Credit Suisse -Growth on the way to 'Nifty Fifty' by riteshbhansali

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									                                                                                                                                                23 November 2012
                                                                                                                                                          Europe
                                                                                                                                                 Equity Research
                                                                                                                                                           Macro




                                                   Global Equity Strategy
                           Research Analysts
                                                    STRATEGY
                          Andrew Garthwaite
                            44 20 7883 6477
          andrew.garthwaite@credit-suisse.com
                                                   Growth: on the way to 'Nifty Fifty'
                             Marina Pronina
                            44 20 7883 6476        ■ We believe growth as a style will continue to outperform: falling real
             marina.pronina@credit-suisse.com        bonds yields should have re-rated long duration assets more than has
                              Mark Richards          occurred – and we believe real bond yields will fall further, as QE is stepped
                            44 20 7883 6484          up by the BoJ and the ECB. Excess liquidity re-rates growth stocks. Lastly,
              mark.richards@credit-suisse.com
                                                     global nominal GDP growth is set to remain well below trend. The issue is
                            Sebastian Raedler        valuation: the relative 12-month forward P/E of our simple growth style is at
                              44 20 7888 7554        a 9% premium to its norm; quality growth is slightly more expensive (15%
           sebastian.raedler@credit-suisse.com
                                                     above its norm). Growth stocks on aggregate still only trade on a P/E of 15x,
                                Robert Griffiths     compared to peak valuations of 50x (in 1973 and 1999). Quality growth only
                               44 20 7883 8885
                                                     tends to underperform if there is a sharp fall in junk bond yields (unlikely) or
              robert.griffiths@credit-suisse.com
                                                     a sharp rise in economic indicators (we think only small rise is likely).
                           Nicolas Wylenzek        ■ The best performing quant style for growth has been Credit Suisse
                             44 20 7883 6480
           nicolas.wylenzek@credit-suisse.com
                                                     HOLT®’s eCAP superior (effectively, high and stable profitability) combined
                                                     with superior asset growth and asset turns. This combined style has
                                                     achieved 5% outperformance pa over the past 10 years (Capita, Assa Abloy,
                                                     Diageo, Intertek qualify).
                                                   ■ Stocks and themes: We screen for growth stocks using three measures:
                                                     quant screens (HOLT® and ours), our analysts’ picks and structural themes
                                                     (CSERGROW). The following stocks qualify as growth under at least two of
                                                     these methodologies, are attractively priced (on P/E relatives, free-cash flow
                                                     yield or HOLT®) and are Outperform-rated: Dufry, SAB Miller, SAP, Sonova,
                                                     WPP,      Swatch,      Capita,    RyanAir,     Assa     Abloy,      ICH,   Pru,
                                                     Moneysupermarket.com in Europe and Qualcomm, Google and Mead
                                                     Johnson Nutrition in the US. Our favoured growth themes: software (SAP,
                                                     TDC); the emerging market consumer (Swatch, SAB, Diageo, YUM);
                                                     underleveraged banks in underleveraged countries (Sberbank); specific
                                                     plays on the internet (GOOG and Moneysupermarket.com); global travel
                                                     (ICH, STAR, Dufry); global trade (Intertek, UPS); energy efficiency
                                                     (Schneider, JCI); lower car emissions (Johnson Matthey, BWA); ageing in
                                                     emerging markets (Hikma); water (Halma; PLL); industrial automation
                                                     (Schneider, ROK); specific oilfield services (Amec).
                                                   Figure 1: Growth outperforms as real bond yields fall
                                                           112                                                                                         -1.2%
                                                                      MSCI European growth index, relative to the market
                                                           110
                                                                                                                                                       -0.7%
                                                           108        US 10-year TIPS yield, inverted, rhs
                                                           106                                                                                         -0.2%
                                                           104                                                                                         0.3%
                                                           102
                                                           100                                                                                         0.8%
                                                            98                                                                                         1.3%
                                                            96
                                                            94                                                                                         1.8%
                                                            92                                                                                         2.3%
                                                            90
                                                                                                                                                       2.8%
                                                            88
                                                            86                                                                                         3.3%
                                                              2003   2004       2005        2006       2007       2008     2009   2010   2011   2012


                                                   Source: Thomson Reuters, Credit Suisse research

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. FOR
OTHER IMPORTANT DISCLOSURES, visit www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683 US
Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors
should consider this report as only a single factor in making their investment decision.
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS                                                                                    BEYOND INFORMATION™
                                                                                                                Client-Driven Solutions, Insights, and Access
                                                                                             23 November 2012




Table of contents
Why focus on growth?                                                                     3
   (1) Growth as a style is a play on low real interest rates                            3
   (2) A sluggish recovery puts a premium on growth                                      4
   (3) Excess liquidity                                                                  5
   (4) Other performance drivers remain supportive                                       5
   (5) Market breadth is narrowing – a feature of a growth-led market                    6
Continue to focus on quality growth                                                      7
   Valuation of quality growth is high – but recall the ‘Nifty Fifty’                    9
Which growth indices have performed best?                                               12
How to play growth?                                                                     13
   Our aggregate screen                                                                 13
   1)   Quant approach                                                                  15
   2)   Analyst judgment                                                                18
   3)   Thematic approach                                                               20
Growth themes                                                                           22
   1)   Branded GEM consumer plays                                                      22
   2)   Industrial Automation                                                           28
   3)   Global trade                                                                    34
   4)   Global travel                                                                   38
   5)   Water                                                                           41
   6)   Underleveraged banks in underleveraged countries                                43
   7)   Labour-intensive oilfield services                                              44
   8)   Energy efficiency                                                               47
   9)   Reducing car emissions                                                          50
   10)     Specific plays on the internet – in particular, e-financial services         51
   11)     Ageing in emerging markets                                                   54
   12)     Software                                                                     60
A sector perspective                                                                    64
Appendix                                                                                66
   Appendix 1: Growth as a style                                                        66
   Appendix 2: Sector valuations in Europe and the US                                   67
   Appendix 3: Outperform rated NJA growth stocks and quality growth                    69
   Appendix 4: Full list of companies that our analysts identified as growth in Europe and
   the US                                                                               70




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                                                                                                                                            23 November 2012




Why focus on growth?
     (1)       Growth as a style is a play on low real
               interest rates
The more real bond yields fall, the more longer duration assets – and, therefore, growth
stocks – re-rate relative to shorter duration assets.

Figure 2: Growth stocks have more potential upside if the                 Figure 3: Growth tends to outperform as real interest
discount rate falls                                                       rates fall
                                                                          112                                                                          -1.2%
    180%                                                                               MSCI European growth index, relative to the market
                                                                          110
                     % change in the                                                                                                                   -0.7%
    160%                                                                  108          US 10-year TIPS yield, inverted, rhs
                       fair v alue of:
                                                                          106                                                                          -0.2%
    140%            High grow th (=5%) stock
                                                                          104
    120%                                                                                                                                               0.3%
                    Low grow th (=2%) stock                               102
    100%                                                                  100                                                                          0.8%

    80%                                                                    98                                                                          1.3%
                                                                           96
    60%                                                                                                                                                1.8%
                                                                           94
    40%
                                                    Discount rate falls    92                                                                          2.3%
    20%                                                                    90
                                                                                                                                                       2.8%
     0%                                                                    88
                                                                           86                                                                          3.3%
             5%          4%        3%          2%    1%          0%
                                                                             2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
                                    Bond y ield

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



We continue to believe that the main solution to the developed market debt crisis is for real
interest rates to fall even further – from the current minus 80bps to between minus 1.5% to
minus 2%. Only at this level on our calculations can developed markets both stabilise
government debt to GDP and unemployment (for details, see our report Synchronised QE
and how to play it, Sep 12).
Over the course of 2013, we believe that QE will become more aggressive:

■    The Fed is likely to expand their balance sheet by $85bn a month from mid-December
     compared to just $36bn a month since QE3 started;

■    The BoJ is likely to become more aggressive under a likely LDP-led administration
     following the December election (with the LDP likely to present a BoJ Act, committing
     the BoJ to a 2% inflation goal);

■    The ECB is likely to expand its balance sheet once the OMT is activated.
As central banks’ balance sheets expand, real bond yields will fall. Recently, if anything,
growth as a style has performed worse than the fall in real bond yields would have
suggested (we show the performance of the US growth style in the Appendix).




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                                                                                                                                                 23 November 2012



Figure 4: Low real interest rates improve the funding of                                 Figure 5: Real interest rates stayed negative for nearly
government debt.                                                                         two decades in the 1940s/50s… and financial repression
                                                                                         lasted until the end of Bretton Woods
                    4%                                                                                                US real Bond yield
                                US 10Y real bond yield required to keep US                   15%                      US Government debt to GDP, rhs     140%
                    3%
                                government debt to GDP stable (at 3% trend
                    2%          growth rate)                                                                                                             120%
                                                                                             10%
                    1%
                                                                                                                                                         100%
  Real bond yield




                    0%                                                                        5%
                    -1%                                                                                                                                  80%
                    -2%    At current BY                                                      0%
                                                                                                                                                         60%
                    -3%                             Government to GDP ratio stable if:       -5%
                    -4%                                                                                                                                  40%
                    -5%                    Primary balance % GDP = Debt/GDP *(bond
                                                                                            -10%                                                         20%
                                                    yield - trend growth rate)
                    -6%
                          0%         2%             4%           6%            8%           -15%                                                         0%
                                                                                                   1925 1935 1945 1955 1965 1975 1985 1995 2005
                                       Required fiscal tightening, % of GDP


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




               (2)         A sluggish recovery puts a premium on
                           growth
As Figure 6 shows, the recovery in US GDP has been far more muted than in previous
cycles. Three years after the recovery started, US real GDP is only 2.2% above the
previous peak. This compares to an average of 11.2% above previous peak at the same
point in previous post recession periods. In nominal terms, global GDP growth is running
just below 5%, compared to a 10 year CAGR of 7%. Such a scarcity of growth should
result in a premium on companies that can generate it.




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                                                                                                                                                                    23 November 2012



       (3)          Excess liquidity
Excess liquidity is rising and that has historically tended to support the valuation of growth
stocks.

Figure 6: The recovery has been considerably more                                              Figure 7: Excess liquidity tends to support a re-rating of
sluggish then past recoveries have been at a similar stage                                     growth stocks
                                                                                                            12m fwd P/E, Credit Suisse European high growth / low growth, 1-yr lag
    20%       US post-recession recovery in real GDP (relative to previous peak,
              three years after the trough or at cycle peak)
                                                                                                2.6         Global excess liquidity, rhs
                                                                                                                                                                                     25%
    18%
                                                                                                2.4                                                                                  20%
    16%

    14%                                                                                         2.2                                                                                  15%
    12%
                                                                                                2.0                                                                                  10%
    10%

       8%                                                                                       1.8                                                                                  5%

       6%                                                                                       1.6                                                                                  0%
       4%
                                                                                                1.4                                                                                  -5%
       2%

       0%                                                                                       1.2                                                                                  -10%
             1957    1960     1970     1973     1980     1981      1990     2001   2007            1991     1994       1997        2000     2003       2006      2009       2012


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




       (4)          Other performance drivers remain supportive
Growth as a style tends to outperform the market unless economic lead indicators rise
sharply (typically ISM new orders needs to be above 57 for growth to underperform) or
high yield bond spreads narrow sharply, neither of which we expect to occur in coming
months.

Figure 8: The growth style only underperforms if                                               Figure 9: … or credit spreads narrow sharply
economic indicators rise sharply…
 18%                  MSCI growth, price relative, y/y%                                   20                       MSCI growth, price relative, y/y%                                       20
                      US ISM new orders, rhs, inverted                                         14%                 High yield bond spreads, rhs, % pts
                                                                                                                                                                                           18
 13%                                                                                      30
                                                                                               11%                                                                                         16

                                                                                                8%                                                                                         14
  8%                                                                                      40
                                                                                                                                                                                           12
                                                                                                5%
  3%                                                                                      50                                                                                               10
                                                                                                2%
                                                                                                                                                                                           8
 -2%                                                                                      60    -1%
                                                                                                                                                                                           6
                                                                                                -4%
                                                                                                                                                                                           4
 -7%                                                                                      70
                                                                                                -7%                                                                                        2

-12%                                                                                      80   -10%                                                                                        0
       1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012                                         1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

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




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                                                                                              23 November 2012



     (5)       Market breadth is narrowing – a feature of a
               growth-led market
A feature of the late 1990s was that the market rose against the backdrop of a weak
advance / decline line – i.e. the market was driven by a narrow set of strong performers.
There are signs of this happening again.

Figure 10: There are signs that – as in the late 1990s – the market is driven by a narrow
set of strong performers
                                  6m rolling advance/decline line, %
                                                                                        30
   8%                             S&P500 deviation from 130 day average, % (rhs)

   6%                                                                                   20

   4%
                                                                                        10
   2%

   0%                                                                                   0

   -2%
                                                                                        -10
   -4%

   -6%                                                                                  -20

   -8%                                         Declining market breadth
                                                                                        -30
  -10%

  -12%                                                                                  -40
      1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Thomson Reuters, Credit Suisse research




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                                                                                                                                        23 November 2012




Continue to focus on quality growth
We also continue with our preference for quality growth. Performance drivers are very
similar to those of the conventional growth style (yet, the magnitude of quality growth
performance is greater), with periods of sustained underperformance only tending to occur
when lead indicators rise sharply or high yield spreads narrow.

Figure 11: High quality growth tends to underperform                Figure 12: … or credit spreads narrow sharply
only if lead indicators rise sharply…
 70%                                                               20 70%                                                                            25
                  High quality growth / low quality growth, y/y%                       High quality growth / low quality growth, y/y%
 60%                                                                    60%

                  US ISM new orders, rhs, inverted                 30 50%              US high yield spreads, rhs                                    20
 50%
                                                                        40%
 40%
                                                                   40
                                                                        30%                                                                          15
 30%
                                                                        20%
 20%                                                               50
                                                                        10%                                                                          10
 10%
                                                                   60 0%
    0%
                                                                     -10%                                                                            5
-10%
                                                                   70-20%
-20%
                                                                     -30%                                                                            0
                                                                              1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
-30%                                                               80
         1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

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



The reason for this is that:

■        Low quality companies tend to have abnormally high operational leverage (by
         definition, they have higher fixed costs than their to peers);

■        Lower quality companies tend to have higher financial leverage ratios, owing to inferior
         profitability.
We expect only a modest upside surprise to economic growth expectations in 2013 – and
see only little scope for the absolute cost of junk bond debt to fall (given the convexity
problem that the economic circumstances that allow junk bond spreads to fall – i.e. better
economic growth – are likely to lead to a significant rise in 10-year bond yields).
Lastly, the relative price momentum of high quality growth companies is at the bottom-end
of its historical range. However, earnings momentum has fallen in line with the market,
although at least it is not weaker than for the market overall.




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                                                                                                                                       23 November 2012



Figure 13: European high quality growth appears                              Figure 14: Earnings momentum of European high quality
oversold                                                                     growth has fallen in line with the market
                    Euro pean High Quality Gro wth %dev fro m 6mma, rel to
  25%               Euro pean market
                                                                              30%          Euro pean High Quality Gro wth 3m breadth

                    A verage (+/1SD)                                                       Rel Euro pean market
  20%                                                                         25%

  15%                                                                         20%

                                                                              15%
  10%
                                                                              10%
   5%
                                                                               5%
   0%
                                                                               0%
  -5%
                                                                               -5%
 -10%                                                                         -10%
 -15%                                                                         -15%
 -20%                                                                         -20%
     1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012                       1993     1996      1999         2002      2005       2008    2012

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




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                                                                                                                                         23 November 2012



Valuation of quality growth is high – but recall the
‘Nifty Fifty’
The biggest pushback we have received from clients on our preference for growth is that
valuation levels are problematic. However, on our analysis, actual valuation may not be as
high as perceived. We look at three growth indices:
       a)   MSCI growth indices
According data provided by MSCI, their European growth index is trading on a trailing
reported P/E of 15.2x, compared to a European market multiple of 13.0x. This 17%
premium compares to a historical average premium of 23% (using data starting in 2006).
The MSCI growth index is constructed using the long- and short-term forward EPS growth,
trailing 12-month implied growth (which is equal to the RoE*dividend cover) and 5-year
historical EPS and sales growth.


       b) Credit Suisse prospective growth
Our proprietary style of looking at the companies that have the best (top quintile)
combination of FY1, FY2 and long-term consensus growth expectations (on a sector
neutral basis) appears only slightly expensive relative to the market. At 21.2x, it is at a
95% 12-month forward P/E premium to the market compared to a post-1991 average of
79%; Figure 16).
Figure 15: MSCI growth is trading on a P/E relative below                    Figure 16: Our prospective growth style looks only
its recent average (this uses 12 month trailing)                             modestly expensive relative to the market

1.45                Trailing PE of Europe MSCI growth versus market                           12m fwd P/E of CS high prospective growth relative to
                                                                              2.4             the market
 1.4
                                                                              2.2
1.35

 1.3                                                                          2.0

1.25
                                                                              1.8
 1.2
                                                                              1.6
1.15

 1.1                                                                          1.4

1.05
    2005     2006   2007      2008      2009      2010     2011       2012    1.2
                                                                                 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Thomson Reuters, Credit Suisse research                              Source: Thomson Reuters, Credit Suisse research



       c)   Credit Suisse quality growth
The third measure we look at is quality growth, which we define as companies that have
had a CFROI® above 8% for five consecutive years, have a limited decay in profitability,
low CFROI volatility and 5-year asset growth above 5% (we show a screen of these
companies later in the publication). All but the last of these criteria are key inputs into
HOLT®’s eCAP style which can be tracked on Bloomberg (HTERECAP in Europe and
HTUSECAP in the US).
Quality growth stocks do look quite expensive, trading on a 12-month forward P/E of 14.9x
(a premium to the market of 48%), compared with a post-1991 average of 15.5x (a 29%
premium). We show in the Appendix that dividend yield and price-to-book relatives are
similarly stretched. However, in absolute terms, the P/Es are not demanding.



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                                                                                                                                                          23 November 2012



Figure 17: High quality growth companies appear                                              Figure 18: In absolute terms, high quality growth stocks
expensive relative to the market                                                             do not appear expensive
1.8
                                                                                                                                                 12m fwd P/E
                    12m fwd P/E of European high quality growth                               25
                    companies relative to MSCI Europe                                                                                            Eur High Quality Growth
1.6
                                                                                                                                                 MSCI Europe

1.4                                                                                           20


1.2
                                                                                              15

1.0
                                                                                              10
0.8

                                                                                                 5
0.6
                                                                                                  1990       1993          1997         2001   2004       2008        2012
   1990           1993       1997         2001        2004        2008        2012

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

We believe that the current environment of abnormally loose monetary policy leads to the
survival of low quality companies that would normally be forced into bankruptcy. This is
because there is little pressure on excess capacity to exit, as the opportunity cost of
servicing an NPL is zero in a zero interest rate environment. An example of this is the UK
where the proportion of loss-making corporates is close to the high-end of the historical
range, but insolvencies are at the low-end (i.e. loss-making companies are not being
forced to shut down). This condition of ‘zombie capitalism’ is likely to maintain depressed
returns in the low-quality segments of the market. This means that the denominator of a
relative valuation calculation is abnormally depressed.

Figure 19: Abnormally loose monetary policy has led to the persistence of loss-making
companies and hence low quality is abnormally poor
      35                                                                                                                           35
                                Loss-making companies, % of total private non-financial companies

      30                        Company liquidations, rhs, 000s                                                                    30


      25                                                                                                                           25


      20                                                                                                                           20


      15                                                                                                                           15


      10                                                                                                                           10


       5                                                                                                                           5


       0                                                                                                                           0
           1984   1986   1988     1990    1992    1994    1996    1998    2000    2002    2004      2006   2008     2010    2012

Source: Bank of England, Credit Suisse research




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Remember the ‘Nifty Fifty’
We remind investors of the valuation of tech in the 1998-2000 period (12m fwd P/E of US
tech got to 48x) and the ‘Nifty Fifty’ bubble in the early 1970s (where the median PE of
high-quality large-cap stocks got to 52x).

Figure 20: US tech reached a PE of 48x in 1998 – three                               Figure 21: The ‘Nifty 50’ stocks reached a multiple of 52x
times the valuation of the market                                                    in the early 1970s
 2.4
                                                                                               Stock                     PE in January 1973
                                                                                               Walt Disney                       188
 2.2                                                                                           Intl.Flavors & Frag.             78.2
                                                                                               Mcdonalds                        72.5
  2                                               US tech, 12m fwd PE                          Baxter Intl.                     71.8
                                                  relative to market                           Avon Products                    68.3
 1.8                                                                                           Johnson & Johnson                65.2
                                                                                               Xerox                            51.7
 1.6                                                                                           Coca Cola                        50.2
                                                                                               Eli Lilly                        49.8
 1.4                                                                                           Merck & Co.                      48.4
                                                                                               Schlumberger                     46.4
 1.2                                                                                           Procter & Gamble                 43.5
                                                                                               American Express                 39.5
  1                                                                                            Median                           51.7
                                                                                               Average                          67.2
 0.8
                                                                                               Market                           18.3
    1996     1998   2000    2002    2004   2006     2008    2010        2012

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



What is striking is that on the screens of growth stocks shown in the next few pages there
are lots of companies with powerful growth stories – but which are nonetheless trading
below 20x.
Below we compare the earnings yield of growth to the government bond yield: in 1973 the
earnings yield of the ‘Nifty Fifty’ stocks was just 29% of the US Treasury 10-year yield; at
the peak of the tech bubble, the tech sector had an earnings yield of about a third of the
US Treasury yield. Currently, quality growth stocks, as defined above, offer an earnings
yield that is more than four times the US Treasury yield.

Figure 22: Quality growth is cheaper relative to bonds that in previous market bubbles
                                                                   10-yr US Treasury
                                           Earnings yield                                   EY / BY ratio
                                                                          yield
           Nifty Fity in 1973                     1.9                          6.5             29.4%
           US tech in 2000                        2.1                          6.3             33.6%
           Current quality growth                 6.7                          1.5             436.2%
Source: Thomson Reuters, Credit Suisse research




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                                                                                                                                               23 November 2012




Which growth indices have
performed best?
We show the performance of the various growth indices discussed in this report. The best
performing growth basket over the last decade has been the stocks that meet HOLT’s
eCAP criteria and have more than 10% asset growth and asset turns in the top 40% of the
market. So far in 2012, the best performing growth style has been the HOLT eCAP basket
with an additional filter for stocks with more than 5% asset growth.

Figure 23: HOLT eCAP plus growth and asset turns is the                             Figure 24: HOLT eCAP and growth has been the best
best performing growth style over the last decade                                   performing growth style in 2012

                                                                                             20.0%                     Annualised performance, 2012 YTD
           9.7%                        Annualised price performance last 10 years
   10%                                                                               20%
                                                                                                       17.5%
                                                                                                                    16.7%     16.7%
                       7.9%
    8%                            7.1%        6.8%                                   15%                                                  13.3%
                                                          5.7%                                                                                       11.4%
    6%
                                                                      4.8%           10%

    4%
                                                                                      5%
    2%

                                                                                      0%
    0%                                                                                     HOLT eCAP    HOLT         High    HOLT eCAP     MSCI       MSCI
         HOLT eCAP HOLT quality HOLT eCAP    High         MSCI        MSCI
                                                                                             + >5%      quality   prospective + >10%      Europe     Europe
           + >10%     (eCAP)      + >5%   prospective    Europe      Europe
                                                                                             growth    (eCAP)       growth growth + top   growth
         growth + top             growth    growth       growth
          40% asset                                                                                                           40% asset
            turns                                                                                                               turns

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



We believe that superior asset turns are a key ingredient underpinning quality growth. A
company with abnormally high margins is likely to attract competitors into its business area.
If a company has low margins, but high asset turns (because, for example, of the
efficiency of its supply chain), then it is harder for a competitor to move in.




