1. China 2.0 Tim Rocks, Head of Market Research and Strategy, BTIS June 2016

2. China bouncing  There has been a major change in government priorities. The government has softened its hard line reform agenda and refocussed on economic growth.  The effect could last around 2 years because this is the length of the construction cycle.  However, extra credit ultimately adds to financial strains so cannot be sustained for too long. Page 2

3. China 2.0 e-commerce Page 3 China leads the world in ecommerce with more to follow: No legacy assets like shopping malls Less regulation that acts as a barrier. Companies were able to build “closed loops” including banking, distribution as well as retail Massive scale Government assistance. The government gave away 4G spectrum

4. China 2.0: fintech disruption Page 4 Alibaba will reshape global commerce A progression from transaction then payments then banking then credit bureau then wealth management products the accounting also seem natural when you have a closed loop “marketplace”: +If you know a companies payment history you can start micro-lending or selling data as a credit bureau. And since you hold cash on escrow you have money to lend. +If your clients hold excess cash in their accounts, why not offer them a better return? Alibaba became one of the largest wealth firms in the world in a matter of months. +If your clients mostly transact through your website, why not offer accounting? Alibaba has become one of the largest cloud computing software companies in the world.

5. China 2.0: tourism Page 5 Chinese tourism is already having a major impact

6. China 2.0: tourism Page 6 But there is much more to come… Winners include casinos, airlines, airports, accommodation, attractions, flagship retailers, wine and skin products and construction Fun holiday?

7. China 2.0: Electric Vehicles Source: UBS Page 7 Electric vehicles take up is happening fast. Sales have been growing at 60% per year. There will be 1 million electric vehicle sold in 2016, half of which will be in China. China targeting 5 million by 2020 – 20% of auto sales. Plug in EV sales globally

8. Clean tech boom Page 8 Rapid and complimentary advances in battery, solar and electric vehicle technology are combining to create one of the most significant transformations in economic history. This could all happen much faster than you think: +No more petrol vehicles +Most energy from solar +Most households off the electrical grid There will be major winners and losers from this

9. Tech take up is always under-estimated Source: CLSA, Tony Seba Page 9 In 1985, AT&T forecast for cell-phone adoption by the year 2000: 900,000 subscribers

10. Tech take up is always under-estimated Source: CLSA, Tony Seba Page 10 In 1985, AT&T forecast for cell-phone adoption by the year 2000: 900,000 subscribers The actual number was 109 million US cell phone ownership

11. Best selling luxury car model in America in 2015 Source: UBS Page 11

12. EVs are better cars Page 12 EVs are superior for a few reasons: Combustion engines only 20% energy efficient vs 95% for EV. EV will cost at least 10 times less to fuel ($300/yr vs $3000/yr) Maintenance will be much less. There are less than 100 moving parts in EV compared with 2000 for conventional cars and much less complicated parts (transmission, clutch, crankshafts etc) …and they will soon be cheaper cars

13. Battery costs are collapsing with scale Source: CLSA Page 13 The battery cost in the EV will fall from $35,000 to $8,000 over the next five years

14. Cost of electric vehicle Source: CLSA Page 14 Purchase cost parity by 2020 but operating costs head towards zero. GM Bolt will be $37,000 in 2017 and Foxconn is targeting $15,000

15. Tesla Gigafactory Construction Source: Company reports Page 15 Will open in 2017 and cost $5 bill. It will build enough batteries to run 500,000 cars and reduce costs by 30-50%.

16. Tesla Powerwall & Powerpack Source: Company reports Page 16

17. Batteries make solar viable Source: Salt Batteries Page 17

18. Hydro is inefficient storage Source: US Geological Survey Page 18

19. Grid defection in Australia Source: Climate Change Authority, AGL Page 19

20. Solar is here Source: CLSA, EPIA Page 20 Solar installed capacity has been growing at 41% per year. If this rate continues, it will meet 100% of energy needs by 2030

21. Implications are significant Source: Climate Change Authority, AGL, US DOE Page 21 60% of oil is used for land transportation What happens to the electrical grid? Mechanics and car dealers? Lithium and graphite producers are major winners

22. Lithium boom – Orocobre (ORE AU) Source: Company reports Page 22

23. Lithium price Source: Thomson reuters Page 23

24. Graphite boom – Syrah Resources (SYR AU) Source: Company reports Page 24

25. Redflow already producing (RFX AU) Source: Company reports Page 25

26. Smart meter boom – Netcomm (NTC AU) Source: Company reports Page 26

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