Company Update

Hong Kong: Handsets Action

BUY (Upgrade)
TP upside (downside) 29.7% Close 29 August, 2011
Price 12M Target Previous Target Hang Seng Index HK$3.47 HK$4.50 HK$5.20 19,865.1

30 August, 2011 Whats new?

No further impairment loss was booked in 1H11, indicating the completion of inland relocation.

Our view
We turn positive on FIH as we expect its gains at HTC and China brands will help it offload Nokias impact in the long run. of the takeoff of entry-level smartphones in 2012. We view FIH as a key beneficiary

We cut our 2011-12F EPS by 95%/47%, but expect a turnaround to arrive in 2H11.

Company profile: Foxconn International Holdings, a part of the Hon Hai Group, is a vertically integrated handset EMS that services leading global handset brands.
Share price performance relative to Hang Seng Index
7.0
Share Price (HK$) Performance relative to Hang Seng Index (%)

Foxconn Intl Holdings (2038 HK)

-2 -7 -12 -17 -22 -27

6.5 6.0 5.5 5.0 4.5

Glimmer of light at the end of tunnel

Upgrade to BUY with new TP of HK$4.50: We expect FIH to enter a HOLD) outsourcing; 2) improved operating efficiency on the turnaround phase in 2H11, following 1) gains from HTCs (2498 TT; completion of its relocation to inland China; 3) the benefits from China handset customers market share gain in the global handset market and their ramp-up of entry-level smartphones. In addition, Nokias

-32 4.0 3.5 3.0 Aug-10 -37 -42 -47 Nov-10 Feb-11 May-11

Market cap 6M avg. daily turnover Outstanding shares Free float Major shareholders Net debt/equity BVPS (2011F) P/B (2011F)
Financial outlook (US$ mn) Year to Dec Sales Op. profit Net profit EPS (US$) EPS growth (%) DPS (US$) P/E (X) Div. yield (%) ROE (%) 2009 7,214 (32) 39 0.01 (67.9) 0.00 81.5 0.0 1.1 2010A 6,626 (216) (218) (0.03) N.M. 0.00 N.M. 0.0 (6.1)

US$3,206.2 mn US$5.2 mn 7,203.3 mn 29% Hon Hai group, 70.5%% Net cash US$0.48 0.9x

sell-in strength in 2H11 on its launches of new models should provide near-term momentum to FIH. Our new TP of HK$4.50 (down from HK$5.20) is based on the average of our P/B and price/sales valuation methodologies, and implies 30% upside. Thus, we upgrade to BUY. HTC adds fresh driving force: We anticipate HTC to contribute 10% 8% of HTCs volume, mostly in mid- and low-end smartphones.

of FIHs revenue in 2012 based on the assumption that FIH will gain

Benefits from China handset customers market share gains: As a

2011F 6,580 (126) 12 0.00 N.M. 0.00 263.1 0.0 0.4 2012F 8,022 53 192 0.03 1,436.1 0.00 17.1 0.0 5.4

key ODM/EMS service provider to China handset brands such as Huawei, we expect FIH to capitalize on its China customers fast offerings to smartphones and tablet PCs.

volume growth in the global handset market and improving product

Lightening Nokia influence: While it is hard to judge Nokias

turnaround based its sell-in strength in 2H11, for the long term we expect FIH to gradually offload Nokias impact following FIHs gain at HTC and increasing contribution from China handset brands.

Operating efficiency set to improve: We expect FIH to run on a

lighter cost base in 2H11 following the completion of its relocation its parent company Hon Hai (2317 TT; BUY).

Primary Analyst: Bonnie Chang +852 3969 9904 bonnie.chang@yuanta.com With significant contribution from:

to inland China and the sale of excessive manufacturing facilities to

Kelly Hsu
+886 2 3518 7947 kelly.hsu@yuanta.com

ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES BEGIN ON PAGE 10. Yuanta does and seeks to do business with companies covered in its research reports. As a result, investors should be 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.

Turnaround to arrive in 2H11

1H11 earnings recap: largely reduced net loss suggests the end of relocation FIH reported a 1H11 net loss of US$18 mn, which was not a surprise to the market in light of its profit warning released on July 21. Notably, there were no more impairment losses booked in 1H11, leading to a largely reduced net loss from 2H10 and 1H10, which in our view indicated that FIHs inland relocation has ended. Figure 1: FIHs 1H11 results comparison
(US$ mn) Sales Gross profit Operating Profit Pretax profit Net Profit EPS (US$) Weighted avg. shares (mn) Margin Gross margin Operating margin Pretax margin Net margin 4.8% -3.1% 0.1% -0.6% 5.7% -2.1% -1.3% -2.2% 2.8% -4.5% -4.0% -4.4% 4.7% -0.1% 2.1% 1.9% N.A. -2.1% -0.4% -1.2% 1H11 2H10 HoH 1H10 YoY % 1H11 Yuanta forecast 3,778 179 -3 80 73 0.01 7,391 Diff. 1H11 Consensus 4002 N.A. -85 -18 -50 -0.007 7,386 Diff.