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                                                                                                                                                                                23 November 2012




How to play growth?
Our aggregate screen
We employ three methods to identify growth stocks:
■      The quant approach: we use two quant screens: (a) looking at conventional growth
       (historical and projected sales and EPS growth) and (b) HOLT metrics of high and
       stable CFROI and reasonable asset growth;
■      Analyst opinion: we have asked our analysts to highlight the stocks with the best
       growth outlook over the next five years.
■      Themes: we look for stocks with exposure to what we believe are the most promising
       growth themes.
Below, we show a screen of the European stocks that are highlighted by at least two of
these methodologies.
Figure 25: European stocks highlighted as growth by two or more of our methodologies (sorted by cheapness on Holt
price to best)
                          Screening Methodology             -----P/E (12m fwd) ------        ------ P/B -------        2012e, %       HOLT 2012e Momentum, %                   Share price,
                                                                                                                                                                 Consensus
                                                                            rel to mkt %             rel to mkt %                    Price, %                                      local
                                               Analyst               rel to                                                                                   recommendation                  Credit Suisse
Name                 Themes      Quants                  Abs                above/below    Abs       above/below    FCY       DY    change to 3m EPS 3m Sales                  currency (21
                                             judgement             Industry                                                                                    (1=Buy; 5=Sell)                rating
                                                                              average                  average                         best                                        Nov)
SAP                   P            P              P      16.5       121%       -32%        5.4          -42%         3.6      1.5      58.2    -0.6     1.6         2.3            58.8       Outperform
Sonova N              P            P              P      18.3       142%       -10%        4.4          -22%         4.3      1.4      42.8     0.7     0.2         2.4           100.6       Outperform
Wpp                   P            P              P      10.5        76%       -18%        1.5          -86%         8.8      3.4       7.8    -1.2    -1.8         2.0           825.0       Outperform
Lvmh                  P            P              P      16.4       105%         3%        2.9          -10%         4.1      2.3      -1.2    -1.2     1.8         2.0           129.0       Outperform
Fresenius Med.Care    P            P              P      16.3       126%         2%        2.6           19%         4.5      1.4     -11.3    -1.9    -1.1         2.4            51.6       Outperform
Burberry Group        P            P              P      17.5       112%        35%        6.3           45%         4.4      2.1     -13.8    -6.2    -4.4         2.5         1,233.0       Outperform
Diageo                P            P              P      16.7       103%        47%        8.1           71%         4.2      2.5     -14.6     0.7    -1.5         2.1         1,846.0       Outperform
Intertek Group        P            P              P      19.9       127%        60%        8.8          -51%         3.0      1.4     -20.1     2.0     1.7         2.8         2,898.0       Outperform
Pernod-Ricard         P            P              P      15.4        95%        46%        2.0           14%         4.3      1.9     -22.5    -2.7     0.4         2.7            84.9       Outperform
Saipem                P            P              P      14.2       133%        18%        3.3           28%         6.2      2.1     -33.6    -2.9     1.5         2.1            32.5       Outperform
Dufry 'R'             P                           P      10.5        63%         -7%       3.7           46%         9.2      0.0      67.9    -2.9    -0.8         2.0           124.3       Outperform
Petrofac              P            P                     12.3       116%        11%        7.1           27%        -0.2      2.5      56.5    -0.7    -1.7         2.3         1,590.0       Outperform
Rotork                P                           P      19.5       169%        54%        9.0           80%         4.0      1.9      19.0     0.6     1.6         2.8         2,426.0       Outperform
Capita                             P              P      13.2        84%       -41%        8.6          -36%         4.8      3.2      17.5     0.7     1.0         2.7           722.5       Outperform
The Swatch Group      P                           P      14.0        89%       -52%        2.8           23%         4.0      1.7       9.0     1.8     0.9         2.3           432.2       Outperform
'B'
Johnson Matthey       P                           P      13.7       107%        28%        3.2           40%         na       2.5       8.0    -5.4    -4.2         2.6         2,190.0       Outperform
Halma                 P                           P      15.1       146%        35%        4.0           21%         5.3      2.4       7.2    -1.0    -1.0         2.9           419.5       Outperform
Aker Solutions        P                           P      10.8       102%        29%        2.7          -10%        -4.3      3.0       0.0     4.1     5.8         1.9           104.7       Outperform
Atlas Copco 'A'                    P              P      14.7       127%        61%        7.1          120%         4.2      3.3      -3.0    -0.8    -1.3         2.9           167.6       Outperform
Amec                  P            P                     11.8       111%        19%        2.6          -17%         4.1      3.1      -3.5    -2.8     5.5         2.3         1,022.0       Outperform
Moneysupermarket      P                           P      14.3       105%        34%        4.4           98%         5.4      3.7      -5.5     3.4     0.5         2.3           153.5       Outperform
Com Gp.
Sabmiller             P                           P      16.7       103%        50%        1.7          -11%         5.5      2.3     -13.5     0.5     0.8         2.6         2,633.0       Outperform
Hikma                 P            P                     16.7       135%        25%        2.9           14%         na       1.2     -14.4    -0.4     0.2         2.2           738.0       Outperform
Pharmaceuticals
Eutelsat                           P              P      15.0       108%         6%        3.1            7%         1.9      4.2     -18.2    -1.7    -0.1         2.3            23.6       Outperform
Communications
Petroleum Geo         P                           P      11.6       110%       -72%        2.1          -55%         2.8      1.4     -21.2    26.8     3.4         1.9            97.7       Outperform
Services 'B'
Assa Abloy                         P              P      14.7       127%         -6%       3.5            5%         4.7      2.4     -24.1    -1.5    -1.7         2.9           231.9       Outperform
Deutsche Post         P                           P      11.5        85%        42%        1.7          -19%         8.0      4.6     -26.5     0.1     1.1         1.9            15.3       Outperform
Coloplast 'B'                      P              P      19.8       153%        24%        11.8          89%         4.3      1.4     -27.8     0.2     0.3         3.1         1,311.0       Outperform
Ryanair Holdings                   P              P      13.2        98%       -10%        2.0          -31%         9.6      8.8     -28.9    -3.2    -0.6         2.2             4.6       Outperform
Prudential            P                           P      11.4       118%         7%        2.4          -18%         5.9      3.1     -33.8     0.6     1.4         2.2           880.0       Outperform
Kuehne+Nagel Intl.    P                           P      20.3       151%        70%        5.7           66%         4.3      3.3     -36.7    -1.7     0.2         2.6           113.8       Outperform
Ictl.Htls.Gp.         P                           P      15.7        94%        44%        8.1          -51%         6.1      2.6     -40.4    -1.1     0.1         2.6         1,650.0       Outperform
Easyjet                            P              P      10.0        74%       -12%        1.6           15%         7.1      1.9     -44.2    11.5     0.1         2.3           682.0       Outperform
Chr Hansen Holding    P                           P      21.4       166%        45%        5.1           49%         na       1.9     -50.4     2.0     0.5         2.7           187.3       Outperform

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



Of these, SAP, Sonova and WPP are highlighted by all three screening criteria and look
cheap on HOLT. The following stocks are cheap on P/E relatives and feature on at least
two of our growth screens: SAP, Sonova, WPP, Petroleum Geo, Assa Abloy, Ryanair,
Dufry, Capita, Swatch and EasyJet. Additionally, we can see almost all the names have
FCF above 4%.
Credit Suisse has set up a sector-neutral Delta One basket, CSERGROW, that offers
exposure to our preferred European growth names.
We show the corresponding screen for the US. Of these, Qualcomm, Google, Mead
Johnson Nutrition are highlighted by all three screening criteria as well as being cheap on
HOLT. Credit Suisse has also set up a sector-neutral Delta One basket for these US
growth names(CSUSGROW).



Global Equity Strategy                                                                                                                                                                                   13
                                                                                                                                                                                   23 November 2012



Figure 26: US stocks highlighted as growth by two or more of our methodologies
                            Screening Methodology              -----P/E (12m fwd) ------         ------ P/B -------       2012e, %       HOLT 2012e Momentum, %                   Share price,
                                                                                                                                                                    Consensus
                                                                               rel to mkt %              rel to mkt %                   Price, %                                      local
                                                 Analyst                rel to                                                                                   recommendation                  Credit Suisse
Name                   Themes      Quants                   Abs                above/below     Abs       above/below    FCY      DY    change to 3m EPS 3m Sales                  currency (21
                                               judgement              Industry                                                                                    (1=Buy; 5=Sell)                rating
                                                                                 average                   average                        best                                        Nov)
Google 'A'              P            P              P       15.0       110%       -26%         3.8          -29%         5.9     0.0      35.1     -7.9   -3.1         1.9           665.9       Outperform
Mead Johnson            P            P              P       19.0       119%        18%        -73.9            na        2.9     1.8       9.9     -2.8   -4.3         2.2            66.1       Outperform
Nutrition
Yum! Brands             P            P              P       19.7       117%        62%         18.2         -22%         4.0     1.7     -31.5     -0.1   -0.7         2.0            73.5       Outperform
Salesforce.Com          P            P              P       76.9       563%        16%         12.7          23%         2.6     0.0     -66.9      1.1    0.3         2.1           158.8       Outperform
Broadcom 'A'                         P              P       11.1        79%       -69%         2.6          -54%         7.0     1.3     110.3     -2.1   -1.6         1.8            31.2       Outperform
Qualcomm                             P              P       14.3       138%       -39%         3.7          -18%         5.5     1.6      93.1     -0.3   -0.4         1.9            62.1       Outperform
Emc                                  P              P       13.1       126%       -47%         2.7          -40%         8.8     0.0      85.1     -2.4   -1.8         1.7            24.4       Outperform
Apple                                P              P       11.2       107%       -58%         7.0          116%         8.1     1.7      82.1    -10.7   -2.7         1.7           561.7       Outperform
Unitedhealth Gp.        P            P                      10.2        79%       -15%         2.1          -26%        11.2     1.4      61.7      5.3   -0.2         1.8            53.5       Outperform
Mastercard                           P              P       18.6       137%        26%         10.2          44%         4.3     0.2      57.9     -0.5   -2.5         1.9           479.4       Outperform
Eli Lilly               P            P                      13.1       105%       -14%         4.2          -44%         7.8     4.0      54.8      2.2   -0.9         2.7            47.4       Outperform
Ihs 'A'                              P              P       19.0       121%         8%         4.2           27%         5.0     0.0      54.7     -3.8   -3.2         2.2            89.2       Outperform
Teradata                P                           P       20.1       147%        38%         7.1           40%         4.6     0.0      37.2      3.6   -1.7         2.1            61.2       Outperform
Priceline.Com                        P              P       17.4       104%       -34%         12.3          23%         4.7     0.0      34.1     -3.1   -4.3         2.1           639.6       Outperform
Allergan                             P              P       19.5       157%         7%         5.3          -10%        -4.8     0.2      31.1      0.3   -0.9         1.9            90.9       Outperform
Biogen Idec                          P              P       19.2       116%       -45%         5.2           10%         4.3     0.0      14.1      5.9    1.7         2.2           147.4       Outperform
Nielsen Holdings Nv                  P              P       14.4        92%        17%         2.3           13%         5.8     0.0       3.5      2.9   -1.1         2.1            28.1       Outperform
Ralph Lauren Cl.A                    P              P       18.6       119%        56%         4.1           63%         5.0     0.8      -2.5     -0.7   -1.4         2.4           156.5       Outperform
Rockwell                P                           P       13.6       117%        41%         6.1           73%         5.3     2.4      -3.8     -3.2   -2.7         2.2            77.4       Outperform
Automation
Dollar Tree                          P              P       14.3        86%         -5%        6.8           39%         4.3     0.0     -14.8      0.1   -0.9         2.3            41.5       Outperform
Amazon.Com              P                           P      142.3       850%       163%         13.6         -58%         1.5     0.0     -18.1    -97.1   -1.9         2.0           238.0       Outperform
Vmware                  P                           P       27.7       203%       -14%         7.9            -2%        4.8     0.0     -23.2      4.6    0.2         2.3            88.1       Outperform
Family Dollar Stores                 P              P       15.1        90%        13%         5.9           70%         1.5     1.3     -35.8      2.5    2.5         2.4            68.8       Outperform
Las Vegas Sands         P                           P       17.5       104%       -44%         4.3          -35%         5.6     2.3     -38.7    -14.4   -5.4         2.1            43.7       Outperform
Starbucks                            P              P       22.9       136%         -9%        8.6           57%         2.7     1.2     -39.1     -5.3   -1.1         2.0            50.5       Outperform
Starwood Htls.&         P                           P       19.8       118%        14%         3.4           41%         4.6     2.0     -45.4      4.9    0.1         2.2            52.6       Outperform
Rsts. Worldwide
Heartware               P                           P      -32.1         nm          na        9.4           54%         na      0.0     -63.5     nm      3.1         2.1            81.6       Outperform
International
Volcano                 P                           P       62.6       484%       -11%         4.5           30%         0.8     0.0     -65.8    -16.7   -1.8         1.9            26.9       Outperform
Netsuite                P                           P      208.0      1523%       171%         33.8         154%         0.9     0.0     -91.1     13.8    2.2         2.8            60.1       Outperform

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




Global Equity Strategy                                                                                                                                                                                      14
                                                                                                                                                                      23 November 2012


We discuss our three screening methodologies in more detail below:

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

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

■       Above market median projected sales and EPS growth between 2012 and 2014 on
        Credit Suisse and consensus estimates;

■       Above average projected long-term consensus EPS growth;

■       Outperform-rated by Credit Suisse analysts.
In Europe, this highlights the following stocks in the screen below.

Figure 27: Outperform rated European growth stocks ranked by upside potential on HOLT
Stoxx 600 median             1%       10%         5%        4%        2%       10%        5%        5%         8.6
                                      Analyst estimates                        IBES estimates                                               12m fwd PE               Share price,
                                                                                                             Long-term HOLT price                         Rel mkt,      local
                              EPS CAGR             Sales CAGR          EPS CAGR            Sales CAGR                                                                               CS rating
Company                                                                                                     EPS growth to best (%)   Abs      Rel        devn from    currency
                           2007-12   2012-14    2007-12   2012-14   2007-12   2012-14   2007-12   2012-14                                                 average     (20 Nov)
Sap (Xet)                   14%       15%         10%      11%       14%       15%       10%       11%         11.1        58        16.0    143%          -14%         57.7        Outperform
Petrofac                    23%       16%         22%       8%       29%       14%       22%        8%         14.4        56        11.5    103%          -24%        1,574.0      Outperform
Sonova N                     2%       19%         9%        9%        6%       13%       11%        8%         14.9        43        18.5    166%          -5%          100.6       Outperform
Fresenius (Xet)             16%       14%         11%       9%       15%       11%       11%        8%         13.5         1        14.4    130%           3%          84.4        Outperform
Lvmh                         9%       11%         11%       9%       11%       11%       11%        8%         10.9         -1       15.9    143%          -2%          129.0       Outperform
Amec                        24%       11%         12%       5%       24%       15%       11%        8%         15.7         -4       11.2    100%          -15%        1,024.0      Outperform
Air Liquide                  6%       10%         5%       10%        7%       10%        5%        7%         7.9          -7       16.2    146%           6%          93.4        Outperform
Experian                     7%       12%         6%        7%        7%       14%        7%        9%         11.8         -7       17.5    157%          18%         1,025.0      Outperform
Fresenius Med.Care (Xet)    10%       14%         7%        8%        9%       11%        7%        8%         8.8         -11       16.5    148%           4%          51.5        Outperform
Burberry Group              16%       11%         17%      11%       21%       14%       18%       10%         10.3        -14       16.3    147%           4%         1,247.0      Outperform
Hikma Pharmaceuticals       42%       21%         20%      13%        9%       22%       20%       11%         20.3        -14       16.4    147%          -5%          739.0       Outperform
Diageo                      11%       13%         8%        6%       13%       12%        9%        7%         10.4        -15       16.7    150%          22%         1,848.5      Outperform
Adidas (Xet)                 7%       13%         8%        7%        7%       18%        8%        7%         13.5        -18       14.1    127%          13%          64.8        Outperform
Intertek Group              22%       17%         22%       8%       21%       13%       22%        8%         14.6        -20       19.6    176%          30%         2,876.0      Outperform
Coloplast 'B'               22%       19%         7%        7%       34%       11%        6%        6%         14.1        -28       20.3    183%          13%         1,303.0      Outperform
Ryanair Holdings             6%       11%         14%       9%        6%       12%       16%        6%         9.8         -29       12.1    109%          -19%          4.7        Outperform
Saipem                      13%       13%         8%        6%       12%       13%        7%        6%         13.3        -34       12.9    116%          -10%         32.7        Outperform
Easyjet                     11%       10%         17%       5%        9%       11%       17%        6%         17.1        -44       10.0    90%           -29%         692.0       Outperform

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



We show the same screen for the US.

Figure 28: Outperform rated US growth stocks ranked by upside potential on HOLT
S&P 500 median               5%       11%         5%        5%        6%       12%        5%        5%         10.3
                                      Analyst estimates                        IBES estimates                                               12m fwd PE               Share price,
                                                                                                             Long-term HOLT price                         Rel mkt,      local
                              EPS CAGR             Sales CAGR          EPS CAGR            Sales CAGR                                                                               CS rating
Company                                                                                                     EPS growth to best (%)   Abs      Rel        devn from    currency
                           2007-12   2012-14    2007-12   2012-14   2007-12   2012-14   2007-12   2012-14                                                 average     (20 Nov)
Microsoft                   14%       14%         8%       12%       14%       12%        9%        8%         10.0        83        8.9     71%           -35%         26.71       Outperform
Apple                       62%       25%         45%      27%       66%       16%       52%       15%         20.5        82        10.2    82%           -58%        561.15       Outperform
Prec.Castparts              14%       18%         6%       16%       17%       15%        9%       11%         14.2        62        15.8    127%          19%         176.76       Outperform
Mastercard                  24%       17%         13%      12%       31%       17%       13%       12%         18.5        58        18.1    146%           1%         477.57       Outperform
Google 'A'                  21%       18%         26%      19%       21%       18%       29%       19%         13.5        35        14.4    115%          -38%        669.97       Outperform
Priceline.Com               50%       16%         30%      18%       50%       20%       30%       18%         19.9        34        17.1    137%          -6%         635.58       Outperform
Allergan                    14%       14%         8%        8%       14%       13%        8%        8%         12.5        31        19.1    153%          -4%          91.15       Outperform
VF                          12%       13%         9%        6%       12%       14%        9%        9%         13.0        19        14.1    113%          27%         157.57       Outperform
Cognizant Tech.Sltn.'A'     24%       18%         28%      17%       24%       15%       28%       15%         19.0         9        16.5    132%          -32%         65.34       Outperform
Union Pacific               19%       13%         5%        7%       19%       14%        5%        7%         15.2         4        12.9    104%           2%         120.03       Outperform
Ralph Lauren Cl.A           12%       14%         10%       6%       16%       15%       11%       10%         14.0         -3       17.6    141%          21%         156.51       Outperform
O Reilly Automotive         23%       13%         20%       6%       23%       15%       20%        6%         16.6        -11       16.7    134%          10%          91.37       Outperform
Ww Grainger                 16%       13%         7%        7%       16%       14%        7%        9%         15.2        -13       15.9    127%           9%         191.54       Outperform
Dollar Tree                 27%       19%         11%       9%       32%       15%       13%        9%         19.0        -15       14.4    115%           5%          41.61       Outperform
Quanta Services             12%       20%         19%       9%       12%       18%       19%        9%         17.8        -16       15.8    127%          -29%         25.14       Outperform
Yum! Brands                 14%       15%         6%        8%       14%       14%        6%       10%         13.4        -31       19.7    158%          32%          72.39       Outperform
Family Dollar Stores        16%       17%         6%       11%       21%       16%        9%        9%         15.0        -36       15.0    121%           6%          68.89       Outperform
Starbucks                   16%       26%         7%       13%       20%       21%       10%       12%         18.0        -39       21.7    174%          -11%         50.05       Outperform
Salesforce.Com              38%       24%         35%      31%       46%       30%       44%       24%         27.0        -67       73.8    592%          -23%        145.90       Outperform

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




Global Equity Strategy                                                                                                                                                                    15
                                                                                                                                                                                                     23 November 2012


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


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

■        CFROI above 8% for five consecutive years;

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

■        5-year asset growth above 5%;

■        Low CFROI volatility.


We highlight those stocks that also have asset turns in the top 40% of the market, since
higher asset turns has led to outperformance among our growth styles over the last
decade.

Figure 29: Outperform rated European quality growth stocks ranked by upside potential on HOLT; circled stocks have
asset turns in the top 40% of the market
                                                                 -----P/E (12m fwd) ------             ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                                                     Consensus        Share price,
                                                                                      rel to mkt %             rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
                       CFROI Median - Five   5-yr asset
Name                                                      Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (20 Nov) rating
                             Year             growth
                                                                                        average                  average                            best
Shire                         17.3             14.9       13.0         105%              -37%        4.9           26%        13.4         0.6     98.0       3.6        -0.5           1.9            1,759.0     Outperform
Imperial Tobacco Gp.          66.2             18.3       11.0          80%              26%         3.1          -90%        8.3          4.4     66.9       -1.4       -0.1           2.2            2,428.0     Outperform
Sap                           19.7              7.5       16.5         121%              -32%        5.4          -42%        3.6          1.5     58.2       -0.6       1.6            2.3              57.7      Outperform
Petrofac                      29.3             19.3       12.3         116%              11%         7.1           27%        -0.2         2.5     56.5       -0.7       -1.7           2.3            1,574.0     Outperform
Vivendi                       14.8              8.0       8.0           66%              -33%        1.1          -37%        11.2         6.3     56.2       -1.9       0.2            2.2              16.1      Outperform
Novartis 'R'                  12.3              7.5       11.6          93%              -11%        2.2          -26%        7.7          4.0     56.0       -3.1       -1.5           2.3              55.5      Outperform
Sonova N                      23.7              7.7       18.3         142%              -10%        4.4          -22%        4.3          1.4     42.8       0.7        0.2            2.4             100.6      Outperform
Smiths Group                  18.0              7.7       10.9          94%              32%         4.3          -13%        3.6          3.6     25.1       -2.6       0.6            2.7            1,050.0     Outperform
Capita                        42.0              5.9       13.2          84%              -41%        8.6          -36%        4.8          3.2     17.5       0.7        1.0            2.7             719.0      Outperform
Wpp                           25.6              5.7       10.5          76%              -18%        1.5          -86%        8.8          3.4     7.8        -1.2       -1.8           2.0             814.0      Outperform
Fresenius                     14.1              8.7       14.6         113%               9%         2.3          -22%        8.1          1.2     1.1        0.7        1.3            2.2              84.4      Outperform
Lvmh                          12.6              9.1       16.4         105%               3%         2.9          -10%        4.1          2.3     -1.2       -1.2       1.8            2.0             129.0      Outperform
Atlas Copco 'A'               21.1              7.7       14.7         127%              61%         7.1          120%        4.2          3.3     -3.0       -0.8       -1.3           2.9             168.1      Outperform
Fresenius Med.Care            13.9              7.5       16.3         126%               2%         2.6           19%        4.5          1.4    -11.3       -1.9       -1.1           2.4              51.5      Outperform
Burberry Group                15.2             19.8       17.5         112%              35%         6.3           45%        4.4          2.1    -13.8       -6.2       -4.4           2.5            1,247.0     Outperform
Diageo                        24.8              6.8       16.7         103%              47%         8.1           71%        4.2          2.5    -14.6       0.7        -1.5           2.1            1,848.5     Outperform
Eutelsat                      10.8              7.9       15.0         108%               6%         3.1            7%        1.9          4.2    -18.2       -1.7       -0.1           2.3              23.1      Outperform
Communications
Intertek Group                20.4             20.0       19.9         127%              60%         8.8          -51%        3.0          1.4    -20.1       2.0        1.7            2.8            2,876.0     Outperform
Pearson                       13.0              6.5       13.8         100%              -7%         1.7          -58%        7.2          3.6    -21.5       -1.2       -0.1           2.8            1,196.0     Outperform
Pernod-Ricard                 16.8              6.1       15.4          95%              46%         2.0           14%        4.3          1.9    -22.5       -2.7       0.4            2.7              85.0      Outperform
Assa Abloy 'B'                18.8              5.0       14.7         127%              -6%         3.5            5%        4.7          2.4    -24.1       -1.5       -1.7           2.9             232.0      Outperform
Coloplast 'B'                 12.0              6.1       19.8         153%              24%         11.8          89%        4.3          1.4    -27.8       0.2        0.3            3.1            1,303.0     Outperform

