Earnings Releases

Alumina Limited (NYSE:AWC) announced its 1H 08 results on 31 July 2008. The top-line declined significantly due to high operating costs at AWAC. Going forward, we expect moderation in aluminum prices, due to global oversupply conditions. Along with the impact of rising input costs, we expect this to negatively impact Alumina’s top-line in the coming quarters. We continue to anticipate a positive currency impact on the common stock over our investment horizon.

Anglo American PLC (NASDAQ:AAUK) reported its 1H 08 results on 31 July 2008. While revenues were in-line with our estimates, profitability exceeded our expectations. Given the robust 1H 08 earnings growth, the company’s strong business portfolio and its capacity expansion projects to meet increasing demand for most of its products, we continue to see upside potential for the company. Despite our expectation of a negative currency impact on the UK stock over our investment horizon, we upgrade the UK stock rating to a BUY as our target price no longer supports a HOLD rating.

AngloGold Ashanti Limited (NYSE:AU) announced its 2Q 08 results on 31 July 2008, noting significantly higher-than-expected gold income. However, the company reported a net loss in 2Q 08, due to significant losses on hedging contracts. We continue to expect a significant negative currency impact on the South African stock. Therefore, we maintain our SELL rating.

Aspen Insurance Holdings Limited’s (NYSE:AHL) 2Q 08 adjusted1 total revenues were in line with our expectations. However, net income exceeded our expectation due to lower than-anticipated claims and underwriting expenses. We do not expect a significant change in our revenues and claims estimates going forward. Based on our fundamental outlook for the company and anticipated positive currency impact on the European stock over our investment horizon, we maintain our BUY rating for the European stock.

AstraZeneca PLC (NYSE:AZN) reported strong sales and margin growth in 2Q 08. Sales as well as operating and net margins exceeded our expectations in 2Q 08. Considering the better than expected performance by AstraZeneca. We are likely to revert to a 6-24 month investment horizon as we no longer anticipate a significant currency impact on the European Stock in the medium term.

Banco Santander-Chile (NYSE:SAN) reported strong y-o-y growth in core revenues attributable to rising Net Interest Margin and an increased loan portfolio in 2Q 08. While the bank’s core revenues exceeded our estimate, adjusted1 net income was below our estimate. Going forward, we remain concerned about deteriorating credit quality due to increasing exposure to retail banking. Based on our fundamental outlook for the company and anticipation of a significant positive currency impact over our investment horizon, we maintain our BUY rating for the ADR.

BASF SE (OTC:BFASF) announced its 2Q 08 results on 31 July 2008. Revenues and profitability were in line with our estimates. We are likely to marginally increase our estimates and target price upwards in our next update report, in line with management guidance. Given the recent decline in stock prices we see potential upside from the current price levels. We expect a significant positive currency impact on the ADR over 6-12 months. Furthermore, given the current price levels, we reiterate the ADR a BUY.

British American Tobacco PLC’s (AMEX:BTI) 2Q 08 revenues exceeded our estimate. Since we are likely to marginally revise our estimates upwards in our next update report and given the current common stock price supports a BUY rating. We expect a positive currency impact on the ADR in the medium term and therefore we reiterate a BUY rating on the ADR.

While British Sky Broadcasting Group PLC’s (NYSE:BSY) revenues displayed 8.8% y-o-y growth in FY 2008, margins declined due to higher total operating expenses, as a percentage of revenues. The y-o-y growth in revenues was primarily due to an increase in revenues from Retail Subscription. We reiterate our ADR rating, as we now expect a significant positive currency impact on the ADR over the next 6-24 months.

Although BT Group PLC’s (NYSE:BT) revenues were in line with our estimate, margins were below our estimates, primarily due to higher than anticipated operating expenses in 1Q 09. In light of lower than anticipated results, we are likely to revise our target price downwards. We maintain our current ADR rating as we continue to anticipate a significant positive currency impact on the ADR over the next 6-24 months.

Compania de Minas Buenaventura S.A.A. (NYSE:BVN) announced its 2Q 08 results on 30 July 2008. While revenues were in line with our estimates, adjusted operating income was significantly above our forecast. Going forward, we remain optimistic about ongoing projects, which should lift gold production volumes. We continue to anticipate a significant positive currency impact on the Peruvian stock over our investment horizon. Therefore, we maintain BUY rating.

Compagnie Générale de Géophysique-Veritas (NYSE:CGV) reported a decline in 2Q 08 revenues, as the performance of its equipment division, Sercel, was impacted by a depreciation of the US dollar against the euro. Although its operating margin declined on a y-o-y basis, its net margin improved with a decline in its effective tax rate. As we continue to anticipate a negative currency impact on the ADR in the medium term, we do not anticipate a change in our current ADR rating.

