine Containers 716 HKSingamas Container Holdings 2343 HKPacific Basin Shipping 316 HKOrient Overseas International Water Treatment Systems SINOSPSinomem Technology 0.90 1.03 1.10 0.40 0.400.360.3951,41860,79770,1120.4 15,386 18,719 19,987 0.5 28,600 35,079 38,989 0.4 28,188 36,808 27,693 (0.3) 0.72 0.65 0.71 (0.03) 0.320.320.32126,608125,291132,5290.5 12,666 11,318 12,496 0.2 30,020 30,311 32,438 0.2 24,531 10,047 11,450 1.0 0.62 0.55 0.58 0.19 0.300.270.2840,74641,52045,5290.4 4,825 4,295 4,557 0.2 9,300 8,564 9,375 0.2 2,357 3,314 5,353 1.0 0.56 0.54 0.52 (0.09) 0.150.160.1612,24211,00311,3670.1 2,834 2,690 2,546 (0.1) 5,517 5,001 4,766 (0.1) (6,066) (7,927) (10,408) NM 0.61 1.01 0.49 (0.04) 0.210.330.1636,52557,47748,3170.2 6,912 11,497 5,663 (0.0) 12,340 19,137 12,261 0.1 7,758 5,928 3,216 (0.2) 0.69 1.17 1.36 0.54 0.350.590.6825,98151,29461,7790.7 2,084 6,950 8,042 1.1 3,838 14,446 16,468 1.2 778 17,017 10,405 3.1 0.43 0.41 0.79 0.23 0.160.150.2831,57733,09043,0560.3 2,864 2,687 5,109 0.2 5,668 6,067 9,750 0.3 7,442 14,736 17,134 1.3 0.29 0.71 0.96 0.16 0.070.120.1610,44713,24214,9430.4 372 902 1,210 0.1 2,006 3,327 4,280 0.3 7,112 8,094 8,882 0.3 0.65 1.40 1.25 0.79 0.190.560.5012,95318,38917,2540.3 1,840 4,083 3,631 0.8 1,849 4,483 3,739 0.9 1,805 2,165 3,053 (0.1) 0.73 0.87 0.79 0.17 0.330.390.35536,218602,046627,5870.3 129,495154,879 141,127 0.2 236,417 280,987 269,780 0.2 (9,066) (29,352) (26,338) NA 0.60 0.68 0.59 0.25 0.200.210.2167,44284,33881,9790.2 24,589 28,980 25,789 0.3 40,915 47,653 43,999 0.3 (3,699) (6,492) (5,951) NM 0.46 0.51 0.50 0.11 0.130.140.14808,394917,193937,3580.3 39,734 44,190 42,966 0.1 95,379 103,577 104,550 0.1 130,591 156,388 184,814 0.2 (0.23) (0.07) (0.05) NA 0.000.000.0015,34114,45613,3260.0 (939) (264) (191) NA 2 571 687 (0.3) (190) (825) (635) NA 0.25 0.19 0.29 (0.26) 0.100.070.1243,88047,50847,6280.1 1,797 1,334 2,094 (0.3) 4,053 3,552 4,486 (0.2) 4,393 3,617 1,692 (0.5) 0.13 0.19 0.25 0.96 0.020.030.0419,24925,72933,2800.7 779 1,085 1,473 1.0 1,026 1,402 1,880 0.8 1,193 1,372 1,395 (0.1) 0.20 0.17 0.18 0.03 0.050.030.044,6625,5926,4970.3 797 677 729 0.0 1,559 1,812 2,089 0.3 (768) 813 2,212 NM 0.24 0.33 0.47 0.66 0.070.130.197,9317,19512,9900.2 1,535 2,135 3,000 0.7 1,743 2,158 4,024 0.7 2,053 4,992 3,961 0.3 0.23 0.33 0.43 0.46 0.110.130.171,9683,7196,5370.9 544 828 1,095 0.6 627 1,024 1,667 0.7 1,396 3,127 2,565 NM 0.25 0.23 0.32 3.74 0.070.060.092,7074,4675,9550.8 385 700 995 5.8 479 1,016 1,420 8.5 3,805 4,924 5,563 0.6 0.12 0.16 0.34 0.48 0.050.070.141,1021,3235,9500.9 205 270 589 0.5 331 395 1,342 0.7 3,184 1,189 6,868 0.7 0.48 0.49 0.58 0.24 0.200.250.256,5397,7478,6540.2 1,173 1,259 1,502 0.3 2,065 2,681 3,122 0.3 6,244 6,916 5,335 (0.1) 0.42 0.49 0.67 0.55 0.170.200.279,91814,13116,3740.5 1,350 1,941 2,680 0.7 2,098 2,905 3,392 0.6 394 4,095 2,038 0.5 1.65 3.04 4.41 1.15 0.661.061.325,64411,39512,9150.8 1,227 2,319 3,370 1.5 1,283 3,033 4,136 1.5 1,051 2,892 2,789 0.1 0.29 0.46 0.62 0.61 0.180.280.388271,0851,4160.4 