Global Equity Strategy - Credit Suisse | PLUS

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23 November 2012

Europe

Equity Research

Macro

Global Equity Strategy STRATEGY

Growth: on the way to 'Nifty Fifty'

■ We believe growth as a style will continue to outperform: falling real bonds yields should have re-rated long duration assets more than has occurred – and we believe real bond yields will fall further, as QE is stepped up by the BoJ and the ECB. Excess liquidity re-rates growth stocks. Lastly, global nominal GDP growth is set to remain well below trend. The issue is valuation: the relative 12-month forward P/E of our simple growth style is at a 9% premium to its norm; quality growth is slightly more expensive (15% above its norm). Growth stocks on aggregate still only trade on a P/E of 15x, compared to peak valuations of 50x (in 1973 and 1999). Quality growth only tends to underperform if there is a sharp fall in junk bond yields (unlikely) or a sharp rise in economic indicators (we think only small rise is likely).

■ The best performing quant style for growth has been Credit Suisse HOLT®’s eCAP superior (effectively, high and stable profitability) combined with superior asset growth and asset turns. This combined style has achieved 5% outperformance pa over the past 10 years (Capita, Assa Abloy, Diageo, Intertek qualify).

■ Stocks and themes: We screen for growth stocks using three measures: quant screens (HOLT® and ours), our analysts’ picks and structural themes (CSERGROW). The following stocks qualify as growth under at least two of these methodologies, are attractively priced (on P/E relatives, free-cash flow yield or HOLT®) and are Outperform-rated: Dufry, SAB Miller, SAP, Sonova, WPP, Swatch, Capita, RyanAir, Assa Abloy, ICH, Pru, Moneysupermarket.com in Europe and Qualcomm, Google and Mead Johnson Nutrition in the US. Our favoured growth themes: software (SAP, TDC); the emerging market consumer (Swatch, SAB, Diageo, YUM); underleveraged banks in underleveraged countries (Sberbank); specific plays on the internet (GOOG and Moneysupermarket.com); global travel (ICH, STAR, Dufry); global trade (Intertek, UPS); energy efficiency (Schneider, JCI); lower car emissions (Johnson Matthey, BWA); ageing in emerging markets (Hikma); water (Halma; PLL); industrial automation (Schneider, ROK); specific oilfield services (Amec).

Figure 1: Growth outperforms as real bond yields fall

-1.2%

-0.7%

-0.2%

0.3%

0.8%

1.3%

1.8%

2.3%

2.8%

3.3%86

88

90

92

94

96

98

100

102

104

106

108

110

112

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

MSCI European growth index, relative to the market

US 10-year TIPS yield, inverted, rhs

Source: Thomson Reuters, Credit Suisse research

Research Analysts

Andrew Garthwaite

44 20 7883 6477

[email protected]

Marina Pronina

44 20 7883 6476

[email protected]

Mark Richards

44 20 7883 6484

[email protected]

Sebastian Raedler

44 20 7888 7554

[email protected]

Robert Griffiths

44 20 7883 8885

[email protected]

Nicolas Wylenzek

44 20 7883 6480

[email protected]

23 November 2012

Global Equity Strategy 2

Table of contents Why focus on growth? 3

(1) Growth as a style is a play on low real interest rates 3 (2) A sluggish recovery puts a premium on growth 4 (3) Excess liquidity 5 (4) Other performance drivers remain supportive 5 (5) Market breadth is narrowing – a feature of a growth-led market 6

Continue to focus on quality growth 7 Valuation of quality growth is high – but recall the ‘Nifty Fifty’ 9

Which growth indices have performed best? 12 How to play growth? 13

Our aggregate screen 13 1) Quant approach 15 2) Analyst judgment 18 3) Thematic approach 20

Growth themes 22 1) Branded GEM consumer plays 22 2) Industrial Automation 28 3) Global trade 34 4) Global travel 38 5) Water 41 6) Underleveraged banks in underleveraged countries 43 7) Labour-intensive oilfield services 44 8) Energy efficiency 47 9) Reducing car emissions 50 10) Specific plays on the internet – in particular, e-financial services 51 11) Ageing in emerging markets 54 12) Software 60

A sector perspective 64 Appendix 66

Appendix 1: Growth as a style 66 Appendix 2: Sector valuations in Europe and the US 67 Appendix 3: Outperform rated NJA growth stocks and quality growth 69 Appendix 4: Full list of companies that our analysts identified as growth in Europe and

the US 70

23 November 2012


Why focus on growth? (1) Growth as a style is a play on low real

interest rates

The more real bond yields fall, the more longer duration assets – and, therefore, growth

stocks – re-rate relative to shorter duration assets.

Figure 2: Growth stocks have more potential upside if the

discount rate falls

Figure 3: Growth tends to outperform as real interest

rates fall

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

5% 4% 3% 2% 1% 0%

High grow th (=5%) stock

Low grow th (=2%) stock

Bond y ield

Discount rate falls

% change in the

fair v alue of:

-1.2%

-0.7%

-0.2%

0.3%

0.8%

1.3%

1.8%

2.3%

2.8%

3.3%86

88

90

92

94

96

98

100

102

104

106

108

110

112

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

MSCI European growth index, relative to the market

US 10-year TIPS yield, inverted, rhs

Source: Credit Suisse research Source: Thomson Reuters, Credit Suisse research

We continue to believe that the main solution to the developed market debt crisis is for real

interest rates to fall even further – from the current minus 80bps to between minus 1.5% to

minus 2%. Only at this level on our calculations can developed markets both stabilise

government debt to GDP and unemployment (for details, see our report Synchronised QE

and how to play it, Sep 12).

Over the course of 2013, we believe that QE will become more aggressive:

■ The Fed is likely to expand their balance sheet by $85bn a month from mid-December

compared to just $36bn a month since QE3 started;

■ The BoJ is likely to become more aggressive under a likely LDP-led administration

following the December election (with the LDP likely to present a BoJ Act, committing

the BoJ to a 2% inflation goal);

■ The ECB is likely to expand its balance sheet once the OMT is activated.

As central banks’ balance sheets expand, real bond yields will fall. Recently, if anything,

growth as a style has performed worse than the fall in real bond yields would have

suggested (we show the performance of the US growth style in the Appendix).

https://doc.research-and-analytics.csfb.com/docView?sourceid=em&document_id=x470671&serialid=q3qDwgviMs07zoH%2bqfvLaXOxiXxZLEftWVjh0DP98Xs%3d

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23 November 2012


Figure 4: Low real interest rates improve the funding of

government debt.

Figure 5: Real interest rates stayed negative for nearly

two decades in the 1940s/50s… and financial repression

lasted until the end of Bretton Woods

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

0% 2% 4% 6% 8%

Rea

l bon

d yi

eld

Required fiscal tightening, % of GDP

US 10Y real bond yield required to keep USgovernment debt to GDP stable (at 3% trendgrowth rate)

Government to GDP ratio stable if:

Primary balance % GDP = Debt/GDP *(bond yield - trend growth rate)

At current BY

0%

20%

40%

60%

80%

100%

120%

140%

-15%

-10%

-5%

0%

5%

10%

15%

1925 1935 1945 1955 1965 1975 1985 1995 2005

US real Bond yield

US Government debt to GDP, rhs

Source: Thomson Reuters, Credit Suisse research Source: Thomson Reuters, Credit Suisse research

(2) A sluggish recovery puts a premium on

growth

As Figure 6 shows, the recovery in US GDP has been far more muted than in previous

cycles. Three years after the recovery started, US real GDP is only 2.2% above the

previous peak. This compares to an average of 11.2% above previous peak at the same

point in previous post recession periods. In nominal terms, global GDP growth is running

just below 5%, compared to a 10 year CAGR of 7%. Such a scarcity of growth should

result in a premium on companies that can generate it.

23 November 2012


(3) Excess liquidity

Excess liquidity is rising and that has historically tended to support the valuation of growth

stocks.

Figure 6: The recovery has been considerably more

sluggish then past recoveries have been at a similar stage

Figure 7: Excess liquidity tends to support a re-rating of

growth stocks

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1957 1960 1970 1973 1980 1981 1990 2001 2007

US post-recession recovery in real GDP (relative to previous peak,three years after the trough or at cycle peak)

-10%

-5%

0%

5%

10%

15%

20%

25%

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

1991 1994 1997 2000 2003 2006 2009 2012

12m fwd P/E, Credit Suisse European high growth / low growth, 1-yr lag

Global excess liquidity, rhs


(4) Other performance drivers remain supportive

Growth as a style tends to outperform the market unless economic lead indicators rise

sharply (typically ISM new orders needs to be above 57 for growth to underperform) or

high yield bond spreads narrow sharply, neither of which we expect to occur in coming

months.

Figure 8: The growth style only underperforms if

economic indicators rise sharply…

Figure 9: … or credit spreads narrow sharply

20

30

40

50

60

70

80-12%

-7%

-2%

3%

8%

13%

18%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

MSCI growth, price relative, y/y%

US ISM new orders, rhs, inverted

0

2

4

6

8

10

12

14

16

18

20

-10%

-7%

-4%

-1%

2%

5%

8%

11%

14%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

MSCI growth, price relative, y/y%

High yield bond spreads, rhs, % pts


23 November 2012


(5) Market breadth is narrowing – a feature of a

growth-led market

A feature of the late 1990s was that the market rose against the backdrop of a weak

advance / decline line – i.e. the market was driven by a narrow set of strong performers.

There are signs of this happening again.

Figure 10: There are signs that – as in the late 1990s – the market is driven by a narrow

set of strong performers

-40

-30

-20

-10

0

10

20

30

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

6m rolling advance/decline line, %

S&P500 deviation from 130 day average, % (rhs)

Declining market breadth


23 November 2012


Continue to focus on quality growth We also continue with our preference for quality growth. Performance drivers are very

similar to those of the conventional growth style (yet, the magnitude of quality growth

performance is greater), with periods of sustained underperformance only tending to occur

when lead indicators rise sharply or high yield spreads narrow.

Figure 11: High quality growth tends to underperform

only if lead indicators rise sharply…

Figure 12: … or credit spreads narrow sharply

20

30

40

50

60

70

80-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

High quality growth / low quality growth, y/y%

US ISM new orders, rhs, inverted

0

5

10

15

20

25

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

High quality growth / low quality growth, y/y%

US high yield spreads, rhs


The reason for this is that:

■ Low quality companies tend to have abnormally high operational leverage (by

definition, they have higher fixed costs than their to peers);

■ Lower quality companies tend to have higher financial leverage ratios, owing to inferior

profitability.

We expect only a modest upside surprise to economic growth expectations in 2013 – and

see only little scope for the absolute cost of junk bond debt to fall (given the convexity

problem that the economic circumstances that allow junk bond spreads to fall – i.e. better

economic growth – are likely to lead to a significant rise in 10-year bond yields).

Lastly, the relative price momentum of high quality growth companies is at the bottom-end

of its historical range. However, earnings momentum has fallen in line with the market,

although at least it is not weaker than for the market overall.

23 November 2012


Figure 13: European high quality growth appears

oversold

Figure 14: Earnings momentum of European high quality

growth has fallen in line with the market

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

European High Quality Growth %dev from 6mma, rel to

European market

Average (+/1 SD)

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

1993 1996 1999 2002 2005 2008 2012

European High Quality Growth 3m breadth

Rel European market


23 November 2012


Valuation of quality growth is high – but recall the

‘Nifty Fifty’

The biggest pushback we have received from clients on our preference for growth is that

valuation levels are problematic. However, on our analysis, actual valuation may not be as

high as perceived. We look at three growth indices:

a) MSCI growth indices

According data provided by MSCI, their European growth index is trading on a trailing

reported P/E of 15.2x, compared to a European market multiple of 13.0x. This 17%

premium compares to a historical average premium of 23% (using data starting in 2006).

The MSCI growth index is constructed using the long- and short-term forward EPS growth,

trailing 12-month implied growth (which is equal to the RoE*dividend cover) and 5-year

historical EPS and sales growth.

b) Credit Suisse prospective growth

Our proprietary style of looking at the companies that have the best (top quintile)

combination of FY1, FY2 and long-term consensus growth expectations (on a sector

neutral basis) appears only slightly expensive relative to the market. At 21.2x, it is at a

95% 12-month forward P/E premium to the market compared to a post-1991 average of

79%; Figure 16).

Figure 15: MSCI growth is trading on a P/E relative below

its recent average (this uses 12 month trailing)

Figure 16: Our prospective growth style looks only

modestly expensive relative to the market

1.05

1.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

2005 2006 2007 2008 2009 2010 2011 2012

Trailing PE of Europe MSCI growth versus market

1.2

1.4

1.6

1.8

2.0

2.2

2.4

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

12m fwd P/E of CS high prospective growth relative tothe market


c) Credit Suisse quality growth

The third measure we look at is quality growth, which we define as companies that have

had a CFROI® above 8% for five consecutive years, have a limited decay in profitability,

low CFROI volatility and 5-year asset growth above 5% (we show a screen of these

companies later in the publication). All but the last of these criteria are key inputs into

HOLT®’s eCAP style which can be tracked on Bloomberg (HTERECAP in Europe and

HTUSECAP in the US).

Quality growth stocks do look quite expensive, trading on a 12-month forward P/E of 14.9x

(a premium to the market of 48%), compared with a post-1991 average of 15.5x (a 29%

premium). We show in the Appendix that dividend yield and price-to-book relatives are

similarly stretched. However, in absolute terms, the P/Es are not demanding.

23 November 2012


Figure 17: High quality growth companies appear

expensive relative to the market

Figure 18: In absolute terms, high quality growth stocks

do not appear expensive

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1990 1993 1997 2001 2004 2008 2012

12m fwd P/E of European high quality growthcompanies relative to MSCI Europe

5

10

15

20

25

1990 1993 1997 2001 2004 2008 2012

Eur High Quality Growth

MSCI Europe

12m fwd P/E


We believe that the current environment of abnormally loose monetary policy leads to the

survival of low quality companies that would normally be forced into bankruptcy. This is

because there is little pressure on excess capacity to exit, as the opportunity cost of

servicing an NPL is zero in a zero interest rate environment. An example of this is the UK

where the proportion of loss-making corporates is close to the high-end of the historical

range, but insolvencies are at the low-end (i.e. loss-making companies are not being

forced to shut down). This condition of ‘zombie capitalism’ is likely to maintain depressed

returns in the low-quality segments of the market. This means that the denominator of a

relative valuation calculation is abnormally depressed.

Figure 19: Abnormally loose monetary policy has led to the persistence of loss-making

companies and hence low quality is abnormally poor

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Loss-making companies, % of total private non-financial companies

Company liquidations, rhs, 000s

Source: Bank of England, Credit Suisse research

23 November 2012


Remember the ‘Nifty Fifty’

We remind investors of the valuation of tech in the 1998-2000 period (12m fwd P/E of US

tech got to 48x) and the ‘Nifty Fifty’ bubble in the early 1970s (where the median PE of

high-quality large-cap stocks got to 52x).

Figure 20: US tech reached a PE of 48x in 1998 – three

times the valuation of the market

Figure 21: The ‘Nifty 50’ stocks reached a multiple of 52x

in the early 1970s

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

1996 1998 2000 2002 2004 2006 2008 2010 2012

US tech, 12m fwd PErelative to market

Stock PE in January 1973

Walt Disney 188

Intl.Flavors & Frag. 78.2

Mcdonalds 72.5

Baxter Intl. 71.8

Avon Products 68.3

Johnson & Johnson 65.2

Xerox 51.7

Coca Cola 50.2

Eli Lilly 49.8

Merck & Co. 48.4

Schlumberger 46.4

Procter & Gamble 43.5

American Express 39.5

Median 51.7

Average 67.2

Market 18.3


What is striking is that on the screens of growth stocks shown in the next few pages there

are lots of companies with powerful growth stories – but which are nonetheless trading

below 20x.

Below we compare the earnings yield of growth to the government bond yield: in 1973 the

earnings yield of the ‘Nifty Fifty’ stocks was just 29% of the US Treasury 10-year yield; at

the peak of the tech bubble, the tech sector had an earnings yield of about a third of the

US Treasury yield. Currently, quality growth stocks, as defined above, offer an earnings

yield that is more than four times the US Treasury yield.

Figure 22: Quality growth is cheaper relative to bonds that in previous market bubbles

Earnings yield10-yr US Treasury

yieldEY / BY ratio

Nifty Fity in 1973 1.9 6.5 29.4%

US tech in 2000 2.1 6.3 33.6%

Current quality growth 6.7 1.5 436.2% Source: Thomson Reuters, Credit Suisse research

23 November 2012


Which growth indices have performed best? We show the performance of the various growth indices discussed in this report. The best

performing growth basket over the last decade has been the stocks that meet HOLT’s

eCAP criteria and have more than 10% asset growth and asset turns in the top 40% of the

market. So far in 2012, the best performing growth style has been the HOLT eCAP basket

with an additional filter for stocks with more than 5% asset growth.

Figure 23: HOLT eCAP plus growth and asset turns is the

best performing growth style over the last decade

Figure 24: HOLT eCAP and growth has been the best

performing growth style in 2012

9.7%

7.9%

7.1% 6.8%

5.7%

4.8%

0%

2%

4%

6%

8%

10%

HOLT eCAP+ >10%

growth + top40% asset

turns

HOLT quality(eCAP)

HOLT eCAP+ >5%growth

Highprospective

growth

MSCIEuropegrowth

MSCIEurope

Annualised price performance last 10 years

20.0%

17.5%16.7% 16.7%

13.3%

11.4%

0%

5%

10%

15%

20%

HOLT eCAP+ >5%growth

HOLTquality(eCAP)

Highprospective

growth

HOLT eCAP+ >10%

growth + top40% asset

turns

MSCIEuropegrowth

MSCIEurope

Annualised performance, 2012 YTD

Source: Thomson Reuters, Credit Suisse HOLT, Credit Suisse

research

Source: Thomson Reuters, Credit Suisse HOLT, Credit Suisse

research

We believe that superior asset turns are a key ingredient underpinning quality growth. A

company with abnormally high margins is likely to attract competitors into its business area.

If a company has low margins, but high asset turns (because, for example, of the

efficiency of its supply chain), then it is harder for a competitor to move in.

23 November 2012


How to play growth? Our aggregate screen

We employ three methods to identify growth stocks:

■ The quant approach: we use two quant screens: (a) looking at conventional growth

(historical and projected sales and EPS growth) and (b) HOLT metrics of high and

stable CFROI and reasonable asset growth;

■ Analyst opinion: we have asked our analysts to highlight the stocks with the best

growth outlook over the next five years.

■ Themes: we look for stocks with exposure to what we believe are the most promising

growth themes.

Below, we show a screen of the European stocks that are highlighted by at least two of

these methodologies.

Figure 25: European stocks highlighted as growth by two or more of our methodologies (sorted by cheapness on Holt

price to best)

Name Themes QuantsAnalyst

judgementAbs

rel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best

3m EPS 3m Sales Credit Suisse

rating

SAP P P P 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 58.8 Outperform

Sonova N P P P 18.3 142% -10% 4.4 -22% 4.3 1.4 42.8 0.7 0.2 2.4 100.6 Outperform

Wpp P P P 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 825.0 Outperform

Lvmh P P P 16.4 105% 3% 2.9 -10% 4.1 2.3 -1.2 -1.2 1.8 2.0 129.0 Outperform

Fresenius Med.Care P P P 16.3 126% 2% 2.6 19% 4.5 1.4 -11.3 -1.9 -1.1 2.4 51.6 Outperform

Burberry Group P P P 17.5 112% 35% 6.3 45% 4.4 2.1 -13.8 -6.2 -4.4 2.5 1,233.0 Outperform

Diageo P P P 16.7 103% 47% 8.1 71% 4.2 2.5 -14.6 0.7 -1.5 2.1 1,846.0 Outperform

Intertek Group P P P 19.9 127% 60% 8.8 -51% 3.0 1.4 -20.1 2.0 1.7 2.8 2,898.0 Outperform

Pernod-Ricard P P P 15.4 95% 46% 2.0 14% 4.3 1.9 -22.5 -2.7 0.4 2.7 84.9 Outperform

Saipem P P P 14.2 133% 18% 3.3 28% 6.2 2.1 -33.6 -2.9 1.5 2.1 32.5 Outperform

Dufry 'R' P P 10.5 63% -7% 3.7 46% 9.2 0.0 67.9 -2.9 -0.8 2.0 124.3 Outperform

Petrofac P P 12.3 116% 11% 7.1 27% -0.2 2.5 56.5 -0.7 -1.7 2.3 1,590.0 Outperform

Rotork P P 19.5 169% 54% 9.0 80% 4.0 1.9 19.0 0.6 1.6 2.8 2,426.0 Outperform

Capita P P 13.2 84% -41% 8.6 -36% 4.8 3.2 17.5 0.7 1.0 2.7 722.5 Outperform

The Swatch Group

'B'

P P 14.0 89% -52% 2.8 23% 4.0 1.7 9.0 1.8 0.9 2.3 432.2 Outperform

Johnson Matthey P P 13.7 107% 28% 3.2 40% na 2.5 8.0 -5.4 -4.2 2.6 2,190.0 Outperform

Halma P P 15.1 146% 35% 4.0 21% 5.3 2.4 7.2 -1.0 -1.0 2.9 419.5 Outperform

Aker Solutions P P 10.8 102% 29% 2.7 -10% -4.3 3.0 0.0 4.1 5.8 1.9 104.7 Outperform

Atlas Copco 'A' P P 14.7 127% 61% 7.1 120% 4.2 3.3 -3.0 -0.8 -1.3 2.9 167.6 Outperform

Amec P P 11.8 111% 19% 2.6 -17% 4.1 3.1 -3.5 -2.8 5.5 2.3 1,022.0 Outperform

Moneysupermarket

Com Gp.

P P 14.3 105% 34% 4.4 98% 5.4 3.7 -5.5 3.4 0.5 2.3 153.5 Outperform

Sabmiller P P 16.7 103% 50% 1.7 -11% 5.5 2.3 -13.5 0.5 0.8 2.6 2,633.0 Outperform

Hikma

Pharmaceuticals

P P 16.7 135% 25% 2.9 14% na 1.2 -14.4 -0.4 0.2 2.2 738.0 Outperform

Eutelsat

Communications

P P 15.0 108% 6% 3.1 7% 1.9 4.2 -18.2 -1.7 -0.1 2.3 23.6 Outperform

Petroleum Geo

Services

P P 11.6 110% -72% 2.1 -55% 2.8 1.4 -21.2 26.8 3.4 1.9 97.7 Outperform

Assa Abloy 'B' P P 14.7 127% -6% 3.5 5% 4.7 2.4 -24.1 -1.5 -1.7 2.9 231.9 Outperform

Deutsche Post P P 11.5 85% 42% 1.7 -19% 8.0 4.6 -26.5 0.1 1.1 1.9 15.3 Outperform

Coloplast 'B' P P 19.8 153% 24% 11.8 89% 4.3 1.4 -27.8 0.2 0.3 3.1 1,311.0 Outperform

Ryanair Holdings P P 13.2 98% -10% 2.0 -31% 9.6 8.8 -28.9 -3.2 -0.6 2.2 4.6 Outperform

Prudential P P 11.4 118% 7% 2.4 -18% 5.9 3.1 -33.8 0.6 1.4 2.2 880.0 Outperform

Kuehne+Nagel Intl. P P 20.3 151% 70% 5.7 66% 4.3 3.3 -36.7 -1.7 0.2 2.6 113.8 Outperform

Ictl.Htls.Gp. P P 15.7 94% 44% 8.1 -51% 6.1 2.6 -40.4 -1.1 0.1 2.6 1,650.0 Outperform

Easyjet P P 10.0 74% -12% 1.6 15% 7.1 1.9 -44.2 11.5 0.1 2.3 682.0 Outperform

Chr Hansen Holding P P 21.4 166% 45% 5.1 49% na 1.9 -50.4 2.0 0.5 2.7 187.3 Outperform

Share price,

local

currency (21

Nov)

-----P/E (12m fwd) ------ 2012e Momentum, %------ P/B ------- HOLT2012e, %Screening MethodologyConsensus

recommendation

(1=Buy; 5=Sell)

Source: MSCI, IBES, Factset, Thomson Reuters, Credit Suisse HOLT, Credit Suisse research

Of these, SAP, Sonova and WPP are highlighted by all three screening criteria and look

cheap on HOLT. The following stocks are cheap on P/E relatives and feature on at least

two of our growth screens: SAP, Sonova, WPP, Petroleum Geo, Assa Abloy, Ryanair,

Dufry, Capita, Swatch and EasyJet. Additionally, we can see almost all the names have

FCF above 4%.

Credit Suisse has set up a sector-neutral Delta One basket, CSERGROW, that offers

exposure to our preferred European growth names.

We show the corresponding screen for the US. Of these, Qualcomm, Google, Mead

Johnson Nutrition are highlighted by all three screening criteria as well as being cheap on

HOLT. Credit Suisse has also set up a sector-neutral Delta One basket for these US

growth names(CSUSGROW).

23 November 2012


Figure 26: US stocks highlighted as growth by two or more of our methodologies

Name Themes QuantsAnalyst

judgementAbs

rel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Google 'A' P P P 15.0 110% -26% 3.8 -29% 5.9 0.0 35.1 -7.9 -3.1 1.9 665.9 Outperform

Mead Johnson

Nutrition

P P P 19.0 119% 18% -73.9 na 2.9 1.8 9.9 -2.8 -4.3 2.2 66.1 Outperform

Yum! Brands P P P 19.7 117% 62% 18.2 -22% 4.0 1.7 -31.5 -0.1 -0.7 2.0 73.5 Outperform

Salesforce.Com P P P 76.9 563% 16% 12.7 23% 2.6 0.0 -66.9 1.1 0.3 2.1 158.8 Outperform

Broadcom 'A' P P 11.1 79% -69% 2.6 -54% 7.0 1.3 110.3 -2.1 -1.6 1.8 31.2 Outperform

Qualcomm P P 14.3 138% -39% 3.7 -18% 5.5 1.6 93.1 -0.3 -0.4 1.9 62.1 Outperform

Emc P P 13.1 126% -47% 2.7 -40% 8.8 0.0 85.1 -2.4 -1.8 1.7 24.4 Outperform

Apple P P 11.2 107% -58% 7.0 116% 8.1 1.7 82.1 -10.7 -2.7 1.7 561.7 Outperform

Unitedhealth Gp. P P 10.2 79% -15% 2.1 -26% 11.2 1.4 61.7 5.3 -0.2 1.8 53.5 Outperform

Mastercard P P 18.6 137% 26% 10.2 44% 4.3 0.2 57.9 -0.5 -2.5 1.9 479.4 Outperform

Eli Lilly P P 13.1 105% -14% 4.2 -44% 7.8 4.0 54.8 2.2 -0.9 2.7 47.4 Outperform

Ihs 'A' P P 19.0 121% 8% 4.2 27% 5.0 0.0 54.7 -3.8 -3.2 2.2 89.2 Outperform

Teradata P P 20.1 147% 38% 7.1 40% 4.6 0.0 37.2 3.6 -1.7 2.1 61.2 Outperform

Priceline.Com P P 17.4 104% -34% 12.3 23% 4.7 0.0 34.1 -3.1 -4.3 2.1 639.6 Outperform

Allergan P P 19.5 157% 7% 5.3 -10% -4.8 0.2 31.1 0.3 -0.9 1.9 90.9 Outperform

Biogen Idec P P 19.2 116% -45% 5.2 10% 4.3 0.0 14.1 5.9 1.7 2.2 147.4 Outperform

Nielsen Holdings Nv P P 14.4 92% 17% 2.3 13% 5.8 0.0 3.5 2.9 -1.1 2.1 28.1 Outperform

Ralph Lauren Cl.A P P 18.6 119% 56% 4.1 63% 5.0 0.8 -2.5 -0.7 -1.4 2.4 156.5 Outperform

Rockwell

Automation

P P 13.6 117% 41% 6.1 73% 5.3 2.4 -3.8 -3.2 -2.7 2.2 77.4 Outperform

Dollar Tree P P 14.3 86% -5% 6.8 39% 4.3 0.0 -14.8 0.1 -0.9 2.3 41.5 Outperform

Amazon.Com P P 142.3 850% 163% 13.6 -58% 1.5 0.0 -18.1 -97.1 -1.9 2.0 238.0 Outperform

Vmware P P 27.7 203% -14% 7.9 -2% 4.8 0.0 -23.2 4.6 0.2 2.3 88.1 Outperform

Family Dollar Stores P P 15.1 90% 13% 5.9 70% 1.5 1.3 -35.8 2.5 2.5 2.4 68.8 Outperform

Las Vegas Sands P P 17.5 104% -44% 4.3 -35% 5.6 2.3 -38.7 -14.4 -5.4 2.1 43.7 Outperform

Starbucks P P 22.9 136% -9% 8.6 57% 2.7 1.2 -39.1 -5.3 -1.1 2.0 50.5 Outperform

Starwood Htls.&

Rsts. Worldwide

P P 19.8 118% 14% 3.4 41% 4.6 2.0 -45.4 4.9 0.1 2.2 52.6 Outperform

Heartware

International

P P -32.1 nm na 9.4 54% na 0.0 -63.5 nm 3.1 2.1 81.6 Outperform

Volcano P P 62.6 484% -11% 4.5 30% 0.8 0.0 -65.8 -16.7 -1.8 1.9 26.9 Outperform

Netsuite P P 208.0 1523% 171% 33.8 154% 0.9 0.0 -91.1 13.8 2.2 2.8 60.1 Outperform

Screening MethodologyConsensus

recommendation

(1=Buy; 5=Sell)

Share price,

local

currency (21

Nov)

-----P/E (12m fwd) ------ 2012e Momentum, %------ P/B ------- HOLT2012e, %


23 November 2012


We discuss our three screening methodologies in more detail below:

1) Quant approach

a) Conventional growth. We screen for stocks with the following characteristics:

■ Above market median sales and EPS growth between 2007 and 2012;

■ Above market median projected sales and EPS growth between 2012 and 2014 on

Credit Suisse and consensus estimates;

■ Above average projected long-term consensus EPS growth;

■ Outperform-rated by Credit Suisse analysts.

