Earning Release

Magna International Inc’s (NYSE:MGA) 3Q 08 sales and profitability significantly underperformed our expectations. Management has also reduced its FY 2008 sales guidance considering the significant slowdown in vehicle production associated with the severe downturn in its key markets, such as North America and Europe. In light of the downward revision of sales guidance and uncertain economic conditions in Magna’s key markets, coupled with weaker than anticipated margins, we remain concerned about its sales and margin growth and, hence, are likely to revise downwards our estimates in our 3Q 08 update report. Consequently, we reiterate the NYSE common stock a HOLD even though the current target price supports a BUY rating. We are likely to revert to a 6-12 month investment horizon as we now expect a significant positive currency impact on the Canadian stock over the medium term1. We maintain our BUY rating for the Canadian stock based on our expectation of a significant positive currency impact on the Canadian stock over the medium term.

Mitsui & Co., Ltd.’s (NASDAQ:MITSY) 1H 09 total trading transactions were broadly in line with our expectation, while revenues and earnings surpassed our expectations. As we maintain our positive outlook for the company, we do not anticipate a change in our current outlook for the company. Furthermore, the common stock price has declined significantly since our 1Q 09 update report, primarily due to weak global financial markets. Hence, we reiterate our current BUY rating for the common stock. We continue to expect a significant positive currency impact on the ADR over the medium term. Furthermore, we maintain our positive fundamental outlook for the company. Hence, we reiterate our BUY rating for the ADR.

Companhia Brasileira de Distribuicao’s (NYSE:CBD) volume sales were above our estimate in 3Q 08 EBITDA and adjusted1 net income were also significantly above our estimates. In light of strong margin growth, we expect to raise our margin estimates, as the company focuses on aggressive price reduction strategies. However, we do not anticipate a change to our current rating as we expect the current economic climate to impact consumer spending and, therefore, we expect top-line growth to contract. Hence, we maintain our HOLD rating for the preferred stock, even though the target price supports a BUY. As we anticipate a significant negative currency impact on the ADR over our investment horizon and given our fundamental outlook, we maintain our HOLD rating, even though the target price supports a BUY rating at current levels.

Swisscom AG (OTC:SCMWY) reported healthy revenue growth in 9M 08. EBITDA and operating income increased on y-o-y basis. However, adjusted1 net income declined due to higher finance expenses. Going forward, we continue to expect Fastweb to support top-line growth and we believe Swisscom will continue to lead the domestic market with the blend of its core activities, voice, Internet and multimedia. Although the target price does not support a BUY rating at current levels, given our fundamental outlook for the company, we maintain our BUY rating. Although target price supports a BUY rating at current levels, we downgrade the ADR from a BUY to a HOLD as we anticipate a negative currency impact on the ADR.

Arcelor Mittal (NYSE:MT) reported healthy top-line growth in 3Q 08, although revenues feel slightly short of our estimate. However, adjusted1 EBITDA and operating income were in line with our estimates. However, steel prices have fallen significantly over the past couple of months and the company has cut back production at some of its higher-cost plants in an attempt to reduce inventory. Therefore, we expect to lower our estimates and target price when we revalue the company in our next full update report. Nevertheless, considering the significant recent decline in the ADR price, we maintain our BUY rating. We continue to anticipate a positive currency impact on the European stock over our investment horizon. Therefore, we maintain our BUY rating.

Endesa S.A. (ELE.MC) reported strong growth in revenues and earnings for 9M 08. Going forward, we are encouraged by Endesa’s efforts to focus on key end markets in Latin America, Spain and Portugal, where demand for electricity is expected to remain strong. Therefore, given the company’s strong performance during 9M 08, we do not anticipate a change in the current rating for the common stock. Hence, we maintain our BUY rating until we fully reassess the company in our next update report.

