Vestas Wind Systems (VWS DC)

Company report Nat Resources & Energy Equity Denmark Vestas Wind Systems (VWS DC) Overweight (V) Target price (DKK) 345. Share price (DKK) 28. Potential return (%) 23.2 Note: Potential return equals the percentage difference between the current share price and the target price Dec 213 a 214 e 215 e HSBC EPS.13 1.52 2.13 HSBC PE 282.9 24.7 17.6 Performance 1M 3M 12M Absolute (%) 17.7 38.1 54. Relative^ (%) 1.2 28.1 25.3 Note: (V) = volatile (please see disclosure appendix) Sean McLoughlin* Analyst HSBC Bank plc +44 2 7991 3464 sean.mcloughlin@hsbcib.com Christian Rath* Analyst HSBC Trinkaus and Burkhardt AG +49 211 91 349 christian.rath@hsbc.de View HSBC Global Research at: http://www.research.hsbc.com *Employed by a non-us affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: HSBC Bank plc Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it OW(V): Earnings momentum driving upside We expect strong Q4 earnings on 11 February and see a number of upside drivers for 215 With low FX risk and 4% EPS growth forecast for 215e we believe Vestas is a key stock to hold in a buoyant market Trading on a cash adjusted forward P/E of 14.5x we remain OW(V) with a new price target of DKK345 (was DKK285) Seasonal strength in Q4 and constructive outlook expected. Vestas report Q4 results on 11 February. We look for EUR2.46bn sales (+4% y-o-y) and EUR254m EBIT (+6% y-o-y), driving a Q4 EBIT margin of 1.3% and 214 underlying EBIT margin of 8.1%, slightly above the top end of the guidance 7-8% margin range for 214. Management may prefer to guide for 215 on minimum sales and EBIT metrics, which proved a successful strategy last year, but we would expect positive market commentary to drive sentiment. We expect the US to drive performance in 215 and present our takeaways from a recent visit to Vestas China HQ. We see China as a longer-term growth driver for Vestas. FX risks quashed. We have noted concerns in recent investor meetings around potential FX risks for Vestas if the Danish krone is devalued. On 5 February, Nationalbank, the Danish central bank, lowered interest rates to -.75% in its fourth rate cut since mid- January as it pledged to defend the krone s peg to the Euro. We expect this action to reassure investors that FX risk for Vestas remains low. Amid rising FX volatility, Vestas regional manufacturing model minimises FX exposure and overall we expect Vestas to benefit from a weak Euro, particularly as it increases US sales in 215. A key holding for 215? With 4% EPS growth forecast for 215e, Vestas has the highest forecast earnings growth rate among HSBC s large cap European capital goods coverage. With strong cyclical momentum and structural momentum, we note that Vestas has outperformed the market during the past two major market upcycles (see page 3). Valuation has risen to 17.6x forward P/E but, adjusted for the EUR2bn cash pile at 214e, however, this falls to a less demanding 14x. Vestas now has a number of options to grow acquisitively or reward shareholders (e.g. via a dividend). Valuation and changes to estimates. We raise our 214e EPS estimates by 9% to reflect strong Q4 execution and leave 215/16e estimates broadly unchanged. We have lowered our WACC assumption by 9bp to reflect the lower sector MACC, which drives a 21% increase in our DCF based price target to DKK345. We remain OW(V) on Vestas. Index^ KFX Index level 8 RIC VWS.CO Bloomberg VWS DC Source: HSBC Enterprise value (EURm) 6967 Free float (%) 1 Market cap (USDm) 9,634 Market cap (DKKm) 62,741 Source: HSBC

