Earning Release

Domtar Corporation (NYSE:UFS) reported its 1Q 09 results on 01 May 2009, with revenue growth falling in line with our expectations, but with a greater net loss than we had forecast. We remain concerned about the weak demand outlook for paper and pulp over the near-to-medium term. Considering this, as well as the company’s weak 1Q 09 bottom-line result, we expect to cut our estimates and target price in our next update report. Therefore, at current levels, we maintain our 6-12 month SELL rating. We will reassess our NYSE common stock rating in our next update report. We continue to anticipate a significant positive currency impact on the Canadian stock over the next 6- 12 months. However, considering our fundamental outlook, we downgrade the Canadian stock from a HOLD to a SELL. We will reassess our Canadian stock rating in our next update report.

Shinhan Financial Group’s (NYSE:SHG) top- and bottom-lines fell y-o-y, with earnings suffering from a sharp rise in operating expenses. We remain concerned about the near term impact of the economic downturn in South Korea and ongoing volatility in financial markets. Considering these factors, as well as the company’s disappointing earnings, we maintain our 6-12 month HOLD rating. We will reassess our common stock rating for Shinhan in our next update report. We continue to anticipate a significant negative currency impact on the ADR over the coming 6-12 months. Therefore we maintain our SELL rating. We will reassess our ADR (1 ADR = 2 common shares) rating for Shinhan in our next update report.

Alcatel-Lucent S.A’s (NYSE:ALU) 1Q 09 revenues were in line with our expectations. However, operating and net performance fell short of our expectations, primarily due to higher-than-expected cost of sales. The y-o-y revenue and earnings decline in the quarter reflected a challenging business environment. We expect continued weakness in the industry in FY 2009 in view of the current economic slowdown. Subsequently, we are likely to revise our estimates downwards when we come to revalue the stock. Hence, given lower-than-expected results and current price levels we downgrade Alcatel’s common stock from a HOLD to a SELL over our 6-12 month investment horizon. We will reassess the Alcatel common stock target price and rating in our 1Q 09 update report. As we expect a negative currency impact on the ADR (1 ADR = 1 common share) over the medium term and given our fundamental outlook we maintain our SELL rating for the ADR. We will reassess the Alcatel ADR target price and rating in our 1Q 09 update report.

The Philippine Long Distance Telephone Company’s (NYSE:PHI) 1Q 09 revenues, EBITDA and net margin were broadly in line with our estimates while operating margin was below our estimate. Growth in revenues was supported by strong performance from the Wireless segment, supported by the Fixed Line and Information Communication Technology (ICT) segments. Lower-than-expected operating margin was primarily attributable to higher-than-expected depreciation expenses, as a percentage of revenues. In light of mixed 1Q 09 performance, coupled with our anticipation of declining ARPU, reflecting increased competition in the region and current price levels we maintain our HOLD rating on the common stock. We will reassess the common stock rating for PLDT in our 1Q 09 update report. As we continue to anticipate a negative currency impact on the ADR over the medium term and given current price levels, we reiterate our SELL rating for the ADR. We will reassess our target price and rating in our 1Q 09 update report.

On a y-o-y basis Sohu.com Inc. (NASDAQ:SOHU) reported a healthy set of 1Q 09 results with robust revenue growth in the Advertising and Online game segments and a significant improvement in profitability. However, prevailing poor economic conditions resulted in the company reporting a sequential decline in Advertising revenues. Although the economic slowdown will impact levels of online advertising spend by small and medium enterprises, over the longer term, the significant scope to increase Internet penetration levels in China provides avenues for advertisers to target a wider audience. At the same time, being a renowned online content provider with a large user base and strong brand awareness, Sohu is well positioned to attract new advertisers and retain its existing customer base in the future. However, as current levels support a HOLD rating, we temporarily downgrade our rating for the NASDAQ common stock from a BUY to a HOLD and will reassess this in our next update report in the coming weeks. As we continue to anticipate a positive currency impact over the next 6-12 month, at current levels we do not anticipate any change in our current BUY rating.

Banco Bradesco S.A. (NYSE:BBD) reported a modest y-o-y drop in its bottom-line for 1Q 09, reflecting growth in Allowances for Loan Losses (ALL); earnings came in below our estimate for the quarter. However, the company’s efforts to focus on higher-quality corporate lending, its cost control initiatives and a recent central bank rate cut are all encouraging signs. On balance, we do not anticipate any significant revision to our target price in our next update report. Therefore, even though the target price derived in our last update report does not support a HOLD, we maintain our 6-12 month HOLD rating. We will reassess our preferred stock 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 = 1 preferred share) rating in our next update report.