In Europe, this highlights the following stocks in the screen below.

Figure 27: Outperform rated European growth stocks ranked by upside potential on HOLT

Stoxx 600 median 1% 10% 5% 4% 2% 10% 5% 5% 8.6

Company

2007-12 2012-14 2007-12 2012-14 2007-12 2012-14 2007-12 2012-14

Sap (Xet) 14% 15% 10% 11% 14% 15% 10% 11% 11.1 58 16.0 143% -14% 57.7 Outperform

Petrofac 23% 16% 22% 8% 29% 14% 22% 8% 14.4 56 11.5 103% -24% 1,574.0 Outperform

Sonova N 2% 19% 9% 9% 6% 13% 11% 8% 14.9 43 18.5 166% -5% 100.6 Outperform

Fresenius (Xet) 16% 14% 11% 9% 15% 11% 11% 8% 13.5 1 14.4 130% 3% 84.4 Outperform

Lvmh 9% 11% 11% 9% 11% 11% 11% 8% 10.9 -1 15.9 143% -2% 129.0 Outperform

Amec 24% 11% 12% 5% 24% 15% 11% 8% 15.7 -4 11.2 100% -15% 1,024.0 Outperform

Air Liquide 6% 10% 5% 10% 7% 10% 5% 7% 7.9 -7 16.2 146% 6% 93.4 Outperform

Experian 7% 12% 6% 7% 7% 14% 7% 9% 11.8 -7 17.5 157% 18% 1,025.0 Outperform

Fresenius Med.Care (Xet) 10% 14% 7% 8% 9% 11% 7% 8% 8.8 -11 16.5 148% 4% 51.5 Outperform

Burberry Group 16% 11% 17% 11% 21% 14% 18% 10% 10.3 -14 16.3 147% 4% 1,247.0 Outperform

Hikma Pharmaceuticals 42% 21% 20% 13% 9% 22% 20% 11% 20.3 -14 16.4 147% -5% 739.0 Outperform

Diageo 11% 13% 8% 6% 13% 12% 9% 7% 10.4 -15 16.7 150% 22% 1,848.5 Outperform

Adidas (Xet) 7% 13% 8% 7% 7% 18% 8% 7% 13.5 -18 14.1 127% 13% 64.8 Outperform

Intertek Group 22% 17% 22% 8% 21% 13% 22% 8% 14.6 -20 19.6 176% 30% 2,876.0 Outperform

Coloplast 'B' 22% 19% 7% 7% 34% 11% 6% 6% 14.1 -28 20.3 183% 13% 1,303.0 Outperform

Ryanair Holdings 6% 11% 14% 9% 6% 12% 16% 6% 9.8 -29 12.1 109% -19% 4.7 Outperform

Saipem 13% 13% 8% 6% 12% 13% 7% 6% 13.3 -34 12.9 116% -10% 32.7 Outperform

Easyjet 11% 10% 17% 5% 9% 11% 17% 6% 17.1 -44 10.0 90% -29% 692.0 Outperform

Sales CAGRRel

Share price,

local

currency

(20 Nov)

CS ratingHOLT price

to best (%)

Analyst estimates

EPS CAGR Sales CAGR

IBES estimates

EPS CAGRRel mkt,

devn from

average

Long-term

EPS growth

12m fwd PE

Abs

Source: MSCI, IBES, Thomson Reuters, Credit Suisse HOLT, Credit Suisse research

We show the same screen for the US.

Figure 28: Outperform rated US growth stocks ranked by upside potential on HOLT

S&P 500 median 5% 11% 5% 5% 6% 12% 5% 5% 10.3

Company

2007-12 2012-14 2007-12 2012-14 2007-12 2012-14 2007-12 2012-14

Microsoft 14% 14% 8% 12% 14% 12% 9% 8% 10.0 83 8.9 71% -35% 26.71 Outperform

Apple 62% 25% 45% 27% 66% 16% 52% 15% 20.5 82 10.2 82% -58% 561.15 Outperform

Prec.Castparts 14% 18% 6% 16% 17% 15% 9% 11% 14.2 62 15.8 127% 19% 176.76 Outperform

Mastercard 24% 17% 13% 12% 31% 17% 13% 12% 18.5 58 18.1 146% 1% 477.57 Outperform

Google 'A' 21% 18% 26% 19% 21% 18% 29% 19% 13.5 35 14.4 115% -38% 669.97 Outperform

Priceline.Com 50% 16% 30% 18% 50% 20% 30% 18% 19.9 34 17.1 137% -6% 635.58 Outperform

Allergan 14% 14% 8% 8% 14% 13% 8% 8% 12.5 31 19.1 153% -4% 91.15 Outperform

V F 12% 13% 9% 6% 12% 14% 9% 9% 13.0 19 14.1 113% 27% 157.57 Outperform

Cognizant Tech.Sltn.'A' 24% 18% 28% 17% 24% 15% 28% 15% 19.0 9 16.5 132% -32% 65.34 Outperform

Union Pacific 19% 13% 5% 7% 19% 14% 5% 7% 15.2 4 12.9 104% 2% 120.03 Outperform

Ralph Lauren Cl.A 12% 14% 10% 6% 16% 15% 11% 10% 14.0 -3 17.6 141% 21% 156.51 Outperform

O Reilly Automotive 23% 13% 20% 6% 23% 15% 20% 6% 16.6 -11 16.7 134% 10% 91.37 Outperform

Ww Grainger 16% 13% 7% 7% 16% 14% 7% 9% 15.2 -13 15.9 127% 9% 191.54 Outperform

Dollar Tree 27% 19% 11% 9% 32% 15% 13% 9% 19.0 -15 14.4 115% 5% 41.61 Outperform

Quanta Services 12% 20% 19% 9% 12% 18% 19% 9% 17.8 -16 15.8 127% -29% 25.14 Outperform

Yum! Brands 14% 15% 6% 8% 14% 14% 6% 10% 13.4 -31 19.7 158% 32% 72.39 Outperform

Family Dollar Stores 16% 17% 6% 11% 21% 16% 9% 9% 15.0 -36 15.0 121% 6% 68.89 Outperform

Starbucks 16% 26% 7% 13% 20% 21% 10% 12% 18.0 -39 21.7 174% -11% 50.05 Outperform

Salesforce.Com 38% 24% 35% 31% 46% 30% 44% 24% 27.0 -67 73.8 592% -23% 145.90 Outperform

CS ratingHOLT price

to best (%)

Analyst estimates

EPS CAGR Sales CAGR

IBES estimates

EPS CAGRRel mkt,

devn from

average

Long-term

EPS growth

12m fwd PE

Sales CAGRRel

Share price,

local

currency

(20 Nov)Abs


23 November 2012


We show the screen for non-Japan Asian stocks in the Appendix.

b) Quality growth. We incorporate HOLT’s eCAP metrics to screen for companies with:

■ CFROI above 8% for five consecutive years;

■ CFROI trend (no more than a 10% decline in CFROI in any one of the last five years);

■ 5-year asset growth above 5%;

■ Low CFROI volatility.

We highlight those stocks that also have asset turns in the top 40% of the market, since

higher asset turns has led to outperformance among our growth styles over the last

decade.

Figure 29: Outperform rated European quality growth stocks ranked by upside potential on HOLT; circled stocks have

asset turns in the top 40% of the market

NameCFROI Median - Five

Year

5-yr asset

growthAbs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Shire 17.3 14.9 13.0 105% -37% 4.9 26% 13.4 0.6 98.0 3.6 -0.5 1.9 1,759.0 Outperform

Imperial Tobacco Gp. 66.2 18.3 11.0 80% 26% 3.1 -90% 8.3 4.4 66.9 -1.4 -0.1 2.2 2,428.0 Outperform

Sap 19.7 7.5 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 57.7 Outperform

Petrofac 29.3 19.3 12.3 116% 11% 7.1 27% -0.2 2.5 56.5 -0.7 -1.7 2.3 1,574.0 Outperform

Vivendi 14.8 8.0 8.0 66% -33% 1.1 -37% 11.2 6.3 56.2 -1.9 0.2 2.2 16.1 Outperform

Novartis 'R' 12.3 7.5 11.6 93% -11% 2.2 -26% 7.7 4.0 56.0 -3.1 -1.5 2.3 55.5 Outperform

Sonova N 23.7 7.7 18.3 142% -10% 4.4 -22% 4.3 1.4 42.8 0.7 0.2 2.4 100.6 Outperform

Smiths Group 18.0 7.7 10.9 94% 32% 4.3 -13% 3.6 3.6 25.1 -2.6 0.6 2.7 1,050.0 Outperform

Capita 42.0 5.9 13.2 84% -41% 8.6 -36% 4.8 3.2 17.5 0.7 1.0 2.7 719.0 Outperform

Wpp 25.6 5.7 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 814.0 Outperform

Fresenius 14.1 8.7 14.6 113% 9% 2.3 -22% 8.1 1.2 1.1 0.7 1.3 2.2 84.4 Outperform

Lvmh 12.6 9.1 16.4 105% 3% 2.9 -10% 4.1 2.3 -1.2 -1.2 1.8 2.0 129.0 Outperform

Atlas Copco 'A' 21.1 7.7 14.7 127% 61% 7.1 120% 4.2 3.3 -3.0 -0.8 -1.3 2.9 168.1 Outperform

Fresenius Med.Care 13.9 7.5 16.3 126% 2% 2.6 19% 4.5 1.4 -11.3 -1.9 -1.1 2.4 51.5 Outperform

Burberry Group 15.2 19.8 17.5 112% 35% 6.3 45% 4.4 2.1 -13.8 -6.2 -4.4 2.5 1,247.0 Outperform

Diageo 24.8 6.8 16.7 103% 47% 8.1 71% 4.2 2.5 -14.6 0.7 -1.5 2.1 1,848.5 Outperform

Eutelsat

Communications

10.8 7.9 15.0 108% 6% 3.1 7% 1.9 4.2 -18.2 -1.7 -0.1 2.3 23.1 Outperform

Intertek Group 20.4 20.0 19.9 127% 60% 8.8 -51% 3.0 1.4 -20.1 2.0 1.7 2.8 2,876.0 Outperform

Pearson 13.0 6.5 13.8 100% -7% 1.7 -58% 7.2 3.6 -21.5 -1.2 -0.1 2.8 1,196.0 Outperform

Pernod-Ricard 16.8 6.1 15.4 95% 46% 2.0 14% 4.3 1.9 -22.5 -2.7 0.4 2.7 85.0 Outperform

Assa Abloy 'B' 18.8 5.0 14.7 127% -6% 3.5 5% 4.7 2.4 -24.1 -1.5 -1.7 2.9 232.0 Outperform

Coloplast 'B' 12.0 6.1 19.8 153% 24% 11.8 89% 4.3 1.4 -27.8 0.2 0.3 3.1 1,303.0 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(20 Nov)



23 November 2012


Figure 30: Outperform rated US quality growth stocks with upside on HOLT, ranked by upside potential on HOLT;

circled stocks have asset turns in the top 40% of the market

NameCFROI Median - Five

Year 5-yr asset growth Abs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Broadcom 'A' 14.5 12.7 11.1 79% -69% 2.6 -54% 7.0 1.3 110.3 -2.1 -1.6 1.8 31.1 Outperform

Transdigm Group 41.5 23.3 17.4 151% 46% 8.5 126% 4.9 1.6 109.8 1.0 -0.2 2.3 131.1 Outperform

Freeport-Mcmor.Cpr.& Gd. 18.5 31.5 8.6 75% -28% 2.4 -90% 3.9 3.1 104.0 -7.3 -4.2 1.8 38.3 Outperform

F5 Networks 19.7 12.5 16.1 155% -51% 5.9 9% 6.5 0.0 96.8 -1.5 -0.6 2.2 87.5 Outperform

Qualcomm Inc 19.4 13.0 14.3 138% -39% 3.7 -18% 5.5 1.6 93.1 -0.3 -0.4 1.9 62.1 Outperform

Oracle Corp 25.4 20.6 11.3 83% -40% 3.5 -56% 8.5 0.8 86.7 -0.1 -1.7 2.1 30.2 Outperform

Emc 14.8 6.8 13.1 126% -47% 2.7 -40% 8.8 0.0 85.1 -2.4 -1.8 1.7 24.2 Outperform

Microsoft 27.6 12.1 9.7 71% -50% 3.7 -43% 11.3 2.9 83.1 -6.3 -1.2 1.9 26.7 Outperform

Deere 12.8 6.4 10.4 90% -6% 5.1 78% 4.7 2.0 68.6 -5.2 -2.3 2.4 86.0 Outperform

Check Point Sftw.Techs. 23.6 8.9 13.2 97% -33% 3.0 -58% 8.2 0.0 62.7 -0.6 -1.1 2.0 45.2 Outperform

Precision Castparts Corp 23.7 8.5 15.8 136% 45% 3.0 42% 4.5 0.1 61.8 -2.3 -1.6 1.9 176.8 Outperform

Unitedhealth Gp. 30.5 5.9 10.2 79% -15% 2.1 -26% 11.2 1.4 61.7 5.3 -0.2 1.8 53.1 Outperform

Mastercard 34.9 9.3 18.6 137% 26% 10.2 44% 4.3 0.2 57.9 -0.5 -2.5 1.9 477.6 Outperform

Eli Lilly 11.5 5.7 13.1 105% -14% 4.2 -44% 7.8 4.0 54.8 2.2 -0.9 2.7 47.2 Outperform

Ihs 'A' 48.8 10.3 19.0 121% 8% 4.2 27% 5.0 0.0 54.7 -3.8 -3.2 2.2 89.1 Outperform

General Dynamics 19.2 6.3 9.4 81% -12% 1.9 -25% 11.4 2.9 48.7 -1.6 -0.9 2.3 63.8 Outperform

Stryker Corp 13.6 9.3 12.3 95% -34% 2.6 -49% 6.3 1.6 40.2 -1.0 -0.7 2.2 53.6 Outperform

Thermo Fisher Scientific

Inc

25.7 7.3 11.5 79% -12% 1.5 -4% 6.6 0.8 38.9 1.3 0.3 1.7 61.8 Outperform

Stanley Black & Decker Inc 16.0 17.5 11.8 102% 12% 1.7 -37% 8.2 2.6 33.3 -6.6 -1.2 2.1 70.1 Outperform

Allergan 15.2 11.6 19.5 157% 7% 5.3 -10% -4.8 0.2 31.1 0.3 -0.9 1.9 91.2 Outperform

Bed Bath & Beyond 10.1 8.1 11.5 69% -38% 3.4 -33% 7.3 0.0 25.6 -1.0 0.3 2.1 58.5 Outperform

Parker-Hannifin Corp 14.3 5.1 11.8 102% 12% 2.4 23% 7.3 2.1 23.8 -20.8 -6.4 2.4 79.7 Outperform

Activision Blizzard 16.5 24.8 10.5 77% -39% 1.2 -86% 6.9 1.6 22.0 3.3 2.0 1.7 11.2 Outperform

Cvs Caremark 12.3 9.8 12.4 95% -7% 1.6 -36% 8.6 1.4 18.8 1.4 0.0 1.8 45.6 Outperform

V F 16.8 7.0 14.5 93% 53% 3.9 87% 4.4 1.9 18.8 1.1 -0.9 1.9 157.6 Outperform

Biogen Idec 16.9 8.7 19.2 116% -45% 5.2 10% 4.3 0.0 14.1 5.9 1.7 2.2 148.2 Outperform

Life Technologies 20.5 21.5 11.4 78% -36% 1.9 6% 8.4 0.0 13.9 -1.0 -1.1 2.2 48.9 Outperform

Merck & Co. 11.5 13.3 12.4 100% -1% 2.6 -55% 8.1 3.7 12.2 -0.4 -0.3 2.2 43.6 Outperform

Mead Johnson Nutrition 31.9 10.8 19.0 119% 18% -73.9 na 2.9 1.8 9.9 -2.8 -4.3 2.2 66.1 Outperform

Flowserve 14.9 7.9 13.4 116% 31% 3.3 42% 4.6 1.0 6.9 -1.4 -0.5 1.8 139.3 Outperform

Nielsen Holdings Nv 38.3 7.1 14.4 92% 17% 2.3 13% 5.8 0.0 3.5 2.9 -1.1 2.1 27.6 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(20 Nov)



We show the screen for Non-Japan Asian stocks in the Appendix.

23 November 2012


2) Analyst judgment

We have asked our analysts in Europe, the US and Japan to identify stocks with above-

market projected sales growth over the next five years (our threshold is 6% annual

growth), growth superior to the sector and translating into EPS growth of at least 8% p.a.

The details are in the Appendix, which shows two screens for each region (one with the

analysts’ top picks and the other highlighting those companies that trade on a P/E below

the market or have upside potential on HOLT).

European stocks

Of the stocks highlighted by our European analysts, the following are either cheap on

HOLT or on P/E relative to the market and have an outperform- or neutral-rating by Credit

Suisse analysts.

Figure 31: European growth stocks, as identified by our analysts, that look cheap on HOLT or on P/E relative

and rated Outperform or Neutral by our analysts

Name Abs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best

3m EPS 3m Sales Credit Suisse rating

Aberdeen Asset Man. 13.2 130% 13% 3.7 63% 8.0 3.2 90.1 2.7 1.2 2.1 333.6 Outperform

Sberbank Of Russia 5.7 59% -23% 1.6 20% na 3.1 69.3 10.0 5.7 1.7 87.9 Outperform

SAP 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 58.8 Outperform

Spectris 12.3 118% 21% 3.5 -68% 6.9 2.1 56.8 -2.3 -1.7 2.2 1,819.0 Outperform

Perform Group 24.7 179% 26% 0.2 58% na 0.0 48.4 0.5 1.6 1.8 397.0 Outperform

Sonova N 18.3 142% -10% 4.4 -22% 4.3 1.4 42.8 0.7 0.2 2.4 100.6 Outperform

Richemont 14.9 96% 133% 3.5 69% 3.0 1.1 25.4 5.2 2.9 2.4 68.6 Neutral

Rotork 19.5 169% 54% 9.0 80% 4.0 1.9 19.0 0.6 1.6 2.8 2,426.0 Outperform

Capita 13.2 84% -41% 8.6 -36% 4.8 3.2 17.5 0.7 1.0 2.7 722.5 Outperform

The Swatch Group 'B' 14.0 89% -52% 2.8 23% 4.0 1.7 9.0 1.8 0.9 2.3 432.2 Outperform

Paddy Power 20.8 124% 62% 12.0 99% 5.5 2.0 8.3 -0.2 3.3 2.9 57.3 Outperform

Johnson Matthey 13.7 107% 28% 3.2 40% na 2.5 8.0 -5.4 -4.2 2.6 2,190.0 Outperform

Wpp 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 825.0 Outperform

Halma 15.1 146% 35% 4.0 21% 5.3 2.4 7.2 -1.0 -1.0 2.9 419.5 Outperform

Compass Group 14.9 89% 28% 3.8 43% 4.8 3.1 3.5 -1.4 -0.3 2.5 699.5 Outperform

William Demant Hldg. 18.5 143% -5% 8.7 -64% 4.2 0.0 3.2 -6.5 -0.4 3.3 463.6 Neutral

Subsea 7 12.6 119% -25% 1.3 -46% 4.2 1.9 -4.4 10.5 -0.9 2.0 128.7 Neutral

Petroleum Geo Services 11.6 110% -72% 2.1 -55% 2.8 1.4 -21.2 26.8 3.4 1.9 97.7 Outperform

Vienna Insurance Group

A9.5 98% -23% 1.0 -54% 6.3 3.6 -21.2 -3.5 2.3 2.3 34.2 Neutral

Assa Abloy 'B' 14.7 127% -6% 3.5 5% 4.7 2.4 -24.1 -1.5 -1.7 2.9 231.9 Outperform

Ryanair Holdings 13.2 98% -10% 2.0 -31% 9.6 8.8 -28.9 -3.2 -0.6 2.2 4.6 Outperform

Easyjet 10.0 74% -12% 1.6 15% 7.1 1.9 -44.2 11.5 0.1 2.3 682.0 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



US stocks

Of the stocks highlighted by our US analysts, the following are either cheap on HOLT or

on P/E relative to the market and have an Outperform or Neutral rating by Credit Suisse

analysts.

23 November 2012


Figure 32: US growth stocks, as identified by our analysts, that are cheap on HOLT or on P/E relative

and rated Outperform or Neutral by our analysts


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Celgene 13.3 80% -72% 5.8 -60% 5.4 0.0 220.1 2.0 1.2 1.8 77.9 Neutral

Broadcom 'A' 11.1 79% -69% 2.6 -54% 7.0 1.3 110.3 -2.1 -1.6 1.8 31.2 Outperform

F5 Networks 16.1 155% -51% 5.9 9% 6.5 0.0 96.8 -1.5 -0.6 2.2 90.1 Outperform

Qualcomm 14.3 138% -39% 3.7 -18% 5.5 1.6 93.1 -0.3 -0.4 1.9 62.1 Outperform

Oracle 11.3 83% -40% 3.5 -56% 8.5 0.8 86.7 -0.1 -1.7 2.1 30.4 Outperform

Emc 13.1 126% -47% 2.7 -40% 8.8 0.0 85.1 -2.4 -1.8 1.7 24.4 Outperform

Apple 11.2 107% -58% 7.0 116% 8.1 1.7 82.1 -10.7 -2.7 1.7 561.7 Outperform

Gilead Sciences 15.5 93% -64% 7.5 6% 5.5 0.0 82.0 1.9 3.2 1.7 75.6 Neutral

Mellanox 19.2 185% 23% 7.2 162% 4.9 0.0 71.3 12.2 0.9 2.2 84.4 Neutral

Check Point Sftw.Techs. 13.2 97% -33% 3.0 -58% 8.2 0.0 62.7 -0.6 -1.1 2.0 45.5 Outperform

Mastercard 18.6 137% 26% 10.2 44% 4.3 0.2 57.9 -0.5 -2.5 1.9 479.4 Outperform

Danaher 15.0 130% 0% 2.1 -23% 7.8 0.2 56.6 -3.6 -2.2 1.8 53.0 Neutral

Ihs 'A' 19.0 121% 8% 4.2 27% 5.0 0.0 54.7 -3.8 -3.2 2.2 89.2 Outperform

Salix Pharms. 12.6 102% -71% 4.2 4% 4.7 0.0 37.9 10.7 -0.6 2.1 41.4 Outperform

Teradata 20.1 147% 38% 7.1 40% 4.6 0.0 37.2 3.6 -1.7 2.1 61.2 Outperform

Google 'A' 15.0 110% -26% 3.8 -29% 5.9 0.0 35.1 -7.9 -3.1 1.9 665.9 Outperform

Priceline.Com 17.4 104% -34% 12.3 23% 4.7 0.0 34.1 -3.1 -4.3 2.1 639.6 Outperform

Allergan 19.5 157% 7% 5.3 -10% -4.8 0.2 31.1 0.3 -0.9 1.9 90.9 Outperform

Biogen Idec 19.2 116% -45% 5.2 10% 4.3 0.0 14.1 5.9 1.7 2.2 147.4 Outperform

Mercadolibre 28.1 206% -17% 15.9 16% 3.0 0.5 11.2 4.4 -1.3 2.5 75.4 Neutral

Jazz Pharmaceuticals 9.9 80% -74% 11.9 -47% na 0.0 10.6 3.0 1.9 1.4 52.0 Outperform

Mead Johnson Nutrition 19.0 119% 18% -73.9 na 2.9 1.8 9.9 -2.8 -4.3 2.2 66.1 Outperform

Eog Res. 21.1 199% 27% 2.5 2% -4.4 0.6 6.4 12.4 2.0 1.9 118.1 Neutral

Watson Pharms. 10.8 87% -22% 3.1 28% 7.7 0.0 4.3 1.3 2.4 1.8 85.3 Outperform

Nielsen Holdings Nv 14.4 92% 17% 2.3 13% 5.8 0.0 3.5 2.9 -1.1 2.1 28.1 Outperform

Visa 'A' 19.4 142% 32% 4.4 75% 4.4 0.7 1.5 3.3 1.0 1.9 146.7 Outperform

Hexcel 14.2 123% -40% 3.1 -75% -1.7 0.0 -4.0 2.8 -1.7 2.1 25.1 Outperform

Carmax 17.8 106% -31% 3.0 43% 1.9 0.0 -14.1 -2.5 0.4 1.9 34.6 Outperform

Dollar Tree 14.3 86% -5% 6.8 39% 4.3 0.0 -14.8 0.1 -0.9 2.3 41.5 Outperform

Noble Energy 15.5 146% -13% 2.3 11% -6.1 0.9 -15.0 -16.7 -4.9 2.0 95.3 Outperform

Linear Tech. 17.4 124% -16% 10.1 -35% 7.3 3.1 -19.2 -18.0 -9.0 2.7 31.9 Outperform

Anadarko Petroleum 16.8 158% -26% 1.9 -2% 2.4 0.5 -19.9 -3.5 -3.1 1.6 72.5 Outperform

Vmware 27.7 203% -14% 7.9 -2% 4.8 0.0 -23.2 4.6 0.2 2.3 88.1 Outperform

Zumiez 12.1 72% -46% 2.4 -40% 3.6 0.0 -25.1 -5.4 -0.9 2.3 20.3 Neutral

Las Vegas Sands 17.5 104% -44% 4.3 -35% 5.6 2.3 -38.7 -14.4 -5.4 2.1 43.7 Outperform

Starbucks 22.9 136% -9% 8.6 57% 2.7 1.2 -39.1 -5.3 -1.1 2.0 50.5 Outperform

Chipotle Mexn.Grill 25.6 153% -5% 7.9 45% 2.9 0.0 -40.0 0.0 -1.6 2.6 275.5 Neutral

Fusion-Io 50.1 482% -19% 4.9 -1% 0.3 0.0 -63.6 47.1 9.3 2.4 24.1 Outperform

Volcano 62.6 484% -11% 4.5 30% 0.8 0.0 -65.8 -16.7 -1.8 1.9 26.9 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



We show the full list of companies highlighted by our analysts as growth stocks in Europe

and the US in the screens in the Appendix.

23 November 2012


3) Thematic approach

We highlight our preferred stocks on our preferred growth themes, which are:

(1) Branded GEM consumer plays

(2) Industrial automation

(3) Global trade

(4) Emerging markets travel

(5) Water

(6) Underleveraged banks in underleveraged countries

(7) Oilfield services

(8) Energy efficiency

(9) Reducing auto emissions

(10) Specific plays on the internet, especially the provision of e-financial services.

(11) Ageing in emerging markets

(12) Software

European stocks

We highlight European companies that are exposed to our favoured growth themes, that

are Outperform-rated by our analysts, and offer value (in terms of either P/E relatives, FCF

yield above 5% or potential upside on HOLT).