Financials & valuation Financial statements Year to 12/213a 12/214e 12/215e 12/216e Profit & loss summary (EURm) Revenue 6,84 6,9 7,613 7,321 EBITDA 497 954 1,21 955 Depreciation & amortisation -395-364 -34-324 Operating profit/ebit 12 59 682 63 Net interest -138-91 -23-1 PBT -36 52 662 624 HSBC PBT 73 473 662 624 Taxation -46-133 -185-175 Net profit -82 37 477 449 HSBC net profit 27 341 477 449 Cash flow summary (EURm) Cash flow from operations 1,145 1,73 376 766 Capex -262-25 -275-329 Cash flow from investment -262-25 -275-329 Dividends -85-85 -119 Change in net debt -986-1,344-16 -318 FCF equity 88 728 74 432 Balance sheet summary (EURm) Intangible fixed assets 741 673 623 68 Tangible fixed assets 1,221 1,175 1,16 1,181 Current assets 3,156 5,42 5,497 5,667 Cash & others 694 2,34 2,49 2,367 Total assets 5,38 7,8 7,47 7,646 Operating liabilities 2,877 3,832 3,84 3,65 Gross debt 61 66 66 66 Net debt -84-1,428-1,443-1,761 Shareholders funds 1,524 2,254 2,642 2,968 Invested capital 1,649 1,127 1,529 1,541 Ratio, growth and per share analysis Year to 12/213a 12/214e 12/215e 12/216e Y-o-y % change Revenue -15.7 13.4 1.3-3.8 EBITDA 91.9 7.1-6.5 Operating profit 478.8 15.5-7.6 PBT 31.8-5.9 HSBC EPS 146.9 4. -5.9 Ratios (%) Revenue/IC (x) 2.8 5. 5.7 4.8 ROIC 1.8 31.3 37. 29.6 ROE 1.7 18. 19.5 16. ROA 4. 7.1 7.1 6.4 EBITDA margin 8.2 13.8 13.4 13. Operating profit margin 1.7 8.6 9. 8.6 EBITDA/net interest (x) 3.6 1.5 45. 93.6 Net debt/equity -5.5-63.3-54.6-59.3 Net debt/ebitda (x) -.2-1.5-1.4-1.8 CF from operations/net debt Per share data (EUR) EPS reported (fully diluted) -.4 1.65 2.13 2.1 HSBC EPS (fully diluted).13 1.52 2.13 2.1 DPS..38.54.5 Book value 7.48 1.13 11.88 13.34 Key forecast drivers Year to 12/213a 12/214e 12/215e 12/216e Turbine sales (MW) 4,862 5,834 6,71 6,37 Turbine sales (EURm) 5,82 5,854 6,463 6,76 MW under service at YE 46,614 48,695 53,263 57,289 Service sales (EURm) 954 998 1,12 1,197 Valuation data Year to 12/213a 12/214e 12/215e 12/216e EV/sales 1.4 1..9.9 EV/EBITDA 16.7 7.3 6.8 6.9 EV/IC 5. 6.2 4.5 4.3 PE* 282.9 24.7 17.6 18.7 P/Book value 5. 3.7 3.2 2.8 FCF yield (%) 1.5 8.7.9 5.1 Dividend yield (%). 1. 1.4 1.3 Note: * = Based on HSBC EPS (fully diluted) Price relative 35 35 3 3 25 25 2 2 15 15 1 1 5 5 213 214 215 216 Vestas Wind Systems Rel to KFX Source: HSBC Note: price at close of 5 Feb 215 2

Strong momentum We believe Vestas will cement its #1 status as global wind turbine supplier in 215 A recent field trip to China highlighted the promising growth opportunity for Vestas, which we do not believe is yet appreciated by the market With low FX risk and 4% EPS growth expected in 215e, we believe Vestas is a key stock to hold in a buoyant market We expect outperformance to continue The recent strong share price performance of Vestas has been driven by ongoing positive earnings revisions ahead of Q4 results (see charts page) as well as by a supportive equity market. The ten-fold plus rise in the share price from DKK24.7 on 15 November 212 to current levels above DKK275 reflects a return to robust earnings growth driven by self-help measures under a successful new management team and by strong end-market dynamics in the wind sector. The latest leg of this growth has occurred during a period of equity market buoyancy, spurred by cheap oil and lower cost of equity. Looking at Vestas share price performance since 1998, it is a growth stock that has outperformed during the past two market upcycles (1999-2 and 27-28) and could stand to benefit from further equity market growth. But we argue that earnings momentum is currently Vestas share price over the past two market upcycles Share price (DKK) Fwd P/E ratio (RHS) 7 8 6 5 4 3 2 1 7 6 5 4 3 2 1 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Thomson Reuters DataStream, HSBC estimates 3