Itau Unibanco Banco Multiplo S.A. (NYSE:ITU) reported a modest y-o-y rise in its bottom-line for 1Q 09, while the bottom-line was well above our estimate. However, we remain concerned about deterioration in asset quality and stagnant loan growth, and therefore on balance we do not anticipate any significant revision to our target price. Accordingly, we maintain our 6-12 month HOLD rating. We will reassess our preferred stock rating in our next update report. We continue to anticipate a significant negative currency impact on the ADR over the coming 6-12 months. Therefore, we maintain our SELL rating. We will reassess our ADR (1 ADR = 1 preferred share) rating in our next update report.

During 2Q 09, Sappi Ltd.’s (NYSE:SPP) top-line fell y-o-y as a result of weak demand for paper and pulp around the world. The company has cut back its production in response, which will impact the top-line over the coming quarters. We remain concerned that the global economic downturn will continue to weigh on demand throughout the near-to-medium term. However, sales and EBITDA both came in well above our estimates during 2Q 09, which is encouraging. Therefore, even though the target price derived in our last update report does not support a HOLD, we moderate the ADR to a HOLD. We will reassess our ADR (1 ADR = 1 South African share) rating in our next update report. Although we continue to anticipate a significant positive currency impact on the South African stock over the coming 6-12 months, we moderate the stock to a HOLD in consideration of our fundamental outlook. We will reassess our South African stock rating in our next update report.

UBS AG (NYSE:UBS) has reported another net loss for 1Q 09, although results were much improved y-o-y due to a fall in trading losses and growth in Net Interest Income (NII), which reinforced operating revenues. Meanwhile, although the company’s exposure to risky assets has been trimmed, we remain concerned about prospects for further writedowns against outstanding exposure to leveraged finance and monoline insurers (especially if the macroeconomic scenario worsens). We are also troubled by uncertainty over scrutiny of banking secrecy and tax issues relating to the company’s offshore business. On balance, even though the target price derived in our last update report does not support a HOLD, we maintain our 6-24 month HOLD rating. We will reassess our common stock rating in our next update report. We continue to anticipate a significant negative currency impact on the NYSE stock over the coming 6- 24 months. Therefore, we maintain our SELL rating. We will reassess our NYSE stock rating in our next update report.

Brookfield Properties Corporation’s (NYSE:BPO) total revenue, adjusted net income from continuing operations and adjusted FFO exceeded our expectations in 1Q 09. However, the company now expects its FFO per share to be at the lower end of its guidance while no resolution has been reached with key tenant, Merrill Lynch, regarding its continued occupancy of Brookfield’s office space. We continue to view the stock positively given that results beat our expectations, it has reported healthy renewal levels and has not made a dramatic revision of guidance. Hence, we maintain a BUY rating for the stock although the current price levels no longer suggest a BUY rating. We will reassess our target price and rating for Brookfield in our next update report. We continue to expect a significant positive currency impact on the Canadian stock over our investment horizon and maintain our BUY rating for the Canadian stock. We will reassess our rating for Brookfield in our next update report.

AlthoughCompañia Cervecerias Unidas S.A (NYSE:CCU) reported 1Q 09 revenues which were below our estimate, due to lower-than-expected volumes from all segments and lower-than-expected Average Selling Price (ASP) from Beer-Argentina and Wine segments, net margin exceeded our estimate, reflecting lower-than-expected tax and net finance expense incurred during the quarter. In light of weaker-than-expected 1Q 09 performance, we are likely to revise our estimates and target price downwards. However, considering current price levels, we maintain our HOLD rating on the common stock. We will reassess our target price and rating in our 1Q 09 update report. As we continue to anticipate a negative currency impact on the ADR over the medium term and given current price levels, we maintain our SELL rating for the ADR. We will reassess our target price and rating in our 1Q 09 update report.

