Earning Release

Mindray Medical International Limited (NYSE:MR) reported significant y-o-y revenue growth in 4Q 08, broadly in-line with our estimate, while net level performance exceeded our expectations in 4Q 08. We maintain our positive outlook for the company’s ability to improve its market share, particularly in the Patient Monitoring and Life Support (PMLS) segment, going forward. Hence, we reiterate our BUY rating for the ADR based on our fundamental outlook. 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 fundamental outlook for the company and our anticipation of a significant positive currency impact on the European stock. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

Canadian Natural Resources Limited (NYSE:CNQ) reported weak results during 4Q 08, which reflects a decline in crude oil prices and production volumes during the period. Going forward, poor economic conditions are expected to continue to weigh on hydrocarbon prices in FY 2009. As a result, Management has lowered its hydrocarbon production guidance for the period. Given our concern over the company’s future performance and lower-than-expected 4Q 08 and FY 2008 results, we are likely to revise our estimates downwards in our next update report. As a result, we downgrade our rating for the common stock from a BUY to a HOLD until we reassess our common stock rating for Canadian Natural in our next update report. As we continue to anticipate a negative currency impact on the NYSE stock and given our fundamental outlook, we downgrade our rating for the NYSE stock from a BUY to a HOLD. We will reassess our NYSE stock rating for Canadian Natural in our next update report.

Talisman Energy Inc. (NYSE:TLM) 4Q 08 results fell below our expectations for the quarter. Revenues declined y-o-y, reflecting a decline in realized hydrocarbon prices and production levels. In addition, an increase in operating expenses and depreciation, depletion and amortization costs hampered the company’s operating performance. We expect ongoing weakness in global economy to weigh on hydrocarbon demand and prices in FY 2009, impacting Talisman’s performance during the year. Given lower-than-expected 4Q 08 & FY 2008 results and our concerns over the company’s performance, we are likely to revise our estimates down and hence downgrade our rating for the common stock from a BUY to a HOLD although our target price does not support a HOLD. We will reassess our rating for Talisman’s common stock in our next update report. As we continue to anticipate a negative currency impact1 on the NYSE stock and given our fundamental outlook, we maintain our SELL rating for the stock although our target price does not support a SELL rating. We will reassess the NYSE common stock rating for Talisman in our next update report.

Although Companhia de Bebidas das Americas’ (NYSE:ABV) 4Q 08 net sales were above our estimate, margins were significantly below our expectations, reflecting higher-than-expected Selling, General & Administrative (SG&A) and Depreciation & Amortisation (D&A) expenses, as a percentage of revenues. Considering that 4Q 08 results were broadly below our expectations, we are likely to revise our estimates and target price downwards in our next update report. As a result, although the target price derived in our last update report does not support a HOLD rating, we downgrade the preferred stock rating from a BUY to a HOLD. We will reassess the preferred stock rating for AmBev in our next update report. We anticipate a significant negative currency impact on the ADR over our investment horizon. Although the target price does not support a SELL rating at current price levels, given the negative currency impact and our fundamental outlook, we downgrade the ADR from a HOLD to a SELL. We will reassess the ADR rating and target price for AmBev in our next update report.

News

CPFL Energia S.A. (NYSE:CPL) announced its plan to invest US$1,235 mn in FY 2009, 4.8% higher than capital expenditure of FY 2008. However, considering the company’s weaker-than-anticipated 4Q 08 profitability, we intend to significantly reduce our estimates and target price in our next update report. As a result, although the target price derived in our previous update report does not support a SELL rating at current price levels, we maintain our SELL rating and will reassess the rating and target price in our next update report. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. Although the target price does not support a SELL rating at current price levels, given the negative currency impact and our weak fundamental outlook, we maintain our SELL rating for the ADR. We will reassess the ADR rating and target price for the ADR (1 ADR = 3 common shares) in our next update report.

Genco Shipping & Trading Ltd.’s (NYSE:GNK) NYSE common stock price increased significantly in a single trading session on 04 March 2009, reflecting a 10.5% rise in the Baltic Panamax Index on the same day. Although rising charter demand boosts our optimism, we are likely to revise our estimates downwards in our next update report given that current rates fall significantly below those levels achieved in early 2008 and as the company is scheduled to complete a number of contracts in FY 2009. However, we foresee significant upside from current price levels, and therefore reiterate our BUY rating for Genco’s NYSE common stock. Given our anticipation of a significant positive currency impact on the European stock over our investment horizon and current price levels, we maintain our BUY rating for the European stock. We will reassess our target price and rating in our 4Q 08 and FY 2008 update report.

On 04 March 2009, Mizuho Securities Co. Ltd. (NYSE:MFG) and Shinko Securities Co. Ltd. (Shinko) announced that the terms of their merger, set to be completed on 07 May 2009, have been revised. Under the new terms, 122 Shinko shares will be exchanged for each MHSC share, compared to the earlier ratio of 343 Shinko shares per MHSC share. Meanwhile, our fundamental outlook for Mizuho Financial Group Inc. (MFG) remains unchanged. 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 rating for MFG in our next full update report. We continue to anticipate a significant positive currency impact on the ADR over our investment horizon. Therefore, we maintain our BUY rating. We will reassess our ADR (1 ADR = 2 common shares) rating for MFG in our next full update report.