160 252 337 0.6 208 304 409 0.6 (210) (222) (226) NM 0.37 0.44 0.51 0.21 0.130.150.1713,89815,90017,8040.3 233 274 318 0.2 565 673 761 0.2 (1,033) (978) (1,007) NM 0.56 0.81 1.06 0.67 0.190.160.213,8056,4948,7890.9 160 245 322 0.8 256 466 618 0.9 (326) (258) (202) NM 0.53 0.75 0.95 0.68 0.250.360.451,1791,9762,5540.8 241 416 523 0.9 448 774 991 0.8 (1,793) (1,683) (1,930) NM 0.17 0.16 0.19 0.27 0.050.030.0411,89115,71021,6930.6 281 336 409 0.5 275 346 557 0.5 (1,167) (1,351) (673) NM 0.43 0.50 0.49 0.08 0.220.250.2417,56326,42032,0450.6 2,295 2,652 2,761 0.1 7,093 10,570 13,182 0.5 36,376 44,786 51,675 0.5 0.17 0.20 0.23 0.10 0.060.070.0812,95614,77520,9090.5 1,039 1,223 1,368 0.2 3,580 4,511 6,575 0.4 17,066 32,743 46,004 0.9 0.39 0.44 0.44 0.02 0.240.270.2739,11044,14450,3320.3 4,754 5,332 5,264 0.0 12,859 15,124 17,313 0.2 39,387 51,407 56,249 0.5 0.75 0.55 0.61 0.34 0.190.150.175,9279,41912,2371.5 2,858 2,110 2,337 0.3 1,870 3,024 3,780 1.3 6,342 9,941 11,177 0.4 0.33 0.44 0.52 0.36 0.050.070.082,0333,1964,0960.7 300 400 478 0.4 634 979 1,154 0.6 1,723 1,995 2,296 1.3 0.20 0.25 0.34 0.14 0.080.090.134,2645,9827,9150.6 647 776 1,072 0.3 940 1,354 2,022 0.5 1,765 10,120 13,747 NM 0.15 0.14 0.18 (0.13) 0.060.060.076257309380.1 200 192 237 (0.1) 451 485 596 0.0 877 1,485 1,509 0.2 0.23 0.23 0.25 0.10 0.090.090.105,2495,3835,5730.0 1,303 1,347 1,479 0.1 3,376 3,326 3,448 0.1 11,042 9,186 7,672 (0.2) 0.27 0.38 0.46 0.14 0.180.190.238,3179,52410,8860.2 720 1,013 1,225 0.1 2,321 2,894 3,263 0.2 2,591 6,260 9,850 2.2 0.41 0.43 0.45 0.10 0.080.080.0911,04511,97912,4160.3 930 970 1,021 0.1 3,659 3,989 4,141 0.2 19,170 21,654 25,228 0.3 0.20 0.21 0.24 0.02 0.100.110.121,0111,0821,2470.1 377 398 451 0.0 618 652 763 0.1 (721) (244) (310) NM 0.50 0.52 0.43 0.00 0.250.260.227,9648,6008,9610.3 1,343 1,449 1,250 0.0 2,813 2,931 2,839 0.1 3,087 1,991 2,893 (0.1) 0.41 0.42 0.44 0.07 0.190.230.247,2597,5508,5760.2 3,339 3,450 3,864 0.1 6,410 6,654 7,574 0.2 14,281 11,002 10,722 0.3 0.22 0.20 0.24 0.03 0.180.140.164711,2862,0331.5 482 432 517 0.0 604 829 1,212 0.5 1,706 3,319 4,003 0.6 (0.05) (0.01) 0.07 0.54 0.000.000.009,12312,23515,6600.4 (869) (167) 1,331 0.6 5,713 8,142 10,716 0.5 3,176 3,594 4,721 0.7 0.81 0.65 0.48 (0.11) 0.000.000.0039,35656,24757,9350.4 1,257 1,351 998 0.1 1,566 1,821 3,124 0.7 1,131 2,515 2,208 NM 0.43 0.68 1.01 1.07 0.000.000.3049,42986,720133,6001.3 2,974 4,788 7,198 1.3 3,916 6,161 9,129 1.2 (1,314) (3,014) (5,352) NA 0.15 0.02 0.12 (0.06) 0.050.050.0322,555103,551112,8181.2 1,120 173 1,252 0.1 1,174 2,414 3,405 0.7 (2,512) (1,323) (7,971) NM 1.30 1.30 2.13 0.29 0.240.240.4020,95024,97933,2250.3 1,250 1,251 2,045 0.3 2,246 2,545 3,393 0.3 (3,913) (3,800) (4,836) NM (0.07) 0.06 0.14 (0.07) 0.000.000.009051,3731,5940.2 (73) 98 210 0.1 191 510 634 0.3 1,049 187 (179) NA 2.63 2.82 3.01 0.21 1.031.271.50235,994267,400295,1620.3 51,996 55,617 59,387 0.2 129,472 140,350 149,034 0.2 (66,430) (60,351) (70,369) NM 0.38 0.46 0.24 (0.16) 