The Microenvironment of Amazon.com Research Paper

The Microenvironment of Amazon.com - Research Paper Example It is evidently clear from the discussion that collaboration is concerned with how firms participate in the market through channel members and/or customers leading to the co-creation of value, strong supply chain relationships, partnerships and use of social media. Amazon.com is always seeking collaborative relationships to help grow its business, leading to the creation of customer value and market performance. According to Cimpanu, Amazon collaborated with Target from 2001 where the latter’s e-commerce platform was managed by Amazon.com as it had the capability and experience to do so. This collaboration was however ended in 2011 after several lawsuits against Amazon. The company has also collaborated with some partners in the fashion industry. For instance, according to Vogue, Amazon launched an exclusive collaboration with Meadham Kirchoff designers for a collection of sweatshirts. Still, in the same industry, Amazon is collaborating with another designer for Derek Lamâ₠¬â„¢s 10 Crosby contemporary line. Amazon has also opened up collaboration with other entrepreneurs through its cloud system whereby other entrepreneurs can use it at a cost of 10 cents an hour and harness its computing capability. McConnell reports that Amazon launched ProductWiki which opened the door for citizen marketing as it allowed customer editable information. These collaborations have enabled Amazon to deliver value to customers by providing a variety of products at affordable costs and at their convenience. Customers can, therefore, find a wide variety of products from books to electronics to clothes, courtesy of the various collaborations that Amazon engages in with a number of partners.

Employee Resourcing Essay Example for Free

Employee Resourcing Essay Their business approach and culture is very different from other competitors. Examples of their different culture are; no dress code, flexible working hours and spending lavishly on the recruitment process. Around 700, mostly young employees work under Trilogy and its Director of college recruiting Mr. Jeff Daniel expects the employees to â€Å"commit their expertise and vitality to everything they do†. Trilogy has an expensive and aggressive employee recruitment strategy that includes training at the companys Trilogy University. The new employees joined will undergo an intensive training program at their in-house training facility known as â€Å"Trilogy University†. Recruiters tend to select the ambitious, over achievers with entrepreneurial instincts from the campus recruitment method being the fresher’s in the job market. Trilogy’s recruitment interviews are said to be very intense at the same time an interview day will end with lot of adventure and fun activities for both recruiters and interviewers, which makes a strong bond between new comers and the managers. For Trilogy recruiting is not just a high priority its a company-wide mission. Its mission is to recruit the best of the best?. For that reason Trilogy uses very costly recruiting techniques: The Company spent $13,000 per hire with 262 college graduates were selected from short listed 4000 candidates, and this short listing was from 15000 applications! Q1. Identify some of the established recruiting techniques that underlie Trilogy’s unconventional approach to attracting talent? The company Trilogy, aggressively pursues the least experienced people in the job market. At many college campuses island wide, in career fairs and computer-science departments, looking for students who represent what Daniel calls whom are expected to totally commit their expertise and vitality in everything they do†. In other words, he looks for young, talented over achievers with entrepreneurial ambition – people. The top managers, including CEO of the company, conduct the first round of  inter views, letting all applicants know that it would be hard, but rewarding experience.

The Types Of Inflation Economics Essay

The Types Of Inflation Economics Essay Inflation indicates to a rise in prices that causes the purchasing power of a nation to fall. Inflation is a normal economic development as long as the annual percentage remains low; once the percentage rises over a pre-determined level, it is considered an inflation crisis. The term inflation once referred to increases in the money supply (monetary inflation); however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflation. Inflation can also be described as a decline in the real value of money-a loss of purchasing power in the medium of exchange which is also the monetary unit of account. When the general price level rises, each unit of currency buys fewer goods and services. A chief measure of general price-level inflation is the general inflation rate, which is the percentage change in a general price index, normally the Consumer Price Index, over time. Inflation can cause adverse effects on the economy. For example, uncertainty about future inflation may discourage investment and saving. High inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Low (as opposed to zero or negative) inflation may reduce the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reducing the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements. Types of Inflation Demand-pull The most important inflation is called demand-pull or excess demand inflation. It occurs when the total demand for goods and services in an economy exceeds the supply available, so the prices for such goods and services rise in the economy. Cost-push inflation The name indicates the cause i.e. costs of production rise, for one reason or another, and forces up the prices of finished goods and services. Often a rise in wages in surplus of any gains in labor yield is what raises unit costs of production and thus raises prices. This is less common than demand-pull, but can occur independently as well as in combination with it. Pricing power inflation It occurs whenever businesses in general make a decision to boost their prices to boost their profit margins. This does not occur normally in recessions but when the economy is booming and sales are strong. Causes of Inflation There are many causes for inflation, depending on a number of factors. Excess money printing Inflation can happen when governments print an excess of money to deal with a crisis but dont have resources at backed, usually governments are allowed to print only that amount of currency that is equal to gold available to that country. As a result, prices end up rising at an extremely elevated speed to keep up with the currency surplus. In which prices are forced upwards because of a high demand. High Production Cost Another common cause of inflation is a rise in production costs, which leads to an increase in the price of the final product. For example, if raw materials increase in price, this leads to the cost of production increasing which in turn leads to the company increasing prices to maintain steady profits. Rising labor costs can also lead to inflation. International lending and national debts Inflation can also be caused by international lending and national debts. As nations borrow money, they have to deal with interests, which in the end cause prices to rise as a way of keeping up with their debts. Federal taxes Inflation may be caused by federal taxes put on consumer products such as cigarettes or fuel. As the taxes rise, suppliers often pass on the burden to the consumer; however, once prices have increased, they rarely go back, even if the taxes are later reduced. For example a rise in the rate of excise duty on alcohol and cigarettes, an increase in fuel duties or perhaps a rise in the standard rate of Value Added Tax or an extension to the range of products to which VAT is applied. These taxes are levied on producers (suppliers) who, depending on the price elasticity of demand and supply for their products, can opt to pass on the burden of the tax onto consumers. For example, if the government was to choose to levy a new tax on aviation fuel, then this would contribute to a rise in cost-push inflation. Effects of Inflation Most effects of inflation are negative, and can hurt individuals and companies alike, below is a list of negative and positive effects of inflation. Negative Effects Hoarding People will try to get rid of cash before it is devalued, by hoarding food and other commodities creating shortages of the hoarded objects. Increased risk Higher uncertainties: Uncertainties in business always exist, but with inflation risks are very high, because of the flux of prices. Fixed income recipients will be hurt: Because while inflation increases, their income doesnt increase, and therefore their income will have less value over time. Lowers national saving: When there is a high inflation, saving money would mean watching your cash decrease in value day after day, so people tend to spend the cash on something else. Existing creditors will be hurt: Because the value of the money they will receive from their borrowers later will be lower than the money they gave before. Distortion of relative prices: Usually the prices of goods go higher, especially the prices of commodities. Causes an increase in tax bracket People will be taxed a higher percentage if their income increases following an inflation increase. Causes business life cycles: Many companies will have to go out of business because of the losses they incurred from inflation and its effects). Positive Effects It can benefit the inflators (those responsible for the inflation) It can benefit early and first recipients of the inflated money (because the negative effects of inflation are not there yet). It can benefit the cartels (it benefits big cartels, destroys small sellers, and can cause price control set by the cartels for their own benefits). It might relatively benefit borrowers who will have to pay the same amount of money they borrowed (+ fixed interests), but the inflation could be higher than the interests; therefore they will be paying less money back. (example, you borrowed $1000 in 2008 with a 5% fixed interest rate and you paid it back in full in 2010, lets assume the inflation rate for 2005, 2006 and 2007 has been 13%, and borrower was charged 5% of interests, but in actual borrower earning 8% of interests, because 13% (inflation rate) 5% (interests) = 8% profit, which means you have paid only around 65- 70% of the real value in the 3 years. The first three effects are only positive to a few elite, and therefore might not be considered positive by the general public. Surviving in inflation Be wise when holding cash, whether in your home or in your savings account, if youre earning 5% interest on the money you have in your bank, and inflation rate is 10% then youre in reality losing 5% and not earning anything. Be vigilant when buying bonds, high inflation rates completely destroy the value of long-term bonds. Invest in durable goods or commodities rather than in money. Invest in things that going to be used anyway and will serve for a long time. Invest for long-term capital gains, because short term investments tend to give misleading results or sense of making profits while in reality its resulting in loss. Manage wisely recurring monthly bills such as (phone bills, cable TV), it would help to reduce them or eliminate some of them. Ask yourself, do I really need these things Im spending my money on? Think how much and how often you will need something before buying it. Use the money saving tips such as: you need to reduce your consumption of things that are rising rapidly in price (e.g, gas) without having to reduce your consumption of goods that are rising less rapidly or even falling in price (eg, clothes). Buy only what is need, especially objects that have multi-tasks, and are considered durable goods. Causes of Inflation In Pakistan Several supply and demand factors could be responsible for this surge in inflation. Supply-side shocks If occurs can cause large fluctuations in food and oil prices, which impacts over all inflation, at times, can be so extreme that these cannot be countered through demand management, including monetary policy. Increased domestic demand Increased domestic demand can create an output gap, putting upward pressure on prices. Growth in private consumption on the average remained over 10 % between fiscal year 2004 and 2006, depicting signs of demand side pressures on price level. The relationship between growth and inflation depends on the state of the economy. High growth, without an increase in inflation, is possible if the productive capacity or potential output of the economy is growing enough to keep pace with demand. A prolonged phase of rising inflation in such a case can have severe consequences for the economy. Rising