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




Global Equity Strategy                                                                                                                                                                                                        16
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Figure 30: Outperform rated US quality growth stocks with upside on HOLT, ranked by upside potential on HOLT;
circled stocks have asset turns in the top 40% of the market
                                                                            -----P/E (12m fwd) ------              ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                                                                 Consensus        Share price,
                                                                                                 rel to mkt %              rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
                             CFROI Median - Five
Name                                             5-yr asset growth   Abs       rel to Industry   above/below    Abs        above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (20 Nov) rating
                                   Year
                                                                                                   average                   average                            best

Broadcom 'A'                        14.5               12.7          11.1          79%              -69%        2.6           -54%        7.0          1.3    110.3       -2.1       -1.6           1.8              31.1      Outperform
Transdigm Group                     41.5               23.3          17.4         151%              46%         8.5           126%        4.9          1.6    109.8       1.0        -0.2           2.3             131.1      Outperform
Freeport-Mcmor.Cpr.& Gd.            18.5               31.5          8.6           75%              -28%        2.4           -90%        3.9          3.1    104.0       -7.3       -4.2           1.8              38.3      Outperform
F5 Networks                         19.7               12.5          16.1         155%              -51%        5.9             9%        6.5          0.0     96.8       -1.5       -0.6           2.2              87.5      Outperform
Qualcomm Inc                        19.4               13.0          14.3         138%              -39%        3.7           -18%        5.5          1.6     93.1       -0.3       -0.4           1.9              62.1      Outperform
Oracle Corp                         25.4               20.6          11.3          83%              -40%        3.5           -56%        8.5          0.8     86.7       -0.1       -1.7           2.1              30.2      Outperform
Emc                                 14.8                6.8          13.1         126%              -47%        2.7           -40%        8.8          0.0     85.1       -2.4       -1.8           1.7              24.2      Outperform
Microsoft                           27.6               12.1          9.7           71%              -50%        3.7           -43%        11.3         2.9     83.1       -6.3       -1.2           1.9              26.7      Outperform
Deere                               12.8                6.4          10.4          90%              -6%         5.1            78%        4.7          2.0     68.6       -5.2       -2.3           2.4              86.0      Outperform
Check Point Sftw.Techs.             23.6                8.9          13.2          97%              -33%        3.0           -58%        8.2          0.0     62.7       -0.6       -1.1           2.0              45.2      Outperform
Precision Castparts Corp            23.7                8.5          15.8         136%              45%         3.0            42%        4.5          0.1     61.8       -2.3       -1.6           1.9             176.8      Outperform
Unitedhealth Gp.                    30.5                5.9          10.2          79%              -15%        2.1           -26%        11.2         1.4     61.7       5.3        -0.2           1.8              53.1      Outperform
Mastercard                          34.9                9.3          18.6         137%              26%         10.2           44%        4.3          0.2     57.9       -0.5       -2.5           1.9             477.6      Outperform
Eli Lilly                           11.5                5.7          13.1         105%              -14%        4.2           -44%        7.8          4.0     54.8       2.2        -0.9           2.7              47.2      Outperform
Ihs 'A'                             48.8               10.3          19.0         121%               8%         4.2            27%        5.0          0.0     54.7       -3.8       -3.2           2.2              89.1      Outperform
General Dynamics                    19.2                6.3          9.4           81%              -12%        1.9           -25%        11.4         2.9     48.7       -1.6       -0.9           2.3              63.8      Outperform
Stryker Corp                        13.6                9.3          12.3          95%              -34%        2.6           -49%        6.3          1.6     40.2       -1.0       -0.7           2.2              53.6      Outperform
Thermo Fisher Scientific            25.7                7.3          11.5          79%              -12%        1.5            -4%        6.6          0.8     38.9       1.3        0.3            1.7              61.8      Outperform
Inc
Stanley Black & Decker Inc          16.0               17.5          11.8         102%              12%         1.7           -37%        8.2          2.6     33.3       -6.6       -1.2           2.1              70.1      Outperform
Allergan                            15.2               11.6          19.5         157%               7%         5.3           -10%        -4.8         0.2     31.1       0.3        -0.9           1.9              91.2      Outperform
Bed Bath & Beyond                   10.1                8.1          11.5          69%              -38%        3.4           -33%        7.3          0.0     25.6       -1.0       0.3            2.1              58.5      Outperform
Parker-Hannifin Corp                14.3                5.1          11.8         102%              12%         2.4            23%        7.3          2.1     23.8      -20.8       -6.4           2.4              79.7      Outperform
Activision Blizzard                 16.5               24.8          10.5          77%              -39%        1.2           -86%        6.9          1.6     22.0       3.3        2.0            1.7              11.2      Outperform
Cvs Caremark                        12.3                9.8          12.4          95%              -7%         1.6           -36%        8.6          1.4     18.8       1.4        0.0            1.8              45.6      Outperform
VF                                  16.8                7.0          14.5          93%              53%         3.9            87%        4.4          1.9     18.8       1.1        -0.9           1.9             157.6      Outperform
Biogen Idec                         16.9                8.7          19.2         116%              -45%        5.2            10%        4.3          0.0     14.1       5.9        1.7            2.2             148.2      Outperform
Life Technologies                   20.5               21.5          11.4          78%              -36%        1.9             6%        8.4          0.0     13.9       -1.0       -1.1           2.2              48.9      Outperform
Merck & Co.                         11.5               13.3          12.4         100%              -1%         2.6           -55%        8.1          3.7     12.2       -0.4       -0.3           2.2              43.6      Outperform
Mead Johnson Nutrition              31.9               10.8          19.0         119%              18%         -73.9           na        2.9          1.8     9.9        -2.8       -4.3           2.2              66.1      Outperform
Flowserve                           14.9                7.9          13.4         116%              31%         3.3            42%        4.6          1.0     6.9        -1.4       -0.5           1.8             139.3      Outperform
Nielsen Holdings Nv                 38.3                7.1          14.4          92%              17%         2.3            13%        5.8          0.0     3.5        2.9        -1.1           2.1              27.6      Outperform

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



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




Global Equity Strategy                                                                                                                                                                                                                    17
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       2) Analyst judgment
We have asked our analysts in Europe, the US and Japan to identify stocks with above-
market projected sales growth over the next five years (our threshold is 6% annual
growth), growth superior to the sector and translating into EPS growth of at least 8% p.a.
The details are in the Appendix, which shows two screens for each region (one with the
analysts’ top picks and the other highlighting those companies that trade on a P/E below
the market or have upside potential on HOLT).


European stocks
Of the stocks highlighted by our European analysts, the following are either cheap on
HOLT or on P/E relative to the market and have an outperform- or neutral-rating by Credit
Suisse analysts.

Figure 31: European growth stocks, as identified by our analysts, that look cheap on HOLT or on P/E relative
and rated Outperform or Neutral by our analysts
                                -----P/E (12m fwd) ------              ------ P/B -------           2012e, %         HOLT       2012e Momentum, %
                                                                                                                                                        Consensus        Share price,
                                                     rel to mkt %              rel to mkt %                          Price, %                        recommendation     local currency
Name                     Abs       rel to Industry   above/below    Abs        above/below    FCY              DY   change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov)    Credit Suisse rating
                                                       average                   average                               best
Aberdeen Asset Man.      13.2         130%              13%         3.7            63%        8.0          3.2        90.1       2.7        1.2            2.1             333.6       Outperform
Sberbank Of Russia       5.7           59%             -23%         1.6            20%        na           3.1        69.3       10.0       5.7            1.7              87.9       Outperform
SAP                      16.5         121%             -32%         5.4            -42%       3.6          1.5        58.2       -0.6       1.6            2.3              58.8       Outperform
Spectris                 12.3         118%              21%         3.5            -68%       6.9          2.1        56.8       -2.3       -1.7           2.2            1,819.0      Outperform
Perform Group            24.7         179%              26%         0.2            58%        na           0.0        48.4       0.5        1.6            1.8             397.0       Outperform
Sonova N                 18.3         142%             -10%         4.4            -22%       4.3          1.4        42.8       0.7        0.2            2.4             100.6       Outperform
Richemont                14.9          96%             133%         3.5            69%        3.0          1.1        25.4       5.2        2.9            2.4              68.6       Neutral
Rotork                   19.5         169%              54%         9.0            80%        4.0          1.9        19.0       0.6        1.6            2.8            2,426.0      Outperform
Capita                   13.2          84%             -41%         8.6            -36%       4.8          3.2        17.5       0.7        1.0            2.7             722.5       Outperform
The Swatch Group 'B'     14.0          89%             -52%         2.8            23%        4.0          1.7        9.0        1.8        0.9            2.3             432.2       Outperform
Paddy Power              20.8         124%              62%         12.0           99%        5.5          2.0        8.3        -0.2       3.3            2.9              57.3       Outperform
Johnson Matthey          13.7         107%              28%         3.2            40%        na           2.5        8.0        -5.4       -4.2           2.6            2,190.0      Outperform
Wpp                      10.5          76%             -18%         1.5            -86%       8.8          3.4        7.8        -1.2       -1.8           2.0             825.0       Outperform
Halma                    15.1         146%              35%         4.0            21%        5.3          2.4        7.2        -1.0       -1.0           2.9             419.5       Outperform
Compass Group            14.9          89%              28%         3.8            43%        4.8          3.1        3.5        -1.4       -0.3           2.5             699.5       Outperform
William Demant Hldg.     18.5         143%              -5%         8.7            -64%       4.2          0.0        3.2        -6.5       -0.4           3.3             463.6       Neutral
Subsea 7                 12.6         119%             -25%         1.3            -46%       4.2          1.9        -4.4       10.5       -0.9           2.0             128.7       Neutral
Petroleum Geo Services   11.6         110%             -72%         2.1            -55%       2.8          1.4       -21.2       26.8       3.4            1.9              97.7       Outperform
Vienna Insurance Group   9.5           98%             -23%         1.0            -54%       6.3          3.6       -21.2       -3.5       2.3            2.3              34.2       Neutral
A
Assa Abloy 'B'           14.7         127%              -6%         3.5             5%        4.7          2.4       -24.1       -1.5       -1.7           2.9             231.9       Outperform
Ryanair Holdings         13.2          98%             -10%         2.0            -31%       9.6          8.8       -28.9       -3.2       -0.6           2.2               4.6       Outperform
Easyjet                  10.0          74%             -12%         1.6            15%        7.1          1.9       -44.2       11.5       0.1            2.3             682.0       Outperform

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



US stocks
Of the stocks highlighted by our US analysts, the following are either cheap on HOLT or
on P/E relative to the market and have an Outperform or Neutral rating by Credit Suisse
analysts.




Global Equity Strategy                                                                                                                                                                                 18
                                                                                                                                                                              23 November 2012



Figure 32: US growth stocks, as identified by our analysts, that are cheap on HOLT or on P/E relative
and rated Outperform or Neutral by our analysts
                                 -----P/E (12m fwd) ------              ------ P/B -------           2012e, %         HOLT       2012e Momentum, %
                                                                                                                                                         Consensus        Share price,
                                                      rel to mkt %              rel to mkt %                          Price, %                        recommendation     local currency Credit Suisse
Name                      Abs       rel to Industry   above/below    Abs        above/below    FCY              DY   change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov)    rating
                                                        average                   average                               best
Celgene                   13.3          80%             -72%          5.8           -60%       5.4          0.0       220.1       2.0        1.2            1.8              77.9      Neutral
Broadcom 'A'              11.1          79%             -69%          2.6           -54%       7.0          1.3       110.3       -2.1       -1.6           1.8              31.2      Outperform
F5 Networks               16.1         155%             -51%          5.9            9%        6.5          0.0        96.8       -1.5       -0.6           2.2              90.1      Outperform
Qualcomm                  14.3         138%             -39%          3.7           -18%       5.5          1.6        93.1       -0.3       -0.4           1.9              62.1      Outperform
Oracle                    11.3          83%             -40%          3.5           -56%       8.5          0.8        86.7       -0.1       -1.7           2.1              30.4      Outperform
Emc                       13.1         126%             -47%          2.7           -40%       8.8          0.0        85.1       -2.4       -1.8           1.7              24.4      Outperform
Apple                     11.2         107%             -58%          7.0          116%        8.1          1.7        82.1      -10.7       -2.7           1.7             561.7      Outperform
Gilead Sciences           15.5          93%             -64%          7.5            6%        5.5          0.0        82.0       1.9        3.2            1.7              75.6      Neutral
Mellanox                  19.2         185%              23%          7.2          162%        4.9          0.0        71.3       12.2       0.9            2.2              84.4      Neutral
Check Point Sftw.Techs.   13.2          97%             -33%          3.0           -58%       8.2          0.0        62.7       -0.6       -1.1           2.0              45.5      Outperform
Mastercard                18.6         137%              26%         10.2           44%        4.3          0.2        57.9       -0.5       -2.5           1.9             479.4      Outperform
Danaher                   15.0         130%               0%          2.1           -23%       7.8          0.2        56.6       -3.6       -2.2           1.8              53.0      Neutral
Ihs 'A'                   19.0         121%               8%          4.2           27%        5.0          0.0        54.7       -3.8       -3.2           2.2              89.2      Outperform
Salix Pharms.             12.6         102%             -71%          4.2            4%        4.7          0.0        37.9       10.7       -0.6           2.1              41.4      Outperform
Teradata                  20.1         147%              38%          7.1           40%        4.6          0.0        37.2       3.6        -1.7           2.1              61.2      Outperform
Google 'A'                15.0         110%             -26%          3.8           -29%       5.9          0.0        35.1       -7.9       -3.1           1.9             665.9      Outperform
Priceline.Com             17.4         104%             -34%         12.3           23%        4.7          0.0        34.1       -3.1       -4.3           2.1             639.6      Outperform
Allergan                  19.5         157%               7%          5.3           -10%       -4.8         0.2        31.1       0.3        -0.9           1.9              90.9      Outperform
Biogen Idec               19.2         116%             -45%          5.2           10%        4.3          0.0        14.1       5.9        1.7            2.2             147.4      Outperform
Mercadolibre              28.1         206%             -17%         15.9           16%        3.0          0.5        11.2       4.4        -1.3           2.5              75.4      Neutral
Jazz Pharmaceuticals      9.9           80%             -74%         11.9           -47%       na           0.0        10.6       3.0        1.9            1.4              52.0      Outperform
Mead Johnson Nutrition    19.0         119%              18%         -73.9           na        2.9          1.8        9.9        -2.8       -4.3           2.2              66.1      Outperform
Eog Res.                  21.1         199%              27%          2.5            2%        -4.4         0.6        6.4        12.4       2.0            1.9             118.1      Neutral
Watson Pharms.            10.8          87%             -22%          3.1           28%        7.7          0.0        4.3        1.3        2.4            1.8              85.3      Outperform
Nielsen Holdings Nv       14.4          92%              17%          2.3           13%        5.8          0.0        3.5        2.9        -1.1           2.1              28.1      Outperform
Visa 'A'                  19.4         142%              32%          4.4           75%        4.4          0.7        1.5        3.3        1.0            1.9             146.7      Outperform
Hexcel                    14.2         123%             -40%          3.1           -75%       -1.7         0.0        -4.0       2.8        -1.7           2.1              25.1      Outperform
Carmax                    17.8         106%             -31%          3.0           43%        1.9          0.0       -14.1       -2.5       0.4            1.9              34.6      Outperform
Dollar Tree               14.3          86%              -5%          6.8           39%        4.3          0.0       -14.8       0.1        -0.9           2.3              41.5      Outperform
Noble Energy              15.5         146%             -13%          2.3           11%        -6.1         0.9       -15.0      -16.7       -4.9           2.0              95.3      Outperform
Linear Tech.              17.4         124%             -16%         10.1           -35%       7.3          3.1       -19.2      -18.0       -9.0           2.7              31.9      Outperform
Anadarko Petroleum        16.8         158%             -26%          1.9           -2%        2.4          0.5       -19.9       -3.5       -3.1           1.6              72.5      Outperform
Vmware                    27.7         203%             -14%          7.9           -2%        4.8          0.0       -23.2       4.6        0.2            2.3              88.1      Outperform
Zumiez                    12.1          72%             -46%          2.4           -40%       3.6          0.0       -25.1       -5.4       -0.9           2.3              20.3      Neutral
Las Vegas Sands           17.5         104%             -44%          4.3           -35%       5.6          2.3       -38.7      -14.4       -5.4           2.1              43.7      Outperform
Starbucks                 22.9         136%              -9%          8.6           57%        2.7          1.2       -39.1       -5.3       -1.1           2.0              50.5      Outperform
Chipotle Mexn.Grill       25.6         153%              -5%          7.9           45%        2.9          0.0       -40.0       0.0        -1.6           2.6             275.5      Neutral
Fusion-Io                 50.1         482%             -19%          4.9           -1%        0.3          0.0       -63.6       47.1       9.3            2.4              24.1      Outperform
Volcano                   62.6         484%             -11%          4.5           30%        0.8          0.0       -65.8      -16.7       -1.8           1.9              26.9      Outperform

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



We show the full list of companies highlighted by our analysts as growth stocks in Europe
and the US in the screens in the Appendix.




Global Equity Strategy                                                                                                                                                                                  19
                                                                                                                                                                             23 November 2012



       3) Thematic approach
We highlight our preferred stocks on our preferred growth themes, which are:
(1)             Branded GEM consumer plays
(2)             Industrial automation
(3)             Global trade
(4)             Emerging markets travel
(5)             Water
(6)             Underleveraged banks in underleveraged countries
(7)             Oilfield services
(8)             Energy efficiency
(9)             Reducing auto emissions
(10)            Specific plays on the internet, especially the provision of e-financial services.
(11)            Ageing in emerging markets
(12)            Software


European stocks
We highlight European companies that are exposed to our favoured growth themes, that
are Outperform-rated by our analysts, and offer value (in terms of either P/E relatives, FCF
yield above 5% or potential upside on HOLT).

Figure 33: Top European plays on our favoured growth themes, that are Outperform-rated by our analysts and that offer
value (i.e. either look cheap on P/E relatives, have a FCF yield above 5% or look cheap on HOLT)

                                      -----P/E (12m fwd) ------             ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                          Consensus        Share price,
                                                           rel to mkt %             rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
Name                           Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov) rating
                                                             average                  average                            best
Dufry 'R'                      10.5          63%              -7%         3.7           46%        9.2          0.0     67.9       -2.9       -0.8           2.0             124.3      Outperform
SAP                            16.5         121%              -32%        5.4          -42%        3.6          1.5     58.2       -0.6       1.6            2.3              58.8      Outperform
Petrofac                       12.3         116%              11%         7.1           27%        -0.2         2.5     56.5       -0.7       -1.7           2.3            1,590.0     Outperform
Sonova N                       18.3         142%              -10%        4.4          -22%        4.3          1.4     42.8       0.7        0.2            2.4             100.6      Outperform
Rotork                         19.5         169%              54%         9.0           80%        4.0          1.9     19.0       0.6        1.6            2.8            2,426.0     Outperform
The Swatch Group 'B'           14.0          89%              -52%        2.8           23%        4.0          1.7     9.0        1.8        0.9            2.3             432.2      Outperform
Wpp                            10.5          76%              -18%        1.5          -86%        8.8          3.4     7.8        -1.2       -1.8           2.0             825.0      Outperform
Halma                          15.1         146%              35%         4.0           21%        5.3          2.4     7.2        -1.0       -1.0           2.9             419.5      Outperform
Moneysupermarket Com Gp.       14.3         105%              34%         4.4           98%        5.4          3.7     -5.5       3.4        0.5            2.3             153.5      Outperform
Sabmiller                      16.7         103%              50%         1.7          -11%        5.5          2.3    -13.5       0.5        0.8            2.6            2,633.0     Outperform
Petroleum Geo Services         11.6         110%              -72%        2.1          -55%        2.8          1.4    -21.2       26.8       3.4            1.9              97.7      Outperform
Deutsche Post                  11.5          85%              42%         1.7          -19%        8.0          4.6    -26.5       0.1        1.1            1.9              15.3      Outperform
Saipem                         14.2         133%              18%         3.3           28%        6.2          2.1    -33.6       -2.9       1.5            2.1              32.5      Outperform
Prudential                     11.4         118%               7%         2.4          -18%        5.9          3.1    -33.8       0.6        1.4            2.2             880.0      Outperform
Ictl.Htls.Gp.                  15.7          94%              44%         8.1          -51%        6.1          2.6    -40.4       -1.1       0.1            2.6            1,650.0     Outperform

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



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




Global Equity Strategy                                                                                                                                                                              20
                                                                                                                                                                               23 November 2012



Figure 34: Top US plays on our favoured growth themes, that are Outperform-rated by our analysts and that offer value
(i.e. either look cheap on P/E relatives, have a FCF yield above 5% or look cheap on HOLT)
                                       -----P/E (12m fwd) ------              ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                            Consensus        Share price,
                                                            rel to mkt %              rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
Name                            Abs       rel to Industry   above/below    Abs        above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov) rating
                                                              average                   average                            best
Oracle                          11.3          83%              -40%        3.5           -56%        8.5          0.8     86.7       -0.1       -1.7           2.1              30.4      Outperform
Cigna                           8.6           67%               5%         2.0             3%        13.2         0.1     63.2       3.9        -3.5           1.9              52.0      Outperform
Unitedhealth Gp.                10.2          79%              -15%        2.1           -26%        11.2         1.4     61.7       5.3        -0.2           1.8              53.5      Outperform
Eli Lilly                       13.1         105%              -14%        4.2           -44%        7.8          4.0     54.8       2.2        -0.9           2.7              47.4      Outperform
Halliburton                     10.5          99%              -27%        2.2           -31%        -2.2         1.1     38.6       -6.1       0.2            1.9              31.7      Outperform
Google 'A'                      15.0         110%              -26%        3.8           -29%        5.9          0.0     35.1       -7.9       -3.1           1.9             665.9      Outperform
Emerson Electric                13.6         118%               2%         3.5             2%        7.1          3.2     16.3       -1.5       -2.0           2.3              48.6      Outperform
Mead Johnson Nutrition          19.0         119%              18%         -73.9           na        2.9          1.8     9.9        -2.8       -4.3           2.2              66.1      Outperform
Mindray Med.Intl.Spn. Adr.'A'   17.1         118%              -5%         3.4           -29%        na           1.2     8.2        2.6        1.2            2.1              33.8      Outperform
1:1
Johnson Controls                9.4          117%              -5%         1.6           -12%        9.4          2.6     1.9       -11.8       -4.3           2.5              26.8      Outperform
Rockwell Automation             13.6         117%              41%         6.1            73%        5.3          2.4     -3.8       -3.2       -2.7           2.2              77.4      Outperform
United Parcel Ser.'B'           14.5         107%              -7%         10.1           62%        6.3          3.1     -6.1       -4.9       -2.8           2.3              71.4      Outperform
Vmware                          27.7         203%              -14%        7.9            -2%        4.8          0.0    -23.2       4.6        0.2            2.3              88.1      Outperform
Las Vegas Sands                 17.5         104%              -44%        4.3           -35%        5.6          2.3    -38.7      -14.4       -5.4           2.1              43.7      Outperform
Volcano                         62.6         484%              -11%        4.5            30%        0.8          0.0    -65.8      -16.7       -1.8           1.9              26.9      Outperform

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



We consider each theme in more detail.




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                                                                                                                                          23 November 2012




Growth themes
       1) Branded GEM consumer plays
In our view, the GEM consumer story remains simple and compelling. We have been
overweight this theme for now five years!
The BRIC consumer share of GDP remains abnormally low and the Chinese consumer
share of GDP is still just half that of the US and Japan.

Figure 35: Emerging markets have a low consumption                                Figure 36: In particular, China’s consumption share of
share of GDP                                                                      GDP is less than half the US levels
 65%                                                                               75%

                                                                                   70%
 60%                                                                               65%
                                         G7 consumption share of GDP
                                         BRIC consumption share of GDP             60%
 55%                                                                                                                    Consumption, Share of GDP
                                                                                   55%
                                                                                                                               China        United States
                                                                                   50%
 50%
                                                                                   45%

 45%                                                                               40%

                                                                                   35%

 40%                                                                               30%
        1997       2000         2003         2006         2009           2012            1995 1996 1998 1999 2000 2002 2003 2005 2006 2007 2009 2010 2012

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



We think that the consumer share of GEM GDP is set to rise, partly as a result of
currency appreciation and partly on account of policy. Discretionary consumption looks set
to rise faster than total consumption (with on average a third of income in emerging
markets being spent on non-discretionary items, according to the World Bank). Hence,
under our central case, discretionary consumption will be 9% in real terms and just under
14% in nominal terms (with a currency that near term is unlikely to depreciate).