While Cott Corporation’s (NYSE:COT) 1Q 09 revenues were in line with our expectation, EBITDA was significantly higher than our expectation. Although we expect Cott to struggle in international markets, we believe robust revenue growth from North America, reflecting the increase in demand for private label value products amid declining consumer spending; will support revenue growth, going forward. Cott’s NYSE common stock has appreciated 111.4% over the past 2 trading sessions, based on 1Q 09 results exceeding market estimates. Although we are likely to revise our target price and estimates upwards in our next update report, based on the company’s strong 1Q 09 operating and net level performance, we downgrade our NYSE common stock rating from a HOLD to a SELL, as the anticipated increase in promotional activities from national brands is likely to limit the market share growth of the company. We will reassess our target price and rating in our 1Q 09 update report. Although we anticipate a positive currency impact on the Canadian stock (1 Canadian stock = 1 NYSE common stock) over the medium term and our revised fundamental outlook for the company, considering the current price levels, we downgrade the Canadian stock from a BUY to a HOLD. We will reassess our target price and rating in our 1Q 09 update report.

While Distribucion y Servicio D&S S.A. (OTC:DYSVY) reported revenues above our estimate, operating profit was in line with our estimate. However, adjusted net income was significantly below our expectation due to higher-than-expected financial expenses. DYS increased its sales area by 5,997 square meters, bringing the total retail format sales area to 525,046 square meters at the end of 1Q 09. Going forward, we expect the opening of new stores under the Aceunta and Ekono brands, coupled with the anticipated expansion in the Chilean supermarket industry and real estate business to drive future revenue growth. In light of mixed 1Q 09 results and the current weak economic climate, we maintain our HOLD rating for the common stock. We will reassess our target price and rating in our 1Q 09 update report. Although we anticipate a significant negative currency impact on the ADR (1 ADR=60 common shares) over the medium term, as current price levels support a HOLD rating, we upgrade our rating from a SELL to a HOLD. We will reassess our target price and rating in our 1Q 09 update report.

While Fomento Economico Mexicano, S.A.B de C.V’s (NYSE:FMX) 1Q 09 revenues were above our estimate, operating income was in line with our expectation. However, adjusted net income was below our expectation due to higher-than-anticipated net interest expenses and effective tax rate during the quarter. Going forward, we expect top-line growth to be supported by healthy revenue growth from Coca-Cola Femsa and Femsa Camercio, coupled with ongoing efforts to open new stores under the Oxxo division. In addition, expansion of the business in Latin America, particularly in Central and Southern Mexico, where the penetration level is relatively low, is expected to support future revenue growth. In light of these factors, we maintain our BUY rating and will reassess our target price and rating in our 1Q 09 update report. Although we expect a negative currency impact on the ADR (1 ADR = 10 common shares) over our 6- 12 month investment horizon; considering the current price levels, we maintain our HOLD rating for the ADR. We will reassess our target price and rating in our 1Q 09 update report.

Herbalife Ltd. (NYSE:HLF) reported 1Q 09 results on 04 May 2009, with revenues and margins broadly in line with our estimates. Herbalife’s NYSE common stock achieved our target price on 04 May 2009, reflecting strong results reported for the quarter and an increase of 9.4% in the NYSE composite Index. Although we hold a positive outlook for the company, as the NYSE common stock is trading near its fair value, we downgrade our rating from a BUY to a HOLD. We will reassess our target price and rating in our 1Q 09 update report. We continue to anticipate a significant positive currency impact on the European stock over our 6-12 month investment horizon. Therefore, we maintain our BUY rating for the European stock. We will reassess our target price and rating in our 1Q 09 update report.

Orbotech Limited (NASDAQ:ORBK) reported a decline in its 1Q 09 revenues despite additional revenues from Photo Dynamics Inc. (PDI). Higher financial expenses further impacted bottom-line performance during the quarter. Going forward, we expect the company’s revenues and earnings to remain under pressure over our 6-12 months investment horizon; as weak global economic conditions will restrict demand for the company’s products. Hence, based on our fundamental outlook, we maintain our SELL rating for the NASDAQ common stock. We will reassess our target price and rating in our 1Q 09 update report. We expect a significant positive currency impact on the European stock over the medium term. Therefore, based on our fundamental outlook and current price levels, we downgrade our rating from a BUY to a HOLD. We will reassess our target price and rating in our 1Q 09 update report.

Qiagen N.V. (NASDAQ:QGEN) reported modest y-o-y revenue growth in 1Q 09, in-line with our estimate. Adjusted operating margin fell short of our expectation in 1Q 09. Going forward, we believe Qiagen’s strategy to strengthen its position in the molecular diagnostic solutions market will positively benefit the company’s top-line performance. Furthermore, recent product launches in the Consumables segment are also expected to positively impact revenues in FY 2009. Consequently, our outlook for the company remains positive and we maintain our BUY rating for the NASDAQ common stock. We will reassess our target price and rating in our 1Q 09 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 1Q 09 update report.

