Microsoft word - 1.frontcover_50 for 2012_with poll.doc

December 8, 2008
We have polled our analysts globally to identify the
highest quality companies in their sectors, given that
an increasing number of stocks appear to be dislocated from their fundamental valuations. Our driving principle was to create a list of 50 companies whose business models and market positions one would like to have had Philip Morris International exposure to in 2012. Procter & Gamble Reliance Industries We tried to identify the best franchises, not the most- Bank of New York Mellon Rolls-Royce oversold stocks. We sought the sub-sectors that have the right dynamics to create long-term value, and then the one Baxter International or two truly great companies therein. The main criterion is sustainability — of competitive
China Mengniu Dairy position, business model, pricing power, cost efficiency and growth. For each company, we have chosen to show Credit Suisse Group Takeda Pharmaceutical this through the evolution of ROE. Although the quality of Tingyi (Cayman Islands) a business can be assessed by its return on capital, we are writing for equity investors, and so we cannot ignore Dentsply International management's attitude towards capital structure. We are taking a longer-term view. We are not asserting
Ultra Petroleum that these stocks are all Buys; there was no prerequisite in Iberdrola Renovables our poll that they be rated Overweight, nor any specific assumption about where we are in the economic cycle. IntercontinentalExchange Veolia Environnement Our analysts' strengths lie in understanding their industries Johnson & Johnson and what will differentiate winners from losers as industry Wal-Mart de Mexico value chains evolve. It is these insights we seek to exploit Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. Customers of Morgan Stanley in the US can receive independent, third-party research on companies covered in Morgan Stanley Equity Research, at no cost to them, where such research is available. Customers can access this independent research at www.morganstanley.com/equityresearch or can call 1-800-624-2063 to request a copy of this research.
For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.
+ = Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. December 8, 2008
50 for 2012: Investment Guide — Global

‘50 for 2012' Poll
Stronger
Analyst Impressions
ilience in
Advantage
Benefits
from Scale
Leverage
Leverage
Governance
Adobe Systems (ADBE.O) Air Liquide (AIRP.PA) Amazon.com (AMZN.O) América Móvil (AMX.N) ArcelorMittal (MT.N) Banco Itaú (ITU.N) Bank of NY Mellon (BK.N) Baxter International (BAX.N) Carnival (CCL.L) China Mengniu Dairy (2319.HK) Credit Suisse (CSGN.VX) CVS/Caremark (CVS.N) Dentsply Internat'l (XRAY.O) Goldman Sachs (GS.N) Hitachi Metals (5486.T) Iberdrola Renovables (IBR.MC) IntercontinentalExch. (ICE.N) Johnson & Johnson (JNJ.N) Li & Fung (0494.HK) Michael Page (MPI.L) December 8, 2008
50 for 2012: Investment Guide — Global

‘50 for 2012' Poll
Stronger
Analyst Impressions
ilience in
Advantage
Benefits
from Scale
Leverage
Leverage
Governance
Monsanto (MON.N) Nestlé (NESN.VX) Nintendo (7974.OS) Philip Morris Internat'l (PM.N) Procter & Gamble (PG.N) Reliance Industries (RELI.BO) Rolls-Royce (RR.L) SABMiller (SAB.L) Schlumberger (SLB.N) Standard Bank (SBKJ.J) Takeda Pharmaceutical (4502.T) Tingyi (0322.HK) Toyota Motor (7203.T) Trend Micro (4704.T) Ultra Petroleum (UPL.N) Union Pacific (UNP.N) URS Corp. (URS.N) Veolia Environnement (VIE.PA) Wal-Mart de Mex. (WMMVY.PK) Wells Fargo (WFC.N) Yamada Denki (9831.T) December 8, 2008
50 for 2012: Investment Guide — Global


Financial Metrics
CAGR, (%)
CAGR, (%)
EBIT Margin
Net Debt/
Baxter International China Mengniu Dairy Credit Suisse Group CVS/Caremark Corp. Dentsply International Goldman Sachs Group Iberdrola Renovables Johnson & Johnson Monsanto Company Philip Morris International Inc Procter & Gamble Reliance Industries Takeda Pharmaceutical The Bank of New York Mellon Corp Tingyi (Cayman Islands) Union Pacific Corp. Veolia Environnement Wal-Mart de Mexico Wells Fargo & Co. Source: Morgan Stanley Research estimates December 8, 2008
50 for 2012: Investment Guide — Global