2,994 144 -93 3 -18 -0.002 7,386

3,397 192 -71 -45 -76 -0.011 7,136

-11.9% -24.9% N.M. N.M. N.M. N.M.

3,229 90 -146 -131 -143 -0.020 7,136

-7.3% 60.1% N.M. N.M. N.M. N.M.

-20.8% -19.1% N.M. N.M. N.M. N.M.

-25.2% N.A. N.M. N.M. N.M. N.M.

Source: Company data, Bloomberg, Yuanta Research

Lightening Nokia impact

gain at HTC and increasing contribution from China handset brands.

for the long term we expect FIH to gradually offload Nokias impact following FIHs HTC adds fresh driving force: Based on our channel checks, we believe FIH has

While it is hard to judge Nokias turnaround based on its sell-in strength in 2H11,

been chosen by HTC as its first manufacturing outsourcing partner starting from 2H11, albeit at small volume, on top of its incumbent component supplies (e.g. casing) to HTC. The revenue contribution will be small in 2011, but we expect it 2012. We anticipate HTC to contribute 10% of FIHs revenue in 2012 based on the assumption that FIH will gain 8% HTCs volume of 68 mn units, which are mostly mid- and low-end smartphones.

to expand gradually after HTC raises low- and mid-end range product lineups in

Benefits from China handset customers market share gains: According to IDC,

Huawei posted a handset shipment CAGR of 31% in 2008-2010 to 18.1 mn units, and continued gaining share in the global handset market with growth in 1H11 of 209% YoY to 19.1 mn units. Following its success in the feature phone market, Huawei expanded its

2010. According to our channel checks, Huawei set a shipment target of 20 mn smartphone units in 2011, up from a mere 1.8 mn units in 2010. In 1H11, Huaweis smartphone shipments reached 5.8 mn units.

footprint into the smartphone market with an eye on entry-level products in late

As a key ODM/EMS service provider to China handset brands such as Huawei, we expect FIH to capitalize on its China-based customers fast volume growth in tablet PCs. Yuanta
Hong Kong: Handsets 30 Aug, 2011

the global handset market and improving product offerings to smartphones and

Foxconn Intl Holdings (2038 HK) Company Update Page 2 of 12

 Potential new China smartphone customer: Our latest checks with ZTE suggest it is considering outsourcing its high-end products (i.e. smartphones and tablet PCs) to FIH in order to catch up with the fast-growing smart device market. ZTE

has been keeping most of its handset manufacturing in-house. In 2010, ZTE shipped 50 mn handsets, of which 1.8 mn were smartphones. In 1H11, ZTE

units of handset shipments, while its smartphone shipments accounted for 9% smartphone shipments in 2011 from 1.8 mn units in 2010. We have not yet

remained the fifth-largest handset maker with 4.7% share globally, or 32 mn

or 2.97 mn units of its total shipment. The company is targeting 12 mn units of factored in any contribution from ZTE, thus any order wins at ZTE will represent upside potential to our current estimates. Figure 2: FIHs client breakdown by revenue

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011F 2012F

Others Huawei HTC Palm LG Samsung Sony Ericsson Moto Nokia

Source: Yuanta Research estimates

Operating efficiency set to improve

Upon the end of its inland move (from Shenzheng, Gundong to Langfang, Hebei) and disposal of redundant assets (i.e. the Taiyuan plant) by the end of 1H11, Langfang will be the major manufacturing site for FIH. Therefore, we expect FIHs streamlining of its cost structure and asset consolidation to pay off gradually in its China based customers. 2H11, following the kick-in of new smartphone and tablet projects from HTC and

A new cycle of handset outsourcing begins in 2012

As a cost-down measure, we expect several major handset makers will change their smartphone outsourcing strategies upon their attempts to enter the mass smartphone market. Nokia, HTC, Motorola and ZTE had kept smartphone

manufacturing in-house in the past, but are now either beginning to or are about to leverage EMS/ODM partners for scale and cost synergies, represent a new stream of growth drivers to the handset outsourcing market. We expect the trend of rising smartphone outsourcing to take off in 2012 and thereafter revive capable handset top picks on this theme; but for different reasons (for details on our recent BYDE

EMS/ODM service providers business. FIH and BYD Electronic (285 HK; BUY) are our

upgrade, see our August 23 report Time to pull the trigger).