Nordic American Tanker Shipping’s (NYSE:NAT) 1Q 09 Net Voyage (NV) revenues were above our estimate given higher-than-expected spot freight rates recorded during the quarter. The company has announced that it plans to acquire another Suezmax vessel, which is expected to be delivered in early 3Q 09, and we expect to revise our estimates and target price upwards in our next update report to take this development into account. Moreover, we are encouraged by the company maintaining its dividend policy despite the difficult market conditions. Consequently, even though the target price does not support a HOLD at current price levels, we upgrade the NYSE common stock rating from a SELL to a HOLD. We will reassess the NYSE common stock rating for NAT in the coming weeks. As we continue to expect a significant positive currency impact on the European stock over our investment horizon and as we now have a more positive fundamental outlook for the company over our 6-12 month investment horizon, even though the target price does not support a BUY rating at current price levels, we maintain our BUY rating for the European stock. We will reassess the European stock rating for NAT in the coming weeks.

Teva Pharmaceutical Industries Limited’s (NASDAQ:TEVA) net sales and operating income was below our estimates in 1Q 09. However, operating and net margin outperformed our expectations in 1Q 09. 1Q 09 results also include the results of Barr Laboratories Inc. (Barr). Going forward, we expect continued revenue performance from the company’s key products; Copaxone and Azilect, coupled with improved revenue performance from its generic products. Therefore, our outlook for the company remains broadly positive and, hence, we maintain our BUY rating for the ADR. We will reassess our target price and rating in our 1Q 09 update report. As we continue to anticipate a significant positive currency impact on the Israeli stock over our investment horizon, we maintain our BUY rating. We will reassess our target price and rating in our 1Q 09 update report.

Trico Marine Services, Inc. (NASDAQ:TRMA) reported lower-than-expected revenues in 1Q 09, reflecting lower than anticipated day rates for its Towing and Supply vessels. However, the company’s net earnings exceeded our expectations given a higher-than-expected tax benefit recorded during the quarter. While the company expects an improved operating performance in 2Q 09 and 3Q 09, given its recent contract wins related to its Subsea segment, we remain concerned about the sustained weakness of its Towing and Supply business and its highly leveraged position. Furthermore, given the significant price appreciation since our 4Q 08 and FY 2008 update report, we believe the stock is currently overvalued and maintain our SELL rating for the NASDAQ common stock over our investment horizon of 6-12 months. We will reassess the NASDAQ common stock rating for Trico in our 1Q 09 update report in the coming weeks.

News

Aegon N.V.’s (NYSE:AEG) common stock price reached our target on 30 April 2009. The increase in price reflects improvement in financial markets and renewed optimism regarding the company’s capital position. However, at current levels, we believe that the company’s fundamental upside potential has been exhausted. Therefore, we downgrade the common stock from a BUY to a HOLD. We will reassess the common stock rating for Aegon once it announces its 1Q 09 results on 14 May 2009. We downgrade our rating for the ADR from a HOLD to a SELL based on our fundamental outlook and continued anticipation of a negative currency impact over our investment horizon. We will reassess our ADR (1 ADR= 1 common stock) rating for Aegon once it announces 1Q 09 results on 14 May 2009.

Siliconware Precision Industries Ltd.’s (NASDAQ:SPIL) common stock price has rallied since our 4Q 08 and FY 2008 update report, in line with broader index movements during the period. We continue to believe that stronger demand from China will benefit SATS companies including SPIL and Advanced Semiconductor Engineering, Inc. (ASE) in the near term. While SPIL has not provided any explicit sequential forecast for 2Q 09 revenues, ASE expects 2Q 09 revenues to increase more than 40% q-oq primarily due to strength in the Chinese market. Accordingly, we maintain our HOLD rating for SPIL, although the common stock target price does not support a HOLD rating at current price levels. We will reassess the common stock rating and target price for SPIL in our next update report. We maintain our SELL rating for the ADR (1 ADR=5 common shares), in line with our fundamental outlook and anticipated negative currency impact on the ADR over our 6-12 month investment horizon. We will reassess our target price and rating in our next update report.

The Potash Corporation of Saskatchewan Inc. (NYSE:POT) NYSE common stock hit our target price on 04 May 2009, driven by positive company fundamentals (as discussed in our last update report) as well as a broad-based rise in Canadian equities on the back of encouraging US and Chinese manufacturing data. However, we believe the stock’s near-to-medium term upside potential may have been exhausted, and therefore moderate the stock to a HOLD until the company reports its 2Q 09 results. We continue to anticipate a significant positive currency impact on the Canadian stock over the coming 6-12 months. Therefore, we maintain our BUY rating. We will reassess our Canadian stock rating after the company reports its 2Q 09 results.

