SIM Stock Presentation: Information Technology20Sector_AU15.pdf · Chromecast, and Nexus devices; Google Play, Google Drive, and Google Wallet. In addition, the company provides Google

SIM Stock Presentation: Information Technology

Presenters: Krisztina Nadasdy, Yvonne Qi, Randy Oenardi Raharjo, David Robinson, Tony Cui

2

Sector & Portfolio Overview

Stock Discussion

Recommendation

Appendix

Stock Presentation: Information Technology

AGENDA

3


Sector & Portfolio Overview

4


Consumer Discretion

ary13%

Consumer Staples

10%

Energy7%

Financials16%

Health Care13%

Industrials10%

Info Tech21%

Materials3%

Telecom2%

Utilities2%

Cash3%

Dividend Receivables

0%

SIM PORTFOLIO WEIGHTS

Info Tech21%

Financials16%

Health Care15%

Consumer Discretion

ary13%

Industrials10%

Consumer Staples

10%

Energy7%

Utilities3%

Materials3%

Telecom2%

S&P 500 SECTOR WEIGHTS

5

Activision Blizzard, Inc.

Apple, Inc.

EMC Corp.

Google, Inc.

Micron Technology, Inc.

Vantiv, Inc.


Information Technology Stocks in SIM Portfolio:

6

IT Sector Breakdown: Semiconductors:

Micron

Software and Services:Apple, Activision, Google, Vantiv

Technology and Hardware:EMC, Apple


PORTFOLIO BREAKDOWN BY INDUSTRY

7


Company Market Value Price/Share Weight

Activision, Inc. $286,860.00 $34.15 3.14%

Apple, Inc. $272,951.76 $113.73 2.99%

EMC Corp. $359,916.04 $25.35 3.94%

Google, Inc. $365,118.60 $745.14 4.00%

Micron Technology, Inc.

$228,429.00 $14.93 2.50%

Vantiv, Inc. $589,164.00 $50.79 6.54%

IT STOCKS IN SIM PORTFOLIO: CURRENT STATE [11/16]

8


SECTOR RECOMMENDATIONS:

• Sector as whole: overweight relative to the S&P 500

• Preferred Industry within Info-Tech Sector: Software and Services

• Risks: Possible second “Internet Bubble”, Cyclical Industry – Short Life Cycle, Price Competition

9


STOCK RECOMMENDATIONS

Stock Decision CurrentWeight

Proposed Weight

Change

AAPL HOLD 2.99% 2.99% 0

EMC HOLD 3.94% 3.94% 0

ATVI BUY 3.14% 4.64% + 150 bp

VNTV SELL 6.54% 4.54% - 200 bp

GOOGL HOLD 4.00% 4.00% 0

MU HOLD 2.50% 2.50% 0

10


Stock Discussion

11


STOCK OVERVIEW: MICRON TECHNOLOGY, INC.

• One of the largest memory chip makers in the world.

• Makes DRAM, NAND Flash, and NOR Flash memory and other memory technologies.

Stock Ticker MU

Recommendation HOLD

Current SIM % 2.57%

Recommended SIM % 2.57%

Current Stock Price $14.89

Consensus Price Target $21.37

SIM Price Target $20.00

Potential Upside 34%

Beta 1.82

Profit Margin (ttm) 17.9%

ROE 23.38%

Forward P/E 6.53

12


STOCK OVERVIEW: EMC

Ticker EMCRecommendation HOLDCurrent SIM% 3.94%

Recommended SIM% 3.94%

Current Price $25.28



Dividend Yield 1.77%

Potential Upside 20.44%

ROE 11.04%

Forward P/E 12.77

EMC Corporation is a multinational American company offering data storage, information security, cloud computing, virtualization, analytics and other products and services in providing ITaaS and PaaS.