0.110.160.1084,52693,340103,8670.2 4,791 5,780 3,099 (0.2) 27,615 30,828 32,700 0.1 28,270 34,481 45,568 0.1 0.25 0.29 0.30 0.12 0.070.090.10157,817164,106170,2360.1 20,518 23,154 24,646 0.1 79,453 83,567 86,024 0.1 121,698 107,237 86,899 (0.2) 1.54 1.22 1.12 NM 0.470.550.5681,39783,40485,7520.1 10,179 8,027 7,361 NM 40,927 42,345 43,027 0.1 65,480 64,228 52,820 (0.1) 0.79 0.83 0.94 0.32 0.290.330.388,2689,70011,5770.4 2,613 2,745 3,140 0.3 4,063 4,364 4,974 0.3 542 620 263 (0.5) 1.05 0.70 0.58 (0.15) 0.130.180.1538,03042,52146,6070.2 5,293 4,319 3,570 (0.1) 8,460 8,327 7,285 0.1 8,294 11,154 14,405 0.1 0.58 0.32 0.27 (0.41) 0.120.050.0427,55233,06040,9220.4 3,479 1,950 1,655 (0.3) 5,367 3,865 3,815 (0.2) 4,902 8,016 10,339 1.6 1.29 1.34 1.63 0.19 0.370.340.4930,11733,23640,2460.3 2,597 2,712 3,288 0.2 3,421 3,323 4,120 0.1 (1,874) (1,643) (1,968) NA 0.57 0.75 0.88 0.27 0.210.200.246,5477,9838,9660.5 349 459 538 0.3 527 674 779 0.6 534 665 475 (0.3) 0.90 0.52 0.63 (0.08) 0.650.420.452,0561,8042,1230.2 1,143 662 799 (0.0) 1,296 825 977 (0.0) 1,820 2,403 2,441 (0.0) 8.46 4.89 3.32 (0.40) 2.101.220.8336,47340,46044,1230.2 5,055 3,061 2,077 (0.4) 7,060 5,784 5,186 (0.1) 6,804 10,145 11,803 0.5 0.06 0.05 0.08 0.23 0.010.010.0181911500.7 24 25 38 0.3 26 28 48 0.6 (89) (76) (52) NM Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research estimates. C hina Portfolio Strategy Stance-at-a-G lance 26 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Exhibit 29: Valuation summary Airlines 753 HKAir China 1055 HKChina Southern Airlines 670 HKChina Eastern Airlines Airports 694 HKBeijing Capital International Airport 000089 CHShenzhen Airport 600009 CHShanghai International Airport 600004 CHGuangzhou Baiyun International Airport Banks HK-listed 3328 HKBank of Communications 939 HKChina Construction Bank 183 HKCITICInternational Financial Holdings 349 HKICBC (Asia) A-shares 600000 CHShanghai Pudong Development Bank 600036 CHChina Merchants Bank 000001 CHShenzhen Development Bank 600015 CHHua Xia Bank Conglomerates 1199 HKCOSCOPacific 144 HKChina Merchants Holdings 363 HKShanghai Industrial 392 HKBeijing Enterprises Holdings 267 HKCITICPacific 291 HKChina Resources Enterprise Consumer Electronics 1070 HKTCLMultimedia Technology 751 HKSkyworth Digital 600839 CHSichuan Changhong Food and Beverage 1068 HKChina Yurun Food Group 2319 HKMengniu Dairy 600887 CHYili Industrial PFHSPPeople's Food Holdings 506 HKCOFCOInternational 828 HKDynasty Fine Wines Group 200869 CHYantai Changyu Pioneer Wine Health care equipment 233 HKMingyuan Medicare Development CMEDUSChina Medical Technologies Insurance 2328 HKPICCProperty and Casualty Company 2628 HKChina Life Insurance Company 2318 HKPing An Insurance Group Internet SINAUSSINACorporation SOHUUSSohu.com SNDAUSShanda Interactive Entertainment NTESUSNetease KONGUSKongzhong Corp. TOMOUSTom Online (ADR) IT services 696 HKTravelSky Technology Media 1000 HKBeijing Media FMCNUSFocus Media 700 HKTencent Holdings 8002 HKPhoenix Satellite Television