Valuation Metrics
FCF Yld, %
Div Yld, %
% 12-18 month upside/downside to
Baxter International China Mengniu Dairy Credit Suisse Group CVS/Caremark Corp. Dentsply International Goldman Sachs Group Iberdrola Renovables Johnson & Johnson Monsanto Company Philip Morris International Inc Procter & Gamble Reliance Industries Takeda Pharmaceutical The Bank of New York Mellon Corp Tingyi (Cayman Islands) Union Pacific Corp. Veolia Environnement Wal-Mart de Mexico Wells Fargo & Co. Source: Morgan Stanley Research estimates December 8, 2008
50 for 2012: Investment Guide — Global
Software
Adobe Systems (ADBE.O)
Value of Growth Analysis
Morgan Stanley & Co. Adam Holt
Adobe stands to benefit from several of the most powerful
secular trends in software, in our opinion, including the growing
prevalence of rich Internet applications, convergence of video and Web content, the growth of Web-enabled mobile devices, and the rise of next-generation applications that combine online and offline capabilities. These trends should drive end markets implied value of and correlated spending growth at better than 10%. Adobe should be able to grow revenue at least as fast as the company penetrates these opportunities. Adobe's two largest products, Creative Suite (CS) and Acrobat Return on Equity (ROE) Analysis
(more than 80% of revenue), are the de facto industry standards, and the company is the industry leader in innovation, in our view, which should allow it to retain a market leading position. While the macro weakness could dampen the current product releases, CS 4 (October 2008) and Acrobat 9 (June 2008), we believe that the product cycles combined with the secular drivers should cushion some of the near-term macro headwinds. Looking out further, given CS's status as a virtually mission-critical tool for Morgan Stanley forecast creative professionals, we believe that Adobe will exit the reces- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 sion with pent-up demand for its products that could drive mate-rial EPS acceleration in F2010–11 on easy comparisons. High proportion of variable costs offers flexibility to defend
Adobe Systems vs. Americas Coverage Universe
earnings, and management has shown willingness to do so.
Variable costs account for 90% of Adobe's cost structure — the
highest level in our group. Adobe recently announced a restruc- turing that should lower operating expenses and position the company for material margin expansion when the market im- proves and CS4 or CS5 become catalysts. Risk-Reward on a 12-month view (Overweight/Attractive, PT $32)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Price Target (Dec-09) Historical Stock Performance Current Stock Price Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Chemicals
Air Liquide (AIRP.PA)
Value of Growth Analysis
Morgan Stanley & Co. Michael Eastwood
International plc+ We believe Air Liquide is on the verge of a growth spurt,
driven by increased average project size and lower capital inten- sity levels as a result of the current high energy price environ- ment. During the 1990s, the average project size was €15mn; according to Air Liquide, in 2007 the average size was closer to €40mn. With crude and natural gas prices rising, there is upside implied value of to medium-term project sizes. We like Air Liquide's aggressive capex plans (€10bn 2007-11e). In 2009, 25 projects are set to start, with a significant percentage in China for various industrial applications. Air Liquide also ex- Return on Equity (ROE) Analysis
pects to secure new sources of hydrogen and expand its existing Gulf Coast hydrogen pipeline in 2009. In 2010, 16 facilities are currently signed, with additional projects expected. At the end of 2009 and early in 2010, two large hydrogen facilities are set to start up for Neste Oil in Singapore and Rotterdam. Hydrogen for refiners should remain a significant growth engine for industrial gas companies over the medium term, contributing Morgan Stanley forecast 3-4% to top-line growth. We expect energy and emerging mar- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 kets to add a further 2-3% to Air Liquide's current top-line growth of 8%. Over the past 30 years, Air Liquide has demonstrated little corre-lation with GDP fluctuations; its sales growth has been driven by Air Liquide vs. European Coverage Universe
capex. This is the result of its defensive business structure, Air Liquide
based on take-or-pay contracts with raw material escalation percentile range clauses. We believe the market is failing to appreciate the group's global leadership position and superior growth prospects, under- pinned by capex plans and investments in higher-return projects. Risk-Reward on a 12-month view (Overweight/In-Line,
PT €104.55)
€104.55 (+66% )
€ 63.08
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated Price Target (Dec-09) Historical Stock Performance Current Stock Price with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Internet & Consumer Software
Amazon.com (AMZN.O)
Value of Growth Analysis
Morgan Stanley & Co. Mary Meeker
Amazon.com is well positioned to show robust growth over
the long term, we believe, based on: (1) a best-in-class user
experience and value proposition; (2) potential to gain share both in a recession and thereafter; and (3) a strong free cash flow pro- file. Amazon.com is the world's largest online retailer, though in recent years its market segments have evolved and expanded as it has created what we regard as one of the world's most impres- implied value of sive logistics and distribution businesses. We believe Amazon.com could successfully emerge from this challenging economic environment in a stronger position, as Return on Equity (ROE) Analysis
other low-cost retailers like Wal-Mart have benefited in previous recessions. Amazon.com has reported strong growth metrics over the past year despite the slowing economy and it is notable to compare it with the likes of Wal-Mart. In addition, our recent proprietary pricing analysis shows that Amazon.com has been price-competitive with Wal-Mart; including third-party items (31% of units in CQ3:08), Amazon.com's prices are often lower — a key competitive advantage, in our view. Morgan Stanley forecast We maintain that Amazon.com continues to offer a best-in-class 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 user experience through attractive pricing, one-click shopping, a broad array of products/selection, free and fast shipping, etc. Continual improvements to the user experience is illustrated by the addition of Amazon Prime, increased focus on third-party Amazon.com vs. Americas Coverage Universe
sales, innovation (Kindle, Web Services), and broader offerings. We believe these initiatives should continue to pay off and Ama- zon.com will continue to grow at rates in excess of traditional retail and e-commerce. YTD Amazon's North American segment has grown 32% Y/Y, while e-commerce has grown 8%, and tradi- tional retail has grown a modest 1% over the same period. With a strong balance sheet ($2 billion in net cash as of CQ3:08) and projected FCF of $1 billion-plus annually, Amazon.com is well positioned to successfully navigate the current economy, continue to innovate, and further enhance its value proposition. Risk-Reward on a 12-month view (Overweight/Attractive, PT NA)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Base Case (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Wireless Services
América Móvil (AMX.N)
Value of Growth Analysis
Morgan Stanley & Co. Vera Rossi
We believe AMX enjoys the best competitive position in the
Latin American wireless industry. It has launched 3G services
in 16 countries, while its largest competitor, Telefónica, launched 3G in only three. AMX has a strong spectrum position in Latin America, with about 30–55 MHz in each country. It is also the market share leader in several countries, with 40–50% in each. implied value of The upgrade to 3G will allow AMX to increase voice capacity and data speeds. Companies with higher network capacity should be able to offset potential revenue declines through gains in market share. Also, 3G improves AMX's network quality and ability to Return on Equity (ROE) Analysis
offer value-added services to attract contract users, who are less likely to suffer than prepaid in a macroeconomic slowdown, and help to sustain ARPU through the increase in the use of data and value added services. We estimate most of AMX's 3G capex for the next few years is complete. AMX has shown a strong ability to grow in low-income markets, increasing wireless penetration in Latin America from the low-20 Morgan Stanley forecast percent range to the 70s. AMX operates against limited competi- tion: on average, two wireless players per market. Given its 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 strong market position, AMX is one of the largest buyers of hand-set and telecom equipments globally, with significant leverage to negotiate prices. AMX has a solid balance sheet, in our view, America Movil vs. Americas Coverage Universe
and strong FCF generation; we think management will continue returning money to shareholders, especially via buybacks. We expect communications traffic to continue moving to wireless, both voice and broadband. In voice, as the difference between wireless and wireline prices continues to narrow, wireless market share should keep rising. We see significant potential for wire- less broadband, as customers may use mobile phones for Inter- net access given lower handset prices versus PCs, as distribution of income is uneven in Latin America, limiting some consumers' ability to buy PCs. AMX should benefit from all these trends. Risk-Reward on a 12-month view (Overweight/In-Line, PT $52)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Metals & Mining
ArcelorMittal (MT.N)
Value of Growth Analysis
Morgan Stanley & Co. Ephrem Ravi
International plc+ ArcelorMittal is best placed to benefit from the changes that
have taken place in the steel industry over the past decade,
in our view. At four times the size of its nearest competitor glob- ally (130mt of steel capacity), it has a tremendous scale advan- tage. Integration backward into mining (targeting 75% self- sufficiency in iron ore and 20% in coking coal by 2012), and for- implied value of ward into steel distribution have lifted sustainable long-term earn- ings (and decreased volatility). ArcelorMittal is also the first steel company to introduce group-wide benchmarking and footprint optimization practices, aiming to squeeze out $4bn of costs over Return on Equity (ROE) Analysis
the next five years. With a portfolio of over 70 steel plants at different points on the cost curve, the business model lowers the break-even point sig-nificantly, allowing it to make deeper production cuts to bring supply and demand into balance in an industry notorious for poor production discipline during a downturn. The entrepreneurial management team (which acted decisively on the buy-vs-build Morgan Stanley forecast economics in steel during the ‘bust years' of 1991-2005 to ex- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 pand the business without building any greenfield capacity) owns 43% of the company and is highly geared towards creating shareholder value in the medium to long term. In our view, the market has not fully appreciated the extent of the ArcelorMittal vs. European Coverage Universe
transformation in the steel industry (from government to private ownership, from extreme fragmentation to some consolidation) percentile range and ArcelorMittal's very strong position within it (global footprint, backward integration, diversified product suite and manufacturing Risk-Reward on a 12-month view (Overweight/In-Line, PT US$50)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Telecom Services
AT&T (T.N)
Value of Growth Analysis
Morgan Stanley & Co. Simon Flannery
AT&T is well positioned in a rapidly evolving industry, in our
view. Its structural transformation over the last couple of years – from a wireline centric model to one based on wireless and data – should allow it to reap the benefits of a rapidly evolving industry better than any of its peers. With an increasingly dominant wireless position (33% share of implied value of Big 4 service revenue in 3Q08, +36% in 2012e), AT&T is poised to benefit from mass adoption of wireless data applications in the next few years. Overall, wireless data is now an $11 billion an-nual revenue stream for AT&T (8.6% of consolidated revenues), Return on Equity (ROE) Analysis
growing at 50%; this accounts for 100%+ of AT&T's overall reve- nue growth. This trend should continue as AT&T completes its 3G buildout with its HSDPA deployment allowing for speeds up to 20 Mbps (up from 1-2 Mbps today) within the next couple of years, well ahead and earlier than the competition. The company already has 17 million 3G subscribers (7 million in 3Q07) and a postpaid base where 1 out of 5 subs has an integrated device (up from 1 of 10 in 3Q07). AT&T strengthened its spectrum position Morgan Stanley forecast through the 700 MHz auction in order to build out a 4G network. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 AT&T is also a leader in the Enterprise segment, a position it should maintain due to its focus in IP data, which, aside from wireless data, is the sector's other major revenue growth driver. AT&T, Inc. vs. Americas Coverage Universe
In addition to its growth potential, AT&T enjoys a healthy financial position and a flexible business model characterized by the AT&T, Inc.
subscription-based nature of its revenue mix, with less exposure to usage declines. It has an investment-grade balance sheet, with leverage of just 1.7x. The flexibility of the business model gives it ample room to cut opex and capex if need be. Wireline customers are on fixed price bundles, while most of its wireless customers have large bucket plans with little overage. In addition, for the past 24 years, AT&T has supported and grown its dividend in good and bad times. Today that yield is at 5.5%. Risk-Reward on a 12-month view (Overweight/Attractive, PT $36)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Financial Institutions
Banco Itaú (ITU.N)
Value of Growth Analysis
Morgan Stanley & Co. Jorge Kuri
Look for continued strong growth and profitability from
Banco Itaú. We believe Itaú's superior distribution network, fi-
nancial strength, and strong execution skills should sustain its commanding share of the Brazilian banking market and generate above-average growth and profitability over the next 3 to 5 years. Itaú has delivered far superior EPS growth and ROE over the last implied value of decade, and we expect its competitive advantage relative to its peers to strengthen as a result of the integration with Unibanco. Indeed, we believe Itaú's recent acquisition of Unibanco (pending regulatory approval) will likely result in solid earnings growth Return on Equity (ROE) Analysis
through cost savings and revenue synergies, and will enhance the company's competitive position. We forecast the merger will boost local currency EPS growth to 22% in 2009 and 27% in 2010, vs 13% and 15%, respectively, on a stand-alone basis. We see further growth and value-generating opportunities through Itaú's Latin America expansion. The company's financial strength (with a capital ratio of 15%) combined with manage- Morgan Stanley forecast ment's solid track record in M&A should allow it to capitalize on consolidation opportunities outside its core market. The banking 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 markets in Mexico, Peru, and Colombia, for example, offer attrac-tive growth potential given high pent-up demand for financial ser- vices and relative macroeconomic stability versus the region as a Banco Itau Holding vs. Americas Coverage Universe
Finally, Itaú's diversified revenue stream and large stock of ex- Banco Itau Holding
cess reserves and unrealized gains should help protect earnings through the economic cycle. The company is involved in com- mercial banking for corporates, consumers, and SMEs; invest- ment banking; insurance; asset management; and pension fund management. Itaú's revenues are also diversified geographically, with a presence in Chile, Argentina, Uruguay, and Paraguay. Risk-Reward on a 12-month view (Overweight/Attractive, PT $15)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Forecasts above are for standalone Banco Itaú. Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research Price Target (Dec-09) Historical Stock Performance Current Stock Price on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Banking — Large-Cap
The Bank of New York Mellon (BK.N)
Value of Growth Analysis
Morgan Stanley & Co. Betsy L. Graseck
Bank of New York Mellon appears the best positioned for
growth among the processor banks. Its business model is
balanced across asset servicing and asset management, bonds and stocks, and fees and net interest income. Additionally, inter- national earnings are building as BK leverages its product mix across its integrated footprint. Finally, earnings growth should implied value of become more defensive with the merger benefits expected to come through in 2008–11. BK's business model is more diversified than its processor
bank peers, with revenues more evenly balanced between net
Return on Equity (ROE) Analysis
interest income, servicing fees, and management fees. Securi- ties lending and trading — areas where we expect lower growth — are a smaller portion of BK's revenue stream versus the peer group. Additionally, BK's assets under management (AUM) split is more balanced and has the lowest contribution from equities (35%), better positioning BK in the current bear market. International growth drives higher top line. International busi-
Morgan Stanley forecast ness (34% of revenue) offers fatter margins and higher growth sourced through increasing outsourcing opportunities. In the past 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 several quarters, international revenue grew 1 percentage point (ppt) per quarter, and BK expects to reach a 60/40 domestic/- international revenue split by 2010. International revenue contri- The Bank of New York Mellon Corp vs. Americas Coverage Universe
bution is expected to increase 9ppt in both Asset Management and Asset Servicing, and eight in Issuer Services. The Bank of New York Mellon Corp
Merger benefits play out over next three years. BK's earnings
growth is more defensive than its peer group due to the cost saves and revenue synergies associated with the Mellon merger. Cost saves are expected to be phased in 85% in 2009 and fully by 2010. Management recently increased its cost saves target to $850 million a year, more than 20% above the prior goal. BK also raised its 2011 revenue synergies target to $325-425 million from $250-400 million. Risk-Reward on a 12-month view (Overweight/In-Line, PT $40)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Medical Technology
Baxter International (BAX.N)
Value of Growth Analysis
Morgan Stanley & Co. David R. Lewis
Baxter's strong growth and leverage potential offer an attrac-
tive opportunity in an economically insulated name. Over the
next few years, we expect that more than 300 bps of organic EBIT expansion and the fruits of a heavy investment cycle in R&D and capex will drive double-digit EPS growth. Healthy outlook for plasma market fundamentals underpins
implied value of the strength of the core business. Our diligence indicates that
global plasma demand growth remains robust, and we expect double-digit growth in Intravenous Immunoglobulin (IVIG) and plasma proteins to persist. We believe oversupply problems that Return on Equity (ROE) Analysis
hampered profits in the past are unlikely to repeat, as ongoing consolidation and vertical integration within the industry encour-age responsible production and pricing strategies. Mix-driven margin leverage remains an underappreciated
future earnings driver. We expect more than 250 bps of gross
margin expansion in 2008-12 as the highest-margin segments
and products grow fastest. We also expect material improve- Morgan Stanley forecast ments in EBIT margins in Medication Delivery as the segment lapses a generic, and we see improved profitability in Renal as 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Baxter taps the EM opportunity in end-stage renal disease. Projected FCF growth leads large-cap Med Tech over the
next three years. While Baxter's 2008e FCF yield is depressed
Baxter International vs. Americas Coverage Universe
at 5.7% due to peak capex, we expect an FCF CAGR exceeding 20% through 2011 as capex normalizes and margins expand. FCF yield has been a historical indicator of equity outperfor- mance in Med Tech during recessions, suggesting that Baxter is well-positioned to weather the current storm. Baxter is poised to reap the benefits of the end of a heavy
investment cycle in R&D and capex. Since 2004, R&D has
increased over 60%, and capex is up threefold over last year. Product launches should maintain top-line growth, and a new fractionation facility is expected to boost margins on plasma. Risk-Reward on a 12-month view (Overweight/Attractive, PT $72)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
BG Group (BG.L)
Value of Growth Analysis
Morgan Stanley & Co. Theepan Jothilingam
International plc+ BG offers upstream growth, leverage to tightening gas mar-
kets and substantial exposure to one of the industry's explo-
ration hotspots through its position in Brazil. We believe the
track record with the drillbit and the options for its LNG business provides a logic for sustained superior growth rates relative to the implied value of The LNG business is growing rapidly: 2008 has been step change year, with profits more than doubling. LNG markets have tightened, and with demand expected to remain robust and fur- Return on Equity (ROE) Analysis
ther supply delays likely, we see the opportunities for BG expand-ing rather than diminishing. Furthermore, although BG eventually walked away from the Origin deal (for coal bed methane assets in Australia), we would argue that the interest and prices paid by competitors has again highlighted the entrepreneurial nature of BG's management team. It also confirmed the long-term supply constraints in the Pacific LNG market, a view long held by BG, and that replicating BG's integrated gas business is becoming Morgan Stanley forecast increasingly difficult (and expensive). The upstream portfolio shows few signs of decline, the exploration track record is im- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 pressive, and BG argues that the upside case from Brazil sug-gests it can grow 6-8% per annum to 2020, which would be unique in Big Oil, on Morgan Stanley's estimates. BG Group vs. European Coverage Universe
With some of the most strategically valuable assets in the indus- try, increasing M&A should provide a floor for the shares even in percentile range volatile markets. On the upside, we think it is one of the few com- panies in our coverage universe for which there are tangible cata- lysts for the share price to double. Please refer to the important disclosure regarding BG Group
on page 61.
Risk-Reward on a 12-month view (Overweight/Attractive,
PT 1800p)
1,800p (+125% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Leisure & Hotels
Carnival (CCL.L)
Value of Growth Analysis
Morgan Stanley & Co. Jamie Rollo
International plc+ A leading position in a global duopoly with strong long-term
demand prospects. Carnival is the largest cruise line and con-
trols approximately 50% of the North American and global cruise market; it is twice as large as its closest competitor, Royal Carib- bean. The cruise industry is not only attractive for its duopoly structure and demand growth, but also for its very high entry bar- implied value of riers, high cash generation, and attractive business model. Carnival will continue to grow its capacity at an average annual rate of 6% for the next four years, thanks to its current ships on Return on Equity (ROE) Analysis
order. Long-term demand is being driven by an ageing popula-tion and market share gains from more expensive land-based Carnival will generate EBITDA margins in the high 20s and a return above its WACC even on our cautious 2009 forecasts. We expect net yield to decline 8% in 2009 but EPS to be flattish thanks to lower fuel costs and good cost control. Morgan Stanley forecast CCL has a strong balance sheet but high cash needs. We
estimate net debt of $8.3bn in 2008 and $8.5bn in 2009, equiva- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 lent to 2.1x and 2.2x EBITDA, and capex (new ships and mainte-nance) of $3.4bn in 2009 and $3.5bn in 2010. On a four year view, it has cash commitments of c. $14bn, and liquidity of $17bn. Carnival Corp. vs. European Coverage Universe
It is well above its covenants (debt to cap 65% vs 32% today, EBITDA interest cover 3x vs 9x in 2009e). Net debt falls sharply percentile range post 2010, and this is when we think the dividend will be re- Risk-Reward on a 12-month view (Overweight/In-Line, PT 2300p)
2,300p (+63% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research Price Target (Dec-09) Historical Stock Performance Current Stock Price estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Food, Beverage & Tobacco
China Mengniu Dairy (2319.HK)
Value of Growth Analysis
Morgan Stanley Asia Angela Moh
Rapid growth in disposable income provides a favorable
backdrop for China's leading dairy company, China Mengniu.
Annual per capita milk consumption in China is still low at only 7.0 liters, versus 13.1 in Taiwan, 29.4 in South Korea, and 32.6 in Japan. We expect Mengniu to capitalize on the industry's strong growth and increase its annual volume of liquid milk sales to 10 implied value of million tons by 2012 from 4 million tons currently. Founded by Mr. Niu Gensheng in 1999, Mengniu's principal products are liquid milk (UHT milk, milk beverages, and yogurt) and ice cream. Liquid milk generates the lion's share of earnings, Return on Equity (ROE) Analysis
