August 24, 2011ACTIONBuyE Ink Holdings Inc (8069.TWO)Return Potential: 31%                                                ...
August 24, 2011                                                                                                           ...
August 24, 2011                                                                                                           ...
August 24, 2011                                                                                                           ...
August 24, 2011                                                                                                           ...
August 24, 2011                                                                                                           ...
August 24, 2011                                                                                                           ...
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  1. 1. August 24, 2011ACTIONBuyE Ink Holdings Inc (8069.TWO)Return Potential: 31% Equity ResearchSecular e-reader strength confirmed despite macro; Buy, raise TPSource of opportunity Investment Profile Low HighAt the investor conference on August 23, E Ink Chairman Scott Liu Growth Growthreiterated his guidance for 3Q11 revenues (similar to 1Q11, implying 50% Returns * Returns *qoq growth) and a full year e-reader market size of 25-30mn, with rising Multiple Multipleconfidence in the near term monthly sales ramp. We believe the Chairman’s Volatility Volatilityincreasing confidence, amid current macroeconomic weakness, reinforces Percentile 20th 40th 60th 80th 100th E Ink Holdings Inc (8069.TWO)our structural thesis, highlighted in our previous research, that: (1) the e- Asia Pacific Technology Peer Group Averagereader is still in the early stages of adoption; (2) e-reader is not seeing any * Returns = Return on Capital For a complete description of theimpact from tablet growth; and (3) E Ink remains the dominate display investment profile measures please refer to the disclosure section of this document.supplier in the e-reader space. We see upside risk to Street EPS consensus. Key data CurrentCatalyst Price (NT$) 62.50(1) Strong ramp of its near term monthly sales: as E Ink’s major customer 12 month price target (NT$) 82.00 Market cap (NT$ mn / US$ mn) 65,597.6 / 2,263.7Amazon could soon launch the next generation Kindle e-reader (potentially Foreign ownership (%) 31.9with touch) and 7” tablet for the holiday season, we expect the pull-indemand at E Ink could accelerate in the next few months, potentially 12/10 12/11E 12/12E 12/13E EPS (NT$) New 3.84 5.91 6.78 8.07setting record sales in September; (2) Further clarification on Amazon’s EPS revision (%) 0.0 2.8 4.8 3.2tablet strategy: many investors are still confused by Amazon’s tablet EPS growth (%) 375.2 54.1 14.6 19.0 EPS (dil) (NT$) New 3.84 5.91 6.78 8.07strategy, and are concerned Amazon may use the tablet to replace Kindle P/E (X) 16.3 10.6 9.2 7.7 P/B (X) 2.7 2.4 2.0 1.7as the major hardware platform for e-reading. However, the recent EV/EBITDA (X) 9.0 7.7 6.4 5.3segmentation example of Barnes & Noble’s Nook (e-reader) vs. Nook Color Dividend yield (%) 0.0 3.5 4.7 5.4 ROE (%) 18.2 24.3 23.5 23.8(7” tablet) may suggest that Amazon could leverage pricing, features, and CROCI (%) 11.5 18.2 17.7 18.7functionalities to meaningfully differentiate between the two, positioning EInk as a major beneficiary when Amazon expands its total business scope. Price performance chart 65 9,500Valuation 60 9,000We raise 2011-13E EPS by 3-5% on higher visibility in e-reader strength 55 8,500and LCD panel upside from Amazon. Our new 