13


STOCK OVERVIEW: ALPHABET, INC. [GOOGLE]

Stock Ticker GOOG

Recommendation HOLD

Current SIM % 4.00%

Recommended SIM % 4.00%

Current Stock Price $747.00




Beta 0.92

ROE 23.38%

Forward P/E 6.53

Alphabet Inc., through its subsidiaries, builds technology products and provides services to organize information. The company offers Google Search that provides information online. It also provides YouTube that offers video; Android, hardware products including Chromebook, Chrome OS devices, Chromecast, and Nexus devices; Google Play, Google Drive, and Google Wallet. In addition, the company provides Google Apps, which include Gmail, Docs, etc.

14


STOCK OVERVIEW: VANTIV

Ticker VNTVRecommendation SELLCurrent SIM% 6.54%







ROE 19.02%

Forward P/E 19.70

Vantiv, Inc. is an “integrated payment processor” - it enables merchants and financial institutions to accept and process card and electronic payments. In addition to payment processing, the company offers data security services, financing services, gift and prepaid services, and compliance services.

15


STOCK OVERVIEW: VANTIV

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

LastPrice

Date

12 Month Stock Price Vantiv

16


VANTIV LAST PRICE AND E-COMMERCE QUARTERLY

17


VANTIV LAST PRICE AND MOBILE PAY INDEX

18


VANTIV AND CREDIT CARD COMPANIES

19


VALUATION & FINANCIAL MULTIPLES: VANTIV AND PEER COMPANIES

Ticker Mkt Cap P/E P/S P/B P/CF EV/EBITDA ROE

Average 30.36B 31.54 4.53 6.30 15.02 12.78 19.02%

VNTV 9.48B 47.02 2.43 10.59 11.61 16.98 19.03%

Change -20.88 +15.5 -2.1 +4.29 -3.4 +4.2 0

Insights:• Some multiples indicate that the stock is overpriced [P/E, P/B,

EV/EBITDA]• Others indicate that it is a good investment [P/S, P/CF]

20


Risks of Holding Vantiv

• Acquisition Risk• Short History• Data Security• Price War• Quickly Changing Industry with a

complex set of stakeholders• Regulations

VANTIV: RISKS

21


VANTIV ANALYSIS RECAP

Why Keep?

• Competitive advantage in growing industry

• Largest payment processor by volume in 2014

Why Sell?

• Over-weighted in the SIM portfolio at 6.54%

• Potential upside is only 6%

22

Ticker ATVI

Recommendation BUY

Current SIM% 3.14%







ROE 14.63%

Forward P/E 22.80

Activision Blizzard, Inc. is a leading global developer and publisher of interactive entertainment for prior generation and next-generation consoles, PCs, and mobile devices.

23

12 Month Price Movement

24

Valuation Has Remained Within Reasonable Range of Competitors

Valuation Not Necessarily Cheap In Historical Terms

Ticker P/E TTM P/S TTM P/B P/CF TTM EV/EBITDATTM

ATVI 25.64 3.21 3.40 11.17 9.16

Average 24.20 2.98 4.76 11.28 9.29

Absolute Basis

High Low Median Current

P/E 90.76 10.55 20.94 22.80

P/B 3.40 0.98 1.39 3.12P/S 5.51 2.29 3.28 5.08P/EBITDA 15.71 6.65 10.64 13.82

25

Sustained Competitive Advantages:1. Exceptional Leadership2. Intellectual Property3. SizePrimary Risks:1. Foreign Exchange Exposure (50% of

sales)2. Hit-Driven Industry3. Changes In Tax Legislation


ACTIVISION: COMPETITIVE LANDSCAPE

26

Leadership• CEO and President Bobby Kotick and Chairman Brian Kelly

have run the company for the last 20 years• $100 invested in ATVI in 1995 would have returned $4,400

today (more than nine times the S&P 500 return)• Long-term focus, customer oriented

27

Intellectual PropertyThe Hits Keep Coming

Destiny launched in Q3 2014• By Q3 2015 over 25 million active monthly players• Gamers spend an average of three hours a day online

Call of Duty: Black Ops III released Q3 2015• Generated $550 million in sales in three days• Beat the box office record of Jurassic World• 75 million hours played online in first three days of

launch

28

SizeWith the recently announced acquisition of King Digital Entertainment, Activision Blizzard, Inc. now has a larger combined user base (547 million) than Snapchat (200 million) and Twitter (316 million) combined.

