Earning Release

Telecomunicações de São Paulo S.A.’s (NYSE:TSP) 4Q 08 and FY 2008 results were broadly in line with our expectations. Considering Telesp’s leading position in the fixed-line market in the Sao Paulo region in Brazil, in addition to the opportunity presented by Data Transmission services, we maintain our positive outlook for the company’s financial growth prospects. Furthermore, the company’s Pay TV subscriber-base has experienced strong growth since the service was launched in FY 2007, and we expect this trend to continue. However, offsetting these positive growth factors is the fine of approximately BRL1.0 bn, which the company is expected to pay to the nation’s consumer protection agency due to complaints filed by customers for inadequate customer service and failure to achieve client demands. Hence, despite the strong fundamental factors, considering the fine imposed on the company, we reiterate Telesp’s preferred common stock a HOLD until we fully reassess the company. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. As we anticipate a negative currency impact on the ADR over the medium term, we do not expect a change in our current SELL rating. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Although Transocean Inc. (NYSE:RIG) reported strong revenue growth during 4Q 08 & FY 2008 given a rise in dayrates, its adjusted net income declined with an increase in tax expenses during 4Q 08. The company’s 4Q 08 & FY 2008 results were in line with our estimates. Going forward, despite an anticipated increase in dayrates for its High-Specification Floaters, Management forecasts a decline in dayrates for its Mid-waters Floaters. However, based on current price levels, we believe that Transocean’s common stock presents an attractive investment opportunity. As a result, we maintain our BUY rating for Transocean’s common stock until we fully reassess the company in our next update report. As we anticipate a positive currency impact on the European stock over our investment horizon, we maintain our BUY rating for the European stock until we revalue the company in our next update report.

Portugal Telecom, SGPS, S.A. (NYSE:PT) reported a strong set of results in 4Q 08. While revenues were in line with our estimate, operating and net level performance was significantly below our expectations due to higher-than-expected operating costs. We expect PT’s mobile operations in Brazil to continue supporting top-line growth, going forward, based on increasing wireless penetration in the region and an expanding customer base. Furthermore, PT’s entry into pay-TV has had a strong uptake in Portugal, with more than 300,000 customers as of 18 December 2008. Based on the above factors, we reiterate our BUY rating for the common stock. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We do not anticipate a change in the current ADR rating as we continue to anticipate a significant negative currency impact over the next 6-12 months. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

ING Groep N.V. (NYSE:ING) reported weak 4Q 08 results on 18 February 2009, as both Banking and Insurance operations were adversely impacted by weak financial market and macroeconomic conditions, including falling real estate and private equity valuations. Earnings were also negatively impacted by a sharp rise in impairment charges on the group’s Alt-A RMBS portfolio. Considering these results, we expect to lower our estimates and target price when we revalue the group in our next full update report. Therefore, although the target price derived in our last update report does not support a HOLD, we maintain our HOLD rating. We will reassess our common stock target price and rating in our next full update report. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. However, considering our fundamental outlook, we maintain our HOLD rating. We will reassess our ADR (1 ADR = 1 common share) rating in our next full update report.

Arch Capital Group Ltd.’s (NASDAQ:ACGL) adjusted total revenues exceeded our estimate due to higherthan- expected net premiums earned in 4Q 08. Despite significant reported losses, adjusted net income was broadly in line with our expectation as higher-than-expected top-line partially offset higher-thanexpected total claims and underwriting expenses. Going forward, we believe that hardening rates and increasing demand for reinsurance services will provide support to the company’s top-line. At current levels we maintain our BUY rating for the NYSE common stock. We will reassess the NYSE common stock rating for Arch Capital in our next update report. Based on our fundamental outlook and as we anticipate a significant positive currency impact on the European stock, we maintain our BUY rating. We will reassess the rating for Arch Capital in our next update report.

Montpelier Re Group’s (NYSE:MRH) adjusted total revenues were higher than our estimate in 4Q 08 due to higher-than-expected net premiums earned. Despite reported losses, adjusted net income was higher than our expectation reflecting both net premiums earned and lower-than-expected claims and underwriting expenses in 4Q 08. Going forward, we believe that hardening rates and increasing demand for reinsurance services will provide support to the company’s top-line. Although current price levels no longer support a HOLD rating, we maintain our NYSE common stock rating a HOLD until we reassess the NYSE common stock rating for Montpelier Re in our next update report. Based on our fundamental outlook and as we anticipate a significant positive currency impact on the European stock, we maintain our BUY rating for the European stock. We will reassess the rating for Montpelier Re in the coming weeks.