12-m TP NT$82 still on 1.5X 50 8,000NTM EV/GCI (prior NT$78 on CROCI estimate change), implies 13.5X P/E. 45 7,500Key risks 40 7,000 Aug-10 Nov-10 Mar-11 Jun-11Price pressure and customer concentration risks. E Ink Holdings Inc (L) Taiwan SE Weighted Index (R)INVESTMENT LIST MEMBERSHIPAsia Pacific Buy List Share price performance (%) 3 month 6 month 12 month Absolute 4.0 20.7 23.8 Rel. to Taiwan SE Weighted Index 20.5 36.3 30.7Coverage View: Neutral Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 8/23/2011 close.Robert Yen Goldman Sachs does and seeks to do business with companies+886(2)2730-4196 rob.yen@gs.com Goldman Sachs (Asia) L.L.C., Taipei BranchIris Wu covered in its research reports. As a result, investors should be+886(2)2730-4186 iris.wu@gs.com Goldman Sachs (Asia) L.L.C., Taipei Branch aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC see the end of the text. For other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non- US affiliates are not registered/qualified as research analysts with FINRA in the U.S.The Goldman Sachs Group, Inc. Global Investment Research
  2. 2. August 24, 2011 E Ink Holdings Inc (8069.TWO) E Ink Holdings Inc: Summary FinancialsProfit model (NT$ mn) 12/10 12/11E 12/12E 12/13E Balance sheet (NT$ mn) 12/10 12/11E 12/12E 12/13ETotal revenue 25,178.9 38,973.5 47,183.4 57,078.9 Cash & equivalents 5,767.0 2,515.0 3,191.5 6,146.2Cost of goods sold (17,000.1) (27,341.5) (33,400.8) (41,247.4) Accounts receivable 3,809.2 6,315.6 8,333.1 8,619.7SG&A (2,275.7) (3,137.7) (3,507.1) (3,613.9) Inventory 6,564.9 8,652.3 10,385.5 11,773.5R&D (1,570.9) (1,584.2) (1,611.2) (1,830.9) Other current assets 1,530.5 1,793.1 1,940.7 2,145.8Other operating profit/(expense) 0.0 0.0 0.0 0.0 Total current assets 17,671.7 19,276.1 23,850.7 28,685.2ESO expense -- -- -- -- Net PP&E 9,045.9 11,733.5 13,095.4 13,485.8EBITDA 6,726.1 9,423.5 11,308.6 12,864.2 Net intangibles 8,613.6 7,752.3 6,977.0 6,279.3Depreciation & amortization (2,393.8) (2,513.5) (2,644.3) (2,477.6) Total investments 3,889.4 4,135.5 4,135.5 4,135.5EBIT 4,332.3 6,910.0 8,664.4 10,386.6 Other long-term assets 1,541.4 3,272.4 5,244.6 7,191.5Interest income 16.1 26.0 25.5 39.4 Total assets 40,762.0 46,169.8 53,303.3 59,777.4Interest expense (295.1) (185.8) (239.5) (230.8)Income/(loss) from uncons. subs. (19.7) (12.2) 0.0 0.0 Accounts payable 5,056.2 5,336.9 7,216.5 7,981.7Others 809.0 229.7 0.0 0.0 Short-term debt 6,115.2 3,068.9 2,013.5 1,321.1Pretax profits 4,842.6 6,967.7 8,450.4 10,195.3 Other current liabilities 2,730.7 2,658.3 2,979.7 3,282.6Income tax (929.0) (678.1) (1,152.5) (1,501.6) Total current liabilities 13,902.1 11,064.1 12,209.8 12,585.3Minorities 114.4 91.4 17.8 14.3 Long-term debt 1,584.5 5,033.1 6,033.1 6,033.1Net income pre-preferred dividends 4,028.0 6,381.0 7,315.7 8,708.0 Other long-term liabilities 880.1 960.4 1,039.9 1,150.6Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 2,464.6 5,993.5 7,073.0 7,183.7Net income (pre-exceptionals) 4,028.0 6,381.0 7,315.7 8,708.0 Total liabilities 16,366.7 17,057.6 19,282.8 19,769.1Post-tax exceptionals 0.0 0.0 0.0 0.0Net income 4,028.0 6,381.0 7,315.7 8,708.0 Preferred shares 0.0 0.0 0.0 0.0 Total common equity 23,863.6 28,629.9 33,555.9 39,558.0EPS (basic, pre-except) (NT$) 3.84 5.91 6.78 8.07 Minority interest 531.6 482.3 464.6 450.3EPS (basic, post-except) (NT$) 3.84 5.91 6.78 8.07EPS (diluted, post-except) (NT$) 3.84 5.91 6.78 8.07 Total liabilities & equity 40,762.0 46,169.8 53,303.3 59,777.4EPS excl. ESO expense (basic) (NT$) 4.16 6.44 7.42 8.82EPS excl. ESO expense (dil.) (NT$) 4.16 6.44 7.42 8.82 BVPS (NT$) 22.74 26.54 31.10 36.66DPS (NT$) 0.00 2.16 2.96 3.39Dividend payout ratio (%) 0.0 36.5 43.6 42.0Free cash flow yield (%) 6.4 0.8 8.6 13.7 Ratios 12/10 12/11E 12/12E 12/13EGrowth & margins (%) 12/10 12/11E 12/12E 12/13E CROCI (%) 11.5 18.2 17.7 18.7Sales growth 56.7 54.8 21.1 21.0 ROE (%) 18.2 24.3 23.5 23.8EBITDA growth 1,078.2 40.1 20.0 13.8 ROA (%) 10.6 14.7 14.7 15.4EBIT growth 406.1 59.5 25.4 19.9 ROACE (%) 15.3 21.1 20.3 22.1Net income growth 457.2 58.4 14.6 19.0 Inventory days 117.9 101.6 104.0 98.0EPS growth 375.2 54.1 14.6 19.0 Receivables days 46.7 47.4 56.7 54.2Gross margin 32.5 29.8 29.2 27.7 Payable days 80.2 69.4 68.6 67.2EBITDA margin 26.7 24.2 24.0 22.5 Net debt/equity (%) 7.9 19.2 14.3 3.0EBIT margin 17.2 17.7 18.4 18.2 Interest cover - EBIT (X) 15.5 43.2 40.5 54.3Cash flow statement (NT$ mn) 12/10 12/11E 12/12E 12/13E Valuation 12/10 12/11E 12/12E 12/13ENet income pre-preferred dividends 4,028.0 6,381.0 7,315.7 8,708.0D&A add-back 2,393.8 2,513.5 2,644.3 2,477.6 P/E (analyst) (X) 16.3 10.6 9.2 7.7Minorities interests add-back (114.4) (91.4) (17.8) (14.3) P/B (X) 2.7 2.4 2.0 1.7Net (inc)/dec working capital 65.6 (4,648.2) (1,697.0) (811.8) EV/EBITDA (X) 9.0 7.7 6.4 5.3Other operating cash flow (1,347.8) 986.4 800.7 952.0 EV/GCI (X) 1.2 1.2 1.1 1.0Cash flow from operations 5,025.2 5,141.3 9,045.9 11,311.5 Dividend yield (%) 0.0 3.5 4.7 5.4Capital expenditures (1,320.8) (4,595.4) (3,234.0) (2,095.8)Acquisitions (612.4) (1,900.2) (1,969.0) (2,021.4)Divestitures 477.0 0.0 0.0 0.0Others (99.4) 45.5 0.0 0.0Cash flow from investments (1,555.6) (6,450.1) (5,203.1) (4,117.1)Dividends paid (common & pref) 0.0 (2,328.2) (3,190.5) (3,657.9)Inc/(dec) in debt (1,848.1) 402.3 (55.4) (692.4)Common stock issuance (repurchase) (907.6) 122.3 0.0 0.0Other financing cash flows 2,234.1 (139.6) 79.5 110.7Cash flow from financing (521.6) (1,943.2) (3,166.4) (4,239.6) Note: Last actual year may include reported and estimated data.Total cash flow 2,947.9 (3,252.0) 676.5 2,954.8 Source: Company data, Goldman Sachs Research estimates. Analyst Contributors Robert Yen rob.yen@gs.com Iris Wu iris.wu@gs.com Goldman Sachs Global Investment Research 2
  3. 3. August 24, 2011 E Ink Holdings Inc (8069.TWO)Exhibits Exhibit 1: E-paper business should be the major earnings contributor for E Ink over near to mid term E Ink’s revenues breakdown by product E Inks sales breakdown by product 100% 1% 1% 0% Others 4% 0% 6% 90% 1% 17% 17% 22% Mobile phone panel 80% 17% 5% 4% 6% 70% 9% Consumer electronics panel 60% 50% FFS panel 40% 77% 78% 72% Niche panel 30% 63% 20% EPD 10% 0% 2010 2011E 2012E 2013E Source: Company data, Goldman Sachs Research estimates.Exhibit 2: We raise 2011-2013E EPS by 3-5% on higher visibility in e-reader strength and LCD panel upside fromAmazon.P&L (GAAP, NT$mn) 2011E New 2011E Old Diff. 2012E New 2012E Old Diff. 2013E New 2013E Old Diff.Revenues 38,973 37,845 3% 47,183 44,803 5% 57,079 53,266 7%Gross profits 11,632 11,396 2% 13,783 13,339 3% 15,832 15,386 3% Operating profits 6,910 6,709 3% 8,664 8,275 5% 10,387 10,071 3% Pretax earnings 6,968 6,768 3% 8,450 8,063 5% 10,195 9,884 3% Net earnings 6,381 6,206 3% 7,316 6,981 5% 8,708 8,441 3% EPS (fully diluted, NT$) 5.91 5.75 3% 6.78 6.47 5% 8.07 7.82 3%Ratio analysisGross margin (%) 29.8% 30.1% 29.2% 29.8% 27.7% 28.9%EBIT margin (%) 17.7% 17.7% 18.4% 18.5% 18.2% 18.9%Tax & minority (as % of EBT) 8.4% 8.3% 13.4% 13.4% 14.6% 14.6%Net margin (%) 16.4% 16.4% 15.5% 15.6% 15.3% 15.8%Return analysisROA (%, annualized) 14.7% 14.3% 14.7% 14.1% 15.4% 15.1%ROE (%, annualized) 24.3% 23.7% 23.5% 22.7% 23.8% 23.4%Key assumptions 2011E New 2011E Old Diff. 2012E New 2012E Old