BIDUUSBaidu.com, Inc. CTRPUSCtrip.com International JOBSUS 51job, Inc. 100 HKClear Media Ticker Company DE ratio (%) 20052006E 2007E 2006 PEG 20052006E 2007E 20052006E 2007E 20052006E 2007E 20052006E 2007ECurrent 12.112.510.3 NM 1.51.21.10.81.61.912.0 9.3 10.2 8.28.56.2121.3 (8.5) (92.3) 49.2 NA 0.70.70.70.00.00.0 (8.3) (0.8) 1.4 13.210.06.3 NA 109.7 (39.7) 18.91.50.80.80.80.00.00.00.7 (2.0) 4.0 12.611.46.9 NA 20.118.115.30.72.22.11.91.81.92.311.1 11.5 12.6 9.58.77.3 -9.3 21.720.918.70.82.62.42.32.72.42.711.8 11.7 12.1 13.312.811.6 -25.5 19.617.015.51.03.02.62.30.01.51.615.2 15.4 14.9 18.515.013.146.2 27.322.117.71.31.71.61.51.51.41.46.3 7.4 8.6 11.89.78.581.2 23.418.014.10.12.82.52.31.72.22.811.8 14.1 16.3 NANANANA 15.016.515.6 NM 2.72.52.31.02.42.618.2 15.2 14.7 NANANANA 12.515.412.81.71.51.31.34.03.23.911.7 8.6 9.8 NANANANA 12.412.011.00.71.31.21.24.75.05.510.3 10.3 10.7 NANANANA 14.910.58.60.22.42.01.71.32.02.316.0 19.5 20.1 NANANANA 20.516.913.00.53.22.72.41.11.22.115.8 16.0 18.1 NANANANA 49.624.516.10.42.82.52.20.00.00.05.6 10.3 13.5 NANANANA 12.910.48.40.21.71.61.42.61.72.413.0 15.2 16.5 NANANANA 13.813.213.50.52.42.32.14.14.34.217.8 17.3 15.7 17.117.517.911.5 20.118.616.01.02.92.82.52.32.52.914.6 15.0 15.9 94.160.442.357.6 13.213.311.2 NM 0.80.80.83.02.93.56.3 6.0 6.8 7.57.46.8 -15.9 13.520.215.122.60.90.90.92.42.42.46.8 4.4 5.7 4.34.24.0 -8.4 12.16.614.2 NM 1.21.11.15.05.05.010.2 16.8 7.6 20.117.117.530.8 14.316.814.51.11.71.71.62.63.03.512.2 10.1 11.1 9.88.77.717.5 (4.4) 14.17.8 NM 0.80.80.70.00.71.3 (18.2) 5.4 8.9 (14186.0) 6.54.855.6 3.812.210.5 NM 0.50.50.58.01.61.913.9 4.3 4.9 6.66.54.1 -12.4 27.020.915.9 NA 0.80.80.70.00.00.02.9 3.6 4.5 8.77.86.70.6 17.115.513.10.33.83.32.81.61.92.322.3 21.0 21.1 17.412.69.2 -31.4 27.323.118.71.05.94.84.00.71.11.321.5 20.9 21.5 14.210.58.3 -14.4 40.733.430.21.25.34.73.90.91.21.212.9 14.1 12.8 16.213.410.7 -33.4 7.77.46.60.41.61.41.37.56.76.021.1 19.4 19.3 5.54.54.0 -16.7 17.614.812.60.31.61.51.42.02.63.09.2 10.2 11.1 10.89.47.939.7 18.818.316.5 NM 2.62.42.22.12.32.514.0 13.0 13.4 11.210.58.8 -58.5 38.230.825.50.56.46.15.72.42.73.316.8 19.7 22.2 35.828.223.3 -52.0 26.120.314.80.63.73.12.30.01.01.414.2 15.5 15.2 16.814.310.1 -43.9 25.920.415.90.311.73.32.50.00.00.045.1 16.1 16.0 23.015.211.1 -65.6 27.314.611.20.01.71.61.52.72.83.66.3 10.8 13.0 NANANANA 34.930.622.20.73.93.53.10.40.50.811.2 11.3 13.9 NANANANA 32.525.817.60.54.13.63.20.91.21.712.7 14.1 18.0 NANANANA 29.528.020.0 NM 4.03.53.00.00.00.013.5 12.6 15.0 19.220.413.6 -66.3 30.430.723.36.97.05.74.9 NANA 1.322.9 18.7 21.0 26.221.316.9 -54.5 47.233.315.4 NM 4.53.83.00.00.00.09.5 11.3 19.3 9.021.19.9 -48.9 24.820.422.80.49.66.55.1 NANANA 38.6 31.9 22.6 18.814.315.3 -105.7 13.39.98.50.32.41.91.6 NANA 0.017.9 19.4 18.5 7.55.83.6 -83.8 21.917.813.80.53.02.62.2 NANA 0.013.7 14.5 15.6 19.317.012.3 -18.0 14.915.012.50.82.22.01.82.62.73.214.8 13.4 14.5 7.86.95.8 -57.3 110.022.912.6 NM 1.41.41.24.31.73.21.3 5.9 9.9 34.320.611.0 -4.1 67.640.423.0 NA 8.34.13.5 NANANA 12.3 10.2 15.0 