Global Market Outlook, NYSE:CIM, NYSE:ASR, NASDAQ:FORTY,NASDAQ:AGNC

Global Market Outlook

Shayne Heffernan27th November 2010

27th

November 2W

Wall St Outlook

Europe’s problems continue but not even they will stop a Wall St Rally this week, strong holiday spending

and a much improved US employment situation will be enough to lift the Street this week.

The same fear mongering headlines dominated the news in November, consistent reports that Europe's

debt crisis could spiral out of control have driven stocks off their highs hit in the first few days of

November.

So let’s put some perspective on that, since November 5, the S&P has fallen 3.1 per cent after adding 17

per cent over the two months before that, so the fall remains within a range that we would expect as a

pause in a Bull Market.

At Friday's close, the S&P 500 was down 0.9 per cent for the week, almost matching the Dow's 1 percent

drop, culminating a short week in the USA with a thinly traded fall.

The Irish story seems to be the same nonsense that was published during the Greek Crisis, which passed

as will the news beat up on Ireland. In fact Irish stocks, especially banks look pretty good.

In news that does matter, the signs are clear that there is a gathering recovery in the employment

market. The government's nonfarm payrolls report on Friday is set to be another sign of a turnaround in

hiring that could boost stocks through the end of the year, IF, there are any dips this week buy them as

Friday will deliver a good rally.

Black Friday reports suggest holiday shopping got off to a good start. The S&P retail index rose more than

5 per cent in the run up to Black Friday. This points to an increasingly bullish view of US consumer

spending after a string of stronger indicators on jobs, sentiment and spending.

This Friday's payrolls report is expected to show the economy added 143,000 jobs in November,

according to our research. If we are correct, the jobs data will fit a pattern of growing strength in the

labor market.

As Paul Ebeling said in August, “The fact is that as part of the economic cycles, unemployment is and has

been proven to be a trailing indicator of consumer spending, the historical evidence shows that this

indicator peaks a year after consumer spending and hits the lowest range six to twelve months after the

dip in consumer demand.”

October certainly proved this to be true, USA companies hired at their fastest pace since April, the

government's payrolls data showed, while the latest weekly initial claims for unemployment benefits

have dropped to their lowest in over two years. November consumer sentiment rose to the highest level

since June. October consumer spending also gained.

The early evidence from Black Friday suggested shoppers were spending and that discounts were not as

deep this year as last, potentially helping to lift retailers' margins as they look for the best holiday season

in three years.

Black Friday marks the start of the holiday spending when U.S. retailers traditionally turn a profit, or go

into the black for the year.

The National Retail Federation said that nearly 60 million Americans plan to hit the stores over the

weekend, while another 78 million might join the crowds of shoppers. The NRF will provide an update on

Sunday.

Retailers on the front lines will publish same-store sales data on Thursday when they will likely comment

on the weekend's events.

Europe's debt crisis could cause the odd dip. Prophets of Doom predicting the euro's demise are getting

serious attention, although not the type they need. Europe is not going to change or fall apart, Europe is

very young and is just finding its feet, it will be around for a very long time.

European Commission President Jose Manuel Barroso denied on Friday that a financial rescue plan was in

the works for Portugal and called a newspaper's report that Portugal was under pressure to seek a

bailout "absolutely false," while Spain said it did not need help to manage its finances. But the market

was less sanguine and stocks took a nose dive.

In my opinion, European stocks may be getting hit too hard and that strong companies are getting caught

up in the general selling. There are huge bargains in the European Financial Sector.

Periods of decline in November have worked off the S&P 500's overbought condition. The index has been

finding support at around 1,180 and resistance at 1,200. That may serve as a short-term trading range.

In reality, Bullish sentiment has been on the rise again.

Bullish sentiment rose 7.4 percentage points to 47.4 per cent, according to the latest sentiment survey by

the American Association of Individual Investors. Bullish sentiment has now spent 12 consecutive weeks

above its historical average of 39 per cent despite some drops in November.

On Ireland

US firms have invested more in Ireland than in Brazil, China, India and Russia combined, says Joanne

Richardson, CEO of the American Chamber of Commerce.

The clout of those businesses was on display on Thursday when Finance Minister Brian Lenihan, fresh

from announcing 15 billion euros in spending cuts and domestic tax rises, addressed the American

Chamber of Commerce’s annual Thanksgiving lunch.

In between the pork and pheasant terrine and the roast turkey, he reassured a ballroom full of US

business chiefs that Ireland’s 12.5 per cent corporate tax rate was untouchable.

That tax rate, far lower than in the other countries of Western Europe, has been Ireland’s calling card in

competing for international investment. It infuriates European neighbours that are now funding Ireland’s

bailout and think it competes unfairly with their higher rates, but it remains popular in Ireland.

Ireland’s main political parties are committed to keeping it, and even argue with each other over who will

do a better job defending the low rate from outside meddlers that want it hiked.