accounting for 86% of sales in 1H08. Mengniu's plans to improve product mix and expand the distribution network should help the company maintain a leading position over peers, in our view. Mengniu currently has a 40%-plus market share. The recent melamine-tainting scandal affecting most producers in China's dairy industry shattered consumer confidence in the in- dustry and negatively affected demand and brand image for Morgan Stanley forecast companies such as Mengniu, Yili, and Bright. However, we be- lieve Mengniu can emerge from the crisis with a decent market 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 share, given its strong balance sheet, solid execution capabilities, and established production network. The likely accelerating in- dustry consolidation should weed out weaker firms. China Mengniu Dairy vs. Asia Pacific Coverage Universe
China's dairy industry CAGR was 23% in 2001-06, with annual China Mengniu Dairy
sales at more than US$14 billion in 2006. We expect strong growth to continue in the next five years driven by three evolving trends: 1) rapid urbanization and income growth; 2) a population that is increasingly health conscious; and 3) introduction of, and a growing desire for, higher-value-added products. Risk-Reward on a 12-month view (Underweight/Attractive,
PT HK$13.50)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - Source: FactSet (historical share price data) Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Financials
Credit Suisse Group (CSGN.VX)
Value of Growth Analysis
Morgan Stanley & Co. Huw van Steenis
International plc+ Credit Suisse looks to be one of the longer-term winners of
the structural crisis that has hit the global banking system.
The strong cash and capital generation of its asset and wealth management business — alongside its Swiss franchise — is the core attraction of CSG at a time when we think many banks wil struggle to generate a lot of capital in a harsh downturn. We think this is some 80% of its earnings power in the coming years. Moreover, it is benefiting from a ‘flight to quality', with teams and clients coming its way. We also think it shares the attributes of our winners (which we call the new AA-ristocracy), which include Return on Equity (ROE) Analysis
a good capital base, strong deposit-driven funding, business di- versity, avoiding the credit black spots and effective manage-ment. This is not to say CSG doesn't have its set of challenges: the stress in liquidity markets, disorderly unwind of leverage and re-cession ahead have resulted in large write downs, and we think more are likely ahead. However, a management team that has a Morgan Stanley forecast reputation for cost cutting and turning CSG around once already should provide an edge versus competitors. We also think 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 it could benefit from market share gains. We also see opportunities in potential consolidation, particularly in asset and wealth management, where many good assets could Credit Suisse Group vs. European Coverage Universe
come up for sale as banks look to sell non-core divisions. Its Credit Suisse Group
strong management team should be able to take advantage of percentile range this. Moreover, by recapitalizing upfront, it may have the confi- dence to take advantage of these opportunities. The future will no doubt be challenging, but we think CSG looks reasonably well placed to be a longer-term winner. Risk-Reward on a 12-month view (Overweight/In-Line, PT SFr 59)
SFr59.00 (+113% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; SFr 27.70
Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at Price Target (Dec-09) Historical Stock Performance Current Stock Price www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Healthcare Services
CVS/Caremark (CVS.N)
Value of Growth Analysis
Morgan Stanley & Co. David T. Veal, CFA
CVS/Caremark's integrated business model represents a
radical new approach that provides ample room for robust
future earnings growth. For some time, we have viewed the
company's two operating segments (retail pharmacy and phar- macy benefits management, or PBM) as among the best opera- tors in their respective industries. Yet today, we see the ongoing integration of these entities as a catalyst for accelerating growth implied value of through market share gains resulting from product innovation. At present, the Caremark subsidiary remains the most competitive operator within the PBM industry. Indeed, we believe this year's Return on Equity (ROE) Analysis
marquee account wins signal an improving competitive position and expect the company will remain a share gainer. Moreover, new offerings, such as 90-day prescription fills at retail and private label discounts, are set to offer compelling differentiation in a ma- ture sector increasingly at risk of commoditization, in our view. CVS's retail segment appears well positioned to emerge from
the downturn as an even stronger competitor. Same-store
sales have remained comfortably in positive territory and have Morgan Stanley forecast outpaced rivals in recent quarters, driven by strong customer 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 loyalty programs and private-label offerings, which have gained new traction with consumers looking to "trade down." In addition, new clinical programs including expanded services at Minute Clinics and greater therapy compliance through pharmacist coun- CVS/Caremark Corp. vs. Americas Coverage Universe
seling aim to reinvent the drugstore as a healthcare setting. The company's balance sheet remains solid, and its capital de- ployment strategies appear healthy. While decelerating script growth remains a headwind for the entire pharmaceutical supply chain, these challenges have created opportunities for consolida- tion. Indeed, the recently completed acquisition of Longs Drug Stores appears a shrewd move to expand its national footprint and grow both segments. Share repurchases also should serve as an ongoing catalyst for the near to intermediate term given the strength of the company's balance sheet. Risk-Reward on a 12-month view (Overweight/In-Line, PT $40)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Electrical Equip. & Industrial Conglom.
Danaher (DHR.N)
Value of Growth Analysis
Morgan Stanley & Co. Scott Davis
Best-in-class industrial company with a proven growth strat-
egy. As we see it, the Danaher story stands on three pillars:
(1) existing strong franchises driving long-term organic growth of 4–6%; (2) the Danaher Business System (DBS), a proprietary operating system that drives operational efficiencies; and (3) strong FCF generation for reinvestment (acquisitions), which implied value of adds another 5–8% to growth. Danaher's strong balance sheet position it well to take advantage of reinvestment opportunities. We think Danaher can achieve 15% EPS growth over the long term, which compares favorably to peers. Return on Equity (ROE) Analysis
The Danaher Business System is a key driver of the Danaher
culture. DBS focuses on continuous improvement of everything
from manufacturing to product development, acquisitions, and
customer service. While many peers employ lean manufacturing
and Six Sigma programs, few incorporate these initiatives to the degree that DBS does. We view DBS as a strategic advantage that helps Danaher drive high ROIC and margin improvement. Morgan Stanley forecast Danaher employs what we regard as a highly capable man-
agement team with a history of strong execution. Danaher
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 possesses one of the most highly regarded CEOs in all of indus-trials and arguably the most proven CFO. The company culture is closely tied to a common set of operational metrics through Danaher Corp. vs. Americas Coverage Universe
DBS that provides focused management processes with clear goals. Moreover, the Danaher business model allows younger executives to train and develop at smaller niche businesses. The Danaher portfolio has evolved with a focus on busi-
nesses that are less cyclical. Core platforms include dental
equipment, electronic test, and water quality. In each, Danaher possesses leading brands and market share. A common theme is the balance between the sale of equipment and consumables: Equipment helps Danaher build an installed base, while consum- ables drive recurring revenues and margins. Risk-Reward on a 12-month view (Equal-weight/Cautious, PT $57)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Healthcare Services
Dentsply International (XRAY.O)
Value of Growth Analysis
Morgan Stanley & Co. David T. Veal, CFA
We believe XRAY is best positioned to outperform its peers
within the global dental market long term. The company's
focused exposure to robust secular growth in worldwide dental consumables demand — a $12 billion market that we see ex- panding 200–300 bps per year faster than world GDP over the longer term — makes it a core holding, in our opinion. implied value of With 60% of its revenues derived from markets outside the United States, Dentsply exhibits a level of global diversification we view as unmatched by most of its peers within healthcare. We expect that Dentsply's product leadership and steady emphasis on inno- Return on Equity (ROE) Analysis
vation will continue to drive top-line growth. Indeed, today more than 40% of revenues come from products introduced within the last five years, a figure that speaks volumes about the constant demand for products with superior clinical efficacy. Denstply also continues to execute well on operational initiatives aimed at driving margin expansion. These efforts to deliver cost controls and lean manufacturing should boost operating margins Morgan Stanley forecast by as much as 30–50 bps per year for the medium term. Recent efforts to improve visibility into its end markets by paring back its 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 distribution network should also allow more targeted sales efforts and more effective marketing spending. An effective hedging program has also helped to mitigate the effect of unpredictable swings in foreign currency values on earnings. Dentsply International vs. Americas Coverage Universe
A strong balance sheet and robust free cash flow profile provide ample opportunity for Dentsply to consolidate its industry. Al- though it is the clear leader in global market share, Dentsply represents only about 15% of total sales, such that substantial room exists to consolidate the largely fragmented consumables industry. Our model estimates that M&A activity has the potential to augment organic revenue growth by 200 bps per year or more in coming years. We see room for substantial synergies as the company puts global distribution and marketing muscle behind products that have proven successful locally or regionally. Risk-Reward on a 12-month view (Overweight/In-Line, PT $35)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Goldman Sachs (GS.N)
Value of Growth Analysis
Morgan Stanley & Co. Patrick Pinschmidt
We view Goldman Sachs as well positioned to meet the reali-
ties of a post-credit crisis operating environment… The firm
enjoys a leading capital markets franchise across the most attrac- tive, high-margin products and regions. This global footprint pro- vides GS with significant leverage to a cyclical recovery. …and drive more resilient risk-adjusted returns in a recov-
implied value of ery. We do not see the necessary catalysts over the medium
term for the firm to return to historical levels of profitability ( 20% ROE). But we do expect Goldman's core business mix to help drive better risk-adjusted returns in a recovery ― in the context of Return on Equity (ROE) Analysis
a shift toward more recurring fee-based revenue streams (and a reduced weighting of capital-intensive debt markets business). We assume a gradual recovery in key business drivers (credit, equities, corporate activity) in 2010. We expect at least mid-teens ROE in a cyclical recovery,
based on Goldman's:
(1) leading positions in inherently high-
ROE businesses (asset management, equity trading, and Morgan Stanley forecast M&A/underwriting); (2) strengthened competitive position (as other players retrench or consolidate); (3) more rational pricing in 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 key products (particularly balance sheet-intensive services); and (4) ability to harvest potential gains from distressed investment opportunities in the current environment. Further, the firm's most Goldman Sachs Group vs. Americas Coverage Universe
capital-intensive (and lowest-ROE) business ― fixed income trading ― is likely to be resized to produce better returns. Ongo- Goldman Sachs Group
ing cost-cutting efforts should also boost the firm's operating lev- erage to a recovery. We believe recent capital injections of $21 billion have ef-
fectively removed balance sheet adequacy concerns. Based
on our pro forma calculations, incremental capital has boosted the firm's Tier 1 capital ratio to a level well above the US univer- sal banks group, with tangible assets/tangible equity and Tier 1 leverage ratios now on par with US universal banks. Risk-Reward on a 12-month view (Overweight/In-Line, PT $137)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Hitachi Metals (5486.T)
Morgan Stanley Japan Harunobu Goroh
Value of Growth Analysis
Securities Co., Ltd.+ Despite short-term impact from earnings fluctuations in its cyclical businesses, Hitachi Metals aims to expand earnings based on electric power infrastructure development in emerging markets, environmental technologies to respond to tougher regulations globally, and the firm's prowess in independent technologies. Another fulcrum of earnings growth for the firm is rationaliza- tion/restructuring, with a focus on improving asset efficiency and implied value of margins, in cyclical fields such as specialty steel, rare earth mag- nets and auto castings. Here is where our focus lies: (1) Amorphous alloys (materials for ultra-efficient power transformer cores): Beefing up capacity do- Return on Equity (ROE) Analysis
mestically and in the US (for 2009 start-up; annual production capacity rising from 50,000 tons to 105,000 tons). Demand is vibrant, fueled by the establishment of electric power infrastruc- ture in emerging markets and tougher restrictions on distribution transformers by the US Department of Energy (2010). (2) Hercu- nite (parts for car exhaust systems): Backed by enhanced envi-ronmental regulations and a broadening client base, Hitachi Met-als is bolstering capacity (from 500 tons/month now to 800 Morgan Stanley forecast tons/month). The firm's Hercunite products are highly heat- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 resistant and, as such, play a part in reducing particulate matter and nitrous oxide emissions in exhaust. They comply with Euro5 regulations. (3) Rare-earth sintered magnets for ultra-efficient motors: Hitachi Metals is shooting for 10% annual sales growth, Hitachi Metals vs. Japan Coverage Universe
mainly by increasing output via better productivity. These small, powerful magnets contribute to the process of downsizing motors used in applications like home appliances, factory automation, and hybrid electric vehicles, as well as electric power steering. Risk-Reward on a 12-month view (Overweight/In-Line, PT ¥1,200)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2009e; Valuation 2009e; Leverage 2009e Price Target (Dec-09) Historical Stock Performance Current Stock Price Source: FactSet (historical share price data), Company data, Morgan Stanley Re-search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Clean Energy
Iberdrola Renovables (IBR.MC)
Value of Growth Analysis
Morgan Stanley & Co. Luciano Diana
International plc+ Bobby Chada
Iberdrola Renovables (IBR) is the world leader in renewables,
with the largest wind power asset base and the largest pro-
ject pipeline. It is also an early player in new ‘clean' power
technologies, such as solar thermal and ocean power. Its main focus is to develop, build and operate wind farms, and it is not involved in the manufacture of wind turbines. Its asset base of implied value of 7GW at the end of 2007 is mainly concentrated in Spain, the US and the UK, while the project pipeline of 52GW spreads over 19 countries. Return on Equity (ROE) Analysis
Operating a wind farm typically provides stable cash flows from the sale of electricity at subsidized rates, and is economically attractive, typically with asset returns of 8-10% over a 20-year asset life. We expect supportive regulation and increasing power prices to underpin revenues and returns in the long term. The economics of wind power are very close to being competitive at a long term oil price of $85 per barrel, and we are bullish on the sub-sector over the next 5-10 years. Renewables penetration Morgan Stanley forecast remains very low in many countries, and industry sources expect global installed capacity to more than double by 2012 with a 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAGR of over 20%. We believe owners/developers' business models to be less cyclical than those of turbine manufacturers. IBR's main competitive advantages: Size and first-mover
Iberdrola Renovables vs. European Coverage Universe
advantage. Size and geographic reach diversify regulatory risk,
improve negotiating power with turbine manufacturers and deliver percentile range economies of scale in O&M. First mover advantage and industry expertise are important to secure the best locations (those with the highest wind resources and highest returns). IBR's manage- ment has a very solid track record in bringing projects through its pipeline from the identification stage to completion. Iberdrola owns a 75% stake and is committed to fund IBR's growth at least until 2012. Annual capacity additions of 2GW+ should ensure IBR remains the leader in wind, while its R&D efforts should se- cure leadership in other renewable technologies. Risk-Reward on a 12-month view (Equal-weight, PT €5.10)
€5.10 (+99% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Retailing
Inditex (ITX.N)
Value of Growth Analysis
Morgan Stanley & Co. Fred Bjelland
International plc+ Inditex is the world's largest clothing retailer by sales, oper-
ating over 4,000 stores, and has grown its top line at a CAGR of
over 20% over the past 10 years. Its success to date and global ambitions are founded on a unique, vertically-integrated business model, which greatly reduces operating risks. Unlike traditional clothing retailers, Inditex produces a significant proportion of its implied value of garments in-house, and half of the group's suppliers are located in Spain, Portugal or Northern Africa. This level of proximity sourcing means that Inditex operates with some of the lowest lead times and inventory levels in the clothing industry, reducing Return on Equity (ROE) Analysis
the risk of markdowns and end of season sales. Because of these short lead times and lean inventory position, Inditex can offer the most fashion forward customer proposition of any of the major apparel chains, without taking on excessive fashion risk. This is reflected in the group's stable gross and op- erating margins, which have yielded an average 24% EBIT growth over the past 10 years. Moreover, due to aggressive Morgan Stanley forecast working capital management and strong sales growth, the group is highly cash generative and funds its 15% p.a. space growth 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 programme entirely through its free cash flow, while also yielding a healthy 4% dividend. In our view, Inditex's already strong op- erating and financial position and its uniquely flexible business model means that it is perfectly placed to take advantage of the Inditex vs. European Coverage Universe
trend towards increasing globalisation while delivering the local adaptation that retailing demands. percentile range Risk-Reward on a 12-month view (Overweight/In-Line, PT €35)
€35.00 (+35% )
€ 25.90
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated Price Target (Dec-09) Historical Stock Performance Current Stock Price with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Exchanges
IntercontinentalExchange (ICE.N)
Value of Growth Analysis
Morgan Stanley & Co. Patrick Pinschmidt
We believe ICE is strongly positioned to deliver sustainable,
high-margin growth over the next four years. We see attrac-
tive near- and long-term value drivers, highlighted by internal growth opportunities and multi-asset expansion. ICE's superior operational execution, advantageous competitive position, and multiple organic growth opportunities off a smaller, more nimble implied value of platform support our positive long-term stance on the exchange. • Operational execution. ICE's entrepreneurial management is well-equipped to seize opportunities (e.g., it is repositioning ICE beyond its historical commodities footprint). Return on Equity (ROE) Analysis
Competitive position. CME dominates the US exchange- listed futures market, but this could work to ICE's advantage as broker/dealers and regulators prefer more competition. • Organic growth opportunities off a small, nimble platform. Internal growth opportunities (cleared OTC platform, transition to self-clear) and multi-asset expansion in equities and FX reflect a move to a broader, more sustainable earnings base. Morgan Stanley forecast These strengths are illustrated by a secular opportunity in
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 OTC markets. OTC migration to exchange-like platforms offers
the industry a long-tailed structural growth opportunity. We be-
lieve ICE is best positioned to monetize this shift. Its partnership IntercontinentalExchange vs. Americas Coverage Universe
with the broker/dealer community, which controls liquidity, gives ICE an advantage in clearing CDS contracts. The partnership could also seed a scalable, preferred platform beyond CDS clear- ing to clear other assets in the OTC market. Highly scalable business model should drive near- and long-
term earnings growth. We forecast a 15% CAGR in earnings
over the next three years (with pretax margins of 60%). We expect new product launches and the move to self-clearing to drive this growth. And we expect longer-term growth opportuni- ties to help sustain the momentum. Risk-Reward on a 12-month view (Overweight/Cautious, PT $100)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Medical Technology
Johnson & Johnson (JNJ.N)
Value of Growth Analysis
Morgan Stanley & Co. David H. Roman
Johnson & Johnson is among the best positioned healthcare
companies, in our view, based on its diversified business model,
strong balance sheet, and high-quality reputation. Near-term, the company faces several major patent expirations in its Pharma- ceutical business (38% of 2008e sales that we project to decline 4% in 2009; however, we estimate J&J will still generate 4-5% implied value of constant currency revenue growth in 2009 (ex-acquisitions). Unlike other large cap pharmaceutical names, where the loss of exclusivity on a particular drug has sometimes led to broad-based corporate restructuring, J&J does not need to sacrifice investment Return on Equity (ROE) Analysis
spending to protect earnings. A strong presence in several seg-ments of Medical Devices (general surgery, hip and knee re- placement) allows the company to expand its footprint through selective M&A and generate incremental profitability. Lastly, well-known brands in the Consumer franchise (e.g., Listerine and Ty- lenol) have provided J&J an entry point for its broader product line in new markets. We believe that J&J has one of the most robust product
Morgan Stanley forecast pipelines in the pharmaceutical sub-sector, as we estimate
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 that cumulative pipeline revenues generated from 2008–12 will offset lost sales from generic expirations by a factor of two. This margin of safety should compensate for both regulatory and commercial risks. Outside of Pharmaceuticals, J&J is gaining Johnson & Johnson vs. Americas Coverage Universe
share in most of the medical device and consumer markets in which the company competes. Johnson & Johnson
Significant financial flexibility. In 2007, J&J generated $15.3
billion in operating cash flow (126% of net income), and we esti- mate the company will have a net debt/capital position of (6.7)% by the end of 2009. Management returned 74% and 63% of in- cremental cash flow to shareholders in 2006 and 2007. We model ROIC of 28% in 2009, rising to 35% in 2012. Risk-Reward on a 12-month view (Overweight/Attractive, PT $79)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at Price Target (Dec-09) Historical Stock Performance Current Stock Price www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Consumer
Li & Fung Ltd (0494.HK)
Value of Growth Analysis
Morgan Stanley Asia Angela Moh
Flexible, asset-light business model adapts quickly to cus-
tomers' changing demands: L&F is one of the largest multina-
tional supply-chain management companies, serving some of the biggest retailers in Europe and the US. Using its global network and scale, L&F would benefit from consolidation as retailers opt to work with L&F for more effective sourcing. implied value of In the past three years, L&F has pursued a strategy of growth through a series of key acquisitions. Over the next five years, we see L&F taking a more balanced approach by emphasizing or-ganic growth through cross-selling opportunities and acquiring Return on Equity (ROE) Analysis
businesses that would enhance its ability to provide a wider range of products and services for retail customers. L&F has an extensive global sourcing network of over 80 offices and 10,000 suppliers in more than 40 economies. Through ac- quisitions and organic growth, it has forged solid, interdependent relationships with its customers that are critical to its long-term competitive advantage. Morgan Stanley forecast L&F's asset-light model removes the potential burden of rising 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 cost structures in individual countries and enables the company to move quickly to identify the most cost-effective way of sourc- ing. It has moved up the value chain by adding product planning and design services, enhanced by reliable sourcing and logistics. Li & Fung Ltd vs. Asia Pacific Coverage Universe
Its ability to respond quickly to shifting customer demands allows Li & Fung Ltd
it to form interdependent relationships with customers that are difficult to replicate. Risk-Reward on a 12-month view (Overweight/Attractive,
PT HK$20.80)