0

100

200

300

400

500

600

Activision Snapchat Twitter

Monthly User Base

29

Recent News Indicates Continuation In Upward Trend

E-Sports Division• $465 million market by 2017

• 205 million viewers/participants in e-sports events in 2014

King Digital Entertainment Acquisition• $5.9 billion price tag, below King’s IPO price

• Major addition to rapidly expanding mobile gaming market

• Mobile to reach $55 billion sales by 2019 (Console and PC = E $57 billion)

Activision Blizzard Studios• TV series and movies based on award-winning franchises like Call of Duty,

Skylanders, and World of Warcraft

30

Sector Presentation: Information Technology

Recommendation

31

RECOMMENDATION RECAP

Stock Current Price

SIM Target Price

Consensus Target

Potential Upside/Downside

Recommendation

AAPL $114.23 N/A $146.95 28.6% HOLD

EMC $25.31 $26.37 $30.00 20.44% HOLD

ATVI $36.07 $39.00 $41.50 12.41% BUY

VNTV $51.55 $54.51 $55.05 6.00% SELL

GOOGL $752.26 $803.75 $826.85 8.00% HOLD

MU $15.65 $20.00 $21.37 34.00% HOLD

32


APPENDIX

33


MICRON: DCF VALUATIONAnalyst: Yihuang Qi Terminal Discount Rate = 11.0%2015/11/6 Terminal FCF Growth = 2.0%(in millions)Year 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025ERevenue 16,137 15,920 17,193 17,365 17,539 18,065 18,607 19,165 19,549 19,940 20,338 % Grow th -1% 8% 1% 1% 3% 3% 3% 2% 2% 2%

Operating Income 2,743 2,229 2,751 2,605 2,631 2,710 2,791 2,875 2,932 2,991 3,051 Operating Margin 17% 14% 16% 15% 15% 15% 15% 15% 15% 15% 15%

Interest Expense (335) (159) (172) (174) (175) (181) (186) (192) (195) (199) (203) Interest % of Sales -2% -1% -1% -1% -1% -1% -1% -1% -1% -1% -1%

Taxes (120) (103) (103) (170) (123) (152) (156) (161) (164) (167) (171) Tax Rate -5% -5% -4% -7% -5% -6% -6% -6% -6% -6% -6%

Equity method investees 474 395 569 435 415 425 420 422 421 422 421 Net Income 2,762 2,361 3,045 2,695 2,747 2,802 2,868 2,944 2,994 3,046 3,098 % Grow th -14.5% 29.0% -11.5% 1.9% 2.0% 2.4% 2.6% 1.7% 1.7% 1.7%

Add Depreciation/Amort 3,400 3,354 3,586 3,473 3,508 3,613 3,721 3,833 3,910 3,988 4,068 % of Sales 21% 21% 21% 20% 20% 20% 20% 20% 20% 20% 20%

Plus/(minus) Changes WC -376 200 -536 -521 -702 -903 -930 -958 -782 -798 -814 % of Sales -2% 1% -3% -3% -4% -5% -5% -5% -4% -4% -4%

Subtract Cap Ex -3,212 -3,168 -3,387 -3,473 -3,508 -3,613 -3,721 -3,833 -3,910 -3,988 -4,068 Capex % of sales -20% -20% -20% -20% -20% -20% -20% -20% -20% -20% -20%

Free Cash Flow 2,574 2,747 2,707 2,175 2,046 1,899 1,938 1,986 2,212 2,248 2,284 % Grow th 7% -1% -20% -6% -7% 2% 2% 11% 2% 2%

NPV of Cash Flows 14,366 61%NPV of terminal value 9,117 39% Terminal Value 25,888 Projected Equity Value 23,483 100%Free Cash Flow Yield 13.37% Free Cash Yield 8.82%

Current P/E 7.0 8.2 6.3 Terminal P/E 8.4 Projected P/E 8.5 9.9 7.7 Current EV/EBITDA 3.6 3.9 3.5 Terminal EV/EBITDA 4.0 Projected EV/EBITDA 4.3 4.7 4.1