With growth slowing in the United States and Europe, Barry O’Leary, head of Ireland’s investment

promotion agency IDA, has his eyes on attracting investment from Asia. The IDA has opened offices in

Mumbai, Shanghai, Moscow and Sao Paolo, and is opening new ones in Shenzen, Singapore and

Bangalore.

Foreign firms are not frightened off by the chaos in the domestic economy, which does not really affect

them since they don’t rely on Ireland’s domestic demand for customers or on its financial system for

funding, he said.

“Ireland has such a strong track record of companies operating here and they are not caught up in the

domestic financial system.”

The IDA’s O’Leary says foreign direct investment was responsible for 110 billion euros of Ireland’s 159

billion euros in exports last year.

For the Irish, the biggest question is whether the foreign companies will be able to provide jobs. For now,

they seem to be the only source of them.

Brian Murphy, CEO of the Irish branch of recruitment firm Morgan McKinley, Ireland’s biggest

professional recruiter, says job vacancies are now just half of what they were before the bust. Most of

that loss has been among firms serving the domestic market, while demand for workers among multi-

nationals has held up much better and is now growing.

Multi-nationals made up just 40 per cent of the vacancies on Morgan McKinley’s books before the crisis

but now make up nearly two thirds, Murphy said. Employers are looking for computer programmers,

experts in pharmaceuticals and life sciences, accountants, supply-chain managers and other skilled

workers.

With unemployment at 14 per cent instead of 4 per cent, there are a lot more applicants for those

vacancies, which is only good news for foreign firms who will now find Irish workers “more competitive in

the wage space”, Murphy said.

Richardson rattles off the names of US firms that have announced plans to hire in Ireland in recent

months: Ebay, IBM, Google, GE Healthcare, Covidien.

Facebook opened its office last year, hiring 200 people. Video game company Activision Blizzard hired

800.

Intel, whose $US7 billion, 360 acre “centre of manufacturing excellence in Europe” in county Kildare is

perhaps the grandest monument to Ireland’s export-driven boom, is looking for a Senior Silicon

Validation Engineer and a Thin Films Deposition Engineer, among other vacancies.

Shayne Heffernan

USA Strong Buys

Dividend Stocks

Grupo Aeroportuario (NYSE:ASR)

Price/Share*: $49.29 Annual Dividend: $4.71 Dividend Yield: 9.56%

Pay Date: 06/01 Ex-Dividend Date: 05/14 Record Date: 05/18

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a Mexican airport operator with concessions to

operate, maintain and develop the airports of Cancun, Cozumel, Huatulco, Merida, Minatitlan, Oaxaca,

Tapachula, Veracruz and Villahermosa in the southeast of Mexico. As operator of these airports, ASUR

charges airlines, passengers and other users fees for the use of the airports' facilities. The Company also

derives rental and other income from commercial activities conducted at its airports, such as the leasing

of space to restaurants and retailers. As of December 31, 2009, Cancun had approximately 29,725 hotel

rooms. During the year ended December 31, 2009, it served approximately 15.5 million passengers. As of

December 31, 2009, 15 Mexican and 80 international airlines, including United States-based airlines, such

as American Airlines and Continental Airlines, were operating directly or through code-sharing

arrangements in its airports.

Formula Systems (NASDAQ:FORTY)



Formula Systems (1985) Ltd. (Formula) is a global information technology (IT) solutions and services

company based in Israel. The Company is principally engaged in providing software consulting services,

developing software products and providing computer-based business solutions. It delivers its solutions

in over 50 countries worldwide to customers with IT services needs. The Company’s subsidiaries are

Magic Software Enterprises Ltd. (Magic Software), Matrix IT Ltd. (Matrix) and Sapiens International

Corporation N.V. (Sapiens). The Company operates in two business areas: IT services and proprietary

software solutions. In February 2010, a subsidiary of Magic Software completed the acquisition of the

consulting and staffing business of a United States-based IT services company. In October 2009, the

Company completed the sale of its entire 100% shareholdings in its subsidiary nextSource.

American Capital Agency (NASDAQ:AGNC)



American Capital Agency Corp. (AGNC) is a real estate investment trust (REIT). AGNC earns income

primarily from investing in residential mortgage pass-through securities and collateralized mortgage

obligations. These investments consist of securities, for which the principal and interest payments are

guaranteed by United States Government-sponsored entities, such as the Federal National Mortgage

Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) or by a United

States Government agency, such as the Government National Mortgage Association (Ginnie Mae). The

Company is externally managed by American Capital Agency Management, LLC, a subsidiary of a wholly

owned portfolio company of American Capital, Ltd.

Chimera Investment (CIM)



Chimera Investment Corporation is a specialty finance company that invests, either directly or indirectly

through its subsidiaries, in residential mortgage-backed securities (RMBS), residential mortgage loans,

real estate-related securities and various other asset classes. The Company is externally managed by

Fixed Income Discount Advisory Company (FIDAC). The Company's targeted asset classes and the

principal investments it expects to make includes RMBS comprising agency and non-agency RMBS,

residential mortgage loans consisting of prime mortgage loans, jumbo mortgage loans, and Alt-A

mortgage loans and other asset backed securities (ABS) consisting of debt and equity tranches of

collateralized debt obligations (CDOs), commercial mortgage backed securities (CMBS) and consumer and

non-consumer ABS.

