EFTA Document EFTA01385527

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