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 3 of 12

Only selective capable handset EMS/OMD will benefit

smartphones vs. feature phones, we believe only handset EMS and ODM makers outsourcing.

Due to a higher extent of hardware and software integration requirements for

who have the capability and know-how can benefit from this rise in smartphone

Earnings revisions

cut our 2011F EPS by 95% to US$0.002 and 2012F EPS by 47% to US$0.026. We our previous expectation.

In view of the 1H11 results and the turnaround coming later than we expected, we

continue to expect FIH to remain profitable in 2012, despite a lower net income vs.

Figure 3: Our 2011-12F forecast revisions for FIH

2011F US$ mn New Revenue Gross Profit OPEX Operating Profit Profit before tax Net Profit EPS (US$) Diluted weighted avg. shares (mn) Margin (%) Gross Margin OPEX ratio Operating Margin Net Margin 5.3% -7.3% -1.9% 0.2% 5.5% -4.5% 1.0% 2.6% 6.6% -6.0% 0.7% 2.4% 6.2% -4.3% 1.9% 3.1% 6,580 352 -478 -126 65 12 0.002 7,384 Old 8,967 491 -404 86 251 230 0.031 7,391 % Change -26.6% -28.4% N.M. N.M. -74.3% -94.6% -94.6% New 8,022 531 -478 53 242 192 0.026 7,389 Old 11,809 735 -508 228 392 361 0.049 7,394 % Change -32.1% -27.8% N.M. -76.7% -38.4% -46.8% -47.1% 2012F

Source: Yuanta Research estimates

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 4 of 12

Valuation
Our target price of HK$4.50 (previously HK$5.20) implies 29.7% upside potential. Our target price of HK$4.50 implies 30% upside potential (Figure 3) valuation methodologies, as P/B and price/sales provide valuation support in downcycles, in our view. Forward P/B valuation We continue to derive our target price from the average of our P/B and price/sales

We apply a target multiple of 1.0x to our 2012F BVPS of HK$3.97 and derive a value of HK$3.97. We expect FIHs fundamentals to bottom out in 2H11 and the stocks valuation should begin to reflect its likely earnings turnaround in 2012, and we previous 1.2x to 1.0x mainly to reflect our lower net profit estimate for 2012. Forward P/sales valuation

therefore switch to using our 2012F BVPS. Our target multiple is lowered from the

We apply 0.6x price/sales valuation to our 2012F sales of US$8.0 bn (HK$8.45 sales per share) which yields a value of HK$5.07. The 0.6x price/sales is at discount to FIHs three-year trading average of 0.71x and the one-year trading average of

0.67x, given our low sales forecasts for FIH in 2012 compared to US$10.7 bn in 2007 and US$9.3 bn in 2008. Our target multiple is unchanged.

Figure 4: Target price calculation - FIH

P/B methodology 2012F BVPS Target multiple Target price derived from P/B valuation P/S methodology 2012F SPS Target multiple Target price derived from P/S valuation Final target price based on average of P/B and P/S valuation Potential upside implied by target price HK$8.45 0.6x HK$5.07 HK$4.50 29.7% HK$3.97 1.0x HK$3.97

Source: Yuanta Research estimates

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 5 of 12

Figure 5: Peer valuation comparison table

Company FIH Regional EMS/ODM Compal Comm. BYD Electronic Average Global EMS Elcoteq * Jabil Circuit* Flextronics* Celestica* Average Regional components AAC Merry TXC Largan Silitech Cheng Uei* Ichia* Average 2018 HK 2439 TT 3042 TT 3008 TT 3311 TT 2392 TT 2402 TT BUY HOLD HOLD BUY HOLD Not rated Not rated HK$15.28 NT$29.85 NT$31.8 NT$788 NT$77.5 NT$77.4 NT$11.85 2407.4 163.6 330.9 3639.7 488.2 1267.3 139.0 0.80 3.78 4.00 30.15 8.11 N.A. 0.12 0.99 3.58 3.69 43.72 7.08 N.A. 0.43 1.44 4.78 4.00 64.94 8.34 6.93 1.35 15.6 7.9 7.9 26.1 9.6 N.A. 98.8 27.6 12.7 8.3 8.6 18.0 10.9 N.A 27.3 14.1 8.7 6.2 7.9 12.1 9.3 11.2 8.8 8.9 60.5% 13.7% 47.1% 61.7% 15.2% N.A. N.M. 39.6% 22.8% -5.2% -7.8% 45.0% -12.7% N.A. 261.7% 53.6% 45.5% 33.4% 8.3% 48.5% 17.8% N.A. 211.1% 62.4% ELQAV FH Not rated JBL US FLEX US CLS CN Not rated Not rated Not rated 0.3 US$15.92 US$5.61 CAD7.82 14.4 3480.1 4103.7 1732.3 0.45 0.79 0.77 0.35 N.A. 1.76 N.A. 0.80 N.A. 2.10 0.99 0.96 0.7 20.2 7.3 22.3 12.6 N.A 9.0 N.A 9.8 9.4 N.A 7.6 5.6 8.1 7.1 -112.7% N.A. N.A. 19.2% N.A. 20.4% 19.8% 8078 TT 285 HK Not rated BUY NT$29.3 HK$2.3 613.1 664.9 N.A. 0.46 N.A. 0.31 1.93 0.33 N.A. 4.1 4.1 N.A 6.1 6.1 15.2 5.7 10.4 N.A. 36.8% 36.8% N.A. -32.6% -32.6% N.A. 6.0% 6.0% Ticker 2038 HK Rating BUY Share price Aug 29, 2011 HK$3.47 Market cap (US$ mn) 3,207 EPS 2010 -0.03 2011F 0.00 2012F 0.03 2010 N.M. P/E (x) 2011F 263.1 2012F 17.1 EPS growth % 2010 N.M. 2011F N.M. 2012F 1,436%