The Rio Tinto PLC (NYSE:RTP) ADR has appreciated significantly since our 4Q and FY 2008 update report, reflecting positive investor reaction to a range of encouraging economic data and a broadbased rise in equity markets. However, we remain concerned about the company’s near term growth potential, particularly after its recent weak 1Q 09 production results. Therefore, at current levels, we maintain our 6-12 month SELL rating. We will reassess our ADR (1 ADR = 4 UK shares) rating after the company releases its 1H 09 results. We continue to anticipate a significant positive currency impact on the UK stock over the coming 6-12 months. However, considering our fundamental outlook, we maintain our SELL rating. We will reassess our UK stock rating after the company releases its 1H 09 results.

The ASML Holding N.V. (NASDAQ:ASML) common stock price has appreciated significantly since our 4Q 08 and FY 2008 update report dated 03 February 2009, reflecting a general improvement in global investor confidence, particularly in semiconductor stocks. Nevertheless, our medium term outlook for ASML remains weak with no meaningful improvement in the company’s business environment expected in the near term. Further, the company’s 2Q 09 outlook is significantly below our previous expectations. Subsequently, we maintain our current SELL rating for the ASML common stock. We will reassess the common stock rating and target price in our next update report. We reiterate a SELL rating for the ADR (1 ADR = 1 common share) based on our fundamental outlook for the company coupled with a significant negative currency impact anticipated on the ADR over our 6-12 month investment horizon. We will reassess the ADR rating and target price in our next update report.

Cemex S.A.B. de C.V.’s (NYSE:CX) ADR price has increased significantly since our last update report, including a one day increase of 19.3% on 04 May 2009, following the news of increased construction spending in the US. Moreover, an improvement in demand for the housing and construction sector since the last quarter of CY 2008 and the broad improvement in equity market performance over the same period, also contributed to the increase in ADR price. Although, the target price does not support a HOLD at current price levels, we maintain our HOLD rating based on the ongoing volatility of basic material prices and our expectation of a potential recovery in the housing and construction sector in the US. We will reassess our ADR (1 ADR = 10 Mexican shares) rating for Cemex after the company announces its 2Q 09 results in July 2009. Despite the target price not supporting a BUY at current price levels, as we expect a positive currency impact in the Mexican stock over our 6-12 month investment horizon and given our fundamental outlook, we maintain our BUY rating for the Mexican stock at current levels. We will reassess our Mexican stock rating for Cemex after the company announces its 2Q 09 results in July 2009.

EnCana Corporation’s (NYSE:ECA) NYSE common stock price has increased significantly since we upgraded the stock from a HOLD to a BUY in our 4Q 08 and FY 2008 update report, achieving our target price on 01 May 2009. We are likely to revise our estimates and target price for EnCana’s NYSE common stock in light of the better-than-expected 1Q 09 results. We believe the stock is currently fairly valued and we downgrade EnCana’s NYSE common stock from a BUY to a HOLD until we can fully reassess the company in our 1Q 09 update report in the coming weeks.As we continue to anticipate a positive currency impact on the Canadian stock over our 6-12 month investment horizon, we maintain our BUY rating for the Canadian stock. We will reassess the Canadian stock rating for Encana in our 1Q 09 update report in the coming weeks.

Frontline Ltd.’s (NYSE:FRO) NYSE common stock price has increased significantly since our last update report, reflecting the improvement in financial markets and increase in crude oil prices. However, we expect the demand for oil to remain weak and, consequently, expect spot freight rates to remain low. Accordingly, we maintain our SELL rating for the NYSE common stock. We will reassess our NYSE common stock rating for Frontline in our next update report after the company announces its 1Q 09 results. Although we continue to anticipate a significant positive currency impact on the Norwegian stock over our investment horizon, based on our weak fundamental outlook we downgrade the Norwegian stock rating from a HOLD to a SELL. We will reassess our Norwegian stock rating for Frontline in our next update report once the company announces its 1Q 09 results.

Tenaris S.A.’s (NYSE:TS) ADR price surpassed our target price on 04 May 2009. We believe the rise in the ADR price reflects positive investor reaction to the company’s fundamentals, as discussed in our last update report, coupled with a rise in crude oil prices and the improved global financial situation. Therefore, we downgrade the ADR from a BUY to a HOLD. We will reassess our ADR (1 ADR = 2 European shares) rating for Tenaris after the company releases its 1Q 09 results on 06 May 2009. As we continue to anticipate 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 our European stock rating for Tenaris after the company releases its 1Q 09 results on 06 May 2009.