Shayne Heffernan

Research Reports

McDonald’s Corp. NYSE:MCD

Chutinush Taksinapinunt ,Corporate Account Executive, Heffernan Capital Management

Summary

Change -0.940 (-

1.183%)

Open 79.240

High 79.270

Low 78.540

Volume N.A.

52-Week

Range

79.90 -

60.04

1-Yr

Return 27.498%

Earnings

Earnings

Fundamentals

Earnings Past 12 Months 4.500 Shares (Millions) 1,056.507

Quarter Est. EPS (12/10) 1.16 Market Cap (Millions) 82,978.040

Quarter Est. EPS (03/11) 1.10 Float (Millions) 1,055.367

Year Est. EPS (12/10) 4.60 Return on Equity 33.199

Price/Earnings (Trailing) 17.453 Short Interest 9,659,867.000

Relative P/E 1.172 Last Dividend Reported 0.610 Regular Cash

Earnings Growth Rate 15.600 Dividend Yield (ttm) 2.867

Estimated P/E 17.100 Relative Dividend Yield 1.470

Recommendation

NYSE:MCD is a Strong Buy Sub $74 with a 2011 price target of $100 based on the rapid expansion in Asia

About McDonald’s Corp. (MCD:US)

McDonald’s Corporation franchises and operates McDonald’s restaurants in the food service industry. These restaurants serve a varied, yet limited, value-priced menu in more than 100 countries worldwide. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and foreign-affiliated markets and developmental licensees under license agreements. Independently-owned and operated distribution centers, approved by the Company, distribute products and supplies to most McDonald’s restaurants. In addition, restaurant personnel are trained in the storage, handling and preparation of products and in the delivery of customer service. In February 2009, the Company sold its interest in Redbox Automated Retail, LLC.

The Company’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Chicken Selects, Snack Wraps, french fries, premium salads, shakes, McFlurry desserts, sundaes, soft serve cones, pies, cookies, soft drinks, coffee, McCafe beverages and other beverages. In addition, the restaurants sell a range of other products, during limited-time promotions. McDonald’s restaurants in the United States and many international markets offer a full or limited breakfast menu. Breakfast offerings may include Egg McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches, hotcakes and muffins. During the year ended December 31, 2009, of the 32,478 restaurants in 117 countries, 26,216 were operated by franchisees (including 19,020 operated by conventional franchisees, 3,160 operated by developmental licensees and 4,036 operated by foreign affiliated markets (affiliates) primarily in Japan) and 6,262 were operated by the Company.

McDonald's Corp.'s third-quarter profit soared 10% to trounce expectations, and shareholders are lovin' it. The fast-

food behemoth's stock continued to surge in record territory Thursday, nearing $80 a share. McDonald’s posted a net

income of $1.4 billion, or $1.29 per share, for the three months ended Sept. 30, and revenue jumped 4% to $6.3

billion. Same-store sales, which measure sales at its stores open at least a year and are a key performance gauge,

rose 6%.The company's stock jumped 2.6% to an all-time high of $79.48 following the news. Shares of McDonald's

have been climbing to new records day after day during last two months, and the stock is up more than 30% this year,

leaving rivals Burger King and Wendys/Arbys Group Inc. (WEN) in the dust.

Despite the sluggish economy, Mickey D's been able to thrive by broadening its appeal and introducing new items to

the menu, including the McCafe Frappes and Smoothies. McDonald’s CEO Jim Skinner said he is confident that the

momentum will continue and expects same-store sales in October to increase between 5% and 6%.Analysts polled by

Thompson Reuters expect McDonald's will earn $4.9 billion in 2010, up more than 7% from net income of $4.6 billion

in 2009.