Figure 37: If China grows by 7% per year in real terms between now and 2020, then consumption would likely grow by
10%, and discretionary spending by 13%
                          GDP                         Consumption                                     Discretionary consumption (% of total)
    Country
                    Real trend         Consumption share of GDP            Implied real                                   Implied real    Implied
                                                                                               2007           2020E
                     growth               2011            15y max            growth                                         growth     nominal growth
        Brazil        3.5%                60%               65%               4.3%              64%            65%           4.6%           9.1%
       China          7.0%                32%               42%              10.1%              52%            65%          12.5%          15.5%
        India         6.5%                57%               65%               7.8%              55%            60%           8.7%          12.8%
       Russia         3.0%                50%               56%               4.1%              59%            65%           5.2%          11.7%
        BRIC             6.1%              43%               50%                7.9%            56%            64%            9.2%             13.7%
  Developed
                   2.4%             65%                                                         74%
   countries
Source: Thomson Reuters, Credit Suisse research




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                                                                                                                                                                                                                                                           23 November 2012


When GDP per capita in the developed world was at the same level as it is in the
emerging markets currently, real consumption growth averaged nearly 5%, with the
highest growth being in communication, transport and education.

Figure 38: Current GDP pc in GEM is $7,000. When France, US and Japan had GDP pc at
this level, the highest growth was seen in communication, transport and education
   Average annual growth in real terms as GDP per capita
    rises from c.US$7,400 to US$9,800 in the US, Japan




                                                           12%
                                                                             10.4%
                                                                                               9.7%
                                                           10%

                                                           8%                                                   7.2%
                                                                                                                               6.8%
                                                                                                                                                6.2%       6.2%
                        and France




                                                           6%                                                                                                                  5.4%
                                                                    4.6%                                                                                                                     4.6%              4.3%
                                                           4%                                                                                                                                                               3.0%

                                                           2%

                                                           0%




                                                                                                                                                                                                                            Food & bev
                                                                                               Transportation
                                                                               Communication




                                                                                                                                   Recreation



                                                                                                                                                 Housing




                                                                                                                                                                                Healthcare


                                                                                                                                                                                             Hsehld & Pers
                                                                                                                Education




                                                                                                                                                           Financial servs
                                                                    PCE




                                                                                                                                                                                                                Utilities
Source: Credit Suisse research                                                                                                                                                                  Goods




The key drivers of GEM consumption are higher wage growth (compounding at c.10% p.a)
and a fall in the savings ratio. In the case of China, the savings ratio is still c.40%. This is
set to fall, as there are moves towards a more state-sponsored social security system that
diminishes the need for individuals to save for old age or ill health.
We can see the resilience of the consumer if we look at the example of Chinese exports to
the US (which seem to follow ISM) against Chinese retail sales, which have clearly
decoupled.

Figure 39: Chinese retail sales are decoupling from those                                                                                                                    Figure 40: …while Asian exports have followed the US
in the US…                                                                                                                                                                   cycle
  24%                                                            Retail sales yoy, 3mma                                                                                        50                                                                                        75
                                                                     US
  19%                                                                                                                                                                          40
                                                                                                                                                                                                                                                                         65
                                                                     China
                                                                                                                                                                               30
  14%
                                                                                                                                                                                                                                                                         55
                                                                                                                                                                               20
   9%
                                                                                                                                                                               10                                                                                        45
   4%
                                                                                                                                                                                0
                                                                                                                                                                                                                                                                         35
  -1%                                                                                                                                                                         -10
                                                                                                                                                                                                                                                                         25
                                                                                                                                                                              -20                              Asian exports to US, yoy, 3mma, 6m lag
  -6%
                                                                                                                                                                                                               US ISM new orders, rhs
                                                                                                                                                                              -30                                                                                        15
 -11%
                                                                                                                                                                                    1992                     1996           2000         2004           2008      2012
     2002                                                    2004            2006                   2008                    2010                2012

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




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                                                                                                23 November 2012


Finally, we believe currency appreciation is likely in many of the emerging markets.
This is largely driven by increased QE in the developed world. This in turn drives money to
those regions where there is an interest and a growth premium as well as undervalued
currencies. This points to the emerging markets. Currency appreciation helps the
consumer at the expense of exporters (the price of exports rises, while the price of imports
falls and thus discretionary consumption growth improves). This is also critical because in
recent years as we can see below the currencies have been a modest headwind.

Figure 41: Changes in EM currencies against the Euro




Source: Company data, Credit Suisse estimates



Indirect plays
Over the past five years, the emerging market business of the indirect plays (using food
producers and household products sector) has grown at 10% a year. This is growth!

Figure 42: Average emerging markets growth for the food producers and household
products companies* (quarterly 2007-2012) is close to 10%
 16%

 14%

 12%

 10%

  8%

  6%

  4%

  2%

  0%
        Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
        07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12

Source: Company data, Credit Suisse Consumer Staples Research Team. *Average Emerging Markets
growth based on Nestle, Unilever, Henkel, Kraft, Coke, Colgate, L’Oreal, Danone, Reckitt




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                                                                                                                                                                                                                                           23 November 2012


For the indirect plays we look at stocks with above–market projected average sales growth
over the next five years (our threshold is 6% annual growth), with growth superior to the
sector, translating into EPS growth of at least 8% p.a, and which our analysts believe are
growth. We also want these stocks to have at least 20% of revenues from GEM. This
highlights the following companies:

Figure 43: European stocks that are plays on the emerging markets consumer with at least 20% of revenues from GEM,
that our analysts identified as Growth
                                                                           -----P/E (12m fwd) ------                   ------ P/B -------                2012e, %           HOLT       2012e Momentum, %
                                                                                                                                                                                                                 Consensus
                                                                                                 rel to mkt %                  rel to mkt %                                Price, %                                               Share price, local
                       % Sales from   % Sales from   % Sales from                                                                                                                                             recommendation
Name                                                                Abs       rel to Industry    above/below         Abs       above/below       FCY            DY        change to    3m EPS      3m Sales                       currency (21 Nov) Credit Suisse rating
                          GEM            NJA            China                                                                                                                                                  (1=Buy; 5=Sell)
                                                                                                   average                       average                                     best

Sabmiller                 71%             8%             n.a        16.7         103%               50%              1.7          -11%            5.5           2.3         -13.5           0.5        0.8          2.6                 2,633.0      Outperform
Prudential                60%            60%             n.a        11.4         118%                7%              2.4          -18%            5.9           3.1         -33.8           0.6        1.4          2.2                  880.0       Outperform
The Swatch Group 'B'      50%            47%            37%         14.0          89%               -52%             2.8           23%            4.0           1.7         9.0             1.8        0.9          2.3                  432.2       Outperform
Diageo                    45%            13%             n.a        16.7         103%               47%              8.1           71%            4.2           2.5         -14.6           0.7        -1.5         2.1                 1,846.0      Outperform
Pernod-Ricard             45%            27%             n.a        15.4          95%               46%              2.0           14%            4.3           1.9         -22.5       -2.7           0.4          2.7                  84.9        Outperform
Richemont                 41%            34%            26%         14.9          96%              133%              3.5           69%            3.0           1.1         25.4            5.2        2.9          2.4                  68.6        Neutral
Chr Hansen Holding        40%            10%             2%         21.4         166%               45%              5.1           49%              na          1.9         -50.4           2.0        0.5          2.7                  187.3       Outperform
Lvmh                      35%            23%            14%         16.4         105%                3%              2.9          -10%            4.1           2.3         -1.2        -1.2           1.8          2.0                  129.0       Outperform
Burberry Group            30%             na             n.a        17.5         112%               35%              6.3           45%            4.4           2.1         -13.8       -6.2           -4.4         2.5                 1,233.0      Outperform
Wpp                       25%            11%             6%         10.5          76%               -18%             1.5          -86%            8.8           3.4         7.8         -1.2           -1.8         2.0                  825.0       Outperform
Boss (Hugo)               17%             7%             7%         15.4          99%               29%              10.9         137%            4.1           4.1         -18.8       -4.5           0.0          2.0                  79.2        Neutral

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

Of these, the following look cheap on HOLT or have an FCF yield above 5%: SAB Miller,
Swatch, Richemont, and WPP.
We show the same screen for the US below. Of these, the following look cheap on HOLT
or have an FCF yield above 5%: Las Vegas Sands, and Mead Johnson.

Figure 44: US stocks that are plays on the emerging markets consumer with at least 20% of revenues from GEM, that
our analysts identified as Growth
                                                                                                -----P/E (12m fwd) ------                        ------ P/B -------                         2012e, %           HOLT          2012e Momentum, %
                                                                                                                                                                                                                                                                Consensus        Share price,
                                                                                                                        rel to mkt %                         rel to mkt %                                      Price, %                                      recommendation     local currency C
                                 % Sales from % Sales from % Sales from
Name                                                                                    Abs        rel to Industry      above/below           Abs            above/below              FCY          DY         change to      3m EPS             3m Sales      (1=Buy; 5=Sell)      (21 Nov) r
                                    GEM          NJA          China
                                                                                                                          average                              average                                           best
Las Vegas Sands                       73%            73%            73%                17.5            104%                 -44%              4.3               -35%                  5.6          2.3         -38.7             -14.4            -5.4               2.1            43.4      O
Mead Johnson Nutrition                58%              na            n.a               19.0            119%                 18%               -73.9                 na                2.9          1.8          9.9              -2.8             -4.3               2.2            66.8      O
Yum! Brands                           32%            32%            21%                19.7            117%                 62%               18.2              -22%                  4.0          1.7         -31.5             -0.1             -0.7               2.0            73.3      O
Nike 'B'                              24%            14%             9%                16.9            108%                 23%               4.2                   22%               5.4          1.5         -11.2             1.3              -0.4               2.4            96.3      N

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



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

■        SAB Miller: the 2013E FCF yield is 5.5% (on our analyst’s calculations); yet we see
         long-term sales growth of c7% and EPS growth potential of close to 13% CAGR. In its
         core growth markets of Latam and Africa, SAB has strong positions with an average
         market share of around 90% and 70%, respectively. According to our analyst, Sanjeet
         Aujla, its future growth is driven by its own pace of category development and
         penetration, and is less at risk from competitive threats affecting other businesses
         given high barriers to entry in these markets. As our analyst points out, the percentage
         of income spent on beer rises until GDP per capita hits c$20K (implying that in this
         case beer volumes should grow at a higher rate than GDP). SAB has a wide set of
         price points and, thus, is able to exploit the premium beer market and at the low end.
         Its price points are increasingly competitive against the informal alcohol sector,
         according to our analyst.
We can see from the charts below that beer and international spirits per capita
consumption tends to go up as GDP per capita rises.




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                                                                                                                                                                                 23 November 2012



Figure 45: Beer per capita consumption goes up as GDP                                                Figure 46: …and so does international spirits per capita
per capita rises…                                                                                    consumption
                                                                                                          5.0
                                                                         R² = 0.3789




                                                                                                                      PCC
      160
                                                                                                          4.5
                  PCC



      140
                                                                                                          4.0
      120                                                                                                 3.5
                                                                                                                                                                   R² = 0.3243
      100                                                                                                 3.0

       80                                                                                                 2.5

       60                                                                                                 2.0

                                                                                                          1.5
       40
                                                                                                          1.0
       20
                                                                      GDP per capita                      0.5                                                                    GDP per capita
           0
               0               20000         40000          60000            80000       100000           0.0
                                                                                                                 0             20000          40000          60000           80000       100000


Source: Company data, Credit Suisse Consumer Staples Research                                        Source: Company data, Credit Suisse Consumer Staples Research
team                                                                                                 team

■    Diageo: the world leader in international premium spirits. Within a growing global
     spirits market, premium end offers the fastest growth at the expense of local cheap
     liquor, according to our analyst Charlie Mills. 45% of Diageo sales come from
     emerging markets.

■    Swatch: more than Richemont, it tends to sell into wholesale channels, which offer
     less advantageous pricing than retailers. Yet, on a tactical basis, our analysts see the
     medium-price segment in Asia holding up better than the high-end segment. Strong
     tourist purchases in Europe should be a key mitigating factor. Swatch looks well
     placed to capitalise on the stabilisation of macro indicators in China, which accounts
     for about 35% of group sales. In the medium term, its best-in-class supply chain
     capabilities and gradual reduction in supply of movements (i.e. watch parts) to external
     parties should result in lower investment requirements than peers to support growth of
     mechanical watches for brands such as Longines or Tissot. Its balance sheet remains
     strong and valuation is among the cheapest in the European luxury space, according
     to our analyst Rogerio Fujimori. Its FCF yield is well above its peers’.

Figure 47: Swiss watch survey is improving yoy                                                       Figure 48: HK watch & jewellery sales appear to have
                                                                                                     troughed
                                       Swatch price relative (euros), y/y%                              50%                  HK watch and jewellery volume sales, y/y%                       100%
    80%                                                                                       100                            Swatch price relative (euros), y/y%
                                       Swiss watch manufacturers survey,
                                       Production compared to prev. year, rhs                 80        40%                                                                                  80%
    60%
                                                                                              60
                                                                                                        30%                                                                                  60%
                                                                                              40
    40%
                                                                                                        20%                                                                                  40%
                                                                                              20

    20%                                                                                       0         10%                                                                                  20%
                                                                                              -20
     0%                                                                                                  0%                                                                                  0%
                                                                                              -40

                                                                                              -60       -10%                                                                                 -20%
    -20%
                                                                                              -80
                                                                                                        -20%                                                                                 -40%
    -40%                                                                                      -100             2006         2007       2008      2009       2010      2011        2012
           1998         2000      2002       2004      2006       2008       2010      2012

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




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                                                                                                 23 November 2012




Clearly, there is an issue of valuation in absolute terms – but we would point out that, on a
sum of the parts basis, the indirect GEM plays look attractively valued relative to the direct
plays.

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




Source: Company data, Credit Suisse estimates




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                                                                                                                                                                     23 November 2012




                    2) Industrial Automation
We believe there are four main drivers of this theme:
                    a)    Rising wage pressures in emerging markets
Strong wage pressure in emerging markets means that their cost advantage is shrinking
and the incentives for automation in both developed and developing countries are
increasing.
Figure 50: Dwindling Supply of Manual Labor (China)                                              Figure 51: Hourly Manufacturing Labor Costs in China)
                   100                                                                           24%


                   80                                                                            22%
                                                                                                                              China: hourly manufacturing wage growth, yoy
                   60
                                                                                                 20%
                   40
                                                                                                 18%
                   20                         Population aged between 15-19 minus population
 Million persons




                                              aged between 50- 54 and new college students.
                                                                                                 16%
                    0

                   -20                                                                           14%

                   -40
                                                                                                 12%
                   -60
                                                                                                 10%
                   -80                                                                                 2003   2004     2005      2006    2007     2008     2009     2010     2011   2012
                         1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Source: Company data, Credit Suisse China Strategy Team                                          Source: Credit Suisse US Capital Goods team,
                                                                                                 Credit Suisse research

China in particular seems to have hit a ‘Lewis Turning Point’, which is the point at which
the excess low cost labour force is exhausted, leading to increased wage inflation. The 19-
24 year old age group is peaking this year, with the broader labour force estimated to peak
in 2015. A rise in social security related costs is also likely to happen over time (the costs
falling probably on the employer) again raising the relative cost of labour.
Company comments about Asian labour price inflation have proliferated, with ITW, Metso
and NTN recently flagging increased wage inflation, according to our European Capital
Goods team.
Figure 52: After hitting the ‘Lewis Turning Point’, other Asian export-led countries
experienced higher inflation and lower trend growth (but still good growth)
                                                        Japan                          Korea                     China
                                                     (1960-1972)                     (1982-96)                (1997-2009)

               GDP: Average                              8.9%                           8.5%                         9.6%

               CPI: Average                              5.6%                           5.2%                         1.3%

               CPI: Maximum                              13.1%                         11.1%                         4.8%

               CPI: Minimum                              3.6%                           2.3%                     -1.5%

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

                    b) Robot density in emerging markets is low
The robot density (industrial robots per manufacturing employees) in emerging markets is
only a fraction of the penetration seen in developed economies. In emerging markets
(which account for 50% of global manufacturing output), there are only 7 industrial robots
per 10,000 manufacturing employees, against 149 for the developed markets, or just 5%
of the density of developed markets. Non-Japan Asia accounts for 35% of the world’s
manufacturing output, but only has a robot density of 11.


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                                                                                                                                         23 November 2012



Figure 53: Robot density for select countries (2011),                  Figure 54: Robot density by region (2002 vs. 2011),
Robots per 10,000 manufacturing employees                              Robots per 10,000 manufacturing employees
                                                                                      Employees          Output         Output per head        Robot
                                                                       Country
                                                                                        (mn)              ($bn)               ($)              Density


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


                                                                        China             99              1,612             16,281                7


                                                                                       China has        China and                          US has 18.5x the
                                                                                                                          US has 7.5x
                                                                                      7x as many     the U.S. produce                          number
                                                                        Point                                            higher output
                                                                                     manufacturing       the same                             of robots
                                                                                                                           per head
                                                                                        workers           output                              per head




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



There is already evidence of an accelerating move towards automation even among
emerging markets companies that have long benefited from the abundant supply of cheap
labour. Foxconn, for example, one of the world’s largest maker of electronic components,
has recently announced that it would replace a part of its 1m workforce with robots (New
York Times, 18 August 2012). This suggests to us that automation may be at an inflection
point in China.


Figure 55: The industrial robot density ‘S’ curve                      Figure 56: The automated machine tool ‘S’ curve
(base year = 1974 for Japan, 1999 for China)                           (Share of Machine Tools Shipped with Numerical
Robots per 10,000 manufacturing employees                              Controls); (base year = 1970 for Japan, 2000 for China)
 350
                                                                        450,000

 300                                                                    400,000

                                                                        350,000
 250
                                                                        300,000
 200
                                                                        250,000

 150                                                                    200,000

                                                                        150,000
 100
                                                Japan Robot Density                                                           Japan          China
                                                                        100,000
  50                                            China Robot Density
                                                                         50,000

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

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




Global Equity Strategy                                                                                                                                   29
                                                                                              23 November 2012


     c)   Reduced outsourcing in developed markets leads to more automation in
          developed markets
There are a number of factors at work, which are likely to significantly reduce the rate of
outsourcing to other countries:

■   Rising wage inflation in emerging markets. A report by the Boston Consulting
    Group (Made in America, Again, August 2011) suggested that by 2015, wage rates in
    Chinese cities such as Shanghai and Tianjin will be only about 30% below those in
    low-cost US states. Since wage rates account for 20% to 30% of a product’s total cost,
    manufacturing in China will be only 10% to 15% cheaper than in the US; clearly,
    reducing the attractiveness of outsourcing.

■   Rising indirect cost of labour in developed markets (e.g. increased social security
    payments) increases the labour costs relative to capital and thus the attractiveness of
    substituting labour with machines.

■   Moving production closer to the consumer. Technologies like 3D printing increase
    the benefits of bringing production closer to the consumer, giving companies
    increased flexibility. This allows the production process to be quickly adapted to
    changes in demand (e.g. the European clothing retailer Inditex’s business model). In
    addition, the recent weakness in global growth has led to increased protectionist
    pressures in several countries. The WTO noted in a report in May 2012 that over the
    previous 6 months the G20 countries introduced 124 new restrictive measures
    affecting about 1% of world imports. This further incentivises companies to produce
    close to the consumer to prevent tariffs and restrictions.
Furthermore, the Obama administration is committed to support this trend, with the
president lobbying during his recent election campaign “to bring jobs back home”,
promising tax breaks as an incentive (FT, 9 July 2012).
     d) Improvement in technology increases the degree of precisions and that in
        turn enables more efficient and better use of automation


Valuation and cyclicality
Global automation stocks look cheap on P/E and P/B relative, with both ratios close to a
four year low.




Global Equity Strategy                                                                                     30
                                                                                                                                            23 November 2012



Figure 57: Global automation looks cheap on 12m fwd PE                            Figure 58: …as well as P/B relative
relative…
 170%            Cap gds stocks with automation exposure 12m fwd P/E rel Market    200%

 160%
                 Average (+/- 1SD)
 150%                                                                              185%

 140%

 130%                                                                              170%

 120%

 110%                                                                              155%

 100%
                                                                                                                       Cap gds stocks with automation
  90%                                                                              140%                                exposure P/B rel Market
                                                                                                                       Average
  80%

  70%                                                                              125%
     2002       2004         2006         2008         2010         2012               2002      2004        2006        2008        2010         2012

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



Earnings momentum and price momentum both look neutral.


Figure 59: Earnings momentum is neutral…                                          Figure 60: … as is price momentum
  30%             Cap gds stocks w ith automation ex posure 3m breadth             20%          Cap gds stocks w ith automation ex posure %dev from 6mma,
                  Rel Market                                                                    rel to Market
                                                                                   15%          Av erage (+/1 SD)
  20%

                                                                                   10%
  10%
                                                                                    5%
   0%
                                                                                    0%
 -10%
                                                                                    -5%
 -20%
                                                                                   -10%

 -30%                                                                              -15%

 -40%                                                                              -20%
     1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012                       1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

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



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




Global Equity Strategy                                                                                                                                      31
                                                                                                                                                                                                  23 November 2012



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

  0.4
  0.3                                                                  Global sectors correlation w ith ISM
  0.2
  0.1
  0.0
 -0.1
 -0.2
 -0.3
 -0.4
 -0.5
 -0.6
                    Tch H/W/Eq




                     Real Estate




                                                                                      H/H Pers Prd

                                                                                     Fd/Staples Rtl
         Cap gds with automation




                                                                                            Utilities
                        Retailing
                      Met & Min




                       Insurance
                  Cons Dur/App




                  Auto & Compo




                                                                                           Transpt
                                                                                          Con Mat
                                                                                             Media




                                                                                            Fd Prd
                         Div Fin




                    Pap/For Prd




                                                                                          Tobacco




                                                                                       Ph/Bio L Sci
               S/Con&S/Con Eq




                          Banks
                        Cap Gds




                     S/W & Svs
                      Chemicals




                                                                                       H/C Eq/Svs
                                                                                     Coml/Prof Svs
                                                                                            Energy




                                                                                        Beverages
                                                                                         Cons Svs




                                                                                        T/Cm Svs
Source: Thomson Reuters, Credit Suisse research

Stock picks
In the screen below, we highlight companies exposed to industrial or factory automation,
rather than process automation. That is, companies which produce equipment for the
automation of discrete processes that today are mainly performed by human workers,
rather than the flow processes (such as refining) that are already mainly performed by
machines.
There are a number of categories of industrial automation products and services, but they
can be split into two main classes: the actuation-type products such as robots, motors,
drives, machine tools (supplied by companies such as Fanuc, Yaskawa, THK) and those
focused on the ‘brains’ guiding the products (supplied by companies such as Rockwell
Automation and Schneider). Some companies provide both (Siemens (rated Outperform)
and Mitsubishi Electric (rated Neutral)).
We show a list of stocks exposed to this theme in the screen below. Of these, Schneider
(Neutral), Emerson Electric (Outperform) and Mitsubishi Electric (Neutral) have upside
potential on HOLT.