Cosan Limited (NYSE:CZZ) recorded net sales above our estimate in 4Q 08 due to higher-than-expected ethanol volumes sold. However, the company reported an operating loss and net loss during the quarter, due to high cost of goods sold. Although we continue to anticipate a positive currency impact on the NYSE stock in 6-12 months, at current price levels our target price no longer supports a BUY rating.

Dassault Systemes S.A.’s (NASDAQ:DASTY) 2Q 08 results were above our and market’s expectations. The company has revised downwards FY 2008 non-US GAAP total revenue guidance after considering the spin-off of Dassault Systemes Solutions France (DSF) and acquisition of Engineous Software Inc, US. We do not anticipate a change in our rating for the ADR as we continue to expect a significant negative currency impact on the ADR over the next 6-24 months.

Deutsche Bank AG’s (NYSE:DB) net revenues fell short of our and consensus estimates in 2Q 08. However, its adjusted net income was above our and market expectations. Nevertheless, we remain concerned about the sensitivity of the global banking sector to ongoing volatility in global financial markets. We anticipate a significant negative currency impact on the NYSE stock over our investment horizon. Therefore, we maintain our SELL rating.

Elan Corporation PLC’s (NYSE:ELN) stock price declined on 30 July 2008 due to the poor Phase II clinical results of the company’s Alzheimer’s drug, Bapineuzumab. According to the information provided by Elan and Wyeth Pharmaceuticals, most Alzheimer’s patients treated with Bapineuzumab reported no clinical benefit from the drug treatment. In addition, incidence of serious side effects such as brain swelling were reported in patients treated with the drug. We believe the negative outcome of the Phase II clinical trial for the drug, the pace of regulatory approval and commercial launch may be slow. Consequently, we are likely to exclude Bapineuzumab from our revenue forecasts and, consequently, may revise downwards our estimates, going forward.

Enbridge Inc. (TSX:ENB) reported robust top-line growth in 1Q 08, supported by a strong performance from its Gas Distribution and Services segment. However, its operating income declined significantly on a y-o-y basis from rising natural gas costs. Although we continue to anticipate a positive currency impact on the NYSE stock, as current price levels no longer support our BUY rating, we downgrade the NYSE stock from a BUY to a HOLD.

EDP – Energias de Portugal, S.A. (OTC:EDPFY) reported strong revenue growth in 1H 08, primarily driven by strong performances from its Generation and Supply and Distribution businesses, coupled with remarkable growth from its Renewable business. As we expect to revise our estimates downwards in our next update report, we downgrade the ADR from a BUY to a HOLD although current price levels support a BUY rating. We expect to revert to a 6-24 month investment horizon in order to value the company in our next full update report.

Eni S.p.A (NYSE:E) registered strong revenue and earnings growth during 2Q 08, above our expectations, largely driven by higher realized prices for its products. As our outlook for hydrocarbon prices remains bullish in the near-to-medium term and given better-than-expected 2Q 08 results, we do not anticipate a change in our BUY for Eni’s common stock. Although we continue to anticipate a negative currency impact on the ADR over the medium term, given our fundamental outlook, we do not anticipate a change in our BUY rating for Eni’s ADR.

While revenues and EBITDA were in line with our estimates, France Telecom (NYSE:FTE) adjusted operating income was above our estimates. However, adjusted net income was lower than our expectations due to higher than anticipated tax expenses in 1H 08. We downgrade the ADR from a BUY to a HOLD as the current price no longer supports a BUY rating and we expect a negative currency impact on the ADR.

Garmin Ltd. (NASDAQ:GRMN) reported 2Q 08 results below our and market expectations. Pricing pressure continued to deteriorate margins in 2Q 08. Furthermore, Management has provided a weak revenue and margins outlook for FY 2008. The company’s guidance is below our expectations, hence, we are likely to revise our estimates and target price downwards in our next update report. The NASDAQ common stock declined 21.9% in single trading day on 30 July, primarily due to poor 2Q 08 results and weak outlook for FY 2008. In view of the company’s downward revision of estimates due to an expected decline in consumer spending, we downgrade the Garmin NASDAQ common stock from a BUY to a HOLD until we fully reassess the company in our next update report.