China Telecom Corporation Ltd’s (NYSE:CHA) common stock achieved our target price on 30 April 2009, reflecting the company’s strong fundamental outlook and an increase of 11.75% in the Hang Seng Index. Going forward, we continue to expect revenues to grow over the next two years due to an anticipated increase in non-voice revenues and CDMA revenues. Although we have a positive outlook for the company as the common stock is trading near its fair value, we are downgrading the common stock rating from a BUY to a HOLD. We will reassess the common stock rating for China Telecom in our next update report. As the target price supports a HOLD rating at current levels, we reiterate the ADR a HOLD. The Hong Kong dollar is pegged to the US dollar. We will reassess the ADR rating for China Telecom in our next update report.

China Unicom (Hong Kong) Ltd.’s (NYSE:CHU) common stock appreciated significantly on 05 May 2009, due to broader market movement, driven by positive investor sentiments of early global economic recovery. Going forward, we expect Management’s intention to incur higher capex for GSM and broadband networks will put pressure on margins and suppress FCFF. In light of these factors and as the common stock is trading significantly above its fair value, we downgrade the common stock from a HOLD to a SELL. We will reassess the common stock rating for China Unicom in our next update report. As the target price supports a SELL rating at current levels, we downgrade the ADR from a HOLD to a SELL. The Hong Kong dollar is pegged to the US dollar. We will reassess the ADR rating for China Unicom in our next update report.

The Kongzhong Corporation (NASDAQ:KONG) ADR has appreciated significantly since our previous 4Q 08 and FY 2008 update report, outperforming the appreciation seen in the broader NASDAQ index. We believe this movement was driven by a broader market recovery and positive investor sentiment related to an expected recovery in the Chinese economy in the second half of FY 2010. The ADR also achieved its 52-week high on 04 May 2009, which prompts us to maintain our limited upside outlook for the stock. In addition, given the impact of current macro-economic conditions, we expect to have greater clarity regarding the company’s performance and ability to boost margins based on its focus on the Mobile gaming business after the release of 1Q 09 results. Therefore, at current levels we downgrade our rating from a HOLD to a SELL. We will reassess our target price and rating in our next update report. As current levels support a HOLD rating and given our fundamental outlook, we downgrade the European stock from a BUY to a HOLD and we will reassess the target price and rating in our next update report.

Net Serviços de Comunicação S.A. (NASDAQ:NETC) The Brazilian preferred stock achieved its target price on 04 May 2009, closing at BRL19.00, reflecting broader market movements coupled with impressive 1Q 09 results. Going forward, we expect revenues to be driven by robust expansion in subscriber-base. Moreover we expect EBITDA margin to improve due to an anticipated decline in programming and network expenses. Although the current price does not support a BUY rating, we maintain our rating in light of these strong fundamentals. We will reassess the Brazilian preferred stock rating for Net Serviços de Comunicação S.A. (NETC) in our next update report. As the current price supports a SELL rating, coupled with significant a negative currency impact, we maintain our SELL rating. We will reassess the ADR stock rating for NETC in our next update report.

O2Micro International Limited’s (NASDAQ:OIIM) ADR price has appreciated significantly since our 4Q 08 and FY 2008 update report dated 23 April 2009 reflecting overall improvement in the broader equity indices. The appreciation in the ADR price also reflects that the company’s 1Q 09 results beat Management guidance and its better than previously expected 2Q 09 net sales guidance. The company’s 1Q 09 performance was also better than our expectations and Management’s net sales and gross margin guidance for 2Q 09 is better than our previous estimates. In view of this, we maintain our current HOLD rating for the O2Micro ADR until we revalue the stock in our next full update report, although the stock does not support a HOLD at current price levels. We will reassess our ADR rating and target price for O2Micro in our next update report. We maintain the Hong Kong stock (1 ADR = 50 Hong Kong shares) a BUY based on our fundamental outlook and the significant discount at which the Hong Kong stock is currently trading. The currency impact on the Hong Kong stock is neutral as the Hong Kong dollar is pegged to the US dollar. We will reassess the Hong Kong stock rating and target price for O2Micro in our next update report.