107.333.317.4 -19.6 59.328.520.80.49.410.47.90.52.44.615.9 36.6 37.7 44.518.813.6 -77.1 39.631.225.01.16.15.44.71.00.91.415.5 17.2 18.8 29.722.618.0 -55.0 266.099.753.20.420.417.913.30.00.00.07.7 17.9 24.9 201.273.639.4 -103.6 57.848.932.10.716.813.410.50.50.71.229.1 27.4 32.6 51.341.927.1 -103.4 73.237.228.20.65.24.33.6 NANANA 7.1 11.5 12.8 42.021.917.4 -87.2 42.032.121.70.62.92.62.5 NANA 3.36.8 8.2 11.7 15.213.310.0 -8.3 EV/EBITDA (calendarized) P/B (calendarized) Dividend yield (calendarized) (%) ROE (calendarized) (%) P/E (calendarized) Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research estimates. Stance-at-a-G lance C hina Portfolio Strategy G oldm an Sachs G lobal Strategy R esearch - July 3,2006 27 Exhibit 30: Valuation summary CompanyTicker DE ratio (%) 20052006E 2007E 2006 PEG 20052006E 2007E 20052006E 2007E 20052006E 2007E 20052006E 2007ECurrent EV/EBITDA (calendarized) P/B (calendarized) Dividend yield (calendarized) (%) ROE (calendarized) (%) P/E (calendarized) Metals and mining 1088 HKChina Shenhua Energy 600019 CHBaoshan Iron & Steel 600005 CHWuhan Iron and Steel 1171 HKYanzhou Coal Mining 2600 HKAluminum Corporation of China 347 HKAngang New Steel 323 HKMaanshan Iron & Steel 914 HKAnhui Conch Cement 358 HKJiangxi Copper Oil and chemicals 857 HKPetroChina 883 HKCNOOC 386 HKChina Petroleum and Chemical 1033 HKSinopec Yizheng Chemical Fibre 338 HKSinopec Shanghai Petrochemical 297 HKSinochem Hong Kong Holdings 2883 HKChina Oilfield Services Limited Property 688 HKChina Overseas Land & Investment 2337 HKShanghai Forte Land 1109 HKChina Resources Land 2868 HKBeijing Capital Land 69 HKShangri-La 000002 CHChina Vanke (A) 2777 HKGuangzhou R&FProperties Retailing 589 HKPorts Design 980 HKLianhua Supermarket 8277 HKWumart Stores 3368 HKParkson Retail Group 503 HKChina Paradise Utilities HK-listed 991 HKDatang International Power Generation 1071 HKHuadian Power International 902 HKHuaneng Power International 836 HKChina Resources Power 2688 HKXinao Gas Holdings 2380 HKChina Power International 1065 HKTianjin Capital Environmental Protection 270 HKGuangdong Investment A-shares 000539 CHGuangdong Electric Power Development 600795 CHGDPower Development 600649 CHShanghai Municipal Raw Water 600642 CHShenergy 600900 CHChina Yangtze Power 600008 CHBeijing Capital Technology 981 HKSMIC 903 HKTPVTechnology 2038 HKFoxconn International Holdings 992 HKLenovo Group 763 HKZTECorporation 3355 HKAdvanced Semiconductor Manufacturing Telecom services 941 HKChina Mobile (HK) 762 HKChina Unicom 728 HKChina Telecom 906 HKChina Netcom Transportation 1138 HKChina Shipping Development 1919 HKChina COSCOHoldings 2866 HKChina Shipping Container Lines 000039 CHChina International Marine Containers 716 HKSingamas Container Holdings 2343 HKPacific Basin Shipping 316 HKOrient Overseas International Water Treatment Systems SINOSPSinomem Technology 14.712.912.00.34.33.62.93.02.72.929.2 28.2 24.4 9.77.97.157.6 5.96.66.0 NM 1.00.90.97.57.67.617.0 14.1 14.4 2.82.82.612.5 