- The document recommends a long position in Nissan and short position in Renault (RNO), expecting a 13% upside. - Renault owns 44.7% of Nissan, worth around €16.5 billion or 64.75% of Renault's market cap. - The author believes Renault's core business valuation is not too expensive based on historical levels, and the French state may sell 5% of its Renault stake this summer, reducing its holding. - The trade expects Renault's remaining business ("rump") value to fall to €4 billion, a 13% upside on the proposed long/short position.

1. Renault rump:
Time to Chinese (+ 7201 JP / - RNO FP)
13% upside
April 2016
Mathias Lascar mlascar@makorsecurities.com
+ 44 207 290 57 77

2. Trade: Long Nissan / Short RNO. 13% upside
• Renault owns 44,7% of Nissan since 1998
• Renault s stake in Nissan is worth 16,5bnE at market value (or 64,75% of
Renault market cap)
• Our views
• Renault core business is not quite expensive vs historical levels
• A placement by the French State, which was “promised” for Spring 2016 in late 2015
is still due to take place. A 5% placement could happen by the Summer of 2016 we
think.
• Upside:
• We estimate Rump could return to around 4bnE (vs 7,6bnE at present), which
represents a 13% upside on the trade

3. Evolution of the Renault rump – 1 year
• RNO RUMP = RNO market cap - stake in Nissan (in EUR) – stake
in Daimler (in EUR) – RNO treasury shares

4. Evolution of the Renault rump – 5 years

5. Valuation wise, RNO core business not cheap
RENAULT
Price 86,59
Shares 295,722
Market Cap 25 607
NAV 28 499
NAV / SHARE 96,37
Upside on Renault = 11%
-0,101502833
Listed Asset Price Shares O/S Ownership Shares owned Dividend per share in EURTotal Gross dividend perceived Hedge Value % of Total
Nissan Motor 8,24 4 495 44,7% 2007 0,34 684 678,677% 16 546 58%
Nissan Diesel
Daimler 63,23 1 070 1,6% 16,58 3,3 54 1 049 4%
Avtovaz 0,00 0 25,0% 0,00 0 0 0%
Volvo A sold 12/12/12 505 20,0% 138,60 0,33 45 0 0%
Volvo B sold 8/10/10
Renault 86,59 295,7 3,0% 8,900 771 3%
Sub Total 18 365 64%
Core Business ShareHolder Equity15 Imply sales x e Price / Book value Multiple Value % of Total
Renault Automobile * 23127 0,17 0,28 6 575 23%
Renault Finance 3 136 1 3 136 11%
Subtotal 9 711 34%
Pension profivions (31/12/14) -1 681 -6%
- Renault Automobile Net Debt Dec 2014 2 104 7%
Sub Total 423 1%
Total NAV = 28 499 100%
• RNO core business trades at 4,5x EBIT (in line with BMW and
Daimler !!)

6. French State could sell 5% soon
• Despite promises to revert to 15% shareholding, the French
government continues to hold 19.7% of Renault shares (though
maintains that it will reduce the stake in spring 2016).
• => placement could happen soon in my view, I think we're back
to levels where French government loses nothing nor wins
nothing (bot a bit higher but received a DVD of 1.90E)

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