trade deficit The prospect effect is very important since there is a danger that the current high rate of inflation can get locked into expectations of inflation. People expect higher salaries to compensate for intended increase in prices, speculation in asset prices increases, credit meant for manufacturing sector diverts to real estate and stock markets, and hoarders, profit and rent seekers become active in expectation of high price in the future. All this can have devastating effect for the prices. Fiscal policy remained expansionary Fiscal policy has remained expansionary in the last few years. Expansionary fiscal policy fuels domestic demand and puts pressure on the current account deficit. It widens the investment-saving gap, which has to be financed externally. Financing of fiscal deficit through money creation adds to inflationary pressures. Increased government borrowing from central bank can have serious consequences for general price level. Expansionary monetary policy The expansionary monetary policy- high growth in money supply and loose credit policy- was believed to be contributing to high inflation. Although expansion of credit is usual in expanding economies, excessive credit growth can have adverse effects on real variables. Increase in import prices Increasing import prices are also considered an important factor for inflation. Exchange rate, if depreciating can also put upward pressure on price level. Increase in prices of goods, such as petrol, raw material etc makes our imports costlier, impacting on cost of production. Indirect taxes Indirect taxes are also blamed as the main cause of inflation. The indirect taxes, such as sales tax and excise duties raise the prices of consumer goods. This creates inflationary pressure. contarary, direct taxes reduce the take-home income and have anti-inflationary effect. A substantial increase in support price of wheat is estimated to have an inflationary effect on consumer prices, particularly food prices. This effect is due to the fact that wheat and wheat-related products account for 5.1 per cent of the CPI basket. Measuring Inflation Four different price indices are used in Pakistan over the course of fiscal year, namely: the Consumer Price Index (CPI), the Wholesale Price Index (WPI), the Sensitive Price Index (SPI) and the GDP deflator. The CPI is the main measure of price changes at the retail level. It covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas. The WPI is designed for those items which are of day to day use on the primary and secondary level; these prices are collected from wholesale markets as well as from manufacturers. The WPI covers the wholesale price of 106 commodities prevailing in 18 major cities of Pakistan. The SPI shows the weekly change of price of 53 selected items of daily use consumed by those households The SPI is based on the prices prevailing in 17+ major cities and is computed for the basket of commodities being consumed by the households belonging to all income groups combined. In Pakistan, the main focus is placed on the CPI as a measure of inflation as it represents more with a wider coverage of more than 374 items in 71 markets of 35 cities around the country. As such, the change in CPI becomes an indicator of the inflation that affects all of us. WPI indicates the change in wholesale prices which affects businesses and industries. And SPI that covers a limited number of essential items of daily use including food and fuel can be termed as the inflation for the poor. CPI Analysis from 2008 to 2012 In March 2012 inflation rate in Pakistan was reported to be 10.8%. From 2003 until 2010, the average inflation rate in Pakistan was 10.15 percent reaching an all time height of 25.33 percent in August of 2008 and a record low of 1.41 percent in July of 2003. Controling Inflation To reduce our Government Luxury Expenses both Federal and Provincial. To reassess the complete system of Direct and Indirect Taxes. To increase the Production of Food, Industry and Service things. Take benefit to public in shape of (Oil Petrol is low than reduce the prices) Reduce Unemployment Increase in Agriculture, industry Monopoly Control System should be work accurately SBP should take major steps to control inflation Conclusion Inflation impacts the multiple sectors of the economy (impact on the distribution of income and wealth, impact on production, impact on the Government, impact on the Balance of Payment, impact on Monetary Policy, impact on Social Sector, impact on Political environment) and different classes of the people (Debtors Creditors, Salaried Class, Wages earners, Fixed income group, Investors and shareholders, Businessmen, Agriculturists). A reasonable rate of inflation of around 3- 6 per cent is often viewed to have positive effects on the national economy as it encourages investment and production and allows growth in wages. When inflation crosses reasonable limits, it has negative effects. It reduces the value of money, resulting in uncertainty of the value of gains and losses of borrowers, lenders, and buyers and sellers. The increasing uncertainty discourages saving and investment. Not only can high inflation grind down the gains from growth, it also makes the poor worse off and widens the gap between the rich and the poor. If much of the inflation comes from increase in food prices, it hurts poor more since over half of family budget of the low wage earners goes for food. Second, it redistributes income from fixed income earners (for instance pensioners) to owners of assets and earners of large and variable income, such as profits. For Pakistans economy, inflation can be bad if it crosses the threshold of six per cent, and can be extremely harmful if it crosses the double digit level. Several supply and demand factors could be responsible for this surge in inflation. Supply-side shocks can cause large fluctuations in food and oil prices, effects of which on overall inflation, at times, can be so excessive that these cannot be countered through demand management.

Achilles vs. Hector in the Iliad :: Iliad essays

Achilles vs. Hector in the Iliad In the Iliad, many of the male characters display heroic characteristics, consistent with the heroic warrior code of ancient Greece. They try to win glory in battle, yet are often characterized as having a distinctly human side. They each have certain strengths and weaknesses, which are evident at many times throughout the conflicts described in the Iliad. Prime examples of such characters are Achilles and Hector. These two characters have obvious differences in their approaches to fitting the heroic mold to which they both try to conform. However, despite their differences and the fact that they are fighting for opposing armies and meet each other with hatred in battle, they also have numerous similar traits which logically lend themselves to a comparison between the two men. They both display behavior that could be described as heroism. The first way in which Achilles, who fights for the Greeks, and Hector, who fights for the Trojans, act differently is how they approach war and the inevitable violence and death which accompany it. Although Achilles knows that he is fated to be killed in battle, when his faithful and devoted friend Patroclus is mercilessly and dishonorably cut down in combat, he puts aside his pride and chooses to temporarily forget about his previous feuds with Agamemnon that have up until now prevented him from participating in the war. He joins the fighting with a deadly and vengeful mindset that will likely play a major factor in the outcome of the war. Today, this lust for revenge might be considered a glaring character flaw. However, this passion for retribution undoubtedly conforms to the heroic code of Greek society. Meanwhile, Hector is full of indecision and reluctance about whether to take part in the war. He too believes that fate has dictated that he will be killed in battle. He spends much time with his pleading wife Andromache, who begs him not to go to war, both for his sake and for his familyÕs. He does not want to die and thus widow Andromache, leaving her "at the loom of another man." Indeed, when he bids farewell to his young son Astyanax, clothed in his shining war gear with gleaming helmet complete with plume crest (the

Exploration of Irony and Surprise Essay

Irony and surprise are common literary devices authors use to communicate their ideas when writing literary works. Irony allows the writer to suggest an interpretation that is different from the literal meaning of the words used in the text. The element of surprise allows the writer to manipulate the reader’s expectations and take them somewhere completely different. In the short stories, A Good Man Is Hard to Find by Flanney O’Connor and Happy Endings by Margaret Atwood, both authors use the element of irony and surprise to engage readers and to develop deeper levels of meaning in their text. In A Good Man is Hard to Find, O’connor uses several kinds of irony to communicate her message about the human condition. The foreshadowing of irony is established in the very beginning of the story when she gives us the reason for the grandmother getting dressed for the car ride. â€Å"In case of an accident anyone seeing the dead on the highway would know at once that she was lady. † The grandma is a character that is narrow-minded, ignorant, and critical of others but not of herself. She has the idea that the goodness of a person can be determined by their physical appearance and outward behavior. After the car crash,the Misfit makes an appearance and the grandmother recognizes the Misfit. His politeness, which is sincere but also done to put the family at ease, draws out the grandmother’s assessment of the Misfit: â€Å"Listen,† the grandmother almost screamed, â€Å"I know you’re a good man. You don’t look a bit like you have common blood. I know you must come from nice people! † At the beginning of the story, her opinion about the Misfit is quite the contrary but realizing the Misfit intends harm, she changes her opinion to save herself. The dramatic irony occurs towards the end of the story when the grandma who has been superficial till this point, is in her final moments alone with the Misfit and is able make sense of everything that has gone wrong in her life. She has an epiphany and feels sympathy for the Misfit as â€Å"one of [her] own children. † She is showing that she has found the ability to see others with compassion and kindness but this consciousness is immediately followed by three bullets to her chest. In Happy Ending by Margaret Atwood, we can trace the irony in the story’s title in relation to its content. In story A, we are given a perfect story of what an ideal marriage should be but the John and Mary still die and that is not a happy ending. Atwood challenges the reader to engage with all that happens in the middle because the journey is the interesting part In story A, John and Mary appear to be happy because they possess the ideal elements to a happy lifestyle: fabulous jobs, money, children, a large home, and personal luxuries. However, at the end of the story, they just die and the story comes to an end. As the stories progress, the characters’ lives become a bit more complicated, but they still always end up at story A, and they die in the end. At the end. By the end, all one can say is the fact of what has happened, not the â€Å"how† or the â€Å"why† of the situation. In story A, how do all these things make the couple happy. Why? They’re really not happy at all and have no actual story to tell. A Good Man Is Hard to Find by Flanney O’Connor and Happy Endings by Margaret Atwood, both authors use the element of surprise to manipulate the reader’s expectation. In A Good Man Is Hard to Find, the contribution of surprise can be traced in the plot line. The story strings the reader along in believing it is about a comedic family vacation with funny situations that happen along the way. We reach a turning point when the family car crashes and encounters the Misfit, everyone dies of a tragic death that is caused by the grandma. In Happy Endings ,the title misleads the reader in assuming the story would have a happy ending but in fact every ending leads to death. A Good Man Is Hard to Find by Flanney O’Connor and Happy Endings by Margaret Atwood, both authors use irony to reveal the less obvious truths about the human condition. Both authors use the element of surprise is use to take the readers down an unexpected path. Both of the short stories integrate the elements of irony and surprise seamlessly in their works. I personally enjoyed reading and analyzing A Good Man Is Hard to Find by Flanney O’Connor more than the other one because it is a higher quality story with a richer plot line and character development. The story is crafted beautifully.

