Earning Release

Trina Solar Ltd. (NYSE:TSL) reported strong results during 3Q 08 with revenues and profitability exceeding our estimate for the quarter. However, our outlook for the company’s future performance is weak given that the company has lowered its FY 2009 outlook to reflect the impact of ongoing financial turbulence on demand for solar equipment. Although we are likely to lower our estimates and target price in our next full update report to account for slowing demand and a decline in Average Selling Prices (ASP), we believe that the recent decline in the ADR price has left the stock significantly undervalued. Therefore, we do not anticipate a change in the ADR rating until we fully reassess the company in our next update report. We maintain our current BUY rating for the European stock as we anticipate a significant positive currency impact on the European stock over our investment horizon. We are likely to revert to 6-12 month horizon in our next update report, as we now anticipate a significant currency impact over the medium term.

LDK Solar Co., Ltd. (NYSE:LDK) reported strong 2Q 08 results which exceeded our and market expectations. As Management has provided a stable outlook for its performance in FY 2008 and FY 2009 given strong demand for demand for its wafers, we upgrade our NYSE common stock rating from a HOLD to a BUY. As we anticipate a significant positive currency impact on the European stock over the medium term, we do not anticipate a change in our current European stock rating.

News

Satyam Computer Services Ltd.’s (NYSE:SAY) common stock price has declined significantly since our 1Q 09 update report, dated 18 August 2008, reflecting weakness in equity indices and prevailing economic uncertainty. However, although there has been a decline in discretionary budgets for IT related projects, we believe non-discretionary spending, which accounts for the majority of Satyam’s revenues, will be relatively protected. Furthermore, the company has recently stated that it expects a flat pricing environment and, coupled with reduced pressure on wage increases, we expect this to support revenue and earnings. Hence, we believe the decline in the stock price has left the company significantly undervalued and, therefore, we maintain our current BUY rating for the common stock at current levels. Although we anticipate a significant negative currency impact over the medium term and now expect to retain our 6-12 month investment horizon, given the fundamental outlook and current target price, we upgrade the ADR from a SELL to a HOLD.

The Alumina Limited (NYSE:AWC) common stock has depreciated significantly since our company news alert dated 14 November 2008. This decline follows fears amongst investors that further declining aluminum prices could lead to further production cuts coupled with broad-based weakness in global equity markets. We expect to lower our estimates and target price, considering these factors, in our next update report. However, at current levels we continue to believe the stock has been oversold and therefore maintain our BUY rating. We continue to anticipate a significant negative currency impact on the ADR over our investment horizon. However, in line with our fundamental outlook, we maintain our BUY rating.

Garmin Ltd’s (NASDAQ:GRMN) common stock price has declined significantly since our previous HOLD rating, dated 30 October 2008, reflecting investor concerns over slow demand for Portable Navigation Devices (PND’s), in line with the weakening the global economy. Hence, we are likely to lower our revenue and margin estimates in our next full update report. However, although the current NASDAQ common stock price supports a BUY rating, we maintain our HOLD rating until we revalue the company. Although we continue to anticipate a positive currency impact on the European stock over 6-12 months, we maintain our current HOLD rating for the European stock based on our fundamental outlook.

Rhodia S.A‘s (OTC:RHAYY) common stock has declined 25.6% since our company news alert dated 06 November 2008, reflecting recent weakening of chemical prices, especially polyamide, and a broader decline in global equity markets. Although we are likely to lower our estimates and target price in our next update report to account for an anticipated decline in realized prices and slowdown in chemicals demand, given the drop in stock price, we continue to expect upside from current price levels and therefore reiterate the common stock a BUY. As we continue to anticipate a negative currency impact on the ADR over our investment horizon we reiterate HOLD rating for the ADR, despite the target price supporting a BUY at current levels.

The Yanzhou Coal Mining Company Ltd. (NYSE:YZC) common stock has declined significantly since our company news alert dated 31 October 2008, reflecting a steep fall in benchmark coal prices at Australia’s Newcastle port. Going forward, we expect to lower our coal price estimates and target price when we revalue the stock in our next update report, to reflect the recent downturn in spot coal prices and commodities in general. Nevertheless, we believe that Yanzhou is trading below its fair value at current levels, and maintain our BUY rating for the common stock. The Hong Kong dollar is pegged to the US dollar. Therefore, no currency impact is expected on the ADR over our investment horizon. We maintain our BUY rating in line with our fundamental outlook.