4.45.04.70.31.11.00.911.09.810.423.8 19.3 18.5 2.62.92.614.9 9.910.210.7 NM 1.61.41.22.73.02.816.0 13.7 11.5 3.53.94.1 -40.5 9.35.711.7 NM 2.01.51.33.75.82.921.3 26.5 11.4 5.63.65.613.4 10.05.95.10.11.91.41.25.28.69.918.6 23.3 22.8 15.04.03.557.4 5.65.93.10.30.90.80.66.46.011.515.5 13.3 20.5 5.45.03.173.5 41.416.812.51.12.82.42.00.61.01.46.9 14.2 15.9 11.57.05.4128.3 10.34.85.30.12.41.61.42.88.47.523.3 34.5 25.6 11.74.85.818.4 10.99.210.10.52.82.42.14.14.94.525.9 26.2 21.2 5.95.05.2 -5.0 9.98.810.10.43.42.42.13.43.63.534.4 27.1 20.9 5.85.05.4 -6.1 9.28.38.50.81.71.51.33.03.43.318.3 17.7 15.3 5.55.05.062.7 (6.9) (24.5) (33.9) NA 0.80.90.90.00.00.0 (12.0) (3.5) (2.6) 2820.19.98.2 -10.9 14.619.712.6 NM 1.41.41.32.72.03.29.8 7.0 10.2 7.48.46.719.1 20.314.610.70.24.63.62.80.71.01.422.4 24.4 25.6 16.812.39.130.9 18.221.419.96.31.91.81.71.50.91.010.7 8.5 8.7 9.88.47.310.3 17.812.89.10.22.62.42.01.63.14.414.6 18.4 22.4 18.515.08.043.1 12.08.46.50.22.01.51.33.84.76.216.5 18.4 20.5 16.310.06.168.4 15.416.312.00.00.71.21.11.71.62.34.8 7.5 9.5 35.116.611.850.6 18.914.56.70.31.51.41.22.13.26.08.2 9.9 18.5 15.513.03.843.7 29.428.624.01.21.71.61.41.41.81.85.9 5.5 6.0 20.515.813.536.7 12.711.08.00.22.42.01.73.23.65.018.9 18.4 21.5 9.77.06.04.7 19.510.67.30.14.83.52.62.03.34.124.7 33.4 35.5 21.59.16.741.6 39.024.818.50.48.57.56.51.62.53.321.7 30.1 34.8 28.919.814.7 -26.5 21.818.515.90.92.82.52.31.51.82.112.7 13.6 14.3 7.26.15.4 -48.5 49.434.426.30.56.44.53.90.70.60.812.9 13.0 15.0 32.117.713.3 -13.6 39.628.122.30.46.86.05.21.21.72.117.0 21.3 23.5 22.312.910.1 -86.4 11.011.99.80.41.61.71.52.71.72.114.3 14.0 15.0 9.67.64.7 -56.3 11.710.110.51.31.51.31.24.44.94.712.7 12.8 11.3 10.06.75.4 NA 12.310.49.21.01.00.90.93.03.64.08.4 9.1 9.2 12.710.16.9 NA 12.911.311.44.61.61.41.34.95.55.412.0 12.5 11.5 8.77.46.4121.3 7.710.49.40.31.71.41.33.32.73.021.8 13.8 13.7 17.010.58.464.9 20.515.513.10.42.92.32.00.71.01.114.3 15.1 15.5 13.78.97.569.8 14.111.68.30.81.41.21.12.73.34.59.6 10.5 12.7 20.314.19.4137.6 11.612.19.8 NM 1.01.00.93.63.44.28.9 8.2 9.4 11.911.19.039.1 12.612.611.51.31.51.41.33.23.33.611.8 11.0 11.2 7.47.57.365.7 16.611.89.70.91.41.31.24.04.25.18.6 11.4 12.7 7.66.15.470.2 18.617.816.91.82.32.11.91.11.11.212.5 11.8 11.3 10.69.79.4 NA 28.326.923.713.41.81.71.61.81.92.16.2 6.3 6.9 16.916.013.7 -3.9 12.211.814.166.61.71.51.44.14.23.613.7 12.7 10.2 7.06.76.917.0 16.315.815.22.42.52.31.92.83.43.615.0 14.3 12.6 10.29.98.745.6 23.025.721.49.52.42.42.33.62.73.310.5 9.3 10.7 23.817.411.971.6 (21.5) (112.9) 14.1 NM 0.80.80.70.00.00.0 (3.7) (0.7) 5.2 3.92.82.115.0 8.410.514.2 NM 1.81.91.70.00.00.021.1 18.5 12.0 6.95.93.419.0 36.923.215.60.29.36.65.10.00.01.925.3 28.6 32.7 27.317.311.7 -18.0 17.5152.721.0 NM 3.82.91.92.12.01.021.5 1.9 8.9 12.96.34.5 -64.9 18.918.911.50.72.42.21.81.01.01.612.6 11.4 16.0 8.87.85.8 -34.6 (22.1) 22.610.6 NM 1.41.11.00.00.00.0 (6.4) 5.1 9.8 12.64.73.89.7 16.115.014.10.73.22.92.62.43.03.619.8 19.4 18.8 6.05.55.2 -21.0 17.914.927.8 NM 1.21.11.11.62.41.46.5 7.4 3.9 