Only the Strong Survive

January 17, 2013 Industry Report Shipbuilding (Neutral) Only the strong survive Offshore orders to drive growth The shipbuilding industry is in a situation similar to that of 2002. In 2013, plunging order volume and weak new building prices are fueling intensifying competition. In 2002, shipbuilding shares rose because of an increase in orders, but then quickly fell on concerns over weak new building prices, which caused earnings to stagnate. For a period in 2002, shipbuilders went into red. There is a big difference between the shipbuilding market of 2002 and 2013, however.In 2013, a few, major shipbuilders with an edge in the construction of offshore plants are expanding order backlogs due to growing demand for offshore plants. We anticipate investments in offshore E&P projects will continue to rise, as we expect oil prices will remain high. We anticipate major shipbuilders will offset sluggishness in the commercial vessels market with their offshore-plant businesses. Daewoo Securi ties Co. , Ltd. Ki-jong Sung +822-768-3263 kijong. [email  protected] com Ryan Kang +822-768-3065 ryan. [email  protected] om Three major catalysts in 2013 1) Increase in new orders despite depressed market conditions. 2) Improved cash flow and balance sheets. 3) Growing competitive gap between shipbuilders due to accelerated restructuring. Historic low P/B presents attractive valuations We expect Korean shipbuilders will be able to maintain their competitive edge regardless of the depressed shipbuilding market. Although shipbuilding shares currently trade at a P/B of 1. 0x, we believe they have the potential trade at a P/B of 1. 2x.We recommend Hyundai Heavy Industries (009540 KS/Buy/TP: W280,000), and Samsung Heavy Industries (010140 KS/Buy/TP: W46,200) out of the large shipbuilders. We find Hyundai Mipo Dockyard (010620 KS/Buy/TP: W148,000) to be the best among shipbuilders that focus on mid-to-small vessels. We raise our target price on Samsung Heavy Industries by 5% to W46, 200 to reflect its stable earnings and solid order flow; however, we downgrade our rating of Hanjin Heavy I&C (097230 KS/Hold) from Trading Buy to Hold. Three major domestic shipbuildersE cash flow and share performance (Wbn) 10,000 Avg. ash flow of major shipbuilders (L) Avg. share price of major shipbuilders (R) (1/31/2005=100) 1,000 6,000 800 600 2,000 400 -2,000 200 -6,000 05 06 07 08 09 10 11 12 13F 13 14 14F 0 Source: KDB Daewoo Securities Research Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the U. S. January 17, 2013 Shipbuilding Figure 1. New orders and newbuilding price for commercial vessels (mnCGT) 100 New orders (L) Newbuilding price (R) 80 180 160 60 140 40 120 20 100 80 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F 14F (1988=100) 200 Source: Clarkson, KDB Daewoo Securities Research Figure 2. Three major domestic shipbuildersE order trend and forecast (Wbn) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 01 02 03 04 05 06 07 08 09 10 11 12 13F Shipbuilding Non-shipbuilding Source: Company data, KDB Daewoo Securities Research Figure 3. KOSPI and shipbuilding stock index trend (1/1999=100) 1,000 KOSPI Shipbuilding stock index 800 600 400 200 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F 13 14F 14 Source: KDB Daewoo Securities ResearchKDB Daewoo Securities Research 2 January 17, 2013 Shipbuilding Three major catalysts in 2013 1. New orders for major Korean shipbuilders to increase sharply In 2013, we expect major Korean shipbuilders will see sharp increases in new orders. Despite intensifying competition, these companies have demonstrated competitive advantages in the construction of large commercial vessels and offshore plants. We expect demand for LNG carriers will remain sound, and anticipate orders for mega-containerships will also increase.We expect the latter to be driven by small- and mid-sized shipping companies improving their competitiveness through greater efficiency. We also expect shipbuilders will be forced to take new orders at lower-than-normal prices because of the dearth of order backlogs for commercial vessels. We forecast the number of bids and orders for large offshore-plant construction projects to increase for each company in 2013. In particular, we expect orders for certain high-priced vessels, including FPSO and LNG FPSO, to increase. 2.Improved cashflow and balance sheets Since 2009, shipbuilders have taken out more loans for more orders as the proportion of heavy-tail payments (characterized by small advance payments) has increased. On a positive note, however, we expect shipbuilder loans to decrease (thus improving cashflow) as these contracts are paid off toward late 2013. We believe share prices will improve (despite concerns about lower-priced orders) thanks to increasing orders, and improved cashflow. Share prices for shipbuilders will be influenced by cashflow.Despite intensifying market competition, we anticipa te Hyundai Mipo Dockyard will take an increasing amount of orders, even though some will be lower-priced. 3. Second phase of restructuring to further consolidate industry We anticipate the shipbuilding market will remain weak due to the global economic downturn, and the tightening of ship financing. We project the current, still-surviving shipbuilding companies will aggressively seek new orders to strengthen backlogs. We believe the winners of this second phase of restructuring will benefit significantly when the market recovers.Amid the current drop in vessel construction, the percentage of bulk carriers and tankers (out of total orders) has decreased significantly, while the percentage of megacontainerships and LNG carriers has increased. We expect these trends will continue in 2013. We also anticipate major Korean shipbuilders will be able to develop new types of vessels boasting improved efficiency, which will strengthen these companiesE competitiveness. Risk factors Earnings at shipbuilders will not recover easily, due to orders at lower-than-normal prices and won appreciation. In order to secure backlogs, hipbuilders will need to take low price orders. Another risk factor is won appreciation, but at current levels, we believe risks are limited, thanks to Korean shipbuildersE technological edge, and dollar denominated payment for raw materials, which accounts for 40% of total raw material purchase. KDB Daewoo Securities Research 3 January 17, 2013 Shipbuilding Figure 4. Three major domestic shipbuildersE cash flow and share performance (Wbn) 10,000 Avg. cash flow of major shipbuilders (L) Avg. share price of major shipbuilders (R) (1/31/2005=100) 1,000 6,000 800 600 2,000 400 -2,000 00 -6,000 05 06 07 08 09 10 11 12 13F 13 14 14F 0 Source: Company data, KDB Daewoo Securities Research Figure 5. Korean and Chinese shipbuildersE restructuring (No. of shipuilders) 200 Korea China 160 197 120 -88. 3% 80 40 24 23 -66. 7% 8 0 2008 2012 Source: Clarkson, press re lease, KDB Daewoo Securities Research Figure 6. Comparison of currency rates (10/2/2012=100) 105 US$/W JPY100/W EUR/W RMB/W 100 95 90 85 80 10/12 11/12 12/12 1/13 Source: KOSTAT, KDB Daewoo Securities Research KDB Daewoo Securities Research 4 January 17, 2013 Shipbuilding Investment strategy & valuationWe believe the P/B of KoreaEs top 3 shipbuilders, which is trading at around 1. 0x, should rebound to 1. 2x, a level seen historically as the low, thanks to the aforementioned three major catalysts. In addition, the ROE of shipbuildersE is projected to improve to 19%. And as most new orders are expected in 1H, shares are likely to show strong performance in the same period. The relative share performance of global shipbuilders has changed. Thanks to the rising proportion of offshore orders, Korean shipbuilders and Hyundai Mipo Dockyard are now grouped together with Keppl Corp. nd Sembcorp Marine (Singapore companies specialized in offshore plant). In light of the ongoing eurozone cris is and unstable global economy, shipbuilding shares are expected to trade between a P/B of 1. 0x~1. 3x. Although we believe the shares have bottomed, we do not expect a long term recovery until new building prices rebound in earnest. We suggest accumulating the shares near a P/B of 1. 0x. Shipbuilding shares will likely begin to recover full-swing from 2014, when the market starts to turnaround, along with increased orders for commercial vessels, improved cashflow, and earnings recovery.Figure 7. Major shipbuildersE ROE, P/B trends (Market cap, Wtr) 4. 0x (%) 50 3. 0x 40 90 60 2. 0x 30 20 30 1. 0x 10 0 05 07 09 11 13 13F 0 Source: Bloomberg, KDB Daewoo Securities Research Figure 8. Relative share performances of major shipbuilders (-1Y=100) 150 140 130 120 110 100 90 80 70 60 1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 HHI DSME HMD Guangzhou Shipyard Keppel Corp. SHI STX Offshore & Shipbuilding Rongsheng Heavy Sembcorp Marine Source: Bloomberg, KDB Daewoo Sec urities Research KDB Daewoo Securities Research 5 January 17, 2013 Shipbuilding Figure 9.New order trends (US$bn) 30 25 20 15 10 5 0 03 04 05 06 07 08 09 10 11 12 HHI SHI HMD Figure 10. Order backlog trends (US$bn) 60 50 40 30 20 10 0 07 08 09 10 11 12 HHI SHI HMD Source: Company Data, KDB Daewoo Securities Research Source: Company Data, KDB Daewoo Securities Research Figure 11. Sales breakdown by business unit (Wtr) 70 60 50 40 30 20 10 0 10 HHI 11 10 SHI 11 Construction Other Refinery Finance Green energy Electro electric systems Construction equipment Engine & machinery Industrial plant & engineering Offshore & engineering Shipbuilding Figure 12. Hyundai Heavy IndustriesE P/B trend Market cap,Wbn) 42,000 35,000 28,000 21,000 14,000 7,000 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13F 13 3. 0x 2. 5x 2. 0x 1. 5x 1. 0x Source: Company Data, KDB Daewoo Securities Research Source: KDB Daewoo Securities Research Figure 13. Samsung Heavy IndustriesE P/B trend (Market cap,Wbn) 14,000 12,00 0 10,000 8,000 1. 0x 6,000 4,000 2,000 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 13F 2. 0x 6. 0x 4. 0x Figure 14. Hyundai Mipo DockyardEs P/B trend (Market cap,Wbn) 10,000 2. 5x 8,000 1. 5x 6,000 2. 0x 1. 5x 4,000 1. 0x 2,000 0. 5x 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 13F Source: KDB Daewoo Securities ResearchSource: KDB Daewoo Securities Research KDB Daewoo Securities Research 6 January 17, 2013 Shipbuilding Figure 15. Global new orders by vessel type (mnCGT) 25 LPG carrier LNG carrier Containership 20 Bulker Tanker 15 Figure 16. Newbuilding prices by vessel type (US$'000/TEU) 30 Containership (L) Tanker (R) Gas carrier (R) Bulker (R) (US$'000/DWT) 3 20 2 10 10 5 1 0 03 04 05 06 07 08 09 10 11 12 0 04 05 06 07 08 09 10 11 12F 12 13F 13 0 Source: Clarkson, KDB Daewoo Securities Research Source: Clarkson, KDB Daewoo Securities Research Figure 17. ROE-P/B comparison (P/B ,x) 3. 