Shares Outstanding 1,170

Current Price 16.45$ Implied equity value/share 20.07$ 0% 1% 2% 3% 4%Upside/(Downside) to DCF 22.0% 9% 22.56 23.81 25.42 27.56 30.55

10% 20.35 21.27 22.42 23.89 25.87 Debt 7,551 11% 18.53 19.22 20.07 21.13 22.49 Cash 4,860 12% 17.01 17.55 18.19 18.97 19.95 Cash/share 4.15 13% 15.73 16.15 16.64 17.23 17.95

Terminal FCF Growth =

Terminal Discount Rate =

34

EMC: DCF VALUATIONEMC Corporation

Analyst: Stefanus Randy Oenardi Raharjo Terminal Discount Rate = 10.25%8/2/2012 Terminal FCF Growth = 3.50%(000000s)Year 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Revenue 17,014 20,006 21,714 23,222 24,440 24,929 25,677 26,960 28,309 29,724 31,210 32,459 33,757 35,107 36,511 % Grow th 17.6% 8.5% 6.9% 5.2% 2.0% 3.0% 5.0% 5.0% 5.0% 5.0% 4.0% 4.0% 4.0% 4.0%

Operating Income 2,683 3,444 3,964 4,150 4,037 4,487 4,622 4,853 5,096 5,350 5,618 5,843 6,076 6,319 6,572 Operating Margin 15.8% 17.2% 18.3% 17.9% 16.5% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%

Total non-operating income (expense) (75) (193) (160) (285) (275) (184) (189) (199) (209) (219) (230) (239) (249) (259) (269) Interest % of Sales -0.4% -1.0% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7% -0.7%

Taxes 638 640 918 772 868 994 1,024 1,075 1,129 1,185 1,245 1,294 1,346 1,400 1,456 Tax Rate 24.5% 19.7% 24.1% 20.0% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1% 23.1%

Net Income 1,970 2,611 2,886 3,093 2,894 3,309 3,409 3,579 3,758 3,946 4,143 4,309 4,481 4,661 4,847 % Grow th 32.5% 10.5% 7.2% -6.4% 14.4% 3.0% 5.0% 5.0% 5.0% 25.2% 4.0% 4.0% 4.0% 4.0%

Add Depreciation/Amort 1,167 1,421 1,528 1,665 1,864 1,620 1,541 1,618 1,699 1,635 1,717 1,785 1,857 1,931 2,008 % of Sales 6.9% 7.1% 7.0% 7.2% 7.6% 6.5% 6.0% 6.0% 6.0% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%Plus/(minus) Changes WC (1,313) (483) (748) (167) (232) (249) (257) (270) (283) (297) (312) (325) (338) (351) (365) % of Sales -7.7% -2.4% -3.4% -0.7% -0.9% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0%Subtract Cap Ex 745 801 819 943 979 1,122 1,284 1,348 1,557 1,635 1,717 1,785 1,857 1,931 2,008 Capex % of sales 4.4% 4.0% 3.8% 4.1% 4.0% 4.5% 5.0% 5.0% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%

Free Cash Flow 1,079 2,748 2,847 3,648 3,547 3,559 3,409 3,579 3,617 3,649 3,831 3,984 4,144 4,310 4,482 % Grow th 154.7% 3.6% 28.1% -2.8% 0.3% -4.2% 5.0% 1.0% 0.9% 5.0% 4.0% 4.0% 4.0% 4.0%

NPV of Cash Flows 25,467 50%NPV of terminal value 25,901 50% Terminal Value 68,723 Projected Equity Value 51,368 100%Free Cash Flow Yield 2.14% Free Cash Yield 6.52%

Current P/E 25.5 19.3 17.4 Terminal P/E 14.2 Projected P/E 26.1 19.7 17.8 Current EV/EBITDA 17.2 13.6 12.1 Terminal EV/EBITDA 9.9 Projected EV/EBITDA 17.5 13.9 12.3

Shares Outstanding 1,948

Current Price 25.83$ premarket after preannouncementImplied equity value/share 26.37$ Upside/(Downside) to DCF 2.1%