VALUATION RATIOS

COMPANY INDUSTRY SECTOR S&P 500

P/E RATIO (TTM) 17.33 24.44 12.25 17.89

P/E HIGH - LAST 5 YRS. NA 3.81 0.20 19.18

P/E LOW - LAST 5 YRS. NA 0.77 0.04 4.87

BETA 0.55 0.42 0.97 1.26

PRICE TO SALES (TTM) 3.48 1.44 1.74 2.08

PRICE TO BOOK (MRQ) 6.08 4.81 0.91 2.86

PRICE TO TANGIBLE BOOK (MRQ) 7.46 5.95 1.10 7.85

PRICE TO CASH FLOW (TTM) 13.43 21.37 5.78 10.46

PRICE TO FREE CASH FLOW (TTM) 49.29 22.03 7.49 47.51

% OWNED INSTITUTIONS -- -- -- --

DIVIDENDS


DIVIDEND YIELD 3.11 1.56 1.06 1.71

DIVIDEND YIELD - 5 YEAR AVG. 2.62 0.99 1.35 2.45

DIVIDEND 5 YEAR GROWTH RATE 30.10 8.95 2.02 -6.08

PAYOUT RATIO(TTM) 47.91 28.10 13.35 40.15

GROWTH RATES


SALES (MRQ) VS QTR. 1 YR. AGO 4.27 11.13 5.40 9.57

SALES (TTM) VS TTM 1 YR. AGO 6.70 2.71 7.48 9.15

SALES - 5 YR. GROWTH RATE 4.11 10.65 9.37 9.88

EPS (MRQ) VS QTR. 1 YR. AGO 12.49 48.07 235.61 7.02

EPS (TTM) VS TTM 1 YR. AGO 16.95 -- -- --

EPS - 5 YR. GROWTH RATE 18.11 10.49 1.75 7.14

CAPITAL SPENDING - 5 YR. GROWTH RATE 6.58 2.20 4.90 4.98

FINANCIAL STRENGTH


QUICK RATIO (MRQ) 1.25 1.03 0.61 0.68

CURRENT RATIO (MRQ) 1.28 1.14 0.79 1.01

LT DEBT TO EQUITY (MRQ) 83.28 54.01 26.56 117.71

TOTAL DEBT TO EQUITY (MRQ) 83.86 83.28 40.26 170.95

INTEREST COVERAGE (TTM) 36.64 2.90 0.35 19.18

PROFITABILITY RATIOS


GROSS MARGIN (TTM) 39.93 54.57 12.45 33.13

GROSS MARGIN - 5 YR. AVG. 35.25 52.14 24.31 29.48

EBITD MARGIN (TTM) 35.75 -- -- --

EBITD - 5 YR. AVG 28.60 8.61 10.42 18.73

OPERATING MARGIN (TTM) 31.23 6.44 -1.87 --

OPERATING MARGIN - 5 YR. AVG. 23.45 4.88 5.45 16.26

PRE-TAX MARGIN (TTM) 29.23 6.21 -1.89 15.06

PRE-TAX MARGIN - 5 YR. AVG. 22.03 4.63 5.31 15.87

NET PROFIT MARGIN (TTM) 20.65 4.03 -2.76 11.19

NET PROFIT MARGIN - 5 YR. AVG. 15.26 2.78 3.57 11.65

EFFECTIVE TAX RATE (TTM) 29.38 23.93 16.38 49.38

EFFECITVE TAX RATE - 5 YR. AVG. 30.75 60.55 32.78 25.27

EFFICIENCY


REVENUE/EMPLOYEE (TTM) 61,906 32,339,818 22,703,747 683,552

NET INCOME/EMPLOYEE (TTM) 12,781 567,455 1,139,253 86,580

RECEIVABLE TURNOVER (TTM) 25.18 116.65 18.07 10.76

INVENTORY TURNOVER (TTM) 136.10 34.33 4.86 6.87

ASSET TURNOVER (TTM) 0.78 1.34 0.41 0.56

MANAGEMENT EFFECTIVENESS


RETURN ON ASSETS (TTM) 16.07 5.69 1.86 6.11

RETURN ON ASSETS - 5 YR. AVG. 11.41 3.90 3.54 5.85

RETURN ON INVESTMENT (TTM) 18.08 7.90 2.80 7.85

RETURN ON INVESTMENT - 5 YR. AVG. 12.95 5.20 6.23 7.57

RETURN ON EQUITY (TTM) 36.68 13.92 5.44 18.37

RETURN ON EQUITY - 5 YR. AVG. 22.68 9.55 9.09 9.37

China-Biotics Inc

(NASDAQ: CHBT)

Chutinush Taksinapinunt ,Corporate Account Executive, Heffernan Capital Management

China-Biotics Inc (NASDAQ: CHBT)

Our Price target in 2011 is $20

China-Biotics, Inc. ("China-Biotics" or "the Company"), a leading manufacturer of biotechnology products and supplements, engages in the research, development, marketing and distribution of probiotics dietary supplements in China. Through its wholly owned subsidiaries, Shanghai Shining Biotechnology Co., Ltd. and Growing Bioengineering (Shanghai) Co. Ltd., the Company develops and produces a proprietary product portfolio. Currently, its retail products are sold over the counter, mainly through large distributors, to pharmacies and supermarkets in Shanghai and Jiangsu and Zhejiang provinces. The Company also sells bulk products to institutional customers such as dairy and animal feed producers as well as pharmaceutical companies. In February 2010, China-Biotics began its commercial production in China's largest probiotics production facility to meet growing demand in China.

China-Biotics, Inc. is one of just a few Chinese food companies that have received four major international certifications — including HACCP, a U.S. FDA designation required for all food imports into the U.S. And CHBT’s probiotics have a survival rate of 70% at room temperature two years after manufacture — twice the requirement for probiotic products sold in Europe, it says.

