REAL CLIENT MANAGED PORTFOLIO

RUI DENG

FRANK DAMIAN

PO-CHIEH SHIH

March 29, 2012

AGENDA

Introduction Macroeconomic Review Relevant Stock Market Company Review & Business Financial Analysis Financial Projections Recommendations

INTRODUCTION

Source: Capital IQ Benchmark S&P 500

INTRODUCTION – TARGET COMPANY

EnerSys (ENS) is one of largest manufacturer, marketer and distributor of industrial batteries. ENS manufacture, market and distribute related products such as chargers, power equipment and battery accessories. In addition, ENS provides related after-market and customer-support services for industrial batteries. ENS’s products sell globally to over 10,000 customers in more than 100 countries.

Source: ENS 2011 Annual Report, Form 10-K, p. 5

INTRODUCTION – TARGET COMPANY

Position in GICS Map

Electrical Components & EquipmentCompanies that produce electric cables and wires, electrical components or equipment not classified in the Heavy Electrical Equipment Sub-Industry.

201040 Electrical Equipment 20104010

INTRODUCTION – TARGET COMPANY STOCK PRICE

Source: Morningstar

INTRODUCTION – TARGET’S KEY STATISTICS

Ticker ENS

Stock Price 35.79

Beta: 1.79

52wk Range: 17.35 - 40.32

Market Cap: 1.71B

P/E (ttm): 13.83

EPS (ttm): 2.59

Dividend Yield: N/A (N/A)

Number of Shares Oustanding: 50,044,246

Gross Profit Margin: 22.90%

Operating Income Margin: 9.40%

Net Profit Margin: 5.80%

Return on Assets (ttm): 7.01%

Return on Equity (ttm): 13.67%

SOURCE: Yahoo Finance

INTRODUCTION – TARGET’S KEY STATISTICS

MACROECONOMICS REVIEW –GLOBAL STATISTICS

MACROECONOMICS REVIEW – US STOCK MARKET

RELEVENT STOCK MARKET-INDUSTRY MARKET IN THE U.S.

RELEVENT STOCK MARKET-INDUSTRY COSTS STRUCTURE

RELEVENT STOCK MARKET-COMPETITORSThe industrial battery market is highly competitive. ENS’s competitors range from development stage companies to large domestic and international corporations.

•EuropeExide Technologies, FIAMM, NorthStar, SAFT, and Hoppecke.•AmericasExide Technologies, East Penn Manufacturing, C&D Technologies Inc, NorthStar, SAFT and EaglePicher (OM Group).•AsiaGS-Yuasa, Shin-Kobe and Zibo Torch, Coslight, Narada, and China Shoto.

Source: ENS 2011 Annual Report, Form 10-K, p. 8

RELEVENT STOCK MARKET-ENS MARKET SHARE IN THE U.S.

RELEVENT STOCK MARKET-COMPETITORS

RELEVENT STOCK MARKET-COMPETITORS

RELEVENT STOCK MARKET-COMPETITORS

Competitor Comparisons

ENS XIDE JCIMarket Cap: 1.71B 252.07M 21.86B

Employees: 8,400 10,027 162,000

Qtrly Rev Growth (yoy): 12.90% -2.00% 9.20%

Revenue (ttm): 2.24B 3.08B 41.71B

Gross Margin (ttm): 21.97% 16.91% 15.07%

EBITDA (ttm): 250.08M 185.88M 2.76B

Operating Margin (ttm): 9.02% 3.28% 4.79%

Net Income (ttm): 128.74M 45.75M 1.66B

EPS (ttm): 2.59 0.55 2.41

P/E (ttm): 13.83 5.81 13.34

PEG (5 yr expected): 1.71 0.25 0.62

P/S (ttm): 0.75 0.08 0.53

Dividend Yield: N/A N/A 2.20%

Return on Assets (ttm): 7.01% 3.05% 4.49%

Return on Equity (ttm): 13.67% 11.08% 15.98%

SOURCE: Yahoo Finance

COMPANY REVIEW & BUSINESSHISTORY •EnerSys and its predecessor companies have been manufacturers of industrial batteries for over 100 years. •Morgan Stanley Capital Partners teamed with the management of Yuasa, Inc. in late 2000 to acquire from Yuasa Corporation (Japan) its reserve power and motive power battery businesses in North and South America. •On January 1, 2001, the company changed its name from Yuasa, Inc. to EnerSys to reflect our focus on the energy systems nature of our businesses.• In 2004, EnerSys completed an initial public offering (the “IPO”).

Source: ENS 2011 Annual Report, Form 10-K, p. 6

ENS has two primary industrial battery product lines: reserve power products and motive power products.

•Reserve power products •Backup power for the continuous operation of critical applications in telecommunications systems.•Uninterruptible power systems, or “UPS”, applications for computer and computer-controlled systems.•Other specialty power applications

•Motive power products •Are used to provide power for manufacturing, warehousing and other material handling equipment, primarily electric industrial forklift trucks, mining equipment, and for diesel locomotive starting and other rail equipment.