0 Figure 18.EPS growth-P/E comparison (P/E, x) 20 Keppel 2. 0 Sembcorp Mitsubishi HHI 1. 0 Guangzho u Sumitomo Mitsui (ROE, %) 0. 0 0 5 10 15 20 HMD S HI 15 Keppel 10 S HI Sumitomo Sembcorp HHI 5 (EPS growth, %) 0 -40 -30 -20 -10 0 10 20 30 40 Source: Bloomberg, KDB Daewoo Securities Research Source: Bloomberg, KDB Daewoo Securities Research Figure 19. Global shipbuildersE share performances (-1Y=100) 160 HHI Mitsui SHI Guangzhou HMD Sembcorp CSSC Keppel Figure 20. KOSPI and shipbuilding stock index (index) 8,000 Shipbuilding stock index KOSPI 140 6,000 120 4,000 100 2,000 80 60 1/12 3/12 5/12 7/12 9/12 11/12 1/13 05 06 07 08 09 10 11 12 Source: Thomson Reuters, KDB Daewoo Securities Research Source: KDB Daewoo Securities Research KDB Daewoo Securities Research 7 January 17, 2013 Shipbuilding Hyundai Heavy Industries (009540 KS) Buy (Maintain) Target Price (12M, W) 280,000 Share Price (01/16/13, W) 227,500 Expected Return (%) 23. 1 EPS Growth (13F, %) 17. 6 Market EPS Growth (13F, %) 19. 1 P/E (13F, x) 8. 5 Market P/E (13F, x) 9. 0 KOSPI 1,977. 45 Market Cap (Wbn) 17,290 Shares Ou tstanding (mn) 76 Avg Trading Volume (60D, ‘000) 229 Avg Trading Value (60D, Wbn) 51 Dividend Yield (13F, %) 1. Free Float (%) 59. 3 52-Week Low (W) 193,500 52-Week High (W) 346,500 Beta (12M, Daily Rate of Return) 1. 46 Price Return Volatility (12M Daily, %, SD) 2. 1 Foreign Ownership (%) 19. 6 Major Shareholder(s) Mong-Jun Jung et al. (21. 31%) Treasury shares (19. 36%) NPS (5. 08%) Price Performance (%) 1M 6M 12M Absolute -1. 7 -3. 8 -20. 7 Relative -0. 9 -12. 6 -27. 1 One step back for two steps forward ? ? ? Targeting orders of US$29. 7bn and revenues of W26. 9tr (non-consolidated) in 2013 Implemented a self-rescue plan for the first time in 40 years. Maintain Buy with TP of W280,000Maintain Buy with TP of W280,000 We maintain our Buy call on Hyundai Heavy Industries (HHI) with a target price of W280,000. HHI displayed weak share performance due to poor earnings and orders in 2012. However, we expect the company to record robust orders in 2013, boosted by a pickup in the offshore/onshore plant market. The companyEs earnings are anticipated to turn around in 2H13, while its cash flow should improve on massive orders and an increase in heavy-tail payments. HHIEs shares are trading at a 2013F P/E of 8. 5x and a P/B of 1. 0x, the lowest levels in the companyEs peer group.This tepid performance signals that weak 2012 orders and earnings results have been fully reflected. However, HHI has strong investment merits in 2013, as it is projected to win massive orders. Investment summary 1) The company exhibited poor orders across all business units last year, posting disappointing earnings results. In 2013, however, the company will be able to achieve its order target of US$29. 7bn in light of its strong determination to revamp its business structure. 2) The company is anticipated to receive massive offshore/onshore plant orders.In particular, the company will likely win orders for the Egina project (US$2. 5bn) and the Brass LNG project (US$3. 5bn) in 1Q. In a ddition, HHI is expected to bid for additional projects worth US$1-4bn; indeed, we believe the company will be aggressive in its order-taking efforts. 3) Orders for merchant ships, including mega containerships, LNG carriers, and LNG FSRU, will likely increase markedly in light of their superior competitiveness. 4) Exports of construction equipment and ultra-high voltage transformers should also increase on recoveries in the US and Chinese economies. ) The company has recently implemented a self-rescue plan for the first time in 40 years. While the number of applications for HHIEs early retirement plan (pushed through at end-2012) missed expectations, the company has subsequently carried out structural reform measures. We expect the companyEs long-term restructuring efforts to positively affect earnings going forward. Share price 130 120 110 100 90 80 70 60 1/12 5/12 9/12 1/13 KOSPI Earnings & Valuation Metrics FY 12/10 12/11 12/12F 12/13F 12/14F Revenue (Wbn) 37,342 53,712 54,741 5 8,433 63,025 OP OP Margin (Wbn) (%) 5,532 14. 8 4,536 8. 4 2,485 4. 5 3,331 5. 7 3,782 6. NP (Wbn) 4,154 2,559 1,729 2,033 2,449 EPS EBITDA FCF ROE P/E (Won) (Wbn) (Wbn) (%) (x) 54,652 6,326 88 34. 5 8. 1 33,671 5,473 -504 16. 7 7. 6 22,750 3,469 -2,260 10. 2 10. 6 26,750 4,320 2,005 11. 1 8. 5 32,218 4,768 2,297 12. 2 7. 1 P/B (x) 2. 5 1. 3 1. 1 1. 0 0. 9 EV/EBITDA (x) 6. 5 5. 3 8. 5 6. 2 5. 2 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates Daewoo Securities Research 8 January 17, 2013 Shipbuilding Hyundai Heavy Industries (009540 KS/Buy/TP: W280,000) Comprehensive Income Statement (Summarized) Wbn) Revenues Cost of Sales Gross Profit SG Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Ne t Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 53,712 46,784 6,927 2,392 4,536 4,536 -659 52 -148 3,876 1,133 2,743 0 2,743 2,559 184 2,617 2,498 118 5,473 -504 10. 8. 4 4. 8 12/12F 54,741 49,759 4,981 2,496 2,485 2,485 110 233 -240 2,595 766 1,829 0 1,829 1,729 100 1,568 1,458 110 3,469 -2,260 6. 3 4. 5 3. 2 12/13F 58,433 52,473 5,960 2,630 3,331 3,331 -448 248 -200 2,882 749 2,133 0 2,133 2,033 100 1,872 1,762 110 4,320 2,005 7. 4 5. 7 3. 5 12/14F 63,025 56,408 6,618 2,836 3,782 3,782 -338 188 -150 3,444 895 2,549 0 2,549 2,449 100 2,288 2,178 110 4,768 2,297 7. 6 6. 0 3. 9 Statement of Financial Condition (Summarized) Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Inta ngible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 23,076 1,610 9,525 6,478 2,359 25,924 973 15,565 2,324 49,001 25,491 14,339 8,903 2,249 5,334 3,224 1,954 30,824 16,379 380 1,100 15,399 1,797 18,177 12/12F 25,628 1,888 10,237 6,897 2,737 24,553 916 15,706 2,290 50,181 23,183 11,605 9,060 2,518 7,460 5,550 1,755 30,643 17,624 380 1,100 16,894 1,915 19,538 12/13F 28,538 3,517 10,927 7,304 2,922 24,365 716 15,703 2,264 52,903 24,136 12,388 9,060 2,688 7,602 5,550 1,896 31,737 19,141 380 1,100 18,682 2,025 21,166 12/14F 30,153 3,469 11,786 7,878 3,151 24,277 566 15,700 2,240 54,430 24,320 13,361 8,060 2,899 6,901 4,550 2,195 31,221 21,074 380 1,100 20,885 2,135 23,208 Cash Flows (Summariz ed) Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 276 2,743 3,078 853 85 -860 -4,072 -178 -1,442 -364 -1,474 -888 -1,583 -67 -34 796 347 1,206 0 -411 -448 -269 1,879 1,610 12/12F -1,972 1,829 1,907 899 85 107 -4,572 -512 -453 -3,197 -1,136 -544 -1,074 -60 406 184 2,806 3,484 0 -245 -444 278 1,610 1,888 12/13F 3,082 2,133 2,187 903 86 50 -489 -691 -407 783 -749 -770 -900 -60 0 190 -683 0 0 -245 -438 1,628 1,888 3,517 12/14F 3,345 2,549 2,220 903 84 50 -528 -859 -574 973 -895 -738 -900 -60 0 222 -2,654 -2,000 0 -245 -409 -48 3,517 3,469 Forecasts/Valuatio ns (Summarized)P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 12/12F 12/13F 12/14F 7. 6 10. 6 8. 5 7. 1 5. 6 6. 8 5. 7 5. 0 1. 3 1. 1 1. 0 0. 9 5. 3 8. 5 6. 2 5. 2 33,671 22,750 26,750 32,218 46,009 35,699 39,772 45,203 203,367 220,183 240,492 266,237 4,000 0 4,000 4,000 9. 6 0. 0 12. 1 10. 0 1. 6 0. 0 1. 8 1. 8 43. 8 1. 9 6. 7. 9 -13. 5 -36. 6 24. 5 10. 4 -18. 0 -45. 2 34. 0 13. 5 -38. 4 -32. 4 17. 6 20. 4 5. 9 6. 0 6. 1 6. 1 9. 3 8. 2 8. 2 8. 3 4. 1 4. 8 5. 7 5. 8 5. 7 3. 7 4. 1 4. 8 16. 7 10. 2 11. 1 12. 2 17. 3 7. 8 10. 0 11. 2 169. 6 156. 8 150. 0 134. 5 90. 5 110. 6 118. 2 124. 0 40. 8 45. 3 34. 1 22. 7 15. 7 6. 0 7. 6 9 . 2 Source: Company data, KDB Daewoo Securities Research estimates KDB Daewoo Securities Research 9 January 17, 2013 Shipbuilding Samsung Heavy Industries (010140 KS) Buy (Maintain) Target Price (12M, W) 46,200 Share Price (01/16/13, W) 37,850 Expected Return (%) 22. 1 EPS Growth (13F, %) 0. 6 Market EPS Growth (13F, %) 19. 1 P/E (13F, x) 9. Market P/E (13F, x) 9. 0 KOSPI 1,977. 45 Market Cap (Wbn) 8,739 Shares Outstanding (mn) 231 Avg Trading Volume (60D, ‘000) 938 Avg Trading Value (60D, Wbn) 34 Dividend Yield (13F, %) 0. 0 Free Float (%) 69. 5 52-Week Low (W) 31,650 52-Week High (W) 42,350 Beta (12M, Daily Rate of Return) 1. 57 Price Return Volatility (12M Daily, %, SD) 2. 3 Foreign Ownership (%) 32. 0 Major Shareholder(s) Samsung Electronics et al. (24. 42%) Treasury shares (6. 13%) Mirae Asset Global Investment (5. 05%) Price Performance (%) 1M 6M 12M Absolute -2. 7 4. 3 12. 3 Relative -1. 8 -4. 5 6. 0 Reliable again in 2013 ? ? ? 2013 orders and revenues forecast at US$1 4. 2bn and W14. tr Stable business operations and earnings to remain intact in 2013 Raise TP by 5% to W46,200; Maintain Buy Raise TP by 5% to W46,200; Maintain Buy We maintain our Buy call on Samsung Heavy Industries (SHI) and raise our target price 5% to W46,200. In deriving our target price, we applied a 5% premium to the companyEs lowest P/B level since 2005 (1. 3x). We believe that the 5% premium is undemanding, as the company is expected to win solid orders and display stable earnings in 2013. We expect SHI to win massive orders of US$14. 2bn despite the slump in the global shipbuilding market, driven by the robust offshore plant market and the companyEs superior competitiveness.SHIEs shares are trading at a 2013F P/E of 9. 4x and a P/B of 1. 3x. We think that SHI has strong investment merits in light of its competitive edge, stable earnings, robust growth potential, and cash flow improvement. Investment summary 1) Domestic institutions are most optimistic on SHI among the thre e largest domestic shipbuilders. SHI has proven its superior competitiveness in the offshore plant business, including FLNG and drillships. As such, the company has solid earnings relative to its competitors. 2) SHI is expanding into the subsea business, and we believe that the company will be able to bolster its competitiveness in the segment rapidly. ) The commercial vessel unit, which exhibited a tepid performance last year, is likely to recover in 2013 thanks to: 1) rising mega containership orders and 2) steady orders for LNG carriers and LNG FSRU. 4) SHI is expected to display the fastest cash flow improvement in its peer group this year, backed by: 1) a rise in orders for both offshore plants and commercial vessels and 2) an increase in heavy-tail payments. As such, the company will be able to repay its debt and strengthen its financial structure. 5) SHIEs earnings should gradually increase on rising revenue contributions from the offshore plant unit. Share price 150 140 130 120 110 100 90 80 1/12 5/12 9/12 1/13 KOSPI Earnings & Valuation Metrics FY 12/10 12/11 12/12F 12/13F 12/14F Revenue (Wbn) 13,146 13,392 14,875 14,980 15,751 OP OP Margin NP (Wbn) (%) (Wbn) 1,433 10. 