Genco Shipping & Trading Ltd.’s (NYSE:GNK) 2Q 08 revenues and margins exceeded our expectations due to higher than expected TCE rates and lower than expected operating expenses, as a percentage of revenues. Given our positive outlook for the dry-bulk industry and higher than expected results, we are likely to revise our estimates upwards when we come to revalue the stock in our next update report. Therefore, we maintain our current BUY rating for the Genco NYSE common stock.

General Maritime Corporation’s (NYSE:GMR) 2Q 08 Net Voyage Revenues (NVR) and margins exceeded our expectations due to higher-than-anticipated average Time Charter Equivalent (TCE) rates. As we are likely to revise our estimates marginally upwards when we come to revalue the stock in our next update report, we maintain our BUY rating for the NYSE common stock at current price levels.

Hitachi Ltd.’s (TSE:6501) 1Q 09 revenues were in line with our and market estimates, while operating and net margins exceeded our expectations. We may marginally revise upwards our margin estimates in light of better than expected operating and net level performance in 1Q 09.

Infosys Technologies Ltd. (NASDAQ:INFY) overall 1Q 09 results were above our expectations with earnings higher, aided by a lower tax rate on account of a reversal of tax provisions during the quarter. Despite weak volume growth, top-line growth exceeded Management guidance, aided by a positive currency impact as the Indian rupee depreciated against the US dollar by 5.5%. The largest segment, Banking, Financial Services and Insurance regained its growth momentum in 1Q 09, which we consider a positive given the turbulence witnessed in this sector on account of the mortgage and credit crisis in the US, the company’s largest market. However, this growth was offset by a slowdown in Infosys’ Telecom segment, which we believe was attributable to the decline in business from its largest client British Telecom (BT). Going forward, Infosys expects Manufacturing and Energy and Utilities verticals to increasingly contribute to top-line growth. Management has revised its revenue guidance for FY 2009 upwards, mainly attributable to the change in its INR/USD outlook. Although the above factors indicate a mixed outlook for Infosys, on account of the current low levels at which the stock trades, our outlook for the common stock remains positive.

Lazard Ltd.’s (NYSE:LAZ) 2Q 08 top-line exceeded market estimates, despite challenging conditions affecting the financial sector more broadly. Consequently, our fundamental outlook remains unchanged. Therefore, despite a rise in the NYSE common stock price since our last update report, we continue to see upside potential and therefore maintain our BUY rating.

Mizuho Financial Group (TSE:8411) reported a decline in gross profits in 1Q 08, in line with our estimates, due to the impact of ongoing weakness in global financial markets which, going forward, is expected to have a further impact on fees and commission income, while the slowdown in the Japanese economy is expected to constrain lending growth. In view of the group’s 1Q 08 results, our outlook for the common stock remains unchanged. Therefore, we maintain our HOLD rating.

Although NEC Corporation’s (TSE:6701) 1Q 09 revenues were in broadly in line with our and market estimate, EBITDA and operating margins were below our expectations. Considering the company’s weak performance in 1Q 09 and Management’s reiteration of its guidance for FY 2009 estimates; our outlook for the company remains broadly unchanged. Therefore, we maintain our current HOLD rating for the common stock.

O2Micro International Limited’s (NASDAQ:OIIM) 2Q 08 net sales and gross performance were in line with our expectations, but operating and net performance exceeded expectations, primarily reflecting lower than anticipated Selling, General & Administrative (SG&A) expenses. Management’s 3Q 08 net sales guidance is below our previous expectations. Although it is possible that we will revise our estimates to reflect Management guidance and 2Q 08 results, we do not anticipate a change in our rating and maintain our current BUY rating for the O2Micro ADR.

Prudential PLC (LSE:PRU) reported y-o-y growth in its top-line in 1H 08, primarily driven by growing sales from its insurance, retirement savings and investment products in Asia. However, the company reported a net loss in European Embedded Value and IFRS GAAP, due to a loss as a result of short term fluctuations in investment returns. As a result of the company’s weak performance in 1H 08, we are likely to revise our target price downwards in our next full update report, and we temporarily downgrade the Prudential common stock from a BUY to a HOLD even though our current target price suggests a BUY.

PT Telekomunikasi Indonesia Tbk.’s (JKSE:TLKM) 1H 08 results were below our estimates. During 1H 08, margins remained under pressure due to increased operating expenses. In light of the weak 1H 08 numbers we are likely to revise our estimates downwards. Furthermore going forward, we expect competition to intensify in the Indonesian cellular market. However, we believe the company’s emphasis on improving its network infrastructure will positively impact the subscriber-base growth rate, thereby improving its market share. Therefore we do not expect a change in our current rating.