COMPANY REVIEW & BUSINESSPRODUCTS & SERVICES

Source: ENS 2011 Annual Report, Form 10-K, p. 5

COMPANY REVIEW & BUSINESPRODUCTS & SERVICES ENS’s trademarks:

ArmaSafePlus, Cyclon, DataSafe, Deserthog, Douglas Battery, Douglas Legacy, Energia , FIAMM Motive Power, General Battery, Genesis, Hawker, HUP, Ironclad, LifeGuard, LifePlus, Life Speed, LifeTech, Loadhog, Odyssey, Oerlikon Battery, Oldham, Perfect Plus, PowerGuard, PowerSafe, ProSeries, Redion, Smarthog, Superhog, Supersafe, TeleData, Varta, Waterless, Wi-IQ, Workhog and XFC Flex.

ENS offer high-quality service, including preventative maintenance programs and customer support. The extensive industry experience of ENS’s sales organization results in strong long-term customer relationships.

Source: ENS 2011 Annual Report, Form 10-K, p. 6

Financial Analysis

Recent News: Mar 22, 2012 Completed a license and technology development agreement

with PowerGenix Systems, Inc. to provide nickel-zinc batteries to EnerSys' industrial battery customers worldwide

Mar 28, 2012 Announced the formation of a new joint venture company in India

to produce and market batteries for industrial applications Expands the addressable markets for its products

Source: ENS Investor Relations

http://phx.corporate-ir.net/phoenix.zhtml?c=180086&p=irol-newsArticle&ID=1677641&highlight=http://phx.corporate-ir.net/phoenix.zhtml?c=180086&p=irol-newsArticle&ID=1675579&highlight=

Financial Analysis

Sales (2010-2011)

Contributions to % Increase

 ($million) 2010% Net sales 2011% Net sales$ Increase% IncreaseEurope 742 47.0% 890.3 45.3% 148.3 20.0%Americas 700.3 44.3% 896.6 45.6% 196.3 28.0%Asia 137.1 8.7% 177.5 9.0% 40.4 29.5%Total net sales 1579.4 100.0% 1964.4 100.0% 385 24.4%

Reserve power 820.5 52.0% 970.4 49.4% 149.9 18.3%Motive power 758.9 48.0% 994 50.6% 235.1 31.0%Total net sales 1579.4 100.0% 1964.4 100.0% 385 24.4%

  Volume Price Acquisition FoEx Total % IncreaseEurope 16% 6% 3% -5% 20.0%Americas 19% 4% 5%  28.0%Asia 25% -2%  6% 29.5%   Reserve power 16% 2% 2% -2% 18.3%Motive power 21% 6% 6% -2% 31.0%

Financial Analysis

Interest Expense

Estimated Interest Expense

($million) 2009 2010 2011 AverageAvg debt outstanding 395.8 364.1 326.3 362.1Avg cash interest rate 5.00% 4.30% 4.40% 4.57%Interest 19.8 15.7 14.4 Accured interest 4.3 5.4 5.9 5.2Amortization of deferred financing fees 1.7 1.7 1.9 1.8Interest expense 25.8 22.8 22.2

($ million) 2012 2013 2014 2015 2016 2017 2018

Avg debt outstanding 362.1 362.1 362.1 362.1 362.1 362.1 362.1Avg cash interest rate 4.57% 4.57% 4.57% 4.57% 4.57% 4.57% 4.57%Interest 16.5 16.5 16.5 16.5 16.5 16.5 16.5Accured interest 5.2 5.2 5.2 5.2 5.2 5.2 5.2Amortization of deferred financing fees 1.8 1.8 1.8 1.8 1.8 1.8 1.8Interest expense 23.5 23.5 23.5 23.5 23.5 23.5 23.5

Financial Analysis

Profitability

Margin Analysis

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012

Profitability Return on Assets % 4.2% 5.3% 6.1% 5.1% 6.8% 7.0% Return on Capital % 6.3% 8.0% 9.0% 7.2% 10.0% 10.1% Return on Equity % 9.1% 9.6% 12.0% 8.5% 12.9% 13.7% Return on Common Equity % 9.2% 9.7% 12.0% 8.6% 12.9% 13.8%

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012

Margin Analysis Gross Margin % 20.7% 18.8% 21.0% 22.9% 22.9% 22.0% SG&A Margin % 14.7% 12.3% 13.0% 14.8% 13.2% 13.0% EBITDA Margin % 9.1% 8.9% 10.3% 10.9% 12.0% 11.2% EBITA Margin % 6.0% 6.6% 8.0% 8.1% 9.7% 9.1% EBIT Margin % 6.0% 6.5% 8.0% 8.1% 9.7% 9.0% Net Income Margin % 3.0% 2.9% 4.2% 3.9% 5.8% 5.8%