1,000 1,160 8. 7 851 1,226 8. 2 929 1,198 8. 0 934 1,355 8. 6 1,015 EPS EBITDA FCF ROE (Won) (Wbn) (Wbn) (%) 4,330 1,504 598 28. 7 3,685 1,455 1,556 19. 4 4,021 1,551 282 18. 4 4,044 1,514 931 15. 8 4,396 1,667 978 14. 9 P/E (x) 9. 5 7. 6 9. 6 9. 4 8. 6 P/B (x) 2. 1 1. 2 1. 5 1. 3 1. 1 EV/EBITDA (x) 8. 2 5. 4 6. 1 5. 5 4. 5 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates Daewoo Securities Research 10 January 17, 2013 Shipbuilding Samsung Heavy Industries (010140 KS/Buy/TP: W46,200) Comprehensive Income Statement (Summarized) Wbn) Revenues Cost of Sales Gross Profit SG Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income N et Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 13,392 11,628 1,763 681 1,083 1,160 -10 -25 -32 1,150 299 851 0 851 851 0 616 616 0 1,455 1,556 10. 9 8. 7 6. 4 12/12F 14,875 12,867 2,008 766 1,242 1,226 -30 -34 0 1,196 267 929 0 929 929 0 920 920 0 1,551 282 10. 4 8. 2 6. 2 12/13F 14,980 13,017 1,962 764 1,198 1,198 4 -44 0 1,202 268 934 0 934 934 0 925 925 0 1,514 931 10. 1 8. 0 6. 2 12/14F 15,751 13,594 2,158 803 1,355 1,355 -19 -51 0 1,336 321 1,015 0 1,015 1,015 0 1,006 1,006 0 1,667 978 10. 6 8. 6 6. 5 Statement of Financial Condition (Summarized) Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Inv estments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 9,617 806 4,132 540 1,905 6,797 0 5,408 86 16,414 10,539 4,425 3,232 2,883 1,231 1,004 88 11,770 4,644 1,155 423 3,610 0 4,644 12/12F 9,112 1,115 3,793 550 1,711 6,316 5 5,434 38 15,428 7,758 3,882 1,570 2,306 2,213 1,881 138 9,971 5,457 1,155 423 4,430 0 5,457 12/13F 9,229 1,264 3,820 554 1,648 6,372 5 5,506 21 15,601 7,301 3,910 1,070 2,322 1,918 1,481 188 9,219 6,382 1,155 423 5,364 0 6,382 12/14F 9,720 1,445 4,017 583 1,733 6,439 5 5,573 13 16,159 7,223 4,111 670 2,442 1,656 1,081 271 8,878 7,280 1,155 423 6,272 0 7,281 Cash Flows (Summarized) Wbn) Cash Flows from Op Activitie s Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 1,341 1,150 189 294 78 75 549 1,284 150 164 -548 332 -242 -1 309 265 -1,306 -1,090 1 -108 -109 359 447 806 12/12F 351 1,131 558 297 11 -268 -1,061 34 39 -541 -276 -274 -368 -1 3 92 240 416 1 -108 -68 309 806 1,115 12/13F 1,376 934 580 299 17 -50 130 -27 -4 27 -268 -310 -370 -1 0 61 -917 -900 0 -108 -17 149 1,115 1,264 12/14F 1,408 1,015 651 302 10 -50 62 -197 -29 201 -321 -307 -370 -1 0 64 -921 -800 0 -108 -13 181 1,264 1,445 Forecasts/Valuations (Summarized)P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout rati o (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 7. 6 5. 3 1. 2 5. 4 3,685 5,296 22,582 500 12. 7 1. 8 1. 9 -3. 3 -19. 0 -14. 9 2. 8 23. 3 3. 2 4. 8 19. 4 15. 5 253. 4 91. 3 25. 8 57. 5 12/12F 9. 6 7. 2 1. 5 6. 1 4,021 5,358 26,307 0 0. 0 0. 0 11. 1 6. 6 5. 7 9. 1 3. 8 27. 3 3. 7 5. 8 18. 4 18. 9 182. 7 117. 5 7. 2 57. 9 12/13F 9. 7. 0 1. 3 5. 5 4,044 5,410 30,381 0 11. 6 0. 0 0. 7 -2. 4 -2. 2 0. 6 4. 0 27. 1 4. 0 6. 0 15. 8 16. 9 144. 5 126. 4 -10. 3 69. 5 12/14F 8. 6 6. 6 1. 1 4. 5 4,396 5,747 34,309 0 0. 0 0. 0 5. 2 10. 1 13. 0 8. 7 4. 1 27. 7 4. 1 6. 4 14. 9 19. 1 121. 9 134. 6 -22. 5 106. 2 Source: Company data, KDB Daewoo Securities Research estimates KDB Daewoo Securities Research 11 January 17, 2013 Sh ipbuilding Hyundai Mipo Dockyard (010620 KS) Buy (Maintain) Target Price (12M, W) 148,000 Share Price (01/16/13, W) 125,000 Expected Return (%) 18. 4 EPS Growth (13F, %) 45. 2 Market EPS Growth (13F, %) 19. 1 P/E (13F, x) 13. 1 Market P/E (13F, x) 9. 0 KOSPI 1,977. 5 Market Cap (Wbn) 2,500 Shares Outstanding (mn) 20 Avg Trading Volume (60D, ‘000) 121 Avg Trading Value (60D, Wbn) 14 Dividend Yield (13F, %) 1. 6 Free Float (%) 51. 6 52-Week Low (W) 102,500 52-Week High (W) 167,000 Beta (12M, Daily Rate of Return) 1. 58 Price Return Volatility (12M Daily, %, SD) 2. 4 Foreign Ownership (%) 18. 1 Major Shareholder(s) Hyundai Samho Heavy Industries et al. (46. 4%) NPS (7. 38%) Price Performance (%) Absolute Relative Shining in the dark ? ? ? 2013 target: US$3. 2bn in orders and W3. 6tr in revenues Stands to benefit most from industry restructuring Maintain Buy and TP of W148,000 Maintain Buy and TP of W148,000We maintain our Buy recommendation on Hyundai Mipo Dockyard (HMD) and our target price of W148,000. We expect HMD to maintain stable growth in orders and earnings, despite the global economic slowdown and eurozone fiscal crisis. Indeed, among small- to mid-sized shipbuilders, HMD is the company most favored by shipowners. Amid an expected further slowdown in the shipbuilding market, the company is anticipated to display distinguished share performance in 2013. Given HMDEs cash holdings of W450bn and the value of its stake in Hyundai Heavy Industries (W1. 4tr; 8. 0% of outstanding shares), we believe that the companiesE shares are currently undervalued (trading at a 2013F P/E of 13. 1x and a P/B of 0. 9x). Investment points ) We believe HMD will continue to display outstanding performance among small- to mid-sized Korean shipbuilders in 2013. Even amid intensifying competition due to limited orders and low ship prices, the company is expected to enjoy stable orders, earnings, and cash flow this year. 2) HMDEs competitiveness comes from its productivity, fi nancing capability, and the quality of its products. It also boasts strong cost competitiveness as the company purchases raw materials at relatively lower prices from the Hyundai Heavy Industries Group. 3) In the small- to mid-sized merchant ship market, the product carrier (P/C) segment, in which HMD has the strongest competitive edge, is expected to be relatively robust in 2013. ) If the shipbuilding market remains in a slump for a protracted period of time, HMD should be able to widen its gap with its peers. The company stands to benefit most from a second industry restructuring that is expected to end sometime in 2014. 1M 2. 5 3. 3 6M 6. 4 -2. 4 12M 11. 6 5. 3 Share price 160 150 140 130 120 110 100 90 80 1/12 5/12 9/12 1/13 KOSPI Earnings & Valuation Metrics FY 12/10 12/11 12/12F 12/13F 12/14F Revenue OP OP Margin NP EPS EBITDA FCF ROE P/E (Wbn) (Wbn) (%) (Wbn) (Won) (Wbn) (Wbn) (%) (x) 4,138 683 16. 5 493 24,629 741 431 14. 7 9. 1 4,624 378 8. 2 200 9,992 441 -633 5. 5 11. 2 4 ,404 126 2. 9 131 6,556 192 -563 4. 3 19. 4 4,624 191 4. 1 190 9,518 256 397 6. 4 13. 1 4,855 230 4. 235 11,770 293 416 7. 4 10. 6 P/B EV/EBITDA (x) (x) 1. 2 4. 4 0. 8 4. 2 1. 0 13. 8 0. 9 8. 6 0. 8 6. 0 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates Daewoo Securities Research 12 January 17, 2013 Shipbuilding Hyundai Mipo Dockyard (010620 KS/Buy/TP: W148,000) Comprehensive Income Statement (Summarized) (Wbn) Revenues Cost of Sales Gross Profit SG Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from ContinuingOperations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controlling Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit M argin (%) Net Profit Margin (%) 12/11 4,624 3,975 649 272 378 378 -63 -24 0 315 112 202 0 202 200 3 -821 -823 2 441 -633 9. 5 8. 2 4. 3 12/12F 4,404 4,002 402 276 126 126 41 -8 -2 167 41 126 0 126 131 -5 -274 -265 -9 192 -563 4. 4 2. 9 3. 0 12/13F 4,624 4,143 481 290 191 191 52 -9 -2 243 58 185 0 185 190 -5 185 194 -9 256 397 5. 5 4. 1 4. 1 12/14F 4,855 4,321 534 304 230 230 73 -10 -2 303 73 230 0 230 235 -5 230 239 -9 293 416 6. 0 4. 7 4. 9 Statement of Financial Condition (Summarized) Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Interests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interest s Stockholders' Equity 12/11 4,134 564 975 283 427 3,691 34 889 340 7,825 3,914 1,774 1,779 361 502 56 420 4,416 3,217 100 91 2,081 191 3,409 12/12F 4,994 418 1,814 231 352 3,632 35 928 341 8,626 4,499 1,850 2,253 396 999 191 781 5,498 2,912 100 90 2,172 215 3,127 12/13F 4,919 468 1,568 243 462 3,675 33 964 344 8,593 4,274 1,905 1,953 416 1,046 141 878 5,320 3,067 100 90 2,323 206 3,273 12/14F 4,878 532 1,427 255 486 3,650 31 933 347 8,527 4,071 1,991 1,643 437 993 101 865 5,063 3,267 100 90 2,519 197 3,464 Cash Flows (Summarized) Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equity Dividends Paid Others Increase (Decrease) in Cash Beginning Balan ce Ending Balance 12/11 -697 202 311 62 1 -213 -1,075 -190 -54 -593 -135 441 -100 -4 400 145 93 245 0 -93 -59 -168 732 564 12/12F -816 126 78 65 2 -12 -969 -220 52 66 -50 150 -112 -4 79 186 516 601 0 -39 -46 -146 564 418 12/13F 489 185 71 64 1 10 291 247 -12 56 -58 -47 -100 -4 0 57 -392 -350 0 -39 -2 50 418 468 12/14F 432 230 62 62 1 30 212 140 -12 86 -73 23 -30 -4 0 57 -391 -350 0 -39 -2 64 468 532 Forecasts/Valuations (Summarized)P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 12/12F 12/13F 12/14F 11. 2 19. 4 13. 1 10. 6 8. 5 12. 9 9. 8 8. 4 0. 8 1. 0 0. 9 0. 8 4. 2 13. 8 8. 6 6. 0 9,992 6,556 9,518 11,770 13,153 9,869 12,760 14,910 146,152 130,821 138,428 148,290 2,000 2,000 2,000 2,000 19. 6 29. 9 20. 6 16. 6 1. 8 1. 6 1. 6 1. 6 11. 7 -4. 8 5. 0 5. 0 -40. 5 -56. 5 33. 4 14. 3 -44. 7 -66. 8 52. 2 20. 3 -59. 4 -34. 4 45. 2 23. 7 6. 1 4. 2 3. 9 5. 0 18. 1 17. 1 19. 5 19. 5 2. 5 3. 2 3. 8 3. 8 2. 3 1. 5 2. 2 2. 7 5. 5 4. 3 6. 4 7. 4 53. 8 8. 1 10. 7 15. 6 129. 6 175. 8 162. 5 146. 2 105. 6 111. 0 115. 1 119. 8 -18. 0 -4. 9 -16. 9 -27. 9 689. 5 45. 6 78. 1 109. 7Source: Company data, KDB Daewoo Securities Research estimates KDB Daewoo Securities Research 13 January 17, 2013 Shipbuilding Hanjin Heavy I&C (097230 KS) Hold (Downgrade) Target Price (12M, W) Share Price (01/16/13, W) 10,000 Expected Return (%) 0. 0 EPS Growth (13F, %) RR Market EPS Growth (13F, %) 19. 1 P/E (13F, x) Market P/E (13F, x) 9. 0 KOSPI 1,977. 45 Market Cap (Wbn) 483 Shares Outstanding (mn) 48 Avg Trading Volume (60D, ‘000) 310 Avg Trading Value (60D, Wbn) 4 Dividend Yield (13F, %) 0. 0 Free Float (%) 62. 6 52-Week Low (W) 10,00 0 52-Week High (W) 23,850 Beta (12M, Daily Rate of Return) 1. 43 Price Return Volatility (12M Daily, %, SD) 2. 7 Foreign Ownership (%) 9. Major Shareholder(s) Hanjin Heavy I Holdings et al (37. 38%) KB Asset Management (5. 13%) Price Performance (%) 1M Absolute -23. 4 Relative -22. 5 Unlikely to weather market slump ? ? ? Earnings unlikely to recover due to shipbuilding market slump and protracted strike Cash flow to deteriorate due to excessive debt and weak orders Downgrade to Hold Downgrade to Hold We lower our rating on Hanjin Heavy I (HHIC) to Hold from Trading Buy. We believe that the companyEs earnings and cash flow will not improve for the time being, given its tepid order performance amid the sluggish commercial vessel market, and the suspension of its Youngdo shipyard due to a strike.Although the company has recently embarked on the development of an industrial site near the Incheon port, the project is unlikely to boost operating profit markedly due to high capital requir ements and increased interest expenses. As such, the companyEs shares are unlikely to recover in the near term, in our view Although the companyEs shares are trading at a 2013F P/B of just 0. 