Figure 62: Global capital goods companies with exposure to automation
                                                            -----P/E (12m fwd) ------             ------ P/B -------       Yield (2012e)     HOLT        Momentum
                                                                                                                                                                                Consensus
                                                                                 rel to mkt %             rel to mkt %                       Price, %                                            Share price,
                                                                                                                                                                  3m Sales
                                                                                                                                                         3m EPS




                                     % exposure to                                                                                                                           recommendation                    Credit Suisse
Name                                                 Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to                         (1=Buy; 5=Sell)   local currency
                                      automation                                                                                                                                                               rating
                                                                                   average                  average                            best                                                (21 Nov)

Rockwell Automation                     100%         13.6         117%              41%         6.1           73%        5.28        2.38     -3.8      -3.2      -2.7             2.2              77.9      Outperform
Keyence Corporation(C)                   95%         19.4         187%              -18%        2.0          -40%        0.07        0.28    -39.3      1.0       2.7              2.9           22,060.0     Neutral
Smc Corporation(C)                       90%         14.1         122%              -38%        1.5          -35%        0.30        1.07    -23.8      -6.2      -4.0             2.5           13,260.0     Neutral
Abb Limited                              52%         12.1         105%               4%         2.7          -83%        6.05        3.85     65.3      -5.6      -2.7             2.1              17.0      Not Rated
Emerson Electric Co                      50%         13.6         118%               2%         3.5            2%        7.14        3.17     16.3      -1.5      -2.0             2.3              48.5      Outperform
Yaskawa Electric Corporation(C)          50%         16.5         159%              -35%        1.5          -43%        2.21        1.58    -47.0      -24.2     -3.9             2.7             639.0      Outperform
Thk Co., Ltd.(C)                         40%         15.2         132%              -42%        1.0          -53%         na         1.49    -33.4      -34.8     -7.0             2.6            1,397.0     Outperform
Fanuc Corporation(C)                     40%         18.0         156%              -23%        2.7           25%        3.43        1.53    -37.7      -10.2     -6.7             2.8           13,830.0     Neutral
Nabtesco Corporation(C)                  30%         13.5         117%               5%         2.1           14%         na         2.23    -41.8      -20.3     -6.5             2.7            1,633.0     Neutral
Schneider Electric Sa                    25%         12.1         104%               1%         1.7            4%        5.77        3.49     43.5      -0.8      -0.3             2.8              51.3      Neutral
Mitsubishi Electric Corporation(C)       22%         9.7           84%              -61%        1.1          -33%        12.51       1.93     30.7      -8.8      -2.0             2.4             626.0      Neutral

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

For more details on automation, please have a look at an extensive analysis done by our
global capital goods team Global Industrial Automation - The next growth phase, dated 14
August 2012. In addition, Credit Suisse offers a sector-neutral Delta One basket,




Global Equity Strategy                                                                                                                                                                                                         32
                                                                                      23 November 2012


CSERATMN, that represents 26 global cyclicals, largely within the capital goods and
technology space, with high exposure to this theme.




Global Equity Strategy                                                                             33
                                                                                                                                                   23 November 2012



      3) Global trade
Over the past 40 years, global trade has risen around 1.3x as fast as global GDP (the
CAGR of global trade has been 8% in nominal terms, compared with 6% nominal GDP
growth).

Figure 63: Global trade is equivalent to around 25% of               Figure 64: In 2012, global trade growth has been weaker
global GDP, up from 7% in 1970                                       than the historical relationship with global GDP would
                                                                     have suggested
                                                                                             20%

    26%                                                                                                        y = 3.58x - 0.07
                                                                                             15%                  R² = 0.71
    24%                  Global trade, % of global GDP

    22%                                                                                      10%




                                                                     Trade growth, volumes
    20%
                                                                                              5%
    18%
                                                                                              0%
    16%
                                                                                                                                           2012
    14%                                                                                      -5%

    12%
                                                                                             -10%
    10%

      8%                                                                                     -15%
           1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012                                   -1%   0%   1%         2%      3%          4%       5%      6%
                                                                                                                       Global GDP growth

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

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

■     There are still significant cost advantages of producing in emerging markets, which
      leads to more outsourcing (despite the increase in emerging market wages);

Figure 65: Domestic prices in emerging markets continue              Figure 66: Manufacturing unit labour costs in the
to be considerably below those in the US                             emerging markets are still relatively low
75%
                  Domestic price (cost) relative to the US, in %
70%
                                                  Emerging markets
65%                                               Non-Japan Asia

60%

55%

50%

45%

40%

35%

30%
   1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Source: Thomson Reuters, Credit Suisse research                      Source: Thomson Reuters, Credit Suisse EEMEA Equity Strategy
                                                                     team



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




Global Equity Strategy                                                                                                                                          34
                                                                                                                         23 November 2012



Figure 67: Tariff rates continue to decrease in the major           Figure 68: container shipping rates are up only 20% and
economies                                                           are likely to fall further despite the rise in fuel costs
 14                                                                   520
                                                                                     Oil price
                                    Median tariff rate applied to     470
                                    manufactured goods in major                      Container shipping rates
 12
                                    economies, %                      420
                                                                                  2003 = 100
 10                                                                   370

                                                                      320
    8
                                                                      270

    6                                                                 220

                                                                      170
    4
                                                                      120

    2                                                                  70
     1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011        Mar-03      Mar-05        Mar-07        Mar-09    Mar-11
Source: Thomson Reuters, Credit Suisse research                     Source: Thomson Reuters, Credit Suisse research



■       The rise in energy prices has not translated into an increase in shipping costs: oil
        prices are up by 350% over the past decade, while container shipping rates have risen
        by only 20%. Furthermore, our analysts expect rates to fall in 2013, as supply looks
        set to increase by up to 10%, and this should keep the cost of transporting low.

■       The emergence of the GEM consumer should lead to more developed market
        companies selling into emerging markets, thus turning global trade into a two-way
        affair, away from a model in which emerging markets merely function as a production
        location for developed market consumption.


This year however trade volumes have been flat over the past 12 months. This is much
weaker than should have been the case. This weakness is due to the following factors, in
our view:

■       The rebalancing within Europe: the current account balance in peripheral Europe
        has turned into surplus for the first time in a decade, as peripheral countries have
        stopped importing, most likely as a consequence of the capital flight seen earlier this
        year (capital flight from Spain over the past year has been 32% of GDP, for instance).
        This weakness in demand has not been offset by increased imports in core Europe.
        Consequently, Euro-area imports are down year-to-date by 7% compared to the same
        period in 2011, while they are up in most other regions (and the annualised import
        growth in the rest of the world, at 14%, is above the10-year average of 17%).




Global Equity Strategy                                                                                                                35
                                                                                                                                                                                       23 November 2012



Figure 69: Capital flight in the periphery earlier this year…                              Figure 70: … has led to considerable import weakness in
                                                                                           the Euro-area, which explains most of the softness in
                                                                                           global imports
                                                                                             15%
    15%                                                        September data annualised
                                                                    Periphery ex. Italy                                          Import growth, ytd over the same period last year
    10%
                                                                   Periphery inc. Italy      10%
     5%

     0%                                                                                       5%

     -5%
                                                                                              0%
    -10%

    -15%
                                                                                             -5%
    -20%          3 month annualised change in
                    Target 2 balance, % GDP
    -25%                                                                                    -10%
                          Periphery inc. Italy




                                                                                                                   Japan

                                                                                                                           NJA

                                                                                                                                 GEM




                                                                                                                                                                                            Eastern Europe

                                                                                                                                                                                                             Euro-area
                                                                                                                                                                               World
                                                                                                   Latin America




                                                                                                                                       World ex Europe

                                                                                                                                                         Africa



                                                                                                                                                                          US



                                                                                                                                                                                       UK
                                                                                                                                                                  China
    -30%
                          Periphery ex. Italy
    -35%
        Apr-07           Apr-08        Apr-09       Apr-10          Apr-11     Apr-12

Source: Bank of Spain, Bank of Portugal, Bank of Italy, Central Bank                       Source: Thomson Reuters, Credit Suisse research
of Ireland, Bank of Greece, Thomson Reuters, Credit Suisse research



■        The reduction in trade finance, as Euro-area banks deleverage (and, in particular,
         shed dollar-denominated assets);

Figure 71: Global ex EU import growth has been in line                                     Figure 72: Euro-area banks have significantly reduced
with the historical average                                                                their exposure to trade finance
 30%


 20%


 10%


    0%


-10%
                   Global import growth, nominal


-20%                     World      World ex EU


-30%
           2000        2002        2004          2006        2008       2010     2012

Source: Thomson Reuters, Credit Suisse research                                            Source: IIF



Overall, we believe that the rebalancing in Europe is likely to be the main reason for weak
trade growth this year. While we believe that growth in the Euro-area will be sluggish, we
think some of the sharp trade moves that we have seen should normalise, given that the
capital outflows that have most likely triggered it have now begun to reverse, owing to the
change in ECB policy. Hence, we would agree with IMF projections suggesting that global
trade volumes will continue to grow at around 1.3x the rate of global real GDP over the
next five years.



Global Equity Strategy                                                                                                                                                                                                   36
                                                                                                                                                                           23 November 2012


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

■      Testing/verification benefit from increasing global trade volume, the increased
       sophistication and complexity of global supply chains (which creates demand for more
       independent verification and certification) as well as tighter regulation and safety
       standards. We highlight Intertek, SGS and Bureau Veritas.
■      Freight forwarding: over the past 10 years, both sea and air freight forwarding have
       grown more than global GDP (8% and 3%, respectively, compared with average GDP
       growth of 2.5%) – and our analysts expect this to continue. Within this area, we think
       air freight is particularly interesting, given that it should benefit disproportionately from
       a possible rebound in global trade. Furthermore, it is helped by the outsourcing
       moving to high-value-added products (with a low weight). On the downside, though, it
       will be negatively affected as, structurally, air is losing market share to shipping, due to
       the latter’s cost advantage. We would highlight Kühne + Nagel and Panalpina in
       Europe as well as Expeditors in the US. Cargo-focused airlines should again benefit
       from growth in air freight (EVA Airways, Cathay Pacific, China Airlines and Asiana Air).

■      Express, the premium segment of the air freight business, should benefit from the
       structural growth outlook in the emerging markets, where penetration for these
       services is still low. It should also benefit from the rebound in trade volumes we
       forecast, given the just-in-time nature of the service (i.e. if demand surprises on the
       upside, time-sensitive delivery would grow in importance). Lastly, the industry has an
       oligopolistic structure, with four main players (FedEx, UPS, TNT Express and DHL, a
       part of Deutsche Post) dominating the intercontinental trade lanes.


Figure 73: Plays on global trade
                                 -----P/E (12m fwd) ------             ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                     Consensus        Share price,
                                                      rel to mkt %             rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
Name                      Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov) rating
                                                        average                  average                            best
Cathay Pacific Airways    16.2         120%               8%         1.0          -17%        2.6          0.9     14.4      -53.8       0.6            2.5              13.9      Outperform
United Parcel Ser.'B'     14.5         107%              -7%         10.1          62%        6.3          3.1     -6.1       -4.9       -2.8           2.3              71.4      Outperform
Eva Airways               12.1          90%              -48%        1.5           28%        na           0.4    -15.6      -28.9       -0.4           2.8              16.3      Outperform
Dsv 'B'                   13.1          97%              24%         4.7           54%        8.7          0.9    -18.6       -1.1       -1.3           2.4             133.0      Neutral
Intertek Group            19.9         127%              60%         8.8          -51%        3.0          1.4    -20.1       2.0        1.7            2.8            2,898.0     Outperform
Expeditor Intl.Of Wash.   19.7         146%              -1%         3.9          -22%        4.6          1.5    -21.0       -8.5       -5.6           2.4              36.8      Neutral
Bureau Veritas Intl.      20.2         128%              70%         8.6            5%        3.9          1.7    -26.3       0.8        1.0            3.0              83.6      Neutral
Deutsche Post             11.5          85%              42%         1.7          -19%        8.0          4.6    -26.5       0.1        1.1            1.9              15.3      Outperform
Sgs 'N'                   21.4         136%              51%         7.6           77%        2.2          3.1    -31.2       -2.2       0.0            2.8            2,012.0     Neutral
Fedex                     13.0          97%               7%         2.0            1%        1.5          0.6    -35.8      -14.5       -1.4           1.8              87.7      Neutral
Kuehne+Nagel Intl.        20.3         151%              70%         5.7           66%        4.3          3.3    -36.7       -1.7       0.2            2.6             113.8      Outperform
Tnt Express               22.9         170%              40%         1.6           15%        1.6          1.1    -38.5       -5.9       -0.9           3.1              7.2       Neutral

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




Global Equity Strategy                                                                                                                                                                              37
                                                                                                                                                                                         23 November 2012




      4) Global travel
As emerging market consumers grow richer, they are likely to travel more. World Bank
data suggest that the beta of the growth in flights per capita to growth in income per capita
is around 2x (i.e. if GDP per capita increases by 10%, flights per person should be
expected to increase by 20%). Projections from the IMF and the UN suggest that GDP per
capita in the emerging markets could increase by 5% per year over the next five years,
suggesting an increase in flights per capita of around 10% per year.

Figure 74: Flights per capita tend to increase by twice as                   Figure 75: When developed countries were at the same
much as income per capita                                                    level of development as emerging markets are today,
                                                                             transportation was among the fastest-growing areas of
                                                                             consumer spending
    18%            Average annual growth since 1980                                 Average annual growth in real terms as GDP per capita rose from
                                                                                         c.US$7,000 to US$9,000 in the US, Japan and France
    16%
             GDP per capita    Flights per capita
    14%                                                                       14%           12.8%
                                                                                                             11.5% 11.4%
    12%                                                                       12%                                                        10.3%
                                                                              10%
    10%                                                                              7.5%                                                              7.4%
                                                                               8%                                                                                   6.5%
    8%                                                                         6%                                                                                               4.5% 4.4% 3.8%
    6%                                                                         4%
                                                                               2%
    4%
                                                                               0%




                                                                                                                                                                                               beverages
                                                                                                                                                                    Financial
                                                                                             Communication



                                                                                                                               Housing

                                                                                                                                          Recreation

                                                                                                                                                       Healthcare
                                                                                      PCE



                                                                                                              Transportation




                                                                                                                                                                                HH utilities



                                                                                                                                                                                                           Education
                                                                                                                                                                    services
    2%




                                                                                                                                                                                                Food &
    0%
                                                            Brazil
           World




                                                                     India
                                     EU
                         US




                                                    China




Source: World Bank                                                           Source: Credit Suisse Thematic research

Furthermore, when developed markets were at roughly the level of development of
emerging markets today, transportation was the fastest growth area within consumer
spending after telecommunication, growing on average by around 12% per year in real
terms, compared with real consumer spending growth of around 8%.
We note that in its long-term market outlook (2012–32) Boeing forecasts Asia’s passenger
air traffic to grow at an average annual rate of 6.4% over the next 20 years. In addition, the
International Civil Aviation Organization forecasts annual growth of 5.9% in global
passenger traffic until 2014. Lastly, the Emerging Consumer Survey 2012, published by
our Thematic research team in January 2012, also points to strong growth in travel
intentions in emerging markets.
We highlight the following as potential beneficiaries of strong structural growth of global
(and especially emerging market) travel:

■     Beneficiaries of the growth in Asian tourism: AirAsia (South East Asia’s largest
      low-cost carrier), Air China (the domestic Chinese carrier with the biggest exposure to
      international outbound routes), China Eastern Airlines, China Southern Airlines,
      Cathay Pacific, Garuda Indonesia and MAHB.

■     Up-market hotels benefit from the increased travel budgets of the growing emerging
      market middle class in two ways. First, they increasingly push into domestic markets,
      deriving a growing share of revenues from the fast-growing emerging market hotel
      segment; secondly, they benefit from outbound travel by emerging market (especially
      Chinese) consumers, visiting developing markets, especially if these countries
      ultimately allow their currencies to strengthen, benefiting consumers’ purchasing



Global Equity Strategy                                                                                                                                                                                                 38
                                                                                                                                                             23 November 2012


       power. Furthermore, the business is protected by high barriers to entry in the top-end
       luxury hotel space (i.e. shortage of sites in inner city areas). We would highlight M&C
       (benefits from presence in gateway cities) and Intercontinental (pushing into domestic
       markets), as well as Starwood (the US hotel stocks with the largest GEM exposure). In
       addition, Shangri-La has developed a strong presence in China.
We admit that revenue per available room (RevPAR) fell by more than 20% in the last
month. However, Tim Ramskill, from our European travel & leisure team, highlights that
operators believe this reflects short-term political disruption rather than any structural
issues and therefore the long-term dynamics are unaltered. Thus we think this weakness
provides a buying opportunity.

Figure 76: Asian revenue per available room fell in the last 2 months but our analyst, Tim
Ramskill, believes this will reverse quickly as the structural growth story remains intact
    30.0
    25.0
    20.0
    15.0
    10.0
     5.0
     0.0
 (5.0)
(10.0)
(15.0)
(20.0)                       Occupancy Year on Year change %
(25.0)                       Average Daily Rate Year on Year change %
(30.0)                       RevPAR Year on Year change %

(35.0)
                    Jul-05




                                        Jul-06




                                                          Jul-07




                                                                            Jul-08




                                                                                              Jul-09




                                                                                                                Jul-10




                                                                                                                                  Jul-11




                                                                                                                                                    Jul-12
           Jan-05




                               Jan-06




                                                 Jan-07




                                                                   Jan-08




                                                                                     Jan-09




                                                                                                       Jan-10




                                                                                                                         Jan-11




                                                                                                                                           Jan-12




Source: Credit Suisse Travel & Leisure Equity Research team



■      Duty free is another sector likely to benefit from growth in global travel volumes. The
       world’s biggest travel retailer is Dufry, which currently holds about 8% of global market
       share and derives 70% of its revenue from emerging markets.


Valuation
Global travel looks slightly expensive on 12m fwd PE relative to global. However, relative
to its average over the past 4 years, the valuation appears less stretched.




Global Equity Strategy                                                                                                                                                    39
                                                                                                                                                                                         23 November 2012



Figure 77: Global travel looks slightly expensive on P/E relative over a 10-year period but
not if we just look at the past 4 years
 170%
                                            Global travel stocks 12m fwd P/E rel World

 160%                                       Average (+/- 1SD)

 150%

 140%

 130%

 120%

 110%

 100%

  90%
     2007                    2008                  2009                       2010                  2011                  2012

Source: Thomson Reuters, Credit Suisse research



Stock picks
We highlight plays on this theme in the screen below.

Figure 78: Beneficiaries of the strong structural growth of global travel
                                                       -----P/E (12m fwd) ------          ------ P/B -------       Yield (2012e)    HOLT       Momentum
                                                                                                                                                                      Consensus       Share price,
                                                                         rel to mkt %             rel to mkt %                     Price, %



                                                                                                                                                         3m Sales
                                                                                                                                                                    recommendation
                                                                                                                                                3m EPS
                                                              rel to                                                                                                                     local       Credit Suisse
Name                            GEM sales        Abs                    above/below     Abs      above/below      FCY        DY    change to
                                                            Industry                                                                                                (1=Buy; 5=Sell)   currency (20 rating
                                                                           average                  average                          best
                                                                                                                                                                                         Nov)
Malaysia Airports Holdings          100%        17.8         132%           73%         1.8          75%         -14.38     2.96    -28.4      -3.4      -4.2            1.8              5.7        Outperform
Bhd
Intercontinental Hotels             34%         15.7          94%           44%         8.1          -51%        6.15       2.60    -40.4      -1.1      0.1             2.6           1,633.0       Outperform
Group PlcHotels&Resorts
Starwood                            15%         19.8         118%           14%         3.4          41%         4.62       1.97    -45.4      4.9       0.1             2.2             52.4        Outperform
Wrld Berhad
Airasia                             100%         9.1          67%           -10%        2.1           3%         -31.86     1.24     49.5      -6.3      1.9             2.1              2.9        Outperform
Air China Limited                   100%         9.8          73%           -7%         1.3          -26%         na        1.44    -38.3      -18.0     -0.6            2.2              5.1        Outperform
Shangri-La Asia                     100%        27.6         164%           85%         1.1          14%         1.02       1.32    -17.4      -18.8     0.7             3.0             15.1        Not Rated
China Southern Airlines Co          100%         9.5          71%           -54%        0.9          -10%        -16.10     1.37    -78.2      -27.9     0.2             2.1              3.4        Outperform
Ltd
Cathay Pacific Airways              78%         16.2         120%            8%         1.0          -17%        2.58       0.90     14.4      -53.8     0.6             2.5             13.9        Outperform
Limited
Dufry Ag                            70%         10.5          63%           -7%         3.7          46%         9.24       0.00     67.9      -2.9      -0.8            2.0            125.6        Not Rated
Garuda Indo.(Persero)               70%         12.3          91%           16%         2.1          33%         -7.10      0.0%   -113.1      -22.9     -0.2            1.6            690.0        Outperform
Millennium & Copthorne              48%         13.3          79%            4%         0.7           -1%        13.85      2.81     24.8      1.2       -1.5            2.3            464.6        Neutral
Hotels Plc
Source: MSCI, IBES, Fact set, Thomson Reuters, Credit Suisse HOLT, Credit Suisse estimates




Global Equity Strategy                                                                                                                                                                                           40
                                                                                                                                                                                23 November 2012



                            5) Water
For many parts of the world, the supply and demand imbalance in water provision appears
set to deteriorate. The UN estimate that by 2025, 21.4% of the global population (or 1.8
billion people) will face absolute water scarcity (defined as annual water supply below 500
cubic metres per person), up from 17% (1.2 billion people) in 2010. Contributing factors
include: (i) a growing world population and (ii) the tendency of water demand per capita to
increase as real incomes grow (partly because industrial processes become more water
intensive and partly because urbanisation brings with it more water-intensive sewage and
bathing systems). Meanwhile, the supply of freshwater water remains relatively static.
Desalination has clearly augmented supply in certain areas, but this source remains
relatively small in the global context and is only available to coastal areas. Essentially to
date, supply grows arithematically while demand growing geometrically for water.

Figure 52: Global water use and population                                                                     Figure 53: Water prices have increased sharply relative to
                                                                                                               headline inflation across most markets
                                                                                                                 2.4
                            4500                                                18.0                                               US CPI water rel. to overall CPI index
                            4000                                                16.0                             2.2               Canada CPI water rel. to overall CPI index
                            3500                                                14.0
                                                                                                                 2.0
 Water use, km cubed p.a.




                                                                                       World population (bn)


                            3000                                                12.0
                                                 World water use                                                 1.8
                            2500                                                10.0

                            2000                                                8.0                              1.6

                            1500                        Global population       6.0                              1.4
                            1000                                                4.0
                                                                                                                 1.2
                             500                                                2.0

                               0                                                0.0                              1.0
                                1900   1920    1940      1960        1980   2000
                                                                                                                 0.8
                                                                                                                    1972   1977   1982     1987       1992      1997        2002   2007    2012

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

There are two obvious consequences of this supply/demand imbalance:
(1) Prices have risen: When we investigate the prices paid by consumers for their water
    supply within national CPI indices, we find that without exception water prices have
    outstripped headline inflation. Over the past 10 years, the consumer price of water has
    risen by an average of 6% in the US, more than double the average increase in overall
    consumer prices, at 2.5%. Even in countries that are relatively water rich (e.g.
    Canada) the price of water has outstripped headline inflation by an average of 4.6
    percentage points over the past 10 years (6.5% CAGR, compared to 1.9% for
    headline inflation).
(2) There is substantial pent-up demand for investment to alleviate water shortages and
    supply/demand imbalances. We find that global investment in water has generally
    been disappointing over the last few years. It has lagged required investment levels as
    detailed by the US Environmental Protection Agency and fallen short of expectations
    across many of the emerging economies.
                            China has faced significant localised water shortages over the past several years and
                            the authorities’ response has been a CAGR in water investment of 20% since 2004.
                            Investment is likely to remain strong in this area - the government aims to launch 60
                            large hydro plants before 2015 (as reported by Reuters, 18 November 2012). Middle
                            East and North African markets have also prioritised water infrastructure investment
                            given similar acute water shortages.



Global Equity Strategy                                                                                                                                                                       41
                                                                                                                                                                                                                              23 November 2012


Hence, we recommend focusing on geographies where growing the water supply is
already a priority—Australia, North Africa and the Middle East and China—or where water
efficiency and conservation is increasingly necessary.
Stock picks in this area suffer the perpetual problem of regulatory risk and/or lack pure
exposure to the theme (i.e. many ‘water’ plays are also significantly exposed to other
areas of infrastructure spend). However, the combination of attractive absolute valuations
plus the long-term growth prospects in water provision mean we recommend Outperform-
rated Sembcorp, Pall and Halma. Pall also features on the Credit Suisse US Focus List.