cyclically stronger now compared to previous upturns. Vestas currently trades on a forward consensus P/E ratio of 18.5x, far lower than in 1999 or in 27. Vestas also has a stronger balance sheet in comparison; if we consider the cash adjusted P/E, the forward ratio is nearer 14x. We believe the stock is well placed both cyclically and structurally to see higher earnings growth. Cash-adjusted consensus P/E ratio benefits from Vestas' large cash pile Fwd P/E ratio (RHS) Cash adjusted PE 4 3 2 1 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Source: Thomson Reuters DataStream US the growth engine in 215 We expect the US wind market (global #2 market behind China) to support robust sales and margin growth for Vestas in 215. We forecast 1.6GW of deliveries in 215, +33% from 1.2GW in 214e and equating to a 17% market share (vs Vestas global market share of 13% in 213). In December 214, the US Congress passed a one-year extension to the Production Tax Credit (PTC), the subsidy driving wind demand in the US. Though this PTC extension expired almost immediately at YE214 it has shifted market risk to beyond 216. Details on construction deadlines relating to the 214 PTC extension await clarification by the Internal Revenue Service (IRS). We assume the structure is much like the previous (213) PTC edition, i.e. wind farms have a two-year window beyond the PTC expiry date to be completed. Vestas signed ~2GW of conditional turbine orders in late Q4 214 as utilities specified the turbine supplier in order to move projects to construction ready status under PTC qualification rules. We would expect conditional orders to turn into firm orders once the IRS has provided clarity (this happened in August 214 for the previous edition), which means order flow through to early 216. 4

Consensus 215 EBIT margin expectations rising Suzlon Gamesa Nordex Vestas 1% 8% 6% 4% 2% Vestas gross margin and margin trend 7 6 5 EURm 4 3 2 1 2% 15% 1% 5% % % Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Source: Thomson Reuters DataStream Gross profit Source: company data, HSBC estimates Gross margin (rolling 12m avg, RHS) Manufacturing revenues and margin trend Vestas service revenue and margin trend EURm 2,5 2, 1,5 1, 5 8% 6% 4% 2% % -2% -4% -6% -8% EURm 35 3 25 2 15 1 5-2% 15% 1% 5% % Manufacturing revenue 12-month rolling EBIT margin (RHS) Service revenue 12-month rolling EBIT margin (RHS) Source: company data, HSBC estimates Source: company data, HSBC estimates Vestas order trends Vestas free cash flow (EURm) 3,5 3, 2,5 2, 1,5 1, 5 - Turbine orders (MW) Firm order book (MW - RHS) 12, 1, 8, 6, 4, 2, - 8 6 4 2 (2) (4) (6) FCF (EURm) 12m rolling avg Source: company data, HSBC estimates Source: company data, HSBC estimates 5

China a longer-term growth driver: field trip takeaways We recently visited Vestas AsiaPac office located in Beijing, China, and toured the company s integrated manufacturing facility in Tianjin. We present our key takeaways here. In the 23 October 214 note, Upgrade to OW(V): A buying opportunity, we highlighted the significant growth opportunity for Vestas, along with other non-china OEMs in China. China is a ~2GW annual market for new wind turbines in 216-22e (the global #1 market, representing 3-4+% of global installation volumes), but has increasingly become a closed shop for turbine suppliers, with the share of non-china OEMs falling to 6% in 213. However, thanks to an increasing focus on quality in the Chinese market, we estimate a doubling of Vestas addressable market opportunity in China, which equates to 1GW annual order potential. Vestas faces stiff opposition from leading Chinese turbine suppliers but we are encouraged by the change in strategy to address growth in the Chinese market. After trying unsuccessfully to compete on price with Chinese OEMs over the past few years, Vestas