Debt 22,360 Cash 6,343 Cash/share 3.26

26.37$ 9.00% 9.25% 9.50% 9.75% 10.00% 10.25% 10.50% 10.75% 11.00% 11.25% 11.50% 11.75%2.00% 28.24 27.23 26.29 25.41 24.58 23.79 23.06 22.36 21.70 21.08 20.49 19.932.25% 28.80 27.74 26.76 25.83 24.97 24.16 23.39 22.67 21.99 21.35 20.74 20.162.50% 29.41 28.29 27.26 26.29 25.39 24.54 23.75 23.00 22.29 21.63 21.00 20.402.75% 30.06 28.88 27.80 26.78 25.84 24.95 24.12 23.35 22.61 21.92 21.27 20.653.00% 30.76 29.52 28.38 27.31 26.32 25.39 24.53 23.72 22.95 22.24 21.56 20.923.25% 31.53 30.22 29.00 27.88 26.83 25.86 24.96 24.11 23.32 22.57 21.87 21.213.50% 32.37 30.97 29.68 28.49 27.39 26.37 25.42 24.53 23.70 22.93 22.20 21.513.75% 33.29 31.79 30.42 29.15 27.99 26.91 25.92 24.99 24.12 23.31 22.54 21.834.00% 34.29 32.69 31.22 29.88 28.64 27.50 26.45 25.47 24.56 23.71 22.92 22.174.25% 35.41 33.67 32.10 30.66 29.35 28.14 27.03 25.99 25.04 24.14 23.31 22.534.50% 36.65 34.77 33.07 31.53 30.12 28.83 27.65 26.56 25.55 24.61 23.74 22.924.75% 38.03 35.98 34.14 32.47 30.96 29.59 28.33 27.17 26.10 25.11 24.19 23.345.00% 39.59 37.34 35.33 33.52 31.89 30.42 29.07 27.84 26.70 25.66 24.69 23.795.25% 41.36 38.86 36.66 34.69 32.92 31.33 29.88 28.56 27.35 26.24 25.22 24.275.50% 43.38 40.59 38.15 35.99 34.06 32.33 30.77 29.36 28.06 26.88 25.79 24.795.75% 45.70 42.57 39.84 37.45 35.34 33.45 31.76 30.23 28.84 27.58 26.42 25.366.00% 48.42 44.85 41.78 39.11 36.77 34.70 32.85 31.20 29.70 28.34 27.10 25.976.25% 51.63 47.51 44.02 41.01 38.40 36.11 34.08 32.27 30.65 29.18 27.85 26.64

35

GOOGLE: DCF VALUATIONGoog leIn Million

Terminal Discount Rate = 11.0%Terminal FCF Growth = 5.0%

MillionsYear 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Revenue 79,201 95,833 116,917 136,793 157,312 179,335 200,855 220,941 238,616 252,933 265,580 % Growth 21.0% 22.0% 17.0% 15.0% 14.0% 12.0% 10.0% 8.0% 6.0% 5.0%

Operating Income 20,617 26,642 31,382 35,566 40,901 46,627 52,222 55,235 59,654 63,233 69,051 Operating Margin 26.0% 27.8% 26.8% 26.0% 26.0% 26.0% 26.0% 25.0% 25.0% 25.0% 26.0%

Interest Income - - - - - - - - - - - Interest % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Taxes 4,123 5,328 6,276 7,113 8,180 9,325 10,444 11,047 11,931 12,647 13,810 Tax Rate 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%

Net Income 16,493 21,313 25,105 28,453 32,721 37,302 41,778 44,188 47,723 50,587 55,241 % Growth 29.2% 17.8% 13.3% 15.0% 14.0% 12.0% 5.8% 8.0% 6.0% 9.2%