The Allied Irish Banks PLC’s (NYSE:AIB) common stock has depreciated significantly since our last update report reflecting concerns over a possible downgrade of the asset quality by Moody’s Investors Service in light of its significant exposure to the property and construction sector in a deteriorating economic environment due to the prevailing recession in Ireland, in addition to the impact of the financial crisis on the banking sector. Considering these factors together with the need for government assistance for recapitalization and the bank’s weak 3Q 08 trading update, we remain concerned regarding its near term prospects. Therefore, we maintain our HOLD rating even though our present target price implies a BUY at current levels. We expect to introduce a 6-12 month investment horizon to value the bank in our next update report, as we still anticipate a significant negative currency impact on the ADR over the medium term. Therefore, we maintain our HOLD rating.

On 18 November 2008, Bank of Nova Scotia (NYSE:BNS), announced that its 4Q 08 post-tax profit will decline by approximately C$595 mn due to eroding value of investments due to volatility in financial markets and loss in trading revenues owing to the bankruptcy of Lehman Brothers Holding Inc. (Lehman Brothers) Considering these factors, coupled with a downturn in the Canadian economic conditions and continued volatility in the financial markets, we remain concerned regarding the bank’s near term prospects. Therefore, we downgrade the common stock from a BUY to a HOLD, although our present target price implies a BUY at current levels. We expect to introduce a 6-12 month investment horizon for this stock, as we now expect a significant negative currency impact on the NYSE stock over the medium term1. Therefore, we maintain our current rating for the NYSE stock.

Westpac Banking Corporation (NYSE:WBK) common stock price has witnessed a significant decline since our previous update report, which we believe reflects negative investor sentiment regarding increased provisions related to bad loans as well as the turmoil in the global financial sector. Given that we remain concerned over rising provisions going forward and the slowing domestic and global economies, we maintain our HOLD rating even though our target price suggests a BUY at current levels. We continue to anticipate a negative currency impact on the ADR over our investment horizon and therefore, we maintain our HOLD rating in line with our fundamental outlook.

New Valuations

Agrium Inc. (NYSE:AGU) reported strong y-o-y growth in top-line and earnings, surpassing our expectations, supported by higher price realization for fertilizers and improved earning contributions from the recently acquired UAP Holdings (UAP) and Common Market Fertilizers S.A (CMF). Given the recent fall in urea and DAP prices, which looks set to continue through FY 2009 we have lowered our FY 2008 and FY 2009 estimates. We expect prices to rise marginally in FY 2010, supported by tight demand-supply conditions and low inventory levels.

SAP AG (NYSE:SAP) reported y-o-y top-line growth in 3Q 08, supported by growth in all segments, while EBIT margin declined on account of rising operating expenses, in line with our expectations. However, bottom-line was above expectations led by lower-than-anticipated financial expenses and a non-operating income. Although we expect the current global economic downturn to impact the company’s growth prospects, we believe the company’s strategic collaborations and inorganic growth activities will strengthen revenue growth over our investment horizon. Furthermore, we anticipate cost saving initiatives to soften the impact on margins, going forward.

In 3Q 08, Norsk Hydro A.S.A (OTC:NHYDY) recorded significantly lower than expected revenues due to lower than anticipated aluminum prices realized by the company. However adjusted operating income was above our estimate due to lower than expected raw material and energy prices. The recent global credit crisis has resulted in steep fall in commodity prices. The LME spot price of aluminum has declined significantly since our previous update report. In FY 2009, we expect the prices of aluminum to decline further which would however be slightly offset by the anticipated sharp depreciation of the Norwegian kroner against the US dollar. We expect the cost pressure to continue in FY 2009 which is expected to further affect profitability. However, during FY 2010, increasing aluminum prices coupled with the depreciating Norwegian kroner against the US dollar are expected to boost revenues and profitability.

Weak performance by Honda’s (NYSE:HMC) Automobile business led to a significant decline in net sales in 2Q 09. However net sales were in line with our expectations. Honda’s net sales growth is expected to remain subdued over the next 2 years, considering the anticipated slowdown in demand for automobiles, associated with the economic slowdown in its major markets such as the US. We expect margins to contract as a result of decline in revenues and anticipated increase in Cost of Sales (COS).

Axis Capital Holdings Ltd.’s (NYSE:AXS) adjusted4 total revenues declined in 3Q 08, in line with expectations, despite significantly lower-than-expected net investment income and insurance premiums, as the reinsurance segment performed more strongly than forecast. With loss expenses exceeding expectations, net loss was significantly higher than anticipated. We expect the impact of improvement in premium rates following recent large catastrophe and investment losses to be limited by economic slowdown in global markets. We do not expect improvement in net investment income in the near-to-medium term due to the significant reduction in investment portfolio during 3Q 08, although we expect improvement in FY 2010. However, despite downturn, Axis’ fundamental strengths, with a strong global presence across a wide range of insurance and reinsurance lines will help it in the hardening market.