is introducing its latest 2MW turbines (V1 and V11) to the Chinese market and is expanding its blade production facilities in Tianjin to manufacture the longer blades. Up to 8 staff could be hired in Tianjin in 215, depending upon end-market demand in Asia Pacific. Vestas has not disclosed sales targets for China but expects to grow deliveries year-on-year in 214 and 215. We see considerable room for growth in 216 and beyond. Vestas China deliveries MW 9 8 7 6 5 4 3 2 1 Source: company data, HSBC estimates We see five key drivers behind changing customer attitudes towards quality in China: Market shift towards larger (2MW+) turbines, away from the government defined 1.5MW standard adopted previously. Vestas believes a simplistic attitude to turbines meant standardized textbook approach to sourcing without considering maximizing the production from each site. A September 214 document released by China s National Energy Administration (NEA) calls for the establishment of a quality assessment system to regulate the type-certification of turbines and turbine components. This indicates a growing focus on quality throughout the supply chain, which should lead to better sourcing and rationalization among the ~4 existing Chinese suppliers. 6

Technology shift towards low/medium wind speed sites, with a shift to Class III (low wind) from Class I (high wind) sites favouring a versatile product range. Vestas new 2MW turbines are suited to low and medium wind speeds. Shift in customer dynamics. 8% of China demand is from State Owned Enterprises (SOEs) and the government is moving to diversify this. Vestas expects to see a less centralized and more provincial approach to installations, with more private developers, public/private partnerships and international investors developing wind farms in China. Legacy repair costs. Low quality turbines installed are proving to be costly for Chinese utilities that are faced with rising repair bills for unexpected faults after only 2-3 years of operation and a lack of longterm turbine service agreements. Vestas expects utilities to change focus on higher quality in future wind farm investments as previously the investment decision was based on capex alone without much consideration for lifetime cost of energy. China EPCs going abroad. Engineering, Procurement and Construction (EPC) contractors in China are expanding into international markets. Vestas believes that once EPC providers learn how to price up competitively in other markets they will increasingly look at lifetime cost considerations focusing on long-term reliability and, thus, favouring higher quality, service oriented suppliers. Q4 preview Vestas report Q4 results on Wednesday 11 February. We look for EUR2.46bn sales (+4% y-o-y) and EUR254m EBIT (+6% y-o-y). This gives a Q4 EBIT margin of 1.3% and 214 underlying EBIT margin of 8.1%, slightly above the top end of the 7-8% margin guidance range for 214. Our 4Q net profit forecast of EUR172m is +19% y-o-y. Q4 214 HSBC estimates (EURm) Q4 213a Q4 214 HSBCe Q4 214 cons y-o-y HSBCe y-o-y Cons HSBC vs. cons Revenues 2,361 2,463 2,431 4% 3% 1% EBIT 24 254 247 6% 3% 3% EBIT margin 1.2% 1.3% 1.2% 1 1 Net profit 144 172 181 19% 25% -5% EPS.71.77.81 9% 14% -5% Source: HSBC estimates, Company consensus, Bloomberg, Inquiry financials. Changes to estimates 214e 215e 216e New Old Cons % HSBC New Old Cons % HSBC New Old Cons % HSBC change vs cons change vs cons change vs cons Revenue 6,9 6,9 6,821 % 1% 7,613 7,613 7,363 % 3% 7,321 7,321 7,7 % 4% EBITDA 954 917 924 4% 3% 1,21 1,2 989 % 3% 955 953 94 % 2% Margin (%) 13.8% 13.3% 13.5% 13.4% 13.4% 13.4% 13.% 13.% 13.4% EBIT 59 553 572 7% 3% 682 68 645 % 6% 63 629 611 % 3% Margin (%) 8.6% 8.% 8.4% 9.% 8.9% 8.8% 8.6% 8.6% 8.7% Net Income 37 343 334 8% 11% 477 47 457 1% 4% 449 447 424 % 6% EPS 1.52 1.4 1.54 9% -1% 2.13 2.11 2.3 1% 5% 2.1 2. 1.97 % 2% Source: HSBC estimates, Bloomberg 7