Figure 33: Top European plays on our favoured growth themes, that are Outperform-rated by our analysts and that offer

value (i.e. either look cheap on P/E relatives, have a FCF yield above 5% or look cheap on HOLT)


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Dufry 'R' 10.5 63% -7% 3.7 46% 9.2 0.0 67.9 -2.9 -0.8 2.0 124.3 Outperform

SAP 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 58.8 Outperform

Petrofac 12.3 116% 11% 7.1 27% -0.2 2.5 56.5 -0.7 -1.7 2.3 1,590.0 Outperform




Wpp 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 825.0 Outperform


Moneysupermarket Com Gp. 14.3 105% 34% 4.4 98% 5.4 3.7 -5.5 3.4 0.5 2.3 153.5 Outperform

Sabmiller 16.7 103% 50% 1.7 -11% 5.5 2.3 -13.5 0.5 0.8 2.6 2,633.0 Outperform

Petroleum Geo Services 11.6 110% -72% 2.1 -55% 2.8 1.4 -21.2 26.8 3.4 1.9 97.7 Outperform

Deutsche Post 11.5 85% 42% 1.7 -19% 8.0 4.6 -26.5 0.1 1.1 1.9 15.3 Outperform

Saipem 14.2 133% 18% 3.3 28% 6.2 2.1 -33.6 -2.9 1.5 2.1 32.5 Outperform

Prudential 11.4 118% 7% 2.4 -18% 5.9 3.1 -33.8 0.6 1.4 2.2 880.0 Outperform

Ictl.Htls.Gp. 15.7 94% 44% 8.1 -51% 6.1 2.6 -40.4 -1.1 0.1 2.6 1,650.0 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



US stocks

We show the corresponding screen for the US in the screen below.

23 November 2012


Figure 34: Top US plays on our favoured growth themes, that are Outperform-rated by our analysts and that offer value

(i.e. either look cheap on P/E relatives, have a FCF yield above 5% or look cheap on HOLT)


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating


Cigna 8.6 67% 5% 2.0 3% 13.2 0.1 63.2 3.9 -3.5 1.9 52.0 Outperform

Unitedhealth Gp. 10.2 79% -15% 2.1 -26% 11.2 1.4 61.7 5.3 -0.2 1.8 53.5 Outperform

Eli Lilly 13.1 105% -14% 4.2 -44% 7.8 4.0 54.8 2.2 -0.9 2.7 47.4 Outperform

Halliburton 10.5 99% -27% 2.2 -31% -2.2 1.1 38.6 -6.1 0.2 1.9 31.7 Outperform


Emerson Electric 13.6 118% 2% 3.5 2% 7.1 3.2 16.3 -1.5 -2.0 2.3 48.6 Outperform


Mindray Med.Intl.Spn. Adr.'A'

1:117.1 118% -5% 3.4 -29% na 1.2 8.2 2.6 1.2 2.1 33.8 Outperform

Johnson Controls 9.4 117% -5% 1.6 -12% 9.4 2.6 1.9 -11.8 -4.3 2.5 26.8 Outperform

Rockwell Automation 13.6 117% 41% 6.1 73% 5.3 2.4 -3.8 -3.2 -2.7 2.2 77.4 Outperform

United Parcel Ser.'B' 14.5 107% -7% 10.1 62% 6.3 3.1 -6.1 -4.9 -2.8 2.3 71.4 Outperform




Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



We consider each theme in more detail.

23 November 2012


Growth themes 1) Branded GEM consumer plays

In our view, the GEM consumer story remains simple and compelling. We have been

overweight this theme for now five years!

The BRIC consumer share of GDP remains abnormally low and the Chinese consumer

share of GDP is still just half that of the US and Japan.

Figure 35: Emerging markets have a low consumption

share of GDP

Figure 36: In particular, China’s consumption share of

GDP is less than half the US levels

40%

45%

50%

55%

60%

65%

1997 2000 2003 2006 2009 2012

G7 consumption share of GDP

BRIC consumption share of GDP

Consumption, Share of GDP

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

1995 1996 1998 1999 2000 2002 2003 2005 2006 2007 2009 2010 2012

China United States


We think that the consumer share of GEM GDP is set to rise, partly as a result of

currency appreciation and partly on account of policy. Discretionary consumption looks set

to rise faster than total consumption (with on average a third of income in emerging

markets being spent on non-discretionary items, according to the World Bank). Hence,

under our central case, discretionary consumption will be 9% in real terms and just under

14% in nominal terms (with a currency that near term is unlikely to depreciate).

Figure 37: If China grows by 7% per year in real terms between now and 2020, then consumption would likely grow by

10%, and discretionary spending by 13%

GDP

2011 15y max

Brazil 3.5% 60% 65% 4.3% 64% 65% 4.6% 9.1%

China 7.0% 32% 42% 10.1% 52% 65% 12.5% 15.5%

India 6.5% 57% 65% 7.8% 55% 60% 8.7% 12.8%

Russia 3.0% 50% 56% 4.1% 59% 65% 5.2% 11.7%

BRIC 6.1% 43% 50% 7.9% 56% 64% 9.2% 13.7%

Developed

countries2.4% 65% 74%

Implied

nominal growth

CountryConsumption share of GDP

Consumption

Implied real

growth

Implied real

growth 2007 2020E

Real trend

growth

Discretionary consumption (% of total)


23 November 2012


When GDP per capita in the developed world was at the same level as it is in the

emerging markets currently, real consumption growth averaged nearly 5%, with the

highest growth being in communication, transport and education.

Figure 38: Current GDP pc in GEM is $7,000. When France, US and Japan had GDP pc at

this level, the highest growth was seen in communication, transport and education

4.6%

10.4%9.7%

7.2%6.8%

6.2% 6.2%

5.4%4.6% 4.3%

3.0%

0%

2%

4%

6%

8%

10%

12%

PC

E

Com

mun

icat

ion

Tra

nspo

rtat

ion

Edu

catio

n

Rec

reat

ion

Hou

sing

Fin

anci

al s

ervs

Hea

lthca

re

Hse

hld

& P

ers

Goo

ds Util

ities

Foo

d &

bev

Ave

rage

ann

ual g

row

th in

rea

l ter

ms

as G

DP

per

cap

ita

rises

from

c.U

S$7

,400

to U

S$9

,800

in th

e U

S, J

apan

an

d F

ranc

e

Source: Credit Suisse research

The key drivers of GEM consumption are higher wage growth (compounding at c.10% p.a)

and a fall in the savings ratio. In the case of China, the savings ratio is still c.40%. This is

set to fall, as there are moves towards a more state-sponsored social security system that

diminishes the need for individuals to save for old age or ill health.

We can see the resilience of the consumer if we look at the example of Chinese exports to

the US (which seem to follow ISM) against Chinese retail sales, which have clearly

decoupled.

Figure 39: Chinese retail sales are decoupling from those

in the US…

Figure 40: …while Asian exports have followed the US

cycle

-11%

-6%

-1%

4%

9%

14%

19%

24%

2002 2004 2006 2008 2010 2012

US

China

Retail sales yoy, 3mma

15

25

35

45

55

65

75

-30

-20

-10

0

10

20

30

40

50

1992 1996 2000 2004 2008 2012

Asian exports to US, yoy, 3mma, 6m lag

US ISM new orders, rhs


23 November 2012


Finally, we believe currency appreciation is likely in many of the emerging markets.

This is largely driven by increased QE in the developed world. This in turn drives money to

those regions where there is an interest and a growth premium as well as undervalued

currencies. This points to the emerging markets. Currency appreciation helps the

consumer at the expense of exporters (the price of exports rises, while the price of imports

falls and thus discretionary consumption growth improves). This is also critical because in

recent years as we can see below the currencies have been a modest headwind.

Figure 41: Changes in EM currencies against the Euro

Source: Company data, Credit Suisse estimates

Indirect plays

Over the past five years, the emerging market business of the indirect plays (using food

producers and household products sector) has grown at 10% a year. This is growth!

Figure 42: Average emerging markets growth for the food producers and household

products companies* (quarterly 2007-2012) is close to 10%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Source: Company data, Credit Suisse Consumer Staples Research Team. *Average Emerging Markets

growth based on Nestle, Unilever, Henkel, Kraft, Coke, Colgate, L’Oreal, Danone, Reckitt

23 November 2012


For the indirect plays we look at stocks with above–market projected average sales growth

over the next five years (our threshold is 6% annual growth), with growth superior to the

sector, translating into EPS growth of at least 8% p.a, and which our analysts believe are

growth. We also want these stocks to have at least 20% of revenues from GEM. This

highlights the following companies:

Figure 43: European stocks that are plays on the emerging markets consumer with at least 20% of revenues from GEM,

that our analysts identified as Growth

Name% Sales from

GEM

% Sales from

NJA

% Sales from

ChinaAbs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


Sabmiller 71% 8% n.a 16.7 103% 50% 1.7 -11% 5.5 2.3 -13.5 0.5 0.8 2.6 2,633.0 Outperform

Prudential 60% 60% n.a 11.4 118% 7% 2.4 -18% 5.9 3.1 -33.8 0.6 1.4 2.2 880.0 Outperform

The Swatch Group 'B' 50% 47% 37% 14.0 89% -52% 2.8 23% 4.0 1.7 9.0 1.8 0.9 2.3 432.2 Outperform

Diageo 45% 13% n.a 16.7 103% 47% 8.1 71% 4.2 2.5 -14.6 0.7 -1.5 2.1 1,846.0 Outperform

Pernod-Ricard 45% 27% n.a 15.4 95% 46% 2.0 14% 4.3 1.9 -22.5 -2.7 0.4 2.7 84.9 Outperform

Richemont 41% 34% 26% 14.9 96% 133% 3.5 69% 3.0 1.1 25.4 5.2 2.9 2.4 68.6 Neutral

Chr Hansen Holding 40% 10% 2% 21.4 166% 45% 5.1 49% na 1.9 -50.4 2.0 0.5 2.7 187.3 Outperform

Lvmh 35% 23% 14% 16.4 105% 3% 2.9 -10% 4.1 2.3 -1.2 -1.2 1.8 2.0 129.0 Outperform

Burberry Group 30% na n.a 17.5 112% 35% 6.3 45% 4.4 2.1 -13.8 -6.2 -4.4 2.5 1,233.0 Outperform

Wpp 25% 11% 6% 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 825.0 Outperform

Boss (Hugo) 17% 7% 7% 15.4 99% 29% 10.9 137% 4.1 4.1 -18.8 -4.5 0.0 2.0 79.2 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price, local

currency (21 Nov)


Source: MSCI, IBES, Factset, Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates

Of these, the following look cheap on HOLT or have an FCF yield above 5%: SAB Miller,

Swatch, Richemont, and WPP.

We show the same screen for the US below. Of these, the following look cheap on HOLT

or have an FCF yield above 5%: Las Vegas Sands, and Mead Johnson.

Figure 44: US stocks that are plays on the emerging markets consumer with at least 20% of revenues from GEM, that

our analysts identified as Growth

Name% Sales from

GEM

% Sales from

NJA

% Sales from

ChinaAbs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Las Vegas Sands 73% 73% 73% 17.5 104% -44% 4.3 -35% 5.6 2.3 -38.7 -14.4 -5.4 2.1 43.4 Outperform

Mead Johnson Nutrition 58% na n.a 19.0 119% 18% -73.9 na 2.9 1.8 9.9 -2.8 -4.3 2.2 66.8 Outperform

Yum! Brands 32% 32% 21% 19.7 117% 62% 18.2 -22% 4.0 1.7 -31.5 -0.1 -0.7 2.0 73.3 Outperform

Nike 'B' 24% 14% 9% 16.9 108% 23% 4.2 22% 5.4 1.5 -11.2 1.3 -0.4 2.4 96.3 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)


Source: MSCI, IBES, Factset, Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates

There are three particular areas we would highlight as plays on the GEM consumer:

■ SAB Miller: the 2013E FCF yield is 5.5% (on our analyst’s calculations); yet we see

long-term sales growth of c7% and EPS growth potential of close to 13% CAGR. In its

core growth markets of Latam and Africa, SAB has strong positions with an average

market share of around 90% and 70%, respectively. According to our analyst, Sanjeet

Aujla, its future growth is driven by its own pace of category development and

penetration, and is less at risk from competitive threats affecting other businesses

given high barriers to entry in these markets. As our analyst points out, the percentage

of income spent on beer rises until GDP per capita hits c$20K (implying that in this

case beer volumes should grow at a higher rate than GDP). SAB has a wide set of

price points and, thus, is able to exploit the premium beer market and at the low end.

Its price points are increasingly competitive against the informal alcohol sector,

according to our analyst.

We can see from the charts below that beer and international spirits per capita

consumption tends to go up as GDP per capita rises.

23 November 2012


Figure 45: Beer per capita consumption goes up as GDP

per capita rises…

Figure 46: …and so does international spirits per capita

consumption

R² = 0.3789

0

20

40

60

80

100

120

140

160

0 20000 40000 60000 80000 100000

GDP per capita

PC

C

R² = 0.3243

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0 20000 40000 60000 80000 100000

GDP per capita

PC

C

Source: Company data, Credit Suisse Consumer Staples Research

team

Source: Company data, Credit Suisse Consumer Staples Research

team

■ Diageo: the world leader in international premium spirits. Within a growing global

spirits market, premium end offers the fastest growth at the expense of local cheap

liquor, according to our analyst Charlie Mills. 45% of Diageo sales come from

emerging markets.

■ Swatch: more than Richemont, it tends to sell into wholesale channels, which offer

less advantageous pricing than retailers. Yet, on a tactical basis, our analysts see the

medium-price segment in Asia holding up better than the high-end segment. Strong

tourist purchases in Europe should be a key mitigating factor. Swatch looks well

placed to capitalise on the stabilisation of macro indicators in China, which accounts

for about 35% of group sales. In the medium term, its best-in-class supply chain

capabilities and gradual reduction in supply of movements (i.e. watch parts) to external

parties should result in lower investment requirements than peers to support growth of

mechanical watches for brands such as Longines or Tissot. Its balance sheet remains

strong and valuation is among the cheapest in the European luxury space, according

to our analyst Rogerio Fujimori. Its FCF yield is well above its peers’.

Figure 47: Swiss watch survey is improving yoy Figure 48: HK watch & jewellery sales appear to have

troughed

-100

-80

-60

-40

-20

0

20

40

60

80

100

-40%

-20%

0%

20%

40%

60%

80%

1998 2000 2002 2004 2006 2008 2010 2012

Swatch price relative (euros), y/y%

Swiss watch manufacturers survey,Production compared to prev. year, rhs

-40%

-20%

0%

20%

40%

60%

80%

100%

-20%

-10%

0%

10%

20%

30%

40%

50%

2006 2007 2008 2009 2010 2011 2012

HK watch and jewellery volume sales, y/y%

Swatch price relative (euros), y/y%

Source: Company data, Credit Suisse Luxury Goods Research Team Source: Company data, Credit Suisse Luxury Goods Research team

23 November 2012


Clearly, there is an issue of valuation in absolute terms – but we would point out that, on a

sum of the parts basis, the indirect GEM plays look attractively valued relative to the direct

plays.

Figure 49: Developed market consumer stocks with emerging market exposure are trading cheaply relative to their foreign-listed subsidiaries

Source: Company data, Credit Suisse estimates

23 November 2012


2) Industrial Automation

We believe there are four main drivers of this theme:

a) Rising wage pressures in emerging markets

Strong wage pressure in emerging markets means that their cost advantage is shrinking

and the incentives for automation in both developed and developing countries are

increasing.

Figure 50: Dwindling Supply of Manual Labor (China) Figure 51: Hourly Manufacturing Labor Costs in China)

-80

-60

-40

-20

0

20

40

60

80

100

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Mill

ion

pers

ons Population aged between 15-19 minus population

aged between 50- 54 and new college students.

10%

12%

14%

16%

18%

20%

22%

24%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

China: hourly manufacturing wage growth, yoy

Source: Company data, Credit Suisse China Strategy Team Source: Credit Suisse US Capital Goods team,

Credit Suisse research

China in particular seems to have hit a ‘Lewis Turning Point’, which is the point at which

the excess low cost labour force is exhausted, leading to increased wage inflation. The 19-

24 year old age group is peaking this year, with the broader labour force estimated to peak

in 2015. A rise in social security related costs is also likely to happen over time (the costs

falling probably on the employer) again raising the relative cost of labour.

Company comments about Asian labour price inflation have proliferated, with ITW, Metso

and NTN recently flagging increased wage inflation, according to our European Capital

Goods team.

Figure 52: After hitting the ‘Lewis Turning Point’, other Asian export-led countries

experienced higher inflation and lower trend growth (but still good growth)

Japan

(1960-1972)

Korea

(1982-96)

China

(1997-2009)

GDP: Average 8.9% 8.5% 9.6%

CPI: Average 5.6% 5.2% 1.3%

CPI: Maximum 13.1% 11.1% 4.8%

CPI: Minimum 3.6% 2.3% -1.5%

Source: Company data, Credit Suisse research, Credit Suisse US Capital Goods team

b) Robot density in emerging markets is low

The robot density (industrial robots per manufacturing employees) in emerging markets is

only a fraction of the penetration seen in developed economies. In emerging markets

(which account for 50% of global manufacturing output), there are only 7 industrial robots

per 10,000 manufacturing employees, against 149 for the developed markets, or just 5%

of the density of developed markets. Non-Japan Asia accounts for 35% of the world’s

manufacturing output, but only has a robot density of 11.

23 November 2012


Figure 53: Robot density for select countries (2011),

Robots per 10,000 manufacturing employees

Figure 54: Robot density by region (2002 vs. 2011),


Country

Employees

(mn)

Output

($bn)

Output per head

($)

Robot

Density

U.S. 14 1,732 121,931 130

China 99 1,612 16,281 7

Point

China has

7x as many

manufacturing

workers

China and

the U.S. produce

the same

output

US has 7.5x

higher output

per head

US has 18.5x the

number

of robots

per head

Source: Company data, Credit Suisse US Capital Goods team Source: Company data, Credit Suisse US Capital Goods team

There is already evidence of an accelerating move towards automation even among

emerging markets companies that have long benefited from the abundant supply of cheap

labour. Foxconn, for example, one of the world’s largest maker of electronic components,

has recently announced that it would replace a part of its 1m workforce with robots (New

York Times, 18 August 2012). This suggests to us that automation may be at an inflection

point in China.

Figure 55: The industrial robot density ‘S’ curve

(base year = 1974 for Japan, 1999 for China)


Figure 56: The automated machine tool ‘S’ curve

(Share of Machine Tools Shipped with Numerical

Controls); (base year = 1970 for Japan, 2000 for China)

0

50

100

150

200

250

300

350

T+0 T+3 T+6 T+9 T+12 T+15 T+18 T+21 T+24 T+27 T+30 T+33

Japan Robot Density

China Robot Density

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

T+0 T+3 T+6 T+9 T+12 T+15 T+18 T+21 T+24 T+27 T+30 T+33

Japan China

Source: Company data, Credit Suisse Capital Goods team Source: Company data, Credit Suisse estimates, Credit Suisse

Capital Goods team

23 November 2012


c) Reduced outsourcing in developed markets leads to more automation in

developed markets

There are a number of factors at work, which are likely to significantly reduce the rate of

outsourcing to other countries:

■ Rising wage inflation in emerging markets. A report by the Boston Consulting

Group (Made in America, Again, August 2011) suggested that by 2015, wage rates in

Chinese cities such as Shanghai and Tianjin will be only about 30% below those in

low-cost US states. Since wage rates account for 20% to 30% of a product’s total cost,

manufacturing in China will be only 10% to 15% cheaper than in the US; clearly,

reducing the attractiveness of outsourcing.

■ Rising indirect cost of labour in developed markets (e.g. increased social security

payments) increases the labour costs relative to capital and thus the attractiveness of

substituting labour with machines.

■ Moving production closer to the consumer. Technologies like 3D printing increase

the benefits of bringing production closer to the consumer, giving companies

increased flexibility. This allows the production process to be quickly adapted to

changes in demand (e.g. the European clothing retailer Inditex’s business model). In

addition, the recent weakness in global growth has led to increased protectionist

pressures in several countries. The WTO noted in a report in May 2012 that over the

previous 6 months the G20 countries introduced 124 new restrictive measures

affecting about 1% of world imports. This further incentivises companies to produce

close to the consumer to prevent tariffs and restrictions.

Furthermore, the Obama administration is committed to support this trend, with the

president lobbying during his recent election campaign “to bring jobs back home”,

promising tax breaks as an incentive (FT, 9 July 2012).

d) Improvement in technology increases the degree of precisions and that in

turn enables more efficient and better use of automation

Valuation and cyclicality

Global automation stocks look cheap on P/E and P/B relative, with both ratios close to a

four year low.

23 November 2012


Figure 57: Global automation looks cheap on 12m fwd PE

relative…

Figure 58: …as well as P/B relative

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

2002 2004 2006 2008 2010 2012

Cap gds stocks with automation exposure 12m fwd P/E rel Market

Average (+/- 1SD)

125%

140%

155%

170%

185%

200%

2002 2004 2006 2008 2010 2012

Cap gds stocks with automation

exposure P/B rel MarketAverage


Earnings momentum and price momentum both look neutral.

Figure 59: Earnings momentum is neutral… Figure 60: … as is price momentum

-40%

-30%

-20%

-10%

0%

10%

20%

30%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Cap gds stocks w ith automation ex posure 3m breadthRel Market

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Cap gds stocks w ith automation ex posure %dev from 6mma,

rel to MarketAv erage (+/1 SD)


Automation is clearly a cyclical play, but it is slightly more defensive than capital goods in

general.

23 November 2012


Figure 61: Automation is a cyclical sector, but less cyclical than the cap goods sector in

general

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

Div

Fin

S/C

on&

S/C

on E

q

Con

s D

ur/A

pp

Met

& M

in

Cap

Gds

Tch

H/W

/Eq

Aut

o &

Com

po

Cap

gds

with

aut

omat

ion

Pap

/For

Prd

Ban

ks

S/W

& S

vs

Che

mic

als

Rea

l Est

ate

Ret

ailin

g

Insu

ranc

e

Med

ia

Con

Mat

Con

s S

vs

Ene

rgy

Com

l/Pro

f S

vs

Tra

nspt

H/C

Eq/

Svs

Tob

acco

T/C

m S

vs

Bev

erag

es

H/H

Per

s P

rd

Fd

Prd

Fd/

Sta

ples

Rtl

Util

ities

Ph/

Bio

L S

ci

Global sectors correlation w ith ISM


Stock picks

In the screen below, we highlight companies exposed to industrial or factory automation,

rather than process automation. That is, companies which produce equipment for the

automation of discrete processes that today are mainly performed by human workers,

rather than the flow processes (such as refining) that are already mainly performed by

machines.

There are a number of categories of industrial automation products and services, but they

can be split into two main classes: the actuation-type products such as robots, motors,

drives, machine tools (supplied by companies such as Fanuc, Yaskawa, THK) and those

focused on the ‘brains’ guiding the products (supplied by companies such as Rockwell

Automation and Schneider). Some companies provide both (Siemens (rated Outperform)

and Mitsubishi Electric (rated Neutral)).

We show a list of stocks exposed to this theme in the screen below. Of these, Schneider

(Neutral), Emerson Electric (Outperform) and Mitsubishi Electric (Neutral) have upside

potential on HOLT.

Figure 62: Global capital goods companies with exposure to automation

Name% exposure to

automationAbs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best

3m

EP

S

3m

Sa

les

Share price,

local currency

(21 Nov)

Credit Suisse

rating

Rockwell Automation 100% 13.6 117% 41% 6.1 73% 5.28 2.38 -3.8 -3.2 -2.7 2.2 77.9 Outperform

Keyence Corporation(C) 95% 19.4 187% -18% 2.0 -40% 0.07 0.28 -39.3 1.0 2.7 2.9 22,060.0 Neutral

Smc Corporation(C) 90% 14.1 122% -38% 1.5 -35% 0.30 1.07 -23.8 -6.2 -4.0 2.5 13,260.0 Neutral

Abb Limited 52% 12.1 105% 4% 2.7 -83% 6.05 3.85 65.3 -5.6 -2.7 2.1 17.0 Not Rated

Emerson Electric Co 50% 13.6 118% 2% 3.5 2% 7.14 3.17 16.3 -1.5 -2.0 2.3 48.5 Outperform

Yaskawa Electric Corporation(C) 50% 16.5 159% -35% 1.5 -43% 2.21 1.58 -47.0 -24.2 -3.9 2.7 639.0 Outperform

Thk Co., Ltd.(C) 40% 15.2 132% -42% 1.0 -53% na 1.49 -33.4 -34.8 -7.0 2.6 1,397.0 Outperform

Fanuc Corporation(C) 40% 18.0 156% -23% 2.7 25% 3.43 1.53 -37.7 -10.2 -6.7 2.8 13,830.0 Neutral

Nabtesco Corporation(C) 30% 13.5 117% 5% 2.1 14% na 2.23 -41.8 -20.3 -6.5 2.7 1,633.0 Neutral

Schneider Electric Sa 25% 12.1 104% 1% 1.7 4% 5.77 3.49 43.5 -0.8 -0.3 2.8 51.3 Neutral

Mitsubishi Electric Corporation(C) 22% 9.7 84% -61% 1.1 -33% 12.51 1.93 30.7 -8.8 -2.0 2.4 626.0 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

-----P/E (12m fwd) ------ Momentum------ P/B ------- HOLTYield (2012e)


For more details on automation, please have a look at an extensive analysis done by our

global capital goods team Global Industrial Automation - The next growth phase, dated 14

August 2012. In addition, Credit Suisse offers a sector-neutral Delta One basket,

https://plus.credit-suisse.com/u/MnRP5g

23 November 2012


CSERATMN, that represents 26 global cyclicals, largely within the capital goods and

technology space, with high exposure to this theme.

23 November 2012


3) Global trade

Over the past 40 years, global trade has risen around 1.3x as fast as global GDP (the

CAGR of global trade has been 8% in nominal terms, compared with 6% nominal GDP

growth).

Figure 63: Global trade is equivalent to around 25% of

global GDP, up from 7% in 1970

Figure 64: In 2012, global trade growth has been weaker

than the historical relationship with global GDP would

have suggested

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012

Global trade, % of global GDP

2012

y = 3.58x - 0.07R² = 0.71

-15%

-10%

-5%

0%

5%

10%

15%

20%

-1% 0% 1% 2% 3% 4% 5% 6%

Tra

de g

row

th, v

olum

es

Global GDP growth

Source: Thomson Reuters, Credit Suisse research Source: IMF, Credit Suisse research

We think that this is set to continue, driven by the following factors:

■ There are still significant cost advantages of producing in emerging markets, which

leads to more outsourcing (despite the increase in emerging market wages);

Figure 65: Domestic prices in emerging markets continue

to be considerably below those in the US

Figure 66: Manufacturing unit labour costs in the

emerging markets are still relatively low

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010

Emerging markets

Non-Japan Asia

Domestic price (cost) relative to the US, in %

Source: Thomson Reuters, Credit Suisse research Source: Thomson Reuters, Credit Suisse EEMEA Equity Strategy

team

■ Trade benefits from the continuing decline in tariffs in the major economies.

23 November 2012


Figure 67: Tariff rates continue to decrease in the major

economies

Figure 68: container shipping rates are up only 20% and

are likely to fall further despite the rise in fuel costs

2

4

6

8

10

12

14

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Median tariff rate applied tomanufactured goods in majoreconomies, %

70

120

170

220

270

320

370

420

470

520

Mar-03 Mar-05 Mar-07 Mar-09 Mar-11

Oil price

Container shipping rates

2003 = 100


■ The rise in energy prices has not translated into an increase in shipping costs: oil

prices are up by 350% over the past decade, while container shipping rates have risen

by only 20%. Furthermore, our analysts expect rates to fall in 2013, as supply looks

set to increase by up to 10%, and this should keep the cost of transporting low.

■ The emergence of the GEM consumer should lead to more developed market

companies selling into emerging markets, thus turning global trade into a two-way

affair, away from a model in which emerging markets merely function as a production

location for developed market consumption.

This year however trade volumes have been flat over the past 12 months. This is much

weaker than should have been the case. This weakness is due to the following factors, in

our view:

■ The rebalancing within Europe: the current account balance in peripheral Europe

has turned into surplus for the first time in a decade, as peripheral countries have

stopped importing, most likely as a consequence of the capital flight seen earlier this

year (capital flight from Spain over the past year has been 32% of GDP, for instance).

This weakness in demand has not been offset by increased imports in core Europe.

Consequently, Euro-area imports are down year-to-date by 7% compared to the same

period in 2011, while they are up in most other regions (and the annualised import

growth in the rest of the world, at 14%, is above the10-year average of 17%).

