EFTA01385527.pdf

> Energy, Materials & Industrials Deutsche Bank Q Renault — Gaetan Toulemonde. BUY, close €85.2, €115 tgt, 35% upside ■ Emerging markets are the key drivers of the growth, such as: 1) Russia (delivering €500-700m operating profit growth); 2) Americas (mostly 2016-22E volume growth breakdown: EM leads the way focused in Brazil and bringing €300-€350m earnings growth); 3) China; 4) Iran; 5) India. 000 units 2016 2017E 2022 2016-2022E Europe 1,805 1,910 2,000 +200 ■ We expect the profit contribution from Europe to remain stable, at a high level, in light of modest growth (with Brexit a further drag on the UK) Africa Middle East (Maghreb, India, Iran) 491 540 850 +360 and regulatory costs. Eurasia (Russia, Turkey, CIS) 649 730 1,100 +450 ■ Economies of scale should drive €700m pa cost savings and thus Americas Brazil, Argentina...) 354 400 600 +250 increased operating profit. Renault has volumes of only 3.5m units, but in Asia Pacific (China, South Korea) 167 230 700 +530 partnership with Nissan has access to a purchasing department (€120bn) Sum 3.468 3.810 5,250 +1,790 and an R&D centre (€10bn) of 10m units. o/w from Europe 52% 50% 38% ■ Acceleration of synergies with Nissan. It took 18 years (1999-2017) to Source: Renault. Deutsche Bank esluneles have 20% of commonality between the two. It will take 4 years (2018-2021) to move it to 80%. ■ Renault has an attractive profile in the sector's context, including low cost Implied share price of Renault core is only €25 via SoTP and ultra low cost line up, main sites in low cost countries, EV expertise, 90 €85 economies of scale and EM exposure 80• ■ Renault's core is far too cheap at the current share price. The current 70 €54 E3 Ez share price implies a share price of €25/share for Renault's core business. 60 This is less than 2x P/E for a business still growing EPS at 5% p.a. to 50 40 2019E. 30 - ■ Catalysts: confirmation of the recovery in Russia and Brazil and the 20- resilience of European sales 10 0 Nissan value/ Daimler value / Net cash/pensions Renault core by Current price Related DB Research: Renault share Renault share core business difference Postcard from Curitiba (Toulemondel Source: Renault. Deutsche Bank estimates Deutsche Bank Research' European Equity Focus —January 2018 7S CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0086813 CONFIDENTIAL SDNY_GM_00232997 EFTA01385527