Financial Analysis

Outperform the benchmark

Source: Bloomberg

Financial Analysis

Asset Turnover

Short-term Liquidity

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012Asset Turnover Total Asset Turnover 1.1x 1.3x 1.2x 1.0x 1.1x 1.2x Accounts Receivable Turnover 4.6x 4.7x 4.6x 4.3x 4.6x 5.1x Inventory Turnover 5.8x 5.8x 5.7x 5.3x 5.1x 5.3x

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012Short Term Liquidity Current Ratio 1.7x 1.7x 2.2x 2.1x 2.2x 2.2x Quick Ratio 1.0x 1.0x 1.5x 1.4x 1.3x 1.2x Cash from Ops. to Current Liability 0.2x 0.0x 0.6x 0.3x 0.2x 0.3x Avg. Days Sales Outstanding

80.1

77.2

79.5

85.5

78.8

71.1 Avg. Days Inventory Outstanding

63.3

63.4

63.8

69.5

71.0

68.3 Avg. Days Payable Outstanding

52.3

48.3

49.4

47.1

51.5

46.9 Avg. Cash Conversion Cycle

91.0

92.3

93.8

107.9

98.3

92.4

Financial Analysis

Solvency

Growth

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012Long Term Solvency Total Debt/Equity 73.8% 61.4% 57.7% 45.9% 26.5% 28.4% Total Debt/Capital 42.5% 38.0% 36.6% 31.5% 20.9% 22.1% LT Debt/Equity 69.7% 53.6% 52.9% 42.5% 26.1% 26.0% LT Debt/Capital 40.1% 33.2% 33.5% 29.1% 20.6% 20.3% Total Liabilities/Total Assets 61.3% 59.4% 54.8% 52.5% 46.5% 46.7%

For the Fiscal Period Ending12 months

Mar-31-2007

12 monthsMar-31-

2008

12 monthsMar-31-

2009

12 monthsMar-31-

2010

12 monthsMar-31-

2011

LTM12 months

Jan-01-2012Growth Over Prior Year Gross Profit 12.4% 22.7% 8.3% (12.7%) 24.6% 16.6% Net Income 47.1% 32.0% 37.2% (24.0%) 82.1% 27.3% Accounts Receivable 13.9% 43.1% (29.2%) 7.7% 21.0% 8.0% Inventory 30.5% 43.3% (37.6%) 21.5% 31.7% 14.3% Net PP&E 6.8% 13.0% (11.4%) 4.6% 9.3% 3.8% Total Assets 11.5% 21.4% (12.7%) 10.7% 10.7% 3.5% Tangible Book Value 170.2% 96.6% 14.2% 28.9% 42.8% 4.8% Common Equity 21.8% 27.6% (3.1%) 16.4% 24.9% 6.6% Cash from Ops. 68.9% (94.5%) 5,361.3% (37.7%) (44.0%) 112.3% Capital Expenditures 6.8% 6.3% 26.9% (21.1%) 32.9% (3.4%)

Comparables – Multiples Valuation

Reality Check

DuPont Analysis

Estimated

  2008 2009 2010 2011

NPM 2.9% 4.2% 3.9% 5.8%

TAT 1.30 1.23 1.00 1.13EM 2.53 2.35 2.17 1.98ROE 9.7% 12.0% 8.6% 12.9%

2012 2013 2014 2015 2016 2017 2018NPM 7.2% 8.2% 8.9% 9.3% 9.6% 9.8% 9.9%

TAT 1.24 1.28 1.29 1.27 1.25 1.20 1.16EM 1.86 1.80 1.70 1.57 1.44 1.34 1.24ROE 16.6% 19.0% 19.4% 18.5% 17.2% 15.8% 14.2%

DCF Model

CAPM

Historical ROE

Cost of Equity

Risk -free rate Beta Risk PremiumCAPM2% 1.79 6% 12.7%

           LTM 12-m

  31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 1-Jan  2007 2008 2009 2010 2011 2012

ROE 9.2% 9.7% 12.0% 8.6% 12.9% 13.8%

WACC

Discount Rate

WeightCAPM 12.74% 80%ROE 13.35% 20%Cost of equity 12.86%

Debt 253,400Cost of debt 7.26%Equity 1,679,493Cost of equity 12.86%Tax rate 28.80%WACC 11.9%

Adjustment 1.0%Discount rate 12.9%

Financial Analysis

Sensitivity Analysis Sensitive to discount rate

1% increase in discount ratePrice estimation drops to $33 (13% decrease)

1% decrease in discount ratePrice estimation increases to $45 (17% increase)

Recommendation

• Current Price = $34.77• DCF Model = $35.80• Comparables Approach = $36.31

• Uncertainty over its ability to compete with new technologies and companies in Asia

• Insider Transaction• Need to see tangible results from its cost-cutting initiatives and

recent acquisitions • Still believe in management and business

• Recommendation: WATCH LIST