4.33.93.744.4 9.68.58.00.71.11.00.92.83.64.311.6 11.7 11.3 3.83.63.554.1 8.510.811.8 NA 1.41.31.23.64.24.216.6 11.8 9.8 3.73.63.594.0 6.86.55.70.21.71.41.25.46.27.124.8 21.2 20.8 4.54.23.74.8 3.55.36.4 NM 1.01.11.03.44.73.929.6 19.9 14.8 3.73.74.346.3 3.66.37.5 NM 0.80.70.75.72.42.021.5 11.5 9.0 3.85.35.347.3 12.211.79.60.63.42.82.32.42.13.127.6 23.9 23.5 8.89.07.3 -14.5 9.16.95.90.31.91.61.34.03.94.720.8 22.8 22.4 7.35.74.933.1 3.76.35.2 NM 1.72.01.719.612.813.647.6 31.7 33.4 5.18.06.7115.0 3.25.68.2 NM 0.90.80.87.74.53.028.4 15.2 9.6 3.94.75.350.6 13.814.59.70.62.52.21.81.21.31.418.2 15.2 19.0 10.910.16.0 -45.9 Note: The following stocks are covered by Gao Hua Securities: Beijing Capital International Airport, Guangzhou Baiyun International Airport, Shanghai International Airport, Shenzhen Airport, COFCO International, China Yurun Food Group, Dynasty Fine Wines Group, Mengniu Dairy, People’s Food Holdings, Yantai Changyu Pioneer Wine, Yili Industrial, Beijing Capital Land, China Overseas Land & Investment, China Resources Land, China Vanke, Shanghai Forte Land, GDPower Development, Guangdong Electric Power Development, Shanghai Municipal Raw Water, Shenergy Company, Tianjin Capital Environmental Protection, China Mobile (HK), China Netcom, China Telecom, China Unicom, TCl Multimedia Technology, Skyworth Digital, and Sichuan Changhong. Other stocks and valuation estimates are Goldman Sachs Research coverage and estimates. Source: Bloomberg, Goldman Sachs Research estimates, Gao Hua Securities Research estimates. C hina Portfolio Strategy Stance-at-a-G lance 28 G oldm an Sachs G lobal Strategy R esearch -July 3,2006 Stance-at-a-Glance China Portfolio Strategy Goldman Sachs Global Strategy Research - July 3,200629 D isclosures RegAC I, Thomas Deng, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.. Investment profile The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. 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China Portfolio Strategy Stance-at-a-Glance Recent China Strategy ideas and associated publications Publication title Date of publication Key ideas for investors China Stance-at-a-Glance (June 2006 issue): A belated but healthy correction June 2,2006 Provides latest market overview, sector analysis, allocation, and stock picks. China Strategy: Olympics 12000 odyssey May 15,2006 Highlights our new H-share index targets for 2006 and 2008 and discusses investment implications. China Stance-at-a-Glance (May 2006 issue): Solid 2005 results; Brace for further tightening May 3,2006 Provides latest market overview, sector analysis, allocation, and stock picks. China Strategy: QDII – The vanguard for Chinese money April 21,2006 Updates the development of QDII scheme and discusses investment implications. China Stance-at-a-Glance (April 2006 issue): Solid earnings; abundant liquidity April 4,2006 Provides latest market overview, sector analysis, allocation, and stock picks. China Strategy: Implication of a potential monetary tightening on Chinese