IPC Holdings Ltd.’s (NASDAQ:IPCR) 4Q 08 adjusted1 total revenues were above our estimate due to higher-than-expected premiums earned and net investment income. Going forward, we believe that hardening premium rates and increasing demand for reinsurance services will provide support to the company’s top-line. At current levels, we maintain our BUY rating for the NASDAQ common stock. We will reassess the NASDAQ common stock rating for IPC Holdings in our next update report. Based on our fundamental outlook and as we anticipate a significant positive currency impact on the European stock, we maintain our BUY rating. We will reassess the European stock rating for IPC Holdings in our next update report.

News

Chicago Bridge & Iron Co. N.V.’s (NYSE:CBI) NYSE common stock price has depreciated significantly since our previous company news alert, achieving our target price on 17 February 2009. The decline in the NYSE common stock price reflects ongoing volatility in global equity markets and the decline in oil prices. As the NYSE common stock price has declined and achieved our target price, we upgrade the NYSE common stock rating from a SELL to a HOLD at current price levels. We will reassess our target price and rating in our next update report, once the company releases its 4Q 08 & FY 2008 results. As we anticipate a significant positive currency impact on the European stock over our investment horizon, we maintain our BUY rating for the European stock at current price levels. We will reassess our target price and rating in our next update report, once the company releases its 4Q 08 & FY 2008 results.

The weakness in US financial markets has significantly impacted Babcock & Brown Air Limited’s (NYSE:FLY) ADR price, which has declined 25.5% since our last update. We reiterate the ADR a BUY, given our positive fundamental outlook arising from the company’s plan to further strengthen its balance sheet. We will reassess our target price and rating in our next update report, once the company announces its 4Q 08 and FY 2008 results. We continue to anticipate positive currency impact on the European ADR over the medium term. Furthermore, given our positive fundamental outlook for the company and current price levels, we do not anticipate a change in our BUY rating for the European ADR. We will reassess our target price and rating in our next update report, once the company announces its 4Q 08 and FY 2008 results.

Celestica Inc.’s (NYSE:CLS) NYSE common stock price has declined significantly since we downgraded the stock from a HOLD to a SELL in our company news alert, dated 01 December 2008, achieving our target price on 17 February 2009. The decline in the NYSE common stock price reflects the ongoing volatility in the stock markets and market concern over weak IT spending. Going forward, we continue to expect the company’s top-line to be negatively impacted by falling consumer and corporate IT spending over the medium term. However, as the NYSE common stock price has significantly declined and achieved our target price, we upgrade the NYSE common stock from a SELL to a HOLD. We will reassess the NYSE common stock target price and rating in our next update report. As we expect a significant positive currency impact on the Canadian stock over our investment horizon and given our fundamental outlook, we upgrade the Canadian stock rating from a HOLD to a BUY at current price levels. We will reassess the Canadian stock rating and target price in our next update report.

Compton Petroleum Corporation’s (NYSE:CMZ) common stock has declined significantly since we had moderated the common stock rating from a SELL to a HOLD in our company news alert dated 06 February 2009, which we believe reflects a decline in oil prices and general turmoil in equity markets over the same period. Although our target price no longer supports our HOLD rating, we maintain our HOLD rating given our concerns regarding the company’s leverage position and sustained volatility in equity markets. We will reassess our target price and rating in our next update report, once the company releases it 4Q 08 results in March 2009. We maintain our current SELL rating for the NYSE stock although our target price no longer supports a SELL rating given our fundamental outlook and as we continue to anticipate a significant negative currency impact on the NYSE stock over the medium term. We will reassess our target price and rating in our next update report, once the company releases its 4Q 08 results in March 2009.

The Allied Irish Banks PLC (NYSE:AIB) common stock appreciated significantly on 17 February 2009, reflecting heightened volatility in Irish financial stock prices. Despite this rise, we remain concerned about the ongoing recession in Ireland and its likely adverse impact on credit growth, as well as the possibility of further ratings downgrades in light of deteriorating asset quality. Therefore, although the target price derived in our last update report does not support a HOLD at current levels, we maintain our HOLD rating. We will reassess our target price and rating in our next update report, after the company releases its FY 2008 results. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. Therefore, we maintain our SELL rating. We will reassess our ADR (1 ADR = 2 common shares) target price and rating in our next update report, after the company announces its FY 2008 results.

