Earning Release

Although TAM S.A. (NYSE:TAM) reported strong growth in its net operating revenue during 3Q 08, the company reported losses at the operating and net levels given a significant increase in its fuel expenses and a depreciation of the real against the US dollar which increased its fuel-hedging expenses. As we expect to lower our estimates in our next update report, we downgrade the TAM preferred stock from a BUY to a HOLD although current price levels support a BUY rating. As we now expect a negative currency impact over the medium term, we are downgrading the ADR from a BUY to a HOLD.

Focus Media Holding Limited (NASDAQ:FMCN) reported strong y-o-y revenue growth in 3Q 08. However, top-line was marginally below our and market expectations. Revenue growth was led by broad-based growth across segments. Earnings were above expectations due to lower than anticipated costs coupled with a lower than expected effective tax rate. Considering the better than expected profitability and earnings growth during the quarter, we maintain our current BUY rating for the ADR. However, we are likely to revise our target price for the FMCN ADR downwards on account of the company’s mute guidance for 4Q 08. We maintain our current rating for the European ADR as we continue to anticipate a positive currency impact over the next 6-12 months.

Lions Gate Entertainment Corporation (NYSE:LGF) 2Q 09 reported healthy revenue growth during the quarter, in line with market expectations. Top-line growth was driven by healthy performance from the Motion Pictures and Television segments. Operating and net losses declined y-o-y due to a decline in operating costs. Based on the company’s performance during the quarter, we remain optimistic regarding the NYSE common stock. However, we are likely to revise our target price for the NYSE common stock downwards due to the worsening state of worldwide equity markets on account of the challenging global economic environment. As we continue to anticipate a positive currency impact on the European stock in the next 6-12 months, we do not expect to change our current BUY rating for the European stock.

Vivo Participações S.A.’s (NYSE:VIV) reported strong y-o-y growth in 3Q 08 revenues, in line with our expectations. We continue to expect Vivo to post robust top–line growth on account of its dominance in the Brazilian wireless market and the relatively low penetration levels in the region. Based on the company’s performance during the quarter, we remain optimistic regarding its long term prospects. However, we are likely to reassess our target price for the preferred stock. Although we anticipate a negative currency impact on the ADR over the next 6-12 months, we expect this to be offset by our fundamental outlook. Hence, we maintain our BUY rating on the ADR.

Although Vodafone Group PLC’s (NYSE:VOD)1H 09 revenues adjusted1 EBIT and EBITDA were in line with our expectation, net income was above our estimate. In 1H 09, revenues increased due to robust growth from Eastern Europe, the Middle East, Africa, Asia and the Pacific area (EMAPA) and Europe. However, margins in 1H 09 declined due to increased operating expenses. Going forward, we continue to expect margins to be under pressure due to an anticipated increase in cost of sales. Furthermore, taking into account the downward revision in Management’s guidance for FY 2009, we are likely to revise our estimates and target price downwards. In light of these factors, although the target price supports a BUY rating at current levels we do not anticipate a change in our current common stock rating. We do not anticipate change in the current rating for the ADR as we expect a significant negative currency impact on the ADR. We expect to revise our investment horizon for this company from 6-24 to 6-12 months in our next update report, as we anticipate a significant currency impact on ADR in the medium term.

Crucell N.V. (NASDAQ:CRXL) reported strong y-o-y revenue growth in 3Q 08, supported by robust revenue growth across key product lines during the quarter. Crucell has agreements with multiple companies which support its product offerings, going forward. Moreover, the company has received additional contracts for supplies of its products to multiple organizations. We expect these factors to support topline growth and, hence, we are likely to revise our revenue estimates upward, going forward, to reflect 3Q 08 performance, during which operating margins exceeded our estimates. Consequently, we reiterate the common stock a BUY based on our positive fundamental outlook, even though the current price no longer support a BUY rating. We are likely to revert to a 6-12 month investment horizon as we no longer anticipate a significant positive currency impact over the long term1. Despite our expectation of a significant negative currency impact on the ADR, we reiterate our BUY rating based on our fundamental outlook.

Mindray Medical International Limited ( NYSE:MR) reported strong revenues in 3Q 08, primarily due to consolidation of Datascope Corporation’s (Datascope) patient monitoring business, effective from 01 May 2008. Revenue was in line with estimates, while operating and net performance exceeded our expectations in 3Q 08. We maintain our positive view for the company’s ability to improve its market share, particularly in the Patient Monitoring and Life Support (PMLS) segment, going forward. Hence, we reiterate our BUY rating for the ADR based on our fundamental outlook. We are likely to revert to a 6-12 month investment horizon as we now anticipate a significant positive currency impact on the European stock over the medium term. Consequently, we maintain our BUY rating for the European stock, based on our fundamental outlook for the company and our anticipation of a significant positive currency impact on the European stock.