23 November 2012


Figure 69: Capital flight in the periphery earlier this year… Figure 70: … has led to considerable import weakness in

the Euro-area, which explains most of the softness in

global imports

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12

3 month annualised change in Target 2 balance, % GDP

Periphery inc. Italy

Periphery ex. Italy

September data annualised

Periphery ex. Italy

Periphery inc. Italy

-10%

-5%

0%

5%

10%

15%

Latin

Am

eric

a

Japa

n

NJA

GE

M

Wor

ld e

x E

urop

e

Afr

ica

Chi

na US

Wor

ld

UK

Eas

tern

Eur

ope

Eur

o-ar

ea

Import growth, ytd over the same period last year

Source: Bank of Spain, Bank of Portugal, Bank of Italy, Central Bank

of Ireland, Bank of Greece, Thomson Reuters, Credit Suisse research


■ The reduction in trade finance, as Euro-area banks deleverage (and, in particular,

shed dollar-denominated assets);

Figure 71: Global ex EU import growth has been in line

with the historical average

Figure 72: Euro-area banks have significantly reduced

their exposure to trade finance

-30%

-20%

-10%

0%

10%

20%

30%

2000 2002 2004 2006 2008 2010 2012

World World ex EU

Global import growth, nominal

Source: Thomson Reuters, Credit Suisse research Source: IIF

Overall, we believe that the rebalancing in Europe is likely to be the main reason for weak

trade growth this year. While we believe that growth in the Euro-area will be sluggish, we

think some of the sharp trade moves that we have seen should normalise, given that the

capital outflows that have most likely triggered it have now begun to reverse, owing to the

change in ECB policy. Hence, we would agree with IMF projections suggesting that global

trade volumes will continue to grow at around 1.3x the rate of global real GDP over the

next five years.

23 November 2012


The following areas should benefit from continued strong growth in global trade:

■ Testing/verification benefit from increasing global trade volume, the increased

sophistication and complexity of global supply chains (which creates demand for more

independent verification and certification) as well as tighter regulation and safety

standards. We highlight Intertek, SGS and Bureau Veritas.

■ Freight forwarding: over the past 10 years, both sea and air freight forwarding have

grown more than global GDP (8% and 3%, respectively, compared with average GDP

growth of 2.5%) – and our analysts expect this to continue. Within this area, we think

air freight is particularly interesting, given that it should benefit disproportionately from

a possible rebound in global trade. Furthermore, it is helped by the outsourcing

moving to high-value-added products (with a low weight). On the downside, though, it

will be negatively affected as, structurally, air is losing market share to shipping, due to

the latter’s cost advantage. We would highlight Kühne + Nagel and Panalpina in

Europe as well as Expeditors in the US. Cargo-focused airlines should again benefit

from growth in air freight (EVA Airways, Cathay Pacific, China Airlines and Asiana Air).

■ Express, the premium segment of the air freight business, should benefit from the

structural growth outlook in the emerging markets, where penetration for these

services is still low. It should also benefit from the rebound in trade volumes we

forecast, given the just-in-time nature of the service (i.e. if demand surprises on the

upside, time-sensitive delivery would grow in importance). Lastly, the industry has an

oligopolistic structure, with four main players (FedEx, UPS, TNT Express and DHL, a

part of Deutsche Post) dominating the intercontinental trade lanes.

Figure 73: Plays on global trade


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Cathay Pacific Airways 16.2 120% 8% 1.0 -17% 2.6 0.9 14.4 -53.8 0.6 2.5 13.9 Outperform


Eva Airways 12.1 90% -48% 1.5 28% na 0.4 -15.6 -28.9 -0.4 2.8 16.3 Outperform

Dsv 'B' 13.1 97% 24% 4.7 54% 8.7 0.9 -18.6 -1.1 -1.3 2.4 133.0 Neutral

Intertek Group 19.9 127% 60% 8.8 -51% 3.0 1.4 -20.1 2.0 1.7 2.8 2,898.0 Outperform

Expeditor Intl.Of Wash. 19.7 146% -1% 3.9 -22% 4.6 1.5 -21.0 -8.5 -5.6 2.4 36.8 Neutral

Bureau Veritas Intl. 20.2 128% 70% 8.6 5% 3.9 1.7 -26.3 0.8 1.0 3.0 83.6 Neutral


Sgs 'N' 21.4 136% 51% 7.6 77% 2.2 3.1 -31.2 -2.2 0.0 2.8 2,012.0 Neutral

Fedex 13.0 97% 7% 2.0 1% 1.5 0.6 -35.8 -14.5 -1.4 1.8 87.7 Neutral

Kuehne+Nagel Intl. 20.3 151% 70% 5.7 66% 4.3 3.3 -36.7 -1.7 0.2 2.6 113.8 Outperform

Tnt Express 22.9 170% 40% 1.6 15% 1.6 1.1 -38.5 -5.9 -0.9 3.1 7.2 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)


Source: MSCI, IBES, Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates

23 November 2012


4) Global travel

As emerging market consumers grow richer, they are likely to travel more. World Bank

data suggest that the beta of the growth in flights per capita to growth in income per capita

is around 2x (i.e. if GDP per capita increases by 10%, flights per person should be

expected to increase by 20%). Projections from the IMF and the UN suggest that GDP per

capita in the emerging markets could increase by 5% per year over the next five years,

suggesting an increase in flights per capita of around 10% per year.

Figure 74: Flights per capita tend to increase by twice as

much as income per capita

Figure 75: When developed countries were at the same

level of development as emerging markets are today,

transportation was among the fastest-growing areas of

consumer spending

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Wor

ld

US

EU

Chi

na

Bra

zil

Indi

aGDP per capita Flights per capita

Average annual growth since 1980

7.5%

12.8%11.5% 11.4%

10.3%

7.4%6.5%

4.5% 4.4% 3.8%

0%

2%

4%

6%

8%

10%

12%

14%

PC

E

Com

mun

icat

ion

Tra

nspo

rtat

ion

Hou

sing

Rec

reat

ion

Hea

lthca

re

Fin

anci

alse

rvic

es

HH

util

ities

Foo

d &

beve

rage

s

Edu

catio

n

Average annual growth in real terms as GDP per capita rose from c.US$7,000 to US$9,000 in the US, Japan and France

Source: World Bank Source: Credit Suisse Thematic research

Furthermore, when developed markets were at roughly the level of development of

emerging markets today, transportation was the fastest growth area within consumer

spending after telecommunication, growing on average by around 12% per year in real

terms, compared with real consumer spending growth of around 8%.

We note that in its long-term market outlook (2012–32) Boeing forecasts Asia’s passenger

air traffic to grow at an average annual rate of 6.4% over the next 20 years. In addition, the

International Civil Aviation Organization forecasts annual growth of 5.9% in global

passenger traffic until 2014. Lastly, the Emerging Consumer Survey 2012, published by

our Thematic research team in January 2012, also points to strong growth in travel

intentions in emerging markets.

We highlight the following as potential beneficiaries of strong structural growth of global

(and especially emerging market) travel:

■ Beneficiaries of the growth in Asian tourism: AirAsia (South East Asia’s largest

low-cost carrier), Air China (the domestic Chinese carrier with the biggest exposure to

international outbound routes), China Eastern Airlines, China Southern Airlines,

Cathay Pacific, Garuda Indonesia and MAHB.

■ Up-market hotels benefit from the increased travel budgets of the growing emerging

market middle class in two ways. First, they increasingly push into domestic markets,

deriving a growing share of revenues from the fast-growing emerging market hotel

segment; secondly, they benefit from outbound travel by emerging market (especially

Chinese) consumers, visiting developing markets, especially if these countries

ultimately allow their currencies to strengthen, benefiting consumers’ purchasing

https://plus.credit-suisse.com/u/MnpIyK

23 November 2012


power. Furthermore, the business is protected by high barriers to entry in the top-end

luxury hotel space (i.e. shortage of sites in inner city areas). We would highlight M&C

(benefits from presence in gateway cities) and Intercontinental (pushing into domestic

markets), as well as Starwood (the US hotel stocks with the largest GEM exposure). In

addition, Shangri-La has developed a strong presence in China.

We admit that revenue per available room (RevPAR) fell by more than 20% in the last

month. However, Tim Ramskill, from our European travel & leisure team, highlights that

operators believe this reflects short-term political disruption rather than any structural

issues and therefore the long-term dynamics are unaltered. Thus we think this weakness

provides a buying opportunity.

Figure 76: Asian revenue per available room fell in the last 2 months but our analyst, Tim

Ramskill, believes this will reverse quickly as the structural growth story remains intact

(35.0)

(30.0)

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Occupancy Year on Year change %

Average Daily Rate Year on Year change %

RevPAR Year on Year change %

Source: Credit Suisse Travel & Leisure Equity Research team

■ Duty free is another sector likely to benefit from growth in global travel volumes. The

world’s biggest travel retailer is Dufry, which currently holds about 8% of global market

share and derives 70% of its revenue from emerging markets.

Valuation

Global travel looks slightly expensive on 12m fwd PE relative to global. However, relative

to its average over the past 4 years, the valuation appears less stretched.

23 November 2012


Figure 77: Global travel looks slightly expensive on P/E relative over a 10-year period but

not if we just look at the past 4 years

90%

100%

110%

120%

130%

140%

150%

160%

170%

2007 2008 2009 2010 2011 2012

Global travel stocks 12m fwd P/E rel World

Average (+/- 1SD)


Stock picks

We highlight plays on this theme in the screen below.

Figure 78: Beneficiaries of the strong structural growth of global travel

Name GEM sales Absrel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best

3m

EP

S

3m

Sa

les

Share price,

local

currency (20

Nov)

Credit Suisse

rating

Malaysia Airports Holdings

Bhd

100% 17.8 132% 73% 1.8 75% -14.38 2.96 -28.4 -3.4 -4.2 1.8 5.7 Outperform

Intercontinental Hotels

Group Plc

34% 15.7 94% 44% 8.1 -51% 6.15 2.60 -40.4 -1.1 0.1 2.6 1,633.0 Outperform

Starwood Hotels&Resorts

Wrld

15% 19.8 118% 14% 3.4 41% 4.62 1.97 -45.4 4.9 0.1 2.2 52.4 Outperform

Airasia Berhad 100% 9.1 67% -10% 2.1 3% -31.86 1.24 49.5 -6.3 1.9 2.1 2.9 Outperform

Air China Limited 100% 9.8 73% -7% 1.3 -26% na 1.44 -38.3 -18.0 -0.6 2.2 5.1 Outperform

Shangri-La Asia 100% 27.6 164% 85% 1.1 14% 1.02 1.32 -17.4 -18.8 0.7 3.0 15.1 Not Rated

China Southern Airlines Co

Ltd

100% 9.5 71% -54% 0.9 -10% -16.10 1.37 -78.2 -27.9 0.2 2.1 3.4 Outperform

Cathay Pacific Airways

Limited

78% 16.2 120% 8% 1.0 -17% 2.58 0.90 14.4 -53.8 0.6 2.5 13.9 Outperform

Dufry Ag 70% 10.5 63% -7% 3.7 46% 9.24 0.00 67.9 -2.9 -0.8 2.0 125.6 Not Rated

Garuda Indo.(Persero) 70% 12.3 91% 16% 2.1 33% -7.10 0.0% -113.1 -22.9 -0.2 1.6 690.0 Outperform

Millennium & Copthorne

Hotels Plc

48% 13.3 79% 4% 0.7 -1% 13.85 2.81 24.8 1.2 -1.5 2.3 464.6 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)


Source: MSCI, IBES, Fact set, Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates

23 November 2012


5) Water

For many parts of the world, the supply and demand imbalance in water provision appears

set to deteriorate. The UN estimate that by 2025, 21.4% of the global population (or 1.8

billion people) will face absolute water scarcity (defined as annual water supply below 500

cubic metres per person), up from 17% (1.2 billion people) in 2010. Contributing factors

include: (i) a growing world population and (ii) the tendency of water demand per capita to

increase as real incomes grow (partly because industrial processes become more water

intensive and partly because urbanisation brings with it more water-intensive sewage and

bathing systems). Meanwhile, the supply of freshwater water remains relatively static.

Desalination has clearly augmented supply in certain areas, but this source remains

relatively small in the global context and is only available to coastal areas. Essentially to

date, supply grows arithematically while demand growing geometrically for water.

Figure 52: Global water use and population Figure 53: Water prices have increased sharply relative to

headline inflation across most markets

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1900 1920 1940 1960 1980 2000

Wat

er u

se, k

m c

ubed

p.a

.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Wor

ld p

opul

atio

n (b

n)

World water use

Global population

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

1972 1977 1982 1987 1992 1997 2002 2007 2012

US CPI water rel. to overall CPI index

Canada CPI water rel. to overall CPI index

Source: FAO Aquastat, UN, Credit Suisse research Source: Thomson Reuters, Credit Suisse research

There are two obvious consequences of this supply/demand imbalance:

(1) Prices have risen: When we investigate the prices paid by consumers for their water

supply within national CPI indices, we find that without exception water prices have

outstripped headline inflation. Over the past 10 years, the consumer price of water has

risen by an average of 6% in the US, more than double the average increase in overall

consumer prices, at 2.5%. Even in countries that are relatively water rich (e.g.

Canada) the price of water has outstripped headline inflation by an average of 4.6

percentage points over the past 10 years (6.5% CAGR, compared to 1.9% for

headline inflation).

(2) There is substantial pent-up demand for investment to alleviate water shortages and

supply/demand imbalances. We find that global investment in water has generally

been disappointing over the last few years. It has lagged required investment levels as

detailed by the US Environmental Protection Agency and fallen short of expectations

across many of the emerging economies.

China has faced significant localised water shortages over the past several years and

the authorities’ response has been a CAGR in water investment of 20% since 2004.

Investment is likely to remain strong in this area - the government aims to launch 60

large hydro plants before 2015 (as reported by Reuters, 18 November 2012). Middle

East and North African markets have also prioritised water infrastructure investment

given similar acute water shortages.

23 November 2012


Hence, we recommend focusing on geographies where growing the water supply is

already a priority—Australia, North Africa and the Middle East and China—or where water

efficiency and conservation is increasingly necessary.

Stock picks in this area suffer the perpetual problem of regulatory risk and/or lack pure

exposure to the theme (i.e. many ‘water’ plays are also significantly exposed to other

areas of infrastructure spend). However, the combination of attractive absolute valuations

plus the long-term growth prospects in water provision mean we recommend Outperform-

rated Sembcorp, Pall and Halma. Pall also features on the Credit Suisse US Focus List.

Figure 79: Water plays

NameExposure to

WaterDescription Abs

rel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Hyflux100% Water desalination, reclamation,

recycling & purification17.4 116% 14% 2.2 -48% na 2.2 -70.6 -26.4 -1.2 3.1 1.3 Outperform

Energy Recovery100% Manufacturing energy recovery

devices-99.4 nm na 1.7 -14% na 0.0 -49.8 nm 3.6 2.6 2.9 Neutral

Pall 80% High end liquid fi ltration 19.3 167% 43% 4.8 52% 2.0 1.3 -38.7 -1.2 1.1 2.5 60.4 Outperform

Sabesp On55% Water and wastewater services in

Sao Paulo10.1 67% 104% 1.9 -94% na 2.6 85.3 7.1 -0.4 2.5 85.3 Neutral

Ivrcl38% Water pipelines, irrigation projects,

desalination 13.9 121% 21% 0.4 -66% -21.0 1.3 141.1 -21.3 -9.0 2.8 38.4 Neutral

Rotork18% Actuators to control valves in water

treatment plants19.5 169% 54% 9.0 80% 4.0 1.9 19.0 0.6 1.6 2.8 2,435.0 Outperform

Gud Holdings 16% Pumps, water pressure systems 11.9 76% 49% 2.1 1% 8.2 9.3 10.3 -9.4 -0.8 3.1 8.1 Neutral

Halma 12%

Equipment for leak detection,

pressure measurement and quality

sensors

15.1 146% 35% 4.0 21% 5.3 2.4 7.2 -1.0 -1.0 2.9 419.2 Outperform

Melrose10% Metering through acquisition of

Elster13.6 117% 138% 3.4 135% 2.1 3.0 -7.4 -10.2 25.8 2.0 208.2 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local

currency (20

Nov)



We highlight a special focus on irrigation as it both increases agricultural productivity and

improves the efficiency of water use. The stocks exposed here are: Lindsay, Jain Irrigation

and Eurodrip Irrigation System (all Not Rated).

Figure 55: Stocks with irrigation exposure


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Lindsay Corp 17.3 142% na 3.0 166% 5.0 0.6 -4.5 0.1 na 2.5 74.7 Not Rated

Jain Irrigation Systems

Limited8.5 70% na 1.5 84% 25.4 1.7 105.2 -0.2 na 2.3 62.3 Not Rated

Eurodrip SA na na na 1.3 72% na na -55.9 na na na 1.4 Not Rated

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(20 Nov)



Credit Suisse offers a tradable index on global water plays (Bloomberg ticker: CSWTR).

More details can be found on the Credit Suisse Proprietary Indices website.

http://www.credit-suisse.com/indices

23 November 2012


6) Underleveraged banks in underleveraged

countries

We continue to believe that within banks the most attractive plays are those based in

countries where both aggregate leverage and financial product penetration rates are

relatively low. Low levels of private sector debt offer the prospect of profitable lending

growth, while low levels of government debt ensure that the risks to economic growth (and

by extension loan quality) from a period of harsh austerity are limited.

Net foreign assets is another critical component of macro risk, because if a country has

borrowed externally to finance its debt, then the risk associated with that country is

accordingly higher.

We construct a simple scorecard of emerging economies, ranking highly those countries

with low levels of private and government debt, high net external assets, low historical loan

growth rates (the lower the growth in credit, then again the better the asset quality) and

low financial product penetration (as proxied by life policies as a percentage of GDP).

Weighing these factors, Russia, Indonesia, the Philippines, and Mexico rank highly.

Figure 80: The Philippines, Chile, Russia and Mexico rank top on our scorecard of underleveraged economies

CountryPrivate credit, % of

GDP

Government debt,

% of GDP

Net external assets,

% of GDP

5-y loan

growth

Life premia, % of

GDP

GDP per capita,

USD

Weight 35% 20% 20% 5% 20%

Russia 51% 9.2% 1.1% 44% 0.0% 13,560 1

Indonesia 31% 20% -41% 23% 0.9% 3,690 2

Philippines 33% 49% -5.3% 4.0% 1.0% 2,450 3

Mexico 25% 39% -35% 15% 0.9% 10,050 4

Chile 61% 10% -4.9% 17% 2.3% 14,260 5

Egypt 31% 80% -19% 11% 0.4% 3,020 6

Turkey 54% 39% -44% 36% 0.2% 10,420 7

Overall

Rank

Note: A high value is considered positive for Net external assets; A low value is considered positive for private credit, government debt, loan growth and life premia.


Our preference is for banks within these economies with relatively low leverage (as

proxied by an asset-to-equity ratio). We would highlight the following names which are all

either Outperform-rated or Neutral-rated by Credit Suisse analysts: Bank Negara,

Sberbank, Bank Central Asia, Bank Mandiri, Metropolitan Bank & Trust and Bank Rakyat.

Using valuation criteria, it is Sberbank and Negara who look cheap on P/E and P/TB.

Figure 81: Underleveraged banks in underleveraged countries

Company Country Market cap(USD) TA/TE Loans / deposits 12m fwd P/E Price / PPP P / tang bookPrice to

book

Share price local

currency (19 Nov)Recommendations

Bank Negara Indonesia Indonesia 7,101 8.5 78% 9.3 7.6 1.7 1.8 3,625.0 Outperform

Sberbank Russian Federation 62,680 8.3 107% 5.8 4.1 1.3 1.6 87.4 Outperform

G.F. Inbursa Mexico 18,072 3.8 125% 27.5 13.7 2.9 3.3 34.0 Neutral

Bank Central Asia Indonesia 20,932 8.6 69% 15.4 13.4 4.1 4.8 8,850.0 Outperform

Bank of Philippine Islands Philippines 7,277 9.8 71% 17.3 14.0 3.2 3.4 88.5 Neutral

Bank Mandiri (Persero) Indonesia 20,170 8.7 82% 12.0 9.4 2.6 3.2 8,500.0 Outperform

Metropolitan Bank & Trust Philippines 5,016 9.1 75% 13.6 10.0 1.9 2.0 95.0 Outperform

Bank Rakyat Indonesia Indonesia 18,025 8.4 81% 9.4 7.6 2.7 3.5 7,200.0 Outperform

Security Bank Corporation Philippines 2,014 6.2 75% 11.9 14.3 2.6 2.7 161.0 Neutral Source: MSCI, IBES, Thomson Reuters, Factset, Credit Suisse HOLT, Credit Suisse estimates

23 November 2012


7) Labour-intensive oilfield services

There are three main drivers of the call on OFS as growth:

1) Oil price stays above levels to leave high cost projects economic: We

believe that the oil price is unlikely to fall below $90 pb- the level requires to make

high cost marginal conventional projects economic and these high cost marginal

projects are in the opinion of the oil team needed to meet demand at c90mbd.

Figure 82: Oil production cost curve

0

20

40

60

80

100

120

75 80 85 90 95 100

Global Total hydrocarbon liquids produced-millions of barrels per day

16%

RO

CE

Bre

nt

pri

ce $

per

bo

e

Exceptional /

NOC

Traditional

Unconventional

Frontier

Brazil Presalt

Angola Deep Water

GOM Paleogene

Less efficient oil sands

More efficient oil sands

Less efficient GTL

Biofuels

GOM Miocene

Russia greenfield

Uneconomic

More efficient GTL


Furthermore, we would point out:

■ The 5 year forward price has been a good predictor long term of spot prices and is

currently $91/bbl.

■ The budget break-even for Saudi Arabia and Russia is rising. Our energy-commodities

research head, Jan Stuart, expects the budget break even of Saudi to rise to $115-

130/bbl by 2015, depending on production. In Russia, the government budget

breakeven point is set to rise to $125/bbl next year. Essentially this means that even if

prices were to fall below $80-$90pb, there would be a very significant response to cut

back on production to support the price. Furthermore, most of global spare capacity is

controlled by Saudi Arabia (c2mbd), making its production policy one of the single

most important factors influencing the oil price.

■ On the supply side, prices remain supported by restricted access to resources (Saudi

Arabia, Venezuela, Russia,), political instability (Iraq, Nigeria, Libya, Iran, Sudan,

Yemen) and more restrictive or protective sovereign oil policy (Brazil) and production

is falling in mature oil fields (with 3% of global oil supply capacity being lost every year

due to natural decline).

■ Although Chinese oil demand has grown by an average of 2.7% over the past 30

years (compared with 0.4% in the US), oil consumption per capita in China is still only

a tenth of the US level while steel consumption per capita is 1.5x the US level.

23 November 2012


2) Oil companies set to increase capex significantly further.

Given the current level of the oil price, we would expect capex to rise from its current level,

as illustrated below.

Figure 83: Oil majors’ profitability continues to be high Figure 84: Capex to sales of global IOCs

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

3) On our calculations, the oilfield service stocks have a beta of around 1.6x to

the market (and thus sell off when the market sells off, as investors anticipate

that weaker economic growth will lead to a fall in the oil price) – but ironically a

beta of only 0.7x versus the oil price. This means, in periods of equity market

weakness, the structural growth story of the oilfield service stocks is being

‘undervalued’ by the market.

Figure 85: Global OFS beta with oil price is about 0.7x, while the beta with markets is

about 1.6x

-0.5

0.0

0.5

1.0

1.5

2.0

1999 2001 2003 2005 2007 2009 2012

Global OFS, 12m rolling beta w ith crude oilWith w orld market


European OFS companies trade on a P/E relative to the market close to their historical

average levels (they are trading at a 7% premium to the market, compared with an

average premium of 13%), while US OFS companies are almost one standard deviation

cheap.

23 November 2012


Figure 86: 12m fwd P/E relative of European OFS Figure 87: 12m fwd P/E relative of US OFS

40%

60%

80%

100%

120%

140%

160%

180%

200%

1990 1993 1997 2001 2004 2008 2012

European OFS 12m fw d P/E rel Europe market: 107%

Av erage (+/- 1SD)

35%

60%

85%

110%

135%

160%

185%

210%

1990 1993 1997 2001 2004 2008 2012

US OFS 12m fw d P/E rel

US marketAv erage (+/- 1SD)


Stock picks

We show our analysts’ top picks among the global oilfield services stocks below. Our

analysts especially like firms in the labour intensive part of the cycle, which are Amec,

Petrofac and PGS.

Figure 88: Global Outperform rated OFS picks


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


Halliburton 10.5 99% -27% 2.2 -31% -2.2 1.1 38.6 -6.1 0.2 1.9 31.7 Outperform

Amec 11.8 111% 19% 2.6 -17% 4.1 3.1 -3.5 -2.8 5.5 2.3 1,024.0 Outperform

Petrofac 12.3 116% 11% 7.1 27% -0.2 2.5 56.5 -0.7 -1.7 2.3 1,574.0 Outperform


Aker Solutions 10.8 102% 29% 2.7 -10% -4.3 3.0 0.0 4.1 5.8 1.9 106.1 Outperform

Petroleum Geo

Services11.6 110% -72% 2.1 -55% 2.8 1.4 -21.2 26.8 3.4 1.9 97.5 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(20 Nov)



23 November 2012


8) Energy efficiency

There are two trends which, in our view, are likely to make this an area of structural

growth.

■ We think the price of power/energy is set to remain high, benefiting products

that enhance energy efficiency;

We think that the oil price, as discussed in the section on oilfield services, is unlikely to fall

significantly below $90 per barrel.

The European Union has a stated goal of increasing the share of renewable energy in

gross final energy consumption, from its current share of 12.5% to 20% by 2020. As the

International Energy Agency notes, “economic barriers” to greater use of renewable

energy remain, barriers which would only be overcome by a higher power price.

Electricity production is likely to be abnormally high cost because the low-cost areas

(particularly coal and nuclear) are being increasingly shut down by governments for a

combination of environmental and safety reasons and replaced by much higher-cost

renewables. This in turn pushes up the price of electricity.

The BDI (the German industry federation) estimates that the price of electricity is likely to

rise c20% by 2020 as a result. Our European utility team highlight the cost of renewable

subsidies—as defined by the excess of renewable remuneration above the baseload

power price—has risen to c€32bn p.a. across the five largest EU power markets: and that

the PDV of charges that the consumer will incur is c€422bn (c74%) through higher bills.

This equates to c5% of GDP!

Figure 89: The European Union has a target to increase the share of renewable energy in

final energy consumption from 12.5% currently to 20% by 2020

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Electricity generated from renewable sources (%)

Share of renewable energy in gross final energy consumption (%)

Source: Eurostat, Credit Suisse research

■ Regulation is likely to force even more improvements in energy efficiency

■ In the long run, Carbon emission prices must rise.

We would note that the carbon price has fallen by around 60% over the past four years as

the slowdown in economic activity has reduced industrial emissions more than widely

expected, contributing to a further oversupply of carbon allowances. However, to boost

energy efficiency production processes, the European Commission seems determined to

support the price of carbon.

23 November 2012


The EC has already announced that the sale of 900 million additional carbon allowances

will be delayed—this was previously to take place in 2013–15, and in a recent report (The

state of the European carbon market in 2012, released on 14 November 2012), the EC put

forward six proposals to address the supply/demand imbalance including the possible

cancellation of a large number of allowances, or the withdrawal of a proportion of permits

when the price falls below a certain, albeit unspecified, level.

As our European Utilities team notes the outlook for the carbon price is consequently

uncertain in the near term, but it seems clear that the European regulators of the carbon

market are ultimately determined to push it higher in order to drive energy efficiency, even

if their policy approach is still to be finalised. Additionally, we would note that even in the

US the idea of taxing carbon as a source of raising revenue is gaining traction.

Growth areas to focus on:

Our Capital Goods analysts expect that sales in the energy-efficiency space have a beta

of 2x GDP over the next three years. They highlight the following growth areas:

■ Smart building technology where the localised controls and monitoring allow

building managers to adjust the heating and lighting requirements to the needs of the

local environment. Solution packages offered by companies such as Schneider are

now able to achieve energy savings of 20–30% with payback periods of 1–3 years.

Company plays: In Europe, Schneider’s buildings division is 7% of sales which is

directly associated with building efficiency. However, most products sold into buildings

(via divisions other than the Buildings division) are energy efficiency related, and of

group sales, 9% is to residential buildings and 30% to non-residential. In the US, our

analysts would highlight Honeywell and JCI, and in Japan Daikin.

■ In data centres, electricity accounts for c10% of operating costs. Hence, there is great

interest in technologies which reduce energy consumption. Innovations include 'in

rack' cooling for servers which reduce the energy used to cool the whole data centre

environment and the use of direct current (DC) electricity to reduce energy losses

related to voltage transformation in an AC system.

Company plays: Schneider’s IT division is 13% of group sales and the key end market

for this division is data centres. In the US, our analysts would highlight Emerson and

Eaton.

■ Solid state lighting where the replacement of incandescent lighting technologies with

LED solutions offers potential energy savings of over 80%.

Company plays: In Europe, LED is 20% of Philips’ lighting sales or 7% of group sales.

In the US, our analysts would highlight CREE.