Because of its superior fermentation technology, the company’s products also have a much higher active ingredient concentration than most domestic competitors. In fact, many of its domestic competitors use outdated technology to manufacture probiotics, which tend to be inferior and have a shorter shelf life.

Snapshot

SUMMARY

INTRA-DAY INTERACTIVE CHART

Change 0.030 (0.272%)

Bid 11.020

Ask 11.500

Open 11.000

High 11.080

Low 10.350

Volume N.A.

52-Week Range 19.74 - 8.75

1-Yr Return -26.253%

Earnings

EARNINGS

FUNDAMENTALS

Earnings Past 12 Months 0.960 Shares (Millions) 22.150

Quarter Est. EPS (12/10) 0.45 Market Cap (Millions) 244.538

Quarter Est. EPS (03/11) 0.50 Float (Millions) 10.892

Year Est. EPS (03/11) 1.68 Return on Equity 14.124

Price/Earnings (Trailing) 11.500 Short Interest 4,365,296.000

Relative P/E 0.765 Last Dividend Reported N.A.

Earnings Growth Rate 31.300 Dividend Yield (ttm) N.A.

Estimated P/E 6.600 Relative Dividend Yield N.A.

Our Price target in 2011 is $20

Source : http://www.bloomberg.com/apps/quote?ticker=CHBT:US

REVENUE

Periods 2009 2010 2011

June 11.371 15.4125 24.9357

September 11.495 17.1487 23.5886

December 15.8101 23.2943

March 15.5211 25.509

Note: Units in Millions of U.S. Dollars

EARNINGS PER SHARE

Periods 2009 2010 2011

June 0.18952 0.33769 0.39477

September 0.13395 -0.20393 0.33175

December 0.22235 0.32463

March 0.38578 0.12951

Note: Units in U.S. Dollars

VALUATION RATIOS

Company Industry Sector S&P 500

P/E Ratio (TTM) 9.35 28.07 29.22 17.84

P/E High - Last 5 Yrs. NA 4.03 1.17 18.98

P/E Low - Last 5 Yrs. NA 1.38 0.41 4.83

Beta 1.28 0.79 0.66 1.27

Price to Sales (TTM) 2.51 14.93 5.82 2.09

Price to Book (MRQ) 1.32 2.67 2.36 2.84

Price to Tangible Book (MRQ) 1.33 3.98 5.84 19.10

Price to Cash Flow (TTM) 5.37 16.97 16.99 10.46

Price to Free Cash Flow (TTM) 19.78 64.90 16.88 47.74

% Owned Institutions -- -- -- --

GROWTH RATES


Sales (MRQ) vs Qtr. 1 Yr. Ago 37.55 1,664.34 53.79 9.36

Sales (TTM) vs TTM 1 Yr. Ago 52.33 33.77 8.63 8.94

Sales - 5 Yr. Growth Rate -- 26.44 13.43 9.86

EPS (MRQ) vs Qtr. 1 Yr. Ago 262.68 10.17 186.56 5.76

EPS (TTM) vs TTM 1 Yr. Ago 59.14 -- -- --

EPS - 5 Yr. Growth Rate -- 21.77 13.86 6.98

Capital Spending - 5 Yr. Growth Rate -- 6.38 12.26 4.90

FINANCIAL STRENGTH


Quick Ratio (MRQ) 2.77 2.33 2.23 0.67

Current Ratio (MRQ) 2.78 2.92 2.82 0.99

LT Debt to Equity (MRQ) 0.00 19.79 23.66 118.67

Total Debt to Equity (MRQ) 12.96 22.44 28.11 173.06

Interest Coverage (TTM) 4.26 6.61 1.27 19.01



Gross Margin (TTM) 68.45 23.62 54.66 32.87

Gross Margin - 5 Yr. Avg. -- 34.52 54.75 29.18

EBITD Margin (TTM) 46.37 -- -- --

EBITD - 5 Yr. Avg -- -89.59 19.09 18.55

Operating Margin (TTM) 43.84 -129.33 19.51 --

Operating Margin - 5 Yr. Avg. -- -113.25 13.50 16.25

Pre-Tax Margin (TTM) 53.16 -129.88 19.50 15.01

Pre-Tax Margin - 5 Yr. Avg. -- -112.33 14.46 15.86

Net Profit Margin (TTM) 44.24 -128.95 13.94 11.14

Net Profit Margin - 5 Yr. Avg. -- -113.77 9.54 11.64

Effective Tax Rate (TTM) 16.77 16.72 23.85 50.15

Effecitve Tax Rate - 5 Yr. Avg. -- 13.10 27.39 25.24

EFFICIENCY


Revenue/Employee (TTM) 190,839 7,042,981 27,261,163 676,313

Net Income/Employee (TTM) 84,432 -728,924 3,122,603 84,785

Receivable Turnover (TTM) 4.45 4.40 3.65 10.51

Inventory Turnover (TTM) 32.41 6.86 3.37 6.76