Diana Shipping Inc.’s (NYSE:DSX) NYSE common stock price has increased significantly since our last update report, reflecting encouraging economic data from the US and the general rebound in broader markets. However, spot freight rates remain low and, therefore, our outlook for the common stock remains weak. Consequently, we downgrade the NYSE common stock rating from a HOLD to a SELL. We will reassess our target price and rating once the company announces its 1Q 09 results on 06 May 2009. Although we anticipate a significant positive currency impact on the European stock over our 6-12 month investment horizon, based on our weak fundamental outlook for the company we downgrade the European stock rating from a BUY to a HOLD. We will reassess our target price and rating once the company announces its 1Q 09 results on 06 May 2009.

Genco Shipping & Trading Ltd.’s (NYSE:GNK) NYSE common stock price has increased significantly since our last update report reflecting the strong 1Q 09 results, which exceeded market expectations; encouraging economic data announced in the US; and the general rebound in broader markets. However, freight rates remain low and, therefore, our outlook for the common stock remains weak. Consequently, we downgrade the NYSE common stock rating from a HOLD to a SELL. We will reassess our target price and rating for the NYSE common stock in our next full update report in the coming weeks. Although we anticipate a significant positive currency impact on the European stock over our investment horizon, based on our weak fundamental outlook we downgrade the European stock rating from a BUY to a HOLD. We will reassess our European stock target price and rating in our next full update report in the coming weeks.

General Maritime Corporation’s (NYSE:GMR) NYSE common stock has appreciated significantly since our last update report and exceeded our target price. We believe the increase reflects the improvement in financial markets and rise in crude oil prices. However, we expect the demand for oil to remain weak and, consequently, expect spot freight rates to remain low over our investment horizon. Furthermore, we do not expect any further upside for the NYSE common stock from current price levels, hence we downgrade the NYSE common stock from a BUY to a HOLD. We will reassess the NYSE common stock rating 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 the European stock a BUY over our 6-12 month investment horizon. We will reassess our target price and rating in our next full update report in the coming weeks.

The Credit Suisse Group (NYSE:CS) common stock has appreciated significantly since our previous update report, reflecting positive investor reaction to a stronger-than-expected earnings result during 1Q 09, as well as a company statement that, contrary to rumors, it will not quit its offshore business. Therefore, even though the target price derived in our last update report does not support a HOLD, and although we continue to anticipate further writedowns within the near-to-medium term, we maintain our 6-24 month HOLD rating. We will reassess our common stock rating in our next update report. We continue to anticipate a significant negative currency impact on the ADR over the coming 6-24 months. Therefore, we maintain our SELL rating. We will reassess our ADR (1 ADR = 1 common share) rating in our next update report.

On 01 May 2009, Mitsubishi UFJ Financial Group (NYSE:MTU) cut its FY 2009 earnings estimate and dividend, reflecting impairments on the company’s equities portfolio and a valuation allowance against deferred tax assets. We remain concerned about MUFJ’s exposure to the US mortgage market, which is likely to lead to further credit losses, as well as prospects for further impairments on the equities portfolio. Therefore, we maintain our 6-12 month HOLD rating. We will reassess our common stock rating in our next update report. We continue to anticipate a significant positive currency impact on the ADR over the coming 6-12 months. Therefore, we maintain our BUY rating. We will reassess our ADR (1 ADR = 1 common share) rating in our next update report.

Elan Corporation PLC’s (NYSE:ELN) ADR experienced a significant increase of 19.9% in a single trading session to close at US$7.06 on 04 May 2009, primarily due to general increase in broader market index, coupled with study results reporting positive data of Tysabri’s efficacy on multiple sclerosis (MS). We believe the positive study data will have a significant positive impact on Tysabri sales over the medium term. Consequently, we now expect the company’s key product; Tysabri, to support future revenue growth. Therefore, although the ADR target price does not support a HOLD rating at current price levels, we upgrade the ADR from a SELL to a HOLD and will reassess our target price and rating in our 1Q 09 update report. Despite our expectation of a significant positive currency impact on the European stock over our investment horizon, we maintain our HOLD rating based on our neutral fundamental outlook for the company. We will reassess our target price and rating in our 1Q 09 update report.