Qiagen N.V. (NASDAQ:QGEN) reported robust y-o-y revenue growth in 3Q 08, in-line with our estimate. Adjusted1 operating margin exceeded our expectation, while adjusted net margin fell short of our estimate in 3Q 08. Going forward, we believe acquisition of the Biosystem business from Biotage will strengthen Qiagen’s position in the molecular diagnostic solutions market and expand its product offering in the Consumable business. Consequently, our outlook for the company remains positive and we reiterate our BUY rating for the NASDAQ common stock. We are likely to revert to a 6-12 month investment horizon as we now anticipate a significant positive currency impact on the European stock over the medium term. 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.

Warner Chilcott Limited (NASDAQ:WCRX) reported revenues in-line with our expectations in 3Q 08. Adjusted operating income was in-line with our expectation, while adjusted net income exceeded our expectation in 3Q 08. We believe the company will continue to report strong top-line growth, going forward, driven by strong demand for Taclonex, Doryx, Leostrin 24 FE and Femcon FE. Consequently, our outlook for the company remains broadly unchanged and we reiterate our BUY rating for the common stock. We are likely to revert to a 6-12 month investment horizon as we now anticipate a significant positive currency impact on the European stock over the medium term. 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.

Intercontinental Hotels Group PLC (NYSE:IHG) experienced y-o-y growth in its 3Q 08 revenues from continuing operations, reflecting an increase in the number of rooms and y-o-y growth in Revenue Per Available Room (RevPAR), on a constant currency basis. While revenues and adjusted operating income1 from continuing operations were in line with our estimates, earnings was above our expectation. Going forward, we maintain our cautious outlook given the downturn in the global economy and the depressed outlook for travel and tourism. Therefore, we reiterate our HOLD rating for the ADR, even though the target price supports a BUY at current levels. Given that we continue to anticipate a significant positive currency impact on the UK stock in the coming 6-12 months, we maintain our BUY rating at current levels. We expect to introduce a 6-12 month investment horizon to value the stock in our next full update report.

Tyco International Ltd. (NYSE:TYC) reported strong 4Q 08 results, with net income significantly exceeding our estimate given lower than expected tax expenses during the quarter. Going forward, we expect the company’s top-line to benefit from sustained demand for industrial valves and electronic security products in US markets. We also expect its operation performance to benefit from its restructuring initiatives during the quarter. As a result, we do not anticipate a change in our current NYSE common stock rating. As we continue to anticipate a significant positive currency impact on the European stock over our investment horizon, we do not anticipate a change in our rating for the European stock. We expect to revert to a 6-12 month horizon to value the stock in our next update report as we now anticipate a significant currency impact in the medium term.

OJSC Rostelecom (NYSE:ROS) revenues were in line with our estimates, margins were below our expectations, mainly due to higher than expected operating expenses and lower than expected other gains, as a percentage of revenues in 9M 08. In light of this, we are likely to revise our estimates and target price downwards in our next update report. As a result, although the target price supports a BUY rating at current levels, we maintain our SELL rating in light of our weak fundamental outlook for the company. We maintain our SELL rating for the ADR, given our fundamental outlook and as we expect a negative currency impact on the ADR over the medium term.

News

Carnival PLC’s (NYSE:CUK)ADR has declined significantly since our previous update report reflecting ongoing volatility in global equity markets, an announcement that the company has suspended its dividend for FY 2009 as well as a depressed future outlook for the travel and leisure industry. In view of these factors, we temporarily downgrade the Carnival ADR from a BUY to a HOLD as we do not see much upside potential in the next few months until the broader economy shows signs of recovery. We reiterate the UK stock a BUY as we now expect a significant positive currency impact over our investment horizon. We expect to introduce a 6-12 month horizon to value this stock in our next full update report as we now expect a significant currency impact in the short to medium term.

Qimonda AG’s (NYSE:QI) ADR declined 25.6% in a single trading session on 10 November 2008 reflecting investor concerns over the possible delisting of the stock, since the stock currently falls short of NYSE’s continued listing compliance standards, and ongoing fears regarding the company’s survival. Given the instability associated with the stock and concerns regarding the company’s financial soundness we maintain our current HOLD rating for the stock. We maintain our current HOLD rating for the European stock based our fundamental outlook for the company despite an anticipated positive currency impact in the medium term.