HK$ 13.96
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - 2009e Source: FactSet (historical share price data) Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso- Price Target (Dec-09) Historical Stock Performance Current Stock Price ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Industrials
Michael Page (MPI.L)
Value of Growth Analysis
Morgan Stanley & Co. David Hancock
International plc+ Michael Page is the leading franchise in the professional
staffing arena, well positioned to deliver strong structural
growth to 2012. Page's markets are highly cyclical (its mix is
80% perm placement and 20% temp staffing), but the business offers strong structural top-line growth from two sources. First, Page plans to expand its office footprint by 60-80 offices over the implied value of next four years, an increase of 35-50%. Growth will come mainly in EMEA ex-France and the Americas. Second, we expect a greater share of recruitment activity to be outsourced to agencies in the coming decade, especially in Continental Europe. HAS Return on Equity (ROE) Analysis
estimates the current level of outsourcing in Continental Europe at 20%; MPI puts it at 10-25%. In the UK, the proportion is roughly the mirror image, and we expect Continental Europe to evolve towards this structure over time. Top-line growth should translate into similarly strong profit growth. Entry barriers in recruitment are low, but Page's strong brand is a key differentiator, attracting the best candidates and clients. As a result, gross margins have been very stable over Morgan Stanley forecast the past 15 years. Operating margins are cyclical, as SG&A is 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 largely semi-fixed personnel and branch costs, but over the course of the cycle we expect Page to maintain return on sales and return on capital in line with the historical average. Michael Page vs. European Coverage Universe
Page has a highly cash generative business model, allowing on- Michael Page
going cash returns. Capex and working capital requirements for percentile range recruitment agencies are very low, even when they grow fast. Page's policy is to maintain its balance sheet at a broadly neutral net debt position, and as it has a 100% organic growth strategy, all post-dividend FCF is reinvested in share buybacks. Even in the 2001-04 period, MPI did not cut its dividend and bought back shares. We expect MPI to keep to this policy between 2009 and 2012, buying back 22% of its equity and delivering a total cash return yield of 65% over four years. Risk-Reward on a 12-month view (Underweight/In-Line, PT 160p)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research 160p (-17% )
on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Medical Devices
Mindray (MR.N)
Value of Growth Analysis
Morgan Stanley Asia Integration of Datascope and international growth to drive
stock performance: We view the successful integration of
Datascope patient monitoring (PM) business acquired earlier this year and continued international market expansion as key drivers for Mindray shares in the next five years. Meanwhile, sustainable government tenders and new product launches should drive ro- implied value of bust domestic market growth. Mindray's broad product portfolio covers three key areas: PM devices; ultrasound imaging systems; and diagnostic lab instru-ments. Mindray has the biggest global presence among Chinese Return on Equity (ROE) Analysis
medical device companies. About two-thirds of its sales come from outside China. We believe its well-recognized brand, strong R&D capability, and diversified product portfolio should enable it to maintain its lead over local competitors. The medical devices industry has been the most dynamic seg- ment of the China healthcare industry over the past five years. We project this segment will grow at a 20-25% rate for the next Morgan Stanley forecast five years, faster than growth for the Chinese drug segment. The 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 medical device market is still relatively under-penetrated and lo-cal companies have only a 30% market share in China. We be-lieve there is still low-hanging fruit in the segment as domestic companies develop a better understanding of market demand. Mindray vs. Asia Pacific Coverage Universe
Mindray is the clear leader in the China medical devices industry, with dominant market shares in all of the device segments in which it competes. Its growing international presence and R&D strength set it apart from its peers, in our view. Mindray has rap- idly expanded its international operations and become the biggest exporter among Chinese medical device companies. It has es- tablished a solid foothold in the US market through its acquisition of Datascope's PM business in 2Q08, and it has become the No. 3 global PM provider. Risk-Reward on a 12-month view (Overweight/Attractive, PT US$40)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - 2009e Source: FactSet (historical share price data) Company data, Morgan Stanley Re-search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Agricultural Products
Monsanto (MON.N)
Value of Growth Analysis
Morgan Stanley & Co., Vincent Andrews
We think Monsanto is the best-positioned company in global
agriculture. Monsanto, in our opinion, holds the key to unlocking
the greatest bottleneck in global agriculture: a limited supply of arable land. The company's biotechnology traits increase the productivity of existing land by increasing yields. In six of the past eight years, global grain consumption has exceeded produc- implied value of tion; we believe that this trend should continue as a function of increased demand for biofuels and protein/meat. The company's biotech offerings are under-penetrated and
underpriced,
in our view, relative to the value that they provide
Return on Equity (ROE) Analysis
to farmers. Monsanto has the dominant position in corn and soy- bean biotech in the US with 60% and 95% market shares, re-spectively, and it is the first company to commercialize corn and soybean biotechnology in South America. To be clear, we be-lieve that Monsanto's opportunity set is exacerbated — rather than created — by the secular increase in soft commodity prices. Monsanto is the clear R&D leader in agricultural biotechnology, expensing 10% of sales annually in the form of R&D ( $1 billion Morgan Stanley forecast in F2009). The company has a multi-year lead versus its peers, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 in its current offerings and in the development of new biotech products such as an eight-stack corn trait, drought-tolerant corn, and insect-resistant soybeans. Monsanto Company vs. Americas Coverage Universe
Monsanto's margin structure is extremely attractive, with
segment gross profit margins ranging from 53% to 70% and
growth being driven primary by the 80%-plus gross margin bio- technology business. We see further opportunities for growth in Monsanto's newly
acquired vegetable and sugarcane businesses. Monsanto
has a history of accretive acquisitions and sharing its extant tech- nology across new platforms. Additionally, given the low-cost nature of Monsanto's business, we believe that the company can generate significant operating leverage in coming years. Risk-Reward on a 12-month view (Overweight/Attractive, PT $170)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Telecom Services
MTN (MTNJ.J)
Value of Growth Analysis
Morgan Stanley & Co. Sean Gardiner
International plc+ MTN is a leading pan-regional mobile operator with busi-
nesses in 20 countries in Africa and the Middle East. Nigeria
and South Africa are its two biggest markets; management runs a regional hub system to ensure effective management of its geo- graphically diverse operations. Growth in Africa will be driven by lower cost of ownership — as mobile phone prices continue to fall implied value of and prepaid top-up denominations are getting smaller — and by the basic human need, and want, to communicate. We expect these drivers to help penetration double over the next five years from just over 20%. Return on Equity (ROE) Analysis
Competition is a risk, making pricing power more limited, but scale and first mover advantage should help MTN to mitigate this challenge, in our view. Low levels of usage also suggest room for elasticity. MTN is looking at further international expansion with a focus on Africa, the Middle East and Asia. Management has also indicated its willingness to merge with a larger player, holding discussions with Indian operators earlier this year. Morgan Stanley forecast 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 MTN Group vs. European Coverage Universe
MTN Group
percentile range Risk-Reward on a 12-month view (Overweight/In-Line,
PT ZAR156)
ZAR156.00 (+73% )
ZAR 90.05
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at Price Target (Dec-09) Historical Stock Performance Current Stock Price www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Food Producers
Nestlé (NESN.VX)
Value of Growth Analysis
Morgan Stanley & Co. Michael Steib
International plc+ Nestlé is a market leader in an industry where scale and
market leadership matter. The company has built leading posi-
tions in virtually all the categories it competes in, either organi- cally or through successfully executed acquisitions. This is im- portant, because market leadership typically allows a food pro- ducer to set the agenda in terms of innovation and to maximize implied value of pricing power versus food retail customers. Nestlé's global geo- graphic presence enables the company to balance its growth profile between developed and developing markets without rely-ing overly on one particular region. Return on Equity (ROE) Analysis
Nestlé has successfully improved both returns on sales (EBIT margins) and returns on capital over the past few years, and we expect this to continue. The company has accomplished this through portfolio mix improvement (as a result of product innova-tion), cost containment, and also the elimination of surplus work- ing capital, which has resulted in accelerated free cash flow growth and improved ROIC. Morgan Stanley forecast Nestlé's earnings growth has proved to be very stable and has 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 consistently exceeded 10% a year. The Nestlé earnings model is based on 5-6% average sales growth, ongoing margin improve- ment and tight balance sheet control. The company has strong risk management capabilities, in our view, which have allowed it Nestle vs. European Coverage Universe
to deliver record margin improvement in years of unprecedented commodity cost headwinds. percentile range Risk-Reward on a 12-month view (Overweight/In-Line, PT SFr 58)
SFr58.00 (+37% )
SFr 42.46
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research Price Target (Dec-09) Historical Stock Performance Current Stock Price For more detail on our investment thesis and valuation methodology and risks associated Note: we have reduced our bear case for Nestle from SFr 46 to SFr 40. We now assume organic with price targets mentioned, please refer to the latest relevant research sales growth below the bottom end of the 5-6% target range in 2009, owing to a sharp slowdown on these stocks, which is available through your sales representative; Client Link at in emerging market growth. Margins decline by 10bps owing to negative operational leverage www.morganstanley.com; or other electronic systems. from lower volume growth. No improvement in cash generation; slowing balance sheet deleverag- December 8, 2008
50 for 2012: Investment Guide — Global
Consumer Electronics
Nintendo (7974.OS)
Value of Growth Analysis
Morgan Stanley Japan Masahiro Ono
Securities Co., Ltd.+ We see tremendous potential via hardware penetration vol-
ume and prolonging of cycle. We forecast penetration by end-
March 2009 to 100.0 million units for the DS and 52.0 million units for the Wii, as Nintendo dwarfs the competition in terms of software sales potential. Two million in software sales normally qualifies as a big hit, but Nintendo is in a class by itself with cu- implied value of mulative volume of 30.0 million for Wii Sports and a combined 20.0 million for Nintendogs. The number of titles recording 1.0 million in sales is also higher for third parties than for Nintendo for both the Wii and DS, and so we are especially upbeat on soft- Return on Equity (ROE) Analysis
ware sales as a stabilizer for earnings going forward. We expect hardware sales volume to peak in F3/10 and fall from F3/11, but with strong 30% OPM levels to continue. Nintendo's next- generation hardware hits stores in F3/13, and we expect profit growth to resume from F3/14. We believe the principal risks are, in the near term, a decline in first-party titles and relatively cautious development trends for third-party titles. Longer-term risks are tougher competition as Morgan Stanley forecast PC games, the PS3, and Xbox 360 make up ground, as well as 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 the emergence of iPhone/iPod Touch and smart phone games. Even so, Nintendo's earnings growth potential is significant. Nin-tendo should benefit in the near term through crossover users from the PS2, as well as further hardware penetration with the Nintendo vs. Japan Coverage Universe
DSi launch. Longer term, it can gain from expansion into emerg- ing markets (China, etc.), and by making further headway in the software market by expanding content in educational fields, among others. Nintendo is addressing each of these points, and we think earnings will benefit greatly if its goals are realized. Risk-Reward on a 12-month view (Equal-weight/Cautious,
PT ¥45,000)
¥ 30,800
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2009e; Valuation 2009e; Leverage 2009e Source: FactSet (historical share price data), Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso- Price Target (Oct-09) Historical Stock Performance Current Stock Price ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Philip Morris International (PM.N)
Value of Growth Analysis
Morgan Stanley & Co. David J. Adelman
Philip Morris International (PM) enjoys a number of substan-
tial structural competitive advantages, in our view, including:
(1) significant geographic diversity; (2) an outstanding brand port- folio with attractive demographics; (3) structurally high profit mar-gins; (4) market leadership in many countries, which enhances its pricing power; (5) limited commodity input exposure; (6) signifi- implied value of cant free cash generation; (7) relative leverage over the retail trade; (8) a significantly underleveraged balance sheet; and (9) a recession-resilient business model. We argue that these advantages are complemented by favor-
Return on Equity (ROE) Analysis
able recent company and industry dynamics, including: (1)
PM's more effective levels of product innovation; (2) a more be- nign overall competitive environment; (3) a general absence of large-scale excise tax increases; and (4) a more aggressive cost- reduction effort. The combination of a favorable structural back- drop coupled with these dynamics — which in our view are likely to persist — has translated into a significant "step-up" in PM's overall operating and financial performance. YTD, local currency Morgan Stanley forecast operating income is up more than 10%, the dividend increased 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 17%, and share repurchases exceed $4.7 billion. We anticipate that PM will deliver consistent returns of capital by continuing share repurchases and at least a 60–65% dividend payout ratio. Philip Morris International Inc vs. Americas Coverage Universe
An advantaged geographic mix. Although PM is well-
positioned to capitalize on the long-term growth potential within
Philip Morris International Inc
emerging markets ( 35% of its operating income), the company's overall business is very well balanced, as it generates 55% of operating income from developed and high-margin markets in the EU and Japan. Furthermore, no single country accounts for more than 12% of operating income, limiting its exposure to market- specific competitive and excise tax risks. And PM — which gen- erates no revenues in the US — is consequently not exposed to that market's secular challenges and likely excise tax increases. Risk-Reward on a 12-month view (Overweight/In-Line, PT $60)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Household & Personal Care
Procter & Gamble (PG.N)
Value of Growth Analysis
Morgan Stanley & Co. William Pecoriello
Procter & Gamble is well-positioned to outperform its peer
group, in our opinion, based on its vast portfolio of products,
geographic diversity, and strong balance sheet. With leading global market shares in most categories it competes in, P&G has clear scale advantages in marketing, innovation, distribution, re- tailer relationships, and overhead costs. We expect it to continue implied value of to gain market share in two-thirds of its global sales and to deliver mid-single-digit revenue growth over the next several years. With over 30% of sales in emerging markets, P&G is poised
to benefit from outsized growth in those regions
as new con-
Return on Equity (ROE) Analysis
sumers enter its categories and as it gains share from local play- ers. Globally, private label share remains small in P&G's catego- ries and the company benefits from its tiered product offerings, allowing consumers to trade up or down within its portfolio. In addition, the company's strong market share position at Wal-Mart and the club stores allows it to take advantage of consumers shifting to those channels from traditional grocery stores. Morgan Stanley forecast An increased focus on productivity improvement should al ow P&G to continue to deliver 30-50 bps of operating margin expan- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 sion each year. With key raw material prices down significantly from their summer peaks, we believe margins will begin to ex- pand late in F2009; and we are projecting a 25 bps annual gain in Procter & Gamble vs. Americas Coverage Universe
gross margin over the long term. P&G maintains a strong balance sheet, with a debt/EBITDA ratio Procter & Gamble
of 1.6. The company returned almost $15 billion to shareholders in F2008 in the form of dividends and share repurchases and has been paying uninterrupted dividends since 1890. The dividend has increased 12% annually over the past five years. With only one product line (laundry) comprising more than 10% of its revenue, P&G can weather periodic softness in various cate- gories and still hit its targeted long-term growth rates, as opposed to most of its peers, which rely heavily on 2-3 sub-sectors. Risk-Reward on a 12-month view (Overweight/In-Line, PT $79)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Reliance Industries (RELI.BO)
Value of Growth Analysis
Morgan Stanley India Vinay Jaising
Company Private Limited+ RELI is focused on growth, and we expect its net profits and
assets to double in the next four years. RELI has one of the
most complex refineries in Asia, which it leverages to earn strong refining margins. Its new refinery, due for commissioning in April 2009, is expected to be even more complex. RELI has interests in upstream, refining and marketing, and pet- implied value of rochemical businesses. It operates the world's largest grass- roots, multi-feed cracker and is the largest exploration acreage holder in the private sector in India. RELI's 33mmtpa oil refinery is the most complex in India, enabling it to process heavy oils. It Return on Equity (ROE) Analysis
has recently entered into retail business and is a top ten global producer of petrochemicals. RELI's E&P division is the growth vehicle. We estimate RELI's oil and gas business will generate 53% of net profit by F2012. We estimate the E&P business will account for 56% of capex in F2008-12. RELI has E&P fields that have found or are producing oil or gas. It has 2P reserves of 5.0 billion boe, a figure which, Morgan Stanley forecast according to the company, could rise to 10 billion boe. RELI has 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 already started producing oil from its MA field in the KG-D6 basin, and we expect the first gas from there in the next three months. In our view, the next three to six months should mark an inflection point for RELI. Its execution capabilities will be tested when three Reliance Industries vs. Asia Pacific Coverage Universe
of its big projects are commissioned in F2009. We expect Reli- ance Petroleum to be commissioned by April 2009, with start-up by December 2008 and the first gas from the KG basin to come on stream in the next three months, with production to stabilize by Risk-Reward on a 12-month view (Overweight/Attractive,
PT Rs1,619)
Rs. 1,069.50
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - Source: FactSet (historical share price data) Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Industrials
Rolls-Royce (RR.L)
Value of Growth Analysis
Morgan Stanley & Co. Rupinder Vig
International plc+ Rolls-Royce is one of the three largest engine manufacturers
in the world. It has a leading share on new wide-body pro-
grammes, such as the A380, B787 and the A350XWB (for which it is sole-source engine provider). In addition, it has a 32.5% share on the V2500 engine (which powers the single-aisle A320 implied value of The company currently sells 80% of new engines with long-term maintenance contracts (called TotalCare contracts) whereby air-lines pay per month for hours flown. Half of its total installed Return on Equity (ROE) Analysis
base is now covered by TotalCare contracts. This provides Rolls-Royce with a high-margin revenue stream for the next 10-15 years (given that engine manufacturers typically sell new engines at cost and earn 40% gross margins on maintenance activities). In addition, TotalCare gives the company more visibility than many of its peers and provides protection against airline capacity cuts (given that the last aircraft airlines retire are those on long- term maintenance contracts for which they have been paying Morgan Stanley forecast 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Another competitive advantage that the civil business has over its peers is its leading position on new wide-body programs (such as A380 and B787) which should allow it to grow its instal ed fleet (a key driver of service revenues) in even the most testing condi- Rolls-Royce vs. European Coverage Universe
percentile range Rolls-Royce earns 40% of its profits from non-commercial aero- space activities, led by its Marine division. These parts of the business account for two-thirds of its profit growth over the next three years, and give the company a much more defensive busi-ness mix than its peer group. This makes for a better risk-reward profile than that of its competitors, in our view. Risk-Reward on a 12-month view (Overweight,/In-Line, PT 460p)
460p (+64% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Base Case (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Beverages
SABMiller (SAB.L)
Value of Growth Analysis
Morgan Stanley & Co. Eveline Varin
International plc+ SABMiller is the dominant player in the emerging markets
that will drive long-term growth in the beer industry. Its expo-
sure to Latin America and Africa, where demographics underpin the fundamentals, is particularly important. In mature markets, the Miller Coors joint venture should deliver significant medium- term synergies for no capital outlay and improve the competitive implied value of position of the combined group with regard to wholesaler effi- ciency and retail relationships. Margin expansion should pick up as commodity pressures ease, the investment in new packaging falls away and cost savings start to kick in more strongly in the Return on Equity (ROE) Analysis
US and Colombia. Dominance in its key markets gives SABMiller ultimate discretion over pricing, but its products are heavily reliant on affordability for growth. With among the best-regarded management teams in the industry, it has a cultural focus on cost but also delivers above-average margins. It is particularly adept at exploiting the upper mainstream segment, where it is possible to generate large Morgan Stanley forecast volumes at premium prices. In Central & Eastern Europe, it has 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 by far the best profit per hectolitre (HL), making three times as much as the least profitable multinational in the region (InBev). SABMiller's medium-term growth plan breaks out targeted growth by region, volume, revenue per HL and margin expansion. Meet- SABMiller vs. European Coverage Universe
ing these targets (given in a range) would imply EBIT growth of 9- 14% per annum, we estimate, with strong cash flow enhancing percentile range earnings growth thereafter. Risk-Reward on a 12-month view (Equal-weight/In-Line,
PT 1120p)
1,120p (+7% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research Price Target (Dec-09) Historical Stock Performance Current Stock Price on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Oil Services, Drilling & Equip.
Schlumberger (SLB.N)
Value of Growth Analysis
Morgan Stanley & Co. Ole Slorer
Schlumberger is increasingly becoming a unique investment
opportunity, in our opinion. Thanks to an estimated $1 billion
investment per year in R&D, Schlumberger has what we consider the most advanced technology portfolio in the industry. Its fun-damentals are impressive, with what we think are some of the best field personnel, a pristine service and performance reputa- implied value of tion, and leading market share in most of its product lines. Schlumberger had a remarkable run since 2000, quadrupling in size, shifting its geographic mix toward the Eastern Hemisphere, and expanding its dominance with national oil companies. The Return on Equity (ROE) Analysis
industry recently came off a five-year upcycle in E&P investment characterized by a North American natural gas drilling ramp (in 2004-06) and an increase in Eastern Hemisphere development activity (2006 through mid-2008, with huge expenditures in Saudi Arabia and, most notably, Mexico and Russia). However, sharply increased spending has not led to a significant supply response due to an aging production base and high depletion rates, as well as the time needed for exploration to translate to new production. Morgan Stanley forecast Schlumberger is poised to enter the next upcycle in a strong