Figure 79: Water plays
                                                                                   -----P/E (12m fwd) ------               ------ P/B -------        2012e, %              HOLT       2012e Momentum, %                       Share price,
                                                                                                                                                                                                                Consensus
                                                                                                          rel to mkt %             rel to mkt %                          Price, %                                                local
                  Exposure to                                                               rel to                                                                                                          recommendation                   Credit Suisse
Name                             Description                                 Abs                          above/below    Abs      above/below      FCY        DY      change to       3m EPS    3m Sales                      currency (20
                    Water                                                                 Industry                                                                                                          (1=Buy; 5=Sell)                  rating
                                                                                                            average                  average                               best                                                  Nov)
                    100%         Water desalination, reclamation,
Hyflux                           recycling & purification                    17.4          116%              14%         2.2          -48%         na         2.2          -70.6       -26.4     -1.2              3.1            1.3        Outperform

                    100%         Manufacturing energy recovery
Energy Recovery                  devices                                     -99.4          nm                na         1.7          -14%         na         0.0          -49.8        nm        3.6              2.6            2.9        Neutral

Pall                 80%         High end liquid filtration                  19.3          167%              43%         4.8          52%          2.0        1.3          -38.7       -1.2       1.1              2.5           60.4        Outperform
                     55%         Water and wastewater services in
Sabesp On                        Sao Paulo                                   10.1           67%             104%         1.9          -94%         na         2.6          85.3         7.1      -0.4              2.5           85.3        Neutral

                     38%         Water pipelines, irrigation projects,
Ivrcl                            desalination                                13.9          121%              21%         0.4          -66%        -21.0       1.3         141.1        -21.3     -9.0              2.8           38.4        Neutral

                     18%         Actuators to control valves in water
Rotork                                                                       19.5          169%              54%         9.0          80%          4.0        1.9          19.0         0.6       1.6              2.8         2,435.0       Outperform
                                 treatment plants
Gud Holdings         16%         Pumps, water pressure systems               11.9           76%              49%         2.1           1%          8.2        9.3          10.3        -9.4      -0.8              3.1            8.1        Neutral

                                 Equipment for leak detection,
Halma                12%         pressure measurement and quality            15.1          146%              35%         4.0          21%          5.3        2.4           7.2        -1.0      -1.0              2.9          419.2        Outperform
                                 sensors

                     10%         Metering through acquisition of
Melrose                          Elster                                      13.6          117%             138%         3.4         135%          2.1        3.0          -7.4        -10.2     25.8              2.0          208.2        Neutral


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


We highlight a special focus on irrigation as it both increases agricultural productivity and
improves the efficiency of water use. The stocks exposed here are: Lindsay, Jain Irrigation
and Eurodrip Irrigation System (all Not Rated).

Figure 55: Stocks with irrigation exposure
                                       -----P/E (12m fwd) ------                       ------ P/B -------                      2012e, %            HOLT         2012e Momentum, %
                                                                                                                                                                                                   Consensus              Share price,
                                                              rel to mkt %                           rel to mkt %                                  Price, %                                     recommendation           local currency Credit Suisse
Name                            Abs       rel to Industry     above/below           Abs              above/below         FCY             DY       change to     3m EPS              3m Sales     (1=Buy; 5=Sell)            (20 Nov) rating
                                                                average                                average                                       best
Lindsay Corp                    17.3           142%               na                3.0                166%              5.0            0.6         -4.5            0.1               na                  2.5                 74.7       Not Rated
Jain Irrigation Systems         8.5            70%                na                1.5                 84%              25.4           1.7        105.2            -0.2              na                  2.3                 62.3       Not Rated
Limited SA
Eurodrip                        na              na                na                1.3                 72%              na               na       -55.9            na                na                   na                 1.4        Not Rated

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



Credit Suisse offers a tradable index on global water plays (Bloomberg ticker: CSWTR).
More details can be found on the Credit Suisse Proprietary Indices website.




Global Equity Strategy                                                                                                                                                                                                                                  42
                                                                                                                                                                               23 November 2012



        6) Underleveraged banks in underleveraged
           countries
We continue to believe that within banks the most attractive plays are those based in
countries where both aggregate leverage and financial product penetration rates are
relatively low. Low levels of private sector debt offer the prospect of profitable lending
growth, while low levels of government debt ensure that the risks to economic growth (and
by extension loan quality) from a period of harsh austerity are limited.
Net foreign assets is another critical component of macro risk, because if a country has
borrowed externally to finance its debt, then the risk associated with that country is
accordingly higher.
We construct a simple scorecard of emerging economies, ranking highly those countries
with low levels of private and government debt, high net external assets, low historical loan
growth rates (the lower the growth in credit, then again the better the asset quality) and
low financial product penetration (as proxied by life policies as a percentage of GDP).
Weighing these factors, Russia, Indonesia, the Philippines, and Mexico rank highly.

Figure 80: The Philippines, Chile, Russia and Mexico rank top on our scorecard of underleveraged economies
                             Private credit, % of        Governm ent debt,        Net external assets,             5-y loan      Life prem ia, % of           GDP per capita,
         Country                                                                                                                                                                      Overall
                                     GDP                     % of GDP                   % of GDP                   grow th              GDP                        USD
                                                                                                                                                                                       Rank
           Weight                          35%                      20%                        20%                   5%                     20%
Russia                                     51%                      9.2%                      1.1%                  44%                     0.0%                   13,560                 1
Indonesia                                  31%                      20%                       -41%                  23%                     0.9%                    3,690                 2
Philippines                                33%                      49%                       -5.3%                 4.0%                    1.0%                    2,450                 3
Mexico                                     25%                      39%                       -35%                  15%                     0.9%                   10,050                 4
Chile                                      61%                      10%                       -4.9%                 17%                     2.3%                   14,260                 5
Egypt                                      31%                      80%                       -19%                  11%                     0.4%                    3,020                 6
Turkey                         54%                      39%                      -44%                36%                 0.2%                10,420               7
Note: A high value is considered positive for Net external assets; A low value is considered positive for private credit, government debt, loan growth and life premia.

Source: Thomson Reuters, Credit Suisse research



Our preference is for banks within these economies with relatively low leverage (as
proxied by an asset-to-equity ratio). We would highlight the following names which are all
either Outperform-rated or Neutral-rated by Credit Suisse analysts: Bank Negara,
Sberbank, Bank Central Asia, Bank Mandiri, Metropolitan Bank & Trust and Bank Rakyat.
Using valuation criteria, it is Sberbank and Negara who look cheap on P/E and P/TB.

Figure 81: Underleveraged banks in underleveraged countries
                                                                                                                                                   Price to    Share price local
Company                               Country     Market cap(USD)      TA/TE     Loans / deposits    12m fwd P/E   Price / PPP   P / tang book                                      Recommendations
                                                                                                                                                    book       currency (19 Nov)

Bank Negara Indonesia        Indonesia                 7,101               8.5        78%                9.3           7.6            1.7            1.8            3,625.0               Outperform
Sberbank                     Russian Federation       62,680               8.3        107%               5.8           4.1            1.3            1.6             87.4                 Outperform
G.F. Inbursa                 Mexico                   18,072               3.8        125%              27.5          13.7            2.9            3.3             34.0                     Neutral
Bank Central Asia            Indonesia                20,932               8.6        69%               15.4          13.4            4.1            4.8            8,850.0               Outperform
Bank of Philippine Islands   Philippines               7,277               9.8        71%               17.3          14.0            3.2            3.4             88.5                     Neutral
Bank Mandiri (Persero)       Indonesia                20,170               8.7        82%               12.0           9.4            2.6            3.2            8,500.0               Outperform
Metropolitan Bank & Trust    Philippines               5,016               9.1        75%               13.6          10.0            1.9            2.0             95.0                 Outperform
Bank Rakyat Indonesia        Indonesia                18,025               8.4        81%                9.4           7.6            2.7            3.5            7,200.0               Outperform
Security Bank Corporation    Philippines               2,014               6.2        75%               11.9          14.3            2.6            2.7            161.0                     Neutral

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




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     7) Labour-intensive oilfield services
There are three main drivers of the call on OFS as growth:
     1)   Oil price stays above levels to leave high cost projects economic: We
          believe that the oil price is unlikely to fall below $90 pb- the level requires to make
          high cost marginal conventional projects economic and these high cost marginal
          projects are in the opinion of the oil team needed to meet demand at c90mbd.

          Figure 82: Oil production cost curve

                                            120

                                                                                                                                                                                   Biofuels
                                                                                                                                    Uneconomic

                                            100
                                                                                                                                                                 Less efficient GTL

                                                                                                                                                        Less efficient oil sands
                                                                                                           Unconventional
                                                                                                                                                        More efficient GTL
           16% ROCE Brent price $ per boe




                                            80
                                                                                                                                          More efficient oil sands
                                                                                                 Frontier                               GOM Paleogene
                                                                                                                       Brazil Presalt

                                                                            Traditional                        Angola Deep Water
                                            60
                                                       Exceptional /                             Russia greenfield

                                                       NOC                            GOM Miocene


                                            40




                                            20




                                             0
                                                  75                   80                      85                              90                                    95                        100
                                                                            Global Total hydrocarbon liquids produced-millions of barrels per day


Source: Thomson Reuters, Credit Suisse research

Furthermore, we would point out:

■   The 5 year forward price has been a good predictor long term of spot prices and is
    currently $91/bbl.

■   The budget break-even for Saudi Arabia and Russia is rising. Our energy-commodities
    research head, Jan Stuart, expects the budget break even of Saudi to rise to $115-
    130/bbl by 2015, depending on production. In Russia, the government budget
    breakeven point is set to rise to $125/bbl next year. Essentially this means that even if
    prices were to fall below $80-$90pb, there would be a very significant response to cut
    back on production to support the price. Furthermore, most of global spare capacity is
    controlled by Saudi Arabia (c2mbd), making its production policy one of the single
    most important factors influencing the oil price.

■   On the supply side, prices remain supported by restricted access to resources (Saudi
    Arabia, Venezuela, Russia,), political instability (Iraq, Nigeria, Libya, Iran, Sudan,
    Yemen) and more restrictive or protective sovereign oil policy (Brazil) and production
    is falling in mature oil fields (with 3% of global oil supply capacity being lost every year
    due to natural decline).

■   Although Chinese oil demand has grown by an average of 2.7% over the past 30
    years (compared with 0.4% in the US), oil consumption per capita in China is still only
    a tenth of the US level while steel consumption per capita is 1.5x the US level.



Global Equity Strategy                                                                                                                                                                                     44
                                                                                                                                    23 November 2012


        2)     Oil companies set to increase capex significantly further.
Given the current level of the oil price, we would expect capex to rise from its current level,
as illustrated below.

Figure 83: Oil majors’ profitability continues to be high                           Figure 84: Capex to sales of global IOCs




Source: Company data, Credit Suisse estimates                                       Source: Company data, Credit Suisse estimates

        3)     On our calculations, the oilfield service stocks have a beta of around 1.6x to
               the market (and thus sell off when the market sells off, as investors anticipate
               that weaker economic growth will lead to a fall in the oil price) – but ironically a
               beta of only 0.7x versus the oil price. This means, in periods of equity market
               weakness, the structural growth story of the oilfield service stocks is being
               ‘undervalued’ by the market.

Figure 85: Global OFS beta with oil price is about 0.7x, while the beta with markets is
about 1.6x

  2.0



  1.5



  1.0



  0.5



  0.0

                              Global OFS, 12m rolling beta w ith crude oil
                              With w orld market
 -0.5
        1999           2001              2003              2005              2007        2009           2012

Source: Thomson Reuters, Credit Suisse research

European OFS companies trade on a P/E relative to the market close to their historical
average levels (they are trading at a 7% premium to the market, compared with an
average premium of 13%), while US OFS companies are almost one standard deviation
cheap.




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                                                                                                                                                                                        23 November 2012



Figure 86: 12m fwd P/E relative of European OFS                                                         Figure 87: 12m fwd P/E relative of US OFS
 200%                      European OFS 12m fw d P/E rel Europe market: 107%                              210%                                                              US OFS 12m fw d P/E rel
                                                                                                                                                                            US market
 180%                      Av erage (+/- 1SD)                                                                                                                               Av erage (+/- 1SD)
                                                                                                          185%

 160%
                                                                                                          160%
 140%
                                                                                                          135%
 120%
                                                                                                          110%
 100%
                                                                                                           85%
  80%

  60%                                                                                                      60%

  40%                                                                                                      35%
        1990     1993           1997           2001           2004         2008          2012                     1990           1993           1997          2001         2004         2008          2012

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



Stock picks
We show our analysts’ top picks among the global oilfield services stocks below. Our
analysts especially like firms in the labour intensive part of the cycle, which are Amec,
Petrofac and PGS.

Figure 88: Global Outperform rated OFS picks
                                -----P/E (12m fwd) ------              ------ P/B -------              2012e, %           HOLT          2012e Momentum, %
                                                                                                                                                                  Consensus        Share price,
                                                     rel to mkt %                 rel to mkt %                            Price, %                             recommendation     local currency
Name                     Abs       rel to Industry   above/below     Abs          above/below    FCY          DY         change to      3m EPS    3m Sales      (1=Buy; 5=Sell)      (20 Nov) Credit Suisse rating
                                                       average                      average                                 best
Halliburton              10.5          99%              -27%         2.2             -31%        -2.2         1.1          38.6          -6.1          0.2           1.9             31.7       Outperform
Amec                     11.8          111%             19%          2.6             -17%        4.1          3.1          -3.5          -2.8          5.5           2.3            1,024.0     Outperform
Petrofac                 12.3          116%             11%          7.1             27%         -0.2         2.5          56.5          -0.7          -1.7          2.3            1,574.0     Outperform
Saipem                   14.2          133%             18%          3.3             28%         6.2          2.1         -33.6          -2.9          1.5           2.1             32.7       Outperform
Aker Solutions           10.8          102%             29%          2.7             -10%        -4.3         3.0          0.0           4.1           5.8           1.9             106.1      Outperform
Petroleum Geo            11.6          110%             -72%         2.1             -55%        2.8          1.4         -21.2          26.8          3.4           1.9             97.5       Outperform
Services
Source: MSCI, IBES, Factset, Thomson Reuters, Credit Suisse HOLT, Credit Suisse research




Global Equity Strategy                                                                                                                                                                                       46
                                                                                                                23 November 2012




       8) Energy efficiency
There are two trends which, in our view, are likely to make this an area of structural
growth.
■      We think the price of power/energy is set to remain high, benefiting products
       that enhance energy efficiency;
We think that the oil price, as discussed in the section on oilfield services, is unlikely to fall
significantly below $90 per barrel.
The European Union has a stated goal of increasing the share of renewable energy in
gross final energy consumption, from its current share of 12.5% to 20% by 2020. As the
International Energy Agency notes, “economic barriers” to greater use of renewable
energy remain, barriers which would only be overcome by a higher power price.
Electricity production is likely to be abnormally high cost because the low-cost areas
(particularly coal and nuclear) are being increasingly shut down by governments for a
combination of environmental and safety reasons and replaced by much higher-cost
renewables. This in turn pushes up the price of electricity.
The BDI (the German industry federation) estimates that the price of electricity is likely to
rise c20% by 2020 as a result. Our European utility team highlight the cost of renewable
subsidies—as defined by the excess of renewable remuneration above the baseload
power price—has risen to c€32bn p.a. across the five largest EU power markets: and that
the PDV of charges that the consumer will incur is c€422bn (c74%) through higher bills.
This equates to c5% of GDP!


Figure 89: The European Union has a target to increase the share of renewable energy in
final energy consumption from 12.5% currently to 20% by 2020
    20.0


    18.0                 Electricity generated from renewable sources (%)
                         Share of renewable energy in gross final energy consumption (%)
    16.0


    14.0


    12.0


    10.0


     8.0


     6.0
           1990   1992   1994        1996       1998        2000       2002       2004     2006   2008   2010

Source: Eurostat, Credit Suisse research



■      Regulation is likely to force even more improvements in energy efficiency

■      In the long run, Carbon emission prices must rise.
We would note that the carbon price has fallen by around 60% over the past four years as
the slowdown in economic activity has reduced industrial emissions more than widely
expected, contributing to a further oversupply of carbon allowances. However, to boost
energy efficiency production processes, the European Commission seems determined to
support the price of carbon.


Global Equity Strategy                                                                                                       47
                                                                                                  23 November 2012


The EC has already announced that the sale of 900 million additional carbon allowances
will be delayed—this was previously to take place in 2013–15, and in a recent report (The
state of the European carbon market in 2012, released on 14 November 2012), the EC put
forward six proposals to address the supply/demand imbalance including the possible
cancellation of a large number of allowances, or the withdrawal of a proportion of permits
when the price falls below a certain, albeit unspecified, level.
As our European Utilities team notes the outlook for the carbon price is consequently
uncertain in the near term, but it seems clear that the European regulators of the carbon
market are ultimately determined to push it higher in order to drive energy efficiency, even
if their policy approach is still to be finalised. Additionally, we would note that even in the
US the idea of taxing carbon as a source of raising revenue is gaining traction.
Growth areas to focus on:
Our Capital Goods analysts expect that sales in the energy-efficiency space have a beta
of 2x GDP over the next three years. They highlight the following growth areas:

■   Smart building technology where the localised controls and monitoring allow
    building managers to adjust the heating and lighting requirements to the needs of the
    local environment. Solution packages offered by companies such as Schneider are
    now able to achieve energy savings of 20–30% with payback periods of 1–3 years.
    Company plays: In Europe, Schneider’s buildings division is 7% of sales which is
    directly associated with building efficiency. However, most products sold into buildings
    (via divisions other than the Buildings division) are energy efficiency related, and of
    group sales, 9% is to residential buildings and 30% to non-residential. In the US, our
    analysts would highlight Honeywell and JCI, and in Japan Daikin.

■   In data centres, electricity accounts for c10% of operating costs. Hence, there is great
    interest in technologies which reduce energy consumption. Innovations include 'in
    rack' cooling for servers which reduce the energy used to cool the whole data centre
    environment and the use of direct current (DC) electricity to reduce energy losses
    related to voltage transformation in an AC system.
    Company plays: Schneider’s IT division is 13% of group sales and the key end market
    for this division is data centres. In the US, our analysts would highlight Emerson and
    Eaton.

■   Solid state lighting where the replacement of incandescent lighting technologies with
    LED solutions offers potential energy savings of over 80%.
    Company plays: In Europe, LED is 20% of Philips’ lighting sales or 7% of group sales.
    In the US, our analysts would highlight CREE.
Based on these growth areas, we highlight our analysts’ preferred plays on energy
efficiency below.




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Figure 90: US and European plays on energy efficiency within the industrials universe
                                            -----P/E (12m fwd) ------          ------ P/B -------       2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                                        Share price,
                     % revenue from                                                                                                                     Consensus
                                                              rel to mkt %             rel to mkt %                  Price, %                                              local
                        energy                     rel to                                                                                             recommendation                   Credit Suisse
Name                                  Abs                    above/below     Abs      above/below     FCY      DY    change to   3m EPS    3m Sales                     currency (21
                       efficiency                Industry                                                                                             (1=Buy; 5=Sell)                  rating
                                                                average                  average                       best                                                Nov)
                       technology
Schneider Electric       52%          12.1        104%            1%         1.7           4%         5.8      3.5     43.5       -0.8      -0.3           2.8             51.6        Neutral
Eaton                     n/a         11.2         97%           21%         2.2           8%         6.1      3.1     32.9       -4.8      -5.8           2.0             50.7        Neutral
Emerson Electric          n/a         13.6        118%            2%         3.5           2%         7.1      3.2     16.3       -1.5      -2.0           2.3             48.6        Outperform
Honeywell Intl.           n/a         12.7        110%           10%         4.5          33%         6.2      2.4     10.4       -0.4      -1.4           2.0             60.6        Neutral
Philips                   7%          13.0        113%           19%         1.6           2%         7.5      3.7     5.6        -1.1       3.6           2.6             19.9        Neutral
Eltn.Koninklijke
Johnson Controls          n/a         9.4         117%           -5%         1.6          -12%        9.4      2.6     1.9       -11.8      -4.3           2.5             26.8        Outperform
Daikin Industries         n/a         11.8        102%           -44%        1.3          -34%        5.4      1.7     -1.5       -7.9      -1.3           2.5           2,575.0       Neutral
Cree                      n/a         22.4        160%           -21%        1.4          -51%        3.1      0.0     -8.4       -9.3      -5.3           2.3             30.9        Neutral

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




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       9) Reducing car emissions
Closely related to the theme of energy efficiency within industrial processes is the theme
of greater energy efficiency within the auto industry. We think this will become much more
important as urbanisation rates increase and cars per capita rise in emerging markets. In
China, for example, cars per capita are only around one fifth of US levels, while in India
cars per capita are around 2% of US levels.
The impact of emissions legislation on the auto industry
Our Autos team highlights that the European Commission is capping emission at 130g of
CO2/km by 2015 and 95g/km by 2020. These targets represent reductions of 18% and
40%, respectively, compared with the 2007 fleet average of 158.7g/km.
We also believe the average age of the auto fleet cannot get much higher in the US (it is
already at a 17-year high of 11 years); replacement demand alone would underpin US car
sales at 12.5m.
Our Autos team have previously highlighted that within the autos universe, products
relating to fuel efficiency account for 100% of BorgWarner revenues, 70% of those of
ElringKlinger and 30% of those of Continental.
Our European Chemicals team highlights that increasing emissions legislation on
petrochemical car engines, primarily within Europe and China, should drive demand for
next-generation automotive technology. Our analysts highlight both Umicore and Johnson
Matthey as being potential beneficiaries of this theme, with Umicore focusing on the
production of electric vehicles and Johnson Matthey more focused on fuel cells.
Umicore: About 35% of revenues come from the manufacture of catalysts to reduce
emissions from light-duty vehicles. A further 20% of revenues come from the Energy
materials division which produces electric battery materials for cars and other energy-
related materials. In addition, Umicore has built the first full-scale EV battery recycling
plant.
Johnson Matthey: 70% of JMAT’s revenues come from catalyst technology, of which
around 80% is from auto catalysts (70% car and 30% truck markets) and 20% from
stationary catalysts used in industrial processes. Johnson Matthey is also investing in fuel
cell catalyst technology for zero-emission vehicles (a venture which our analysts point out
is currently loss making).

Figure 91: Plays on reduced auto industry emission norms
                                         -----P/E (12m fwd) ------          ------ P/B -------       2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                                    Share price,
                  % revenue from                                                                                                                    Consensus
                                                           rel to mkt %             rel to mkt %                  Price, %                                             local
                     energy                     rel to                                                                                            recommendation                   Credit Suisse
Name                               Abs                    above/below     Abs      above/below     FCY      DY    change to   3m EPS   3m Sales                     currency (21
                    efficiency                Industry                                                                                            (1=Buy; 5=Sell)                  rating
                                                             average                  average                       best                                               Nov)
                    technology
Continental              30%       7.4          92%           -8%         2.2          37%         5.9      2.4     97.9       8.5       -0.1          2.2             80.0        Outperform
Borgwarner           100%          11.9        149%           27%         3.0          88%         5.8      0.0     26.8       -7.1      -6.9          2.2             63.7        Neutral
Johnson Matthey          70%       13.7        107%           28%         3.2          40%         na       2.5     8.0        -5.4      -4.2          2.6           2,190.0       Outperform
Umicore                  55%       14.9        131%           47%         2.7          75%         3.6      2.6    -14.4       -4.0      -2.3          2.7             39.4        Neutral

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




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        10)    Specific plays on the internet – in
          particular, e-financial services
The idea of the internet emerging as a growth theme may be nearly 15 years old, but we
believe that there remain growth opportunities.
Internet retail sales have seen a CAGR of 18% in the US over the past decade and 23% in
the UK since the ONS began to track the data five years ago.
Despite this strong growth, US internet sales still only accounted for 5.1% of total retail
sales in the second quarter of this year (the latest for which we have data). In the UK,
internet sales accounted for 8.8% of all retail sales in September. Were US internet sales
to rise to account for the same proportion of total retail sales as that in the UK, it would
imply a further 72% rise from their current level.

Figure 92: Annual internet sales growth has stabilised at                  Figure 93: …leading internet retail sales to account for a
around 10–15% in the UK and US…                                            steadily growing share of total retail sales
 80%                                                                       10

 70%                                                                        9

                                                                            8                   US internet retail sales % total
 60%
                     US internet retail sales % chg Y/Y
                                                                            7                   UK internet retail sales % total
 50%                 UK internet retail sales % chg Y/Y
                                                                            6
 40%
                                                                            5
 30%
                                                                            4

 20%                                                                        3

 10%                                                                        2

                                                                            1
  0%
                                                                            0
 -10%                                                                           2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
        2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Thomson Reuters, Credit Suisse research                            Source: Thomson Reuters, Credit Suisse research

In certain categories in the UK, most notably music & video and books and electricals, the
internet has very high penetration rates, accounting for 70%, 40% and 33% of total sales
in each of these categories, respectively. In the remaining categories of goods, however,
penetration rates are at most 10% of total sales, suggesting scope for rates to rise across
the board.