Based on these growth areas, we highlight our analysts’ preferred plays on energy

efficiency below.

http://ec.europa.eu/clima/policies/ets/reform/docs/com_2012_652_en.pdf

http://ec.europa.eu/clima/policies/ets/reform/docs/com_2012_652_en.pdf

23 November 2012


Figure 90: US and European plays on energy efficiency within the industrials universe

Name

% revenue from

energy

efficiency

technology

Absrel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Schneider Electric 52% 12.1 104% 1% 1.7 4% 5.8 3.5 43.5 -0.8 -0.3 2.8 51.6 Neutral

Eaton n/a 11.2 97% 21% 2.2 8% 6.1 3.1 32.9 -4.8 -5.8 2.0 50.7 Neutral

Emerson Electric n/a 13.6 118% 2% 3.5 2% 7.1 3.2 16.3 -1.5 -2.0 2.3 48.6 Outperform

Honeywell Intl. n/a 12.7 110% 10% 4.5 33% 6.2 2.4 10.4 -0.4 -1.4 2.0 60.6 Neutral

Philips

Eltn.Koninklijke

7% 13.0 113% 19% 1.6 2% 7.5 3.7 5.6 -1.1 3.6 2.6 19.9 Neutral

Johnson Controls n/a 9.4 117% -5% 1.6 -12% 9.4 2.6 1.9 -11.8 -4.3 2.5 26.8 Outperform

Daikin Industries n/a 11.8 102% -44% 1.3 -34% 5.4 1.7 -1.5 -7.9 -1.3 2.5 2,575.0 Neutral

Cree n/a 22.4 160% -21% 1.4 -51% 3.1 0.0 -8.4 -9.3 -5.3 2.3 30.9 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local

currency (21

Nov)



23 November 2012


9) Reducing car emissions

Closely related to the theme of energy efficiency within industrial processes is the theme

of greater energy efficiency within the auto industry. We think this will become much more

important as urbanisation rates increase and cars per capita rise in emerging markets. In

China, for example, cars per capita are only around one fifth of US levels, while in India

cars per capita are around 2% of US levels.

The impact of emissions legislation on the auto industry

Our Autos team highlights that the European Commission is capping emission at 130g of

CO2/km by 2015 and 95g/km by 2020. These targets represent reductions of 18% and

40%, respectively, compared with the 2007 fleet average of 158.7g/km.

We also believe the average age of the auto fleet cannot get much higher in the US (it is

already at a 17-year high of 11 years); replacement demand alone would underpin US car

sales at 12.5m.

Our Autos team have previously highlighted that within the autos universe, products

relating to fuel efficiency account for 100% of BorgWarner revenues, 70% of those of

ElringKlinger and 30% of those of Continental.

Our European Chemicals team highlights that increasing emissions legislation on

petrochemical car engines, primarily within Europe and China, should drive demand for

next-generation automotive technology. Our analysts highlight both Umicore and Johnson

Matthey as being potential beneficiaries of this theme, with Umicore focusing on the

production of electric vehicles and Johnson Matthey more focused on fuel cells.

Umicore: About 35% of revenues come from the manufacture of catalysts to reduce

emissions from light-duty vehicles. A further 20% of revenues come from the Energy

materials division which produces electric battery materials for cars and other energy-

related materials. In addition, Umicore has built the first full-scale EV battery recycling

plant.

Johnson Matthey: 70% of JMAT’s revenues come from catalyst technology, of which

around 80% is from auto catalysts (70% car and 30% truck markets) and 20% from

stationary catalysts used in industrial processes. Johnson Matthey is also investing in fuel

cell catalyst technology for zero-emission vehicles (a venture which our analysts point out

is currently loss making).

Figure 91: Plays on reduced auto industry emission norms

Name

% revenue from

energy

efficiency

technology

Absrel to

Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Continental 30% 7.4 92% -8% 2.2 37% 5.9 2.4 97.9 8.5 -0.1 2.2 80.0 Outperform

Borgwarner 100% 11.9 149% 27% 3.0 88% 5.8 0.0 26.8 -7.1 -6.9 2.2 63.7 Neutral

Johnson Matthey 70% 13.7 107% 28% 3.2 40% na 2.5 8.0 -5.4 -4.2 2.6 2,190.0 Outperform

Umicore 55% 14.9 131% 47% 2.7 75% 3.6 2.6 -14.4 -4.0 -2.3 2.7 39.4 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local

currency (21

Nov)



23 November 2012


10) Specific plays on the internet – in

particular, e-financial services

The idea of the internet emerging as a growth theme may be nearly 15 years old, but we

believe that there remain growth opportunities.

Internet retail sales have seen a CAGR of 18% in the US over the past decade and 23% in

the UK since the ONS began to track the data five years ago.

Despite this strong growth, US internet sales still only accounted for 5.1% of total retail

sales in the second quarter of this year (the latest for which we have data). In the UK,

internet sales accounted for 8.8% of all retail sales in September. Were US internet sales

to rise to account for the same proportion of total retail sales as that in the UK, it would

imply a further 72% rise from their current level.

Figure 92: Annual internet sales growth has stabilised at

around 10–15% in the UK and US…

Figure 93: …leading internet retail sales to account for a

steadily growing share of total retail sales

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US internet retail sales % chg Y/Y

UK internet retail sales % chg Y/Y

0

1

2

3

4

5

6

7

8

9

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US internet retail sales % total

UK internet retail sales % total


In certain categories in the UK, most notably music & video and books and electricals, the

internet has very high penetration rates, accounting for 70%, 40% and 33% of total sales

in each of these categories, respectively. In the remaining categories of goods, however,

penetration rates are at most 10% of total sales, suggesting scope for rates to rise across

the board.

23 November 2012


Figure 94: Music, books and electricals stand out in terms of internet penetration; the

other categories lag notably behind

% of sales online 2006 2007 2008 2009 2010 2011

Music & Video 18.2 25.8 36.0 47.7 59.9 69.9

Books 18.1 19.6 23.2 28.3 35.1 39.3

Electricals 11.8 15.3 19.4 23.8 27.9 32.7

Clothing & footw ear 3.2 4.2 5.7 7.1 8.7 10.6

Homew ares 5.9 7.7 8.3 8.7 9.0 9.7

DIY & Gardening 4.0 4.9 5.2 5.2 5.5 5.4

Furniture & floorcov erings 2.7 3.8 3.9 4.1 4.2 5.0

Food & grocery 1.9 2.5 3.0 3.4 3.9 4.4

Health & beauty 1.8 2.2 2.7 3.2 3.7 4.3

Other markets 3.7 4.8 5.8 8.0 9.8 11.6

Total retail 3.8 4.9 6.0 7.0 8.1 9.3 Source: Verdict Research

There are three particular general plays we have on the internet:

Google, the leader in online advertising. Our US Consumer Internet research team, led by

Stephen Ju, believes that the core global search market can sustain 12–13% compound

annual volume growth over the next five years. Our analysts also highlight the

comprehensive mobile presence being built by Google, placing it at the centre of the

mobile internet ecosystem. They believe that Google is poised to materially grow its share

in online display advertising, which should add an estimated 100bps to annual revenue

growth, in their view. As a result of these factors, they forecast revenue growth in the mid-

to-high teens on a compound annual rate over the next five years.

Amazon: Our US Consumer Internet analysts also have an Outperform rating on Amazon.

They see scope for margin expansion as digital media and web services account for a

large proportion of the company’s sales. They also highlight the prospect of further

fulfilment productivity gains, with new fulfilment centres having opened over the past two

years enabling the company to generate cost savings by having additional facilities closer

to end customers. As a result, they consider Amazon a long-term core holding, given its

growth prospects in e-commerce and its long-term strategic orientation.

This theme, and the greater use of parcels it entails, reinforces the case for the logistic

plays, discussed in more detail in our section on global trade. We continue to see UPS as

a preferred play on this theme owing to their legacy businesses.

Moneysupermarket.com: An additional area we would highlight is financial

disintermediation. We believe that regulation will continue to drive more price visibility in

the financial services industry and this will not only expose the high fees that are hidden

when products are bought via traditional aggregators (such as insurance companies), but

should also increase the comfort level with buying a product via the internet.

The data below show the significant potential for growth which remains within certain

categories of online financial products in the UK. In the case of car insurance, online

providers already capture 80% of the churn in the motor insurance market, a significantly

higher proportion than in any other category. In other relatively high-churn categories,

such as home insurance and loans, less than 50% of new or switched policies are

captured online, implying significant growth potential. Growth in the online share of new or

switched home insurance policies and loan sales has been 11% and 18%, respectively, on

a CAGR basis between 2009 and 2011.

23 November 2012


Figure 95: UK financial product sales via the internet

Channel Market New/Switchers Policy churn Online new/switchers % new/switchers Online new/switchers

policies policies/yr rate (%) policies/yr captured online CAGR % 09-11

(millions) (millions) (million)

Motor insurance 24.0 10.3 43% 8.2 80% 9.0%

Home insurance 18.0 4.3 24% 2.0 47% 10.7%

Trav el insurance 20.0 11.4 57% - - -

Sav ings 63.0 9.3 15% 2.5 27% 16.9%

Credit Cards 33.0 4.5 14% 2.2 49% 8.4%

Loans 5.0 1.0 20% 0.3 30% 18.4%

Energy 31.0 5.7 18% 1.3 23% 2.9% Source: Moneysupermarket.com, Credit Suisse research

We would focus on moneysupermarket.com. Our European Media team believes that

13.4x 2013E P/E, just an 8% premium to the wider European media sector, is too cheap

for a company likely to continue to grow significantly quicker than the wider European

media sector owing to its exposure to structurally intact internet-based revenues.

Figure 96: Internet retailing and services plays


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Amazon.Com 142.3 850% 163% 13.6 -58% 1.5 0.0 -18.1 -97.1 -1.9 2.0 233.8 Outperform

Moneysupermarket

Com Gp.14.3 105% 34% 4.4 98% 5.4 3.7 -5.5 3.4 0.5 2.3 155.2 Outperform


Fedex 13.0 97% 7% 2.0 1% 1.5 0.6 -35.8 -14.5 -1.4 1.8 87.4 Neutral


Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(20 Nov)



23 November 2012


11) Ageing in emerging markets

The segment of the emerging market population aged over 65 is forecast by the UN to

grow by 4.5% a year until 2020, compared with a 2.3% growth rate in developed markets.

We would highlight healthcare as a key beneficiary, given that the proportion of household

expenditure spent on healthcare for the over 65s is 79% higher than for the 55–64 age

group.

Figure 97: Developing markets 65+ age group is set to

grow at twice the rate of developed markets

Figure 98: Spending on healthcare rises sharply once

people start to age

0

2

4

6

8

10

12

14

16

18

20

2010 2015 2020

More developed regions Less developed regions

% of population aged 65 or over

4.5% CAGR

2.3% CAGR

0

2

4

6

8

10

12

14

16

45–54 55–64 65 and over 65–74 75 and over

Percentage of US Total Household Expenditures Spent on Healthcare by Age - 2008

Source: UN, Federal Interagency Forum on Ageing Related Statistics,

Credit Suisse Demographics Research

Source: UN, Federal Interagency Forum on Ageing Related Statistics,

Credit Suisse Demographics Research

Even as the population ages, healthcare spending as a percentage of GDP tends to be

low within emerging markets, even adjusted for the lower level of per capita income.

Figure 99: Healthcare spending is low as a % of GDP in emerging markets given GDP per

capita

Australia (67,983, 9.1)

AustriaBelgium

Canada

Chile Czech Republic

Denmark

Estonia

Finland

FranceGermany

Greece

Hungary Iceland

Ireland

Israel

Italy Japan

KoreaMexico

Netherlands

New Zealand

Norway (99,316, 9.4)

Poland

Portugal

Slovak Republic

Slovenia

Spain Sweden

Switzerland (77,840, 11.4)

Turkey

UK

US

Middle East& North Africa4

6

8

10

12

14

16

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000

GDP PC, USD

Hea

lth

care

exp

end

itu

re, %

of

2011

Source: OECD, IMF, Credit Suisse research

23 November 2012


Big cap pharma exposure

Of the big cap European and US pharma companies, Sanofi and Novartis have the

highest proportion of sales from emerging markets. IMS Health estimates that emerging

markets will double their spending on drugs, adding $150bn of sales by 2015, with 20% of

this increase coming from branded drugs. Figure 101 shows a reasonable correlation

between Credit Suisse’s estimate of 2012–15 average annual EPS growth and the 2012e

P/E of large cap pharma companies.

Figure 100: Sanofi and Novartis have the highest

proportion of sales from emerging markets

Figure 101: P/E (x) vs growth scatter of global pharma

28%

24%23% 23%

22%

20% 20%19%

17%

12%

5%

10%

15%

20%

25%

30%

San

ofi

Nov

artis

GS

K

Mer

ck

Pfiz

er

Abb

ott

Roc

he

AZ

N

J&J

Lilly

% of sales from emerging mkts

SASY.PAPFE

BAYGn.DE

NOVOb.CO

MRK

LLY

BMY

NOVN.VX

ROG.VX ABT

GSK.L

JNJ

AZN.L

5

7

9

11

13

15

17

19

21

23

25

-5% 0% 5% 10% 15% 20%

PE

201

2e

EPS growth 2012-15e

Source: IMS Health 2010 data Source: Thomson Reuters, Credit Suisse

For big cap pharma, we highlight that margins within emerging markets tend to be higher

than might initially be assumed by investors. Typically, pricing is lower (with sales

concentrated in generic drugs), but so are the R&D and other associated costs (because it

tends to be the more mature drugs that are sold in emerging markets). GSK reported that

actual core operating margins in emerging markets and Asia Pacific are around 32% (as

reported in Q2 12), admittedly lower than the 50% margin for its European business, but

not as low as some investors may presume.

We believe the legacy business of big cap drugs is ex-growth. Branded drug prices in the

US are nearly double those in Europe. This is unsustainable when drugs account for 10%

of US healthcare spending and US healthcare spending is 16% of GDP, and Medicare is

due to go into deficit in 2020. In addition, big cap drug companies have the problem of

patent expiries only just being offset by new products, as R&D efficiency has continued to

fall. Above all, the sector is still highly reliant on government spending, with 45% of

revenue in the US from governments and close to 80% in Europe.

23 November 2012


Figure 102: Branded drug prices in the US are double

those of the Europe

Figure 103: R&D efficiency has been on a downtrend for a

long time

0

0.2

0.4

0.6

0.8

1

1.2U

S

Ger

man

y

Sw

itz

Can

ada

Sw

eden

Fra

nce

Italy

UK

Bra

nd d

rug

pric

e in

dexe

d to

US

pric

es

2005 2010

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1985 1989 1993 1997 2001 2005 2009

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

R&D as % of sales ( no lag) EU majorUS major

Sal

es/c

apita

lised

R&

D (

lines

) R&

D as %

of sales (bars)

HOLT Pharma R&D returns. Sales/Capitalised R&D w ith 4 y r lag. Index of

returns falls from >U$2 per R&D dollar inv ested to U$1.3

Source: The Patented Medicine Prices Review Board, Credit Suisse

research

Source: Credit Suisse Pharma research team

Diabetes

We believe diabetes will be a key area of focus in the emerging markets. It is a disease

area which is widely expected to grow significantly with the increasing prevalence of

obesity in emerging markets; according to Sanofi, obesity has tripled in China since 2002.

Our analysts believe that diabetes drug sales could grow by 7% a year (2011–2016E).

Sanofi had 17% of pharmaceutical sales from diabetes drugs in 2011, Novo Nordisk has

70% of sales and Eli Lily has 20% of sales.

Generics

We also continue to favour the generic story, with IMS Health forecasting 4–5% p.a.

growth for generic drug sales through to 2015. The drivers are: i) patent expiries; ii)

emerging market growth, with 80% of the incremental sales in emerging markets by 2015

expected to come from generic drugs (c$120bn); iii) increased penetration in Europe and

Japan (given that the penetration rate of generics in many European countries is below

30%, compared with 70% in the US).

23 November 2012


Figure 104: Most Western European countries have very

low generic penetration rates

Figure 105: Healthcare spend as a % of GDP

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pol

and

US

Ger

man

y

UK

Tur

key

Net

herla

nds

Sw

eden

Hun

gary

Aus

tral

ia

Fra

nce

Japa

n

Spa

in

Bra

zil

Bel

gium Ita

ly

Por

tuga

l

Irel

and

New

Zea

land

Generic utilisation by volume

-1

1

3

5

7

9

11

13

15

17

ME

NA

BR

IC

Me

xico

Ko

rea

Jap

an UK

Italy

Ge

rman

y

Sw

itze

rlan

d

Fra

nce US

Healthcare spending, % of GDP

Source: Company data, Credit Suisse US Specialty Pharma research

team

Source: World Bank

Our South African Healthcare analyst, Mark Wadley, highlights Hikma as a growth stock

for the following reasons:

Geographic footprint that dominates the MENA region – a very low penetration rate as

above in terms of both drugs and healthcare as a percentage of GDP. Not only is

consumption of pharmaceutical products (prescription and OTC) increasing, but also the

type of drug spend is changing to more chronic and lifestyle-related illnesses, which

reflects the ageing of the population. For Hikma, for instance, we have seen the group

moving from having had a drug portfolio mostly made up of anti-infective drugs to one

which is now more balanced (and which includes chronic medications). MENA makes up

c60% of revenue and c65% EBIT for the group.

Acquisitions –the group has also being growing by acquiring businesses within the

MENA region. While Hikma now has a footprint across the whole of the MENA region, it is

still sub-scale (has small market share positions) in some of the large MENA markets like

Egypt and Saudi Arabia. We think the company may still look to acquire / consolidate

within some of these countries, which should continue to drive further growth.

In addition to those parts of health care benefiting from exposure to emerging markets, we

would highlight the following further growth themes in the sector:

Healthcare equipment

Innovation, favourable demographics and emerging markets are important growth drivers

for healthcare equipment and service companies. In certain market segments, primarily

with reimbursed products, price competition has intensified recently and is likely to stay

intense in light of healthcare reform work and likely more government austerity measures.

Yet, price pressure is lower in market segments where products are mainly privately

funded.

In this context, we highlight the hearing device sector, which has two key advantages. First,

c10% of the population within the developed world have a hearing problem, while only

roughly a fifth of those patients currently use a hearing device, thereby leaving substantial

room for patient growth. Second, c90% of sales are funded by private individuals and thus

23 November 2012


the direct public funding exposure is limited. Our analysts would highlight Sonova, in

particular.

We also highlight Fresenius Medical Care. We see attractive growth prospects as the

company benefits from the increasing prevalence of end-stage renal disease in the US,

but also globally, and the corresponding patient growth in dialysis care. Mid-term, we also

see substantial margin expansion opportunities by reducing drug expenses.

Therapeutic medical equipment

Therapeutic medical equipment has the highest 10-year growth rate of any of the

healthcare-related components of US consumer spending, with a 10yr CAGR of 6.5%

(currently 7.8%). Credit Suisse’s US healthcare equipment team highlights Volcano and

Heartware (number 1 and number 2 players in their respective markets) as their preferred

Outperform-rated growth stocks, with projected 10%+ revenue growth in the next five

years.

Outsourcing healthcare

Our US Managed Health Care team believes that Managed Care Organisations (MCOs)

will take advantage of increasing public-private partnerships in Medicare, Medicaid and

Dual Eligibles. MCOs stand between the buyers and the providers of healthcare. Of the

$2.8trn in annual health spending in the US, 71% is addressable by MCOs and of that,

penetration is c60%. With major healthcare reform provisions taking place beginning in

2014, coverage will be expanded to those who are currently uninsured, which is estimated

by the team to add 14m new customers (30m by 2022) to the Medicaid and Health

Insurance Exchange markets.

Their top pick in Managed Care is Cigna (CI) and they also rate UnitedHealth (UNH)

Outperform.

Stock screen

We show a screen with selected health care growth stocks below.

Figure 106: Healthcare growth plays


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Sanofi 11.1 90% -26% 1.6 -64% 8.5 4.0 19.5 3.0 0.8 2.1 68.1 Neutral

Novo Nordisk 'B' 20.9 169% 34% 13.7 207% 3.5 1.8 -19.5 5.1 3.6 2.4 907.0 Neutral

Eli Lilly 13.1 105% -14% 4.2 -44% 7.8 4.0 54.8 2.2 -0.9 2.7 47.4 Outperform

Hikma Pharmaceuticals 16.7 135% 25% 2.9 14% na 1.2 -14.4 -0.4 0.2 2.2 738.0 Outperform


Fresenius Med.Care 16.3 126% 2% 2.6 19% 4.5 1.4 -11.3 -1.9 -1.1 2.4 51.6 Outperform


Heartware International -32.1 nm na 9.4 54% na 0.0 -63.5 nm 3.1 2.1 81.6 Outperform

St.Jude Medical 10.7 83% -30% 2.8 -26% 8.5 2.3 93.3 0.1 -1.3 2.4 31.4 Neutral

Cigna 8.6 67% 5% 2.0 3% 13.2 0.1 63.2 3.9 -3.5 1.9 52.0 Outperform

Unitedhealth Gp. 10.2 79% -15% 2.1 -26% 11.2 1.4 61.7 5.3 -0.2 1.8 53.5 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



Direct Asian plays on an ageing emerging market population

Below, we show those companies that according to the Credit Suisse Asian equity

research department are best placed to take advantage of an ageing emerging market

population.

23 November 2012


Figure 107: Stocks that could benefit from an ageing emerging market population


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best

3m E

PS

3m S

ales

Consensus

(buy less holds

& sells)

Credit Suisse

rating

China Life Insurance

Co Ltd17.7 182% 10% 2.6 -13% na 1.12 -49.9 -29.4 -4.0 2.7 22.4 Neutral

Ping An Insurance

(Group) Company Of 13.8 142% -20% 2.8 -17% na 1.00 -43.6 -2.4 -4.1 2.2 58.2 Outperform

Sinopharm Group Co 21.4 166% -5% 3.3 -5% na 0.98 -24.2 0.0 3.3 2.0 24.5 Outperform

Mindray Medical Intl 17.1 118% -5% 3.4 -29% na 1.21 8.2 2.6 1.2 2.1 33.4 Outperform

Aia Group Ltd 17.6 182% 51% 2.3 35% na 1.20 -32.9 0.6 -8.4 2.0 30.3 Outperform

Prudential Plc 11.4 118% 7% 2.4 -18% 5.89 3.07 -33.8 0.6 1.4 2.2 889.0 Outperform

Share price,

local currency

(20 Nov)



23 November 2012


12) Software

Software has been our largest sector overweight since July 2009 and we believe it is a

growth sector for the following reasons:

■ Software has enjoyed particularly high sales and EPS growth rates over the last

5 years.

Figure 108: Five-year CAGR of EPS growth versus sales growth

Utilities

Transpt TobaccoTech H/W

T/Cm Sv s

Softw are

Semis

Retail

Pharm

Pap/For

Met & Min

Media

MarketHH Prd

H/C Eq/Sv sFd/Drug Rtl

Fd PrdEnergy

Hot & Lei

Cons DurCon Mat (-45%, -7.3%)Comm/Prof

Chem

Cap Gds

Bev erages

Autos-18%

-14%

-10%

-6%

-2%

2%

6%

10%

14%

-15% -10% -5% 0% 5% 10% 15% 20%

US sectors CAGR, last 5 years

EPS

Sal

es


Sales growth on top-down data has been close to 16% over the past 17 years.

Figure 109: US software yoy sales growth versus the

market since 1995

Figure 110: US software sector CAGR sales (1995-2012E):

15.5%, among the highest within tech

-10

-5

0

5

10

15

20

25

30

1995 1997 1998 2000 2001 2003 2004 2005 2007 2008 2010 2011 2012

Softw are Market

US sector sales grow th, YoY, %

45.8

15.5

11.09.6 8.9

2.5

4.5

0

10

20

30

40

50

Int

S/W/Sv s

Softw are Comp &

Per

Semis IT Comms

Eq

Off Eltro

US sectors, sales CAGR, 1995-2012, %

Market = 8.1


■ The tech share of GDP is still low, with tech accounting for 34% of total business

investment against a trend line that suggests it ought to be closer to 41%.

23 November 2012


Figure 111: The net tech share of GDP is still low Figure 112: Tech spending is below trend

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

1929 1943 1957 1970 1984 1998 2011

US Net tech inv estment, % of GDP

5%

10%

15%

20%

25%

30%

35%

40%

45%

1961 1969 1978 1986 1995 2003 2012

US Tech spending, % total non-res.inv estment

Trend


■ Data (total global IP traffic) is likely to see growth of 29% per year over the next

five years, according to Cisco VNI (Visual Networking Index).

Our US software analyst, Philip Winslow, particularly stresses the innovation of Big Data

(the number of devices is likely to triple over the next four years, according to our tech

team) and Fast Data (the ability to analyse unstructured data, owing to the move away

from HDD to NAND and Flash storage, where response times fall exponentially, allowing a

significant increase in the number of applications).

Figure 113: Mobile traffic to grow at 52% CAGR over 2011-

2017E

Figure 114: Devices shipments for tablets and

smartphones (2011-2015E)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2011 2012 2013 2014 2015 2016

Data - Mobile PCs / Tablets Data - Mobile Phones Voice

Pet

aByt

es p

er m

onth

473

674

8501,003

1,12566

110

170

247

328

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 2014 2015

Tablets Smartphones

Dev

ice

ship

men

ts (

mn)

Source: Company data, Ericsson Traffic and Market Report, Credit

Suisse Tech Team research

Source: Company data, Ericsson Traffic and Market Report, Credit

Suisse Tech Team research

■ Software has high barriers to entry caused by:

(i) A high cost of switching to alternative systems;

(ii) Significant after-market sales (in SAP’s case it is around half of revenue, according to

our analysts);

23 November 2012


(iii) A high ratio of R&D to sales.

Figure 115: High barriers to entry in tech and software

especially

Figure 116: SAP's Q3 2012 revenue split shows more than

50% of sales are from maintenance

Market

Softw are

Semis

Office Elec

IT Serv ices

Internet

Sw &Sv s

Elec Equip

ComputersComm Equip

Utilities

Telecoms

Materials

IT

Industrials

Health Care

Energy

Cons Sv s

Cons Dis

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

0% 20% 40% 60% 80% 100%

Capitalized R&D as % of sales

2011

e C

FR

OI

26%

53%

2%

19%

0%

10%

20%

30%

40%

50%

60%

Software revenue Support revenue Cloudsubscriptions and

support

Professionalservices and other

Source: Credit Suisse HOLT, Credit Suisse research Source: Company data, Credit Suisse Software Research Team

■ Software companies have strong balance sheets – which adds to their

defensiveness (on top its high barriers to entry);

Figure 117: Software has the lowest leverage among global sectors

-20%

0%

20%

40%

60%

80%

100%

120%

Util

ities

Aut

os

Tel

ecom

s

Tra

nspo

rt

Cap

Goo

ds

Med

ia

Met

& M

in

Bev

erag

es

Foo

d R

tl

Com

ml S

vs

Hea

lthca

re

Ene

rgy

Fd

Pro

ds

Hot

els

& L

ei

Tob

acco

H/H

& P

er P

rod

Ret

ail

Con

s D

ur &

App

Pha

rma

Tec

h H

/W

Sem

is

S/W

& S

vs

Global sectors net debt to market cap

Non-financials


■ Software is also cyclical, with c80% of revenue coming from corporate discretionary

spend. Thus, we regard software as a sector that is defensive, growth and cyclical!

■ The valuations of the software sector as a whole continue, from a global point of

view, to look clearly cheap.

23 November 2012


Figure 118: Global software price-to-book relative is one

standard deviation below average ...

Figure 119: ... and 1.7 standard deviations cheap on 12-

month forward P/E relative

160%

180%

200%

220%

240%

260%

280%

300%

320%

340%

2001 2002 2004 2006 2008 2010 2012

Global Softw are: P/B rel to market

Av erage (+/- 1 sd)

85%

105%

125%

145%

165%

185%

205%

225%

245%

1995 1998 2000 2003 2006 2009 2012

Global Softw are: 12m fw d

P/E rel to marketAv erage x bubble


Below we show software companies that our analysts in Europe and the US highlight as

growth stocks. Of these, the following have FCF above 5% and look cheap on HOLT:

Oracle, Microsoft and Check Point.

Figure 120: European and US Software companies that our analysts highlight as growth


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating



SAP 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 58.8 Outperform



Dassault Systemes 21.6 158% 3% 4.9 -33% 4.5 0.9 -23.5 2.3 1.8 2.7 83.5 Neutral

Salesforce.Com 76.9 563% 16% 12.7 23% 2.6 0.0 -66.9 1.1 0.3 2.1 158.8 Outperform

Netsuite 208.0 1523% 171% 33.8 154% 0.9 0.0 -91.1 13.8 2.2 2.8 60.1 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



23 November 2012


A sector perspective We screen for sectors that have high delivered and forecast earnings and sales growth –

but remain attractive on our valuation scorecard. In Europe, household and personal

products, beverages, tobacco and pharma have the highest combination of sales and

earnings growth (last five years and next three years). Paper, construction and banks have

the lowest growth score.