Total S.A. (NYSE:TOT) reported robust y-o-y growth in revenues in 3Q 08, driven by higher realized hydrocarbon prices. However, higher input costs in the company’s Downstream segment seriously impacted operating margin. Going forward, we expect revenues to be marginally impacted by downturn in crude oil and gas prices, but the decline in prices will improve the company’s margin performance. Total will also benefit from its new projects, including Akpo in Nigeria and the Jubail refinery, which will boost its volume growth, going forward. Hence, we maintain our BUY rating for Total’s common stock until we fully reassess the company in our next update report. Given our fundamental outlook, and as we now anticipate a significant negative currency impact on the ADR over the medium term, which is likely to lead us to reduce the ADR target price in our next update report, we downgrade our ADR rating from a BUY to a HOLD at current levels.

News

Due to significant volatility in global markets, disappointing 3Q 08 results and weak Management guidance, Herbalife Ltd.’s (NYSE:HLF) NYSE common stock depreciated significantly on 04 November 2008. Although at current price levels the target price supports a BUY rating, we maintain our HOLD rating for the NYSE common stock due to weak market conditions and as we expect consumer incomes to decline, negatively impacting, revenue growth over our investment horizon. We are likely to revert to a 6-12 months investment horizon in our next update report as we now expect a significant positive currency impact on the European stock over the medium term. Furthermore, the current price supports a BUY rating. Therefore, we maintain our BUY rating for the European common stock over the medium term.

Cott Corporation’s (Cott) NYSE common stock appreciated significantly on 04 November 2008, reflecting volatility in global equity markets. However, going forward, in light of the difficult economic environment and the declining Carbonated Soft Drinks (CSD) market in North America, we remain sceptical over any improvement in Cott’s operating performance. Therefore, we maintain our HOLD rating for Cott’s NYSE common stock. We are likely to revise our investment horizon from 6-24 months to 6-12 months as we now expect a significant positive currency impact over the medium term1. Therefore, given the significant positive currency impact and current target price, we upgrade our Canadian stock rating from a HOLD to a BUY.

On 05 November 2008, Allied Irish Banks PLC (NYSE:AIB) released its 3Q 08 trading update, noting a rise in operating income during 9M 08. However, impairment charges continued to rise, reflecting deterioration in the credit environment and rising unemployment. AIB continues to foresee strong growth in the Poland division, driven by expansion initiatives. Nevertheless, as the Irish economy is currently in recession and banking stocks remain particularly sensitive to volatility in financial markets, our near term outlook remains cautious. Therefore, we maintain our HOLD rating even though our target implies a BUY. We expect to revert to a 6-12 month investment horizon to value the bank in our next update report, as we now expect a significant negative currency impact on the ADR over the medium term1. Therefore, we maintain our HOLD rating.

The Stora Enso OYJ (OTC:SEOAY) European R stock reached our target price on 04 November 2008, driven by positive reaction to the company’s restructuring initiatives, which involve the closure of unprofitable mills in an effort to offset high wood costs and improve long term profitability. However, as the global economic downturn appears to be having an impact on demand for paper in the company’s major markets, and as we anticipate softer paper prices over the medium-to-long term, we remain about the company’s fundamental growth prospects. Therefore, we believe the stock’s upside potential is now exhausted and downgrade it from a BUY to a HOLD. We expect to revert to a 6-12 month horizon to value the company in our next update report, as we now anticipate a significant negative currency impact on the ADR over the medium term1. Therefore, we downgrade the ADR from a BUY to a HOLD.

The Van der Moolen Holding N.V. (VDMN.AS) common stock price exceeded our target price on 04 November 2008, in line with broad-based recovery in global equity markets. Meanwhile, our fundamental outlook remains unchanged. Therefore, we believe the stock’s fundamental upside potential has now been exhausted and downgrade it from a BUY to a HOLD.