-114.0% 122.8% N.M. N.M. N.A. 128.3%

-113.4% 125.5%

Source: Company data, Bloomberg, Yuanta Research estimates Notes: EPS of FIH is shown in US dollars; BYDE is shown in RMB. For other stocks, share prices and EPS figures are shown in their local currency.

Figure 6: Peer valuation comparison table (continued)

Cash dividend yield (%) Company FIH Regional EMS/ODM Compal Comm. BYD Electronic Average Global EMS Elcoteq * Jabil Circuit* Flextronics* Celestica* Average Regional components AAC Merry TXC Largan Silitech Cheng Uei* Ichia* Average 2018 HK 2439 TT 3042 TT 3008 TT 3311 TT 2392 TT 2402 TT 2.6% 12.5% 7.8% 1.7% 7.8% N.A. 6.5% 6.5% 5.1% 10.8% 7.0% 3.0% 5.9% 4.0% 8.7% 6.4% 5.4% 14.4% 7.5% 4.5% 7.0% N.A. N.A. 7.8% 25.6% 13.5% 19.1% 26.9% 26.2% 6.5% 5.2% 17.6% 26.6% 12.9% 16.9% 31.9% 21.7% 12.8% N.A. 20.5% 31.9% 16.8% 17.3% 37.5% 23.8% 13.5% N.A. 23.5% 3.4 27.8 22.0 122.2 32.4 N.A. 18.8 4.0 27.6 22.2 152.4 33.2 N.A. 17.0 5.0 29.2 24.0 193.7 36.9 N.A. 17.5 3.7 1.1 1.4 6.5 2.4 N.A. 0.6 2.6 3.1 1.1 1.4 5.2 2.3 N.A. 0.7 2.3 2.5 1.0 1.3 4.1 2.1 N.A. 0.7 2.0 ELQAV FH JBL US FLEX US CLS CN 0.0% 1.8% 0.0% 0.0% 0.4% N.A. 1.8% 0.0% 0.0% 0.6% N.A. N.A. N.A. N.A. N.A. -142.7% -56.1% N.A. 3.9% -65.0% N.A. 25.1% 26.4% 13.7% 21.7% N.A. 21.5% 25.3% 12.3% 19.7% 0.2 6.9 3.0 6.8 N.A. 9.1 N.A. 6.6 N.A. 11.2 4.7 7.5 1.6 2.3 1.9 1.2 1.7 N.A. 1.8 N.A. 1.2 1.5 N.A. 1.4 1.2 1.0 1.2 8078 TT 285 HK N.A. 0.0% 0.0% 0.9% 0.0% 0.5% N.A. 0.0% 0.0% N.A. 14.7% 14.7% 1.7% 8.9% 5.3% 8.2% 8.6% 8.4% N.A. 3.3 N.A. 3.6 19.8 4.0 N.A. 0.6 0.6 N.A. 0.5 0.5 1.5 0.5 1.0 Ticker 2010 2038 HK 0.0% 2011F 0.0% 2012F 0.0% 2010 -6.1% 2011F 0.4% 2012F 5.4% 2010 0.50 2011F 0.48 2012F 0.51 2010 0.9 2011F 0.9 2012F 0.9 ROE (%) BVPS P/B (x)

Source: Company data, Bloomberg, Yuanta Research estimates Notes: BVPS of FIH is shown in US dollars; BYDE is shown in RMB. For other stocks, BVPS figures are shown in local currency.

