Earning Release

Trico Marine Services, Inc. (NASDAQ:TRMA) reported lower than expected results in 4Q 08, which largely reflected a decline in day and utilization rates for its multi-purpose service vessels (MSVs). While the company has an order backlog of US$0.9bn comprised largely of subsea contracts, it expects sustained weakness in its towing segment in the future. Given lower than expected results and the company’s anticipation of sustained weakness in towing day and utilization rates going forward, we maintain a HOLD rating for the NASDAQ common stock despite our target price not supporting a HOLD. We will reassess the NASDAQ common stock rating for Trico in the coming weeks.

Pearson PLC’s (NYSE:PSO) top-line as well as earnings in FY 2008 were above our expectations. Top-line growth was led by strong double-digit percentage growth in the Education and FT Group businesses, despite recessionary trends witnessed in the US economy, which is the company’s largest operating segment. Given the company’s better-than-expected results and current price levels we maintain our BUY rating for the common stock. We will reassess the common stock rating and target price for Pearson in the coming weeks. We expect to introduce a 6-12 month investment horizon in our next update report as we now expect a significant positive currency impact over the medium term1. We will reassess the ADR rating for Pearson in the following weeks.

While Distribucion y Servicio D&S S.A. (NYSE:DYS) recorded 2.5% y-o-y revenue growth in 4Q 08, higher than our estimate, operating profit and adjusted1 net income declined y-o-y. Going forward, DYS is expecting to open new stores in both Peru and Chile. In addition, the company’s continuous effort of opening new stores under the Aceunta and Ekono brands, coupled with the focus on the lower and middle-income group, by offering products at lower prices, will further support top-line growth. We expect DYS’ dominant position in the Chilean retail market to support the company through weakening economic conditions. Therefore, in light of these factors and mixed 4Q 08 results; we maintain our cautious outlook for the company. As a result, although the common stock target price does not support a HOLD rating at current price levels, we maintain our HOLD rating. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We anticipate a significant negative currency impact on the ADR over our investment horizon. In addition, current price levels no longer support our HOLD rating. Therefore, we downgrade our ADR rating from a HOLD to a SELL. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Perfect World Co. Ltd (NASDAQ:PWRD) reported 4Q 08 and FY 2008 top-line marginally above our expectations and within Management’s guided range. We maintain our positive outlook for Perfect World’s future performance based on its upcoming game titles, alliances and agreements to operate and develop games, in addition to Perfect World’s entry into Europe and other Asian markets. Hence, we reiterate our BUY rating for the ADR. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We anticipate a positive currency impact on the European stock over the next 6-12 months. Therefore, we maintain our BUY rating for the European stock based on our anticipated positive currency impact and positive fundamental outlook for the company. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Telecom Italia S.p.A.’s (NYSE:TI) 4Q 08 overall performance was below our expectations. In addition, FY 2008 top-line and EBITDA margin fell short of Management expectations. The company reported a y-o-y decline in 4Q 08 revenues, however, the company reported strong operating and net performances, supported by lower operating costs and tax charges. Although TI dominates the Domestic Wireline and Wireless markets in Italy, we remain concerned over the company’s future performance based on a saturated Wireless domestic market and declining Wireline accesses. Since our previous update report, the common stock has declined 22.7%, in line with the 27.6% decline experienced by the MIBTEL index over the same period. Therefore, considering the lower-thanexpected 4Q 08 performance, we hold a cautious outlook for TI. As a result, although the common stock target price does not support a HOLD rating at current levels, we downgrade our rating from a BUY to a HOLD. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. We anticipate a negative currency impact on the ADR over the next 6-12 months. Therefore, although the ADR target price does not support a HOLD rating at current price levels, we downgrade our rating from a BUY to a HOLD, based on our cautious outlook for the company and our anticipated negative currency impact on the ADR. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Warner Chilcott Limited (NASDAQ:WCRX) reported revenues in-line with our estimate for 4Q 08. Performance at the operating and net levels exceeded our expectations in 4Q 08. We believe the company will continue to report strong top-line growth, going forward, driven by strong demand for Taclonex, Doryx, Leostrin 24 FE and Femcon FE. Consequently, our outlook for the company remains broadly unchanged and 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 maintain our BUY rating for the European stock based on our expectation of a positive currency impact on the European stock 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.