Royal Dutch Shell PLC (NYSE:RDSa) reported strong 2Q 08 results with revenues and earnings above our estimates. Although revenues benefited from increased realized hydrocarbon prices during the quarter, margins were impacted by higher input costs, particularly in its Downstream segment. As we are optimistic of future revenue growth given an increase in crude oil prices in line with our investment horizon, we do not expect a change in our current ADR rating until we fully reassess the company in our next update report.

Royal Dutch Shell PLC1 (NYSE:RDSb) reported strong 2Q 08 results with revenues and earnings above our estimates. Although revenues benefited from increased realized hydrocarbon prices during the quarter, margins were impacted by higher input costs, particularly in its Downstream segment. As we are optimistic of future revenue growth given an increase in crude oil prices in line with our investment horizon, we do not expect a change in our current ADR rating until we fully reassess the company in our next update report.

Reed Elsevier NV’s (ASM:ELSN) top-line growth in 1H 08 was lower than our expectations. Revenues were negatively impacted by the stronger Euro against both the US dollar and Sterling during the period. In 1H 08, the company completed the sale of its Harcourt Education business and has partially divested Reed Business Information. Given the company’s weaker-than-expected performance in the period we are likely to reduce our estimates in the coming weeks. However, given the current price level we maintain our BUY rating until we fully reassess the target price.

Repsol YPF (NYSE:REP) reported strong revenue growth in 2Q 08, primarily driven by higher realized hydrocarbon prices during the quarter. EBITDA margin declined on a y-o-y basis, given higher input costs within its Refining and Marketing segment. Although we continue to anticipate a negative currency impact on the ADR over the medium term, given our fundamental outlook, we do not anticipate a change in our current ADR rating until we reassess the company in our next update report.

Sadia S.A. (SAO:SDIA4) recorded strong y-o-y growth in 2Q 08. Revenues were above our estimate, primarily due to higher-than-expected Average Selling Price in both the domestic and international markets, while operating profit and adjusted1 net income were broadly in line with our expectations. We continue to expect Sadia’s revenue growth to be supported by the demand for its products in the markets and increasing ASP. In addition, we believe Sadia will benefit from its continuous efforts to increase its existing production capacity in both the domestic and export markets. Furthermore, the company intends to invest heavily in innovative projects to leverage its brands in both markets. In light of these factors and impressive performance in 2Q 08, we do not anticipate to change our current BUY rating for the preferred stock.

Sanofi-Aventis S.A. (PSE:SASY) reported decline in 2Q 08 revenues, in line with our expectation. Sanofi-Aventis’ top-line was impacted by intense generic competition faced by some of top selling drugs. Going forward, we continue to believe the company’s top-line will be impacted by increasing generic threats to its top brands. However, we also believe Sanofi-Aventis’ will continue to strengthen its product portfolio through potentially beneficial acquisitions and focused research and development activities. Therefore, our outlook for the company remains broadly unchanged and consequently we maintain our BUY rating for the common stock.

Sappi Ltd.’s (NYSE:SPP) 3Q 08 operating performance was in line with our estimate, while the bottom-line exceeded our forecast. Going forward, we expect the Fine Paper business to benefit from sustained demand in North America and growth in production in other markets. In light of the company’s 3Q 08 results, we expect to raise our estimates and target price in our next update report. Therefore, we upgrade the ADR from a HOLD to a BUY.

Steiner Leisure Limited’s (NASDAQ:STNR) 2Q 08 total revenues were marginally below our estimate while margins were in line with expectations. However, in view of the current weakness in the global economic scenario, we continue to take a cautious view for the company. Therefore, we maintain our current HOLD rating for the NASDAQ common stock, despite the current price supporting a BUY rating at current levels.

Tata Communications’ (BSE:TATA) 1Q 09 standalone net sales, EBITDA, operating profit and adjusted1 net income were significantly below our expectations. However, EBITDA and operating margins were above our expectations due to lower than expected network costs, as a percentage of total income2. Although the current price supports a SELL rating and the company reported weak 1Q 09 numbers, in light of the Management’s expansion strategy for the 20 largest emerging markets, we remain optimistic regarding future growth prospects and maintain our HOLD rating on the common stock until we revisit our model.

Tata Motors Ltd. (BSE:TAMO) reported 1Q 09 Standalone Automotive Business results on 30 July 2008. Although SAB’s revenues exceeded our expectations, subsidiaries performance fell below expectations. Although we remain concerned about rising raw material and crude oil prices, at current levels we reiterate our BUY rating for the common stock.

