Earning Release

On 19 February 2009, Gerdau S.A. (NYSE:GGB) reported its FY 2008 results. While revenues and operating income were in-line with our estimates, adjusted1 net income exceeded our estimates. However, our fundamental outlook remains broadly unchanged and, therefore, we maintain our HOLD rating for the preferred stock. We will reassess our target price and rating for the Gerdau preferred stock in our next update report. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. Furthermore, based on our fundamental outlook for the company and current price levels, we downgrade the Gerdau ADR from a HOLD to a SELL. We will reassess our target price and rating in our next update report.

Shire Ltd. (NASDAQ:SHPGY) reported modest growth in 4Q 08 revenues, marginally below our estimate. Adjusted operating margin and net margin fell short of our expectations in 4Q 08. However, we expect the company to continue to benefit from new product launches, in terms of revenues and margins, in FY 2009. Therefore, we maintain our positive outlook for the company. Consequently, we reiterate our BUY rating for the ADR (1 ADR = 3 UK shares). We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We maintain our BUY rating for the UK stock based on our expectation of a positive currency impact over the medium term and our positive fundamental outlook for the company. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Although Copa Holdings S.A.’s (NYSE:CPA) 4Q 08 operating revenues were in line with our estimate, profitability, adjusted for hedging losses, significantly exceeded our expectation. As we continue to expect Copa will add more fuel efficient planes to its fleet in the future and given our anticipation of a decline in fuel prices, we are confident of growth in the company’s profitability in the future. Therefore, we do not anticipate a change in our NYSE common stock rating. We will reassess the ADR in our next update report. As we continue to expect a significant positive currency impact over the medium term and given our fundamental outlook, we do not anticipate a change in our current European stock rating. We will reassess the European stock (1 European stock = 1 NYSE common stock) in our next update report.

Diana Shipping Inc. (NYSE:DSX) experienced strong y-o-y growth in both its top-line and profitability during 4Q 08, beating our expectations for the quarter. Going forward, we are cautious about the company’s future revenue growth as a number of its vessels are scheduled to complete their current contracts in the next year and as we expect TCE rates to remain under pressure over the same period. Consequently, we are likely to revise our estimates and target price downwards when we come to revalue the stock in our next update report. Therefore, based on current price levels, we downgrade the NYSE stock from a BUY to a HOLD. We will reassess the NYSE common stock rating for Diana in the coming weeks. Given our anticipation of a significant positive currency impact on the European stock over our investment horizon, we maintain our BUY rating for the European stock. We will reassess the European stock rating for Diana in the coming weeks.

Grupo Aeroportuario del Sureste, S.A.B de C.V.’s (NYSE:ASR) 4Q 08 revenues and earnings exceeded our estimates. However, we do not anticipate a significant change in our estimates as we expect its passenger traffic growth will be impacted by poor economic conditions in FY 2009. We will reassess the common stock in our next update report. As we continue to expect a negative currency impact over the medium term and given our fundamental outlook, we do not anticipate a change in our current ADR rating although our target price does not support a SELL. We will reassess the ADR (1 ADR = 10 common shares) in our next update report.

QLT Inc. (NASDAQ:QLTI) reported a y-o-y increase in revenues led by robust Eligard sales in 4Q 08. Results are not comparable with our estimates as we considered revenues from Eligard as income from discontinued operations, while QLT’s 4Q 08 and FY2008 results include Eligard’s revenue as income from continuous operations. Although QLT reported improved operating performance in 4Q 08, we remain concerned over QLT’s weak product pipeline, with no strong product expected over the next 2 years and weakening sales of Visudyne. Consequently, although the NASDAQ common stock target price does not support a HOLD rating at current price levels, we maintain our HOLD rating and will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We reiterate the Canadian stock a BUY, as we continue to anticipate a significant positive currency impact over our investment horizon. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Verigy Limited’s (NASDAQ:VRGY) 1Q 09 results were below our previous expectations, but reflected revised Management guidance. With the impact of the seasonally slow quarter of the year compounded by severe deterioration in end-market demand, we anticipate semiconductor companies to curb capital spending even further. As a result, we continue to hold a weak outlook for the company in the near term and maintain our HOLD rating for Verigy, although the current price does not suggest a HOLD. We will reassess the NASDAQ common stock rating and target price for Verigy in our next full update report. Although the target price does not support a HOLD rating at current levels, and despite our anticipation of a positive currency impact on the European stock in the medium term, we moderate the European stock rating from a BUY to a HOLD in view of our reduced fundamental outlook. We will reassess the European stock rating and target price for Verigy in our next full update report.

Anglo American PLC (NASDAQ:AAUK) reported lower-than-expected FY 2008 revenues and profitability on 20 February 2009. Considering weak demand and pricing for commodities at present, as well as cutbacks in the company’s capex plans, we expect to lower our estimates and target price in our next update report. Despite this, we feel the recent sell-off has left the company fundamentally undervalued. Therefore, we maintain our BUY rating for the ADR. We will reassess our ADR (2 ADRs = 1 UK share) rating for Anglo American in our next update report. We continue to anticipate a significant positive currency impact on the UK stock over our investment horizon. Therefore, we maintain our BUY rating. We will reassess our UK stock rating for Anglo American in our next update report.