New Valuations

We expect a major slowdown in TAM S.A.(NYSE:TAM) revenue growth as slowing growth in domestic revenues is compounded by an anticipated decline in international revenues, with the swine flu pandemic’s negative impact on incoming passenger traffic adding to the impact of the prevailing weak economic scenario. The Brazilian aviation regulator’s (ANAC) recent decision to gradually reduce minimum prices for international flights, eventually eliminating the limit by 2010, is likely to impact TAM most significantly among Brazilian airline companies, since TAM comprehensively dominates Brazil’s international air passenger traffic (85.4% international market share in 1Q 09). With domestic revenues also expected to take a hit from economic contraction, we expect a severe growth slowdown from FY 2008. Furthermore, we expect TAM’s margins to contract y-o-y in both FY 2009 and FY 2010. FY 2009 operating margin is forecast to contract primarily as a result of a significant anticipated reduction in high margin international revenues compounded by higher personnel expenses as a percentage of sales. Further, TAM is approximately 34% hedged for FY 2009 at approximately US$109 per barrel, which is high compared to present and expected fuel price levels, preventing TAM from taking full advantage of prevailing low fuel prices. For FY 2010 also, the company is 22% hedged at levels of US$114 per barrel. This hedging is significantly higher than our crude oil price expectation of US$76 per barrel in the year, which is expected to drag down TAM’s margins further. However, this hit on TAM’s operating margin in both FY 2009 and FY 2010 will be marginally mitigated by non-payment of travel agents’ commissions in addition to lower maintenance costs as a percentage of sales. Maintenance costs are expected to remain in check as TAM’s domestic fleet is now limited to Airbus A- 320 aircraft. We believe that TAM’s current price levels reflect the anticipated negatives.

LDK Solar Co., Ltd. (NYSE:LDK) The solar industry is currently going through a significant transition phase, with solar system prices tumbling given weak demand due to the global credit crunch and the amount of over-capacity created over the past years. As a result, we believe the company’s 1Q 09 net sales will decline q-o-q driven by our forecast of lower shipments and significant drop in Average Selling Price (ASP) during the quarter. We also expect a significant deterioration in LDK’s gross margin in 1Q 09 reflecting the impact of a huge inventory pile up of wafers and raw materials, which occurred when raw material costs were much higher than current levels, and the high start up costs of new polysilicon and wafer plants. Although we expect LDK Solar to be able to increase its wafer shipments in FY 2009 and FY 2010, bolstered by the Chinese government’s solar subsidy package announced on 26 March 2009, our expectation of a sharp decline in ASP has led us to forecast a y-o-y contraction in the company’s topline in FY 2009. However, we do expect top-line to increase y-o-y in FY 2010. We expect a significant deterioration in gross margin for LDK in FY 2009 reflecting the huge inventory pile up and high start up costs. The company ended FY 2008 with very high debt levels on its balance sheet, which the company expects to meet by lowering working capital,; through existing cash; and through cash accrued from operating activities. Although we believe the company has sufficient funds to support its operations, especially as the company announced on 15 April 2009 that it had secured US$785 mn of unused credit lines, we remain concerned about its unusually high debt levels, particularly as operating conditions are deteriorating, which will prove detrimental to the company’s operations and profitability if conditions worsen further. Overall, we feel the company is currently overvalued at current price levels, and therefore hold a negative outlook for LDK’s NYSE common stock over our investment horizon.

Verigy Limited (NASDAQ:VRGY) derives a significant portion of its revenues from Outsourced Semiconductor Assembly and Test (OSAT) manufacturers and sub-contractors (41% of total net revenue in 1Q 09). Demand for consumer electronics products has improved in Mainland China due to the stimulus package implemented by the Chinese government; consequently back-end companies have reported improving utilizations during the quarter. Accordingly, we believe an up-tick in orders by OSAT customers will start for Verigy in the medium term. Moreover, we believe that the company’s order book will bottom out in the coming quarter and new order numbers will start to recover in the latter half of 2009 based on our assumption of leaner channel inventory and marginal seasonal recovery in demand during the later part of the year. However, despite the positive developments outlined, we still expect to see a steep fall in top-line in FY 2009 (-60.3% y-o-y), in line with leading Automated Test Equipment (ATE) vendors including Advantest Corporation and Teradyne Inc. as a result of increasing production cuts by semiconductor companies. ATE vendors have faced dismal conditions since the second half of 2007 as significant overcapacity in the memory segment and later the weakening economy have dampened any new capital investments. On 09 March 2009, Gartner Inc. forecast a 34.2% y-o-y decline in global semiconductor test equipment sales in 2009. Despite the cost-reduction efforts by Management to lower breakeven levels, we expect the company to continue reporting operating losses into FY 2010 due to a weak top-line performance. However, we expect cost reduction efforts by Verigy to boost margins once demand recovers.

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