Although Technip (PSE:TECF) reported a marginal decline in its revenues during 2Q 08 reflecting depreciation of the US dollar relative to the euro, margins improved on a y-o-y basis given a decline in operating expenses as a percentage of revenues. As the company has raised its margin guidance and as we continue to anticipate that the company will benefit from a rise in Exploration and Production (E&P) activity going forward, we maintain our BUY rating for the common stock until we reassess the company fully in our next update report.

Telefónica S.A’s (TEF) 2Q 08 revenue and earnings were below our expectations, mainly due to lower than expected growth from Latin America. Although revenues during the quarter witnessed mild y-o-y growth, we believe future revenues will be driven by increasing opportunities in terms of increasing penetration levels, especially in Latin America. In addition, revenues from Broadband and Pay TV continue to witness strong growth across various operating regions and are expected to emerge as major growth drivers. The significant decline in the common stock price since our previous update report is in line with the 15.7% decline witnessed in the IBEX index over the same period and global weakness across major global bourses due to concerns over the US recession and rising crude prices. We believe Telefónica will capitalize on opportunities in Latin America, particularly in Brazil through Vivo Participacoes SA (Vivo), its joint venture with Portugal Telecom, SGPS, S.A. Considering the strong fundamentals at current levels we do not expect to change our current BUY rating for the Telefonica common stock.

2Q 08 net revenues for Telemig Celular Participações S.A. (SAO:TMCP4) were marginally below our expectations, while earnings were significantly below our estimates, mainly on account of higher than expected operating costs during the quarter. There has been a significant increase in Telemig’s subscriber-base on account of the higher wireless penetration rate in Minas Gerais. We continue to anticipate healthy growth in subscriber base, aided by an expected increase in the penetration rate. Moreover, Telemig’s acquisition by Vivo Paricipacoes S.A. is expected to benefit operations as Vivo is a dominant player in Brazil. Hence, taking into account the strong fundamentals at current levels we do not expect a change in our rating for preferred stock.

Tomkins PLC’s (LSE:TOMK) 1H 08 revenues and operating profit declined y-o-y, due to soft demand from North America and rising operating costs. Going forward, we remain concerned about the company’s exposure to the US, given the current slowdown in the American housing and automotive markets. Therefore, although our target price implies a BUY, we maintain our HOLD rating.

Taiwan Semiconductor Manufacturing Company Ltd.’s (TAI:2330) 2Q 08 net sales were in line with our expectation. Although margins were higher across the board, net income was also in line. Despite the continued weakness in the semiconductor industry, our outlook for the company remains positive in view of its leadership position and diversified customer base. Therefore, we reiterate our BUY rating for the common stock.

Tyco International Ltd. (NYSE:TYC) reported strong 3Q 08 results, above our and market expectations. Furthermore, Management has revised its FY 2008 EPS guidance upwards. In light of this we do not anticipate a change in our current NYSE common stock rating.

In 2Q 08, Unilever N.V. (ASM:Unc) revenues were below our estimates while adjusted operating profit and operating margin were in line with our estimates. However, adjusted net profit and EPS were above our estimates. Although the current target price supports a SELL rating, in light of mixed results posted by the company and cost saving initiatives taken by the company, we maintain our HOLD rating for the common stock.

In 2Q 08, Unilever PLC (LSE:ULVR) revenues were below our estimates while adjusted operating profit and operating margin were in line with our estimates. However, adjusted net profit and EPS were above our estimates. Though the current target price supports a SELL rating, in light of mixed results posted by the company and cost saving initiatives taken by the company, we maintain our rating of HOLD for the common stock.

Willis Group Holdings Ltd.’s (NYSE:WSH) 2Q 08 total revenues were in line with our and market estimates. However, adjusted1 net profit was lower than our and market expectations. The company performed weakly due to higher interest and operating expenses, which resulted in a y-o-y decline in bottom-line. In light of the company’s weaker performance in 2Q 08, we are likely to revise our estimates downwards when we come to revalue the stock in our next update report. However, we maintain our BUY rating for the NYSE common stock at current price levels.

News

Primus Guaranty Ltd.’s (NYSE:PRS) one day stock price appreciation followed the signing of the rescue package housing bill into US law and the US Central Bank decision to prolong emergency lending facilities, which should act to ease liquidity constraints and reduce spreads. We reiterate our BUY rating.

New Valuations

Although we are concerned by the impact of sluggish growth in the US and UK economies on Aegon’s (NYSE:AEG) top-line growth, we are encouraged by Aegon’s ongoing initiatives to expand operations in emerging economies through strategic acquisitions and entry into partnerships and joint ventures. Moreover, we believe the recent price decline has left the company, which we believe is fundamentally strong, undervalued.

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