4x, we believe that their investment merits are low. Indeed, efforts to dispose of property amid a lackluster real estate market should meet with difficulty, and continued net losses and excessive interest expenses should leave cash flow from operations uncertain. Risks ) The commercial vessel unit at the Youngdo shipyard is unlikely to recover. The slump in the global commercial vessel market is leading to a fall in orders, while intensifying competition among shipbuilders are prompting shipowners to demand discounts on ship prices. . 2) There is a growing possibility that the Subic shipyard will take new orders, as it possesses strong price competitiveness. However, as it is difficult to build highend vessels at the Subic shipyard, the companyEs earnings are unlikely to recover in the near fu ture. 3) There are many labor-management issues yet to be resolved, including one related to employees who are currently on leave due to a lack of work. ) Although HHIC is meeting its short-term capital needs through real estate disposal, the company will likely find it difficult to sell large-scale real estate assets due to the real estate market slump. Indeed, the company needs more capital to engage in the development project near the Incheon port. Given that the project is not progressing rapidly, uncertainties over the companyEs cash flow will likely persist in the long term. 5) HHIC holds massive debt (W2. 8tr). Proceeds from the companyEs planned rights offering (estimated to at W180bn) should be only equivalent to its annual interest expenses. 6M -26. 7 -35. 5 12M -47. 9 -54. 3 Share price 120 110 100 90 80 70 60 50 40 1/12 5/12 9/12 1/13 KOSPI Earnings & Valuation MetricsFY 12/10 12/11 12/12F 12/13F 12/14F Revenue OP OP Margin NP (Wbn) (Wbn) (%) (Wbn) 3,168 120 3. 8 -72 2,8 92 108 3. 7 -97 2,547 63 2. 5 -103 2,795 76 2. 7 -10 3,071 83 2. 7 -32 EPS EBITDA FCF ROE (Won) (Wbn) (Wbn) (%) -1,496 312 487 -3. 6 -2,006 200 -224 -5. 1 -2,123 148 243 -5. 7 -158 195 182 -0. 6 -466 184 146 -1. 8 P/E (x) P/B (x) 1. 0 0. 5 0. 4 0. 4 0. 4 EV/EBITDA (x) 14. 5 19. 9 24. 0 16. 9 18. 0 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates Daewoo Securities Research 14 January 17, 2013 Shipbuilding Hanjin Heavy I (097230 KS/Hold) Comprehensive Income Statement (Summarized) Wbn) Revenues Cost of Sales Gross Profit SG Expenses Operating Profit (Adj) Operating Profit Non-Operating Profit Net Financial Income Net Gain from Inv in Associates Pretax Profit Income Tax Profit from Continuing Operations Profit from Discontinued Operations Net Profit Controlling Interests Non-Controlling Interests Total Comprehensive Profit Controlling Interests Non-Controllin g Interests EBITDA FCF (Free Cash Flow) EBITDA Margin (%) Operating Profit Margin (%) Net Profit Margin (%) 12/11 2,892 2,665 227 140 87 108 -190 171 -2 -82 15 -97 0 -97 -97 0 -90 -90 0 200 -224 6. 9 3. 7 -3. 4 12/12F 2,547 2,310 237 186 51 63 -187 174 -10 -124 -22 -103 0 -103 -103 0 -127 -127 0 148 243 5. 8 2. 5 -4. 0 12/13F 2,795 2,516 280 204 76 76 -89 159 -5 -13 -3 -11 0 -11 -10 0 -35 -34 0 195 182 7. 0 2. 7 -0. 4 12/14F 3,071 2,764 307 224 83 83 -125 150 0 -42 -9 -33 0 -33 -32 0 -57 -56 0 184 146 6. 0 2. 7 -1. 1 Statement of Financial Condition (Summarized) Wbn) Current Assets Cash and Cash Equivalents AR & Other Receivables Inventories Other Current Assets Non-Current Assets Investments in Associates Property, Plant and Equipment Intangible Assets Total Assets Current Liabilities AP & Other Payables Short-Term Financial Liabilities Other Current Liabilities Non-Current Liabilities Long-Term Financial Liabilities Other Non-Current Liabilities Total Liabilities Controlling Inter ests Capital Stock Capital Surplus Retained Earnings Non-Controlling Interests Stockholders' Equity 12/11 2,392 854 917 361 237 4,645 66 3,144 89 7,037 2,483 811 1,603 69 2,687 2,317 329 5,170 1,864 241 644 814 2 1,867 12/12F 2,058 686 868 280 209 4,535 81 2,980 89 6,592 2,286 802 1,421 63 2,566 2,177 336 4,852 1,738 241 644 712 2 1,740 12/13F 2,077 617 925 294 228 4,487 76 2,871 89 6,564 2,384 895 1,421 69 2,369 1,977 338 4,753 1,809 346 644 701 2 1,810 12/14F 2,025 422 1,016 322 250 4,412 76 2,780 89 6,437 2,479 983 1,421 76 2,204 1,777 373 4,683 1,752 346 644 669 2 1,754 Cash Flows (Summarized) Wbn) Cash Flows from Op Activities Net Profit Non-Cash Income and Expense Depreciation Amortization Others Chg in Working Capital Chg in AR & Other Receivables Chg in Inventories Chg in AP & Other Payables Income Tax Paid Cash Flows from Inv Activities Chg in PP&E Chg in Intangible Assets Chg in Financial Assets Others Cash Flows from Fin Activities Chg in Financial Liabilities Chg in Equi ty Dividends Paid Others Increase (Decrease) in Cash Beginning Balance Ending Balance 12/11 -228 -97 246 113 0 44 -379 -192 -42 -150 2 68 -15 0 -43 126 -106 91 1 0 -198 -262 1,116 854 12/12F 316 -103 265 97 0 16 131 23 77 33 22 9 -21 0 -14 44 -488 -297 0 0 -192 -168 854 686 12/13F 194 -11 206 120 0 25 -4 -57 -13 92 3 11 -10 0 0 21 -275 -200 105 0 -180 -70 686 617 12/14F 165 -33 216 101 0 25 -28 -91 -29 88 9 10 -10 0 0 20 -370 -200 0 0 -170 -194 617 422 Forecasts/Valuations (Summarized)P/E (x) P/CF (x) P/B (x) EV/EBITDA (x) EPS (W) CFPS (W) BPS (W) DPS (W) Payout ratio (%) Dividend Yield (%) Revenue Growth (%) EBITDA Growth (%) Operating Profit Growth (%) EPS Growth (%) Accounts Receivable Turnover (x) Inventory Turnover (x) Accounts Payable Turnover (x) ROA (%) ROE (%) ROIC (%) Liability to Equity Ratio (%) Current Ratio (%) Net Debt to Equity Ratio (%) Interest Coverage Ratio (x) 12/11 57. 4 0. 5 19. 9 -2,006 323 36,806 0 0. 0 0. 0 -8. 7 -35. 9 -9. 8 RR 3. 3 8. 9 3. 2 -1. 3 -5. 1 2 . 4 276. 9 96. 3 163. 0 0. 5 12/12F -112. 3 0. 4 24. 0 -2,123 -111 34,182 0 0. 0 0. 0 -11. 9 -25. 9 -41. 8 RR 3. 3 8. 0 3. 9 -1. 5 -5. 7 1. 4 278. 9 90. 0 166. 5 0. 3 12/13F 5. 9 0. 4 16. 9 -158 1,691 24,843 0 0. 0 0. 0 9. 8 31. 8 20. 1 RR 3. 6 9. 8 4. 1 -0. 2 -0. 6 2. 1 262. 6 87. 1 152. 8 0. 4 12/14F 10. 1 0. 4 18. 0 -466 989 24,030 0 0. 0 0. 0 9. 9 -5. 8 9. 9 RR 3. 6 10. 0 4. 0 -0. 5 -1. 8 2. 4 267. 0 81. 7 157. 4 0. 5 Source: Company data, KDB Daewoo Securities Research estimates KDB Daewoo Securities Research 15January 17, 2013 Shipbuilding Important Disclosures & Disclaimers Disclosures As of the publication date, Daewoo Securities Co. , Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of Hyundai Heavy Industries and Samsung Heavy Industries as an underlying asset, and other than this, Daewoo Securities has no other special interests in the covered companies. As of the publication date, Daewoo Securities Co. , Ltd. has been acting as a financi al advisor to Hyundai Mipo Dockyard for its treasury stock trust, and other than this, Daewoo Securities has no other special interests in the companies covered in this report.As of the publication date, Daewoo Securities Co. , Ltd. issued equity-linked warrants with Hyundai Heavy Industries and Samsung Heavy Industries as an underlying asset, and other than this, Daewoo Securities has no other special interests in the covered companies. Stock Ratings Buy Trading Buy Hold Sell Relative performance of 20% or greater Relative performance of 10% or greater, but with volatility Relative performance of -10% and 10% Relative performance of -10% Industry Ratings Overweight Neutral Underweight Fundamentals are favorable or improving Fundamentals are steady without any material changes Fundamentals are unfavorable or worsening Ratings and Target Price History (Share price (—-), Target price (—-), Not covered ( ¦), Buy (^), Trading Buy ( ¦), Hold (? ), Sell (? )) * Our inves tment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analystEs estimate of future earnings. The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions. W) 800,000 600,000 400,000 200,000 0 1/11 7/11 1/12 7/12 1/13 Hyundai Heavy Industries (W) 60,000 50,000 40,000 30,000 20,000 10,000 0 1/11 7/11 1/12 7/12 1/13 Samsung Heavy Industries (W) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1/11 7/11 1/12 7/12 1/13 Hyundai Mipo Dockyard (W) 50,000 40,000 30,000 20,000 10,000 0 1/11 7/11 1/12 7/12 1/13 Hanjin Heavy I&C Analyst Certifica tion The research analysts who prepared this report (the „Analysts†°) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof.Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Daewoo Securities Co. , Ltd. policy prohibits its Analysts and members of their households from owning securities of any company in the AnalystEs area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report.No part of t he compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Daewoo Securities Co. , Ltd. except as otherwise stated herein. Disclaimers This report is published by Daewoo Securities Co. , Ltd. („Daewoo†°), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and pinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently ve rified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. If this report is an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments.The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principle s and no person whose receipt or use of this report would violate any laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Daewoo. Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents.Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide inves tment banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Daewoo Securities Research 16 January 17, 2013 Shipbuilding Distribution United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. n the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the „Order†°), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as „Relevant Persons†°). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U. S. by Daewoo Securities (America) Inc. , a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U. S. Securities Exchange Act of 1934. All U. 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Pronoun Case on SAT Writing Tips and Practice Questions