Diana Shipping Inc. (NYSE:DSX) experienced a robust growth in voyage and time charter revenues (revenues) and its adjusted4 operating margin during 3Q 08 given an expansion in the company’s fleet size and an increase in average Daily Time Charter Equivalent (TCE) rates. Going forward, we expect a decline in the company’s top-line as we expect the TCE rates to suffer from sustained weakness in the global economy and declining demand for coal and iron ore.

IPC Holdings Limited (NASDAQ:IPCR) reported a y-o-y decline in its total revenue, reflecting decline in net investment income, further exacerbated by net realized losses on investments. However, total revenue adjusted3 for net realized losses on investments increased. A significant y-o-y increase in total claims and expenses led to a significant decline in adjusted net income available to common shareholders in 3Q 08. Results were above our expectations. Going forward, we now expect premium rates in the US to begin to recover following recent hurricane activity, which is also expected to provide some support for insurance and reinsurance services demand. However, we expect weakness in the US and other advanced economies to limit premium performance. IPCR’s underwriting strategy, which has historically generated the strongest combined ratio amongst its peers, continues to impress and provides a competitive edge over its peers.

Nabors Industries Ltd. (NYSE:NBR) 3Q 08 top-line exceeded our expectation given a better than expected performance from its US & Canada sub-segments. Operating performance was also above estimates with costs also coming in lower than our expectations. Going forward, Management is optimistic that global Exploration & Production (E&P) activity levels will be sustained given the need to discover new hydrocarbon reserves. Furthermore, although global levels of hydrocarbon demand will be impacted by current economic conditions, we are confident that demand from emerging economies like China and India will support global E&P activity levels. In addition, major oil & gas companies have not indicated any significant reduction in their E&P capital expenditure.

Noble Corporation (NYSE:NE) reported moderate y-o-y growth in revenues during 3Q 08, marginally above our estimate, benefiting from higher average dayrates for its drilling rigs. In additions, its adjusted3 operating income and EPS exceeded our expectations given lowerthan- expected cost of goods sold (COGS). Going forward, although we expect hydrocarbon demand to be impacted by current economic conditions, given the company’s strong order backlog at dayrates above the current average, we expect Noble to register steady revenue growth in the future.

Seagate Technology’s (NYSE:STX) 1Q 09 revenues and operating performance were below our and market expectations. Management’s outlook for 2Q 09 is very conservative, reflecting the decline in IT spending across the world. We expect global demand for data storage and network computing to be limited in FY 2009. In addition, an expected decline in blended Average Selling Price (ASP) will lead to a decline in revenues and margin contraction in FY 2009. As we expect pricing pressure and the current macroeconomic situation in the US to create a difficult operating market, we hold a muted outlook over the medium term. However, we believe the company’s leading position in the HDD industry and strong customer base should afford some protection against the downturn, and we continue to expect steady revenue growth in the company’s Mobile Computing segment (MC). We also expect the decline in demand for Consumer electronics (CE) products to bottom-out in FY 2009 and expect recovery from FY 2010 onwards. Hence, we believe the recent decline in Seagate’s NASDAQ common stock price leaves the company significantly undervalued and, therefore, we view it as an attractive investment opportunity at current levels.

In 3Q 08, Southern Copper Corporation (NYSE:PCU) recorded significantly higher than expected revenues due to higher volumes mined by the company. However, adjusted2 net income was in line with our estimate due to the significant rise in raw material and energy prices, coupled with significantly higher taxes. The LME spot price for copper has halved since our previous update report. Furthermore, higher costs for fuel and power negatively impacted 3Q 08 profitability. Hence, we have significantly lowered our 4Q 08 estimates. During FY 2009, we expect prices of copper, molybdenum, silver and zinc to further decline, which is expected to have a significant negative impact on the company’s revenues. Moreover, we do not expect costs to decline in FY 2009, which is expected to further impact margins. However, during FY 2010, we expect copper and zinc prices to increase, which is likely to be partially offset by declining molybdenum and silver prices. However, as the company generates a significant proportion of revenues from copper, we expect overall revenues to marginally improve in FY 2010. We expect profitability to decline due to higher costs.

Arch Capital Group Ltd. (NASDAQ:ACGL) reported a significant y-o-y decline in total revenues, mainly due to net realized losses on investments. Revenues adjusted3 for net realized losses on investments and other income remained flat in 3Q 08, and exceeded expectations. A y-o-y increase in total claims and expenses led to a significant decline in adjusted net income available to common shareholders which, however, also exceeded expectations. Going forward, we now expect premium rates in the US to begin to recover following recent hurricane activity, which is also expected to provide some support for insurance and reinsurance services demand. Despite the negative impact from prevailing economic conditions, we view Arch Capital as an attractive investment opportunity at current price levels, with the company continuing to demonstrate relatively strong fundamentals.

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