Add Depreciation/ Amort 4,752 5,750 7,015 10,943 14,158 17,934 20,086 24,304 26,248 30,352 34,525 % of Sales 6.0% 7.0% 8.0% 8.0% 9.0% 10.0% 10.0% 11.0% 11.0% 12.0% 13.0%Plus/ (minus) Chang es WC 2,841 2,927 3,711 3,420 3,933 4,483 5,021 5,524 5,965 6,323 6,639 % of Sales 3.6% 3.1% 3.2% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%Subtract Cap Ex 15,840 20,125 25,722 30,094 29,889 32,280 34,145 35,351 35,792 35,411 34,525 Capex % of sales 20.0% 21.0% 22.0% 22.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0%

Free Cash Flow 8,247 9,866 10,109 12,722 20,922 27,438 32,739 38,665 44,144 51,851 61,880 % Growth 19.6% 2.5% 25.8% 54.5% 31.1% 19.3% 18.1% 14.2% 17.5% 19.3%

NPV of Cash Flows 153,806 29% Terminal Value 1,082,902 NPV of terminal value 381,381 71%Firm Value 535,187 100%Less Debt 5,200 Plus Cash 68,000 Free Cash Yield 5.71%Equity Value 597,987

Terminal P/ E 19.6 Current P/ E 33,020.0 25,552.4 21,692.9 Projected P/ E 36,256.5 28,056.9 23,819.1 Terminal EV/ EBITDA 10.5 Current EV/ EBITDA 21,467.8 16,813.2 14,183.7 Projected EV/ EBITDA 23,571.9 18,461.1 15,573.9

Diluted Shares Outstanding 744,000

Current Price 732.00US$ 11/ 6/ 2015Implied equity value/ share 803.75US$ Upside/ (Downside) to DCF 9.8%

Debt 5.2 in BillionCash 68 in BillionCash/ share 13.02 in Billion

####### $539,683 $568,088 $597,987 $627,887 $659,281 $692,2459% $725.38 $689.11 $689.11 $723.57 $797.73 $923.4810% $833.44 $791.77 $791.77 $831.35 $916.57 $1,061.0411% $957.59 $909.71 $909.71 $955.20 $1,053.10 $1,219.1012% $1,100.24 $1,045.22 $1,045.22 $1,097.49 $1,209.98 $1,400.7013% $1,264.13 $1,200.93 $1,200.93 $1,260.97 $1,390.22 $1,609.36

14% $1,452.44 $1,379.82 $1,379.82 $1,448.81 $1,597.32 $1,849.09

Equity Value

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36


VANTIV: DCF VALUATION

NPV[projectedequity] 10,956,609.54$

SharesOutstanding(D) 201,000 FreeCashYield 3.33% Cash 411,586.00$DCFTargetPrice 54.51$ TerminalP/E 28.37 Debt 5,035,487.00$

CurrentPrice 46.12$ TerminalEV/EBITDA 18.31

SensitivityAnalysis WACC54.51$ 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0%3.5% 60.88$ 53.26$ 47.33$ 42.58$ 38.69$ 35.45$ 32.70$

TerminalGrowthRate 4.0% 68.39$ 58.66$ 51.36$ 45.67$ 41.12$ 37.39$ 34.28$4.5% 78.91$ 65.87$ 56.54$ 49.54$ 44.09$ 39.72$ 36.14$5.0% 94.69$ 75.96$ 63.45$ 54.51$ 47.80$ 42.57$ 38.38$5.5% 120.99$ 91.09$ 73.13$ 61.14$ 52.57$ 46.13$ 41.12$6.0% 173.59$ 116.30$ 87.64$ 70.42$ 58.93$ 50.71$ 44.53$6.5% 331.39$ 166.74$ 111.83$ 84.34$ 67.83$ 56.81$ 48.93$

(inthousands)YEAR 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024REVENUE 2,577,203.00$ 3,015,327.51$ 3,467,626.64$ 3,918,418.10$ 4,310,259.91$ 4,698,183.30$ 5,121,019.80$ 5,530,701.38$ 5,917,850.48$ 6,332,100.01$ 6,712,026.01$

%Growth 22% 17% 15% 13% 10% 9% 9% 8% 7% 7% 6%

OPERATINGINCOME 314,691.00$ 487,318.53$ 560,416.31$ 633,270.43$ 646,538.99$ 704,727.50$ 768,152.97$ 829,605.21$ 887,677.57$ 949,815.00$ 1,006,803.90$OperatingMargin 12% 16% 16% 16%