Sappi Ltd.’s (NYSE:SPP) ADR price has declined significantly since our 4Q and FY 2008 update report, dated 16 December 2008. This decline partly reflects a broad-based sell-off in US markets over the same period. Meanwhile, the company reported weak 1Q 09 results and is suffering from weak demand for paper around the world. Considering this, we remain concerned about Sappi’s near-tomedium term growth prospects. Therefore, although the target price derived in our last update report does not support a HOLD, we maintain our HOLD rating. We will reassess our ADR target price and rating in our next full update report. As we continue to anticipate a significant positive currency impact on the South African stock, we do not anticipate a change in our BUY rating. We will reassess our South African stock target price and rating in our next full update report.

The Shinhan Financial Group (NYSE:SHG) common stock has depreciated significantly since our last update report, reflecting investor concerns over the economic downturn in South Korea. Media reports have also speculated that bank shares are suffering as a result of worries over South Korea’s foreign currency liquidity, following a sharp fall in the value of the won against the dollar in recent weeks. Although we remain concerned about the near term impact of volatility in financial markets, along with the impact of the domestic economic slowdown, our view is that the recent fall in the common stock price has left the company fundamentally undervalued. Therefore, we maintain our BUY rating. We will reassess our rating and target price in our next full update report. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. Therefore, we maintain our HOLD rating. We will reassess our ADR (1 ADR = 2 common shares) rating for Shinhan in our next full update report.

The Primus Guaranty Ltd. (NYSE:PRS) NYSE common stock price depreciated 22.9% in a single trading session on 17 February 2009, reflecting market fears over the credit derivative business and the state of the financial sector, and broad-based decline in the benchmark index on the same date. Our outlook for Primus remains negative given potential credit mitigation costs and the current challenging operating conditions. Therefore, we maintain the NYSE common stock rating a SELL. We will reassess our target price and rating in our next update report. Despite our expectation of a positive currency impact over the medium term, we maintain the European stock a SELL based on our fundamental concerns. We will reassess our target price and rating in our next update report, once the company announces its 4Q 08 and FY 2008 results.

On 17 February 2009, Trina Solar Ltd. (NYSE:TSL) released select 4Q 08 and FY 2008 financial figures. Although its revenue estimates reflect its expectations that it will outperform its 4Q 08 total net revenues guidance as well as meet its FY 2008 total net revenue and module shipment guidance, it has lowered its margin guidance for the quarter given an anticipated non-cash inventory charge. Given our concerns of slowing solar product demand in the solar industry with sustained lows in crude oil prices, we may marginally revise our estimates in our next update report once the company announces full results on 03 March 2009. As a result, we reiterate our HOLD rating for the stock until we revalue the ADR in our next full update. As we anticipate a significant positive currency impact on the European stock, we do not anticipate a change in our current BUY rating for the European ADR. We will reassess the European stock rating for Trina Solar after the company announces its 4Q 08 and FY 2008 results on 03 March 2009.

Suntech Power Holdings Co. Ltd. (NYSE:STP) reported higher than expected total net revenues and earnings in 4Q 08 and FY 2008. Although the company’s net revenue guidance is in line with our expectation, as gross margin guidance exceeds our expectation, we expect to revise our estimates upwards in our next update report. However, we do not expect a change in our rating despite an adjustment in our target price. As a result, we reiterate our SELL rating for the company’s ADR until we reassess the ADR in our next full update report in the coming weeks. As we anticipate a significant positive currency impact on the European stock over our investment horizon, we maintain our current HOLD rating for the stock until we reassess the European stock rating for Suntech in coming weeks.

New Valuations

Wipro(NYSE:WIT) expects a sequential decline of 5% in revenues from its largest segment, IT Services, in 4Q 09, reflecting the significant deterioration in global economic conditions and the subsequent impact on the IT services industry. In October 2008, Gartner, Inc. (Gartner), an IT research and advisory firm, forecast flat growth in the IT services sector in 2009, with the US and Western Europe being the most affected regions. Gartner also cut its global technology spending forecast for 2009 from its previous forecast of 5.8% to 2.3% y-o-y. The ongoing global economic downturn has led to several of Wipro’s clients to delay new projects and lower their discretionary IT spending, which may be further impacted by the World Bank ban on Wipro, something that could deter new business activity in the last quarter, there was a significant sequential decline in realisation rates and we expect rates to decline further going forward, as clients increasingly negotiate with vendors in an attempt to reduce costs. We also expect a shift in revenue-mix from onsite to offshore revenues as clients seek alternatives to control costs. Management stated that its Financial Services, Technology, Media and Telecom verticals have been the most affected by the current economic environment and delays in decision making by clients. Our outlook for the IT services industry on the whole is cautious and we expect a difficult operating market for Wipro going forward.

