Earning Release

Arcelor Mittal (NYSE:MT) Despite reporting a steep y-o-y fall in revenues and profitability for 3Q 09, conditions have improved significantly for Arcelor Mittal sequentially as steel demand shows signs of recovery after experiencing a steep dip in 1H 09. Considering improving dynamics for steel demand we maintain our positive outlook towards the ADR at current price levels. Therefore we reiterate the stock a BUY. We will reassess our ADR (1 ADR = 1 European share) rating in our next update report. Although we continue to anticipate a significant negative currency impact on the European stock over the coming 6-12 months, considering our positive fundamental outlook we upgrade the stock from a HOLD to a BUY. We will reassess our European stock rating in our next update report.

Coca-Cola FEMSA, S.A.B de C.V. (NYSE:KOF) reported strong growth in revenues during 3Q 09, above our estimate, driven by strong growth in volumes and Average Selling Price (ASP). In addition, adjusted net margin was above our estimate due to lower-than-anticipated net interest expenses. Going forward, we believe revenue growth will be supported by strong volume growth and increased ASP. In addition, since the results were broadly above our estimates, we expect to revise our estimates and target price upwards. In light of these factors although the common stock target price does not support a HOLD rating we reiterate the common stock a HOLD and will reassess our target price and rating in our 3Q 09 update report. As we expect significant positive currency impact on the ADR over our 6-24 month investment horizon and since the target price supports a BUY we maintain our BUY rating for the ADR (1 ADR = 10 common shares). We will reassess our target price and rating in our 3Q 09 update report.

SAP AG (NYSE:SAP) reported sluggish revenue growth in 3Q 09, below our estimates due to a fall in Product and Professional services revenues. Despite signs of a global economic recovery, SAP's results indicate that the macroeconomic environment continued to depress demand for its software products and services. Going forward, even though an economic recovery may infuse organic growth in other segments of the company, we continue to expect muted growth for SAP's software revenues. However the company's initiatives to improve its technology and product portfolio will continue to increase its market presence. On the other hand, profitability improved on the back of strong cost cutting and restructuring measures. However, taking into account the company's cautious stance on its product sales, which is evident from its unchanged guidance for FY 2009, we maintain our HOLD rating for the SAP common stock until we can reassess the rating in our next update report in the coming weeks. We expect to take a 6-24 month horizon as we no longer expect a significant currency impact on the ADR over the medium term. Also, we now anticipate a significant negative currency impact on the European stock over the long term and, hence, we downgrade our rating for the ADR from a BUY to a HOLD.

News

On 28 October 2009, British American Tobacco PLC (NYSE:BTI) announced its Interim Management Statement, stating robust revenue growth during the period. Hence, we do not anticipate a change in our current BUY rating for the common stock. We will reassess our target price and rating in our next update report, once the company announces its FY 2009 results in February 2010. As we continue to expect a positive currency impact on the ADR, we do not anticipate a change in our BUY rating for the ADR. We will reassess our target price and rating in our next update report, once the company announces its FY 2009 results in February 2010.

On 27 October 2009, Mahanagar Telephone Nigam Limited’s (NYSE:MTE) common stock achieved our target price. The decrease in common stock price primarily reflects weak fundamentals. Although the current stock price does not support a SELL rating, we reiterate our SELL rating for the common stock considering the company’s continuous dismal performance in gaining lucrative 3G subscriber-base. We will reassess our target price and rating in our next update report, once the company releases its 2Q 10 results. We reiterate our ADR rating a BUY as we continue to expect a positive currency impact on the ADR over the medium term. We will reassess our target price and rating in our next update report.

New Valuations

Companhia Energética de Minas Gerais – CEMIG (NYSE:CIG) Brazil's industrial demand for electricity remained weak, as the economy struggles to fully exit the global downturn. During September 2009, the country's industrial power demand totaled 14,623 GWh, down 6.1% y-o-y. Steel mills and other heavy industries in the country are still not operating at full capacity and thus their demand for energy is low. CEMIG's electricity sales volume sold to industrial customers declined 13.3% y-o-y to 5,538.8 GWh in 2Q 09. However, growing electricity demand from the residential sector continues to drive CEMIG's overall volumes and revenues. CEMIG sold 2,421.5 GWh (+7.1% y-o-y) to residential customers during 2Q 09. We expect this segment to continue to perform well. Brazil's residential power consumption in September 2009 increased 7.6% yo- y to 8,411 GWh, benefiting from government programs to bring electricity to poorly served regions of the country such as the northeast and rural areas. Moreover, electricity demand from the commercial sector is expected to grow steadily, going forward driven by growth in the country’s services oriented businesses. The hike in electricity tariff rates announced in April 2009 will further benefit CEMIG's revenue growth in FY 2009. We forecast FY 2009 revenues at BRL11.2 bn, up 3.0% y-o-y. We expect CEMIG’s FY 2010 revenues to increase 7.2% y-o-y given our expectation of an economic revival in the latter half of the year, leading to an increase in demand for electricity. We maintain our positive outlook for the company’s future performance, given the increase in tariffs permitted by the Brazilian energy regulatory authority (ANEEL) coupled with our anticipated growth in electricity demand from the residential sector.

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