equities - Short-term headwind, long-term positive March 20,2006 Discusses investment implications on a potential monetary tightening. China Strategy/Taxation: Revisiting the EIT reform March 17,2006 Updates our view on potential EIT reform and discusses investment implications. China Stance-at-a-Glance (March 2006 issue): Charting the results season March 1,2006 Provides latest market overview, sector analysis, allocation, and stock picks. Investing in China (February issue): A speedy bulldog February 2,2006 Provides latest market overview, sector analysis, allocation, and stock picks. China StrategyFlash: Is the bulldog running too fast January 20,2006 Identifies the catalysts behind the recent market rally. Proposes ways to manage risks using index derivatives 2006 Outlook: Riding the bulldog January 4,2006 Market and sector analysis/allocation. GSChina top-ten stock picks. Style-oriented stock screens China Strategy: GDP upward revision – Positive for Chinese equities; may create trading opportunities December 22,2005 Analyzes the potential implications of the US$280 bn GDP upward revision Investing in China (December/January issue): Rally should continue December 1,2005 Provides market overview, sector analysis, allocation, and stock picks FocusChina – 11th Five-Year Program Insights: Pursuing quality and balanced growth November 29,2005 Previews the 11th Five-Year Program. Outlines potential beneficiaries of the Program. Highlights key takeaways from 16 presentations at the NDRC conference China StrategyFlash: Play the Go West theme September 12,2005 Suggests ways to play the “Go West” theme. Screens stocks to gain exposure from inland economic expansion. China StrategyFlash: China B-share market— The time could be right August 4,2005 Analyzes the recent pullback in the B-share market and associated trading ideas. Details screens of low-P/E stocks with reasonably high liquidity Goldman Sachs/Gao Hua China Investment Frontier 2005 Conference: Key takeaways June 1,2005 Details investor views on the Chinese equity market and highlights key takeaways from the Goldman Sachs / Gao Hua China Conference FocusChina: Rmb reval—Look beyond the surface May 13,2005 Outlines analytical framework for renminbi revaluation, assesses impact at stock, sector and market levels, and identifies potential winners and losers China StrategyFlash: A move in the right direction May 4,2005 Analyzes market impact of CSRC’s latest regulation on the non-tradable shares disposal program. Draws on international experience and highlights the long-term implication of such moves China Strategy/Taxation: Incremental positive to Chinese equities March 1,2005 Discussion of implications of taxation reform in China on Chinese equities; identification of potential key winners and losers China Daily Insights Daily Our leading research views on more than 80 Chinese companies, headline news, and market update Source: Goldman Sachs Strategy Research.

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