Companhia Vale do Rio Doce (NYSE:RIO) announced its 4Q 08 and FY 2008 results on 19 February 2009. While FY 2008 net revenues and adjusted1 operating income were in line with our estimates, adjusted net income was above our estimate. We remain encouraged by Vale’s healthy financial position, which will both support its ambitious capex plans and offer a good deal of isolation from the impact of the current economic downturn. Therefore, we maintain our BUY rating for the preferred ADR (1 preferred ADR = 1 preferred share). We will reassess our preferred ADR target price and rating in our next full update report. We continue to anticipate a significant positive currency impact on the Brazilian preferred stock over our investment horizon. Therefore, we maintain our BUY rating. We will reassess our Brazilian preferred stock rating for Vale in our next full update report.

News

Flextronics International Limited’s (NASDAQ:FLEX) NASDAQ common stock price has declined significantly since we downgraded the stock from a HOLD to a SELL in our previous company news alert, achieving our target price on 19 February 2009. The decline in the NASDAQ common stock price reflects ongoing volatility in global stock markets and market concern over the current Electronics Manufacturing Services (EMS) industry. As the NASDAQ common stock has significantly declined and achieved our SELL target price, we upgrade the NASDAQ common stock from a SELL to a HOLD. We will reassess the NASDAQ common stock rating and target price in our next update report. As we anticipate a significant positive currency impact on the European stock over our investment horizon and given our fundamental outlook, we upgrade the European stock from a HOLD to a BUY at current price levels. We will reassess our target price and rating for the European stock in our next update report.

Tyco Electronics Ltd.’s (NYSE:TEL) NYSE common stock price has declined significantly since our 4Q 08 update report, which we believe primarily reflects weak market conditions and the company’s poor 1Q 09 performance. In view of this, we are likely to lower our estimates and target price in our next update report. As a result, although the NYSE common stock target price does not support a HOLD rating at current price levels, we maintain our HOLD rating for the NYSE common stock and will reassess our target price and rating in our next update report. As we anticipate a significant positive currency impact on the European stock over our investment horizon, we upgrade the European stock to a BUY. We will reassess our target price and rating for the European stock in our next update report.

On 19 February 2009, Embraer-Empresas Brasileira de Aeronautica S.A. (NYSE:ERJ), announced its restructuring plan to limit costs, reflecting the company’s expectation of slowdown in demand for commercial and executive aircraft. In light of this, we are likely to lower our revenue and operating income estimates. Nevertheless, given the decline in the Embraer ADR since our previous update report, we maintain our BUY rating for the ADR. We will reassess our target price and rating in our next update report, once the company issues its 4Q 08 and FY 2008 results. We continue to expect a positive currency impact on the Brazilian stock over the medium term, due to an anticipated appreciation of the US dollar relative to the Brazilian real. Hence, we maintain our BUY rating for the Brazilian stock, based on our fundamental outlook for the company and our expectation of a positive currency impact. We will reassess our target price and rating in our next update report, once the company issues its 4Q 08 and FY 2008 results.

LDK Solar Co., Ltd’s (NYSE:LDK) common stock plunged on 19 February 2009, as investors reacted to the company’s lowered revenue and earnings guidance for FY 2008. As we expect to revise our estimates in our next update report, we maintain our HOLD rating for the company’s NYSE common stock although our target price does not support a HOLD. We will reassess the stock in our next update report after the company announces its 4Q 08 and FY 2008 results on 11 March 2009. Despite our anticipation of a positive currency impact in the medium term and the stock not supporting a HOLD rating at current price levels, we reiterate our HOLD rating for the European stock based on our fundamental outlook. We will reassess the European stock rating for LDK Solar after the company announces its 4Q 08 and FY 2008 results on 11 March 2009.

On 19 February 2009, Allied Irish Banks PLC (NYSE:AIB) issued a trading update for FY 2008, in which it revised its earnings forecast downward and increased its expectations for impairment charges on the loan book. We remain concerned by the ongoing recession in Ireland and its likely adverse impact on credit growth, as well as the impact of deteriorating asset quality on the company. 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 the coming weeks. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. Therefore, although the target price derived in our last update report does not support a SELL at current levels, we maintain our SELL rating. We will reassess our ADR (1 ADR = 2 common shares) target price and rating in the coming weeks.

Prudential PLC (NYSE:PUK) reported modest growth in its insurance business in FY 2008. The company’s decision to transfer the assets and liabilities of its agency distribution business in Taiwan to China Life Insurance Company Ltd. (Taiwan) is positive, and will further enhance the company’s capital position. Considering the general downturn and the company’s expectation of significant unrealized losses, we plan to revise our estimates and target price downwards when we come to revalue the stock. However, we believe that at current levels the stock is undervalued and offers an attractive investment opportunity. We therefore, maintain our current BUY rating for the common stock, and plan to reassess the common stock rating and target price for Prudential in the coming days. Although we continue to expect a significant negative currency impact on the ADR over the medium term, based on our fundamental outlook, we maintain our BUY rating for the ADR at current price levels. We will reassess the ADR (1 ADR = 2 common shares) rating for Prudential in the coming days.

The Royal Bank of Scotland Group PLC’s (NYSE:RBS) common stock price appreciated significantly on 19 February 2009, reflecting ongoing volatility in the financial sector. Furthermore, investors reacted positively to news that the British government was set to waive its rules for participation in its asset protection scheme, allowing the bank to spread fees for the insurance over several years to avoid weakening its capital reserves. Despite this, and although the target price derived in our last update report does not support a SELL, we maintain our SELL rating in light of current conditions in financial markets and the bank’s recent dismal trading update. We will reassess our target price and rating in our next update report, once the bank announces its FY 2008 results. We expect a significant negative currency impact over our investment horizon. Therefore, although the ADR target price does not support a SELL at current price levels, we maintain our SELL rating. We will reassess our ADR (1 ADR = 20 common shares) rating and target price, once the bank releases its FY 2008 results.

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