Allied Irish Banks PLC (NYSE:AIB) reported moderate growth in Net Interest Income (NII) during FY 2008. However, a sharp rise in provisions for credit losses negatively impacted the bottom-line. Considering this, as well as the weak state of the Irish economy and its likely impact on credit growth, we remain concerned about the company’s growth prospects over our investment horizon. Therefore, even though 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 update report. 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.

Empresas ICA, S.A.B. de C.V (NYSE:ICA) reported a significant y-o-y increase in 4Q 08 revenues, operating profitability and adjusted1 net income, above our expectations, reflecting growth in all segments. We believe the company’s overall growth prospects remain strong and in view of its healthy construction backlog, we maintain our current BUY rating for Empresas ICA’s common stock. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report. In light of our fundamental outlook, we continue to maintain our current BUY rating for the ADR (1 ADR = 4 common shares), even though we anticipate negative currency impact on the ADR over our investment horizon. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

HSBC Holdings PLC (NYSE:HBC) reported a marginal y-o-y decline in its top-line, but the bottom-line fell sharply as a result of higher provisions. Meanwhile, the bank has announced that it plans to raise approximately US$18 bn through a rights issue in order to shore up its balance sheet and allow it room for further acquisitions. However, considering the weak macroeconomic outlook, including the slump in the property market, and its likely impact on impairment charges and provisions, we remain concerned about the bank’s growth prospects over our investment horizon. Therefore, even though the target price derived in our last update report does not support a HOLD, we maintain our HOLD rating. We will reassess our ADR (1 ADR = 5 common shares) rating and target price for HSBC in our next full update report.The Hong Kong dollar is pegged to the US dollar. Therefore, the impact of currency movements on the Hong Kong stock is assumed be neutral. We maintain our HOLD rating in line with our fundamental outlook. We will reassess our Hong Kong stock rating for HSBC in our next full update report.

News

The Governor and Company of the Bank of Ireland’s (NYSE:IRE) common stock depreciated significantly on 27 February 2009, as tracker funds were forced to unload their holdings of Irish banks ahead of the reweighting of MSCI equity indices. In addition, investors reacted negatively to a US government deal to take a higher stake in Citigroup, along with much weaker-than-expected US GDP figures. Meanwhile, we remain concerned about Bank of Ireland’s growth prospects, considering the scale of Ireland’s economic and property market downturn, and its likely impact on credit growth. Therefore, even though 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 after the bank releases its FY 2009 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 = 4 common shares) target price and rating after the bank releases its FY 2009 results.

On 02 March 2009, IPC Holdings Limited (NASDAQ:IPCR) and Max Capital Group Limited (Max Capital) announced that they have agreed to combine in an all stock deal. The combined entity will have an enhanced capital position, with a capital base of over US$3 bn, as well as a healthily diversified portfolio across the global insurance and reinsurance markets. Despite our concerns regarding Max Capital’s significant alternative investment losses, we are positive about the prospective benefits arising from the merger. Consequently, we maintain our current BUY rating for the NASDAQ common stock. We will reassess our common stock rating for IPC Holdings in our 4Q 08 and FY 2008 update report. Based on our fundamental outlook coupled with an anticipated significant positive currency impact on the European stock over our investment horizon, we maintain our current BUY rating for the European stock. We will reassess the European stock rating for IPC Holdings in our 4Q 08 and FY 2008 update report.

On 02 March 2009, IPC Holdings Limited (NASDAQ:MXGL) and Max Capital Group Limited (Max Capital) announced that they have agreed to combine in an all stock deal. The combined entity will have an enhanced capital position, with a capital base of over US$3 bn, as well as a healthily diversified portfolio across the global insurance and reinsurance market. Despite our concerns regarding Max Capital’s significant alternative investment losses, we are positive about the prospective benefits arising from the merger with IPC Holdings, for which we hold a strong fundamental outlook, and upgrade the NASDAQ common stock rating from a HOLD to a BUY at current levels. We will reassess our common stock rating for Max Capital in our next full update report. As we anticipate a significant positive currency impact on the European common stock over our investment horizon, we maintain our BUY rating for the European stock. We will reassess the European stock rating for Max Capital in our next full update report.