Vimpelcom Communications (NYSE:VIP) ADR appreciated significantly on 04 November 2008, reflecting volatility in the global financial markets. Going forward, we expect robust expansion in subscriber-base and increased Average Revenues Per User (ARPU) from Russia to drive top-line growth. In light of strong fundamentals we believe the ADR represents an attractive opportunity at current levels. As a result, we reiterate our BUY rating for the ADR. We reiterate our BUY rating for the Russian stock, as we continue to expect a significant positive currency impact over the next 6-12 months.

Aegon N.V.’s (NYSE:AEG)common stock reached our target price on 04 November 2008 as a number of European insurance stocks staged a slight rebound following recent major declines. The increase in price reflects optimism following capital injection as well as significant volatility in global markets. 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 maintain our current SELL rating for the ADR based on our anticipation of a negative currency impact over our investment horizon.

Aries Maritime Transport Ltd.’s (NASDAQ:RAMS) NASDAQ common stock price increased significantly in a single trading session on 04 November 2008 reflecting recent volatility in equity markets. The NASDAQ common stock has rebounded 70% over the last three trading sessions following a sharp decline over the last month. Although we are likely to revise our estimates downwards in our next update report given a softening of spot rates and falling oil demand, the company’s long term fixed rate time charters should protect its performance to some extent, and therefore we reiterate our BUY rating for the NASDAQ common stock based on current price levels. Given our outlook for the company, and as we now anticipate a significant positive currency impact on the European stock over our investment horizon, we maintain our BUY rating for the European stock.

Corn Products International, Inc. (CPO) today announced that it has notified Bunge Limited (NYSE:BG) that its board intends to withdraw support for the merger agreement between the companies. The termination of the agreement would be disappointing for Bunge as the merger offered operational and financial synergies as well as improved geographical diversification. In light of mixed results posted by Bunge during 3Q 08 and weak commodity prices, we intend to revise our target price downwards when we revalue the stock in our next update report. However, at current price levels, we believe there is fundamental upside, and we maintain our BUY rating for the stock. We are likely to revert to a 6-12 months investment horizon in our next update report as we now expect a significant positive currency impact on the European stock over the medium term. Furthermore, the current price supports a BUY rating. Therefore, we maintain our BUY rating for the European common stock over the medium term.

Aracruz Celulose S.A. (NYSE:ARA) has entered into agreements a series of banks to square off its open derivative positions, capping its losses at US$2.13 bn. The company’s success in renegotiating its derivative positions led to a jump of 16.4% in its ADR price on 04 November 2008. However, the stock price remains well down since our last update, reflecting investor concerns over weakening demand for paper amid the economic downturn, rising raw material costs and derivative losses. Although we anticipate a significant positive currency impact on the Brazilian preferred stock over our investment horizon, our target price and rating remain under review.

Banco Itau Holding Financeira S.A. (NYSE:ITU) reported a y-o-y decline in its top-line in 3Q 08, falling short of our estimate, reflecting a lower Net Interest Margin (NIM). However, the bank did improve its asset quality, despite growth in lending; nevertheless, we do anticipate slight deterioration in asset quality within the near term. The preferred stock has appreciated significantly in recent days, reflecting positive investor reaction to the bank’s planned tie-up with Unibanco-Uniao de Bancos Brasileiros S.A. (refer to our company news alert dated 04 November 2008). However, at this stage the deal remains subject to regulatory approval. We will reassess our rating once further details are released. In the meantime, our fundamental outlook remains unchanged and we maintain our HOLD rating. We continue to expect to revert to a 6-12 month investment horizon to value the bank in our next update report, due to a significant negative currency impact on the ADR over the medium term. In line with this, we maintain our SELL rating.

New Valuations

América Móvil S.A. de C.V. (NYSE:AMX) 3Q 08 revenues and EBITDA witnessed moderate growth, earnings experienced robust y-o-y growth. Overall results were below our expectations. Going forward revenues are expected to experience modest growth, driven by subscriber additions on account of existing growth potential and the company’s leading positions in Mexico and Brazil’s wireless markets.

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