Figure 121: Scorecard of European sectors on historic and prospective sales and

earnings growth European

sector 2007-11 2012e-14e CAGR z-score 2007-11 2012e-14e CAGR z-score

H/H Pers Prd 12.2 7.5 10.4 0.6 13.9 2.8 9.6 1.8 1.2

Beverages 13.1 11.4 12.5 0.9 5.9 6.9 6.3 1.0 0.9

Tobacco 5.7 8.1 6.6 0.1 14.2 2.7 9.8 1.8 0.9

Pharma 9.6 5.9 8.2 0.3 11.1 2.9 8.0 1.4 0.8

Semis 31.9 8.6 22.6 2.4 -2.8 1.6 -1.2 -0.8 0.8

Comm. Svs 14.8 11.2 13.4 1.1 1.8 5.6 3.2 0.2 0.7

S/W & Svs 12.5 11.2 12.0 0.9 1.0 8.5 3.7 0.4 0.6

H/C Eq/Svs 12.4 11.8 12.1 0.9 1.7 6.9 3.6 0.3 0.6

Autos 16.4 16.7 16.5 1.5 -2.4 6.8 0.9 -0.3 0.6

Met & Min 4.8 0.7 3.2 -0.4 12.8 2.8 9.0 1.6 0.6

Chemicals 9.2 7.1 8.4 0.3 3.2 5.2 3.9 0.4 0.4

Energy 2.0 5.4 3.2 -0.4 8.7 -0.1 5.3 0.7 0.2

Fd Prd 2.9 8.1 4.8 -0.2 2.1 7.1 3.9 0.4 0.1

Insurance 3.3 15.8 7.8 0.2 0.8 3.9 2.0 0.0 0.1

Cap Gds 4.2 8.8 5.9 0.0 1.6 4.0 2.5 0.1 0.0

Fd/Stpl Rtl 4.1 5.7 4.7 -0.2 1.9 4.5 2.9 0.2 0.0

Cons Dur 7.5 12.2 9.2 0.5 -4.7 8.1 -0.1 -0.5 0.0

Utilities -2.7 3.8 -0.3 -0.9 8.3 1.9 5.9 0.9 0.0

Transpt 2.2 16.2 7.2 0.2 -3.6 5.1 -0.4 -0.6 -0.2

Telecoms 2.4 4.6 3.3 -0.4 1.1 -0.5 0.5 -0.4 -0.4

Media 11.6 7.5 10.0 0.6 -8.3 3.6 -4.0 -1.5 -0.4

Retailing 8.2 11.1 9.3 0.5 -10.8 4.6 -5.3 -1.8 -0.6

Div Fin -9.0 11.7 -1.8 -1.2 1.2 1.0 1.1 -0.2 -0.7

Real Estate -6.8 4.2 -2.8 -1.3 1.1 2.6 1.7 -0.1 -0.7

Cons Svs 6.8 8.9 7.6 0.2 -10.5 4.5 -5.2 -1.7 -0.8

Tech H/w -3.9 6.0 -0.3 -0.9 0.2 -2.6 -0.8 -0.7 -0.8

Banks -13.5 13.4 -4.3 -1.5 0.9 1.4 1.1 -0.2 -0.9

Cons Mat -28.2 31.0 -10.0 -2.4 -1.4 5.3 1.1 -0.3 -1.3

Pap/For Prd -4.3 2.1 -2.0 -1.2 -10.2 0.8 -6.3 -2.0 -1.6

EPS growth Sales growth average z-

score


We then plot this growth score against the sector’s valuation score (a combination of P/E,

P/B, dividend yield and HOLT; see Appendix for the details of the scorecard). On this

basis, pharma, premium autos and software appear undervalued, while paper and

telecoms are in the low growth segment with unappealing valuations.

We show the analysis for US sectors in the Appendix. Household and personal products,

and beverages appear to have undervalued growth.

23 November 2012


Figure 122: Pharma, autos and software feature in the segment of high growth and

attractive valuation

H/H Pers Prd

Beverages

Tobacco

Pharma

Semis

Comm. Svs

S/W & Svs

H/C Eq/Svs

Autos

Met & Min

Chemicals

Energy

Fd Prd

Insurance

Cap Gds

Fd/Stpl Rtl

Cons Dur

Utilities

Transpt

Telecoms

Media

Retailing

Div Fin

Real Estate

Cons Svs

Tech H/wBanks

Cons Mat

Pap/For Prd

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

-1.6 -1.2 -0.8 -0.4 0.0 0.4 0.8 1.2

Val

uatio

n z-

scor

e

Growth z-score

High growth / attractive valuation


23 November 2012


Appendix Appendix 1: Growth as a style

Figure 123: US growth tends to outperform as real interest rates fall

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

86

91

96

101

106

111

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

MSCI US growth index, relative to the market US 10-year TIPS yield, inverted, rhs


Figure 124: Quality growth dividend yield Figure 125: Quality growth price to book

0.55

0.65

0.75

0.85

0.95

1.05

1.15

1.25

1.35

1990 1993 1997 2001 2004 2008 2012

Eur high quality dividend yield relative to the market

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

3.4

1990 1993 1997 2001 2004 2008 2012

Eur high quality price to book relative to the market


23 November 2012


Appendix 2: Sector valuations in Europe and the US

Figure 126: European valuation scorecard – cheapest sector is at the top Eco PE CFROI HOLT score

Absolute Relative z-score Absolute Relative z-score Absolute Relative z-score z-score z-score z-score

Pulp & Paper 10.5 97% 0.2 0.6 43% 1.5 6.5% 167% 1.5 0.6 3.5 2.1 1.3

Utilities 10.0 93% 0.4 1.1 76% 1.5 6.6% 169% 1.2 0.9 3.1 2.0 1.3

Telecoms 9.2 86% 0.1 1.4 92% -0.3 8.3% 212% 2.0 0.8 4.8 2.8 1.2

Food Retail 10.3 95% 1.0 1.5 98% 1.5 4.2% 109% 1.2 0.5 -1.2 -0.3 1.1

Energy 8.4 78% 1.2 1.3 89% 1.8 4.5% 116% -0.1 0.1 2.3 1.2 1.0

Insurance 8.4 77% 0.4 0.9 62% 0.7 5.0% 128% 1.1 0.9 -0.4 0.3 0.6

Pharmaceuticals 11.7 108% 0.5 3.4 232% -0.6 3.8% 99% 0.8 -0.1 1.5 0.7 0.5

Automobiles 6.7 62% 0.2 1.0 67% -0.3 3.5% 90% 0.5 1.0 1.5 1.3 0.4

Software 15.5 144% 0.7 4.0 271% 0.3 1.6% 40% 0.4 0.9 -0.6 0.1 0.4

Banks 8.9 83% 0.0 0.7 47% 1.4 4.0% 101% -0.9 0.1 1.1 0.6 0.3

Technology Hardware 22.6 209% -3.0 1.3 88% 1.9 4.2% 106% 1.3 0.3 1.2 0.8 0.2

Metals and Mining 10.2 94% -0.8 1.3 86% 0.6 3.2% 81% 0.0 0.1 1.5 0.8 0.2

Diversified Financials 9.3 86% -0.7 0.8 52% 1.8 2.4% 61% -1.3 0.9 0.3 0.6 0.1

Media 12.0 111% 0.6 2.8 187% -0.3 3.6% 92% -0.1 0.6 -0.4 0.1 0.1

Semiconductors 21.2 197% 0.0 3.3 220% -2.4 1.5% 37% 1.4 1.0 0.3 0.7 -0.1

Household Products 16.7 155% 0.1 3.2 218% 0.1 2.4% 62% 0.6 -0.7 -2.5 -1.6 -0.2

Capital Goods 12.0 111% -0.4 2.2 147% -1.6 3.5% 89% 0.7 0.9 -0.7 0.1 -0.3

Real Estate 16.7 154% -0.4 1.0 67% -1.6 5.4% 138% 0.8 0.4 -3.1 -1.4 -0.3

Healthcare Equip 17.0 157% -0.6 3.0 204% -1.0 1.3% 34% -0.6 0.6 -0.3 0.2 -0.5

Construction Materials 13.8 128% -1.8 0.9 61% 1.1 2.2% 57% -1.5 -1.7 0.8 -0.4 -0.6

Transport 13.0 120% -0.6 1.5 101% -0.3 3.2% 81% -0.3 -0.9 -1.9 -1.4 -0.6

Tobacco 13.4 124% -0.9 6.4 433% -1.6 4.1% 104% -0.6 1.4 -0.5 0.5 -0.7

Chemicals 12.7 117% -0.8 2.3 154% -1.7 2.9% 74% -0.9 1.0 -0.4 0.3 -0.8

Consumer Durables 14.7 136% -0.7 2.9 195% -1.7 1.8% 46% -1.2 0.1 -1.3 -0.6 -1.1

Food Producers 16.8 155% -1.4 3.6 241% -1.5 3.1% 79% -0.5 -0.7 -1.2 -0.9 -1.1

Hotels & Leisure 15.0 139% -1.6 2.8 191% -2.0 3.4% 88% -1.4 -0.1 0.4 0.1 -1.2

Commercial Services 15.6 144% -1.4 4.5 306% -2.1 2.3% 60% -1.1 0.0 -0.7 -0.4 -1.3

Beverages 16.3 151% -1.6 3.3 225% -2.3 2.0% 52% -1.6 -1.0 -2.1 -1.6 -1.8

Retailing 15.9 148% -1.5 3.5 238% -2.8 3.2% 81% -1.4 -0.5 -3.1 -1.8 -1.9

Total Z-

Score

A high z-score indicates the sector is cheap on all metrics

Pan Europe Sectors12m fwd P/E P/B Div yield

Source: Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates

Figure 127: US valuation scorecard – cheapest sector is at the top Eco PE CFROI HOLT Score

Absolute Relative Z-Score Absolute Relative Z-Score Absolute Relative Z-Score Z-Score Z-Score Z-Score

Technology Hardware 9.7 80% 1.3 2.8 128% 0.5 1.9% 82% 3.0 1.2 0.4 0.8 1.4

Semiconductors 12.3 102% 0.5 2.1 99% 1.0 3.1% 138% 2.0 1.0 0.7 0.9 1.1

Software 12.6 105% 1.3 4.1 192% 0.4 1.2% 53% 1.5 1.1 0.8 1.0 1.0

Pharmaceuticals 12.6 104% 0.4 3.1 144% 0.8 2.6% 114% 0.1 0.2 4.5 2.4 0.9

Food Retail 12.6 105% 0.3 2.5 118% 0.5 2.1% 92% 1.2 0.8 1.9 1.3 0.8

Metals and Mining 9.2 77% 0.4 1.4 67% 0.4 3.2% 140% 1.2 0.8 0.7 0.8 0.7

Div. Financials 9.2 76% 0.3 0.9 39% 1.7 1.6% 71% -0.8 1.4 1.0 1.2 0.6

Healthcare Equip 11.2 93% 0.5 2.4 113% -0.3 1.3% 56% 0.8 1.1 0.8 1.0 0.5

Insurance 9.2 77% 0.1 0.9 42% 1.4 1.6% 72% -0.9 1.2 1.1 1.1 0.4

Energy 10.5 87% 0.4 1.8 82% 0.7 2.2% 98% -0.7 0.0 1.6 0.8 0.3

Banks 8.9 74% 0.2 1.1 52% 0.8 2.6% 115% -0.9 1.6 -0.3 0.7 0.2

Capital Goods 12.0 99% 0.4 2.6 121% -0.4 2.5% 109% -0.2 1.1 0.8 1.0 0.2

Commercial Services 15.0 124% -1.2 2.2 100% 1.3 2.4% 106% 0.8 0.8 -1.4 -0.3 0.2

Food Producers 14.7 122% -1.3 2.2 101% 1.1 3.0% 132% -0.3 0.1 2.0 1.1 0.1

Beverages 15.8 131% 0.1 4.4 204% 1.1 2.0% 90% -0.5 -0.5 -1.0 -0.7 0.0

Media 13.3 110% 1.1 2.7 125% -1.9 1.4% 60% 1.0 0.6 -1.4 -0.4 0.0

H/H Pers Prd 16.0 133% -1.0 4.1 190% 0.4 3.1% 136% 0.7 0.1 -1.8 -0.8 -0.2

Automobiles 7.9 65% 0.1 2.1 95% -0.1 1.3% 58% -1.3 0.4 -0.1 0.1 -0.3

Transport 12.1 100% -0.1 3.2 146% -1.7 2.2% 96% 1.0 0.8 -2.8 -1.0 -0.5

Utilities 13.1 109% -1.3 1.5 68% -0.6 4.4% 194% -0.7 -0.4 1.9 0.8 -0.5

Pulp & Paper 11.2 93% 0.3 2.1 97% -2.5 3.4% 150% -0.1 0.6 -0.5 0.1 -0.5

Telecoms 16.9 141% -2.1 2.2 102% -0.8 4.7% 208% 0.6 0.7 -1.6 -0.5 -0.7

Chemicals 13.0 108% -0.8 3.3 151% -1.1 2.4% 105% -0.9 1.0 -1.2 -0.1 -0.7

Real Estate 29.6 246% 0.2 2.4 111% -1.3 3.9% 175% -0.6 0.0 -2.3 -1.1 -0.7

Hotels & Leisure 16.5 137% -1.2 4.4 201% -1.8 2.4% 106% 1.3 0.6 -3.5 -1.5 -0.8

Construction Materials 64.9 539% -0.5 2.0 92% 0.1 0.8% 34% -2.8 -0.7 -1.6 -1.2 -1.1

Tobacco 13.7 114% -1.5 49.8 2300% -3.0 4.5% 199% -0.8 1.1 -1.2 -0.1 -1.3

Consumer Durables 15.0 125% -1.2 3.5 162% -2.7 1.6% 72% -1.0 0.0 -2.0 -1.0 -1.5

Retailing 17.2 143% -2.0 4.3 200% -2.4 1.2% 52% 0.0 -0.3 -3.0 -1.6 -1.5

Total Z-

Score

Sectors are ranked with cheapest at the to the most expensive at the bottom

US sectors12m fwd P/E P/B Div yield


23 November 2012


Figure 128: Scorecard of US sectors on historical and prospective sales and earnings

growth European

sector 2007-11 2012e-14e CAGR z-score 2007-11 2012e-14e CAGR z-score

H/H Pers Prd 12.2 7.5 10.4 0.6 13.9 2.8 9.6 1.8 1.2

Beverages 13.1 11.4 12.5 0.9 5.9 6.9 6.3 1.0 0.9

Tobacco 5.7 8.1 6.6 0.1 14.2 2.7 9.8 1.8 0.9

Pharma 9.6 5.9 8.2 0.3 11.1 2.9 8.0 1.4 0.8

Semis 31.9 8.6 22.6 2.4 -2.8 1.6 -1.2 -0.8 0.8

Comm. Svs 14.8 11.2 13.4 1.1 1.8 5.6 3.2 0.2 0.7

S/W & Svs 12.5 11.2 12.0 0.9 1.0 8.5 3.7 0.4 0.6

H/C Eq/Svs 12.4 11.8 12.1 0.9 1.7 6.9 3.6 0.3 0.6

Autos 16.4 16.7 16.5 1.5 -2.4 6.8 0.9 -0.3 0.6

Met & Min 4.8 0.7 3.2 -0.4 12.8 2.8 9.0 1.6 0.6

Chemicals 9.2 7.1 8.4 0.3 3.2 5.2 3.9 0.4 0.4

Energy 2.0 5.4 3.2 -0.4 8.7 -0.1 5.3 0.7 0.2

Fd Prd 2.9 8.1 4.8 -0.2 2.1 7.1 3.9 0.4 0.1

Insurance 3.3 15.8 7.8 0.2 0.8 3.9 2.0 0.0 0.1

Cap Gds 4.2 8.8 5.9 0.0 1.6 4.0 2.5 0.1 0.0

Fd/Stpl Rtl 4.1 5.7 4.7 -0.2 1.9 4.5 2.9 0.2 0.0

Cons Dur 7.5 12.2 9.2 0.5 -4.7 8.1 -0.1 -0.5 0.0

Utilities -2.7 3.8 -0.3 -0.9 8.3 1.9 5.9 0.9 0.0

Transpt 2.2 16.2 7.2 0.2 -3.6 5.1 -0.4 -0.6 -0.2

Telecoms 2.4 4.6 3.3 -0.4 1.1 -0.5 0.5 -0.4 -0.4

Media 11.6 7.5 10.0 0.6 -8.3 3.6 -4.0 -1.5 -0.4

Retailing 8.2 11.1 9.3 0.5 -10.8 4.6 -5.3 -1.8 -0.6

Div Fin -9.0 11.7 -1.8 -1.2 1.2 1.0 1.1 -0.2 -0.7

Real Estate -6.8 4.2 -2.8 -1.3 1.1 2.6 1.7 -0.1 -0.7

Cons Svs 6.8 8.9 7.6 0.2 -10.5 4.5 -5.2 -1.7 -0.8

Tech H/w -3.9 6.0 -0.3 -0.9 0.2 -2.6 -0.8 -0.7 -0.8

Banks -13.5 13.4 -4.3 -1.5 0.9 1.4 1.1 -0.2 -0.9

Cons Mat -28.2 31.0 -10.0 -2.4 -1.4 5.3 1.1 -0.3 -1.3

Pap/For Prd -4.3 2.1 -2.0 -1.2 -10.2 0.8 -6.3 -2.0 -1.6

EPS growth Sales growth average z-

score


Figure 129: US sectors: household and personal products and beverages feature in the

segment of high growth and attractive valuation

H/H Pers Prd

Beverages

Tobacco

Pharma

Semis

Comm. Svs

S/W & Svs

H/C Eq/Svs

Autos

Met & Min

Chemicals

Energy

Fd Prd

Insurance

Cap Gds

Fd/Stpl RtlCons Dur

Utilities

Transpt

Telecoms

Media

Retailing

Div Fin

Real Estate

Cons Svs

Tech H/wBanks

Cons Mat

Pap/For Prd

-1.6

-1.2

-0.8

-0.4

0

0.4

0.8

1.2

-1.9 -1.5 -1.1 -0.7 -0.3 0.1 0.5 0.9 1.3 1.7

Val

uatio

n z-

scor

e

Growth z-score

High growth / attractive valuation


23 November 2012


Appendix 3: Outperform rated NJA growth stocks

and quality growth

Figure 130: Outperform-rated NJA growth stocks ranked by upside potential on HOLT

Name

Forecast CFROI

versus 3yr Hist.

Median

CFROI Median - Five

Year 5-yr asset growth Abs rel to Industry

rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Hyundai Mobis -3.2 19.6 20.5 6.9 86% -52% 1.9 35% 3.8 0.7 131.2 -1.7 1.3 1.7 267,500.0 Outperform

Cnooc -3.9 15.8 12.8 9.0 85% 13% 2.3 0% 4.6 2.7 101.4 -4.1 1.0 2.5 16.0 Outperform

United Tractors 0.3 11.9 18.6 12.7 109% 27% 3.0 -32% 3.1 2.9 97.5 -10.9 -7.4 2.8 19,600.0 Outperform

Hcl Technologies 5.5 16.8 12.2 12.9 94% -4% 4.3 7% 4.3 1.6 90.8 19.0 3.8 2.1 616.2 Outperform

Kweichow Moutai 'A' 10.7 30.8 26.0 13.9 86% -39% 10.3 55% na 1.7 88.7 5.9 6.4 1.3 214.1 Outperform

Hindustan Zinc -4.6 17.6 17.8 8.8 77% 42% 2.2 27% 7.9 1.9 81.5 2.8 -2.4 2.0 133.9 Outperform

China Mobile -1.3 12.0 10.6 11.2 93% -19% 2.2 -39% 6.7 3.9 78.2 -2.0 -0.9 2.7 85.2 Outperform

Luzhou Lao Jiao 'A' 10.4 42.6 8.9 10.4 64% -65% 7.7 33% na 3.5 67.4 6.0 9.4 1.3 33.1 Outperform

Samsung Engineering -1.5 22.5 24.3 9.4 81% 3% 4.0 54% na 2.3 55.0 -8.2 -0.2 2.0 145,000.0 Outperform

China Shenhua En.Co.'H' 0.4 11.7 12.6 10.9 103% 1% 2.4 -15% 3.4 3.3 51.9 -2.3 -0.1 2.0 30.8 Outperform

Astra International 1.6 14.5 12.4 14.7 183% 18% 5.3 13% 2.6 2.7 36.3 -0.6 0.3 2.1 7,800.0 Outperform

Coal India -0.3 13.0 5.4 12.3 116% 13% 5.5 7% 5.9 2.6 19.7 -0.7 -0.1 2.2 351.5 Outperform

Tata Consultancy Svs. -0.9 30.1 18.4 17.9 131% 24% 8.8 7% 3.5 1.5 19.2 0.8 1.3 2.4 1,261.5 Outperform

Shanxi Xinghuacun Fen Wine

Fac. 'A'

9.0 16.9 11.5 20.8 128% -2% 15.7 160% -2.0 0.8 9.5 10.5 5.6 1.5 35.7 Outperform

Sembcorp Industries -4.0 13.7 6.0 11.2 97% 4% 2.3 13% na 3.3 7.6 1.2 0.9 1.7 4.8 Outperform

Singapore Telecom -2.7 9.6 5.8 12.9 106% 8% 2.2 -34% 6.3 5.1 2.1 -3.1 -0.1 3.0 3.2 Outperform

Digi.Com 3.1 15.5 9.1 23.1 191% 8% 28.3 336% 5.1 4.9 0.8 -0.6 0.2 3.3 4.8 Outperform

Lg Chem -5.2 12.6 10.3 11.2 87% 91% 2.2 42% 2.1 1.3 -5.9 -9.8 -2.7 1.7 300,000.0 Outperform

Kangwon Land -6.4 17.9 8.6 13.8 82% 60% 2.5 -4% 9.7 3.3 -12.6 -4.8 -2.7 2.0 28,100.0 Outperform

Itc -0.7 19.0 6.8 26.8 196% 77% 11.4 110% 2.2 1.9 -47.2 1.3 0.7 2.0 282.0 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(19 Nov)



Figure 131: Outperform-rated NJA quality growth stocks with potential upside on HOLT, ranked by upside potential on

HOLT MSCI NJA median 5% 14% 15% 9% 6% 13% 14% 10% 10.9

Company

2007-12 2012-14 2007-12 2012-14 2007-12 2012-14 2007-12 2012-14

Shimao Property Holdings 19% 17% 29% 16% 11% 17% 29% 14% 11.8 38 7.7 69% -9% 15.2 Outperform

Astra International 24% 26% 22% 15% 24% 15% 21% 14% 12.3 36 14.3 129% 52% 7,800.0 Outperform

Tencent Holdings 52% 35% 63% 31% 51% 26% 62% 28% 23.3 34 23.0 209% -6% 246.0 Outperform

Largan Precision 11% 21% 25% 18% 11% 25% 24% 20% 11.1 28 15.8 143% 8% 694.0 Outperform

Lupin 23% 19% 28% 24% 28% 17% 35% 15% 20.1 26 19.7 178% 38% 562.1 Outperform

Ncsoft 24% 68% 17% 21% 25% 60% 19% 23% 27.5 -3 12.2 111% -27% 156,000.0 Outperform

Ayala Land 15% 21% 16% 18% 14% 20% 17% 20% 18.3 -11 29.2 264% 15% 23.3 Outperform

Hyundai Engr.& Con. 16% 23% 18% 13% 13% 23% 17% 13% 8.1 -16 10.0 90% -4% 63,000.0 Outperform

Olam International 9% 48% 26% 14% 19% 28% 29% 15% 18.8 -24 9.6 87% -44% 1.7 Outperform

Belle International Hdg. 18% 16% 24% 16% 18% 17% 24% 16% 16.7 -29 17.7 160% -9% 14.8 Outperform

Godrej Consumer Products 27% 16% 39% 26% 29% 23% 46% 20% 22.0 -31 26.8 243% 48% 677.9 Outperform

Hengan Intl.Gp. 26% 23% 28% 22% 25% 20% 28% 20% 24.7 -44 20.7 187% 9% 70.2 Outperform

Tingyi Cymn.Isle.Hldg. 18% 32% 25% 18% 18% 20% 24% 18% 23.2 -53 28.4 257% 24% 23.0 Outperform

Lg Hhld.& Hlth.Care 34% 19% 28% 9% 32% 20% 18% 12% 20.0 -63 27.2 246% 67% 641,000.0 Outperform

Rel mkt,

devn from

average

Long-term

EPS growth

12m fwd PE

Abs Rel

Share price,

local

currency

(19 Nov)

CS ratingHOLT price

to best (%)

Analyst estimates

EPS CAGR Sales CAGR

IBES estimates

EPS CAGR Sales CAGR


23 November 2012


Appendix 4: Full list of companies that our analysts

identified as growth in Europe and the US

Figure 132: European growth stocks (as selected by our analysts) – Outperform or Neutral rated


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


Unibail-Rodamco 17.1 81% 17% 1.4 10% 6.0 4.8 na 1.0 3.9 2.9 169.0 Outperform

Edenred 22.2 141% 40% -5.0 na 5.0 3.3 na -1.4 -1.7 2.5 23.8 Neutral

Aberdeen Asset Man. 13.2 130% 13% 3.7 63% 8.0 3.2 90.1 2.7 1.2 2.1 333.6 Outperform

Sberbank Of Russia 5.7 59% -23% 1.6 20% na 3.1 69.3 10.0 5.7 1.7 87.9 Outperform

SAP 16.5 121% -32% 5.4 -42% 3.6 1.5 58.2 -0.6 1.6 2.3 58.8 Outperform

Spectris 12.3 118% 21% 3.5 -68% 6.9 2.1 56.8 -2.3 -1.7 2.2 1,819.0 Outperform

Perform Group 24.7 179% 26% 0.2 58% na 0.0 48.4 0.5 1.6 1.8 397.0 Outperform


Richemont 14.9 96% 133% 3.5 69% 3.0 1.1 25.4 5.2 2.9 2.4 68.6 Neutral


Capita 13.2 84% -41% 8.6 -36% 4.8 3.2 17.5 0.7 1.0 2.7 722.5 Outperform


Paddy Power 20.8 124% 62% 12.0 99% 5.5 2.0 8.3 -0.2 3.3 2.9 57.3 Outperform

Johnson Matthey 13.7 107% 28% 3.2 40% na 2.5 8.0 -5.4 -4.2 2.6 2,190.0 Outperform

Wpp 10.5 76% -18% 1.5 -86% 8.8 3.4 7.8 -1.2 -1.8 2.0 825.0 Outperform


Compass Group 14.9 89% 28% 3.8 43% 4.8 3.1 3.5 -1.4 -0.3 2.5 699.5 Outperform

William Demant Hldg. 18.5 143% -5% 8.7 -64% 4.2 0.0 3.2 -6.5 -0.4 3.3 463.6 Neutral

Aker Solutions 10.8 102% 29% 2.7 -10% -4.3 3.0 0.0 4.1 5.8 1.9 104.7 Outperform

Lvmh 16.4 105% 3% 2.9 -10% 4.1 2.3 -1.2 -1.2 1.8 2.0 129.0 Outperform

Partners Group Holding 17.4 171% 49% 8.8 22% na 3.0 -2.7 -3.1 0.3 2.6 192.9 Neutral

Atlas Copco 'A' 14.7 127% 61% 7.1 120% 4.2 3.3 -3.0 -0.8 -1.3 2.9 167.6 Outperform

Subsea 7 12.6 119% -25% 1.3 -46% 4.2 1.9 -4.4 10.5 -0.9 2.0 128.7 Neutral

Hammerson 23.0 108% 28% 0.9 21% 4.1 3.6 -4.9 1.7 0.3 2.5 461.5 Outperform

Moneysupermarket

Com Gp.14.3 105% 34% 4.4 98% 5.4 3.7 -5.5 3.4 0.5 2.3 153.5 Outperform

Fresenius Med.Care 16.3 126% 2% 2.6 19% 4.5 1.4 -11.3 -1.9 -1.1 2.4 51.6 Outperform

Sabmiller 16.7 103% 50% 1.7 -11% 5.5 2.3 -13.5 0.5 0.8 2.6 2,633.0 Outperform

Burberry Group 17.5 112% 35% 6.3 45% 4.4 2.1 -13.8 -6.2 -4.4 2.5 1,233.0 Outperform

Umicore 14.9 131% 47% 2.7 75% 3.6 2.6 -14.4 -4.0 -2.3 2.7 39.4 Neutral

Diageo 16.7 103% 47% 8.1 71% 4.2 2.5 -14.6 0.7 -1.5 2.1 1,846.0 Outperform

Eutelsat

Communications15.0 108% 6% 3.1 7% 1.9 4.2 -18.2 -1.7 -0.1 2.3 23.6 Outperform

Boss (Hugo) 15.4 99% 29% 10.9 137% 4.1 4.1 -18.8 -4.5 0.0 2.0 79.2 Neutral

Novo Nordisk 'B' 20.9 169% 34% 13.7 207% 3.5 1.8 -19.5 5.1 3.6 2.4 907.0 Neutral

Intertek Group 19.9 127% 60% 8.8 -51% 3.0 1.4 -20.1 2.0 1.7 2.8 2,898.0 Outperform

Spirax-Sarco 15.1 131% 41% 3.8 36% 4.9 2.7 -20.2 -4.9 -1.1 2.6 2,147.0 Neutral

Petroleum Geo

Services11.6 110% -72% 2.1 -55% 2.8 1.4 -21.2 26.8 3.4 1.9 97.7 Outperform

Vienna Insurance

Group A9.5 98% -23% 1.0 -54% 6.3 3.6 -21.2 -3.5 2.3 2.3 34.2 Neutral

Pernod-Ricard 15.4 95% 46% 2.0 14% 4.3 1.9 -22.5 -2.7 0.4 2.7 84.9 Outperform

Dassault Systemes 21.6 158% 3% 4.9 -33% 4.5 0.9 -23.5 2.3 1.8 2.7 83.5 Neutral

Assa Abloy 'B' 14.7 127% -6% 3.5 5% 4.7 2.4 -24.1 -1.5 -1.7 2.9 231.9 Outperform

Aggreko 19.8 126% 45% 9.5 111% 1.5 1.1 -26.0 -3.5 -3.3 2.3 2,153.0 Neutral


Coloplast 'B' 19.8 153% 24% 11.8 89% 4.3 1.4 -27.8 0.2 0.3 3.1 1,311.0 Outperform

Ryanair Holdings 13.2 98% -10% 2.0 -31% 9.6 8.8 -28.9 -3.2 -0.6 2.2 4.6 Outperform

Sgs 'N' 21.4 136% 51% 7.6 77% 2.2 3.1 -31.2 -2.2 0.0 2.8 2,012.0 Neutral


Prudential 11.4 118% 7% 2.4 -18% 5.9 3.1 -33.8 0.6 1.4 2.2 880.0 Outperform

Whitbread 15.4 92% 87% 3.4 129% 6.4 2.3 -34.1 1.4 1.4 2.6 2,361.0 Neutral

Kuehne+Nagel Intl. 20.3 151% 70% 5.7 66% 4.3 3.3 -36.7 -1.7 0.2 2.6 113.8 Outperform

St.James'S Place 16.6 171% 60% 2.9 4% na 2.6 -38.1 -0.7 -2.6 2.3 396.9 Neutral

Reed Elsevier 11.9 86% 6% 6.5 17% 8.4 3.8 -40.3 1.2 -0.3 2.2 607.5 Neutral

Ictl.Htls.Gp. 15.7 94% 44% 8.1 -51% 6.1 2.6 -40.4 -1.1 0.1 2.6 1,650.0 Outperform

Easyjet 10.0 74% -12% 1.6 15% 7.1 1.9 -44.2 11.5 0.1 2.3 682.0 Outperform

Chr Hansen Holding 21.4 166% 45% 5.1 49% na 1.9 -50.4 2.0 0.5 2.7 187.3 Outperform

Domino'S Pizza Group 22.1 132% 47% 15.0 16% 4.8 2.7 -62.8 -1.3 -12.7 2.5 525.0 Neutral

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



23 November 2012


And below we show the same for the US.