Asset Turnover (TTM) 0.50 0.29 0.57 0.55



Return on Assets (TTM) 22.06 0.53 8.48 6.01

Return on Assets - 5 Yr. Avg. -- 4.94 9.04 5.77

Return on Investment (TTM) 29.97 0.65 10.62 7.71

Return on Investment - 5 Yr. Avg. -- 5.80 11.43 7.46

Return on Equity (TTM) 34.03 -0.11 12.92 18.04

Return on Equity - 5 Yr. Avg. -- 7.69 14.97 9.25

Emerging Markets Research

The Emerging Markets of Asia are set for a rally this week as well, most will recover from minor falls over the last week of trading and will head on to establish new highs in the weeks to come. Singapore features in our research this week.

China Sunsine Chemical Holdings Ltd SGX: CSS

Symbol CSS

Exchange SGX

Current Price 0.26

52 Week High/ Low 0.021/0.029

Shares Outstanding 477.36 M

Market Cap (in $ mn) 126.5

P/E Ratio 5.42

Recommendation:

Price target $1.30c

Strong Profit Growth and a very Low P/E make

China Sunshine chemical an outstanding buy.

Key Developments:

• 3QFY2010 net profit rises 35% to RMB33.8m on 32% increase in revenue to RMB267.1 m

• 9MFY2010 net profit at RMB92.5m has exceeded the full year FY2009 net profit of RMB88.3m

• Strong demand pushes 3Q volume 24% higher to 14,585 tons, consecutive record quarter volume

• Expects demand for its products to remain strong because of the robust PRC and Asia Automobile Market

About the Company

China Sunsine Chemical Holdings Ltd (China Sunsine) is an investment holding company. It is

engaged in the production of rubber accelerators in the People’s Republic of China and globally. The

Company’s products are sold under the Sunsine brand. It includes a range of rubber chemicals, such as

accelerators, anti-oxidant TMQ, vulcanising agent insoluble sulphur, as well as anti-scorching agent CTP.

The Company’s production facilities are located in Shanxian, near Heze City in Shandong Province. The

wholly owned subsidiary of the Company is Shandong Shanxian Chemical Co., Ltd, which is engaged in

the manufacture and sale of rubber chemicals, comprising rubber accelerators, anti-oxidant agents, anti-

scorching agents and insoluble sulphur.

Company’s Website: http://www.chinasunsine.com/

Business Overview

Quarter 3/2010

Full Year 2009

Daily Chart

Outlook

Expansion Plans Update

During 9MFY2010, the Group has completed the following expansions:

• structural construction of the R&D centre and office facilities at Facility 2 in June.

• capacity expansion of insoluble sulphur to 10000 tons pa in September along with the commencement trial production.

• construction of 15000-ton 6PPD plant at Facility 2 in September with trial production commencing in 3Q2011 after completion of its intermediary material (4-Aminodiphenylamine) production plant construction. The Group will continue with the following projects:

• Complete the interior works of the R&D centre and office facilities at Facility 2 by end FY2010.

• Complete Phase 1 of Facility 3 at Weifang plant (15,000-ton MBT) by 1QFY2011.

• Complete the shifting of all production facilities from Facility 1 to Facility 2 by 1H2011. As a

Consequence, we shall recognise impairment of plant and equipment progressively. Due to Facility 1’s proximity to commercial development within Shanxian city, the local government Intends to rezone this site for commercial and residential use. The Group is negotiating with the Local government