Valuation We continue to use a DCF-based valuation, which we believe reflects the long-term value potential of Vestas. We use explicit forecasts to 216 followed by a normalisation period of five years based on a fixed (unchanged) 4% CAGR assumption. We have lowered our WACC assumption to reflect the lower European capital goods sector MACC (Market-Assessed Cost of Capital). Based on our new assumptions (beta of 1., cost of equity of 9.% and cost of debt of 4.5%), our WACC decreases by 9bps to 8.%. The lower discounting factor increases our overall equity value by 22% to EUR1.3bn (vs.eur8.4bn previously). Our equity is roughly one-third from the explicit forecast period and two-thirds from the terminal DCF value, indicating the long-term value potential of Vestas. We derive an equity value per share of DKK345.8, which we round down to DKK345, our new target price (+21% vs our previous DKK285 target price). Under our research model, for stocks with a volatility indicator, the Neutral band is 1ppts above and below the hurdle rate for Danish stocks of 9%. Our target price implies a potential return of 23.2%, which is above the Neutral band; thus, we reiterate our Overweight (V) rating on the stock. Potential return equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated. Risks Downside risks include: (1) higher-than-expected pricing pressure; (2) lack of new orders, negatively affecting profitability as a result of lower operational gearing; (3) technology risk, particularly on new turbines; (4) unsupportive policy announcements; and (5) long-term competitive threat to wind from low natural gas prices. Vestas DCF cost of capital assumptions New Old Risk-free rate 3.5% 3.5% Beta 1. 1.2 EMRP 5.5% 5.5% Cost of equity 9.% 1.1% EURIBOR.5% 3.5% Debt margin 4.% 2.5% Cost of debt 4.5% 6.% Tax rate 28% 28.% Net cost of debt 3.2% 4.3% Debt/equity 25.% 25.% WACC 8.% 8.9% Terminal growth rate assumption 3.% 3.% Source: HSBC estimates 8

Vestas DCF valuation EURm 214e 215e 216e 217e 218e 219e 22e 221e TVe Sales 6,9 7,613 7,321 7,6 7,888 8,185 8,493 8,812 9,141 YoY growth 13% 1% -4% 4% 4% 4% 4% 4% 4% - of which turbine sales 5,854 6,463 6,76 6,255 6,441 6,631 6,827 7,3 7,238 YoY growth 15% 1% -6% 3% 3% 3% 3% 3% 3% -of which service sales 998 112 1197 1296 1399 156 1618 1734 1855 YoY growth 5% 1% 9% 8% 8% 8% 7% 7% 7% Gross profit 124 1389 139 1382 1436 1488 153 1588 1654 Gross margin 18.% 18.2% 17.9% 18.2% 18.2% 18.2% 18.% 18.% 18.1% EBIT 59.4 681.8 63. 692.8 731.4 764.5 782.5 82. 872.4 EBIT margin 8.6% 9.% 8.6% 9.1% 9.3% 9.3% 9.2% 9.3% 9.5% Manufacturing margin 6.9% 7.8% 7.2% 7.8% 7.9% 7.9% 7.7% 7.7% 8.% Services margin 15.7% 15.7% 15.7% 15.7% 15.7% 15.7% 15.7% 15.7% 15.7% Tax rate 28% 28% 28% 28% 28% 28% 28% 28% 28% Tax -165.3-19.9-176.4-194. -24.8-214.1-219.1-229.6-244.3 NOPAT 425.1 49.9 453.6 498.8 526.6 55.4 563.4 59.4 628.1 Depreciation 17.9 164.5 162.4 165.3 18.8 195.4 221.5 23.4 25.7 Amortisation 192.7 175.1 162.1 158. 156.4 156.8 158.6 161.5 165.3 D&A 363.6 339.6 324.5 323.3 337.2 352.2 38.1 391.9 416. Provisions 31.4 29.4 3.8 8.3 1.8 12.3 13.3 14. 14.6 Change in net working capital 248. -464.7-8.1 14.8 15.7 15.8 17. 16.5 15.4 Tangible capex -125. -15. -183. -19. -197.2-24.6-23.8-211.5-214.8 Intangible capex -125. -125. -146.4-152. -157.8-163.7-169.9-176.2-182.8 Total capex as % of turbine sales -4.3% -4.3% -5.4% -5.5% -5.5% -5.6% -5.5% -5.5% -5.5% FCF after tax 818.1 12.2 444.4 53.2 535.3 562.4 6. 625. 676.5 RoE 19.6% 19.5% 16.% 15.3% 14.6% 13.8% 12.9% 12.4% 12.1% ROCE 17.7% 16.9% 14.3% 13.8% 13.3% 12.8% 12.