Figure 133: US growth stocks (as selected by our analysts) – Outperform or Neutral rated


rel to mkt %

above/below

average

Abs

rel to mkt %

above/below

average

FCY DY

Price, %

change to

best


rating

Luxfer na na na na na na na na na na na 11.3 Outperform

Manchester United Cl.A 29.7 177% 21% na na 0.8 0.0 na na na 2.0 13.2 Outperform

Celgene 13.3 80% -72% 5.8 -60% 5.4 0.0 220.1 2.0 1.2 1.8 77.9 Neutral

Broadcom 'A' 11.1 79% -69% 2.6 -54% 7.0 1.3 110.3 -2.1 -1.6 1.8 31.2 Outperform

F5 Networks 16.1 155% -51% 5.9 9% 6.5 0.0 96.8 -1.5 -0.6 2.2 90.1 Outperform

Qualcomm 14.3 138% -39% 3.7 -18% 5.5 1.6 93.1 -0.3 -0.4 1.9 62.1 Outperform


Emc 13.1 126% -47% 2.7 -40% 8.8 0.0 85.1 -2.4 -1.8 1.7 24.4 Outperform

Apple 11.2 107% -58% 7.0 116% 8.1 1.7 82.1 -10.7 -2.7 1.7 561.7 Outperform

Gilead Sciences 15.5 93% -64% 7.5 6% 5.5 0.0 82.0 1.9 3.2 1.7 75.6 Neutral

Mellanox 19.2 185% 23% 7.2 162% 4.9 0.0 71.3 12.2 0.9 2.2 84.4 Neutral


Mastercard 18.6 137% 26% 10.2 44% 4.3 0.2 57.9 -0.5 -2.5 1.9 479.4 Outperform

Danaher 15.0 130% 0% 2.1 -23% 7.8 0.2 56.6 -3.6 -2.2 1.8 53.0 Neutral

Ihs 'A' 19.0 121% 8% 4.2 27% 5.0 0.0 54.7 -3.8 -3.2 2.2 89.2 Outperform

Salix Pharms. 12.6 102% -71% 4.2 4% 4.7 0.0 37.9 10.7 -0.6 2.1 41.4 Outperform



Priceline.Com 17.4 104% -34% 12.3 23% 4.7 0.0 34.1 -3.1 -4.3 2.1 639.6 Outperform

Allergan 19.5 157% 7% 5.3 -10% -4.8 0.2 31.1 0.3 -0.9 1.9 90.9 Outperform

Biogen Idec 19.2 116% -45% 5.2 10% 4.3 0.0 14.1 5.9 1.7 2.2 147.4 Outperform

Mercadolibre 28.1 206% -17% 15.9 16% 3.0 0.5 11.2 4.4 -1.3 2.5 75.4 Neutral

Jazz Pharmaceuticals 9.9 80% -74% 11.9 -47% na 0.0 10.6 3.0 1.9 1.4 52.0 Outperform


Eog Res. 21.1 199% 27% 2.5 2% -4.4 0.6 6.4 12.4 2.0 1.9 118.1 Neutral

Watson Pharms. 10.8 87% -22% 3.1 28% 7.7 0.0 4.3 1.3 2.4 1.8 85.3 Outperform

Nielsen Holdings Nv 14.4 92% 17% 2.3 13% 5.8 0.0 3.5 2.9 -1.1 2.1 28.1 Outperform

Visa 'A' 19.4 142% 32% 4.4 75% 4.4 0.7 1.5 3.3 1.0 1.9 146.7 Outperform

Fmc Technologies 17.4 164% 20% 6.8 42% -4.2 0.0 -0.7 -10.3 -0.6 2.3 41.0 Neutral

Cabela'S 14.4 86% 41% 2.6 76% 5.9 0.0 -0.8 3.4 0.9 2.1 46.5 Outperform

Ralph Lauren Cl.A 18.6 119% 56% 4.1 63% 5.0 0.8 -2.5 -0.7 -1.4 2.4 156.5 Outperform

Rockwell Automation 13.6 117% 41% 6.1 73% 5.3 2.4 -3.8 -3.2 -2.7 2.2 77.4 Outperform

Hexcel 14.2 123% -40% 3.1 -75% -1.7 0.0 -4.0 2.8 -1.7 2.1 25.1 Outperform

Gardner Denver 13.6 117% 39% 2.8 63% 7.2 0.2 -6.2 0.2 -4.4 2.5 68.3 Outperform

Fmc 13.7 107% 89% 6.1 91% 3.1 0.6 -6.9 -0.2 0.6 2.3 53.9 Outperform

Cytec Inds. 15.0 116% 46% 1.9 -5% na 0.8 -7.0 -33.1 -38.6 2.6 67.5 Outperform

Nike 'B' 16.9 108% 23% 4.2 22% 5.4 1.5 -11.2 1.3 -0.4 2.4 95.6 Neutral

Mondelez International Inc na na na na na na na -11.7 na na na 25.4 Outperform

Costco Wholesale 21.0 161% 31% 3.4 28% 4.4 1.1 -13.4 3.0 0.7 2.3 96.7 Outperform

Carmax 17.8 106% -31% 3.0 43% 1.9 0.0 -14.1 -2.5 0.4 1.9 34.6 Outperform

Dollar Tree 14.3 86% -5% 6.8 39% 4.3 0.0 -14.8 0.1 -0.9 2.3 41.5 Outperform

Noble Energy 15.5 146% -13% 2.3 11% -6.1 0.9 -15.0 -16.7 -4.9 2.0 95.3 Outperform

Amazon.Com 142.3 850% 163% 13.6 -58% 1.5 0.0 -18.1 -97.1 -1.9 2.0 238.0 Outperform

Linear Tech. 17.4 124% -16% 10.1 -35% 7.3 3.1 -19.2 -18.0 -9.0 2.7 31.9 Outperform

Dollar General 14.9 89% 27% 3.5 39% 4.0 0.0 -19.3 1.8 -0.1 1.8 48.0 Neutral

Anadarko Petroleum 16.8 158% -26% 1.9 -2% 2.4 0.5 -19.9 -3.5 -3.1 1.6 72.5 Outperform

Acme Packet 35.0 337% 41% 2.6 -42% 3.1 0.0 -20.8 -34.7 -8.1 2.9 18.3 Outperform


Zumiez 12.1 72% -46% 2.4 -40% 3.6 0.0 -25.1 -5.4 -0.9 2.3 20.3 Neutral

Yum! Brands 19.7 117% 62% 18.2 -22% 4.0 1.7 -31.5 -0.1 -0.7 2.0 73.5 Outperform

Nxp Semiconductors 10.6 102% 46% 5.6 28% 9.1 0.0 -32.8 -2.6 2.2 2.0 23.4 Outperform

Edwards Lifesciences 27.7 214% 63% 7.5 111% 2.5 0.0 -33.6 -3.7 -3.3 2.3 83.7 Neutral

Lululemon Athletica 32.2 206% 14% 16.7 59% 2.1 0.0 -35.5 12.7 0.7 2.2 70.0 Outperform

Family Dollar Stores 15.1 90% 13% 5.9 70% 1.5 1.3 -35.8 2.5 2.5 2.4 68.8 Outperform

Ignite Restaurant Group 15.8 94% 4% na na -0.5 0.0 -36.1 -14.0 -1.5 1.8 12.9 Outperform

Affiliated Managers 14.4 141% 36% 3.5 34% na 0.0 -37.2 3.3 -1.2 1.9 126.7 Outperform


Starbucks 22.9 136% -9% 8.6 57% 2.7 1.2 -39.1 -5.3 -1.1 2.0 50.5 Outperform

Itc Holdings 16.3 108% 1% 3.2 24% -9.8 1.9 -39.7 3.1 0.7 2.3 77.2 Neutral

Urban Outfitters 19.7 118% 35% 5.0 42% 2.9 0.0 -40.0 8.6 0.1 2.4 37.4 Neutral

Chipotle Mexn.Grill 25.6 153% -5% 7.9 45% 2.9 0.0 -40.0 0.0 -1.6 2.6 275.5 Neutral

Panera Bread 'A' 24.1 144% 25% 7.6 134% 3.1 0.0 -40.8 3.3 1.9 2.4 161.3 Outperform

Starwood Htls.& Rsts.

Worldwide19.8 118% 14% 3.4 41% 4.6 2.0 -45.4 4.9 0.1 2.2 52.6 Outperform

Under Armour 'A' 35.7 229% 30% 8.8 53% 1.7 0.0 -48.4 1.7 0.9 2.6 52.3 Neutral

Tumi Holdings 27.5 162% 31% na na 2.5 0.0 -49.4 6.4 1.1 1.6 21.6 Outperform

Verisk Analytics Cl.A 22.0 140% 39% -82.7 na 2.8 0.0 -50.8 1.1 1.3 2.2 48.4 Outperform

Whole Foods Market 32.4 249% 58% 5.8 67% 2.4 0.6 -58.3 2.1 0.2 2.1 92.1 Neutral

Heartware International -32.1 nm na 9.4 54% na 0.0 -63.5 nm 3.1 2.1 81.6 Outperform

Fusion-Io 50.1 482% -19% 4.9 -1% 0.3 0.0 -63.6 47.1 9.3 2.4 24.1 Outperform


Salesforce.Com 76.9 563% 16% 12.7 23% 2.6 0.0 -66.9 1.1 0.3 2.1 158.8 Outperform

Marriott Intl.'A' 18.6 111% 24% -15.7 na 7.1 1.2 -74.1 0.7 0.5 2.3 34.8 Outperform

Five Below 52.0 311% 24% na na 0.8 0.0 -77.2 na na 2.6 28.8 Neutral

Netsuite 208.0 1523% 171% 33.8 154% 0.9 0.0 -91.1 13.8 2.2 2.8 60.1 Outperform

Consensus

recommendation

(1=Buy; 5=Sell)

Share price,

local currency

(21 Nov)



23 November 2012


Companies Mentioned (Price as of 22-Nov-2012)

Luzhou Laojiao (000568.SZ, Rmb32.18) Hyundai E&C (000720.KS, W63,200, OUTPERFORM, TP W78,000) Hyundai Mobis (012330.KS, W263,500, OUTPERFORM, TP W402,000) Asiana Airlines (020560.KS, W5,980, UNDERPERFORM, TP W6,750) Samsung Engineering Co Ltd (028050.KS, W145,500, OUTPERFORM, TP W210,000) Cathay Pacific (0293.HK, HK$13.96) Tingyi (0322.HK, HK$21.7) Kangwon Land Inc. (035250.KS, W27,800, OUTPERFORM, TP W32,000) NC Soft (036570.KS, W159,500, OUTPERFORM[V], TP W275,000) LG Household & Healthcare (051900.KS, W659,000, OUTPERFORM, TP W745,000) LG Chem Ltd. (051910.KS, W296,500, OUTPERFORM[V], TP W432,000) China Eastern Airlines (0670.HK, HK$2.66) Tencent Holdings (0700.HK, HK$259.6) Air China (0753.HK, HK$5.13) Shimao Property Holdings Ltd (0813.HK, HK$15.38) CNOOC Ltd (0883.HK, HK$16.36) China Mobile Limited (0941.HK, HK$88.2) Lenovo Group Ltd (0992.HK, HK$6.99) Hengan International (1044.HK, HK$69.9) China Southern Airlines (1055.HK, HK$3.41) China Shenhua Energy Company Limited (1088.HK, HK$31.75) Sinopharm Group Co (1099.HK, HK$24.7) AIA Group (1299.HK, HK$30.45) Belle International Holdings Ltd (1880.HK, HK$15.14) Ping An (2318.HK, HK$58.8) Taiwan Semiconductor Manufacturing (2330.TW, NT$91.3) Foxconn Technology Corp (2354.TW, NT$93.6) Asustek (2357.TW, NT$314.0) China Airlines (2610.TW, NT$11.0) EVA Air (2618.TW, NT$16.3) China Life (2628.HK, HK$22.5) Largan Precision (3008.TW, NT$692.0) Moutai (600519.SS, Rmb217.29) Shanxi Xinghuacun Fen Wine (600809.SS, Rmb36.76) Nabtesco Corporation (6268.T, ¥1,641) SMC (6273.T, ¥13,640) NTN (6472.T, ¥172) THK (6481.T, ¥1,454) Toshiba (6502.T, ¥290) Mitsubishi Electric (6503.T, ¥647) Yaskawa Electric Corporation (6506.T, ¥664) Keyence (6861.T, ¥21,950) Fanuc (6954.T, ¥14,000) Apple Inc (AAPL.OQ, $561.7) ABB (ABBN.VX, SFr17.16) Abbott Laboratories (ABT.N, $63.33) Aberdeen Asset Managers (ADN.L, 333.6p) Activision Blizzard, Inc (ATVI.OQ, $11.35) Adidas AG (ADSGn.F, €65.0) Aggreko (AGGK.L, 2153.0p) Allergan Inc. (AGN.N, $90.92) AirAsia (AIRA.KL, RM2.85) Air Liquide (AIRP.PA, €93.22) Aker Solutions (AKSO.OL, k104.7) Ayala Land (ALI.PS, P23.1) Alesco Corporation (ALS.AX, A$1.91) AMEC (AMEC.L, 1022.0p) Affiliated Managers Group (AMG.N, $126.74) American Express Co. (AXP.N, $55.98) Amgen Inc. (AMGN.OQ, $86.65) Amazon com Inc. (AMZN.OQ, $238.03) Anadarko Petroleum Corp. (APC.N, $72.51) Acme Packet Inc. (APKT.OQ, $18.27) Astra International (ASII.JK, Rp7,750) ASML Holding N.V. (ASML.AS, €42.98) Assa Abloy (ASSAb.ST, Skr231.9) Atlas Copco (ATCOa.ST, Skr167.6) Activision Blizzard, Inc (ATVI.OQ, $11.35) American Express Co. (AXP.N, $55.98) AstraZeneca (AZN.L, 2841.5p) Boeing (BA.N, $73.15) Bayer (BAYGn.DE, €67.75) Bed Bath & Beyond (BBBY.OQ, $58.95) Bank Central Asia (BBCA.JK, Rp8,900) Bank Negara Indonesia (BBNI.JK, Rp3,575) Bank Rakyat Indonesia (BBRI.JK, Rp7,100) Biogen Idec (BIIB.OQ, $147.36) Bank Mandiri (Persero) (BMRI.JK, Rp8,600) BMW (BMWG.F, €66.19) Bristol Myers Squibb Co. (BMY.N, $32.41) Hugo Boss (BOSSn.DE, €79.21) Bank of Philippine Islands (BPI.PS, P90.0)

23 November 2012


Burberry Group (BRBY.L, 1233.0p) Broadcom Corp. (BRCM.OQ, $31.19) Bureau Veritas (BVI.PA, €83.61) BorgWarner, Inc. (BWA.N, $63.72) Cabelas (CAB.N, $46.53) Cameron International Corp. (CAM.N, $53.12) Celgene Corp. (CELG.OQ, $77.86) Compagnie Financiere Richemont SA (CFR.VX, SFr68.55) Check Point Software Technologies Ltd. (CHKP.OQ, $45.5) Christian Hansen Holding (CHRH.CO, Dkr187.3) Cobalt International Energy (CIE.N, $21.68) Chipotle Mexican (CMG.N, $275.46) Cigna Corp. (CI.N, $52.01) Coal India (COAL.BO, Rs354.75) Colgate-Palmolive India (COLG.BO, Rs1330.7) Coloplast B (COLOb.CO, Dkr1311.0) Continental (CONG.DE, €80.03) Costco Wholesale Corporation (COST.OQ, $96.74) Compass (CPG.L, 699.5p) Capita (CPI.L, 722.5p) Cree (CREE.OQ, $30.85) Salesforce.com Inc. (CRM.N, $158.78) Cisco Systems Inc. (CSCO.OQ, $18.48) Cognizant Technology Solutions Corp. (CTSH.OQ, $65.51) CVS Caremark Corporation (CVS.N, $45.74) Cytec (CYT.N, $67.46) Daikin Industries (6367.T, ¥2,480) Danone (DANO.PA, €48.94) Dassault Systemes (DAST.PA, €83.5) Deere & Co. (DE.N, $82.83) Dollar General (DG.N, $48.0) Diageo (DGE.L, 1846.0p) Danaher Corporation (DHR.N, $53.04) Walt Disney Company (DIS.N, $48.68) Discovery Communications, Inc. (DISCA.OQ, $57.38) Dollar Tree (DLTR.OQ, $41.47) Domino’s Pizza Group (DOM.L, 525.0p) Deutsche Post DHL (DPWGn.DE, €15.26) DiGi.Com (DSOM.KL, RM4.77) DSV (DSV.CO, Dkr133.0) Dufry (DUFN.S, SFr124.3) Edenred (EDEN.PA, €23.82) Eli Lilly & Co. (LLY.N, $47.42) EMC Corp (EMC.N, $24.35) Emerson (EMR.N, $48.55) EOG Resources (EOG.N, $118.14) Energy Recovery Inc. (ERII.OQ, $2.91) Eutelsat Communications (ETL.PA, €23.58) Eaton Corporation (ETN.N, $50.73) Edwards LifeSciences Corp. (EW.N, $83.7) Expeditors International of Washington (EXPD.OQ, $36.8) Experian (EXPN.L, 1020.0p) EasyJet (EZJ.L, 682.0p) Freeport-McMoRan Copper & Gold (FCX.N, $38.27) Family Dollar (FDO.N, $68.83) FedEx Corporation (FDX.N, $87.65) F5 Networks (FFIV.OQ, $90.05) Fusion-io (FIO.N, $24.11) Five Below, Inc. (FIVE.OQ, $28.77) Flowserve Corp. (FLS.N, $138.16) FMC Corporation (FMC.N, $53.88) Fresenius Medical Care AG & Co. (FMEG.DE, €51.55) Fresenius (FREG.DE, €84.25) FMC Technologies, Inc. (FTI.N, $41.0) General Dynamics Corporation (GD.N, $64.36) Gardner Denver, Inc. (GDI.N, $68.31) G.F. Inbursa (GFINBURO.MX, $34.91) PT Garuda Indonesia Tbk (GIAA.JK, Rp700) Gilead Sciences Inc. (GILD.OQ, $75.55) Godrej Consumer Products Ltd (GOCP.BO, Rs669.95) Google, Inc. (GOOG.OQ, $665.87) GlaxoSmithKline plc (GSK.L, 1334.5p) G.U.D. Holdings (GUD.AX, A$8.09) WW Grainger Inc. (GWW.N, $190.39) Halliburton (HAL.N, $31.7) HCL Technologies (HCLT.BO, Rs627.0) Hikma Pharmaceuticals Plc (HIK.L, 738.0p) Halma (HLMA.L, 419.5p) Hammerson Property (HMSO.L, 461.5p) Honeywell International Inc. (HON.N, $60.59) Starwood Hotels & Resorts Worldwide (HOT.N, $52.64) Hargreaves Lansdown (HRGV.L, 770.5p) Hermes International (HRMS.PA, €232.0) HeartWare International Inc (HTWR.OQ, $81.64)

23 November 2012


Hexcel Corporation (HXL.N, $25.1) Hyflux Ltd (HYFL.SI, S$1.3) Hindustan Zinc Limited (HZNC.BO, Rs132.75) Intercontinental Hotels (IHG.L, 1650.0p) IHS (IHS.N, $89.16) Imperial Tobacco (IMT.L, 2472.0p) Intel Corp. (INTC.OQ, $19.36) Ignite Restaurant Group (IRG.OQ, $12.92) ITC Ltd (ITC.BO, Rs288.95) ITC Holdings Corp (ITC.N, $77.15) Intertek (ITRK.L, 2898.0p) Illinois Tool Works, Inc. (ITW.N, $59.77) IVRCL Infrastructures and Projects Ltd (IVRC.BO, Rs39.7) Jazz Pharmaceuticals (JAZZ.OQ, $52.02) Johnson Controls (JCI.N, $26.76) Johnson Matthey (JMAT.L, 2190.0p) Johnson & Johnson (JNJ.N, $69.59) KLA-Tencor Corp. (KLAC.OQ, $44.13) CarMax Inc. (KMX.N, $34.62) Kuehne + Nagel (KNIN.VX, SFr113.8) Kraft Foods Group (KRFT.OQ, $44.51) Life Technologies Corporation (LIFE.OQ, $49.22) Linear Technology Corp. (LLTC.OQ, $31.9) Eli Lilly & Co. (LLY.N, $47.42) lululemon athletica Inc. (LULU.OQ, $69.98) Lupin Ltd (LUPN.BO, Rs564.45) LVMH (LVMH.PA, €129.0) Las Vegas Sands Corp. (LVS.N, $43.72) Luxfer (LXFR.N, $11.33) MasterCard Inc. (MA.N, $479.43) Malaysia Airports (MAHB.KL, RM5.53) Manchester United (MANU.N, $13.15) Metropolitan Bank & Trust (MBT.PS, P95.0) McDonald's Corp (MCD.N, $86.01) Mondelez (MDLZ.OQ, $25.41) MercadoLibre Inc. (MELI.OQ, $75.4) Metso (MEO1V.HE, €27.7) Mead Johnson Nutrition Co. (MJN.N, $66.12) Millennium & Copthorne (MLC.L, 461.0p) Mellanox Technologies Ltd. (MLNX.OQ, $84.41) Moneysupermarket.com (MONY.L, 153.5p) Mindray Medical International Ltd (MR.N, $33.77) Merck & Co., Inc. (MRK.N, $43.89) Microsoft Corporation (MSFT.OQ, $26.95) NetSuite Inc. (N.N, $60.09) Noble Energy (NBL.N, $95.31) Nestle (NESN.VX, SFr59.25) NiSource Inc. (NI.N, $23.93) Nike Inc. (NKE.N, $95.6) Nielsen Holdings (NLSN.N, $28.05) Novartis (NOVN.VX, SFr55.65) Novo Nordisk A/S (NOVOb.CO, Dkr907.0) NXP Semiconductors N.V. (NXPI.OQ, $23.35) Melrose (NYN.L, 209.5p) Olam (OLAM.SI, S$1.68) Oracle Corporation (ORCL.OQ, $30.39) L'Oreal (OREP.PA, €102.95) O'Reilly Automotive, Inc. (ORLY.OQ, $91.55) Paddy Power (PAP.I, €57.3) Priceline.com (PCLN.OQ, $639.58) Precision Castparts (PCP.N, $176.92) Perform Group Plc (PER.L, 397.0p) Pernod-Ricard (PERP.PA, €84.94) Petrofac (PFC.L, 1590.0p) Pfizer (PFE.N, $24.35) Partners Group (PGHN.S, SFr192.9) Petroleum Geo Services (PGS.OL, k97.65) Parker Hannifin Corporation (PH.N, $80.1) Philips (PHG.AS, €19.88) Pall Corporation (PLL.N, $60.52) Panera Bread (PNRA.OQ, $161.28) Prudential (PRU.L, 880.0p) Pearson (PSON.L, 1182.0p) Quanta Services (PWR.N, $25.2) Panalpina (PWTN.S, SFr86.35) QUALCOMM Inc. (QCOM.OQ, $62.14) Reckitt Benckiser (RB.L, 3845.0p) Reed Elsevier PLC (REL.L, 607.5p) Robinsons Land Corporation (RLC.PS, P18.26) Roche (ROG.VX, SFr177.7) Rockwell Automation (ROK.N, $77.4) Rotork plc (ROR.L, 2426.0p) Ryanair (RYA.I, €4.58) SABMiller (SAB.L, 2633.0p)

23 November 2012


SAP (SAPG.F, €58.83) Sanofi (SASY.PA, €68.08) Sberbank (SBER.MM, Rbl87.86) Sabesp (SBSP3.SA, R$80.54) Starbucks (SBUX.OQ, $50.51) Schlumberger (SLB.N, $70.21) Schneider (SCHN.PA, €51.64) Sembcorp Industries Limited (SCIL.SI, S$4.98) Security Bank Corporation (SECB.PS, P164.0) SGS Surveillance (SGSN.VX, SFr2012.0) Shire Pharmaceuticals (SHP.L, 1787.0p) Siemens (SIEGn.DE, €77.6) St. James's Place (SJP.L, 396.9p) Standard Life (SL.L, 308.4p) Schlumberger (SLB.N, $70.21) Salix Pharmaceuticals, Ltd (SLXP.OQ, $41.43) Smiths Group (SMIN.L, 1052.0p) Sonova Holding (SOON.VX, SFr100.6) Saipem (SPMI.MI, €32.52) Spirax Sarco (SPX.L, 2147.0p) Singapore Telecom (STEL.SI, S$3.14) St Jude Medical (STJ.N, $31.37) Subsea 7 S.A. (SUBC.OL, k128.7) Stanley Black & Decker, Inc. (SWK.N, $70.03) SPECTRIS (SXS.L, 1819.0p) Stryker Corporation (SYK.N, $53.5) Tata Consultancy Services (TCS.BO, Rs1278.1) Teradata Corp (TDC.N, $61.18) TransDigm (TDG.N, $131.52) Technip (TECF.PA, €86.12) Thoratec Corp. (THOR.OQ, $37.24) Thermo Fisher Scientific Inc (TMO.N, $61.16) TNT Express (TNTE.AS, €7.2) Tumi Holdings (TUMI.N, $21.6) Under Armour, Inc. (UA.N, $52.34) Swatch Group (UHR.VX, SFr432.2) Umicore (UMI.BR, €39.36) Unibail Rodamco (UNBP.PA, €168.95) United Health Group (UNH.N, $53.53) Union Pacific (UNP.N, $120.04) United Tractors (UNTR.JK, Rp19,400) Unilever (UNc.AS, €28.44) United Parcel Service Inc. (UPS.N, $71.4) United Technologies Corp (UTX.N, $77.33) Urban Outfitters (URBN.OQ, $37.35) Visa Inc. (V.N, $146.66) VF Corporation (VFC.N, $156.83) Vienna Insurance Group (VIGR.VI, €34.21) Vivendi (VIV.PA, €16.36) VMware Inc. (VMW.N, $88.06) Volcano Corporation (VOLC.OQ, $26.9) Verisk Analytics (VRSK.OQ, $48.36) Verizon (VZ.N, $43.16) William Demant (WDH.CO, Dkr463.6) Whole Foods Market (WFM.OQ, $92.07) Watson Pharmaceuticals (WPI.N, $85.26) WPP (WPP.L, 825.0p) Whitbread (WTB.L, 2361.0p) Xerox (XRX.N, $6.46) Yum! Brands, Inc. (YUM.N, $73.53) Zumiez (ZUMZ.OQ, $20.3)

Disclosure Appendix

Important Global Disclosures

The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

23 November 2012


Price and Rating History for Hyundai E&C (000720.KS)

000720.KS Closing Price Target Price

Date (W) (W) Rating

03-Feb-10 62,700 67,000 N

27-Apr-10 58,200 64,000

27-Jul-10 62,600 67,000

29-Sep-10 73,500 75,000

25-Oct-10 76,400 81,000

18-Nov-10 59,800 77,000 O

05-Jan-11 80,000 86,000

07-Feb-11 89,700 92,000 N

02-May-11 90,900 90,000

01-Aug-11 85,500 87,000

05-Oct-11 52,200 65,000

28-Oct-11 72,800 70,000

26-Mar-12 83,500 87,000

30-Apr-12 71,400 81,000

03-Jul-12 66,600 88,000 O

27-Jul-12 58,200 81,000

29-Oct-12 63,900 78,000

* Asterisk signifies initiation or assumption of coverage.