Financial Statement

VALUATION RATIOS


P/E Ratio (TTM) 5.42 11.42 27.52 17.84

P/E High - Last 5 Yrs. -- 0.23 0.56 18.98

P/E Low - Last 5 Yrs. -- 0.08 0.06 4.83

Beta 0.79 1.12 1.39 1.27


Price to Book (MRQ) 0.97 1.08 2.91 2.84



Price to Free Cash Flow (TTM) -- 9.39 6.92 47.74


DIVIDENDS


Dividend Yield 7.55 2.05 1.07 1.68

Dividend Yield - 5 Year Avg. -- 1.53 1.70 2.46

Dividend 5 Year Growth Rate -- 6.11 11.82 -6.46

Payout Ratio(TTM) 19.33 26.82 10.07 39.62

GROWTH RATES


Sales (MRQ) vs Qtr. 1 Yr. Ago 32.42 25.33 54.79 9.36


Sales - 5 Yr. Growth Rate 24.69 2.10 13.97 9.86

EPS (MRQ) vs Qtr. 1 Yr. Ago 35.34 187.24 78.52 5.76


EPS - 5 Yr. Growth Rate 29.79 -3.04 13.71 6.98

Capital Spending - 5 Yr. Growth Rate 35.61 -3.33 21.02 4.90

FINANCIAL STRENGTH


Quick Ratio (MRQ) 2.58 1.61 1.69 0.67




Interest Coverage (TTM) -- 0.19 0.07 19.01



Gross Margin (TTM) 23.63 22.33 20.21 32.87

Gross Margin - 5 Yr. Avg. 24.30 23.38 25.63 29.18


EBITD - 5 Yr. Avg 16.96 11.82 19.60 18.55

Operating Margin (TTM) 15.16 7.57 7.66 --

Operating Margin - 5 Yr. Avg. 14.88 6.78 13.80 16.25

Pre-Tax Margin (TTM) 15.16 7.38 7.65 15.01

Pre-Tax Margin - 5 Yr. Avg. 14.41 6.63 13.57 15.86

Net Profit Margin (TTM) 12.94 5.31 4.76 11.14

Net Profit Margin - 5 Yr. Avg. 12.57 4.22 9.54 11.64


Effecitve Tax Rate - 5 Yr. Avg. 12.76 44.54 28.16 25.24

EFFICIENCY


Revenue/Employee (TTM) -- 28,644,531 49,242,125 676,313

Net Income/Employee (TTM) -- 1,471,714 -49,517,005 84,785







Return on Assets - 5 Yr. Avg. 17.44 3.83 9.90 5.77


Return on Investment - 5 Yr. Avg. 25.03 5.40 14.30 7.46

Return on Equity (TTM) 19.24 13.88 7.06 18.04

Return on Equity - 5 Yr. Avg. 25.10 6.96 19.07 9.25

Sunvic Chemical Holdings Limited

Singapore AS7

Woraphop Viriyaroj, Corporate Account Executive

Heffernan Capital Management

Symbol SVC

Exchange SGX

Current Price 0.62SGD

52 Week High/ Low 0.7 – 0.12 SGD

Shares Outstanding 546.49

Market Cap (in $ mn) 330.62M$

P/E Ratio 5.21

Recommendation:

Sunvic rates a very strong buy in this market

Price Target $1.50 in 2011

Low P/E and Book Value

Key Developments:

• Expand to upstream and downstream

products

• Explore opportunities in strategic

investment, strategic alliances, joint

ventures and acquisitions

About the Company

SunVic Chemical Holdings Limited is an investment holding company. The principal

activities of the Company and its subsidiaries are those relating to the manufacture and sale of

chemical products.

Sunvic Chemical is a manufacturer of intermediate chemical products, such as Acrylic

Acid, Arylate Esters, as well as N-phosphonomethyl lminodiacetic Acid (PMIDA), which are

ingredients used in the production of industrial, consumer and agricultural products, such as

coatings, adhesives, diapers, textiles, detergents, water treatment materials and herbicide (weed

killer).

The Company has two segments: manufacture and sale of Acrylic Acid and Acrylate

Esters, and manufacture and sale of PMIDA. The immediate and ultimate holding company

during the year ended December 31, 2009, is Whitefield Capital INC. In May 2010, the

Company’s wholly owned subsidiaries, Yixing Yinyan Import & Export Co., Ltd. and Jiangsu

Jurong Chemical Co., Ltd., incorporated a subsidiary, Yinyan Produtos Quimicos Ltda.

Company’s Website: http://www.sunvic-chem.com

Business Overview

PRODUCTION CAPACITIES:

AA (Purified AA and glacial AA): 205,000 tonnes AE (butyl acrylate, methyl acrylate, ethyl acrylate and 2-ethylhexyl acrylate): 250,000 tonnes PMIDA (N-phosphonomethyl lminodiacetic Acid): 40,000 tonnes

News

SunVic Chemical Holdings Limited's Subsidiary Announces Incorporation Of New

Subsidiary In Argentina

Friday, 4 Jun 2010 05:45am EDT

SunVic Chemical Holdings Limited announced that the Company's wholly-owned subsidiaries, namely, Yixing Yinyan Import & Export Co., Ltd. (YYIE) and Jiangsu Jurong Chemical Co., Ltd. (JJC) (collectively, the Group), have incorporated a new wholly-owned subsidiary in the Argentine Republic (Argentina), known as Yinyan Argentina SA (the Subsidiary). The Subsidiary was duly incorporated as a limited liability company in accordance with applicable Argentina laws on May 6, 2010, with an authorised and paid up capital of ARS$50,000. The share capital will be contributed by YYIE and JJC in equal proportions, which will be funded from the Group's internal resources. The principal activities engaged by the Subsidiary are that of trading of chemical products. The incorporation of the Subsidiary is meant to expand the sales and marketing network of the Group and to facilitate its sales of products in South America.

Daily Chart

Outlook

Expand to upstream and downstream products

Our ongoing projects are:

• Invest 10% equity stake in SunVic Asia Pacific Investment Pte Ltd which owns 100% of Jiangsu Jurong Petrochemical Co., Ltd ("Jurong Petrochemical").

Jurong Petrochemical is located next to our plant. It produces propylene and other petro-related chemical products derivated from heavy oil. Propylene is our essential raw material. This investment helps us to enjoy a free-freight cost of raw material compared with buying from other suppliers. On top of that, we may also enjoy a certain discount on purchasing from a related party.