% 11.7% 12.% Adjusted FCF 818.1 12.2 444.4 53.2 535.3 562.4 6. 625. 13,529.7 Period 1. 2. 3. 4. 5. 6. 7. 8. 9. Discount factor.9.9.8.7.7.6.6.5.5 PV of adjusted FCF 757.5 13.1 352.8 369.9 364.3 354.4 35.1 337.7 6,768.2 EURm DKKm Explicit forecast period 2,99 22,292 Terminal value 6,768 5,464 Enterprise value 9,758 72,756 EV of production (% of total) 7% 7% EV of services (% of total) 3% 3% Adjust for net debt 84 626 Adjust for Feb 214 equity raise 517 3,855 Equity value 1,359 77,237 EUR:DKK 7.46 No. of shares (m) 23.1 Share issue 2.3 Post-share issue 223.4 Implied equity value per share (DKK) 345.8 Rounded price (DKK) 345. Current share price (DKK) 28 % difference 23.2% Source: HSBC estimates 9

Disclosure appendix Analyst Certification The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Sean McLoughlin and Christian Rath Important disclosures Equities: Stock ratings and basis for financial analysis HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations. Given these differences, HSBC has two principal aims in its equity research: 1) to identify long-term investment opportunities based on particular themes or ideas that may affect the future earnings or cash flows of companies on a 12 month time horizon; and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative, technical or event-driven techniques on a -3 month time horizon and which may differ from our long-term investment rating. HSBC has assigned ratings for its long-term investment opportunities as described below. This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when HSBC publishes a short-term trading idea the stocks to which these relate are identified on the website at www.hsbcnet.com/research. Details of these short-term investment opportunities can be found under the Reports section of this website. HSBC believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's existing holdings and other considerations. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research report. In addition, because research reports contain more complete information concerning the analysts' views, investors should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not be used or relied on in isolation as investment advice. Rating definitions for long-term investment opportunities Stock ratings HSBC assigns ratings to its stocks in this sector on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stock s domestic or, as appropriate, regional market established by our strategy team. The price target for a stock represents the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the potential return, which equals the percentage difference between the current share price and the target price, including the forecast dividend yield when indicated, must exceed the required return by at least 5 percentage points over the next 12 months (or 1 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be expected to underperform its required return by at least 5 percentage points over the next 12 months (or 1 percentage points for a stock classified as Volatile*). Stocks between these bands are classified as Neutral. Our ratings are re-calibrated against these bands at the time of any 'material change' (initiation of coverage, change of volatility status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review, expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily triggering a rating change. 1