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Figure 94: Music, books and electricals stand out in terms of internet penetration; the
other categories lag notably behind
      % of sales online             2006   2007     2008       2009      2010       2011
      Music & Video                 18.2   25.8      36.0      47.7       59.9      69.9
      Books                         18.1   19.6      23.2      28.3       35.1      39.3
      Electricals                   11.8   15.3      19.4      23.8       27.9      32.7
      Clothing & footw ear           3.2    4.2       5.7       7.1        8.7      10.6
      Homew ares                     5.9    7.7       8.3       8.7        9.0       9.7
      DIY & Gardening                4.0    4.9       5.2       5.2        5.5       5.4
      Furniture & floorcov erings    2.7    3.8       3.9       4.1        4.2       5.0
      Food & grocery                 1.9    2.5       3.0       3.4        3.9       4.4
      Health & beauty                1.8    2.2       2.7       3.2        3.7       4.3
      Other markets                  3.7    4.8       5.8       8.0        9.8      11.6
      Total retail                   3.8    4.9       6.0       7.0        8.1       9.3
Source: Verdict Research

There are three particular general plays we have on the internet:
Google, the leader in online advertising. Our US Consumer Internet research team, led by
Stephen Ju, believes that the core global search market can sustain 12–13% compound
annual volume growth over the next five years. Our analysts also highlight the
comprehensive mobile presence being built by Google, placing it at the centre of the
mobile internet ecosystem. They believe that Google is poised to materially grow its share
in online display advertising, which should add an estimated 100bps to annual revenue
growth, in their view. As a result of these factors, they forecast revenue growth in the mid-
to-high teens on a compound annual rate over the next five years.
Amazon: Our US Consumer Internet analysts also have an Outperform rating on Amazon.
They see scope for margin expansion as digital media and web services account for a
large proportion of the company’s sales. They also highlight the prospect of further
fulfilment productivity gains, with new fulfilment centres having opened over the past two
years enabling the company to generate cost savings by having additional facilities closer
to end customers. As a result, they consider Amazon a long-term core holding, given its
growth prospects in e-commerce and its long-term strategic orientation.
This theme, and the greater use of parcels it entails, reinforces the case for the logistic
plays, discussed in more detail in our section on global trade. We continue to see UPS as
a preferred play on this theme owing to their legacy businesses.
Moneysupermarket.com: An additional area we would highlight is financial
disintermediation. We believe that regulation will continue to drive more price visibility in
the financial services industry and this will not only expose the high fees that are hidden
when products are bought via traditional aggregators (such as insurance companies), but
should also increase the comfort level with buying a product via the internet.
The data below show the significant potential for growth which remains within certain
categories of online financial products in the UK. In the case of car insurance, online
providers already capture 80% of the churn in the motor insurance market, a significantly
higher proportion than in any other category. In other relatively high-churn categories,
such as home insurance and loans, less than 50% of new or switched policies are
captured online, implying significant growth potential. Growth in the online share of new or
switched home insurance policies and loan sales has been 11% and 18%, respectively, on
a CAGR basis between 2009 and 2011.




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Figure 95: UK financial product sales via the internet
Channel                    Market        New/Switchers           Policy churn Online new/switchers                 % new/switchers Online new/switchers
                         policies             policies/yr                rate (%)               policies/yr         captured online          CAGR % 09-11
                        (millions)             (millions)                                            (million)
Motor insurance              24.0                        10.3               43%                            8.2                  80%                    9.0%
Home insurance               18.0                         4.3               24%                            2.0                  47%                   10.7%
Trav el insurance            20.0                        11.4               57%                              -                    -                        -
Sav ings                     63.0                         9.3               15%                            2.5                  27%                   16.9%
Credit Cards                 33.0                         4.5               14%                            2.2                  49%                    8.4%
Loans                          5.0                        1.0               20%                            0.3                  30%                   18.4%
Energy                       31.0                         5.7               18%                            1.3                  23%                    2.9%
Source: Moneysupermarket.com, Credit Suisse research

We would focus on moneysupermarket.com. Our European Media team believes that
13.4x 2013E P/E, just an 8% premium to the wider European media sector, is too cheap
for a company likely to continue to grow significantly quicker than the wider European
media sector owing to its exposure to structurally intact internet-based revenues.

Figure 96: Internet retailing and services plays
                                    -----P/E (12m fwd) ------                   ------ P/B -------                 2012e, %       HOLT       2012e Momentum, %
                                                                                                                                                                     Consensus        Share price,
                                                          rel to mkt %                  rel to mkt %                              Price, %                        recommendation     local currency Credit Suisse
Name                         Abs       rel to Industry    above/below         Abs       above/below          FCY          DY     change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (20 Nov) rating
                                                            average                       average                                   best
Amazon.Com                  142.3         850%              163%             13.6          -58%              1.5          0.0     -18.1      -97.1       -1.9           2.0             233.8      Outperform
Moneysupermarket             14.3         105%                  34%           4.4           98%              5.4          3.7      -5.5       3.4        0.5            2.3             155.2      Outperform
Com Gp.
Google 'A'                   15.0         110%               -26%             3.8          -29%              5.9          0.0      35.1       -7.9       -3.1           1.9             670.0      Outperform
Fedex                        13.0          97%                  7%            2.0            1%              1.5          0.6     -35.8      -14.5       -1.4           1.8              87.4      Neutral
United Parcel Ser.'B'        14.5         107%                  -7%          10.1           62%              6.3          3.1      -6.1       -4.9       -2.8           2.3              71.3      Outperform

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




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       11)                                                   Ageing in emerging markets
The segment of the emerging market population aged over 65 is forecast by the UN to
grow by 4.5% a year until 2020, compared with a 2.3% growth rate in developed markets.
We would highlight healthcare as a key beneficiary, given that the proportion of household
expenditure spent on healthcare for the over 65s is 79% higher than for the 55–64 age
group.

Figure 97: Developing markets 65+ age group is set to                                                                               Figure 98: Spending on healthcare rises sharply once
grow at twice the rate of developed markets                                                                                         people start to age
                                                % of population aged 65 or over      2.3% CAGR                                          16      Percentage of US Total Household Expenditures Spent
      20
                                                                                                                                                            on Healthcare by Age - 2008
      18                                                                                                                                14
      16
                                                                                                                                        12
      14
      12                                                                                                                                10

      10                                                                             4.5% CAGR                                            8
       8
                                                                                                                                          6
       6
       4                                                                                                                                  4
       2
                                                                                                                                          2
       0
                                                      2010                         2015                      2020                         0
                                                          More developed regions           Less developed regions                               45–54           55–64        65 and over   65–74       75 and over



Source: UN, Federal Interagency Forum on Ageing Related Statistics,                                                                 Source: UN, Federal Interagency Forum on Ageing Related Statistics,
Credit Suisse Demographics Research                                                                                                 Credit Suisse Demographics Research



Even as the population ages, healthcare spending as a percentage of GDP tends to be
low within emerging markets, even adjusted for the lower level of per capita income.

Figure 99: Healthcare spending is low as a % of GDP in emerging markets given GDP per
capita
            Healthcare expenditure, % of 2011




                                                                                                                                                   US

 16


 14                                                                                                                                                     Switzerland (77,840,
                                                                                                                                                                11.4)

 12                                                                                                                 France        Netherlands
                                                                                                                              Germany        Canada Denmark
                                                                   Portugal                             New Zealand                Austria
                                                                          Greece                                            Belgium
 10                              Slovak Republic                                            Spain
                                                                                                     Italy        UK Ireland       Japan             Sweden
                                     Slovenia                                                                       Iceland     Finland
           Hungary                                                                                                                            Norway (99,316, 9.4)
  8                  Chile Czech Republic
                                                                                                    Israel                                             Australia (67,983, 9.1)
                Poland               Korea
           Mexico
  6         Turkey     Estonia
            Middle East                                                                                                                                 GDP PC, USD
  4        & North Africa
  10,000                                         15,000        20,000       25,000        30,000      35,000         40,000      45,000       50,000      55,000        60,000


Source: OECD, IMF, Credit Suisse research




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Big cap pharma exposure
Of the big cap European and US pharma companies, Sanofi and Novartis have the
highest proportion of sales from emerging markets. IMS Health estimates that emerging
markets will double their spending on drugs, adding $150bn of sales by 2015, with 20% of
this increase coming from branded drugs. Figure 101 shows a reasonable correlation
between Credit Suisse’s estimate of 2012–15 average annual EPS growth and the 2012e
P/E of large cap pharma companies.

Figure 100: Sanofi and Novartis have the highest                                            Figure 101: P/E (x) vs growth scatter of global pharma
proportion of sales from emerging markets
 30%    28%                               % of sales from emerging mkts




                                                                                                      PE 2012e
                                                                                               25
                                                                                                                                                                NOVOb.CO
                                                                                               23
 25%             24%
                            23%   23%                                                          21
                                             22%
                                                       20%      20%                            19
 20%                                                                    19%
                                                                              17%              17
                                                                                                                                 BMY
                                                                                               15                                      JNJ
 15%                                                                                                             LLY
                                                                                               13                                ROG.VX    ABT
                                                                                    12%                                             GSK.L      BAYGn.DE
                                                                                               11                                          NOVN.VX
                                                                                                                            MRK PFE SASY.PA
 10%
                                                                                                9
                                                                                                7         AZN.L                                    EPS growth 2012-15e
  5%
                                                                                                5
                 Novartis




                                                                              J&J
                                  Merck

                                              Pfizer




                                                                                    Lilly
                                                                Roche
        Sanofi




                                                       Abbott
                            GSK




                                                                        AZN




                                                                                                    -5%                0%          5%        10%          15%        20%


Source: IMS Health 2010 data                                                                Source: Thomson Reuters, Credit Suisse

For big cap pharma, we highlight that margins within emerging markets tend to be higher
than might initially be assumed by investors. Typically, pricing is lower (with sales
concentrated in generic drugs), but so are the R&D and other associated costs (because it
tends to be the more mature drugs that are sold in emerging markets). GSK reported that
actual core operating margins in emerging markets and Asia Pacific are around 32% (as
reported in Q2 12), admittedly lower than the 50% margin for its European business, but
not as low as some investors may presume.
We believe the legacy business of big cap drugs is ex-growth. Branded drug prices in the
US are nearly double those in Europe. This is unsustainable when drugs account for 10%
of US healthcare spending and US healthcare spending is 16% of GDP, and Medicare is
due to go into deficit in 2020. In addition, big cap drug companies have the problem of
patent expiries only just being offset by new products, as R&D efficiency has continued to
fall. Above all, the sector is still highly reliant on government spending, with 45% of
revenue in the US from governments and close to 80% in Europe.




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                                                                                                                                                                                                            23 November 2012



Figure 102: Branded drug prices in the US are double                                                          Figure 103: R&D efficiency has been on a downtrend for a
those of the Europe                                                                                           long time
                                                                                                                                                HOLT Pharma R&D returns. Sales/Capitalised R&D w ith 4 y r lag. Index of
                                         1.2
                                                                                                                                                         returns falls from >U$2 per R&D dollar inv ested to U$1.3
                                                                                                                                                 3.5                                                                  18%
                                                                      2005      2010
 Brand drug price indexed to US prices




                                          1                                                                                                                                                                           16%
                                                                                                                                                 3.0




                                                                                                                Sales/capitalised R&D (lines)
                                                                                                                                                                                                                      14%




                                                                                                                                                                                                                            R&D as % of sales (bars)
                                         0.8                                                                                                     2.5                                                                  12%
                                                                                                                                                                                                                      10%
                                         0.6                                                                                                     2.0
                                                                                                                                                                                                                      8%
                                                                                                                                                 1.5                                                                  6%
                                         0.4
                                                                                                                                                                                                                      4%
                                                                                                                                                 1.0
                                         0.2                                                                                                                                                                          2%
                                                                                                                                                 0.5                                                                  0%
                                          0                                                                                                            1985      1989     1993      1997    2001     2005      2009
                                                                                                 Italy
                                                              Switz
                                                    Germany




                                                                                        France
                                               US




                                                                                                         UK
                                                                      Canada


                                                                               Sweden




                                                                                                                                                              R&D as % of sales ( no lag)          EU major
                                                                                                                                                              US major


Source: The Patented Medicine Prices Review Board, Credit Suisse                                              Source: Credit Suisse Pharma research team
research



Diabetes
We believe diabetes will be a key area of focus in the emerging markets. It is a disease
area which is widely expected to grow significantly with the increasing prevalence of
obesity in emerging markets; according to Sanofi, obesity has tripled in China since 2002.
Our analysts believe that diabetes drug sales could grow by 7% a year (2011–2016E).
Sanofi had 17% of pharmaceutical sales from diabetes drugs in 2011, Novo Nordisk has
70% of sales and Eli Lily has 20% of sales.


Generics
We also continue to favour the generic story, with IMS Health forecasting 4–5% p.a.
growth for generic drug sales through to 2015. The drivers are: i) patent expiries; ii)
emerging market growth, with 80% of the incremental sales in emerging markets by 2015
expected to come from generic drugs (c$120bn); iii) increased penetration in Europe and
Japan (given that the penetration rate of generics in many European countries is below
30%, compared with 70% in the US).




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Figure 104: Most Western European countries have very                                                                                                                              Figure 105: Healthcare spend as a % of GDP
low generic penetration rates
   80%                                                                                                                                                                              17
   70%                                                                               Generic utilisation by volume                                                                  15
   60%                                                                                                                                                                              13                          Healthcare spending, % of GDP

   50%                                                                                                                                                                              11

   40%                                                                                                                                                                               9

   30%                                                                                                                                                                               7

   20%                                                                                                                                                                               5

   10%                                                                                                                                                                               3

    0%                                                                                                                                                                               1
                                      Turkey




                                                                                                                     Brazil


                                                                                                                                        Italy
                                                                                                     Japan
                       Germany




                                                                                Australia
                                                                      Hungary


                                                                                            France
                                               Netherlands




                                                                                                                                                Portugal
                  US


                                 UK




                                                                                                             Spain


                                                                                                                              Belgium



                                                                                                                                                           Ireland
         Poland




                                                             Sweden




                                                                                                                                                                     New Zealand
                                                                                                                                                                                    -1




                                                                                                                                                                                         MENA




                                                                                                                                                                                                       Mexico




                                                                                                                                                                                                                        Japan




                                                                                                                                                                                                                                                       Switzerland

                                                                                                                                                                                                                                                                     France
                                                                                                                                                                                                                Korea
                                                                                                                                                                                                BRIC




                                                                                                                                                                                                                                     Italy

                                                                                                                                                                                                                                             Germany
                                                                                                                                                                                                                                UK




                                                                                                                                                                                                                                                                              US
Source: Company data, Credit Suisse US Specialty Pharma research                                                                                                                   Source: World Bank
team



Our South African Healthcare analyst, Mark Wadley, highlights Hikma as a growth stock
for the following reasons:
Geographic footprint that dominates the MENA region – a very low penetration rate as
above in terms of both drugs and healthcare as a percentage of GDP. Not only is
consumption of pharmaceutical products (prescription and OTC) increasing, but also the
type of drug spend is changing to more chronic and lifestyle-related illnesses, which
reflects the ageing of the population. For Hikma, for instance, we have seen the group
moving from having had a drug portfolio mostly made up of anti-infective drugs to one
which is now more balanced (and which includes chronic medications). MENA makes up
c60% of revenue and c65% EBIT for the group.
Acquisitions –the group has also being growing by acquiring businesses within the
MENA region. While Hikma now has a footprint across the whole of the MENA region, it is
still sub-scale (has small market share positions) in some of the large MENA markets like
Egypt and Saudi Arabia. We think the company may still look to acquire / consolidate
within some of these countries, which should continue to drive further growth.
In addition to those parts of health care benefiting from exposure to emerging markets, we
would highlight the following further growth themes in the sector:


Healthcare equipment
Innovation, favourable demographics and emerging markets are important growth drivers
for healthcare equipment and service companies. In certain market segments, primarily
with reimbursed products, price competition has intensified recently and is likely to stay
intense in light of healthcare reform work and likely more government austerity measures.
Yet, price pressure is lower in market segments where products are mainly privately
funded.
In this context, we highlight the hearing device sector, which has two key advantages. First,
c10% of the population within the developed world have a hearing problem, while only
roughly a fifth of those patients currently use a hearing device, thereby leaving substantial
room for patient growth. Second, c90% of sales are funded by private individuals and thus




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                                                                                                                                                                           23 November 2012


the direct public funding exposure is limited. Our analysts would highlight Sonova, in
particular.
We also highlight Fresenius Medical Care. We see attractive growth prospects as the
company benefits from the increasing prevalence of end-stage renal disease in the US,
but also globally, and the corresponding patient growth in dialysis care. Mid-term, we also
see substantial margin expansion opportunities by reducing drug expenses.


Therapeutic medical equipment
Therapeutic medical equipment has the highest 10-year growth rate of any of the
healthcare-related components of US consumer spending, with a 10yr CAGR of 6.5%
(currently 7.8%). Credit Suisse’s US healthcare equipment team highlights Volcano and
Heartware (number 1 and number 2 players in their respective markets) as their preferred
Outperform-rated growth stocks, with projected 10%+ revenue growth in the next five
years.
Outsourcing healthcare
Our US Managed Health Care team believes that Managed Care Organisations (MCOs)
will take advantage of increasing public-private partnerships in Medicare, Medicaid and
Dual Eligibles. MCOs stand between the buyers and the providers of healthcare. Of the
$2.8trn in annual health spending in the US, 71% is addressable by MCOs and of that,
penetration is c60%. With major healthcare reform provisions taking place beginning in
2014, coverage will be expanded to those who are currently uninsured, which is estimated
by the team to add 14m new customers (30m by 2022) to the Medicaid and Health
Insurance Exchange markets.
Their top pick in Managed Care is Cigna (CI) and they also rate UnitedHealth (UNH)
Outperform.
Stock screen
We show a screen with selected health care growth stocks below.

Figure 106: Healthcare growth plays
                                 -----P/E (12m fwd) ------             ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                     Consensus        Share price,
                                                      rel to mkt %             rel to mkt %                       Price, %                        recommendation     local currency Credit Suisse
Name                      Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov) rating
                                                        average                  average                            best
Sanofi                    11.1          90%              -26%        1.6          -64%        8.5          4.0     19.5       3.0        0.8            2.1              68.1      Neutral
Novo Nordisk 'B'          20.9         169%              34%         13.7         207%        3.5          1.8    -19.5       5.1        3.6            2.4             907.0      Neutral
Eli Lilly                 13.1         105%              -14%        4.2          -44%        7.8          4.0     54.8       2.2        -0.9           2.7              47.4      Outperform
Hikma Pharmaceuticals     16.7         135%              25%         2.9           14%        na           1.2    -14.4       -0.4       0.2            2.2             738.0      Outperform
Sonova N                  18.3         142%              -10%        4.4          -22%        4.3          1.4     42.8       0.7        0.2            2.4             100.6      Outperform
Fresenius Med.Care        16.3         126%               2%         2.6           19%        4.5          1.4    -11.3       -1.9       -1.1           2.4              51.6      Outperform
Volcano                   62.6         484%              -11%        4.5           30%        0.8          0.0    -65.8      -16.7       -1.8           1.9              26.9      Outperform
Heartware International   -32.1          nm               na         9.4           54%        na           0.0    -63.5       nm         3.1            2.1              81.6      Outperform
St.Jude Medical           10.7          83%              -30%        2.8          -26%        8.5          2.3     93.3       0.1        -1.3           2.4              31.4      Neutral
Cigna                     8.6           67%               5%         2.0            3%        13.2         0.1     63.2       3.9        -3.5           1.9              52.0      Outperform
Unitedhealth Gp.          10.2          79%              -15%        2.1          -26%        11.2         1.4     61.7       5.3        -0.2           1.8              53.5      Outperform

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



Direct Asian plays on an ageing emerging market population
Below, we show those companies that according to the Credit Suisse Asian equity
research department are best placed to take advantage of an ageing emerging market
population.




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Figure 107: Stocks that could benefit from an ageing emerging market population
                                -----P/E (12m fwd) ------             ------ P/B -------       Yield (2011e)     HOLT        Momentum
                                                                                                                                                                 Share price,
                                                     rel to mkt %             rel to mkt %                       Price, %                          Consensus local currency




                                                                                                                                      3m Sales
                                                                                                                             3m EPS
                                                                                                                                                                              Credit Suisse
Name                     Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to                        (buy less holds (20 Nov)
                                                                                                                                                                              rating
                                                       average                  average                            best                              & sells)

China Life Insurance     17.7         182%              10%         2.6          -13%        na          1.12    -49.9      -29.4     -4.0            2.7           22.4      Neutral
Co Ltd
Ping An Insurance        13.8         142%              -20%        2.8          -17%        na          1.00    -43.6      -2.4      -4.1            2.2           58.2      Outperform
Sinopharm Group Of
(Group) Company Co
                         21.4         166%              -5%         3.3           -5%        na          0.98    -24.2      0.0       3.3             2.0           24.5      Outperform
Mindray Medical Intl     17.1         118%              -5%         3.4          -29%        na          1.21     8.2       2.6       1.2             2.1           33.4      Outperform
Aia Group Ltd            17.6         182%              51%         2.3           35%        na          1.20    -32.9      0.6       -8.4            2.0           30.3      Outperform
Prudential Plc           11.4         118%               7%         2.4          -18%        5.89        3.07    -33.8      0.6       1.4             2.2          889.0      Outperform

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




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         12)            Software
Software has been our largest sector overweight since July 2009 and we believe it is a
growth sector for the following reasons:

■        Software has enjoyed particularly high sales and EPS growth rates over the last
         5 years.

Figure 108: Five-year CAGR of EPS growth versus sales growth

    14%              US sectors CAGR, last 5 years                        Bev erages
                                                                       Fd/Drug Rtl
    10%                                                    Energy                  H/C Eq/Sv s
                                                                                                   Softw are
             Sales




                                                                      Fd Prd
                                                                                   Transpt Tobacco      Media
     6%                                                                    Pharm Chem                        Tech H/W
                               T/Cm Sv s                       HH Prd
                                                          Market           Semis
     2%                                                  Cap GdsRetail Hot & Lei Pap/For

    -2%                                                     Utilities
                      Met & Min

  -6%                              Comm/Prof
 Con Mat (-45%, -7.3%)                                                                                Cons Dur
 -10%

 -14%
                                                                                 EPS                             Autos
 -18%
          -15%          -10%           -5%             0%               5%             10%              15%          20%

Source: Thomson Reuters, Credit Suisse research



Sales growth on top-down data has been close to 16% over the past 17 years.

Figure 109: US software yoy sales growth versus the                                    Figure 110: US software sector CAGR sales (1995-2012E):
market since 1995                                                                      15.5%, among the highest within tech
    30                                                                                  50    45.8
                                             US sector sales grow th, YoY, %                                               US sectors, sales CAGR, 1995-2012, %
    25
                                                        Softw are       Market          40                                 Market = 8.1
    20

    15                                                                                  30

    10
                                                                                        20                15.5
    5                                                                                                             11.0
                                                                                                                              9.6         8.9
    0                                                                                   10                                                       4.5
                                                                                                                                                          2.5
    -5
                                                                                         0
 -10                                                                                            Int     Softw are Comp &    Semis         IT    Comms   Off Eltro
         1995 1997 1998 2000 2001 2003 2004 2005 2007 2008 2010 2011 2012                    S/W/Sv s              Per                           Eq

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



■        The tech share of GDP is still low, with tech accounting for 34% of total business
         investment against a trend line that suggests it ought to be closer to 41%.