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 6 of 12

Figure 7: Foxconn Intl Holdingss semi-annual & annual earnings highlights (consolidated basis)
(US$ mn) Sales COGS Gross profit Operating expenses Operating profit Non-op profit Pre-tax profit Minority Income tax Net income FD WA EPS (US$) Wtd. avg. no. of shares Margin analysis Gross margin Operating margin Pre-tax margin Effective tax rate Growth (% HoH) Sales Operating profit Net income FD WA EPS Sales breakdown (US$ mn)* Feature phone Smartphone Total Sales breakdown (%)* Feature phone Smartphone Total 1H2010A 3,229 (3,139) 90 (236) (146) 15 (131) 2 (14) (143) (0.02) 7,136 2.8% (4.5%) (4.0%) N.A. (20.3%) 539.8% (349.0%) (346.5%) 2,412 777 3,189 75.6% 24.4% 100% 2H2010A 3,397 (3,204) 192 (263) (71) 25 (45) 0 (30) (76) (0.01) 7,136 5.7% (2.1%) (1.3%) N.A. 5.2% N.M. N.M. N.M. 2,230 1,166 3,396 65.7% 34.3% 100% FY2010A 6,626 (6,344) 282 (499) (216) 40 (176) 1 (44) (218) (0.03) 7,136 4.3% (3.3%) (2.7%) N.A. (8.1%) N.M. N.M. N.M. 4,642 1,943 6,585 70.5% 29.5% 100% 1H2011A 2,994 (2,849) 144 (237) (93) 96 3 (1) (20) (18) 0.00 7,384 4.8% (3.1%) 0.1% 629.3% (11.9%) N.M. N.M. N.M. 1,845 1,148 2,994 61.6% 38.4% 100% 2H2011F 3,586 (3,379) 207 (240) (33) 94 61 (1) (31) 30 0.00 7,384 5.8% (0.9%) 1.7% 50.0% 19.8% N.M. N.M. N.M. 2,161 1,425 3,586 60.3% 39.7% 100% FY2011F 6,580 (6,228) 352 (478) (126) 191 65 (1) (51) 12 0.00 7,384 5.3% (1.9%) 1.0% 79.0% (0.7%) N.M. N.M. N.M. 4,006 2,573 6,580 60.9% 39.1% 100% 1H2012F 3,634 (3,402) 232 (236) (4) 94 90 (1) (18) 71 0.01 7,384 6.4% (0.1%) 2.5% 20.0% 1.3% N.M. 136.6% 136.6% 1,881 1,753 3,634 51.8% 48.2% 100% 2H2012F 4,389 (4,090) 299 (241) 58 94 152 (1) (30) 121 0.02 7,384 6.8% 1.3% 3.5% 20.0% 20.8% N.M. 69.7% 69.7% 1,998 2,391 4,389 45.5% 54.5% 100% FY2012F 8,022 (7,492) 531 (478) 53 189 242 (1) (49) 192 0.03 7,389 6.6% 0.7% 3.0% 20.1% 21.9% N.M 1,437.2% 1,436.1% 3,879 4,144 8,022 48.4% 51.6% 100%

Source: Company data, Yuanta Research estimates

Figure 8: 12-month forward looking P/S band chart

(HK$)

30 25 20 15 10 5 0 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11

Source: Company data, Yuanta

2.4x P/Sales 1.9x P/Sales 1.4x P/Sales 0.9x P/Sales 0.4x P/Sales

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update

Page 7 of 12

Figure 9: 12-month forward looking P/B band chart

(HK$)

35 30 25 20 15 10 5
0.4x P/B 4.1x P/B 2.3x P/B 7.8x P/B 6.0x P/B

0 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11

Source: Company data, Yuanta

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update

Page 8 of 12

Balance Sheet
Year as of Dec (US$ mn) Cash & ST investment Inventories Accounts receivable Others Current assets LT investments Net fixed assets Others Other assets Total assets Accounts payable ST borrowings Others Current liabilities Long-term debts Others Long-term liabilities Total liabilities Paid-in capital Capital surplus Retained earnings Capital adjustment Shareholders' equity 2008 705 843 1,439 134 3,120 4 2,073 331 2,408 5,528 1,435 478 109 2,022 0 50 50 2,072 282 687 2,039 447 3,456 2009 1,201 716 1,413 161 3,491 2 1,823 320 2,145 5,635 1,523 363 81 1,967 0 61 61 2,028 284 721 2,075 528 3,607 2010A 1,356 748 1,648 268 4,020 0 1,723 274 1,997 6,017 1,401 862 104 2,367 0 57 57 2,424 287 776 1,853 677 3,593 2011F 1,731 685 1,448 30 3,893 0 1,768 213 1,981 5,875 1,376 862 160 2,398 0 0 0 2,398 288 776 1,865 547 3,477 2012F 1,858 824 1,765 31 4,478 0 1,819 50 1,869 6,347 1,655 862 160 2,677 0 0 0 2,677 288 776 2,057 548 3,670