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 position. While the company will likely face reduced activity
(revenue down 10% in 2009e) in a severe global recessionary
environment, we expect 22% growth in 2011/12. We expect the Schlumberger vs. Americas Coverage Universe
next decade to be characterized by an increased offshore fleet and the start of a new wave of exploration while trying to stem decline in the existing production base. Schlumberger looks uniquely positioned throughout the oilfield service value chain, thanks to its ability to seamlessly integrate seismic, drilling, measurement, and completion technologies and package them into integrated projects. We see Schlumberger's high-barrier-to- entry technologies as a perfect match to the future challenges of the oil and gas industry. We believe those technologies, coupled with unmatched service quality, should command a premium and allow Schlumberger to gain market share in the next upcycle. Risk-Reward on a 12-month view (Overweight/Attractive, PT $88)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Media & Internet
SES (SESFd.PA)
Value of Growth Analysis
Morgan Stanley & Co. Sarah Simon
International plc+ SES is the world's second-largest provider of fixed satellite
services (FSS), behind private-equity owned Intelsat. The com-
pany has a fleet of 38 satellites in 25 orbital locations, and deliv- ers mission critical, highly cost-effective bandwidth to broadcast- ers and telcos globally. Despite the difficult economic climate, the company is guiding for 2008-2010 compound annual revenue implied value of growth of "above 5%". This growth is based on several drivers. In broadcasting, the number of channels continues to increase, and the switch to high Return on Equity (ROE) Analysis
definition (HD) requires three to four times the bandwidth of stan-dard digital. In data, demand is growing for Internet services for rural areas not covered by ADSL or cable. SES (and competitor ETL) provide raw capacity and white label end-to-end service. SES is also expanding into higher-growth emerging markets. We forecast that profitability growth should outstrip growth in revenues, a result of operating leverage ( 90% conversion of Morgan Stanley forecast incremental revenues to the bottom line) and the elimination of losses at start-up services businesses, which we believe should 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 be significant profit generators by 2012. Strong profit growth, combined with capital expenditure (which is both highly visible and increasingly efficient, as the FSS industry SES vs. European Coverage Universe
benefits from a "Moore's Law" effect on the capital cost of satellite capacity) means that SES should continue to generate substan- percentile range tial excess cash flow. The company has committed to increase its annual dividend by a minimum of 10% annually, and has a solid track record of cash return via share buybacks. Risk-Reward on a 12-month view (Overweight/In-Line, PT €20)
€20.00 (+45% )
€ 13.82
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research Price Target (Dec-09) Historical Stock Performance Current Stock Price For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Financials
Standard Bank (SBKJ.J)
Value of Growth Analysis
Morgan Stanley & Co. Magdalena Stoklosa
International plc+ Standard Bank has the rare combination of exposure to
growth opportunities in Sub-Saharan Africa and to Africa's
most developed banking system in South Africa. The largest
African bank, Standard should consolidate its dominant position in Africa (it is present in 18 countries) through its recent acquisi- tions in Kenya and Nigeria. The transformational tie-up with Chi- nese ICBC, which owns 20% of Standard, should strengthen the bank's position in financing growing intra-EM trading flows and provide access to domestic Asian markets. We forecast Africa's contribution to Standard's earnings to reach 30% by 2012, from Return on Equity (ROE) Analysis
We like Standard Bank's secular growth in corporate and longer- term retail portfolios, and its sustainable earnings power (it has produced above 15% earnings growth for the past decade). It has a strong management team, in our view, and enjoys a rela-tively secure funding and liquidity position due to the closed na- ture of the South African financial system. The bank's growth is Morgan Stanley forecast well diversified by business and geography. It continues to bene- fit from payback from its African investments and strong delivery 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 from corporate banking, which offsets the weakness of the do-mestic consumer. Despite the recent repricing of emerging market risk, we consider Standard Bank vs. European Coverage Universe
the risk-reward profile for Standard Bank as attractive: its African operations provide an important source of strategic upside, and its dominant South African positioning affords a defensive angle. Risk-Reward on a 12-month view (Overweight, PT ZAR116)
ZAR116.00 (+52% )
ZAR 76.15
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated Price Target (Dec-09) Historical Stock Performance Current Stock Price with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Healthcare
Takeda Pharmaceutical (4502.T)
Morgan Stanley Japan Mayo Mita
Value of Growth Analysis
Securities Co., Ltd.+ We expect Takeda to remain a driving force in the Japanese
healthcare industry. Approaching maturity (patent expiry) of key
global products that have supported growth and internationalisa- tion in the past 10 years-plus, the firm is laying the groundwork for sustainable longer-term growth. At the forefront of this are SYR-322 for diabetes, anti-ulcer TAK-390MR and Uloric for gout, all under review for approval in the US and aiming for launch in implied value of 2009. It is also seeing contributions from cancer treatment Vel- cade at Millennium, which it acquired in May 2008. Other promis- ing projects in Phase III of clinical trials are TAK-491 (for hyper-tension), LuAA21004 (mood disorder) and Hematide (anemia). Return on Equity (ROE) Analysis
We do not expect the three drugs under FDA review and Velcade to fully offset the patent expiry of anti-ulcer Prevacid (2009) and diabetes treatment Actos (2011), and thus we foresee a slow- down in F3/12-13. Yet, while we believe the market is already well aware of the slowdown upon patent expiry, we do not think it has factored in fully the new drug contributions. At a P/E of 10x on our F3/10 estimates, Takeda shares trade at a 25% discount to the healthcare average of 12.5x, not significantly different from Morgan Stanley forecast the 10-11x average of leading European/US healthcare stocks. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 New drug approvals face tougher hurdles, while a slowdown in the pharmaceutical market is becoming clearer as patents expire and the economic climate weakens. New policies of President Takeda Pharmaceutical vs. Japan Coverage Universe
Elect Obama in the US will also warrant attention, though we do not anticipate immediate dramatic reforms. Takeda's earnings will not be unaffected by tougher conditions, but the firm is already sowing the seeds for a fresh growth phase fuelled by new drug launches and business integration. While we may not see imme- diate returns, the ¥700-800 billion at hand in cash/cash equiva-lents gives scope for further investments as well as shareholder Risk-Reward on a 12-month view (Overweight/Attractive,
PT ¥6,800)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at Price Target (Nov-09) Historical Stock Performance Current Stock Price www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Food, Beverage & Tobacco
Tingyi (Cayman Islands) (0322.HK)
Value of Growth Analysis
Morgan Stanley Asia Angela Moh
Tingyi is best placed to benefit from the rapid growth in Chi-
nese demand for convenience food, in our view. It is the lead-
ing instant noodle manufacturer in China, with a market share of 49.9% (September 2008), and is the top brand for ready-to-drink (RTD) tea and bottled water. The beverage business has devel- oped rapidly in recent years, accounting for 54% of sales in 1H08, while noodles accounted for 44%. Tingyi's strong brand implied value of equity and extensive distribution network (556 sales offices and 70,238 direct retailers nationwide) create significant entry barriers for newcomers to the industry. Also, Tingyi has a vertical y inte- Return on Equity (ROE) Analysis
grated operation and significant economies of scale. China's appetite for packaged food is rising, underpinned by strong economic growth and low per capita consumption. Annual per capita consumption of instant noodles remains low in China at 34 packs compared with 43 in Japan and 71 in Korea. Simi- larly, annual per capita consumption of packaged beverages is low at 5 liters in China, against 26 in Taiwan and 32 in Hong Kong for RTD tea; 4 liters in China, against 14 in Taiwan and 19 Morgan Stanley forecast in Hong Kong for juice; and 9 liters in China against 20 in Taiwan and 28 in Hong Kong for bottled water. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Affordability has increased significantly for basic consumer prod- ucts, as income has more than doubled, while on average most product prices have deflated in the past 8-10 years. We see Tingyi (Cayman Islands) vs. Asia Pacific Coverage Universe
competition evolving from basic price competition to a more com- Tingyi (Cayman Islands)
plex level of product differentiation and customer segmentation. We believe key success factors will include: (1) strong product development capabilities; (2) extensive distribution network; and (3) strong financials to fund promotions and changes in working capital needs as modern retail channels grow. Risk-Reward on a 12-month view (Overweight/Attractive,
PT HK$10.00)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - 2009e Source: FactSet (historical share price data) Company data, Morgan Stanley Re-search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Toyota Motor (7203.T)
Morgan Stanley Japan Noriaki Hirakata
Value of Growth Analysis
Securities Co., Ltd.+ Of all autos makers, Toyota Motor looks most likely to bene-
fit from the mid-term growth of the industry, where we think
more vulnerable makers will struggle to stay in business and even relatively advantaged firms will slash R&D and other for- ward investments, losing much of their mid-term competitive power, should the slump persist through 2010. We think Toyota is a rare autos maker that fulfills all the condi- implied value of tions needed for medium-term growth: appealing products, tech- nological development abilities, a flexible production system, cost-cutting potential and a healthy balance sheet. With its range of core vehicles that capture consumers' needs – the Corolla, Return on Equity (ROE) Analysis
Camry, RAV4, the Lexus brand and the Prius – the firm is likely to escape the impact of economic cycles. Toyota's hybrid technology is a clear advantage on the R&D side. Having developed and produced its own batteries – a core com- ponent – since 1997, it has expertise in this field incomparable to that of other auto makers that outsource battery production. Toy- ota also boasts a flexible production system, where a 12-month Morgan Stanley forecast lead time allows a light truck specialist plant to be converted to a mixed line plant for passenger cars and light trucks. In terms of 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 cost control, hybrid cars were considered to be inherently less profitable, but Toyota managed to boost the profit margin of the Prius to about that of the Corolla from the third generation mod- Toyota Motor vs. Japan Coverage Universe
els. Next, we see Toyota challenging the status quo by tackling cost reductions in its new compact model, due to be launched Toyota Motor
globally in 2010. The company has positive net cash and liquidity on hand worth ¥2.6 trillion. Its dividend policy is based on a mid-term share- holder returns strategy, and we see it as having the smallest risk of a dividend cut among autos makers. Risk-Reward on a 12-month view (Overweight/In-Line, PT ¥3,800)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2009e; Valuation 2009e; Leverage 2009e Source: FactSet (historical share price data), Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso- ciated with price targets mentioned, please refer to the latest relevant research Price Target (Dec-09) Historical Stock Performance Current Stock Price on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
Computer Services & Software
Trend Micro (4704.T)
Morgan Stanley Japan Masaharu Miyachi
Value of Growth Analysis
Securities Co., Ltd.+ On a 4-5-year time horizon, we see three key growth drivers
for Trend Micro: (1) the emergence of increasingly complex
malware, and rising budgets to tackle the problem; (2) the expan- sion of business areas; and (3) more penetration in emerging markets. With those, we expect the firm to achieve annual profit growth of around 13%, assuming it escapes the adverse effects of the global economic downturn in 2010. implied value of First, malwares are increasingly complex, and now represent a criminal offence, where cash or personal data are retrieved, rather than mere mischief. Given the rise in risks, clients will likely require securer and more comprehensive anti-malware systems, Return on Equity (ROE) Analysis
so budgets for these measures should keep growing. In such an environment, we expect Trend Micro to benefit from the growing market, by leveraging its novel Smart Protection Network (SPN) technology to offer extensive security systems to clients. Second, we expect business area expansion, as seen in the firm's efforts to beef up anti-virus and related businesses (includ- ing anti-spyware measures), to keep growing profits. Also, we Morgan Stanley forecast see the target of IT protection extending to a wider range of elec- tronic equipment beyond PCs. In this respect too, the firm's SPN 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 technology, which operates on the Web itself and not on individ-ual PCs or other terminals, deserves recognition for its adaptabil- ity to various fields. Trend Micro vs. Japan Coverage Universe
Finally, the penetration rate of security software remains low in Trend Micro
emerging countries such as China and India, and long-term eco- nomic growth there should prompt a further spread. As Trend Micro continues to have a large share of the East Asian market (excluding Japan), we expect significant gains from a full-fledged market expansion in Asia. Risk-Reward on a 12-month view (Equal-weight/In-Line,
PT ¥3,000)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2009e; Valuation 2009e; Leverage 2009e Source: FactSet (historical share price data), Company data, Morgan Stanley Re-search estimates For more detail on our investment thesis and valuation methodology and risks asso- ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at Price Target (Dec-09) Historical Stock Performance Current Stock Price www.morganstanley.com; or other electronic systems. December 8, 2008
50 for 2012: Investment Guide — Global
TSMC (2330.TW)
Value of Growth Analysis
Morgan Stanley Asia TSMC likely to benefit most when cycle turns: During this
downturn, given its size and exposure to semiconductor compa- nies worldwide, TSMC cannot be immune to macroeconomic risks and inventory risks from its customers. However, thanks to its strong balance sheet, TSMC continues to spend money on R&D to solidify its leadership in advanced technology. And, we implied value of expect TSMC will be the key beneficiary of 45nm transition and IDM outsourcing trends, which we expect to be key growth driv- ers for the foundry sector in 2010-12. Longer-term, TSMC is the best-run company among its
Return on Equity (ROE) Analysis
foundry peers, in our view. We believe it is well positioned to
emerge successfully from this downturn, mainly because of the following factors: (1) better cost structure and high break-even point, as its fabs are mostly depreciated, and firmer pricing than peers; (2) a more-than-healthy cash balance means TSMC can continue its investment/development plans through the downturn; and (3) continued leadership at leading-edge processes, with Morgan Stanley forecast high market share at the 65nm node. We believe TSMC will fur- ther differentiate itself in terms of capital structure, return, and 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 capital efficiency, and consequently outperform peers in terms of long-term ROE. Foundry companies have identified the non-logic foundry market TSMC vs. Asia Pacific Coverage Universe
as a potential growth driver. We think analog IC, CIS (CMOS Image Sensors), NOR flash, and MEMS (Micro- electromechanical Systems), among others, are probably the most promising segments, in view of their high growth rates. We have seen TSMC deploy its resources to develop its analog and MEMS businesses, and that is likely to contribute to TSMC's long-term growth, besides the leading-edge logic IC opportunity. Risk-Reward on a 12-month view (Equal-weight/Cautious,
PT NT$43)
NT$ 37.15
Source: Company data, Morgan Stanley Research Note: Regional Yardsticks: Growth metrics 2009-11e; Returns, Valuation, Leverage - 2009e Source: FactSet (historical share price data) Company data, Morgan Stanley Re-search estimates For more detail on our investment thesis and valuation methodology and risks asso-ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Exploration & Production
Ultra Petroleum (UPL.N)
Value of Growth Analysis
Morgan Stanley & Co. Stephen Richardson
We think UPL has a distinctive long-term advantage in the
exploration & production industry due to:
Low-cost/high-return asset. UPL is the low-cost supplier of natural gas in North America. The source of this advantage is the unique geology of the Pinedale Anticline in Wyoming, where UPL is the dominant leaseholder of over 79,000 net acres. implied value of • Reserve base offers reinvestment visibility. UPL has an un- drilled inventory of 5,300 future well sites in the anticline, implying a 25-year inventory at the current development pace. Return on Equity (ROE) Analysis
We expect sustainable value creation in UPL from:
Supplying growing commodity demand. Long-term structural demand drivers for natural gas reside in electricity generation, where we expect natural gas to continue to capture share of total energy usage based on structural demand drivers such as carbon emissions reduction, domestic energy security, and sustainability. Its long reserve life positions UPL favorably relative to peers with shorter-lived reserves as value will be based intrinsically on de- Morgan Stanley forecast ferred future commodity prices. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 • Improving capital efficiency near term to enhance returns. UPL is focused on leveraging the uniform nature of its reserves to achieve operating efficiencies and expand margins. We expect Ultra Petroleum vs. Americas Coverage Universe
such improvements to continue to enhance UPL's operational leverage and further differentiate its asset from those of its peers, who face more service cost inflation and different drilling require- ments across oil and gas reservoirs. UPL is in the early stages of development, able to deliver
20%+ production growth over the next 3–5 years. This path to
growth is well defined and, where necessary, approved by regula- tors. We expect UPL to require less than 25% of cash flow to replace reserves (maintenance capital), affording financial flexibil-ity in concert with high growth and wide margins. Risk-Reward on a 12-month view (Overweight/Attractive, PT $77)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Freight Transportation
Union Pacific (UNP.N)
Value of Growth Analysis
Morgan Stanley & Co. William Greene, CFA
The best positioned railroad for long-term growth. UNP of-
fers a diversified portfolio and what we estimate is the greatest potential for growth outside the economic cycle through legacy contract re-pricing and operational improvements. With the larg- est rail network — and arguably the best in North America, per many rail experts — in an industry where scale matters, UNP's assets could support the best margins in the industry. implied value of UNP's pricing opportunity is unmatched, according to our
analysis. UNP has the most legacy contracts — and the most
underpriced ones, as UNP historically was the biggest discounter.
Return on Equity (ROE) Analysis
About 20% of the portfolio remains in legacy contracts, more than 2 times any other railroad, with renewals extending through 2012. These contracts are 10-50% below current market and lack a proper fuel surcharge. UNP expects 5-6% annual rate increases through 2012, composed of 3-4% organic pricing and 2% from legacy contracts. Organic pricing should outpace inflation; most customers have few options and capacity concerns remain. Largest productivity opportunity within rails. Historically,
Morgan Stanley forecast UNP has been one of the best-run railroads in North America, but 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 margins have lagged peers ever since the company merged with Southern Pacific in the mid-1990s. With returns improving, UNP now has the cash to make necessary upgrades to the network. UNP has made progress over the past year, but still has a large Union Pacific Corp. vs. Americas Coverage Universe
opportunity remaining. Management sees the potential to take up to $1-2 billion of operating costs out of the system over time. Union Pacific Corp.
Free cash flow could triple by 2013. UNP's strong EPS growth
and pricing opportunity should lead to higher returns and cash flow. Given the large but fixed nature of maintenance capex (UNP's capex is 14-15% of revenue, 70-80% of which is mainte- nance), FCF growth should far exceed net income growth as re- turns improve. With limited investment opportunities, we expect excess cash will be returned to shareholders. Maintaining lever- age ratios could support further buybacks. Risk-Reward on a 12-month view (Overweight/Attractive, PT $86)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Business & IT Services
URS Corp. (URS.N)
Value of Growth Analysis
Morgan Stanley & Co. Vance Edelson
URS is poised to leverage its best-in-class expertise to capitalize on long-term growth opportunities across the infrastructure, envi- ronmental, energy, and defense industries. Diversity and global reach allow the company to be highly selective in accepting pro- jects, and the well-regarded management team is disciplined and keenly focused on maximizing profitability. implied value of Infrastructure needs are considerable. A US Congressional
panel recently suggested that, on an annual basis, the US cur-rently spends less than 40% of what it will need to spend over the next 50 years to fix current deficits and address future transporta- Return on Equity (ROE) Analysis
tion needs. Nearer term, with its focus on highways, bridges, tunnels, mass transit, dams, and levies, URS is well positioned to capitalize on fiscal stimulus designed to create jobs and pull the US out of recession. Cleaning up the legacy of the Cold War is another area of
expertise for URS.
The company recently won multi-year, multi-
billion dollar contracts to manage radioactive remediation for the Morgan Stanley forecast US Department of Energy and the UK Nuclear Decommissioning Authority. Environmental retrofits of coal plants to meet stag- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 gered, federal y mandated clean air requirements should drive growth through 2020. Within the energy arena, URS is one of few firms that has re- URS Corporation vs. Americas Coverage Universe
mained in the nuclear business over the past 30 years. As such, we view the company as an attractive play on the upcoming nu- clear renaissance as society seeks clean, abundant, and renew- able sources of energy. URS also has a strong presence in Ca- nadian oil sands, hydroelectric, wind, and solar power, which represent long-term growth opportunities. The outlook for defense spending appears solid as global con- flicts continue. Middle East troop withdrawals would likely take years and play to the company's strength in storing, refurbishing, and remobilizing military resources. Risk-Reward on a 12-month view (Overweight/In-Line, PT $55)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Utilities
Veolia Environnement (VIE.PA)
Value of Growth Analysis
Morgan Stanley & Co. Emmanuel Turpin
International plc+ The world's largest operator in water and waste management
Veolia is well placed to benefit from three drivers for growth.
Environmental standards are rising worldwide, leading service providers (typically local governments) to invest in infrastructure and improve operational sophistication. Capex requirements are therefore very high, creating growth opportunities for operators such as Veolia. This trend also incentivizes municipalities and implied value of governments to outsource operations to the private sector. The operation of public services under long-term contracts is a struc-tural opportunity for Veolia that is likely to be enhanced by budget Return on Equity (ROE) Analysis
constraints in times of economic slowdown. Water and waste industries are very fragmented, but are consolidating. Large op- erators such as Veolia are well positioned to benefit from tuck-in acquisitions that strengthen their existing footprint. Barriers to entry are general y low for water and waste manage-ment activities, but are much higher for larger, more complex operations (water management for densely populated areas, drinking water production in polluted catchment areas, recycling Morgan Stanley forecast and waste-to-energy solutions in waste management). The tech- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 nological complexity of these solutions and Veolia's extensive experience of managing water and waste systems in large cities are a strong competitive advantage. Regional Yardsticks
Veolia Environnement vs. European Coverage Universe