Pronoun Case on SAT Writing Tips and Practice Questions SAT / ACT Prep Online Guides and Tips Are you ready for more grammar funPronoun case is a grammar rule that is regularly tested on the SAT. You know the drill: Learn the SAT Writing rule and you'll raise your score. There are multipe pronoun rules that are tested in SAT Writing. This one is relatively straightforward and tends to be tested a little less often than the others. However, you will most likely see at least one or two pronoun case questions on the SAT. Let's master this rule, learn tips and strategies to solve these questions, and get you one step closer to your target score. In this post, I'll do the following: Explain the difference between subjects and objects. Give you a clear understanding of pronoun case. Offer strategies that can help you correctly answer pronoun case questions. Provide you with practice questions so you can test what you've learned. Quick Review: What's a Pronoun? A pronoun is a word that takes the place of a noun. The noun to which the pronoun refers is called the antecedent. Some examples of pronouns include I, he, she, it, me, him, her, their, we, and us. What is Pronoun Case? Case refers to whether a pronoun is being used as a subject or an object. What is a Subject? Simply, a subject is the noun that corresponds with a verb in a sentence. In a sentence where there is an action, the subject is the noun that is doing the action. Here is an example: Justin writes articles. Justin is the subject because he does the writing. In a sentence where there is a description, typically using a form of the verb "to be", the subject is the noun that is being described. Consider this possibly accurate sentence: Justin is odd. Justin is the subject because he is the person who is odd. What is an Object? An object is a noun that receives an action. An object can be a direct object of a verb, an object of a preposition, or an indirect object of a verb. Here is an example sentence with a noun as a direct object of a verb: I ate an orange. The object is "an orange" because that is what I ate. Here's an example sentence in which I bolded the object of the preposition: John spoke to his niece. John's niece is the object because she is the person to whom he spoke. An indirect object comes before the direct object and indicates to whom or for whom the action is done and who is receiving the direct object. Here is an example sentence with the indirect object bolded: I gave my girlfriend a sweatshirt. In the sentence "my girlfriend" is the indirect object because I gave a sweatshirt to her. The sweatshirt is the direct object because that is what I gave. If you're confused by the concept of an indirect object, for the purpose of pronoun case, just remember that the object receives the action, either directly or indirectly. Subject Pronouns Vs. Object Pronouns If a noun is being used as a subject, it can be replaced by a subject pronoun. If a noun is being used as an object, it can be replaced by an object pronoun. Here is a list of subject pronouns: SINGULAR SUBJECT PRONOUNS I You He/She/It/One Who PLURAL SUBJECT PRONOUNS We You They Who Here is a list of object pronouns, corresponding to the ones above: SINGULAR OBJECT PRONOUNS Me You Her/Him/It/One Whom PLURAL OBJECT PRONOUNS Us You Them Whom Now that we've covered all the basics, we are equipped with the necessary knowledge to tackle pronoun case questions on the SAT. Pronoun Case on the SAT The SAT tests you on whether you should use a subject pronoun or an object pronoun. You will be tested on the following subject/object pairs: I Vs. Me She, He Vs. Her, Him We Vs. Us They Vs. Them Who Vs. Whom So, now we'll go through the process of how to decide whether to use a subject or an object pronoun in a given sentence. Strategy Let's go over some example sentences showing how subject pronouns can replace subjects and object pronouns can replace objects. Check out the following sentence: Sonia delivered a spectacular speech. Let's replace "Sonia" with a pronoun. First, we have to determine if Sonia is a subject or an object. Well, because she is the person who did the action, she is the subject. So, we must use a subject pronoun. After replacing "Sonia" with a pronoun, the sentence should read: She delivered a spectacular speech. You cannot replace "Sonia" with an object pronoun. You cannot write "Her delivered a spectacular speech." That is an example of a pronoun case error. Here is another example sentence: Hillary Clinton gave her autograph to Bob. Let's go through the same process and replace "Bob" with a pronoun. Is Bob a subject or an object? Well, he follows the preposition "to" and received the autograph from Hillary Clinton. Bob is an object. So, we have to replace Bob with an object pronoun. The resulting sentence should look like this: Hillary Clinton gave her autograph to him. If we made a pronoun case error when replacing "Bob" with a pronoun, the sentence would read, "Hillary Clinton gave her autograph to he." This rule seems relatively simple, right? Subjects do actions. Objects receive actions. Well, we know the SAT likes to complicate the most basic sentences and truly test your understanding of a grammar rule. Pronoun case questions become more difficult in sentences with compound subjects and compound objects. The Same Rules Apply for Compound Subjects and Compound Objects Compound just means that two nouns are connected with the word "and". In a sentence with a compound subject, there are two nouns that serve as the subject. In a sentence with compound objects, there are two objects of the same verb. Let's look at an example sentence: Ice-T and Justin met at an IHOP. "Ice-T and Justin" are the subject. They are the people who did the meeting. Now, let's replace "Justin" with a pronoun. We know that "Justin" is a subject so we have to use a subject pronoun. Because I am Justin, my sentence would look like this: Ice-T and I met at an IHOP. If you were writing this sentence about me, your sentence would look like this: Ice-T and he met at an IHOP. That sentence probably sounds awkward to you, but it is grammatically correct. Most people would use the object pronoun and write, "Ice-T and him met at an IHOP." That would be a pronoun case error. Remember, always follow the grammar rules and avoid relying on what "sounds right". Let's go through the same process with another example sentence: Mr. T gave gold chains to Marc and Justin. Again, let's replace "Justin" with a pronoun. Are "Marc and Justin" subjects or objects? Well, they received the gold chains. Also, they follow the preposition "to". They are objects. So, we have to replace "Justin" with an object pronoun. Because I am Justin, this would be my sentence: Mr. T gave gold chains to Marc and me. Many students are tempted to write "Marc and I" in this situation. However, in this sentence, that would be a pronoun case error. "I" can only be used as a subject and "me" can only be used as an object. If you were writing the preceding example sentence about me, you would write: Mr. T gave gold chains to Marc and him. Because we are replacing an object with a pronoun, we have to use an object pronoun. The SAT tends to use compound subjects or objects in questions that test pronoun case because the correct answer often sounds wrong to us. So, can we employ a strategy that allows us to more easily identify pronoun case errors in sentences with compound subjects or objects? Yes!!! Strategy If you see a compound subject/object, cross out the other noun and "and". For compound objects, the sentence should still be grammatically correct. Let's do this with the previous example: Mr. T gave gold chains to Marc and me. This sentence probably sounds less awkward to you. Most likely, you would be able to immediately identify a pronoun case error if you saw a sentence that read, "Mr. T gave gold chains to I". If you do the same thing with a compound subject, the sentence will be grammatically correct if you also change the verb from plural to singular, due to subject-verb agreement. However, keep in mind that the singular and plural forms of a verb can be the same. Let's use the cross-out method with a compound subject to help determine if there is a pronoun case error. Look at the following sentence: Nathan and him went to college together. After crossing out the noun and "and", we're left with "him went to college together". Does "him went to college" sound right to you? Probably not. Regardless, let's rely on the rules. In this sentence, is "him" a subject or an object? It's a subject because they did the action. They went together. Because "him" is an object pronoun, there is a pronoun case error. The sentence should read: Nathan and he went to college together. Let's use what we've learned on a real example from the SAT. Real SAT Writing Example This is an example taken from an actual SAT. Try to use your newly acquired knowledge of pronoun case and the appropriate strategy to answer this question. This is an "identify the error" question. Where is the error? Is there an error? Well, let's take a look at answer choice C and determine if "I" is being used correctly. If we use the cross-out strategy we learned to utilize with compound subjects/objects, we're left with "Mary invited I". Perhaps you know the answer at this point. If not, let's take this a step further. Is "I" being used as a subject or object? Well, in the sentence, "I" is receiving the action. "I" is being invited. Therefore, "I" is being used as an object. That is incorrect. The pronoun "I" can only be used as a subject. The answer is C. The sentence should read, "Mary invited Sandhya and me". Here's one more example for you: Is there a pronoun case error in this sentence? Let's look at the phrase "him and his sister Rosa were presented". If we use the cross-out strategy and change the verb from plural to singular, we're left with "him was presented". Would you ever say, "him was presented with an award"? I hope not, because "him" is an object pronoun and it is being used as a subject! In the example sentence, the phrase should be "he and his sister Rosa were presented with awards". The answer is A. Who Vs. Whom Occasionally, the SAT will also test you on whether to use "who" or "whom" in a sentence. These words are known as relative pronouns. Most people have no idea when and how to properly use "who" and "whom". Luckily, the rule is pretty simple. The word "who" is a subject pronoun and "whom" is an object pronoun. Here's a tip to help you more easily answer questions involving "who" or "whom". Strategy In terms of pronoun case, "who" and "whom" function like "he" and "him". The word "who" is a subject pronoun and "whom" is an object pronoun. To determine if there is a pronoun case error, replace "who" with "he" and "whom" with "him". If the antecedent is plural, replace "who" with "they" and "whom" with "them". Here is an example sentence: Justin, who is my teacher, knows when to use "whom" correctly. So, the sentence is saying that Justin is my teacher. "Who" modifies Justin, who is being described as my