Profit and Loss

Year to Dec (US$ mn) Sales Cost of goods sold Gross profit Operating expenses Operating profit Interest income Interest expense Net interest Net Invst.Inc/(loss) Net oth non-op.Inc/(loss) Net extraordinaries Pretax income Income taxes Net profit EBITDA EPS (US$) EPS (US$) Bonus Adj. 2008 9,271 (8,629) 642 (563) 80 0 (32) (32) 1 149 0 197 (75) 121 315 0.02 0.02 2009 7,214 (6,785) 428 (460) (32) 0 (5) (5) 1 106 0 71 (32) 39 223 0.01 0.01 2010A 6,626 (6,344) 282 (499) (216) 0 (7) (7) 1 45 0 (176) (44) (218) 71 (0.03) (0.03) 2011F 6,580 (6,228) 352 (478) (126) 0 (9) (9) 2 197 0 65 (51) 12 232 0.00 0.00 2012F 8,022 (7,492) 531 (478) 53 0 (9) (9) 0 197 0 242 (49) 192 405 0.03 0.03

Source: Company data, Yuanta

Key Ratios
Year to Dec Growth (% YoY) Sales Op profit (13.6) (87.4) (61.2) (83.2) (82.8) (22.2) (139.7) (29.3) (68.1) (67.9) (8.1) 581.9 (68.2) (665.8) (660.0) (0.7) (41.7) 227.0 (105.7) (105.5) 21.9 (142.2) 74.6 1,437.2 1,436.1 2008 2009 2010A 2011F 2012F

Source: Company data, Yuanta

Cash Flow
Year to Dec (US$ mn) Net profit Depr & amortization Change in working cap. Others Operating cash flow Capex Change in LT inv. Change in other assets Investment cash flow Change in share capital Net change in debt Other adjustments Financing cash flow Net cash flow Free cash flow 2008 121 235 106 (27) 435 (648) 0 119 (529) 7 (530) 17 (506) (599) (227) 2009 39 254 240 132 665 (122) (3) 55 (69) 10 (116) 0 (106) 489 341 2010A (218) 287 (389) 213 (107) (254) (2) (62) (317) 26 506 9 542 118 (571) 2011F 12 358 238 62 670 (350) 0 53 (297) 2 0 0 2 375 120 2012F 192 352 (177) 58 425 (350) 0 53 (297) 0 0 0 0 127 (122)

EBITDA Net profit EPS Profitability (%) Gross margin Operating margin EBITDA margin Net profit margin ROA ROE Stability Gross debt/equity (%) Net cash (debt)/equity (%) Int. coverage (X) Int. & ST debt cover (X) Cash flow int. cover (X) Cash flow/int. & ST debt (X) Current ratio (X) Quick ratio (X) Net debt (US$ mn) BVPS (US$) Valuation Metrics (x) P/E P/FCF P/B P/EBITDA P/S

6.9 0.9 3.4 1.3 2.0 3.6

5.9 (0.4) 3.1 0.5 0.7 1.1

4.3 (3.3) 1.1 (3.3) (3.8) (6.1)

5.3 (1.9) 3.5 0.2 0.2 0.4

6.6 0.7 5.0 2.4 3.2 5.4

13.8 6.6 7.2 0.4 13.7 0.9 1.5 1.1 (227.1) 0.49

10.1 23.2 16.9 0.2 147.6 1.8 1.8 1.4 (838.1) 0.51

24.0 13.7 N.A. N.A. N.A. N.A. 1.7 1.4 (494.0) 0.50

24.8 25.0 8.3 0.1 75.4 0.8 1.6 1.3 (868.5) 0.48

23.5 27.1 28.2 0.3 47.8 0.5 1.7 1.4 (996.0) 0.51

Source: Company data, Yuanta

26.2 (13.9) 0.9 10.1 0.3

81.5 9.2 0.9 14.1 0.4

(14.5) (5.6) 0.9 44.8 0.5

263.1 27.5 0.9 14.2 0.5

17.1 (26.9) 0.9 8.1 0.4

Source: Company data, Yuanta

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 9 of 12

Appendix A: Important Disclosures

Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Foxconn Intl Holdings (2038 HK) Three-year recommendation and target price history
11.5 9.5 7.5 5.5 1 3.5 1.5 Aug-08 No. 1: 2: 3: 4: 5: 6: 7: Date 05 Oct 09 25 Nov 09 02 Feb 10 16 Apr 10 21 Jun 10 31 Aug 10 21 Dec 10 Feb-09 Aug-09 Closing Price (A) 5.10 6.72 8.23 7.79 5.94 5.17 5.49 Target Price (B) 6.33 7.90 9.40 9.30 6.40 4.80 5.20 Feb-10 Aug-10 Rating BUY BUY BUY BUY HOLD HOLD HOLD Feb-11 2 5 6 7 3.5 1.5 Aug-11 Analyst Bonnie Chang Bonnie Chang Bonnie Chang Bonnie Chang Bonnie Chang Bonnie Chang Bonnie Chang
Share Price HK$