Veolia's contracts are typically long term ( 12 years in Water) and include some pass-through clauses on costs such as fuel and general inflation. So although fuel price increases depressed percentile range the EBITDA margin in 1H08, most of the earnings shortfall will be recouped at year end, when contracts rebase. Veolia's business model is one of growth through reinvestment. We expect the company to invest less in the next two years than it has done in the past three years, as management has embarked on a pro- gramme to strengthen its balance sheet. Please refer to the important disclosure regarding Veolia
Environnement on page 61.
Risk-Reward on a 12-month view (Equal-weight/Cautious,
PT €19)

Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at € 18.58
www.morganstanley.com; or other electronic systems. €19.00 (+2% )
Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
IT Services - Information Processing
Visa (V.N)
Value of Growth Analysis
Morgan Stanley & Co. Charles Murphy, CFA
Visa will be a key beneficiary of the global shift to card pay-
ments from cash and checks. Visa owns the world's largest
credit and debit card network: 1.6 billion cards accepted by 29 million retailers. Globally, only 6% of consumer payments are made with cards, and we expect credit and debit card transac- tions to post double-digit annual growth through 2012. implied value of Visa is well positioned in attractive segments:
Best positioned in debit: 35% of dollar volume over Visa's network emanates from debit cards. We believe debit is a more Return on Equity (ROE) Analysis
defensive and faster growing form of payment than credit (be-cause debit is relatively immature and because payments are taken from checking accounts, rather than incurring interest). • International: Visa has 40% of revenue from outside the US and leading positions in developing regions. It does not own its European operations, but Visa Europe (owned by member banks) has the right to sell itself to Visa beginning in March 2009. Morgan Stanley forecast Protected from outstanding litigation. Visa's equity holders
are not liable for any settlements in the pending retailer class 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 action. Instead, Visa's prior US bank owners will be liable. We expect Visa to post the highest growth and margins in
our universe over the next four years.
For F2009–12, we pro-
Visa Inc. vs. Americas Coverage Universe
ject low-double-digit organic revenue growth, with high 40s/low 50s operating margins. Along with transaction and dollar volume Visa Inc.
growth, Visa should enjoy at least 200 bps of revenue growth annually from pricing power over the next several years. Visa is just starting to rationalize its cost structure after dec-
ades of quasi-not-for-profit ownership and regional management (now centralized). We see advertising/marketing as a key area of cost savings, with a F2009–12e CAGR of 3% in ad expense vs. 12% in revenue. Operating leverage/other savings should drive 620 bps of margin expansion over that period. Risk-Reward on a 12-month view (Equal-weight/In-Line, PT NA)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Base Case (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Consumer
Wal-Mart de Mexico (WMMVY.PK)
Value of Growth Analysis
Morgan Stanley & Co. Lore Serra
Walmex's compelling advantages should enable it to grow
within Mexican retail while generating world-class returns:
Large scale. Walmex generates more than twice the sales of its nearest competitor. Its second-largest competitor has en- countered financial difficulties and is likely to be restructured. implied value of • Superior format flexibility. Walmex has complementary and successful formats. Its largest brands — Bodega and Supercen- ter — are know for price and assortment, respectively, and span the income spectrum within Mexico. Return on Equity (ROE) Analysis
Broad product mix. Walmex's mix is 50/50 food/non-food. Its commercial proposition is based on, but transcends, "Value." • Ability to grow. Walmex has excess cash and a variety of formats (and size prototypes) that allow it to grow organically in a way that we believe its competitors cannot as they lack the capi-tal, the formats, or both. • Proactive and focused management. Walmex management Morgan Stanley forecast team has consistently demonstrated an ability to gain share and 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 grow traffic in its stores, while managing its investment levels appropriately, in our view. The Mexican retail sector has typically grown at 3 times GDP Wal-Mart de Mexico vs. Americas Coverage Universe
growth. Informal channels still account for 30–50% of shopping in Mexico, but this share is declining over time as formal stores Wal-Mart de Mexico
offer greater availability and better price/selection. Walmex's banking license represents a sizeable long-term
opportunity. Walmex is building its banking operation organi-
cally; that should take time. Yet our proprietary survey work shows that most low-income consumers in Mexico, as well as many consumers outside of the metro areas, do not have access to banking services (or do not feel comfortable with them). Wal- mex, by far, has the country's greatest access to this type of cus- tomer through its most dominant format, Bodega. Risk-Reward on a 12-month view (Equal-weight/In-Line, PT NA)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; $26.00 (-5%)
Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Base Case (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Banking — Large-Cap
Wells Fargo (WFC.N)
Value of Growth Analysis
Morgan Stanley & Co. Betsy Graseck
We view Wells Fargo as well positioned to weather the cur-
rent environment and drive earnings growth. We expect ac-
cretion from the Wachovia (WB) acquisition to more than offset deterioration in the bank's home equity and subprime portfolios. We forecast sustained long-term growth driven by:
Accretion from the pending WB acquisition. We forecast 16– implied value of 38% accretion to operating EPS in 2010–11. Accretion is high as WFC is buying a bank with assets 123% its own size for a 36% discount to tangible book value. Return on Equity (ROE) Analysis
Our expectation of rapidly rising tangible common equity ratios as WB assets are rolled off and cost saves are realized.Strong balance sheet management. While our estimates do not include revenue synergies, we see ample opportunity for WFC to leverage its best-in-class balance sheet management and cross-selling capabilities across WB's footprint. Importantly, we expect the deal to give WFC a national distribution network. Morgan Stanley forecast Cost saves likely to exceed guidance. We think WFC's esti-
mate of a $5 bn run rate is conservative. We expect total cost 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 saves of $8 bn, or 34% of WB's expected 2008 expenses. We assume costs are reduced almost 100% for WB's corporate and investment banking segment and 22% for the rest of WB. Such levels are more typical of an in-footprint transaction, but WB of- Wells Fargo & Co. vs. Americas Coverage Universe
fers significant savings in headquarters, back-office, information systems, vendor purchasing, and business segment focus. Wells Fargo & Co.
Near-term pressures discounted. We expect near-term earn-
ings pressure, as credit losses in the legacy portfolio peak in 2009 and much of the losses from WB's impaired loans occur over the next two years. The risk is for credit deterioration above our forecast, as 57% of the riskiest assets (home equity loans and WB's negative amortization mortgage portfolio) are in Cali- fornia and Florida. But we believe this is well known by the mar- ket, and that management is addressing the problem assets. Risk-Reward on a 12-month view (Overweight/In-Line, PT $39)
$39.00 (+39% )
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2008e; Valuation 2009e; Leverage 2008e Source: FactSet (historical share price data), Company data, Morgan Stanley Research estimates For more detail on our investment thesis and valuation methodology and risks associated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Specialty Stores
Yamada Denki (9831.T)
Morgan Stanley Japan Yukimi Oda
Value of Growth Analysis
Securities Co., Ltd.+ We believe Yamada Denki stands out among Japan's retail-
ers for its growth potential and efficiency. In the last five
years, recurring profit growth has averaged 35% with ROE at 16%, driven by an unrelenting focus on market share. The firm has honed its low-price strategy to gain a 20% share in Japan, more than twice that of number two Edion. We think rivals will be hard-pressed to match Yamada's power to negotiate purchasing terms with makers or its price competitiveness in stores. implied value of We forecast a 5% drop for Japan's consumer electronics market in 2008, in worsening macro conditions. Yet Yamada was still able to grow sales by 10.8% YoY in 1H, as major electronics Return on Equity (ROE) Analysis
makers have cut rebates provided to lower-tier retail chains with inferior marketing power, making these rivals much less price competitive. Also, makers have been strengthening relationships with Yamada, attracted by its proven ability to shift high volumes, helping purchasing terms to improve. Yamada has used these savings to fund more price discounts, enhancing its competitive strength further in a virtuous circle. The replacement cycle for consumer durables will likely lengthen in the economic downturn, Morgan Stanley forecast but total demand in Japan will still exceed ¥7 trillion even with 5% negative growth. In an ailing economy it is more important than 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ever to appeal to consumers on price, allowing Yamada Denki's strengths come to the fore. We view the stalling economy as an excellent opportunity for Yamada Denki vs. Japan Coverage Universe
Yamada to enhance its presence as tough conditions spur an industry shakeout. This should then provide the company with Yamada Denki
maximize survivor benefits as the market share leader once the economy picks up. TV replacement is still a promising area for demand too. Only 43.9% of Japan's TVs were flat-screen models as of March 2008, and many of the 90 million CRT sets in use will need to be replaced before the transition to terrestrial digital broadcasting in 2011. Assuming a price of ¥70,000, potential demand is ¥6.3 trillion. We expect sales growth and improved mark-ups to work in Yamada's favor when the economy is in re-covery. Risk-Reward on a 12-month view (Overweight/In-Line, PT ¥9,800)
Note: Regional Yardsticks: Growth metrics 2009-11e; Returns 2009e; Valuation 2009e; Leverage 2009e Source: FactSet (historical share price data), Company data, Morgan Stanley Re- search estimates For more detail on our investment thesis and valuation methodology and risks asso- ciated with price targets mentioned, please refer to the latest relevant research on these stocks, which is available through your sales representative; Client Link at www.morganstanley.com; or other electronic systems. Price Target (Dec-09) Historical Stock Performance Current Stock Price December 8, 2008
50 for 2012: Investment Guide — Global
Valuation Methodology
Adobe Systems
Our $32 price target implies a P/E of 15x based on our Underperformance of Creative Suite solutions and Acrobat as C1010 EPS estimate of $2.08, which results in a P/E-to- the impact of adverse macro economic conditions could growth ratio of 1.0x based on our estimate of sustainable exceed our expectations; CS's high mature market earnings growth. Our DCF assumes a 10.5% WACC and penetration means further penetration here could be difficult. 2.5% terminal growth. Small size of other product areas increases reliance on two key products. Air Liquide
Our DCF analysis assumes a WACC of 7.5% with an A sustained fall in energy prices and a significant decline in implied long-term growth rate of 1.6%. Our WACC assumptions are based on a cost of debt of 4.6% for an A- balance sheet and an after-tax cost of debt of 3.4%. We use a cost of equity of 8.4% derived from a risk free rate of 5.4%, and a market risk premium of 3%. Amazon.com
Our $95 DCF valuation assumes an 11.2% discount rate Continued slowdown in US/global economy, execution risk and a 6% terminal growth rate. associated with expansion into new geographies and product categories, potential for significant exchange rate fluctuation. América Móvil
Our US$52 price target is based on (1) DCF parameters A more severe-than-expected downturn in LatAm economies, include a 12.6% WACC, and a 4.5% terminal growth rate with currency depreciation lowering the translated US$ value for FCF in 2015, and (2) valuation multiples — on our of earnings estimates, lower GDP growth combined with 2010 estimates, our target represents multiple contraction higher inflation rates negatively affecting top line growth in vs. AMX's current valuation on 2009e EV/EBITDA, P/E, local currency. In addition, we see potential regulatory risks in Mexico (regarding market share concentration), Brazil (possible abrupt reduction in interconnection rates, or higher-than-expected payment to renew spectrum licenses). Our valuation is based on the average of DCF, Steel cycle risks, EM operational risk, safety issues, anti-trust normalised earnings and 1-year forward multiple of 11. issues (M&A), China and Russia are still a gap in the We set our PT midway between our base case and bear portfolio, economic recession. Our $36 price target is based on various valuation Additional M&A, higher than expected capital spending for methods including DCF, comparative P/E and fiber deployments, competitive price pressure, or greater- EV/EBITDA multiples, and sum of the parts. Our DCF than-expected impact from a weak economic environment. assumes a 7.3% WACC, and a 13.5x terminal multiple. Banco Itaú
Our valuation work is based on residual income. Our Uncertainty on economic growth and interest rates in Brazil, model incorporates a cost of equity of 14.05%, economic currency devaluation, and execution challenges from the growth horizon of 10 years, and 2009-12 ROE of 23-24%. merger with Unibanco. Bank of NY Mellon
Our price target is based on residual income analysis, Downside risks include weaker than expected capital which assumes a 5.25% risk free rate, a 4.5% equity markets, headline risk on Russian lawsuit (next hearing Jan. market risk premium and a beta of 1.15. 27 in a Moscow court), lower than anticipated client retention and a reduced win rate in asset servicing as clients may not want to deal with a company in the midst of a merger. Upside risks include stronger than forecast growth in equity market volumes and values and higher operating leverage. Baxter International
Our price target of $72 equates to 19 times our 2009 EPS Key risk we see is a decrease in plasma pricing due to estimate of $3.75, which is above the stock's long term oversupply in the market. This could happen if poor economic average of 17.2 times. Higher projected growth and conditions cause an increase in plasma collections. margin expansion justify the premium, in our view. Our fair value (and price target) is based on a Upside risks: delivery and extension of growth targets. combination of DCF (assumptions: $100/bbl oil, 3% LT Downside risks: any significant deterioration in the top- growth and a WACC of 7%) and NAV. quartile E&P business, and failure to meet the recently set growth targets in the upstream and LNG businesses. Carnival plc
Combination of P/E, EV/berth, FCF, EV/sales and DCF Geopolitical risk, rising interest rates, weakening consumer (WACC 8%, long-term growth 2.5%). demand, the oil price, and capacity oversupply. China Mengniu Dairy
We base our price target on a DCF valuation (12% Downside risks include a large amount of provisions or write- discount rate, 2% long-term growth). The discount rate of offs related to tainted inventory and product recalls, greater 12% reflects the risk premium, given recent difficulty in regaining consumer confidence, and thus slower developments in the industry and uncertainty. sales growth. Risk to margins could also emerge should supply of raw milk decline at a greater pace. Upside risk could arise from lower drop-off in demand, greater mix of premium products, and greater market share gain as weaker firms are weeded out. (continued) December 8, 2008
50 for 2012: Investment Guide — Global
Valuation Methodology
Credit Suisse
We use three metrics to derive our price target: P/BV Global equity and credit market levels, FX rates (US dollar, based on a Gordon growth model (10.75% COE, 3.3% euro and Swiss franc), investor confidence, and global growth, 20% ROE on tangible book value of SFr 28.1 economic growth. p/s); sum-of-the-parts; and P/E multiples. Our $40 price target assumes a target 12x P/E multiple Key risks to our target for CVS shares include: (1) a failure to on our base-case mid-2009e EPS. This multiple reflects attain merger synergies, particularly on the revenue side a blended average of its peers within the retail and PBM since the cost synergies are becoming increasingly visible, industries to reflect the combination of these two distinct and (2) margin degradation from lower pharmacy pricing business segments, and represents a discount to benchmarks among commercial payors, as well as Medicaid. historical averages to reflect the cyclical slowdown in the US operating environment. Our target equates to a 17x multiple – which would Most important risk, in our view, is inability to make attractive represent a cycle trough – applied to our 2010 EPS acquisitions at reasonable prices. Additional risks include a estimate, which is a premium to high end peers and sharper than expected deterioration of end markets; inability reflects DHR's attractive end markets, high FCF, and well to deliver operating improvement in a flat market (ex regarded management team. Supported by DCF, using a acquisitions); and ability to retain DBS-trained employees. 7.6% WACC, 3.0% terminal growth rate, and 10% ROIC. Dentsply International