The Royal Bank of Scotland Group PLC (NYSE:RBS) common stock depreciated sharply on 27 February 2009, as investors reacted negatively to news that the UK government has forced RBS to forgo the right to claim tax benefits in exchange for its participation in the government’s asset insurance scheme. Meanwhile, considering the bank’s significant losses in FY 2008 (refer to our company news alert dated 26 February 2009), as well as the likelihood of further impairment charges, we maintain our SELL rating even though the target price derived in our last update report does not support a SELL. We will reassess our target price and rating in our next update report. 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 = 20 common shares) rating after the company releases its FY 2008 results.

The Votorantim Celulose e Papel S.A. (NYSE:VCP) ADR has depreciated significantly since our previous update report, in line with a broad sell-off in equities, as investors have reacted negatively to the unfolding economic downturn around the world. However, given the company’s strong business fundamentals and dominant position in the market, we view the ADR as an attractive investment at current levels. Therefore, we maintain our BUY rating. We will reassess our target price and rating after the company releases its 4Q 08 results. We continue to anticipate a significant positive currency impact on the Brazilian stock over our investment horizon. Therefore we maintain our BUY rating. We will reassess our target price and rating after the company releases its 4Q 08 results.

Mindray Medical International Limited’s (NYSE:MR) ADR experienced a significant decline of 20.86% since our previous company news alert, dated 06 February 2009, reflecting investor concerns over recession in the US, slowdown in the Chinese economy and current uncertainty in global financial markets. However, we expect an improvement in the market share for products from the Patient Monitoring and Life Support (PMLS) segment, coupled with the company’s anticipated new product launches to positively impact top-line growth, going forward. Consequently, we upgrade our ADR rating from a HOLD to a BUY. 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 maintain our BUY rating for the European Stock based on our expectation of a positive currency impact over the medium term. We will reassess our target price and rating in our next update report, once the company announces its 4Q 08 and FY 2008 results.

New Valuations

Bell Canada Enterprises(NYSE:BCE) Although we expect Wireless revenues to grow at modest pace and drive total revenues for FY 2009, we anticipate weak economic conditions to slow the pace of growth in Wireless revenue. Further we continue to an anticipate declining growth rate in the Wireline segment supported by increasing erosion of BCE’s NAS customer-base and declining Local and Long distance revenues due to ongoing FTM and competition from Cable telephony. We expect this to be partially offset by growth in Data revenues supported by growth in broadband and network services as the company is focusing on expanding its Fibre-To-The-Node (FTTN) program and broadband deployment. BCE’s FTTN footprint reached 2.4 mn homes at the end of FY 2008 and is expected to pass 5 mn homes by 2012. Furthermore, BCE jointly with Telus Corporation (Telus) expects its HSPA network to be service capable by FY 2010. Although by entering a HSPA network, BCE and Telus conjointly will compete against Rogers Communications Inc (Rogers), we do not expect it to pose a major threat to Rogers’s subscriber-base in the near future considering Rogers’s stronghold in the Canadian Wireless market. During the quarter BCE increased its annual common share dividend by 5.0% to C$1.54 per share. As a result we have reduced our cash flow estimates for the next two years considering the lower retention ratio. Furthermore, in light of incrementing competition from existing players and new entrants we anticipate BCE’s wireless subscriber acquisition and retention costs to increase. Furthermore, in light of higher capex for FTTN and HSPA deployment going forward, depreciation expense are expected to rise. As a result we expect BCE’s operating margins to decline over the next two years supported by higher cost of sales and depreciation expenses.