Paragon Shipping Inc.’s (NASDAQ:PRGN) common stock price increased significantly in a single trading session on 04 March 2009, reflecting a 10.5% rise in the Baltic Panamax Index on the same day. Moreover, as a majority of the company’s vessels continue to operate on long term contracts, we do not expect a significant change in our estimates despite a decline in freight rates since our last update report. Therefore, as our company outlook remains broadly positive, we reiterate our BUY rating for Paragon’s NASDAQ common stock. We will reassess the NASDAQ common stock rating for Paragon once the company announces its 4Q 08 and FY 2008 results in March 2009. Given our anticipation of a significant positive currency impact on the European stock over our investment horizon and current price levels, we maintain our BUY rating for the European stock. We will reassess our target price and rating for the European stock once the company announces it 4Q 08 and FY 2008 results in March 2009.

Suncor Energy Inc.‘s (NYSE:SU) common stock price has increased 13.6% since our last update report, achieving our target price on 04 March 2009. An anticipated recovery in oil prices coupled with higher production levels in FY 2010 support our long term positive outlook for the common stock. However, given ongoing instability in global markets and low crude oil prices expected during FY 2009, we do not foresee a significant upside from current levels, and therefore downgrade the common stock from a BUY to a HOLD. We will reassess the common stock rating for Suncor after it announces its 1Q 09 results on 23 April 2009. As we continue to anticipate a negative currency impact on the NYSE stock over our investment horizon and given current price levels, we maintain our SELL rating for the NYSE stock. We will reassess our NYSE stock rating for Suncor after it announces its 1Q 09 results on 23 April 2009.

New Valuations

Crucell N.V. (NASDAQ:CRXL)We believe Crucell’s expanding vaccine portfolio and the company’s PER.C6 cell line technology provides the company with a strong position in the high growth vaccine market. Global pharmaceutical companies are currently experiencing weak growth in the traditional pharmaceutical market, which has forced companies to focus on other revenue streams, such as the vaccine market (demonstrated by the recent appreciation in Crucell’s stock price associated with interest expressed by global pharmaceutical companies to acquire Crucell). We believe Crucell’s early-stage product pipe-line offers long term revenue growth potential. According to RNCOS (a market research solution provider) the global vaccine market is expected to demonstrate a CAGR of 16% to reach approximately US$25.0 bn over a 10 year period spanning FY 2005-FY 2015. In addition, the global antibody market is expected to be worth approximately US$40.0 bn over FY 2005-FY 2012, with a CAGR of 14% (Source: DataMonitor). Growth in the vaccines market is far more promising than the conventional pharmaceuticals market (the conventional pharmaceutical market is growing at rate of 4%-5% per annum according to IMS Health, Inc). Considering the robust growth opportunities, we believe Crucell is well positioned to derive significant benefits over the longer term. As of FY 2008, Crucell has entered into agreements with approximately 125 partners, including major global pharmaceutical companies, such as Sanofi-Aventis SA and Novartis AG. These collaborations involve development of new vaccines using Crucell’s multiple proprietary technologies, such as PER.C6. We expect more pharmaceutical companies will collaborate with Crucell for its innovative cell culture technologies to meet expanding demand from the global vaccines market, going forward. These agreements are likely to lead to higher licensing revenues over the long term. Moreover, Crucell is constantly trying to expand its product offering and focusing on emerging markets. The company’s Hepavax-Gene has been approved by Chinese authorities. We expect Crucell to achieve higher revenue growth from emerging markets, such as China and India, as these markets have relatively lower penetration. We believe strong y-o-y revenue growth will result in margin expansion, going forward. The company, through its Crucell Ambition program, is aiming for higher operational efficiencies. We believe the program will be margin accretive over the next 2 years, positively impacting operating margin. Therefore, we maintain our positive outlook and reiterate our BUY rating for the common stock.

Novo Nordisk A.S.(NYSE:NVO) With an expanding portfolio and entry into new markets, we believe Novo Nordisk will continue to enjoy its leadership position, going forward. Novo Nordisk’s prime focus is turning toward emerging markets, such as Russia, as these markets have lower penetration and offer significant growth opportunities. According to the Russian diabetes federation, the number of diabetic patients in Russia is expected to be approximately 10 mn in FY2025, from 7.8 mn in FY2007. In addition, the federation estimates there are approximately 5 mn undiagnosed diabetes sufferers in Russia. Novo Nordisk expects the Russian market to provide a 20% per annum (p.a.) growth over the next 2 years, with the Russian government increasing healthcare spending and expanding healthcare benefits, which has led to a greater number of individuals being diagnosed for Type-2 diabetes. Consequently, we maintain our positive view for prospective revenue growth from Russia over the next 2 years. The company has achieved sales growth of 30% in FY 2008 in China, led by an increasing number of people who can afford healthcare benefits. We believe Novo Nordisk will report robust revenue growth from the Chinese market over next 2 years, associated with greater market penetration. Novo Nordisk has demonstrated significant clinical benefits of liraglutide in Type-2 diabetes and has filed for approval in major markets across the world. Moreover, we believe Novo Nordisk will be able to launch liraglutide in emerging markets over next 2 years. Considering the significant revenue potential in emerging markets, we believe liraglutide will gain rapid market share, going forward. In addition, the company has launched NovoMix50 and NovoMix70, targeting Type-1 and Type-2 diabetes. We believe these products will further support top-line expansion in emerging markets. We believe the company’s entry into relatively untapped markets and new product launches will support its growth over the next 2 years. In addition, we expect improvement in EBITDA margin over the next 2 years, associated with the anticipated significant saving in R&D expenses, upon completion and the subsequent launch of some phase 3 products. Therefore, we maintain our positive outlook for the company.

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