Our price target is based on 14x our 2010 EPS estimate Significant global slowdown with a deep decline in European of $2.42, a multiple below its historic average of 20x and markets ( 40% of revenues), poor execution on growth slightly ahead of currently depressed levels. initiatives in both developed and new markets, and FX hedges failing to insulate the company from exchange rates as the dollar strengthens. Goldman Sachs
Price target is equal to 1.3x our 12-month forward book Key risks to our price target include: heightened systemic value estimate of $105. Forward multiple is based on concerns in capital markets, risk management breakdown, relative near-term and long-term ROE generation prolonged asset deterioration in principal investment portfolio capacity of the firm (we forecast 2010 ROE of 13% in and persistent global economic weakness into 2010. modest recovery scenario). Hitachi Metals
Our ¥1,200 PT applies P/E of 12x to our F3/10 EPS (1) Expectations of a sales expansion scenario recede due to forecast of ¥101.7. We consider factors including serious production bottlenecks, (2) cautious approach to the potential to regain a premium over other specialty steel balance sheet could cause ROE to decline stocks, and premium value of the difference in earnings direction from the market as a whole. Thus our target multiple is a 60% premium (allowing for significant difference in earnings direction) over the 7-8x on which other specialty steel stocks have traded recently. Iberdrola Renovables
We value IBR using a sum-of-the-parts approach, based Regulatory risk in Spain, M&A, commodity prices on DCF models (WACC of 7.0%, LT growth 2%). We use a simple average of DCF and RI (WACC 8.8%, Macroeconomic risk in Spain/Europe, overstocking pressuring LT growth 3%) to arrive at our Inditex price target. gross margins, currency (USD) IntercontinentalExchange $100 price target reflects monetization of higher-multiple
Pullback in speculation and trading activity by core liquidity CDS clearing opportunity ( $30 value), not reflected in providers; unfavourable regulatory and legislative moves; our EPS outlook. We valued standalone business at 13x unanticipated competitive threats by CME; protracted decline our 2009e ( $70). Residual income model (RIM) in commodity prices and a subsequent decline in volatility; methodology served as a check for P/E-derived target. limited traction in OTC market and non-energy growth efforts. Johnson & Johnson
Price target of $79 is derived from an average of an Increased competition in Medical Devices; changes in the intrinsic value (IV) analysis and a 15.0x P/E on 2009e regulatory or reimbursement characteristics of US domestic EPS. Our analysis assumes: WACC of 7.8%; steady healthcare policy under the new administration; and state (starting 10 years from now) revenue growth of 4%; continued resurgence of the US dollar. long-term ROE on new investments of 7.7%; steady state net debt/equity of 30%. Li & Fung Ltd
We base our price target on a 30% discount to our DCF Upside risks include: (1) more value-accretive acquisitions; value of HK$29.7 (11% discount rate, 3% terminal (2) faster-than-expected ramp-up in operating leverage; and growth). Concerns over deteriorating US/Europe (3) greater sales growth from the new acquisitions. consumption and strong risk aversion amid current Downside risks include: 1) weak order flow from customers market turbulence will likely keep the stock from reaching on the back of a US slowdown and retailers experiencing our intrinsic value estimate. financial difficulties; 2) greater-than-expected increases in SG&A resulting from new deals; and 3) sluggish performance in the company's US onshore business. (continued) December 8, 2008
50 for 2012: Investment Guide — Global
Valuation Methodology
Michael Page
Average of three methodologies: trough P/E of 6x our Upside risks: macroeconomic outlook improves; stocks re- 2009 EPS forecast; historical 0.7x trough price/sales (12- rate despite continuing downgrades, further staffing sector month forward) to our 2009 sales forecast; 20x target multiple to our bear case (recession scenario) EPS Downside risks: macroeconomic outlook deteriorates; forecast of 7p, based on the historical multiples MPI reluctance to cut capacity in slowdown hurts margins more carried on trough earnings in 1992 and 2003. than we forecast. Our primary valuation method is DCF analysis, wherein Downside risks to our price target include: (1) delays on new we assume a WACC of 9.8% and a perpetual growth rate product approvals; (2) accelerating Rmb appreciation and rising labor and material costs; (3) the Datascope acquisition failing to deliver expected cost synergies; and (4) the Chinese government slowing healthcare spending and further delaying healthcare reform. Monsanto
Price target of $170 per share is based on a sum of the Regulatory approval of both current and future biotechnology, parts analysis for the current earnings stream and for the technology risk, competition, intellectual property rights, pipeline. We derive our $110 current franchise valuation foreign regulatory approvals of biotechnology, and commodity through a DCF that fully expenses Monsanto's existing business for R&D at 9-10% of sales using an 8% cost of capital and a 1.5% terminal growth rate. Our $60 pipeline valuation is uses a risk-adjusted discount rate of 12.8% and a 6.5% terminal growth rate. We assume a WACC of 12.1% and long-term growth of Increasing competition in key markets, such as Nigeria; 3.4% in our DCF analysis. EBITDA margin erosion in key markets due to regulation and competition. Exposure to niche markets – including Iran and Sudan – increases the risk of geopolitical issues. We use residual income valuation and our sum-of-the- The biggest risk, in our view, lies in an unexpected dramatic parts model. We assume an 8.5% cost of equity and rise in input prices putting pressure on margins. terminal growth of 3%. Nintendo
DCF, which assumes capital costs of 6.0% and perpetual Downside: Significant slowing of growth amid a global growth of 2.5%. Forex assumptions are ¥100/US$ and economic slump extending to the games market, which has ¥125/€. We forecast F3/10 OP at ¥591.0 bn. PT equates not suffered greatly during recessions in the past to P/E of 15x and P/B of 4x on our F3/10 estimates. Upside: New products like Wii Music and the DSi prove more popular than expected Philip Morris
Price target of $60 is based on 2009e EV/EBITDA of 11, A ‘hard landing' within EMs, large-scale excise tax increases, which would represent targeted valuation parity with BAT, and significant strengthening of the US dollar. whose similarity of scale and competitive overlap make it the appropriate benchmark for PM, in our view. Procter & Gamble
Our valuation is based on 10-year DCF and EVA models. Delays of cost and revenue synergies from Gillette merger, We use a WACC of 8.5% and terminal growth of 3%. stepped up competitive spending of savings, volatile commodity prices, squeeze from decelerating sales in Wal-Mart, slow growth in emerging markets. Reliance Industries
We base our price target on a sum of the parts. We The stock's historical correlation with the market of 0.85x; the value the R&M business on an average one-year forward removal of the tax holiday for the E&P business; the overhang EV/EBITDA multiple of 3.7x, which we believe is the of RELI stock held by the company's subsidiaries, currently lowest multiple global R&M businesses have traded at in valued at close to US$9.2 billion; a sharp decline in global the past decade. We value the petrochemicals business economic growth that would likely compress our projected on an average one-year forward EV/EBITDA of 3.7x for petrochemical and refining margins; potential delays in the global comps, which we believe is the lowest multiple execution of the company's business plan. petrochemicals businesses have traded at in the past decade. We use a P/E target multiple of 6.0x for RELI's E&P business, applied to our average projected earnings of US$3.9 billion (F2010-15), which is the lowest multiple E&P businesses have traded at in the past seven years for a year as a whole. We value RELI's 70.4% stake in Reliance Petroleum at our base-case price target for the latter of Rs116. We remove any equity valuation from our sum of the parts for RELI pertaining to its retail business, as we believe investors are only interested in any businesses that are profitable or generating cash flow. We value RELI stock held by subsidiaries for future sale at a 20% discount to the current market price in consideration of the current market volatility. (continued) December 8, 2008
50 for 2012: Investment Guide — Global
Valuation Methodology
Rolls-Royce
Our price target is based upon long-term DCF analysis, The key risks, in our view, are a full global economic which assumes a 2.0-2.5% long-term growth rate and slowdown, which would cause civil after-market revenue to 8.6% WACC. As a cross-check, we also value Rolls- compress, rising raw materials and R&D costs and sustained Royce on a long-term relative P/FCF basis. US dollar weakness. SABMiller
Our price target is based on a DCF valuation (WACC Currency risk (LatAm, South Africa), and a tougher operating 9.75%, 2% terminal value) Price target is based on 19.6 times 2010e EPS, or 70% of An extended global recessionary environment which would the historical 12-month forward average of 28x. We drive oil demand further down, and sustained fall in assume multiple compression due to downward risk to commodity prices would drive E&P capex further down, commodity prices resulting in lower drilling activity. resulting in lower activity for the oil services industry. Our valuation is based on an average of three Generic risks of satellite failure and lack of success in methodologies: parity with Eutelsat on 2009e commercializing the fleet. P/Normalized FCF; 15% premium to MSCI Europe on Specific risks: failure of IP Prime as a profitable services 2009e P/E; and DCF (WACC of 8.3%, terminal free cash business and lower than expected takeup for the company's flow growth of 1.25%). Astra2Connect internet business; failure to secure financing on reasonable terms. Standard Bank
Derived from SOTP model, which applies P/BV multiples SBK could underdeliver on earnings or ICBC tie-up targets. based on cross-checking P/E values. For each segment, Consumer recession could lead to pedestrian loan growth. we using a Gordon Growth methodology (ROE – earnings growth/cost of equity – earnings growth). Takeda Pharmaceutical
We set our PT of ¥6,800 at a 10% premium to the Potential risks include R&D cost rises, pipeline delays, industry average P/E of 12-13x. This reflects growth in overseas' costs rises, and patent expirations. new global drugs and efficient use of funds (including share buybacks). Tingyi (Cayman Islands)
We derive our price target by applying a 10% discount to Downside risks: (1) weaker sales growth on slower demand; our DCF value of HK$11.2 (3% long-term growth and (2) pricing pressure from competition; and (3) gross margin 11% WACC), discount is relatively narrow due to our pressure from another wave of commodity price surges. expectations of solid earnings growth and cash flow. Upside risks: (1) strong consumption despite the macro backdrop and the effect of inflation; (2) gross margin upside because of further correction in raw material prices; and (3) faster ramp of new production leading to better efficiency. Toyota Motor
Our ¥3,800 PT is based on forecast of F3/10 OP of (1) Forex trends (yen appreciation), (2) risk of weaker than ¥811.9 bn and a target EBITDA multiple of 5.0x. As we expected business conditions in North America, (3) surging view Toyota as a firm with outstanding ability to weather raw materials prices the perfect storm, and a robust balance sheet, we award Toyota's shares a 25% EV/EBITDA premium over our autos industry standard of 4.0x. Trend Micro
Our PT of ¥3,000 applies target P/E of 13.2x to our IT spending remaining heavily restricted as the global F12/09 EPS forecast of ¥154 and tags on net financial economy worsens further assets of ¥973/share. Our F12/09 earnings forecasts assume local currency sales growth of +5% in Japan, +8% in North America and roughly zero in Europe, and average forex rates of ¥98/$ and ¥125/€. We expect earnings to turn downwards in the short run, but we like the firm's strong medium-term growth potential and estimate fair value P/E at a 10% premium to our assumption for the industry on average (12x). We base our price target on our residual income model, Downside risks include a faster deterioration in the macro which assumes 9.0% cost of equity (risk-free rate: 2.5%; environment, market share related issues, or worse-than- beta: 0.73; risk premium: 6.5%) and 4% terminal growth. expected pricing for TSMC's products. Upside risks include the possibility of liquidity and fund flow into Taiwan continuing to benefit large-cap names such as TSMC and outweighing fundamentals. Ultra Petroleum
Based on our 6 year DCF model assuming a WACC of UPL is levered to long-term natural gas prices which remains 8% and 12.5x terminal multiple. a key risk. Rockies gas price dislocations remain a risk: We expect normalized differentials of 15% with additional take away capacity. (continued) December 8, 2008
50 for 2012: Investment Guide — Global
Valuation Methodology
Union Pacific
Our 2009 year-end price target of $86 is derived from our Industry-wide risks include: Global recession could lead to residual income analysis, assuming a required rate of large declines in volume, which could cause rails to be less return of 11.5% (which we derive by assuming a 5% aggressive with pricing; railroads may struggle to offset fixed equity risk premium over the company's average interest costs in a weaker volume environment; rapid rise in fuel. rate on debt of 6.5%). This valuation implies a 13.7 times UNP-specific risks include: large volume declines, particularly multiple on our 2010 EPS estimate of $6.27, which in low margin businesses; legacy contract renewals can assumes a deep recession in 2009, no growth in 2010, inflate volume losses; lower fuel surcharge coverage implies and GDP slowly returning to trend in 2011. more vulnerable to fuel volatility; excessive capital spending; shifts in demand by geography. URS Corp.
DCF analysis triangulated with near-term trading Sustained economic weakness and lower oil prices may multiples as adjusted for growth. Our DCF assumes a reduce funding for infrastructure and energy projects, and the WACC of 12% and a terminal multiple of 8x, suggesting US Department of Defense could scale back operations long-term perpetual growth of 7.2%. abroad over time. Veolia Environnement
We are setting our price target in between our bear and (1) This approach is crude, in the sense that it does not allow base case valuation estimates. Short term, we believe the for future improvement in the profitability of existing assets, main focus of attention will be to look at the value of the and as such may underestimate their value. (2) Equally, in the existing contracts, across an economic cycle, without current uncertain economic environment, there is a risk that factoring in growth capex. We capitalize the 2009 Free our estimates for 2009 may be too high. (3) Competition risk, Cash Flow to Equity using our estimate of the cost of acquisition risk, inability to source enough profitable equity of 10.5%. We apply a discount to the FCF to reflect the risk of non renewal of the contract at expiry. We value separately the operating financial assets from the rest of the operations. Our base case fair value of $62 is based on 18x C2010e Risks include a severe growth slowdown: slower-than- EPS of $3.43, in line with the stock's current multiple. expected payments volume, slower-than-expected cross-border volume growth, and greater-than-expected advertising expense growth, among other factors. Wal-Mart de Mexico
Our DCF model using an 11% cost of (equity) capital The magnitude of share gains for Walmex and the depth of generates a base case fair value of US$26 in a year's the downturn in the Mexico retail industry overall. Ticket has also been declining for almost two years. Wells Fargo
Our $39 price target is based on triangulating a range of Downside risks include retail banking integration risks, higher valuation methodologies. This includes looking forward reserve requirements, lower mortgage originations, and to normalized earnings in 2011e, where we have a further deterioration in the bank's California and Florida $63.75 value based on EPS of $5.10 and a 12.5x multiple. An 18% discount rate gets us to our $39 price Upside risks include fatter NIM as Wells Fargo takes over target. Our residual income valuation model also Wachovia, and higher-than-expected cost saves. generates a $39 price target. Yamada Denki
We use P/E of 16x on our F3/10 EPS forecast of ¥618.3 (1) Same store sales fall short of our expectations in a in setting our PT at ¥9,800. We arrive at our target P/E protracted economic slump, (2) beefing up of low price multiple via the correlation between profit growth rate and strategy raises S&A spend and impedes improvement in profit P/E, ROE and P/B on a global valuation comparison, margins, (3) lower multiples for retail stocks in general as the based on 2-year forward RP growth of 13% and F3/10 stock market slides estimated ROE of 14.4%. December 8, 2008
50 for 2012: Investment Guide — Global