teacher. If we replace "who" with "he", the resulting sentence is grammatically correct: He is my teacher. Therefore, "who" is being properly used as a subject. Take a look at this sentence: Justin, whom I adore, writes articles for PrepScholar. In the sentence, the clause with "whom" is saying that "I adore Justin". If we replace "whom" with "him", the resulting sentence is also grammatically correct: I adore him. The word "whom" is being properly used as an object. It is modifying "Justin", who is receiving the adoration. Do you get it? Here's one more example: My friend, to whom I wrote a nasty e-mail, is not talking to me. Here, the sentence is saying that "I wrote a nasty e-mail to my friend". If we're replacing "my friend" with a pronoun, would we use the subject or object case? Well, since "my friend" follows the preposition "to" and receives the action, you should use the object form. You would write "I wrote a nasty e-mail to him" and not "I wrote a nasty e-mail to he." Therefore, you would also use the object case of the relative pronoun. The word "whom" is being used correctly in the sentence. Now we can take what we've learned to an actual example from an SAT. Real SAT Writing Example Here is an "identify the error" question from a real SAT. Use our strategy and your knowledge of pronoun case to determine if "who" is being used correctly: In the sentence, "who" is modifying the investors. The antencedent is plural, so with our replacement strategy we should use a plural pronoun. Does the grammatically correct sentence use a subject pronoun? Should it be "They sold stocks"? Or does the grammatically correct sentence use an object pronoun? Should it be "Them sold stocks"? The answer, of course, is that the sentence requires a subject pronoun. The investors did the selling. Therefore, "who" is being used correctly. Actually, the answer to this question is D. The word "exceptional" should be in the adverb form, "exceptionally". Now that we have thoroughly investigated pronoun case and the various types of pronoun case questions on the SAT, here are some general strategies to ensure that you correctly answer any pronoun case question you may encounter. Almost there! General SAT Writing Strategies for Pronoun Case #1: If a Pronoun is Underlined, Check for an Error in Pronoun Case If a pronoun is underlined in any of the writing subsections (sentence improvement, identify the error, or paragraph improvement), make sure there is not a pronoun case error. #2: Determine if the Pronoun is Being Used as a Subject or Object If the pronoun is doing the action or being described, it is a subject. If the pronoun is receiving the action, it is an object. Use subject pronouns for subjects and object pronouns for objects. Use the replacement strategy, if necessary, to help determine if a noun is a subject or object. #3: The Same Rules Apply for Compound Subjects/Objects If you see a compound subject/object, the sentence should be grammatically correct if you get rid of one of the nouns and "and". Change "John and I went to the store" to "I went to the store". The sentence is still correct. So, if you see a compound subject/object on the SAT, use the cross out strategy to help determine if there is a pronoun case error. For compound subjects, also make sure that you change the verb from plural to singular. #4: If a Pronoun Follows a Preposition, It is an Object Pronoun Pronouns that follow prepositions, specifically "to", "for", or "between", should be in the object case. #5: Use the Replacement Strategy for Who Vs. Whom If you are trying to determine whether "who" or "whom" should be used, replace "who" with "he" for singular antecedents and "who" with "they" for plural antecedents. In the spirit of gender equality, you can also replace "who" with "she". The word "whom" should be replaced with "him" for singular antecedents and "them" for plural antecedents. Again, feel free to replace "whom" with "her". Additional Practice Hopefully by this point you understand pronoun case and how to correctly answer any pronoun case question that may appear on the SAT. I've created some realistic SAT Writing practice questionsto test you on what you've learned. Remember to use the general strategies I referenced above. 1. Inside the classroom, my teacher (A) and me (B) have a relationship that (C) inspires me (D) to learn. No error (E) 2.Due to her (A) excellent behavior and kindness to others, (B) she (C) was given the citizenship award by her (D) principal. No error (E) 3. Even after our (A) nasty fight, there is (B) no animosity between (C) our neighbors and we. (D) No error (E) 4.We (A) were surprised to learn (B) that the honor of carrying (C) the torch was bestowed upon she. (D) No error (E) 5.I (A) was excited to hand the coach and they (B) their (C) trophy after they (D) won the championship game. (E) No error Answers: 1. B, 2., E, 3. D, 4. D, 5. B What's Next? Keep honing all the skills you need to do well on SAT Writing. I recommend checking out this article about what's actually tested on SAT Writing. If you're focusing on grammar, read the complete guide to SAT grammar rules. Those who want to challenge themselves and test their mastery of the SAT Writing section should check out this post about the hardest SAT writing questions. Want to improve your SAT score by 240 points? Check out our best-in-class online ACT prep program. We guarantee your money back if you don't improve your ACT score by 4 points or more. Our program is entirely online, and it customizes what you study to your strengths and weaknesses. If you liked this Writing and grammar lesson, you'll love our program.Along with more detailed lessons, you'll get thousands ofpractice problems organized by individual skills so you learn most effectively. We'll also give you a step-by-step program to follow so you'll never be confused about what to study next. Check out our 5-day free trial:

Work Life Balance

Work Life Balance The ability of a person to maintain the healthy work-life balance is critical for his performance and commitment to the goals set by leaders. Therefore, managers should enable workers to attain this goal (Bogenschneider, 2014). The key issue is that non-profit organizations usually provide more support to employees.Advertising We will write a custom essay sample on Work Life Balance specifically for you for only $16.05 $11/page Learn More It is important to understand why they act in this way. Overall, it is consider a wide set of factors such as inability to compete in terms of salaries, regulations, unionizations of workforce, and changes in the labor market. The analysis of these issues can be useful for understanding the methods for retaining the most skilled professionals. At first, it is important to mention that non-profit organizations are not able to compete with various enterprises in terms of salaries that they can offer to workers. Therefore, the y need to attract potential candidates by offering some non-monetary rewards (Valcik Benavides, 2011, p. 184). It is also necessary to mention that many modern employees value the work-family balance and they often regard non-profit organizations as potential employers. This is one of the trends that should be taken into account. One should also note the emphasis on work-life became one of the main trends in the late seventies, at the time, when the rate of employment among women increased significantly (Rajadhyaksha, 2012). Nevertheless, during the later decades, many organizations tried to help male employees maintain the work-life balance. These are the main details that one should take into account.  It is also important to study the critical differences between profit and non-profit businesses. For example, non-profit organizations do not often have to meet stringent deadlines that often prompt people to work overtime. This is one of the details that should be taken into con sideration. Under such circumstances, employees should be compensated for their efforts, but non-profit organizations are not able to offer this reward. Apart from that, one should bear in mind that non-profit organizations are often operated by the government. For instance, one can speak about schools or medical institutions. The employees of these institutions are more likely to be unionized, and employers have to consider the increased bargaining power of workers. Thus, the influence of legislative and social factors should not be disregarded.Advertising Looking for essay on public administration? Let's see if we can help you! Get your first paper with 15% OFF Learn More Nevertheless, it is critical to remember that the policies of non-profit organizations can be explained by dramatic changes in the labor market trends, especially unwillingness of people to work in certain economic sectors. In particular, one can mention the shortage of nurses in many hosp itals. As a result, the work of these medical institutions can be impaired. This is why these organizations try to eliminate or reduce administrative stressors. Additionally, they want to focus on the work-life balance in order to retain nurses (Teo, Yeung, Chang, 2011). Apart from that, this approach can be useful for reducing the employee turnover, which is one of the problems affecting public hospitals (Teo et al., 2011). These are the main points that can be made. On the whole, this discussion shows that non-profit organizations attach importance to the work-life balance because they want to recruit and retain the most skilled professionals. This strategy can be useful for reducing the turnover of employees who may be dissatisfied with their jobs due to some reasons. In the long term, this approach can be vital for strengthening their commitment. Additionally, these institutions have to find ways of competing with businesses that usually offer better salaries. These are the mai n elements that can be distinguished. Reference List Bogenschneider, K. (2014). Family Policy Matters: How Policymaking Affects  Families and What Professionals Can Do. New York, NY: Routledge. Rajadhyaksha, U. (2012). Work-life balance in south east asia: The indian  experience. South Asian Journal of Global Business Research, 1(1), 108-127. Teo, S., Yeung, M., Chang, E. (2011). Administrative stressors and nursing job  outcomes in Australian public and non-profit health care organisations. Journal of Clinical Nursing, 21(200), 1443–1452.Advertising We will write a custom essay sample on Work Life Balance specifically for you for only $16.05 $11/page Learn More Valcik, N., Benavides, T. (2011). Practical Human Resources for Public Managers:  A Case Study Approach. New York, NY: CRC Press.