Shao-Lun Lu Ying Jiang Hui Li

Agenda  Company Overview  Relevant Macroeconomic Trends  Industry Structure Analysis  Financial Analysis  Projections/Assumptions  Valuation  Recommendation

Company Overview  Info:  Incorporated in Delaware in 1929  About 25,000 employees  Market Cap : 3.66 billion  Business:  Producing Ride performance & Clean air products systems to original equipment and aftermarket customers  operate 62 clean air and 27 ride performance manufacturing facilities worldwide  Segment  Clean Air – 68%  Ride Performance – 32%  Clients  Original Equipment Manufacturer – 84%  Aftermarket – 16% Source: TEN 10-K report & FOURTH QUARTER AND FULL YEAR 2013 report

Revenue Analysis Source: TEN 10-K report & Bloomberg

Tenneco’s Brand Source: TEN Website

Product Map Source :Tenneco fourth quarter and full year 2013 report

Technology & Regulation map Technology Roadmap Source :Tenneco official website & TransportPolicy.net

SWOT Analysis StrengthsWeaknesses  Strong market position & top leader  Advanced R&D ability  Strong global presence  Highly leverage  Highly dependence on top 2 clients OpportunitiesThreats  More stringent regulation of vehicle emissions is occurring globally  Available content per vehicle to continue to rise over the next several years  Growing commercial vehicle business  Vulnerable to economy cycle  Longer product lives of automotive parts  Future prevalence of electric vehicle, ex:Tesla

Relevant Macroeconomic Trends  In 2017, the global automotive manufacturing industry is forecast to have a volume of 188,398 thousand units, an increase of 37.2% since  The compound annual growth rate of the industry in the period is predicted to be 6.5%  In 2017, the North American automotive manufacturing industry is forecast to have a volume of 21,666.2 thousand units, an increase of 32.1% since  The compound annual growth rate of the industry in the period is predicted to be 5.7%. Source: MARKETLINE North America automotive manufacturing industry value forecast: $ billion, 2012–17 Global automotive manufacturing industry volume forecast: thousand units, 2012–17

Automotive Manufacturing Industry Volume Forecast: thousand units, 2012–2017 Asia-PacificIndia EuropeSouth America Source: MARKETLINE

Light Vehicle industry production YoY% Change

Porter’s Five forces Rivalry Competition MED-HIGH Numerous players in the industry, including small auto part players and even OEM clients Overall highly competitive nature of the automobile and commercial vehicle parts industries Supplier’s bargaining power MED-HIGH Too much dependency on substrate and steel provider Suppliers to this industry tend to be large multinational incumbents, giving them power over market players Buyer’s bargaining power MED -High Large market players have more buying power Pricing pressure from OEMs. Substitutes LOW Emission control and ride control are necessary End user could replace their car with a new one instead of buying replacement parts Manufacturers will likely be using such products already and industry players already offer these products Threat of new entrants LOW Components are usually produced in high volumes, meaning that large capital investment is required from new entrants Significant intellectual property is needed, ex: patents and copyrights

Stock Performance Source: Yahoo Finance

Financial Analysis Source: Tenneco Inc K, Tenneco Inc K, Bloomberg

Comparable Companies Source: Capital IQ, Bloomberg

Comparable Companies Source: Capital IQ, Bloomberg

Technical Analysis Source: StockCharts.com

Forecast Assumptions Source: Tenneco Inc K, Tenneco Inc K

Forecast Assumptions

Cost of Capital Source: Tenneco Inc K, Bloomberg

Valuation-DCF Source: Tenneco Inc K, Tenneco Inc K

Valuation-DCF

Implied Share Price Current Stock Price: $59.72

Recommendation 24 Watch List