INTERESTEXPENSE 79,701.00$ 58,391.67$ 58,391.67$ 58,391.67$ 86,205.20$ 93,963.67$ 102,420.40$ 110,614.03$ 118,357.01$ 126,642.00$ 134,240.52$%ofRevenue 3% 2% 2% 1%

NON-OPINC.EXPENSE (177.00)$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$ 9,655.50$

TAXEXPENSE 66,177.00$ 119,648.14$ 140,508.18$ 161,298.67$ 157,147.95$ 171,539.25$ 187,225.77$ 202,424.27$ 216,786.84$ 232,154.80$ 246,249.41$

[NetIncome] 168,990.00$ 299,623.22$ 351,860.97$ 403,924.59$ 393,530.34$ 429,569.08$ 468,851.30$ 506,911.41$ 542,878.22$ 581,362.70$ 616,658.47$LESS:NItoNCI 43,698.00$ 59,924.64$ 52,779.15$ 40,392.46$ 19,676.52$ 12,887.07$ 14,065.54$ 10,138.23$ 5,428.78$ 5,813.63$ -$

%NItoNCI 26% 20% 15% 10% 5% 3% 3% 2% 1% 1% 0%

NETINCOME(ATV) 125,292.00$ 239,698.58$ 299,081.82$ 363,532.13$ 373,853.82$ 416,682.00$ 454,785.76$ 496,773.19$ 537,449.44$ 575,549.07$ 616,658.47$%Growth -6.20% 91.31% 24.77% 21.55% 2.84% 11.46% 9.14% 9.23% 8.19% 7.09% 7.14%

DEPR.&AMORT 275,069.00$ 241,226.20$ 277,410.13$ 313,473.45$ 301,718.19$ 281,891.00$ 307,261.19$ 276,535.07$ 295,892.52$ 253,284.00$ 201,360.78$%ofRevenues 7% 6% 6% 5% 5% 4% 3%

CAPEX 103,179.00$ 120,613.10$ 138,705.07$ 156,736.72$ 172,410.40$ 187,927.33$ 153,630.59$ 165,921.04$ 177,535.51$ 189,963.00$ 201,360.78$%ofRevenues 4% 4% 4% 4% 4% 4% 3% 3% 3% 3% 3%

CHANGEINWC (69,090.00)$ (22,343.62)$ (49,536.99)$ (49,371.87)$ (43,102.60)$ (32,887.28)$ (25,605.10)$ (27,653.51)$ (29,589.25)$ (31,660.50)$ (33,560.13)$%ofRevenues 2.68% 0.74% 1.43% 1.26% 1.0% 0.7% 0.5% 0.5% 0.5% 0.5% 0.5%

FREECASHFLOW(FCF) 228,092.00$ 337,968.06$ 388,249.90$ 470,896.99$ 460,059.02$ 477,758.39$ 582,811.26$ 579,733.71$ 626,217.19$ 607,209.57$ 583,098.34$%Growth 14% 48% 15% 21% -2% 4% 22% -1% 8% -3% -4%

TerminalValue 17,492,950.19$TotalFCF 337,968.06$ 388,249.90$ 470,896.99$ 460,059.02$ 477,758.39$ 582,811.26$ 579,733.71$ 626,217.19$ 607,209.57$ 18,076,048.53$