On 10 November 2008, Semiconductor Manufacturing International Corporation (NYSE:SMI) announced a definitive agreement with Datang Telecom Technology & Industry Holdings Co., Ltd. (Datang Holdings) to issue the company with 3,699 mn new shares at HK$0.36 each, following which Datang will hold a 16.6% stake in SMIC. While this transaction is expected to benefit SMIC in the long term and also boost investor sentiments, our medium term outlook for the company remains cautious due to declining semiconductor orders and negative bottom-line. Subsequently, although the deal is at a premium to the current trading price, we maintain our current HOLD rating for the SMIC ADR until we revalue the company in our next full update report. We maintain our HOLD rating for the Hong Kong stock based on our fundamental rating. The Hong Kong dollar is pegged to the US dollar; therefore, we do not anticipate any currency impact.

On 10 November 2008, Banco Santander Central Hispano S.A. (NYSE:STD) announced that it plans to raise €7.2 bn (US$9.2 bn) through a rights issue, in an attempt to reinforce its balance sheet. Considering this, we expect to lower our estimates and target price in our next update report. However, we continue to view the bank as fundamentally strong. Therefore, we maintain our BUY rating. We expect to revert to a 6-12 month investment horizon to value the company in our next full update report, as we now anticipate a significant negative currency impact on the ADR over the medium term. Therefore, we downgrade the ADR from a BUY to a HOLD.

Corel Corporation’s (NASDAQ:CREL)NASDAQ common stock price has depreciated significantly since our 3Q 08 update report. We believe this significant decline in the common stock price is a fallout of the announcement by the company (22 October 2008) related to end of discussions, regarding the potential sale of Corel to third parties, without a positive outcome. Emerging markets plus E-commerce channels being the key growth areas for Corel going forward, will add to its top-line growth along with the expansion of its Digital Media business. Hence, at current levels we do not anticipate any change in our rating for the NASDAQ common stock. We do not anticipate a change in our rating for the Canadian stock as we continue to expect a positive currency impact on the Canadian stock over the next 6-12 months.

New Valuations

National Oilwell Varco, Inc. (NYSE:NOV) revenues grew strongly during 3Q 08, in line with our estimate, while its earnings exceeded our estimates given lower than expected Cost of Goods Sold (COGS) incurred during the quarter. Despite concerns that the recent financial crisis and its impact on the global economy will slowdown global hydrocarbon demand, we are optimistic that demand will be supported in emerging economies like China and India. This is likely to drive global E&P activity and benefit demand for NOV’s services. As a result, we hold a positive outlook for NOV’s NYSE common stock over our investment horizon.

Perfect World Co. Ltd’s (NASDAQ:PWRD) 3Q 08 revenues were in line with our expectations, while earnings were higher than our expectations. Average Concurrent Users (ACUs) and Active Paying Customers (APCs) witnessed robust growth while Average Revenue Per User (ARPU) reported modest growth, reflecting the rising popularity of Perfect World’s game titles in China. Going forward we expect upcoming game titles, several alliances and agreements to operate and develop games as well as Perfect World’s foray into Europe and other Asian countries, to boost revenue growth. Development and operation of higher margin in-house developed games and economies of scale due to a rising user base will enable increased profitability. However, the impact could be partly offset by higher Research and Development (R&D) expenses towards the development of new game titles.

Alcon Inc. (NYSE:ACL) reported strong y-o-y revenue growth, driven by strong growth in sales across all 3 product divisions in 3Q 08. We expect Alcon’s strategy of expanding its market presence by launching new products in emerging markets, coupled with strong demand for glaucoma drugs; Travatan and DuoTrav, to support future revenue growth. However, we expect the benefits of geographical diversification to accrue at a modest rate in the medium term. We expect Alcon to incur higher Selling, General and Administrative (SG&A) expenses in light of greater promotional activities in newer markets and higher Research and Development (R&D) expenses in light of increasing clinical activities aimed at strengthening the existing product portfolio, which will negatively impact margins over the next 2 years.

HDFC Bank Limited (NYSE:HDB) reported another set of strong results for 2Q 09, meeting our forecasts. Top-line growth was driven by higher Net Interest Income (NII) and a wider Net Interest Margin (NIM), coupled with growth in non-interest income. This led to healthy bottom-line growth, despite a rise in non-interest expenses. Although HDFC Bank reported healthy loan portfolio growth, asset quality deteriorated marginally, reflecting the impact of high interest rates during the quarter. Going forward, we anticipate moderate growth in credit off-take, considering steps taken by the Reserve Bank of India (RBI) to increase liquidity and boost demand for credit. However, the economic slowdown is expected to limit growth in credit, while lifting default rates. We believe the bank will respond to this by cutting costs in other areas. Overall, our fundamental outlook remains positive.

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