NTT DoCoMo, Inc.(NYSE:DCM)Due to downturn in the Japanese economy, the number of people travelling outside Japan declined significantly, which in turn pressurized the company’s International revenues in 9M 09. Going forward, we expect this trend to continue, which is expected to pressurize overall revenues. In addition, we expect overall revenues to be pressurized from the decline in wireless revenues, driven by the anticipated decline in ARPU, partially offset by a larger subscriber-base. We expect overall ARPU to decline due to a fall in voice ARPU. Voice ARPU is expected to decline over the next 2 years due to Fami-wari MAX 50 and other discount services launched by the company in order to attract new customers and reduce churn. However, decline in voice ARPU is expected to be partially offset by greater data ARPU. In addition, we expect the decline in overall revenues to be partially offset by increase in equipment revenues. Although we expect the number of handsets sold to decline due to deteriorating economic conditions, we expect Equipment revenues to increase due to an anticipated reduction in handset subsidies, driven by the introduction of new handset purchase methods; value course and basic course, launched in November 2007. Under value course, subscribers are offered cheaper monthly charges and in return, the subscriber has to bear the initial cost of the handset, while under the basic course; subscribers pay lower upfront costs for handsets, but are not entitled to discounts on monthly charges. Since approximately 90% of customers choose Value course, we believe that although it will help to support equipment revenues in the short term, ARPU is likely to be pressurized in the long term due to cheaper monthly charges offered to customers.

Royal Dutch Shell PLC(NYSE:RDSa)Current conditions in the global economy will continue to weigh on the hydrocarbon product demand in the future. Various oil monitoring agencies like the Energy information administration (EIA) and International Energy Agency (IEA) have cut their oil consumption forecasts for FY 2009. In fact, EIA expects world petroleum consumption to decline 0.9% y-o-y to 85.1 mn barrels per day in FY 2009 (Source: Short term energy outlook report dated January 2009). RDS’ refined oil products sales volumes will continue to be impacted in FY 2009, with a maximum proportion of its sales coming from Europe and the US (49.2% of total downstream sales in FY 2008), areas where the greatest decline in overall oil consumption is expected (-2.1% y-o-y in North America and -2.5% y-o-y in Europe) in FY 2009. Oil prices are expected to remain at lower levels during the year, further impacting the company’s revenues. Although declining oil prices will lead to lower input costs within the Downstream segment, the company’s bottom-line is expected to shrink with an anticipated decline in its top-line. Therefore, we maintain our muted outlook for the company’s ADR from current price levels.

Royal Dutch Shell PLC (NYSE:RDSb)Current conditions in the global economy will continue to weigh on the hydrocarbon product demand in the future. Various oil monitoring agencies like the Energy information administration (EIA) and International Energy Agency (IEA) have cut their oil consumption forecasts for FY 2009. In fact, EIA expects world petroleum consumption to decline 0.9% y-o-y to 85.1 mn barrels per day in FY 2009 (Source: Short term energy outlook report dated January 2009). RDS’ refined oil products sales volumes will continue to be impacted in FY 2009, with a maximum proportion of its sales coming from Europe and the US (49.2% of total downstream sales in FY 2008), areas where the greatest decline in overall oil consumption is expected (-2.1% y-o-y in North America and -2.5% y-o-y in Europe) in FY 2009. Oil prices are expected to remain at lower levels during the year, further impacting the company’s revenues. Although declining oil prices will lead to lower input costs within the Downstream segment, the company’s bottom-line is expected to shrink with an anticipated decline in its top-line. Therefore, we maintain our muted outlook for the company’s ADR from current price levels.

Aegon N.V.(NYSE:AEG) In January 2009, the IMF forecast the US economy to contract by 1.6% in 2009 and 2010, the UK economy to contract by 2.8% in 2009 and grow at 0.2% in 2010 and the European economy to contract by 2.0% in 2009 and grow by 0.2% in 2010. This contraction and realized/unrealized investment gains/losses are expected to continue to impact the company in the near to medium term. On 17 February 2009, Moody’s downgraded both its rating on the company’s senior debt and its insurance financial strength rating for US operations, and maintained a negative outlook. However, we believe that Aegon is sufficiently well-diversified and capitalized to withstand the current downturn, and the company’s plan to release €1 bn capital in FY 2009, in addition to €1.7 bn already released in FY 2008, is encouraging. Following the recent price decline, we believe that the common stock offers an attractive investment opportunity.

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