*A stock will be classified as volatile if its historical volatility has exceeded 4%, if the stock has been listed for less than 12 months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However, stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past month's average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility has to move 2.5 percentage points past the 4% benchmark in either direction for a stock's status to change. Rating distribution for long-term investment opportunities As of 6 February 215, the distribution of all ratings published is as follows: Overweight (Buy) 44% (3% of these provided with Investment Banking Services) Neutral (Hold) 38% (27% of these provided with Investment Banking Services) Underweight (Sell) 18% (2% of these provided with Investment Banking Services) Share price and rating changes for long-term investment opportunities Vestas Wind Systems (VWS.CO) Share Price performance DKK Vs HSBC rating history 624 524 424 324 224 124 24 Feb-1 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Source: HSBC Recommendation & price target history From To Date Underweight (V) Neutral (V) 31 October 212 Neutral (V) Overweight (V) 14 May 213 Overweight (V) Restricted 3 February 214 Restricted Overweight (V) 7 February 214 Overweight (V) Neutral (V) 1 July 214 Neutral (V) Overweight (V) 23 October 214 Target Price Value Date Price 1 45. 18 April 212 Price 2 4. 8 May 212 Price 3 25. 23 August 212 Price 4 35. 31 October 212 Price 5 42. 24 January 213 Price 6 1. 14 May 213 Price 7 13. 3 July 213 Price 8 17. 3 September 213 Price 9 19. 15 November 213 Price 1 215. 7 January 214 Price 11 Restricted 3 February 214 Price 12 215. 7 February 214 Price 13 275. 3 April 214 Price 14 24. 23 October 214 Price 15 285. 1 November 214 Source: HSBC 11

HSBC & Analyst disclosures Disclosure checklist Company Ticker Recent price Price Date Disclosure VESTAS WIND SYSTEMS VWS.CO 28. 6-Feb-215 1, 5, 6, 7 Source: HSBC 1 HSBC has managed or co-managed a public offering of securities for this company within the past 12 months. 2 HSBC expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. 3 At the time of publication of this report, HSBC Securities (USA) Inc. is a Market Maker in securities issued by this company. 4 As of 31 December 214 HSBC beneficially owned 1% or more of a class of common equity securities of this company. 5 As of 31 December 214, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of investment banking services. 6 As of 31 December 214, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-investment banking securities-related services. 7 As of 31 December 214, this company was a client of HSBC or had during the preceding 12 month period been a client of and/or paid compensation to HSBC in respect of non-securities services. 8 A covering analyst/s has received compensation from this company in the past 12 months. 9 A covering analyst/s or a member of his/her household has a financial interest in the securities of this company, as detailed below. 1 A covering analyst/s or a member of his/her household is an officer, director or supervisory board member of this company, as detailed below. 11 At the time of publication of this report, HSBC is a non-us Market Maker in securities issued by this company and/or in securities in respect of this company HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments (including derivatives) of companies covered in HSBC Research on a principal or agency basis. Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenues. Whether, or in what time frame, an update of this analysis will be published is not determined in advance. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. Additional disclosures 1 This report is dated as at. 2 All market data included in this report are dated as at close 5 February 215, unless otherwise indicated in the report. 3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. 12