11.5 9.5 7.5 4 5.5

Adjusted Target Price (C) 6.33 7.90 9.40 9.30 6.40 4.80 5.20

Source: Bloomberg, Yuanta Research Notes: A = price adjusted for stock & cash dividends; B = unadjusted target price; C = target price adjusted for stock & cash dividends. Employee bonus dilution is not reflected in A, B or C.
Current distribution of Yuanta ratings

Rating Buy Hold Sell Under Review Restricted Total:

# of stocks 129 78 29 5 2 243

% 53% 32% 12% 2% 1% 100%

Source: Yuanta Research

Ratings Definitions BUY: We have a positive outlook on the stock based on our expected absolute or relative return over the investment period. Our thesis is based on our analysis of the companys outlook, financial performance, catalysts, valuation and risk profile. We recommend investors add to their position. HOLD: We have a neutral outlook on the stock based on our expected absolute or relative return over the investment period. Our thesis is based on our analysis of the companys outlook, financial performance, catalysts, valuation and risk profile. SELL: We have a negative outlook on the stock based on our expected absolute or relative return over the investment period. Our thesis is based on our analysis of the companys outlook, financial performance, catalysts, valuation and risk profile. We recommend investors reduce their position. Under Review: We actively follow the company, although our estimates, rating and target price are under review. Restricted: The rating and target price have been suspended temporarily to comply with applicable regulations and/or Yuanta policies. Note: Yuanta research coverage with a Target Price is based on an investment period of 12 months. Greater China Discovery Series coverage does not have a formal 12 month Target Price and the recommendation is based on an investment period specified by the analyst in the report.

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 10 of 12

Global Disclaimer 2011 Yuanta. All rights reserved. The information in this report has been compiled from sources we believe to be reliable, but we do not hold ourselves responsible for its completeness or accuracy. It is not an offer to sell or solicitation of an offer to buy any securities. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice. This report provides general information only. Neither the information nor any opinion expressed herein constitutes an offer or invitation to make an offer to buy or sell securities or other investments. This material is prepared for general circulation to clients and is not intended to provide tailored investment advice and does not take into account the individual financial situation and objectives of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, investments or investment strategies discussed or recommended in this report. The information contained in this report has been compiled from sources believed to be reliable but no representation or warranty, express or implied, is made as to its accuracy, completeness or correctness. This report is not (and should not be construed as) a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on such business in that jurisdiction. Yuanta research is distributed in the United States only to Major U.S. Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended and SEC staff interpretations thereof). All transactions by a US person in the securities mentioned in this report must be effected through a registered broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended. Yuanta research is distributed in Taiwan by Yuanta Securities Investment Consulting. Yuanta research is distributed in Hong Kong by Yuanta Securities (Hong Kong) Co. Limited, which is licensed in Hong Kong by the Securities and Futures Commission for regulated activities, including Type 4 regulated activity (advising on securities). In Hong Kong, this research report may not be redistributed, retransmitted or disclosed, in whole or in part or and any form or manner, without the express written consent of Yuanta Securities (Hong Kong) Co. Limited. Taiwan persons wishing to obtain further information on any of the securities mentioned in this publication should contact: Attn: Research Yuanta Securities Investment Consulting 10F, 225, Section 3 Nanking East Road, Taipei 104 Taiwan Hong Kong persons wishing to obtain further information on any of the securities mentioned in this publication should contact: Attn: Research Yuanta Securities (Hong Kong) Co. Limited 23/F, Li Po Chun Chambers, 189 Des Voeux Road, Central Hong Kong