Diff. 2013E New 2013E Old Diff.EPD revenues (NT$mn) 27,935 27,598 1% 36,379 36,082 1% 44,720 43,478 3% EPD shipment (k units) 28,204 27,715 2% 45,761 44,669 2% 60,002 56,611 6% EPD ASP (US$) 32.7 32.9 -1% 26.7 27.2 -2% 25.2 25.9 -3%E Inks EPD global market share 93% 95% 86% 89% 74% 75%FFS panel revenues ( NT$mn) 8,448 7,621 11% 8,172 6,042 35% 9,616 7,001 37%Total revenues (NT$mn) 38,973 37,845 3% 47,183 44,803 5% 57,079 53,266 7%EPS (fully diluted, NT$) 5.91 5.75 3% 6.78 6.47 5% 8.07 7.82 3%Source: Company data, Goldman Sachs Research estimates.Goldman Sachs Global Investment Research 3
  4. 4. August 24, 2011 E Ink Holdings Inc (8069.TWO)Exhibit 3: We believe E Ink appears attractive in terms of Exhibit 4: E Ink’s upward trending ROE over the next oneits CROCI-generating ability over the next two years to two years implies share price upside potentialEV/GCI (X) E Ink (8069.TWO) EV/GCI vs. CROCI CROCI P/B (X) E Ink (8069.TWO) P/B vs. ROE EV/GCI (L) Avg. EV/GCI (L) CROCI (R) Avg. CROCI (R) 7.0 Fwd P/B (L) Avg P/B (L) ROE (R) Avg ROE (R) 30%2.5 20% 18% 25% 6.02.0 16% 20% 5.0 14% 15% Avg: 12% 1.5 12% 4.0 Avg: 8% 10% Current: 1.2X 10% 3.0 5% 1.0 8% Avg: 0.9X Avg: 2.0X Current: 2.1X 0% 6% 2.0 -5%0.5 4% 1.0 -10% 2%0.0 0% 0.0 -15% Mar-04 Dec-04 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11 Mar-04 Dec-04 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11Source: Company data, Datastream, Goldman Sachs Research estimates. Source: Company data, Datastream, Goldman Sachs Research estimates.Exhibit 5: E Ink’s quarterly profit model (consolidated, NT$mn)Summary P&L (GAAP) 1Q2011 2Q2011 3Q2011E 4Q2011E 1Q2012E 2Q2012E 3Q2012E 4Q2012E 2010 2011E 2012E 2013ENet sales 10,086 6,926 10,494 11,468 9,845 9,131 12,925 15,282 25,179 38,973 47,183 57,079 Cost of good sold (COGS) (7,173) (4,673) (7,418) (8,077) (6,954) (6,443) (9,204) (10,800) (17,000) (27,342) (33,401) (41,247)Gross profits 2,913 2,253 3,075 3,391 2,891 2,688 3,722 4,482 8,179 11,632 13,783 15,832 Operating expenses (1,058) (1,138) (1,279) (1,247) (1,142) (1,102) (1,471) (1,403) (3,847) (4,722) (5,118) (5,445) SG&A (660) (759) (872) (847) (794) (757) (1,020) (937) (2,276) (3,138) (3,507) (3,614) R&D (398) (379) (407) (400) (348) (345) (452) (466) (1,571) (1,584) (1,611) (1,831)Operating profits 1,855 1,115 1,796 2,144 1,748 1,586 2,250 3,079 4,332 6,910 8,664 10,387Non-operating income/(loss) 12 132 (38) (49) (53) (52) (54) (55) 510 58 (214) (191)Earnings before tax (EBT) 1,867 1,247 1,758 2,095 1,695 1,534 2,196 3,024 4,843 6,968 8,450 10,195 Income tax credit/(expense) (200) 8 (216) (270) (223) (206) (301) (422) (929) (678) (1,152) (1,502) Extraordinary gain/(loss) - - - - - - - - - - - - Minority Interests 9 70 6 6 4 4 5 5 114 91 18 14Earnings after tax (EAT) 1,677 1,325 1,548 1,830 1,476 1,332 1,900 2,607 4,028 6,381 7,316 8,708EPS (NT$) 1.55 1.23 1.44 1.70 1.37 1.23 1.76 2.42 3.84 5.91 6.78 8.07EPS (NT$, fully diluted) 1.55 1.23 1.44 1.70 1.37 1.23 1.76 2.42 3.84 5.91 6.78 8.07Ratio analysis and assumptionsAs % of sales Gross margin 28.9% 32.5% 29.3% 29.6% 29.4% 29.4% 28.8% 29.3% 32.5% 29.8% 29.2% 27.7% Operating expense ratio -10.5% -16.4% -12.2% -10.9% -11.6% -12.1% -11.4% -9.2% -15.3% -12.1% -10.8% -9.5% Operating margin 18.4% 16.1% 17.1% 18.7% 17.8% 17.4% 17.4% 20.2% 17.2% 17.7% 18.4% 18.2% Pre-tax margin 18.5% 18.0% 16.8% 18.3% 17.2% 16.8% 17.0% 19.8% 19.2% 17.9% 17.9% 17.9% Tax rate (as % of EBT) 10.7% -0.6% 12.3% 12.9% 13.2% 13.4% 13.7% 14.0% 19.2% 9.7% 13.6% 14.7% Net margin 16.6% 19.1% 14.8% 16.0% 15.0% 14.6% 14.7% 17.1% 16.0% 16.4% 15.5% 15.3%QoQ growth (%) Sales 3.7% -31.3% 51.5% 9.3% -14.2% -7.2% 41.5% 18.2% Gross