N EU T RA L

O U T PERFO RM

Price and Rating History for Hyundai Mobis (012330.KS)


Date (W) (W) Rating

28-Apr-10 179,500 206,000 O

02-Aug-10 222,000 237,000

05-Nov-10 282,000 327,000

28-Jan-11 276,000 372,000

29-Jul-11 380,000 490,600

28-Oct-11 344,000 473,000

27-Jan-12 303,000 430,000

30-Apr-12 307,500 456,000

26-Oct-12 277,000 402,000


O U T PERFO RM

Price and Rating History for Asiana Airlines (020560.KS)


Date (W) (W) Rating

19-Oct-10 9,650 12,200 O *

15-Jun-12 6,880 8,010 *

22-Aug-12 7,790 6,750 U


O U T PERFO RM

U N D ERPERFO RM

23 November 2012


Price and Rating History for Samsung Engineering Co Ltd (028050.KS)


Date (W) (W) Rating

29-Jan-10 113,500 120,000 N

22-Jul-10 123,500 150,000 O

29-Sep-10 151,000 170,000

26-Nov-10 183,500 200,000

31-Jan-11 197,000 220,000

20-Apr-11 228,500 250,000

26-Jul-11 259,000 300,000

04-Aug-11 229,000 270,000

05-Oct-11 200,000 250,000

24-Oct-11 237,500 300,000

19-Jan-12 219,000 290,000

24-Apr-12 222,500 270,000

03-Jul-12 185,500 240,000

26-Oct-12 145,500 210,000


N EU T RA L

O U T PERFO RM

Price and Rating History for Kangwon Land Inc. (035250.KS)


Date (W) (W) Rating

27-Jan-10 15,700 18,000 O

08-Feb-10 15,450 19,000

10-May-10 16,650 20,000

22-Jun-10 19,000 22,000

09-Aug-10 21,400 25,000

08-Nov-10 26,400 28,000 N

14-Feb-11 24,500 25,000

18-Nov-12 26,400 32,000 O

* Asterisk signifies initiation or assumption of coverage. O U T PERFO RM

N EU T RA L

Price and Rating History for NC Soft (036570.KS)


Date (W) (W) Rating

24-May-10 181,000 250,000 O

05-Nov-10 264,000 330,000

12-Jul-11 309,000 400,000

15-Nov-11 336,000 435,000

12-Jan-12 277,000 390,000

23-Jul-12 212,500 320,000

08-Nov-12 185,500 275,000


O U T PERFO RM

23 November 2012


Price and Rating History for LG Household & Healthcare (051900.KS)


Date (W) (W) Rating

01-Dec-09 278,500 350,000 O

08-Jun-10 335,500 350,000 N

06-Oct-10 406,000 440,000

01-Nov-10 395,000 440,000 O

26-Jan-11 404,500 480,000

26-Jul-11 474,000 540,000

27-Oct-11 532,000 600,000

24-Apr-12 578,000 680,000

24-Oct-12 653,000 745,000


O U T PERFO RM

N EU T RA L

Price and Rating History for LG Chem Ltd. (051910.KS)


Date (W) (W) Rating

23-Jun-10 314,000 380,000 O

06-Dec-10 385,000 450,000

08-Apr-11 479,000 570,000

20-Apr-11 549,000 600,000

21-Oct-11 343,000 530,000

27-Mar-12 358,000 490,000

19-Apr-12 347,500 465,000

22-Oct-12 323,000 432,000

* Asterisk signifies initiation or assumption of coverage. O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of October 2, 2012 Analysts’ stock rating are defined as follows :

Outperform (O) :The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% or more, (depending on perceived risk) over the next 12 months.

Neutral (N) :The stock's total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months.

Underperform (U) :The stock's total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months.

*Relevant benchmark by region: As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s t otal return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American, Japanese, and non -Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zeala nd are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively.

Restricted (R) :In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V]:A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts' sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation::

Overweight:The analyst's expectation for the sector's fundamentals and/or valuation is favorable over the next 12 months.

Market Weight:The analyst's expectation for the sector's fundamentals and/or valuation is neutral over the next 12 months.

Underweight:The analyst's expectation for the sector's fundamentals and/or valuation is cautious over the next 12 months.

*An analyst's coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

23 November 2012


Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe(%) Of which banking clients (%)

Outperform/Buy* 42% (52% banking clients)

Neutral/Hold* 40% (48% banking clients)

Underperform/Sell* 15% (41% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (051900.KS, 051910.KS, 000720.KS, 028050.KS, 020560.KS, RYA.I, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK, 0293.HK, BRBY.L, AIRA.KL, OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DGE.L, BVI.PA, NXPI.OQ, PCLN.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, HZNC.BO, JNJ.N, 1299.HK, AAPL.OQ, CONG.DE, 000568.SZ, CPG.L, TNTE.AS, BPI.PS, 0322.HK, GIAA.JK, SCHN.PA, BAYGn.DE, HYFL.SI, SLXP.OQ, ATCOa.ST, 1044.HK, SIEGn.DE, MJN.N, SPMI.MI, PRU.L, UNH.N, SGSN.VX, SECB.PS, LVS.N, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, DUFN.S, BRCM.OQ, 2354.TW, UNBP.PA, LLY.N, HTWR.OQ, DPWGn.DE, LVMH.PA, HRGV.L, KLAC.OQ, MLC.L, HRMS.PA, HLMA.L, EZJ.L, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, WPI.N, PWTN.S, MONY.L, SHP.L, ROG.VX, GFINBURO.MX, SBER.MM, SAPG.F, 2357.TW, IMT.L, 6273.T, DOM.L, ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, PSON.L, 1099.HK, 1088.HK, 0753.HK, ABBN.VX, MEO1V.HE, 2330.TW, 1880.HK, GOOG.OQ, MAHB.KL, FMEG.DE, GSK.L, HCLT.BO, FDX.N, LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, EXPD.OQ, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, FCX.N, BBCA.JK, PHG.AS, SMIN.L, SL.L, CFR.VX, BBRI.JK, 0992.HK, MR.N, 2318.HK, MLNX.OQ, DE.N, EOG.N, DG.N, MSFT.OQ, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, ABT.N, EMR.N, IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, REL.L, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, INTC.OQ, UPS.N, COST.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, ITW.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, SLB.N, HOT.N, ITC.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, IRG.OQ, APC.N, ORCL.OQ, 6861.T, THOR.OQ, SOON.VX, TDC.N, STEL.SI, AMG.N, KRFT.OQ, NESN.VX, DANO.PA, CI.N, AXP.N, SLB.N, LLY.N, UTX.N, 6367.T, CHRH.CO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (051900.KS, 051910.KS, 000720.KS, 0883.HK, EXPN.L, 0700.HK, 0941.HK, AIRA.KL, OLAM.SI, TUMI.N, DGE.L, NXPI.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, HZNC.BO, JNJ.N, 1299.HK, CONG.DE, 000568.SZ, CPG.L, TNTE.AS, GIAA.JK, SCHN.PA, SIEGn.DE, MJN.N, PRU.L, UNH.N, LVS.N, BBNI.JK, BMWG.F, DUFN.S, LLY.N, LVMH.PA, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, MONY.L, SBER.MM, IMT.L, DOM.L, ETL.PA, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, PSON.L, 1099.HK, ABBN.VX, MEO1V.HE, 1880.HK, GOOG.OQ, MAHB.KL, GSK.L, CELG.OQ, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, BBCA.JK, PHG.AS, BBRI.JK, 0992.HK, MR.N, MLNX.OQ, DE.N, EOG.N, MSFT.OQ, PFE.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, BA.N, CHKP.OQ, SWK.N, UNP.N, AXP.N, DIS.N, CIE.N, INTC.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, SLB.N, HOT.N, ETN.N, FIVE.OQ, 6502.T, AMGN.OQ, MRK.N, MCD.N, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, SOON.VX, STEL.SI, KRFT.OQ, NESN.VX, AXP.N, SLB.N, LLY.N, UTX.N, CHRH.CO) within the past 12 months.

Credit Suisse provided non-investment banking services to the subject company (020560.KS, RYA.I, 0700.HK, 0293.HK, DGE.L, 2628.HK, BMRI.JK, VIV.PA, AAPL.OQ, CONG.DE, CPG.L, BAYGn.DE, ATCOa.ST, SIEGn.DE, PRU.L, SECB.PS, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, BRCM.OQ, LLY.N, DPWGn.DE, LVMH.PA, HRGV.L, HRMS.PA, EZJ.L, CSCO.OQ, SHP.L, ROG.VX, GFINBURO.MX, IMT.L, 6273.T, TCS.BO, AZN.L, DISCA.OQ, NOVN.VX, PSON.L, ABBN.VX, FMEG.DE, GSK.L, FDX.N, FDO.N, ADN.L, PGHN.S, BBCA.JK, SMIN.L, SL.L, CFR.VX, 0992.HK, 2318.HK, DE.N, EOG.N, MSFT.OQ, TMO.N, PFE.N, CVS.N, VZ.N, EMC.N, EMR.N, BA.N, CHKP.OQ, AXP.N, DIS.N, INTC.OQ, HAL.N, BMY.N, NBL.N, HON.N, HOT.N, ITC.N, AMGN.OQ, MRK.N, MCD.N, APC.N, 6861.T, AMG.N, NESN.VX, DANO.PA, CI.N, AXP.N, LLY.N) within the past 12 months

Credit Suisse has managed or co-managed a public offering of securities for the subject company (000720.KS, 0883.HK, 0700.HK, OLAM.SI, TUMI.N, DGE.L, 2628.HK, 1299.HK, CONG.DE, SIEGn.DE, PRU.L, UNH.N, BBNI.JK, BMWG.F, DUFN.S, LVMH.PA, DSOM.KL, SBER.MM, DOM.L, ETL.PA, DISCA.OQ, XRX.N, ABBN.VX, MAHB.KL, GSK.L, ADN.L, PGHN.S, BBCA.JK, PHG.AS, 0992.HK, DE.N, EOG.N, MANU.N, SWK.N, UNP.N, AXP.N, DIS.N, CIE.N, BMY.N, TDG.N, MDLZ.OQ, HOT.N, FIVE.OQ, AMGN.OQ, IRG.OQ, STEL.SI, KRFT.OQ, NESN.VX, AXP.N, CHRH.CO) within the past 12 months.

23 November 2012


Credit Suisse has received investment banking related compensation from the subject company (051900.KS, 051910.KS, 000720.KS, 0883.HK, EXPN.L, 0700.HK, 0941.HK, AIRA.KL, OLAM.SI, TUMI.N, DGE.L, NXPI.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, HZNC.BO, JNJ.N, 1299.HK, CONG.DE, 000568.SZ, CPG.L, TNTE.AS, GIAA.JK, SCHN.PA, SIEGn.DE, MJN.N, PRU.L, UNH.N, LVS.N, BBNI.JK, BMWG.F, DUFN.S, LLY.N, LVMH.PA, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, MONY.L, SBER.MM, IMT.L, DOM.L, ETL.PA, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, PSON.L, 1099.HK, ABBN.VX, MEO1V.HE, 1880.HK, GOOG.OQ, MAHB.KL, GSK.L, CELG.OQ, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, BBCA.JK, PHG.AS, BBRI.JK, 0992.HK, MR.N, MLNX.OQ, DE.N, EOG.N, MSFT.OQ, PFE.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, BA.N, CHKP.OQ, SWK.N, UNP.N, AXP.N, DIS.N, CIE.N, INTC.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, SLB.N, HOT.N, ETN.N, FIVE.OQ, 6502.T, AMGN.OQ, MRK.N, MCD.N, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, SOON.VX, STEL.SI, KRFT.OQ, NESN.VX, AXP.N, SLB.N, LLY.N, UTX.N, CHRH.CO) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (051900.KS, 036570.KS, 051910.KS, 000720.KS, 028050.KS, 020560.KS, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK, 0293.HK, BRBY.L, DLTR.OQ, AIRA.KL, OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DGE.L, BVI.PA, NXPI.OQ, PCLN.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, PERP.PA, HZNC.BO, JNJ.N, 1299.HK, AAPL.OQ, CONG.DE, 000568.SZ, CPG.L, BPI.PS, 0322.HK, GIAA.JK, SCHN.PA, BAYGn.DE, HYFL.SI, EDEN.PA, SLXP.OQ, 1044.HK, SIEGn.DE, BWA.N, MJN.N, SPMI.MI, PRU.L, UNH.N, SGSN.VX, SECB.PS, COAL.BO, LVS.N, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, DUFN.S, BRCM.OQ, UNBP.PA, LLY.N, HTWR.OQ, DPWGn.DE, LVMH.PA, KLAC.OQ, IVRC.BO, MLC.L, HLMA.L, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, HMSO.L, WPI.N, PWTN.S, MONY.L, LUPN.BO, UNTR.JK, KMX.N, GFINBURO.MX, SBER.MM, SAPG.F, 2357.TW, IMT.L, 6273.T, DOM.L, ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, VRSK.OQ, PSON.L, 1099.HK, 1088.HK, 0753.HK, ABBN.VX, MEO1V.HE, 1880.HK, GOOG.OQ, MAHB.KL, GSK.L, HCLT.BO, 1055.HK, FDX.N, LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, VIGR.VI, AKSO.OL, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, FCX.N, BBCA.JK, SBUX.OQ, QCOM.OQ, PHG.AS, 3008.TW, SL.L, ZUMZ.OQ, CFR.VX, BBRI.JK, 0992.HK, MR.N, UMI.BR, 2318.HK, MLNX.OQ, JCI.N, DE.N, EOG.N, FTI.N, MSFT.OQ, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, ABT.N, EMR.N, IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, STJ.N, REL.L, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N, INTC.OQ, UPS.N, COST.OQ, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N, AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, 6503.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, CRM.N, SOON.VX, TDC.N, STEL.SI, AMG.N, UA.N, KRFT.OQ, NESN.VX, COLG.BO, CI.N, ATVI.OQ, AXP.N, SLB.N, LLY.N, UTX.N, 6367.T, CHRH.CO) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (020560.KS, RYA.I, 0700.HK, 0293.HK, DGE.L, 2628.HK, BMRI.JK, VIV.PA, AAPL.OQ, CONG.DE, CPG.L, BAYGn.DE, ATCOa.ST, SIEGn.DE, PRU.L, SECB.PS, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, BRCM.OQ, LLY.N, DPWGn.DE, LVMH.PA, HRGV.L, HRMS.PA, EZJ.L, CSCO.OQ, SHP.L, ROG.VX, GFINBURO.MX, IMT.L, 6273.T, TCS.BO, AZN.L, DISCA.OQ, NOVN.VX, PSON.L, ABBN.VX, FMEG.DE, GSK.L, FDX.N, FDO.N, ADN.L, PGHN.S, BBCA.JK, SMIN.L, SL.L, CFR.VX, 0992.HK, 2318.HK, DE.N, EOG.N, MSFT.OQ, TMO.N, PFE.N, CVS.N, VZ.N, EMC.N, EMR.N, BA.N, CHKP.OQ, AXP.N, DIS.N, INTC.OQ, HAL.N, BMY.N, NBL.N, HON.N, HOT.N, ITC.N, AMGN.OQ, MRK.N, MCD.N, APC.N, 6861.T, AMG.N, NESN.VX, DANO.PA, CI.N, AXP.N, LLY.N) within the past 12 months

As of the date of this report, Credit Suisse makes a market in the following subject companies (NLSN.N, GDI.N, GWW.N, DLTR.OQ, FFIV.OQ, TUMI.N, NXPI.OQ, PCLN.OQ, ERII.OQ, JNJ.N, AAPL.OQ, SLXP.OQ, BWA.N, MJN.N, VMW.N, UNH.N, LVS.N, BRCM.OQ, ORLY.OQ, LLY.N, HTWR.OQ, KLAC.OQ, PNRA.OQ, LXFR.N, FIO.N, CSCO.OQ, WPI.N, KMX.N, DISCA.OQ, XRX.N, BBBY.OQ, VRSK.OQ, GOOG.OQ, FDX.N, LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, EXPD.OQ, CTSH.OQ, BIIB.OQ, FCX.N, SBUX.OQ, QCOM.OQ, ZUMZ.OQ, MR.N, MLNX.OQ, JCI.N, DE.N, EOG.N, DG.N, FTI.N, MSFT.OQ, ROK.N, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, ABT.N, EMR.N, IHS.N, NKE.N, HXL.N, BA.N, STJ.N, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N, INTC.OQ, UPS.N, COST.OQ, MA.N, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N, AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, LIFE.OQ, IRG.OQ, JAZZ.OQ, APC.N, ORCL.OQ, THOR.OQ, CRM.N, TDC.N, V.N, AMG.N, UA.N, KRFT.OQ, CI.N, N.N, ATVI.OQ, AXP.N, SLB.N, LLY.N, UTX.N).

Credit Suisse may have interest in (AIRA.KL, DSOM.KL, MAHB.KL)

As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (051910.KS, RYA.I, EXPN.L, 2628.HK, AMEC.L, VIV.PA, JMAT.L, CPG.L, SASY.PA, TNTE.AS, PGS.OL, BAYGn.DE, SIEGn.DE, PRU.L, DUFN.S, 2354.TW, UNBP.PA, EZJ.L, HMSO.L, MONY.L, SHP.L, SAPG.F, 2357.TW, IMT.L, NOVN.VX, 1099.HK, 1088.HK, ABBN.VX, 2330.TW, WPP.L, PHG.AS, SMIN.L, 3008.TW, 2318.HK, CHKP.OQ, ASML.AS, SOON.VX, NESN.VX, DANO.PA).

Credit Suisse has a material conflict of interest with the subject company (0883.HK). Credit Suisse is acting as financial advisor to both CNOOC Ltd. and SINOPEC on the acquisition of Marathon Oil Corporation's 20% interest in Block 32, offshore Angola.

Credit Suisse has a material conflict of interest with the subject company (0293.HK). Jack So, a Senior Advisor of Credit Suisse, is an Independent Non-Executive Director of Cathay Pacific Airways Limited.

Credit Suisse has a material conflict of interest with the subject company (FFIV.OQ). As of the date of this report, an analyst involved in the preparation of this report has a long position in the common equity of F5 Networks.

Credit Suisse has a material conflict of interest with the subject company (DUFN.S). Credit Suisse has acted as Joint Bookrunner in the CHF 294m accelerated bookbuild of primary shares in Dufry. Proceeds from the capital increase will be used to finance the acqusition of 51% of Folli Follie?s Travel Retail Business.

23 November 2012


Credit Suisse has a material conflict of interest with the subject company (SHP.L). Susan Kilsby, an employee of Credit-Suisse, is a member of the Board of Directors of Shire PLC.

Credit Suisse has a material conflict of interest with the subject company (KNIN.VX). .

Credit Suisse has a material conflict of interest with the subject company (VRSK.OQ). Credit Suisse has a material conflict of interest with the subject company (VRSK). As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (VRSK). An analyst or a member of the analyst's household has a long position in the common stock of Verisk Analytics.

Credit Suisse has a material conflict of interest with the subject company (GSK.L). Credit Suisse Securities (USA) LLC is acting as an advisor to Human Genome Sciences, Inc. (HGSI) in an announced potential transaction with Glaxo SmithKline (GSK).

Credit Suisse has a material conflict of interest with the subject company (PFE.N). A Credit Suisse analyst involved in the preparation of this report has a (long/short) position in the common stock of PFE.

Credit Suisse has a material conflict of interest with the subject company (GILD.OQ). A Credit Suisse analyst involved in the preparation of this report has a long position in the common stock of GILD.

Credit Suisse has a material conflict of interest with the subject company (CAM.N). Credit Suisse Securities (USA) LLC is acting as financial advisor to Cameron in connection with its announced joint venture with Schlumberger.

Credit Suisse has a material conflict of interest with the subject company (UTX.N). Credit Suisse Securities (USA) LLC is acting as an advisor to Goodrich (GR) in a potential transaction with United Technologies Corp.

Credit Suisse has a material conflict of interest with the subject company (6502.T). Credit Suisse Securities (USA) LLC is acting as an advisor to Landis+Gyr on the announced acquisition by Toshiba Corporation. This acquisition remains subject to regulatory approvals and other customary closing conditions.

As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject company (FFIV.OQ). As of the date of this report, an analyst involved in the preparation of this report has a long position in the common equity of F5 Networks.

Important Regional Disclosures

Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (051900.KS, 036570.KS, 012330.KS, 051910.KS, 000720.KS, 028050.KS, 020560.KS, 035250.KS, RYA.I, NLSN.N, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK, 0293.HK, ASSAb.ST, BRBY.L, 0670.HK, DLTR.OQ, AIRA.KL, OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DAST.PA, DGE.L, BVI.PA, NXPI.OQ, PCLN.OQ, 2628.HK, AMEC.L, BMRI.JK, ERII.OQ, VIV.PA, PERP.PA, ALS.AX, HZNC.BO, JNJ.N, 0813.HK, 1299.HK, 2618.TW, JMAT.L, WTB.L, ITC.BO, CONG.DE, 000568.SZ, SBSP3.SA, CPI.L, CPG.L, 6481.T, SASY.PA, ASII.JK, TNTE.AS, BPI.PS, 0322.HK, GIAA.JK, PGS.OL, SCHN.PA, BAYGn.DE, GOCP.BO, HYFL.SI, PER.L, EDEN.PA, SLXP.OQ, ATCOa.ST, 1044.HK, SIEGn.DE, BWA.N, MJN.N, SPMI.MI, AIRP.PA, PRU.L, VMW.N, UNH.N, SGSN.VX, SECB.PS, COAL.BO, SUBC.OL, LVS.N, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, ITRK.L, DUFN.S, HIK.L, BRCM.OQ, ORLY.OQ, 2354.TW, UNBP.PA, LLY.N, HTWR.OQ, BOSSn.DE, DPWGn.DE, SJP.L, LVMH.PA, HRGV.L, KLAC.OQ, IVRC.BO, PNRA.OQ, LXFR.N, MLC.L, HRMS.PA, HLMA.L, EZJ.L, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, SCIL.SI, AGGK.L, HMSO.L, WPI.N, PWTN.S, MONY.L, TECF.PA, LUPN.BO, WDH.CO, UHR.VX, SHP.L, ROG.VX, UNTR.JK, KMX.N, GFINBURO.MX, SXS.L, SBER.MM, SAPG.F, 2357.TW, IMT.L, KNIN.VX, ROR.L, 6273.T, DOM.L, ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, VRSK.OQ, 6954.T, PSON.L, 1099.HK, IHG.L, 1088.HK, 0753.HK, 600809.SS, ABBN.VX, MEO1V.HE, 2330.TW, 6268.T, 1880.HK, GOOG.OQ, MAHB.KL, FMEG.DE, GSK.L, PFC.L, HCLT.BO, 1055.HK, FDX.N, WPP.L, LLTC.OQ, 6506.T, FDO.N, CELG.OQ, GUD.AX, APKT.OQ, VIGR.VI, EXPD.OQ, AKSO.OL, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, NOVOb.CO, FCX.N, BBCA.JK, SBUX.OQ, QCOM.OQ, PHG.AS, SMIN.L, 3008.TW, SL.L, ZUMZ.OQ, 600519.SS, COLOb.CO, PAP.I, CFR.VX, BBRI.JK, SPX.L, 0992.HK, MR.N, NYN.L, UMI.BR, 2318.HK, MLNX.OQ, JCI.N, DE.N, EOG.N, DG.N, FTI.N, MSFT.OQ, ROK.N, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N, NI.N, VZ.N, MANU.N, 6472.T, EMC.N, ABT.N, EMR.N, IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, STJ.N, REL.L, CHKP.OQ, DHR.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N, INTC.OQ, UPS.N, COST.OQ, MA.N, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N, AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, 6503.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, LIFE.OQ, IRG.OQ, JAZZ.OQ, APC.N, ORCL.OQ, ASML.AS, 6861.T, THOR.OQ, CRM.N, SOON.VX, TDC.N, STEL.SI, V.N, AMG.N, UA.N, KRFT.OQ, DSV.CO, NESN.VX, OREP.PA, DANO.PA, UNc.AS, RB.L, COLG.BO, CI.N, N.N, ATVI.OQ, AXP.N, SLB.N, LLY.N, UTX.N, 6367.T, CHRH.CO) within the past 12 months

An analyst involved in the preparation of this report has visited certain material operations of the subject company (AAPL.OQ, SWK.N) within the past 12 months

The travel expenses of the analyst in connection with such visits were not paid or reimbursed by the subject company, other than de minimus local travel expenses.

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

23 November 2012


For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

The following disclosed European company/ies have estimates that comply with IFRS: (RYA.I, EXPN.L, ASSAb.ST, DAST.PA, DGE.L, VIV.PA, PERP.PA, JMAT.L, CONG.DE, CPG.L, SASY.PA, SCHN.PA, ATCOa.ST, SIEGn.DE, SPMI.MI, PRU.L, SGSN.VX, ADSGn.F, BMWG.F, ITRK.L, DUFN.S, HIK.L, BOSSn.DE, DPWGn.DE, MLC.L, HLMA.L, EZJ.L, SAB.L, HMSO.L, PWTN.S, TECF.PA, WDH.CO, SBER.MM, SAPG.F, IMT.L, KNIN.VX, AZN.L, PSON.L, IHG.L, ABBN.VX, MEO1V.HE, FMEG.DE, PFC.L, WPP.L, VIGR.VI, ADN.L, PGHN.S, FREG.DE, PHG.AS, SMIN.L, SL.L, SPX.L, REL.L, BMY.N, ASML.AS, SOON.VX, NESN.VX, OREP.PA, DANO.PA, UNc.AS, RB.L).

As of the end of the preceding month, the subject company (SWK.N) beneficially owned 5% or more of the total issued share capital of Credit Suisse Group.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Credit Suisse Securities (Europe) Limited. Andrew Garthwaite ; Marina Pronina ; Mark Richards ; Robert Griffiths ; Sebastian Raedler ; Nicolas Wylenzek

Important MSCI Disclosures

The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, re-disseminated or used to create and financial products, including any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan Stanley Capital International and the MSCI indexes are services marks of MSCI and its affiliates.

The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor’s. GICS is a service mark of MSCI and S&P and has been licensed for use by Credit Suisse.

Important Credit Suisse HOLT Disclosures

With respect to the analysis in this report based on the Credit Suisse HOLT methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the Credit Suisse HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report

The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently applied to all the companies included in its database. Third-part data (including consensus earnings estimates) are systematically translated into a number of default algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. The adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur.

Additional information about the Credit Suisse HOLT methodology is available on request.

The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variable may also be adjusted to produce alternative warranted prices, any of which could occur.

CFROI®, HOLT, HOLTfolio, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or service marks or registered trademarks or registered service marks of Credit Suisse or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse.

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683.

23 November 2012


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