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Global Natural Resources & Energy Research Team Metals and Mining EMEA Andrew Keen Global Sector Head, Metals and Mining +44 2 7991 6764 andrew.keen@hsbcib.com Thorsten Zimmermann, CFA +44 2 7991 6835 thorsten.zimmermann@hsbcib.com Ash Lazenby +44 2 7991 2351 ash.lazenby@hsbcib.com Emma Townshend +27 21 794 8345 emma.townshend@za.hsbc.com Derryn Maade +27 11 676 4519 derryn.maade@za.hsbc.com North America & Latin America James Steel +1 212 525 3117 james.steel@us.hsbc.com Patrick Chidley, CFA +1 212 525 4915 patrick.t.chidley@us.hsbc.com Botir Sharipov, CFA +1 212 525 515 botir.x.sharipov@us.hsbc.com Howard Wen +1 212 525 3726 howard.x.wen@us.hsbc.com Osmar Camilo +55 11 3847 952 osmar.c.camilo@hsbc.com.br Asia Simon Francis Regional Head of Metals and Mining, Asia Pacific +852 2996 662 simonfrancis@hsbc.com.hk Chris Chen +852 2822 4277 chrislchen@hsbc.com.hk Jeff Yuan +852 3941 71 jeffsyuan@hsbc.com.hk Brian Cho +822 376 875 briancho@kr.hsbc.com Jigar Mistry, CFA +91 22 2268 179 jigarmistry@hsbc.co.in Jena Han +822 376 8772 jenahan@kr.hsbc.com Kirtan Mehta, CFA +91 8 31 3779 kirtanmehta@hsbc.co.in Energy Europe Gordon Gray Global Sector Head, Oil and Gas +44 2 7991 6787 gordon.gray@hsbcib.com Peter Hitchens +44 2 7991 6822 peter.hitchens@hsbcib.com Christoffer Gundersen Analyst +44 2 7992 1728 christoffer.gundersen@hsbcib.com Phillip Lindsay +44 27 991 2577 phillip.lindsay@hsbcib.com CEEMEA Bülent Yurdagül +9 212 376 46 12 bulentyurdagul@hsbc.com.tr Ildar Khaziev, CFA +7 495 645 4549 ildar.khaziev@hsbc.com Latam Luiz F Carvalho +55 11 3371 8178 luiz.f.carvalho@hsbc.com.br Filipe M Gouveia +55 11 3847 5451 filipe.m.silva@hsbc.com.br Asia Thomas C. Hilboldt, CFA Regional Head of Oil, Gas and Petrochemical Research, Asia Pacific +852 2822 2922 thomaschilboldt@hsbc.com.hk Dennis Yoo, CFA +852 2996 6917 dennishcyoo@hsbc.com.hk Kumar Manish +91 22 2268 1238 kmanish@hsbc.co.in Alok P Deshpande +91 22 681245 alokpdeshpande@hsbc.co.in Tingting Si +852 2996 659 tingtingsi@hsbc.com.hk Hanyu Zhang +852 2996 6539 hanyu.zhang@hsbc.com.hk Chemicals Europe Dr Geoff Haire Global Sector Head, Chemicals +44 2 7991 6892 geoff.haire@hsbcib.com Sebastian Satz, CFA +44 2 7991 6894 sebastian.satz@hsbcib.com CEEMEA Yonah Weisz +972 3 71 1198 yonahweisz@hsbc.com Sriharsha Pappu, CFA +971 4 423 6924 sriharsha.pappu@hsbc.com Nicholas Paton, CFA +971 4 423 6923 nicholas.paton@hsbc.com Asia Dennis Yoo, CFA +852 2996 6917 dennishcyoo@hsbc.com.hk Utilities Europe Adam Dickens +44 2 7991 6798 adam.dickens@hsbcib.com Verity Mitchell +44 2 7991 684 verity.mitchell@hsbcib.com Pablo Cuadrado +34 91 456 62 4 pablo.cuadrado@hsbc.com Asia Jenny Cosgrove Regional Head of Utilities and Alternative Energy, Asia Pacific +852 2996 6619 jennycosgrove@hsbc.com.hk Neel Sinha Analyst +65 6658 66 neelsinha@hsbc.com.sg Arun Kumar Singh Analyst +91 22 2268 1778 arun4kumar@hsbc.co.in Gloria Ho +852 2996 6941 gloriapyho@hsbc.com.hk Summer Y Y Huang +852 2996 6976 summeryyhuang@hsbc.com.hk Yeon Lee +822 376 8778 yeonlee@kr.hsbc.com Latin America Francisco Navarrete +55 11 2169 4612 francisco.navarrete@hsbc.com.br Tatiane Shibata +55 11 2169 447 tatiane.shibata@hsbc.com.br CEEMEA Levent Bayar Analyst +9 212 376 46 17 leventbayar@hsbc.com.tr Dmytro Konovalov +7 495 258 3152 dmytro.konovalov@hsbc.com Alternative Energy Jenny Cosgrove Regional Head of Utilities and Alternative Energy, Asia Pacific +852 2996 6619 jennycosgrove@hsbc.com.hk Sean McLoughlin +44 2 7991 3464 sean.mcloughlin@hsbcib.com Charanjit Singh +91 8 31 3776 charanjit2singh@hsbc.co.in Gloria Ho +852 2996 6941 gloriapyho@hsbc.com.hk Christian Rath +49 211 91 349 christian.rath@hsbc.de Specialist Sales James Lesser +44 2 7991 1382 james.lesser@hsbcib.com Mark Van Lonkhuyzen +44 2 7991 1329 mark.van.lonkhuyzen@hsbcib.com Zara Nathan +44 2 7991 5761 zara.nathan@hsbc.com