profits -4.1% -22.6% 36.5% 10.3% -14.8% -7.0% 38.4% 20.4% Operating profits 0.9% -39.9% 61.1% 19.3% -18.4% -9.3% 41.9% 36.9% Non-operating profits -67.5% 969.4% NM NM NM NM NM NM Pre-tax profits -0.5% -33.2% 41.0% 19.2% -19.1% -9.5% 43.1% 37.7% Net profits -12.4% -21.0% 16.9% 18.2% -19.3% -9.8% 42.7% 37.2% EPS (weighted averaged) -14.8% -21.0% 16.9% 18.2% -19.3% -9.8% 42.7% 37.2%Yoy growth (%) Sales 101.2% 34.0% 99.0% 17.9% -2.4% 31.8% 23.2% 33.3% 56.7% 54.8% 21.1% 21.0% Gross profits 95.8% 12.4% 86.6% 11.6% -0.8% 19.3% 21.0% 32.2% 1472.9% 42.2% 18.5% 14.9% Operating profits 188.0% 6.6% 123.5% 16.6% -5.7% 42.3% 25.3% 43.7% NM 59.5% 25.4% 19.9% Non-operating profits -96.0% NM NM NM NM NM NM NM NM -88.7% NM NM Pre-tax profits 95.8% 22.2% 77.2% 11.7% -9.2% 23.0% 24.9% 44.3% NM 43.9% 21.3% 20.6% Net profits 138.4% 89.3% 118.4% -4.4% -12.0% 0.5% 22.7% 42.4% NM 58.4% 14.6% 19.0% EPS (weighted averaged) 131.9% 84.1% 112.5% -7.0% -12.0% 0.5% 22.7% 42.4% NM 54.1% 14.6% 19.0%Dividend policies Cash dividends (NT$ per share) - 2.16 2.96 3.39 Payout ratio (%) - 57.8% 50.0% 50.0%Source: Company data, Goldman Sachs Research estimates.Goldman Sachs Global Investment Research 4
  5. 5. August 24, 2011 E Ink Holdings Inc (8069.TWO)Reg ACI, Robert Yen, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company orcompanies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specificrecommendations or views expressed in this report.Investment ProfileThe Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group andmarket. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on compositesof several methodologies to determine the stocks percentile ranking within the regions coverage universe.The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:Growth is a composite of next years estimate over current years estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregateof various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividendyield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends.QuantumQuantum is Goldman Sachs proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used forin-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.GS SUSTAINGS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus listincludes leaders our analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage andsuperior returns on capital relative to their global industry peers. Leaders are identified based on quantifiable analysis of three aspects of corporateperformance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies management of theenvironmental, social and governance issues facing their industry).Disclosure AppendixCoverage group(s) of stocks by primary analyst(s)Robert Yen: Asia Pacific Technology.Asia Pacific Technology: AAC Technologies, Acer, Advanced Semiconductor, Advanced Semiconductor (ADR), ASUSTeK Computer, AU Optronics,BYD Electronic, Catcher Technology, Cheng Uei Precision (Foxlink), Chimei Innolux, China Wireless Technologies, Chipbond Technology Corp.,Compal Communications, Compal Electronics, Coretronic, Delta Electronics, E Ink Holdings Inc, Epistar, Everlight Electronics, Foxconn Intl Holdings,Foxconn Technology, Hon Hai Precision, HTC Corp., Kinsus Interconnect Technology, Largan Precision, Lenovo Group, Lite-On Technology, Nan YaPCB, Novatek Microelectronics, Pegatron, Powertech Technology, Quanta Computer, Radiant Opto-Electronics, Siliconware Precision, SiliconwarePrecision (ADR), Silitech Technology, SK C&C, TCL Communication, TPK Holding, TPV Technology, Tripod Technology, Unimicron, Wintek, Wistron,Young Fast Optoelectronics.Company-specific regulatory disclosuresThe following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companiescovered by the Global Investment Research Division of Goldman Sachs and referred to in this research.Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: E Ink Holdings Inc(NT$62.50)Distribution of ratings/investment banking relationshipsGoldman Sachs Investment Research global coverage universe Rating Distribution Investment Banking Relationships Buy Hold Sell Buy Hold Sell Global 32% 54% 14% 52% 41% 37%As of July 1, 2011, Goldman Sachs Global Investment Research had investment ratings on 3,167 equity securities. Goldman Sachs assigns stocks asBuys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell forthe purposes of the above disclosure required by NASD/NYSE rules. See Ratings, Coverage groups and views and related definitions below.Goldman Sachs Global Investment Research 5
  6. 6. August 24, 2011 E Ink Holdings Inc (8069.TWO)Price target and rating history chart(s) E Ink Holdings Inc (8069.TWO) Stock Price Currency : Taiw an Dollar Goldman Sachs rating and stock price target history 100 10,000 80 80 50 68 80 47 9,000 42 43 8,000 60 7,000 40 78 82 100 6,000 20 5,000 0 4,000 Apr 15 Sep 13 Stock Price Index Price S B A S O N D J F MA MJ J A S O N D J F MA M J J A S O N D J F MA M J 2008 2009 2010 2011 Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 6/30/2011. Rating Covered by Robert Yen, Price target as of Apr 15, 2010 Price target at removal Not covered by current analyst Taiw an SE Weighted Index The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.Regulatory disclosuresDisclosures required by United States laws and regulationsSee company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manageror co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes amarket in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities.The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts,professionals reporting to analysts and members of their households from owning securities of any company in the analysts area of coverage.Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues.Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households fromserving as an officer, director, advisory board member or employee of any company in the analysts area of coverage. Non-U.S. Analysts: Non-U.S.analysts may not be associated persons of Goldman Sachs & Co. and therefore may not be subject to NASD Rule 2711/NYSE Rules 472 restrictionson communications with subject company, public appearances and trading securities held by the analysts.Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targetsin prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachswebsite at http://www.gs.com/research/hedge.html.Additional disclosures required under the laws and regulations of jurisdictions other than the UnitedStatesThe following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States lawsand regulations. 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  7. 7. August 24, 2011 E Ink Holdings Inc (8069.TWO)coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists representinvestment recommendations focused on either the size of the potential return or the likelihood of the realization of the return.Return potential represents the price differential between the current share price and the price target expected during the time horizon associatedwith the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated ineach report adding or reiterating an Investment List membership.Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group athttp://www.gs.com/research/hedge.html. 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