Morgan Stanley ModelWare is a proprietary analytic framework that helps clients

uncover value, adjusting for distortions and ambiguities created by local accounting
regulations.
For example, ModelWare EPS adjusts for one-time events, capitalizes
operating leases (where their use is significant), and converts inventory from LIFO costing to
a FIFO basis. ModelWare also emphasizes the separation of operating performance of a
company from its financing for a more complete view of how a company generates earnings. Morgan Stanley is currently acting as financial advisor to BG Group (BG.L) with respect to its announced unconditional cash offer for Queensland Gas Company (QGC.AU) announced on Oct 28, 2008. BG Group has agreed to pay fees to Morgan Stanley for its financial advice. Please refer to the notes at the end of the report. Morgan Stanley & Co. International plc (DIFC branch), an affiliate of Morgan Stanley, is acting as financial advisor to Mubadala Development Company PJSC in relation to a joint venture with Veolia Environnement SA as announced on 7th October 2008. This report was prepared solely upon information generally available to the public. No representation is made that it is accurate and complete. This report is not a recommendation or an offer to buy or sell the securities mentioned. Please refer to the notes at the end of this report. December 8, 2008
50 for 2012: Investment Guide — Global
Disclosure Section
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Important US Regulatory Disclosures on Subject Companies
The following analyst, strategist, or research associate (or a household member) owns securities (or related derivatives) in a company that he or
she covers or recommends in Morgan Stanley Research: Vinay Jaising - Reliance Industries (common stock); Theepan Jothilingam - BG Group
(common stock); Mary Meeker - Amazon.com (common stock); David T. Veal - CVS/Caremark Corp. (common stock). Morgan Stanley policy
prohibits research analysts, strategists and research associates from investing in securities in their sub industry as defined by the Global Industry
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As of October 31, 2008, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered
in Morgan Stanley Research: Adobe Systems, Air Liquide, Amazon.com, America Movil, ArcelorMittal, Banco Itau Holding, Credit Suisse Group,
CVS/Caremark Corp., Dentsply International, Goldman Sachs Group, Hitachi Metals, Inditex, IntercontinentalExchange, Li & Fung Ltd, Mindray,
Monsanto Company, Nestle, Philip Morris International Inc, Reliance Industries, Rolls-Royce, SES, The Bank of New York Mellon Corp, TSMC, Visa
Inc., Yamada Denki.
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covered in Morgan Stanley Research (including where guarantor of the securities): Adobe Systems, Air Liquide, Amazon.com, America Movil,
ArcelorMittal, AT&T, Inc., Baxter International, Carnival Corp., Carnival Plc, Credit Suisse Group, CVS/Caremark Corp., Danaher Corp., Dentsply
International, Goldman Sachs Group, Iberdrola Renovables, Johnson & Johnson, Li & Fung Ltd, Monsanto Company, Nestle, Philip Morris
International Inc, Procter & Gamble, Reliance Industries, Rolls-Royce, SABMiller, Schlumberger, SES, Toyota Motor, Union Pacific Corp., URS
Corporation, Veolia Environnement, Wal-Mart de Mexico, Wells Fargo & Co., Yamada Denki.
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Iberdrola Renovables, IntercontinentalExchange, Johnson & Johnson, Monsanto Company, Nestle, Procter & Gamble, Rolls-Royce, SABMiller,
Schlumberger, SES, Standard Bank, The Bank of New York Mellon Corp, Toyota Motor, Union Pacific Corp., URS Corporation, Veolia
Environnement, Wal-Mart de Mexico, Wells Fargo & Co.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Adobe Systems, Air
Liquide, Amazon.com, America Movil, ArcelorMittal, AT&T, Inc., Banco Itau Holding, Baxter International, BG Group, Carnival Corp., Carnival Plc,
CVS/Caremark Corp., Danaher Corp., Dentsply International, Goldman Sachs Group, Inditex, IntercontinentalExchange, Johnson & Johnson,
Mindray, Monsanto Company, MTN Group, Nestle, Nintendo, Procter & Gamble, Reliance Industries, Rolls-Royce, SABMiller, Schlumberger, SES,
Standard Bank, Takeda Pharmaceutical, The Bank of New York Mellon Corp, Union Pacific Corp., URS Corporation, Veolia Environnement, Wal-
Mart de Mexico, Wells Fargo & Co., Yamada Denki.
Within the last 12 months, Morgan Stanley & Co. Incorporated has received compensation for products and services other than investment banking
services from ArcelorMittal, Banco Itau Holding, BG Group, Credit Suisse Group, Goldman Sachs Group, IntercontinentalExchange, Nestle,
Nintendo, Procter & Gamble, Reliance Industries, Rolls-Royce, SABMiller, Schlumberger, Standard Bank, The Bank of New York Mellon Corp,
Toyota Motor, Union Pacific Corp., Veolia Environnement, Wal-Mart de Mexico, Wells Fargo & Co.
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client
relationship with, the following company: Adobe Systems, Air Liquide, Amazon.com, America Movil, ArcelorMittal, AT&T, Inc., Banco Itau Holding,
Baxter International, BG Group, Carnival Corp., Carnival Plc, Credit Suisse Group, CVS/Caremark Corp., Danaher Corp., Dentsply International,
Goldman Sachs Group, Iberdrola Renovables, Inditex, IntercontinentalExchange, Johnson & Johnson, Mindray, Monsanto Company, MTN Group,
Nestle, Nintendo, Procter & Gamble, Reliance Industries, Rolls-Royce, SABMiller, Schlumberger, SES, Standard Bank, Takeda Pharmaceutical,
The Bank of New York Mellon Corp, Toyota Motor, Union Pacific Corp., URS Corporation, Veolia Environnement, Wal-Mart de Mexico, Wells Fargo
& Co., Yamada Denki.
December 8, 2008
50 for 2012: Investment Guide — Global
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Adobe Systems, Air Liquide, America Movil, ArcelorMittal, AT&T, Inc., Banco Itau Holding, BG Group, Credit Suisse Group, Danaher Corp., Goldman Sachs Group, IntercontinentalExchange, Johnson & Johnson, Nestle, Nintendo, Procter & Gamble, Reliance Industries, Rolls-Royce, SABMiller, Schlumberger, SES, Standard Bank, Takeda Pharmaceutical, The Bank of New York Mellon Corp, Toyota Motor, Trend Micro, Union Pacific Corp., URS Corporation, Veolia Environnement, Wal-Mart de Mexico, Wells Fargo & Co. Within the last 12 months, Morgan Stanley has either provided or is providing non-securities related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Goldman Sachs Group. The research analysts, strategists, or research associates principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. An employee or director of Morgan Stanley is a director of AT&T, Inc., Schlumberger. Morgan Stanley & Co. Incorporated makes a market in the securities of Adobe Systems, Amazon.com, AT&T, Inc., Baxter International, Carnival Corp., CVS/Caremark Corp., Danaher Corp., Dentsply International, Goldman Sachs Group, IntercontinentalExchange, Johnson & Johnson, Monsanto Company, Philip Morris International Inc, Procter & Gamble, Schlumberger, The Bank of New York Mellon Corp, Union Pacific Corp., Visa Inc., Wells Fargo & Co. Morgan Stanley & Co. International plc is a corporate broker to BG Group, Rolls-Royce. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. December 8, 2008
50 for 2012: Investment Guide — Global
STOCK RATINGS
Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below).
Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not
the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since
Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Re-
search, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as in-
vestment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings)
and other considerations.
Global Stock Ratings Distribution
(as of November 30, 2008)
For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell along-
side our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks
we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative
weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy
recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.
Coverage Universe Investment Banking Clients (IBC) Stock Rating Category Total 2,333
Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months. Analyst Stock Ratings
Overweight (O or Over) - The stock's total return is expected to exceed the total return of the relevant country MSCI Index or the average total return
of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis over the next 12-18 months.
Equal-weight (E or Equal) - The stock's total return is expected to be in line with the total return of the relevant country MSCI Index or the average
total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis over the next 12-18 months.
Not-Rated/Hold (NA or NAV) - Currently the analyst does not have adequate conviction about the stock's total return relative to the relevant country
MSCI Index or the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18
months. Please note that NA or NAV may also be used to designate stocks where a rating is not currently available for policy reasons. For the
current list of Not-Rated/Hold stocks as counted above in the Global Stock Ratings Distribution Table, please email
[email protected]
Underweight (U or Under) - The stock's total return is expected to be below the total return of the relevant country MSCI Index or the average total
return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.
Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the
relevant broad market benchmark, as indicated below.
In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant
broad market benchmark, as indicated below.
Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant
broad market benchmark, as indicated below.
Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index;
Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index.
December 8, 2008
50 for 2012: Investment Guide — Global
Other Important Disclosures
Morgan Stanley produces a research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to
the recommendations or views expressed in this or other research on the same stock. This may be the result of differing time horizons,
methodologies, market events, or other factors. For all research available on a particular stock, please contact your sales representative or go to
Client Link at www.morganstanley.com.
For a discussion, if applicable, of the valuation methods used to determine the price targets included in this summary and the risks related to
achieving these targets, please refer to the latest relevant published research on these stocks.
Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to
the individual financial circumstances and objectives of persons who receive it. The securities/instruments discussed in Morgan Stanley Research
may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and
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Morgan Stanley Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any
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The value of and income from your investments may vary because of changes in interest rates or foreign exchange rates, securities prices or
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December 8, 2008
50 for 2012: Investment Guide — Global
of their Morgan Stanley & Co. International plc representative about the investments concerned. In Australia, Morgan Stanley Research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. RMB Morgan Stanley (Proprietary) Limited is a member of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by Morgan Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA), and is directed at wholesale customers only, as defined by the DFSA. This research will only be made available to a wholesale customer who we are satisfied meets the regulatory criteria to be a client. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA. As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses, portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations. The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley has based its projections, opinions, forecasts and trading strategies regarding the MSCI Country Index Series solely on publicly available information. MSCI has not reviewed, approved or endorsed the projections, opinions, forecasts and trading strategies contained herein. Morgan Stanley has no influence on or control over MSCI's index compilation decisions Morgan Stanley Research, or any portion hereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley Research is disseminated and available primarily electronically, and, in some cases, in printed form. Additional information on recommended securities/instruments is available on request.
December 8, 2008
50 for 2012: Investment Guide — Global
North America Director of Research
Food & Food Service
Hosp. Supplies & Medical Tech
Semiconductors/Capital Equipment
Associate Director of Research
Gezunterman 1+617-856-8753 Research Associates
Francescone 1+212-761-3222 David J. Adelman Management
Agricultural Products
Communications Equipment
Doreen DiLorenzo Pharmaceuticals
Caius Christoe
ENERGY & UTILITIES
Information Processing &
Economics
INDUSTRIALS
Financial Technology
Alternative Energy
Charles Murphy, CFA Aerospace & Defense
Tannenbaum 1-212-761-7151 U.S. Strategy
Nerlinger 1+415-576-2610 Abhijit Chakrabortti 1+212-761-7201 Schneider 1+212-761-3483 Exploration & Production
McDonnell 1+212-761-4180 Stephen Richardson Business & ITServices
Wireline & Wireless Telecom Services
Christopher Metli Commodities
Hussein Allidina Uplenchwar 1+212-761-4487 Stephen J. Maresca Ragolsky 1+212-761-6253 Industrial Conglomerates
Scott Davis, CFA Oil Services & Equipment
Robert Wertheimer Airlines & Air Freight
Bill Greene
CONSUMER DISCRETIONARY/RETAIL
MATERIALS
Branded Apparel
Utilities
Nonferrous Metals & Mining, Coal
Discounters
FINANCIALS
Gregory Melich, CFA Asset Managers
Food & Drug
Hardlines & Home Vendors
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Gregory Melich, CFA Betsy Graseck, CFA Cable & Satellite
Oliver Wintermantel Benjamin Swinburne McGinley 1+914-225-4973 Restaurants
Benjamin Berenson Brokers & Exchanges
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Patrick Pinschmidt Benjamin Swinburne Softlines
Insurance/Life & Annuity
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Gaming & Lodging
Celeste Mellet Brown Enterprise Software
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CONSUMER STAPLES
Sapna Srivastava Enterprise Systems & PC Hardware
Beverages
Cosmetics & Household Products
Health Care Distribution & Tech
Internet & PC Application Software
Masurekar 1+212-761-8094 December 8, 2008
50 for 2012: Investment Guide — Global
Asia/Pacific
Director of Asia/Pacific Research
Paper & Packaging
+ 61 2 9770 1603 Associate Director of Korea Research
Property
Sachin Salgaonkar 2848-5657 SINGAPORE/ASEAN
Associate Director of Greater China
+ 61 2 9770 1316 Research
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Transportation & Infrastructure
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Utilities
Research
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Girish Achhipalia +91 22 2229 7170 December 8, 2008
50 for 2012: Investment Guide — Global
Greater China Insurance
Internet / Media
Australia PROPERTY
Australia + 61 2 9770 1536 China / Hong Kong +86 21 6279 8496 +86 21 6279 7042 +82 61 6279 8494 Software & Services
Sameer Baisiwala +91 22 2209 7830 +91 22 2209 7915 +91 22 2209 7073 Saumya.Srivastav +91 22 2209 7084 HEALTH CARE
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Australia Sameer Baisiwala +91 22 2209 7830 Paper & Packaging
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Building Materials
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Singapore Vinay Jaising† +91 22 2209 7780 Praveen Choudhary Mayank Maheshwari +91 22 2209 7821 Australia Vinay Jaising† +91 22 2209 7780 +91 22 2209 7925 Mayank Maheshwari +91 22 2209 7821 Fordyanto Widjaja China / Hong Kong +91 22 2209 7149 Cement / Glass / Auto Components / Steel
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Australia + 61 2 9770 1536 +886 2 2730 2865 +886 2 2730 2989 +886 2 2730 2890 +886 2 2730 2873 December 8, 2008
50 for 2012: Investment Guide — Global
Europe
Director of Research
Consumer
+44 (0)20 7425 4271 +44 (0)20 7425 4389 Associate Director of Research
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+44 (0)20 7425 4405 +44 (0)20 7425 2175 +44 (0)20 7425 8022 Economics
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+44 (0)20 7425 3595 +44 (0)20 7425 6230 +44 (0)20 7425 6188 Antonella Bianchessi +44 (0)20 7425 7857 Property
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+44 (0)20 7425 3805 +44 (0)20 7425 8332 Iouli Matevossov +44 (0)20 7425 1820 +44 (0)20 7425 7597 Louise Singlehurst +44 (0)20 7425 7239 +44 (0)20 7425 8607 +44 (0)20 7425 6247 +44 (0)20 7425 5434 +44 (0)20 7425 5387 +44 (0)20 7425 3917 +44 (0)20 7425 3242 +44 (0)20 7677 6302 +44 (0)20 7425 6944 +44 (0)20 7425 3734 +44 (0)20 7425 4267 +44 (0)20 7677 4183 +44 (0)20 7425 7049 +44 (0) 20 7425 2138 Telecommunications Services
Juan Pablo Lopez Cobo +44 (0)20 7425 8954 +44 (0)20 7425 2175 +44 (0) 20 7425 5628 +44 (0)20 7425 3612 Valuation and Accounting
Alexander Vassiouk +44 (0)20 7425 8846 Maxence Le Gouvello +44 (0)20 7425 6942 Charlie Muir-Sands +44 (0)20 7425 5207 +44 (0)20 7425 7979 Polina Efimovikh +44 (0)20 7425 1578 Utilities
+44 (0)20 7425 4670 TECHNOLOGY
Currencies
+44 (0)20 7425 8808 +44 (0)20 7425 5238 Technology/Software & Services
+44 (0)20 7425 8583 +44 (0)20 7425 9094 +44 (0)20 7425 8371 +44 (0)20 7425 9646 +44 (0)20 7425 9034 SOUTH AFRICA -
Patrick Standaert +44 (0)20 7425 9290 Magdalena Stoklosa +44 (0)20 7425 3933 Tammam El Barbir RMB MORGAN STANLEY
TELECOMS
CONSUMER DISCRETIONARY/
+44 (0)20 7425 4466 Head of Research
Insurance
Telecommunications Services
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Leon Michaelides +44 (0)20 7425 2307 +44 (0)20 7425 6611 Financials
Aerospace & Defence
+44 (0)20 7425 1830 Magdalena Stoklosa +44 (0)20 7425 8750 +44 (0)20 7425 6679 +44 (0)20 7425 6830 +44 (0)20 7425 2687 Maciej Wasilewicz +44 (0)20 7425 9104 +44 (0)20 7425 5371 Industrials
Autos & Auto Parts
Andrew Broadfield +44 (0)20 7425 2449 +44 (0)20 7425 5761 Leon Michaelides +44 (0)20 7425 2177 +44 (0)20 7425 1830 +44 (0)20 7425 4399 Anthony de la Cour +44 (0)20 7425 7944 +44 (0)20 7425 2175 HEALTHCARE
+44 (0)20 7425 0664 Alexander Vassiouk +44 (0)20 7425 8846 Business & Employment Services
Biotechnology & Medical Technology
Jessica Flounders +44 (0)20 7425 8985 +44 (0)20 7425 6573 +44 (0)20 7425 3752 +44 (0)20 7425 4394 Transport
+44 (0)20 7425 3893 Healthcare Services
+44 (0)20 7425 6148 Phihlelo Matjekana Capital Goods
Martin Whitbread +44 (0)20 7425 5975 +44 (0)20 7425 3831 +44 (0)20 7425 8750 +44 (0)20 7425 5409 Albert Minassian Guillermo Peigneux +44 (0)20 7425 7225 +44 (0)20 7425 6235 +44 (0)20 7425 6698 Food Producers
+44 (0)20 7425 2044 +44 (0)20 7425 8316 James Easterbrook +44 (0)20 7425 6647 Antonio Rodriguez +44 (0)20 7425 5816 +44 (0)20 7425 3281 +44 (0)20 7425 2244 +44 (0)20 7425 3489 EMERGING MARKETS
+44 (0)20 7425 2272 +44 (0)20 7425 7242 Sayra Can Antuntas +44 (0)20 7425 2365 +44 (0)20 7425 8273 +44 (0)20 7425 9867 Equity Strategy (Global)
+44 (0)20 7425 3346 MATERIALS
+44 (0)20 7425 9237 +90 212 339 0010 CONSUMER STAPLES
+44 (0)20 7425 5534 Economics
Building & Construction
Beverages
Economics
+90 212 339 0022 Alejandra Pereda Alexandra Oldroyd +44 (0)20 7425 6648 +44 (0)20 7425 7515 +44 (0)20 7425 5717 Magdalena Stoklosa +44 (0)20 7425 3933 +44 (0)20 7425 1838 +44 (0)20 7677 4183 +90 212 339 0070 Food Producers/HPC
Chemicals
Banks/ Diversified Financials
Insurance
+44 (0)20 7425 5263 Michael Eastwood +44 (0)20 7425 4657 Magdalena Stoklosa +44 (0)20 7425 3933 +44 (0)20 7425 1830 Mark Christensen +44 (0)20 7425 5392 +44 (0)20 7425 4182 +44 (0)20 7425 8808 Telecommunications Services
+44 (0)20 7425 3935 +44 (0)20 7425 0640 +44 (0)20 7425 4466 Metals & Mining
+44 (0)20 7425 2175 Telecommunications Services
Alexander Vassiouk +44 (0)20 7425 8846 +44 (0)20 7425 4754 +44 (0)20 7425 5354 +44 (0)20 7425 2175 +44 (0)20 7425 8959 Alexander Vassiouk +44 (0)20 7425 8846 Insurance
+44 (0)20 7425 2127 +44 (0)20 7425 1830 +44 (0)20 7425 3075 Property
+44 (0)20 7425 9870 +44 (0)20 7425 6638 +44 (0)20 7425 7831 December 8, 2008
50 for 2012: Investment Guide — Global
Japan
Director of Research Division
Services: Computer Software &
Services
Masaharu Miyachi Shinichiro Muraoka Economic Research
Retailing: Specialty, Restaurants
Services: General Services / Internet
Director of Economic Research
Services
MATERIALS
Robert A. Feldman Economics
Chemicals
TECHNOLOGY
Trading Companies
Yamaguchi +813-5424-5387 Tomokazu Soejima Technology: Consumer Electronics
CONSUMER STAPLES
Equity Research
Glass & Ceramics
Technology: Japan Semiconductors
Director of Japan Research
Paper & Packaging
Associate Director of Research
Technology: Precision Instruments
Steel / Nonferrous Metals/ Wire & Cable
Hiroshi Yoshihara Oil & Coal Products
Equity Strategy
Utilities
TELECOMS
Textiles
FINANCIALS
CONSUMER DISCRETIONARY/
INDUSTRIALS
Financial Services, Insurance
Noriaki Hirakata PROPERTY
Hatakeyama +813-5424-5348 Auto Parts
HEALTHCARE
Shinichiro Muraoka Real Estate

Latin America
Director of Research
MATERIALS
TELECOMS & MEDIA
Homebuilders & Real Estate
AEROSPACE & DEFENSE
+55-11-3048-6201 Economics
Nonferrous Metals & Mining, Coal
Luis A. Arcentales, CFA 1+212-761-4913 CONSUMER STAPLES/BEVERAGE
TRANSPORTATION &
Marcelo Carvalho +55 11 3048-6272 Montanari +55-11-3048-6225 Guzman 1+212-761-7084 Nicolai Sebrel , CFA GEMs Equity Strategy
Tatiana Feldman FINANCIALS
ENERGY & UTILITIES
Financial Services
Oil, Gas, Petrochemicals & Clean
Guzman 1+212-761-7084 SMALL AND MID CAPS
+55-11-3048-6112 +55-11-3048-6206 Alexandre Falcao +55 11-3048 6016 Oil Services
Ole Slorer
Global Management Global Director of Research
Chief Operating Officer
Global Sector Leaders
Economics
Portfolio Analysis
Industrials
Editorial & Publishing
Martin L. Leibowitz Global Director
GEMs Equity Strategy
Foreign Exchange
Global Product Strategist
Technology
Healthcare
+44+20-7425-6620 The Americas
20 Bank Street, Canary Wharf 4-20-3, Ebisu , Shibuya-ku International Commerce Center New York, NY 10036-8293 1 Austin Road West, Kowloon, Hong Kong Tel: +1 (1)212 761 4000 Tel: +44 (0)20 7425 8000 Tel: +81 (0)3 5424 5000 Tel: +852 2848 5200 2008 Morgan Stanley

Source: http://bourse.blogs.challenges.fr/media/00/02/616869063.2.pdf

facstaff.cbu.edu

Tennessee Academy of Science 2009 West Tennessee Regional Collegiate Meeting Registration 8:00-10:30 AM Frazier Jelke Lobby Welcome and Introduction Frazier Jelke Room Keynote Address 8:05 – 8:45 AM Frazier Jelke Room Dr. Laura Luque de Johnson

Consumers' guide to shrimp certification

CONSUMERS' GUIDE TO SHRIMP CERTIFICATION with an analysis of the ASC Shrimp Standard 2nd EDITION (Advanced draft, for review) CONSUMERS' GUIDE TO SHRIMP CERTIFICATIONwith an analysis of the ASC Shrimp Standard 2nd EDITION(Advanced draft, for review) Edited by A.K Thavaraj