ACTUAL PROJECTED

37


ACTIVISION: DCF VALUATION10.75% 4.25%

Year 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028ERevenue 4,786 5,201 5,659 5,998 6,298 6,550 6,943 7,290 7,618 7,923 8,081 8,566 8,909 9,310%Growth 8.7% 8.8% 6.0% 5.0% 4.0% 6.0% 5.0% 4.5% 4.0% 2.0% 6.0% 4.0% 4.5%OperatingIncome 1,460 1,586 1,782 2,099 2,015 2,391 2,430 2,624 2,590 2,931 2,869 3,169 3,385 3,584OperatingMargin 30.5% 30.5% 31.5% 35.0% 32.0% 36.5% 35.0% 36.0% 34.0% 37.0% 35.5% 37.0% 38.0% 38.5%InterestandOther (96) (104) (113) (150) (126) (98) (69) (73) (76) (79) (81) (86) (89) (93)Interest%ofSales -2.0% -2.0% -2.0% -2.5% -2.0% -1.5% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0% -1.0%Taxes 286 311 351 351 340 413 472 510 453 513 502 617 659 698TaxRate 21.0% 21.0% 21.0% 18.0% 18.0% 18.0% 20.0% 20.0% 18.0% 18.0% 18.0% 20.0% 20.0% 20.0%NetIncome 1,078 1,171 1,319 1,598 1,549 1,880 1,888 2,041 2,061 2,339 2,286 2,467 2,637 2,793%Growth 8.7% 12.6% 21.2% -3.1% 21.3% 0.5% 8.1% 1.0% 13.5% -2.2% 7.9% 6.9% 5.9%AddDepreciation/Amort 96 104 113 120 126 196 208 146 152 198 162 171 178 186%ofSales 2.0% 2.0% 2.0% 2.0% 2.0% 3.0% 3.0% 2.0% 2.0% 2.5% 2.0% 2.0% 2.0% 2.0%Plus/(minus)ChangesWC 7 -18 -13 -30 -13 13 -14 -36 38 -40 -40 43 18 -19%ofSales 0.1% -0.4% -0.2% -0.5% -0.2% 0.2% -0.2% -0.5% 0.5% -0.5% -0.5% 0.5% 0.2% -0.2%SubtractCapEx 101 104 113 120 164 144 139 146 168 158 162 171 178 186Capex%ofSales 2.1% 2.0% 2.0% 2.0% 2.6% 2.2% 2.0% 2.0% 2.2% 2.0% 2.0% 2.0% 2.0% 2.0%FreeCashFlow 1,080 1,153 1,306 1,568 1,499 1,945 1,944 2,005 2,084 2,339 2,246 2,510 2,655 2,774%Growth 6.8% 13.3% 20.1% -4.4% 29.8% -0.1% 3.1% 4.0% 12.2% -4.0% 11.8% 5.8% 4.5%

NPVofCashFlows 12,219.51 43%NPVofTerminalValue 16,027.87 57% 44,495.19ProjectedEquityValue 28,247.38 100%FreeCashFlowYield 4.38% 6.24%

CurrentP/E 22.90 21.07 18.71 19.5ProjectedP/E 26.21 24.12 21.42CurrentEV/EBITDA 15.36 14.14 12.61 14.4ProjectedEV/EBITDA 17.66 16.25 14.49

SharesOutstanding 72938.75 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00%

CurrentPrice 33.85 9.00% 47.65 49.03 50.55 52.22 54.06 56.11 58.40 60.98ImpliedEquityValue/Share 38.75 9.50% 43.54 44.66 45.88 47.21 48.66 50.26 52.03 54.00Upside/(Downside)toDCF 14.5% 10.00% 40.03 40.95 41.94 43.02 44.19 45.46 46.86 48.40

10.50% 37.00 37.76 38.58 39.47 40.42 41.45 42.57 43.80Debt 4,078 10.75% 35.63 36.33 37.08 37.88 38.75 39.68 40.69 41.79Cash(+Equivalents) 4,858 11.00% 34.36 35.00 35.68 36.41 37.20 38.05 38.96 39.95Cash/share 6.66 11.50% 32.03 32.57 33.15 33.76 34.42 35.12 35.88 36.69

12.00% 29.97 30.43 30.92 31.44 31.99 32.58 33.21 33.89

TerminalGrowthRate

TerminalDiscountRate

TerminalEV/EBITDA

TerminalDiscountRate= TerminalFCFRate=

TerminalValue

FreeCashYield

TerminalP/E

38

Sector Presentation: Information Technology

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Documents

SIM Stock Presentation: Information Technology20Sector_AU15.pdf · Chromecast, and Nexus devices; Google Play, Google Drive, and Google Wallet. In addition, the company provides Google