Earnings Releases

On 21 August 2008, DRDGOLD Ltd. (JSE:DRDJ) announced its 4Q 08 results. Revenues were in line with our estimates, while net income exceeded our forecast. Our near term outlook for gold prices remains positive. Furthermore, we believe the common stock is currently trading below its fair value. Therefore, at current levels, we maintain our BUY rating.

Frontline Ltd’s (NYSE:FRO) Net Voyage Revenues (NVR) witnessed robust y-o-y growth in 2Q 08 and exceeded our estimate. However, EBITDA margin and adjusted1 operating margin fell short of our estimates due to higher than expected expenses (as a percentage of NVR) in 2Q 08. Considering this, we are likely to revise our estimates and target price marginally downwards in our next update report.

Santos Limited (ASX:STO) reported positive y-o-y growth in revenues in 1H 08, driven by higher realized hydrocarbon prices, partially offset by lower sales volumes. Although operating margin declined on a yo- y basis, reflecting higher cost of sales, operating income was above our expectations due to lower depreciation expenses during the quarter. Management has re-iterated its hydrocarbon production and capex guidance for FY 2008.

News

Compagnie Générale de Géophysique-Veritas’ (PSE:GEPH) common stock has increased significantly since our last update report to achieve our target price on 20 August 2008. We believe the common stock is fairly valued at current levels and therefore downgrade the common stock rating from a BUY to a HOLD.

Corel Corporation’s (NASDAQ:CREL) NASDAQ common stock price appreciated 11.0% in a single day yesterday led by news of the company receiving multiple preliminary offers for a buyout. As at current levels the stock offers an attractive investment opportunity we do not anticipate any change in our current rating for the NASDAQ common stock.

Pharmaxis Limited (ASX:PXS), on 19 August 2008, announced the completion of a Phase III clinical trial of Bronchitol for the treatment of bronchiectasis. According to the company, the Phase III clinical trials have concluded with no serious adverse effects on patients suffering from Bronchietasis after 12 months of therapy. Pharmaxis is expected to file for marketing approval in Australia after the encouraging clinical results.

Tata Motors Ltd. (BSE:TAMO) has announced its plans to scrap the issuance of convertible preference shares which will reduce the prospective dilution of existing equity shareholders and EPS. Management plans to divest its investments to fill the gap of INR30,000 mn. We believe such a move is positive for Tata Motors and consequently we reiterate our BUY rating for the common stock at current levels.

New Valuations

Acergy S.A. (NASDAQ:ACGY) registered a healthy increase in its 2Q 08 revenues, driven by higher exploration and production (E&P) activity levels in most of its operating regions. Furthermore, improved efficiency in project execution has resulted in lower operating costs and higher adjusted3 operating margin in 2Q 08. This was further supported by a lower effective tax rate, which improved Acergy’s adjusted net margin. Although Management expects order delays in West Africa and pricing pressure in Northern Europe and Asia in the short term, a significant portion of revenues have already been realized in 1H 08. Therefore, we believe the company remains well-poised to achieve its full-year revenue guidance of US$3.0 bn in FY 2008. Furthermore, we believe that an anticipated increase in global oil production will sustain E&P activities supporting demand for Acergy’s product line and drive revenue growth, going forward. Moreover, we expect continued improvement in efficiency, in terms of project execution, and a lower effective tax rate to enhance the company’s margins going forward. Hence, we view Acergy’s common stock an attractive investment opportunity at current levels.

National Bank of Greece S.A. (NYSE:NBG) recorded healthy top and bottom-line performance in 1Q 08. Strong credit demand in Greece coupled with greater presence in Turkey, through its subsidiary Finansbank, and operations in Southern-Eastern Europe (SEE) drove the bank’s loan growth in 1Q 08. NBG’s efficiency ratio continued to improve as top-line growth offset the growth in its total operating expenses. This positively impacted the bank’s bottom-line growth during the period. Going forward, NBG’s expansion plans will support growth in Turkey and SEE. Hence, we continue to remain optimistic on NBG’s performance. Improvements in its cost efficiency and asset quality, in addition to the recent price decline, we believe the common stock represent an attractive investment opportunity at current levels.

Nexen Inc. (NYSE:NXY) reported strong top-line growth in 2Q 08 given higher average realized price for hydrocarbons during the quarter. Going forward, we expect the company’s developments projects to increase hydrocarbon production. In addition, the company’s Long Lake Project and development of Ettrick field are on track to meet the company’s production guidance for the year. While we anticipate hydrocarbon prices to decline y-o-y in FY 2009, we expect Nexen to witness stable top-line growth as a result of new output from the above fields. Therefore, at the current levels we find Nexen’s common stock an attractive investment opportunity.

As NTT DoCoMo, Inc.’s (NYSE:DCM) 1Q 09 revenues were below our estimates we have revised our revenue estimates marginally downwards. However, going forward we have a positive outlook for total revenues in FY 2009 and FY 2010 on a y-o-y basis due to an anticipated increase in Equipment sales revenues, partially offset by a decline in Wireless service revenues. In addition, we have revised our margin estimates upwards from our previous update report due to higher than expected 1Q 09 results. Furthermore, going forward we expect EBITDA margin to increase over the next two years due to an anticipated decline in cost of equipment sold and selling general & administrative expenses, as a percentage of revenue. In addition, we expect operating margin to increase over the next two years due to an anticipated decline in depreciation and amortization expenses, as a percentage of revenues. Thus, in light of subscriber-base growth and improved margins over the next two years we have a positive outlook for the common stock.

In 2Q 08, QLT Inc. (NASDAQ:QLTI) reported decline in revenues from its flagship product, Visudyne, resulting in weak performance of the company during the quarter. Although we anticipate sales of Visudyne to continue to decline, we believe the decline will be at a slower rate relative to previous quarters. Moreover, the company has taken multiple cost cutting and restructuring initiatives to focus on core business while selling off non-core assets and generate additional capital to fund R&D activities and repay the debt. We believe these initiatives will generate significant cost savings, going forward. Although we are concerned about the product pipeline, we have revised our revenue and margin estimates upwards to reflect 2Q 08 performance. Moreover, we believe the NASDAQ common stock is currently undervalued, consequently, we are upgrading QLT’s NASDAQ common stock from a SELL to a BUY.

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