Millicom International Cellular S.A.(NASDAQ:MICC)Given relatively low mobile penetration levels in Africa and Asia as well as Management’s focus on improving its network infrastructure in strong growth markets, we expect the company to report strong growth in its subscriber-base there. However, this is expected to be partially offset by a decline in ARPU over the next two years. Deconsolidation of Sierra Leone in 4Q 08 (which had negative margin) and the acquisition of mobile license in Rwanda are expected to boosts margins and revenues from the African region. However, the company is expected to lose market share in Cambodia with a rise in competition from TeliaSonera AB (which has acquired the fifth player in the market) and Viettel Mobile (which has launched VOIP services making International Direct Dialing (IDD) calls cheaper). Nevertheless, we expect revenue growth in South America, supported by an increase in revenues from Bolivia and Paraguay coupled with the launch of 3G and growth in Value Added Services (VAS). However, its subscriber-base growth in Central America is expected to slow given high levels of mobile penetration in these regions, an anticipated decrease in remittances from the US to El Salvador and Guatemala driven by a slow down in the US economy as well as increased competition faced by the company in Honduras (revenues in Honduras will also be impacted by a decline in interconnection rates) given entry of a fourth player into the market. However, the company’s focus on its loyal and high end customers in Central America will help improve its declining ARPU. In addition, we believe that the acquisition of Amnet will enable the company to provide enhanced broadband and television services in Central America as well as provide the company an opportunity to cross-sell its product and services. However, we expect the company to incur higher S&M expenses in order to capture a market share in low penetrated areas such Africa and Asia, to counter competition, to boost subscriber-base growth in Central America (which is approaching saturation in terms of penetration) and South America as well as in promoting its Tigo brand.

SK Telecom Co., Ltd(NYSE:SKM) Going forward, we expect that the merger of KT Corporation (KT) and KT Freetel (KFT) will impact growth in SKT’s subscriber-base and intensify competition in its operating markets. However, in order to combat rising competition, the company is introducing new handset models as well as investing in the development and expansion of its new SIM based mobile finance services. Furthermore, we expect its interconnection ARPU to increase with a rise in traffic volumes. However, its Wireless data ARPU is expected to decline with a tariff cut to its SMS and phone mail as well as a tariff cap on teenage subscribers. Nevertheless, we are confident of revenue growth with an expansion in its subscriberbase and an increase in cellular and interconnection ARPU. In addition, Management is taking initiatives to revive its declining wireless data segment through fixed price plans and the introduction of smart phones. These efforts are unlikely to be realized over the next two years given intensifying competition in the wireless market and as a result, we continue to anticipate declining wireless data revenues. However, margins will likely expand with an expected decline in labor costs.

Advantest (NYSE:ATE)reported operating losses for the fourth straight quarter in 3Q 09. Capital spending cuts have damaged the company and other ATE (Automated Test Equipment) vendors substantially over the past year, with several leading ATE vendors including Verigy Limited and Teradyne Inc. guiding for a further steep drop in sales in CY 1H 09 as global economic uncertainty further taints the demand pattern. On 13 January 2009, Gartner Inc., forecast a 34.1% y-o-y decline in global semiconductor test equipment sales in CY 2009, while Advantest has indicated that it expects the ATE market to contract 43% in the year. To add to concerns, Advantest derives the major portion of its revenues from DRAM memory testers, which has been the worst hit segment of the semiconductor market due to severe over-supply. On 02 February 2009, iSuppli Corp. estimated a steeper than 63% y-o-y decline in DRAM capital spending in CY 2009. While we expect Advantest to survive due to its strong cash position and lack of debt, these factors are expected to continue to severely impact performance, with sharp topline declines forecast in FY 2009 and FY 2010. Massive top-line erosion is expected to take a toll on margins in the coming quarters. On 25 February 2009, Advantest indicated that it will report a record annual loss of ¥78 bn for FY 2009. Although we anticipate a recovery in top-line in FY 2011 and expect the company to benefit from its cost reduction plans, we continue to expect it to record losses at both the operating and net level. However, the stock price has fallen over the past 3 consecutive days, and we believe that the weak business outlook is already factored in the current stock price.

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