Yuanta
Hong Kong: Handsets 30 Aug, 2011

Foxconn Intl Holdings (2038 HK) Company Update Page 11 of 12

Yuanta Greater China Equities

Research
Ming Tan, CFA Head of Greater China Research Head of Financials +852 3969 9525 ming.tan@yuanta.com Kevin Gin, CFA Head of Real Estate +852 3969 9515 kevin.gin@yuanta.com Charles Z. Yan, CFA Head of Consumer +852 3969 9530 charles.yan@yuanta.com Dennis Chan Notebook Supply Chain +886 2 3518 7913 dennis.chan@yuanta.com Ming Hsun Lee, CFA Taiwan Consumer/Small & Mid Cap +886 2 3518 7938 ming.lee@yuanta.com Rita Wu China Energy +852 3969 9513 wurong@yuanta.com John Brebeck, CFA Head of Taiwan Research, Taiwan Strategist +886 2 3518 7906 john.brebeck@yuanta.com Danny Ho Head of Basic Materials +886 2 3518 7923 danny.ho@yuanta.com Aidan Wang Head of Macroeconomic Research +886 2 3518 7992 aidanwang@yuanta.com Andrew C Chen IC Backend +886 2 3518 7940 andrew.chen@yuanta.com May Lin PC Distribution/ODM & Taiwan Telecom +886 2 3518 7942 may.lin@yuanta.com Kelvin Ho Deputy Head of China Research, Head of Telecom and Media +852 3969 9518 kelvin.ho@yuanta.com Min Li Head of Alternative Energy +852 3969 9521 min.li@yuanta.com Bonnie Chang Handsets +852 3969 9904 bonnie.chang@yuanta.com Alison Chen Downstream Tech Small & Mid Cap +886 2 3518 7975 alison.chen@yuanta.com Stone Lin Taiwan Non-Tech +886 2 3518 7927 yichilin@yuanta.com Vincent Chen Head of Technology Research, Tech Strategist +852 3969 9903 vincent.chen@yuanta.com Kim-Chong Tan Head of Oil & Gas Research +852 3969 9526 kimchong.tan@yuanta.com Tess Wang Taiwan Financials +886 2 3518 7901 tess.wang@yuanta.com Charlene Gu Industrials & Autos +852 3969 9531 charlene.gu@yuanta.com Baron Nie, AIAA, CFA China/Hong Kong Insurance +852 3969 9514 baron.nie@yuanta.com Samuel Kwok, CFA China/Hong Kong Strategy and Quant +852 3969 9527 samuel.kwok@yuanta.com Hsinyi Tsai China Retail +852 3969 9532 hsinyi.tsai@yuanta.com George Chang, CFA Head of Upstream Tech +886 2 3518 7907 george.chang@yuanta.com

Johnny Wong Head of Metals & Mining +852 3969 9524 johnny.wong@yuanta.com

Sales and Trading

John Chang Head of Taiwan Equities +886 2 2175 8898 john.chang@yuanta.com Chris Dunham Head of HK Equities Head of HK Sales Trading & Execution +852 3969 9768 chris.dunham@yuanta.com Fanny Lin Head of Dealing +886 2 2175 8818 fanny.lin@yuanta.com Jimmy Huang Head of Greater China Sales +852 3969 9866 jimmy.huang@yuanta.com Augustine Chen Head of Taiwan Sales +886 2 2175 8962 augustine.chen@yuanta.com Duncan Wun Head of Hong Kong Sales +852 3969 9869 duncan.wun@yuanta.com

Tom Hsu Head of Taiwan Sales Trading +886 2 2175 8800 tom.hsu@yuanta.com Kerry Chen - Sales +886 2 2175 8922 kerrychen@yuanta.com Jenny Lo Sales Trading +852 3969 9769 jenny.lo@yuanta.com Joyce Wan Sales +852 3969 9876 joyce.wan@yuanta.com

Leo Hu - Sales +886 2 2175 8880 leo.hu@yuanta.com Sammy Mui Sales +852 3969 9875 sammy.mui@yuanta.com Jason Wang Sales Trading +886 2 2175 8888 Jason.wang@yuanta.com

Vickie Hu - Sales +852 3969 9878 vickie.hu@yuanta.com Charles Nissen - Sales +852 3969 9832 charles.nissen@yuanta.com Sharon Zhao - Sales +852 3969 9870 sharon.zhao@yuanta.com

Chan Hui Sales Trading +852 3969 9728 hui.chan@yuanta.com Fiona Tan Sales +886 2 2175 8921 fiona.tan@yuanta.com

Michael Lin - Sales +886 2 2175 8977 michael.lin@yuanta.com Ming Yi Tan - Sales +852 3969 9879 mingyi.tan@yuanta.com

Sales of Non-Taiwan Equities

Franker Lin Head of Foreign Equity Department +886 2 2175 8720 laiochenlin@yuanta.com Lunghui Chen Co-Head of Sales, Foreign Equity Department +886 2 2175 8730 lunghuichen@yuanta.com Oscar Yang Co-Head of Sales, Foreign Equity Department +886 2 2175 8733 oscaryang@yuanta.com