• The application for the production license of Glyphosate is on progress.

Glyphosate is a downstream product of PMIDA. We possess the technology and network advantages. Glyphosate normally commands higher margin than PMIDA.

Explore opportunities in strategic investment, strategic alliances, joint ventures and

acquisitions

Where opportunities arise, we intend to enter into strategic investments, strategic alliances, joint ventures and acquisitions that would allow us to expand our production capabilities, production range or enhance our market position.

Financial Statement

VALUATION RATIOS


P/E Ratio (TTM) 5.21 11.62 27.53 17.75

P/E High - Last 5 Yrs. -- 0.22 0.56 19.13

P/E Low - Last 5 Yrs. -- 0.08 0.06 4.87

Beta 1.69 1.12 1.39 1.27


Price to Book (MRQ) 1.57 1.09 2.86 2.83



Price to Free Cash Flow (TTM) 29.01 9.51 7.01 47.18


DIVIDENDS


Dividend Yield NA 2.04 1.08 1.72

Dividend Yield - 5 Year Avg. -- 1.53 1.70 2.45

Dividend 5 Year Growth Rate -- 6.11 11.76 -6.11

Payout Ratio(TTM) 0.00 26.94 10.18 40.29

GROWTH RATES


Sales (MRQ) vs Qtr. 1 Yr. Ago 123.92 24.44 54.85 9.49


Sales - 5 Yr. Growth Rate 48.27 1.95 13.95 9.87

EPS (MRQ) vs Qtr. 1 Yr. Ago 3,428.45 190.22 78.96 6.53


EPS - 5 Yr. Growth Rate -37.61 -3.19 13.61 7.10

Capital Spending - 5 Yr. Growth Rate -6.24 -3.55 21.02 4.97

FINANCIAL STRENGTH


Quick Ratio (MRQ) 0.95 1.62 1.70 0.67




Interest Coverage (TTM) -- 0.19 0.07 19.17



Gross Margin (TTM) 21.57 22.29 20.35 33.06

Gross Margin - 5 Yr. Avg. 12.80 23.33 25.68 29.43


EBITD - 5 Yr. Avg 12.02 11.79 19.63 18.69

Operating Margin (TTM) 15.90 7.55 7.67 --

Operating Margin - 5 Yr. Avg. 7.74 6.75 13.83 16.26

Pre-Tax Margin (TTM) 15.03 7.36 7.66 15.05

Pre-Tax Margin - 5 Yr. Avg. 6.11 6.61 13.60 15.86

Net Profit Margin (TTM) 11.02 5.29 4.75 11.18

Net Profit Margin - 5 Yr. Avg. 5.82 4.20 9.56 11.64


Effecitve Tax Rate - 5 Yr. Avg. 4.80 44.03 28.23 25.30

EFFICIENCY


Revenue/Employee (TTM) -- 28,750,736 49,893,793 681,363

Net Income/Employee (TTM) -- 1,476,220 -50,044,640 86,230







Return on Assets - 5 Yr. Avg. 9.21 3.82 9.87 5.83


Return on Investment - 5 Yr. Avg. 17.17 5.39 14.24 7.54

Return on Equity (TTM) 36.51 13.85 7.14 18.28

Return on Equity - 5 Yr. Avg. 18.65 6.93 19.02 9.46

Mr. Woraphop Viriyaroj

Corporate Account Executive


Email: [email protected]

Mr Woraphop Viriyaroj passed Level 1 of the Chartered Financial Analyst (CFA) in the year 2010 and Certified Investment and Securities Analyst (CISA) Level 2 in 2010 and holds a degree in Industrial Engineering.

Chutinush Taksinapinunt holds a Bachelor of Business Administration degree Majoring in Finance and Banking. Chutinush Taksinapinunt is an experienced Market Maker and Portfolio Manager having worked with some of Thailand’s largest Securities Companies and Financial Insitutions.

Corporate Account Executive


Shayne Heffernan of Ebeling Heffernan www.ebeling-heffernan.com prepared this report, Mr

Heffernan holds a PhD in Economics serves as CEO of Heffernan Holdings www.heffernan-

inc.com and oversee’s trading at Heffernan Capital Management He is also Co Founder of

Ebeling Heffernan www.ebeling-heffernan.com the fastest growing Financial Services company

in ASEAN.

Corporate Services

Ebeling Heffernan www.ebeling-heffernan.com [email protected]

Funds Management

Heffernan Capital Management www.heffernan-inc.com [email protected]

Bangkok

Suite 53 Athenee Tower 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 THAILAND

Tel: +66 2 126 8000 Fax: +66 2 126 8080

New York

347 5th Avenue, Suite 1402-508 Ny, NY 10016

Tel: +1 646-403-9881 Fax: +1 646-403-8014

Singapore

3 Raffles Place #07-01 Bharat Building Singapore 048617

Tel: +65 6329 6408Fax: +65 6329 9699

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