News

Hitachi Ltd.’s (NYSE:HIT) common stock price achieved our target price on 26 December 2008. We believe this reflects broad weakness in global financial markets. Moreover, our outlook for the company’s revenues remains weak in light of intense price competition and weak consumer spending levels in Japan, associated with the ongoing global economic slowdown. Therefore, although the current price no longer supports a SELL rating, we maintain our SELL rating and we will review our target price in the next update report.

Satyam Computer Services Ltd.’s (NYSE:SAY) common stock has declined significantly since our 2Q 09 update report, reflecting concern that Satyam violated corporate governance norms and reaction to the World Bank banning the company for a period of 8 years. However, going forward, based on fundamentals outlined in our previous update report, we maintain our BUY rating for the common stock at current levels. Although we anticipate a significant negative currency impact over the medium term, given our fundamental outlook and current price levels, we reiterate the ADR a BUY.

On 26 December 2008, Spreadtrum Communications, Inc. (NASDAQ:SPRD) reduced its 4Q 08 revenue guidance citing weak mobile phone demand in the Chinese market, following which the ADR price declined 20.2% on the same day. Although the target price does not support a HOLD rating, we maintain our current HOLD rating in light of the deteriorating business outlook over the medium term. We maintain our current BUY rating for the European stock as we anticipate a significant positive currency impact on the European stock over the medium term.

New Valuations

Toyota Motor Corporation (NYSE:TM) significantly reduced its revenue and profitability estimates in light of weak global vehicle demand and a strengthening yen against the US dollar and Euro. We have further revised our FY 2009 revenue and profitability estimates to reflect weak vehicle demand associated with recession in Toyota’s core markets, such as Japan and the US, and to reflect weak Management guidance. We expect this weakness to continue into FY 2010.

Grubb & Ellis Company’s (NYSE:GBE) 3Q 08 total revenues depreciated y-o-y, reflecting a decline in Transaction Services and Investment Management fees due to a difficult operating environment. Total revenues and margins were below our expectations in 3Q 08. Going forward, we have reduced our 4Q 08 and FY 2009 revenue and earnings estimates, as we expect demand for commercial space and housing to continue to contract through 2009. However, given the company’s strong market position we anticipate marginal improvement in top-line in FY 2010, after experiencing 2 consecutive years of declining revenue.

ICICI Bank Limited (NYSE:IBN) reported moderate top-line growth in 2Q 09, as growth in Net Interest Income (NII) was offset by a decline in non-interest income. However, the bottom-line increased marginally on a y-o-y basis due to higher top-line growth. Going forward, we believe that credit off-take in India will moderate, reflecting the global and domestic economic slowdown. Moreover, we expect the bank’s asset quality to deteriorate, as economic slowdown is likely to result in growth in defaults. However, our long term outlook remains optimistic, considering measures taken by the Reserve Bank of India (RBI) to address liquidity constraints and anticipation of further easing of monetary policy in the near term. Moreover, we also expect the bank to benefit from its insurance business, reflecting its leadership position and ongoing expansion initiatives. Therefore, at current levels, we believe the company is fundamentally undervalued.

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