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Figure 111: The net tech share of GDP is still low                                                           Figure 112: Tech spending is below trend
         2.0%                                                                                                 45%
                                            US Net tech inv estment, % of GDP                                                                       US Tech spending, % total non-res.inv estment
                                                                                                              40%
                                                                                                                                                    Trend
         1.5%
                                                                                                              35%

                                                                                                              30%
         1.0%
                                                                                                              25%
         0.5%
                                                                                                              20%

                                                                                                              15%
         0.0%
                                                                                                              10%

    -0.5%                                                                                                          5%
                        1929       1943          1957      1970          1984          1998           2011                            1961    1969          1978      1986        1995           2003         2012

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



■                      Data (total global IP traffic) is likely to see growth of 29% per year over the next
                       five years, according to Cisco VNI (Visual Networking Index).
Our US software analyst, Philip Winslow, particularly stresses the innovation of Big Data
(the number of devices is likely to triple over the next four years, according to our tech
team) and Fast Data (the ability to analyse unstructured data, owing to the move away
from HDD to NAND and Flash storage, where response times fall exponentially, allowing a
significant increase in the number of applications).

Figure 113: Mobile traffic to grow at 52% CAGR over 2011-                                                    Figure 114: Devices shipments for tablets and
2017E                                                                                                        smartphones (2011-2015E)
                       7,000                                                                                                          1,600

                       6,000                                                                                                          1,400
                                                                                                                                                                                                        328
                                                                                                                                      1,200
                       5,000                                                                                                                                                             247
 PetaBytes per month




                                                                                                                                      1,000
                                                                                                              Device shipments (mn)




                       4,000                                                                                                                                              170
                                                                                                                                        800
                       3,000                                                                                                                                   110
                                                                                                                                        600
                                                                                                                                                                                                        1,125
                       2,000                                                                                                                   66                                        1,003
                                                                                                                                        400                               850
                                                                                                                                                               674
                       1,000
                                                                                                                                        200    473

                          0
                           2011           2012          2013          2014            2015            2016                               0
                                                                                                                                              2011             2012       2013         2014             2015
                          Data - Mobile PCs / Tablets          Data - Mobile Phones           Voice                                                  Tablets                     Smartphones

Source: Company data, Ericsson Traffic and Market Report, Credit                                             Source: Company data, Ericsson Traffic and Market Report, Credit
Suisse Tech Team research                                                                                    Suisse Tech Team research



■                      Software has high barriers to entry caused by:
(i)                    A high cost of switching to alternative systems;
(ii)                   Significant after-market sales (in SAP’s case it is around half of revenue, according to
                       our analysts);



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(iii) A high ratio of R&D to sales.

Figure 115: High barriers to entry in tech and software                                                                                                                                 Figure 116: SAP's Q3 2012 revenue split shows more than
especially                                                                                                                                                                              50% of sales are from maintenance
 22%                                                                                                                                                                                      60%
                                                                                          Softw are                                                                                                                                                             53%
                                   IT Serv ices
             2011e CFROI




 20%
                                                                                                                                                                                          50%
 18%                                                                  Internet
 16%                                                                  Sw &Sv s                                                                                                            40%

 14%
                                                                                                                                                                                          30%                                   26%
 12%          Cons Sv s
           Computers                                      IT                                                                                  Health Care
 10%                                                                               Semis                 Comm Equip                                                                                                                                                                                  19%
                                                                                                                                                                                          20%
    8% Materials       Market
     Telecoms                   Cons Dis
                                                                                                                                                                                          10%
    6%              Industrials
           Energy                      Office Elec                                                                                                                                                                                                                                 2%
    4%                   Elec Equip
            Utilities                              Capitalized R&D as % of sales                                                                                                                0%
    2%                                                                                                                                                                                                        Software revenue Support revenue                                   Cloud           Professional
                                                                                                                                                                                                                                                                            subscriptions and services and other
        0%                         20%                           40%                         60%                              80%                         100%                                                                                                                  support

Source: Credit Suisse HOLT, Credit Suisse research                                                                                                                                      Source: Company data, Credit Suisse Software Research Team



■     Software companies have strong balance sheets – which adds to their
      defensiveness (on top its high barriers to entry);

Figure 117: Software has the lowest leverage among global sectors

 120%                                                                                                  Global sectors net debt to market cap

 100%                                                                                                  Non-financials

    80%

    60%

    40%

    20%

     0%

    -20%
                                                                                                                              Healthcare




                                                                                                                                                               Hotels & Lei


                                                                                                                                                                                         H/H & Per Prod
              Utilities




                                                                                                                                                                                                                                             Tech H/W
                                                                                                                                                                                                          Retail
                                                                              Met & Min


                                                                                                       Food Rtl




                                                                                                                                                                                                                   Cons Dur & App
                           Autos


                                              Transport


                                                                      Media




                                                                                                                                                                                                                                    Pharma
                                                                                                                                                                              Tobacco




                                                                                                                                                                                                                                                        Semis
                                                                                                                                                    Fd Prods
                                   Telecoms


                                                          Cap Goods




                                                                                                                                                                                                                                                                S/W & Svs
                                                                                                                                           Energy
                                                                                           Beverages


                                                                                                                  Comml Svs




Source: Thomson Reuters, Credit Suisse research



■     Software is also cyclical, with c80% of revenue coming from corporate discretionary
      spend. Thus, we regard software as a sector that is defensive, growth and cyclical!

■     The valuations of the software sector as a whole continue, from a global point of
      view, to look clearly cheap.




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Figure 118: Global software price-to-book relative is one                                             Figure 119: ... and 1.7 standard deviations cheap on 12-
standard deviation below average ...                                                                  month forward P/E relative
 340%                                                                                                   245%                                                 Global Softw are: 12m fw d
                                   Global Softw are: P/B rel to market                                                                                       P/E rel to market
 320%                                                                                                   225%                                                 Av erage x bubble
                                   Av erage (+/- 1 sd)
 300%                                                                                                   205%
 280%
                                                                                                        185%
 260%
                                                                                                        165%
 240%
                                                                                                        145%
 220%
                                                                                                        125%
 200%
                                                                                                        105%
 180%

 160%                                                                                                    85%
         2001       2002      2004             2006           2008     2010          2012                        1995        1998          2000            2003       2006           2009          2012

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



Below we show software companies that our analysts in Europe and the US highlight as
growth stocks. Of these, the following have FCF above 5% and look cheap on HOLT:
Oracle, Microsoft and Check Point.

Figure 120: European and US Software companies that our analysts highlight as growth
                                  -----P/E (12m fwd) ------              ------ P/B -------           2012e, %           HOLT       2012e Momentum, %
                                                                                                                                                                 Consensus        Share price,
                                                       rel to mkt %              rel to mkt %                            Price, %                             recommendation     local currency Credit Suisse
Name                        Abs      rel to Industry   above/below    Abs        above/below    FCY              DY     change to   3m EPS        3m Sales     (1=Buy; 5=Sell)      (21 Nov)    rating
                                                         average                   average                                 best
Oracle                     11.3          83%             -40%         3.5            -56%       8.5          0.8          86.7       -0.1           -1.7            2.1              30.4      Outperform
Check Point Sftw.Techs.    13.2          97%             -33%         3.0            -58%       8.2          0.0          62.7       -0.6           -1.1            2.0              45.5      Outperform
SAP                        16.5         121%             -32%         5.4            -42%       3.6          1.5          58.2       -0.6           1.6             2.3              58.8      Outperform
Teradata                   20.1         147%              38%         7.1            40%        4.6          0.0          37.2       3.6            -1.7            2.1              61.2      Outperform
Vmware                     27.7         203%             -14%         7.9            -2%        4.8          0.0         -23.2       4.6            0.2             2.3              88.1      Outperform
Dassault Systemes          21.6         158%               3%         4.9            -33%       4.5          0.9         -23.5       2.3            1.8             2.7              83.5      Neutral
Salesforce.Com             76.9         563%              16%         12.7           23%        2.6          0.0         -66.9       1.1            0.3             2.1             158.8      Outperform
Netsuite                   208.0       1523%             171%         33.8          154%        0.9          0.0         -91.1       13.8           2.2             2.8              60.1      Outperform

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




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A sector perspective
We screen for sectors that have high delivered and forecast earnings and sales growth –
but remain attractive on our valuation scorecard. In Europe, household and personal
products, beverages, tobacco and pharma have the highest combination of sales and
earnings growth (last five years and next three years). Paper, construction and banks have
the lowest growth score.

Figure 121: Scorecard of European sectors on historic and prospective sales and
earnings growth
European                        EPS growth                                 Sales growth                average z-
sector         2007-11   2012e-14e      CAGR     z-score   2007-11   2012e-14e       CAGR    z-score     score
H/H Pers Prd     12.2        7.5          10.4      0.6      13.9        2.8           9.6      1.8        1.2
Beverages        13.1       11.4          12.5      0.9       5.9        6.9           6.3      1.0        0.9
Tobacco           5.7        8.1           6.6      0.1      14.2        2.7           9.8      1.8        0.9
Pharma            9.6        5.9           8.2      0.3      11.1        2.9           8.0      1.4        0.8
Semis            31.9        8.6          22.6      2.4      -2.8        1.6          -1.2     -0.8        0.8
Comm. Svs        14.8       11.2          13.4      1.1       1.8        5.6           3.2      0.2        0.7
S/W & Svs        12.5       11.2          12.0      0.9       1.0        8.5           3.7      0.4        0.6
H/C Eq/Svs       12.4       11.8          12.1      0.9       1.7        6.9           3.6      0.3        0.6
Autos            16.4       16.7          16.5      1.5      -2.4        6.8           0.9     -0.3        0.6
Met & Min         4.8        0.7           3.2     -0.4      12.8        2.8           9.0      1.6        0.6
Chemicals         9.2        7.1           8.4      0.3       3.2        5.2           3.9      0.4        0.4
Energy            2.0        5.4           3.2     -0.4       8.7       -0.1           5.3      0.7        0.2
Fd Prd            2.9        8.1           4.8     -0.2       2.1        7.1           3.9      0.4        0.1
Insurance         3.3       15.8           7.8      0.2       0.8        3.9           2.0      0.0        0.1
Cap Gds           4.2        8.8           5.9      0.0       1.6        4.0           2.5      0.1        0.0
Fd/Stpl Rtl       4.1        5.7           4.7     -0.2       1.9        4.5           2.9      0.2        0.0
Cons Dur          7.5       12.2           9.2      0.5      -4.7        8.1          -0.1     -0.5        0.0
Utilities        -2.7        3.8          -0.3     -0.9       8.3        1.9           5.9      0.9        0.0
Transpt           2.2       16.2           7.2      0.2      -3.6        5.1          -0.4     -0.6       -0.2
Telecoms          2.4        4.6           3.3     -0.4       1.1       -0.5           0.5     -0.4       -0.4
Media            11.6        7.5          10.0      0.6      -8.3        3.6          -4.0     -1.5       -0.4
Retailing         8.2       11.1           9.3      0.5     -10.8        4.6          -5.3     -1.8       -0.6
Div Fin          -9.0       11.7          -1.8     -1.2       1.2        1.0           1.1     -0.2       -0.7
Real Estate      -6.8        4.2          -2.8     -1.3       1.1        2.6           1.7     -0.1       -0.7
Cons Svs          6.8        8.9           7.6      0.2     -10.5        4.5          -5.2     -1.7       -0.8
Tech H/w         -3.9        6.0          -0.3     -0.9       0.2       -2.6          -0.8     -0.7       -0.8
Banks           -13.5       13.4          -4.3     -1.5       0.9        1.4           1.1     -0.2       -0.9
Cons Mat        -28.2       31.0         -10.0     -2.4      -1.4        5.3           1.1     -0.3       -1.3
Pap/For Prd      -4.3        2.1          -2.0     -1.2     -10.2        0.8          -6.3     -2.0       -1.6

Source: Thomson Reuters, Credit Suisse research

We then plot this growth score against the sector’s valuation score (a combination of P/E,
P/B, dividend yield and HOLT; see Appendix for the details of the scorecard). On this
basis, pharma, premium autos and software appear undervalued, while paper and
telecoms are in the low growth segment with unappealing valuations.
We show the analysis for US sectors in the Appendix. Household and personal products,
and beverages appear to have undervalued growth.




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Figure 122: Pharma, autos and software feature in the segment of high growth and
attractive valuation
                       1.5
                                     Pap/For Prd                                             Utilities                                             High growth /
                                                                        Telecoms                                                             attractive valuation
                       1.0                                                                                         Energy
                                                                                           Fd/Stpl Rtl
                                                                                                                 Insurance        Autos
                       0.5                                                                                                                         Pharma
                                                                   Tech H/w                                                                S/W & Svs
                                                      Banks
   Valuation z-score




                                                              Div Fin                  Media                                              Met & Min
                       0.0                                                                                                                        Semis
                                                                          Real Estate                          Cap Gds                                 H/H Pers Prd
                       -0.5                                                                                                               H/C Eq/Svs
                                               Cons Mat                            Transpt                                                             Tobacco
                                                                                                                                Chemicals
                       -1.0                                                                  Cons Dur            Fd Prd
                                                                         Cons Svs                                                           Comm. Svs
                       -1.5
                                                                                                                                                        Beverages
                                                                            Retailing
                       -2.0
                              -1.6             -1.2             -0.8                -0.4                 0.0              0.4                0.8              1.2
                                                                                      Growth z-score


Source: Thomson Reuters, Credit Suisse research




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Appendix
Appendix 1: Growth as a style
Figure 123: US growth tends to outperform as real interest rates fall

              MSCI US growth index, relative to the market          US 10-year TIPS yield, inverted, rhs                    -1.0%
111
                                                                                                                            -0.5%

106                                                                                                                         0.0%

                                                                                                                            0.5%
101
                                                                                                                            1.0%

                                                                                                                            1.5%
  96
                                                                                                                            2.0%

  91                                                                                                                        2.5%

                                                                                                                            3.0%
  86
    2003     2004        2005         2006        2007         2008          2009       2010         2011    2012

Source: Thomson Reuters, Credit Suisse research



Figure 124: Quality growth dividend yield                                                     Figure 125: Quality growth price to book
  1.35              Eur high quality dividend yield relative to the market                         3.4
                                                                                                                    Eur high quality price to book relative to the market
  1.25                                                                                             3.2

                                                                                                     3
  1.15
                                                                                                   2.8
  1.05
                                                                                                   2.6

  0.95                                                                                             2.4

  0.85                                                                                             2.2

                                                                                                     2
  0.75
                                                                                                   1.8
  0.65
                                                                                                   1.6
  0.55                                                                                             1.4
      1990      1993        1997         2001        2004         2008         2012                   1990   1993        1997         2001         2004        2008         2012


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




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Appendix 2: Sector valuations in Europe and the US
Figure 126: European valuation scorecard – cheapest sector is at the top
                                         12m fwd P/E                                   P/B                                  Div yield                     Eco PE        CFROI        HOLT score   Total Z-
   Pan Europe Sectors
                              Absolute      Relative     z-score      Absolute       Relative     z-score     Absolute      Relative        z-score       z-score       z-score       z-score      Score
Pulp & Paper                    10.5         97%           0.2          0.6           43%            1.5       6.5%          167%              1.5           0.6           3.5           2.1        1.3
Utilities                       10.0         93%           0.4          1.1           76%            1.5       6.6%          169%              1.2           0.9           3.1           2.0        1.3
Telecoms                         9.2         86%           0.1          1.4           92%           -0.3       8.3%          212%              2.0           0.8           4.8           2.8        1.2
Food Retail                     10.3         95%           1.0          1.5           98%            1.5       4.2%          109%              1.2           0.5          -1.2          -0.3        1.1
Energy                           8.4         78%           1.2          1.3           89%            1.8       4.5%          116%             -0.1           0.1           2.3           1.2        1.0
Insurance                        8.4         77%           0.4          0.9           62%            0.7       5.0%          128%              1.1           0.9          -0.4           0.3        0.6
Pharmaceuticals                 11.7         108%          0.5          3.4           232%          -0.6       3.8%          99%               0.8          -0.1           1.5           0.7        0.5
Automobiles                      6.7         62%            0.2          1.0          67%          -0.3        3.5%          90%              0.5           1.0           1.5           1.3         0.4
Software                        15.5         144%           0.7          4.0          271%          0.3        1.6%          40%              0.4           0.9          -0.6           0.1         0.4
Banks                            8.9         83%            0.0          0.7          47%           1.4        4.0%          101%            -0.9           0.1           1.1           0.6         0.3
Technology Hardware             22.6         209%          -3.0          1.3          88%           1.9        4.2%          106%             1.3           0.3           1.2           0.8         0.2
Metals and Mining               10.2         94%           -0.8          1.3          86%           0.6        3.2%          81%              0.0           0.1           1.5           0.8         0.2
Diversified Financials           9.3         86%           -0.7          0.8          52%           1.8        2.4%          61%             -1.3           0.9           0.3           0.6         0.1
Media                          12.0        111%            0.6           2.8          187%         -0.3        3.6%          92%             -0.1           0.6          -0.4            0.1         0.1
Semiconductors                 21.2        197%            0.0           3.3          220%         -2.4        1.5%          37%              1.4           1.0           0.3            0.7        -0.1
Household Products             16.7        155%            0.1           3.2          218%          0.1        2.4%          62%              0.6          -0.7          -2.5           -1.6        -0.2
Capital Goods                  12.0        111%           -0.4           2.2          147%         -1.6        3.5%          89%              0.7           0.9          -0.7            0.1        -0.3
Real Estate                    16.7        154%           -0.4           1.0          67%          -1.6        5.4%          138%             0.8           0.4          -3.1           -1.4        -0.3
Healthcare Equip               17.0        157%           -0.6           3.0          204%         -1.0        1.3%          34%             -0.6           0.6          -0.3            0.2        -0.5
Construction Materials         13.8        128%           -1.8           0.9          61%           1.1        2.2%          57%             -1.5          -1.7           0.8           -0.4        -0.6
Transport                      13.0        120%           -0.6           1.5          101%         -0.3        3.2%          81%             -0.3          -0.9          -1.9           -1.4        -0.6
Tobacco                        13.4        124%           -0.9           6.4          433%         -1.6        4.1%          104%            -0.6           1.4          -0.5            0.5        -0.7
Chemicals                      12.7        117%           -0.8           2.3          154%         -1.7        2.9%          74%             -0.9           1.0          -0.4            0.3        -0.8
Consumer Durables              14.7        136%           -0.7           2.9          195%         -1.7        1.8%          46%             -1.2           0.1          -1.3           -0.6        -1.1
Food Producers                 16.8        155%           -1.4           3.6          241%         -1.5        3.1%          79%             -0.5          -0.7          -1.2           -0.9        -1.1
Hotels & Leisure               15.0        139%           -1.6           2.8          191%         -2.0        3.4%          88%             -1.4          -0.1           0.4            0.1        -1.2
Commercial Services            15.6        144%           -1.4           4.5          306%         -2.1        2.3%          60%             -1.1           0.0          -0.7           -0.4        -1.3
Beverages                      16.3        151%           -1.6           3.3          225%         -2.3        2.0%          52%             -1.6          -1.0          -2.1           -1.6        -1.8
Retailing                      15.9        148%           -1.5           3.5          238%         -2.8        3.2%          81%             -1.4          -0.5          -3.1           -1.8        -1.9
A high z-score indicates the sector is cheap on all metrics

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



Figure 127: US valuation scorecard – cheapest sector is at the top
                                           12m fwd P/E                                   P/B                                    Div yield                     Eco PE       CFROI     HOLT Score   Total Z-
        US sectors
                              Absolute        Relative     Z-Score        Absolute     Relative     Z-Score      Absolute       Relative        Z-Score       Z-Score      Z-Score    Z-Score      Score
Technology Hardware               9.7           80%           1.3            2.8        128%           0.5        1.9%           82%               3.0           1.2          0.4        0.8         1.4
Semiconductors                   12.3          102%           0.5            2.1        99%            1.0        3.1%           138%              2.0           1.0          0.7        0.9         1.1
Software                         12.6          105%           1.3            4.1        192%           0.4        1.2%           53%               1.5           1.1          0.8        1.0         1.0
Pharmaceuticals                  12.6          104%           0.4            3.1        144%           0.8        2.6%           114%              0.1           0.2          4.5        2.4         0.9
Food Retail                      12.6          105%           0.3            2.5        118%           0.5        2.1%           92%               1.2           0.8          1.9        1.3         0.8
Metals and Mining                 9.2           77%           0.4            1.4        67%            0.4        3.2%           140%              1.2           0.8          0.7        0.8         0.7
Div. Financials                   9.2           76%           0.3            0.9        39%            1.7        1.6%           71%              -0.8           1.4          1.0        1.2         0.6
Healthcare Equip                 11.2           93%           0.5            2.4        113%          -0.3        1.3%           56%               0.8           1.1          0.8        1.0         0.5
Insurance                         9.2           77%           0.1            0.9        42%            1.4        1.6%           72%              -0.9           1.2          1.1        1.1         0.4
Energy                           10.5           87%           0.4            1.8        82%            0.7        2.2%           98%              -0.7           0.0          1.6        0.8         0.3
Banks                             8.9           74%           0.2            1.1        52%            0.8        2.6%           115%             -0.9           1.6         -0.3        0.7         0.2
Capital Goods                    12.0           99%           0.4            2.6        121%          -0.4        2.5%           109%             -0.2           1.1          0.8        1.0         0.2
Commercial Services              15.0          124%          -1.2            2.2        100%           1.3        2.4%           106%              0.8           0.8         -1.4       -0.3         0.2
Food Producers                   14.7          122%          -1.3            2.2        101%           1.1        3.0%           132%             -0.3           0.1          2.0        1.1         0.1
Beverages                        15.8          131%           0.1            4.4        204%           1.1        2.0%           90%              -0.5          -0.5         -1.0       -0.7         0.0
Media                            13.3          110%           1.1            2.7        125%          -1.9        1.4%           60%               1.0           0.6         -1.4       -0.4         0.0
H/H Pers Prd                     16.0          133%          -1.0            4.1        190%           0.4        3.1%           136%              0.7           0.1         -1.8       -0.8        -0.2
Automobiles                       7.9           65%           0.1            2.1        95%           -0.1        1.3%           58%              -1.3           0.4         -0.1        0.1        -0.3
Transport                        12.1          100%          -0.1            3.2        146%          -1.7        2.2%           96%               1.0           0.8         -2.8       -1.0        -0.5
Utilities                        13.1          109%          -1.3            1.5        68%           -0.6        4.4%           194%             -0.7          -0.4          1.9        0.8        -0.5
Pulp & Paper                     11.2           93%           0.3            2.1        97%           -2.5        3.4%           150%             -0.1           0.6         -0.5        0.1        -0.5
Telecoms                         16.9          141%          -2.1            2.2        102%          -0.8        4.7%           208%              0.6           0.7         -1.6       -0.5        -0.7
Chemicals                        13.0          108%          -0.8            3.3        151%          -1.1        2.4%           105%             -0.9           1.0         -1.2       -0.1        -0.7
Real Estate                      29.6          246%           0.2            2.4        111%          -1.3        3.9%           175%             -0.6           0.0         -2.3       -1.1        -0.7
Hotels & Leisure                 16.5          137%          -1.2            4.4        201%          -1.8        2.4%           106%              1.3           0.6         -3.5       -1.5        -0.8
Construction Materials           64.9          539%          -0.5            2.0        92%            0.1        0.8%           34%              -2.8          -0.7         -1.6       -1.2        -1.1
Tobacco                          13.7          114%          -1.5           49.8       2300%          -3.0        4.5%           199%             -0.8           1.1         -1.2       -0.1        -1.3
Consumer Durables                15.0          125%          -1.2            3.5        162%          -2.7        1.6%           72%              -1.0           0.0         -2.0       -1.0        -1.5
Retailing                        17.2          143%          -2.0            4.3        200%          -2.4        1.2%           52%               0.0          -0.3         -3.0       -1.6        -1.5
Sectors are ranked with cheapest at the to the most expensive at the bottom

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




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Figure 128: Scorecard of US sectors on historical and prospective sales and earnings
growth
European                                                     EPS growth                                                 Sales growth                           average z-
sector                               2007-11          2012e-14e      CAGR              z-score      2007-11       2012e-14e       CAGR             z-score       score
H/H Pers Prd                           12.2               7.5          10.4               0.6         13.9            2.8           9.6               1.8          1.2
Beverages                              13.1              11.4          12.5               0.9          5.9            6.9           6.3               1.0          0.9
Tobacco                                 5.7               8.1           6.6               0.1         14.2            2.7           9.8               1.8          0.9
Pharma                                  9.6               5.9           8.2               0.3         11.1            2.9           8.0               1.4          0.8
Semis                                  31.9               8.6          22.6               2.4         -2.8            1.6          -1.2              -0.8          0.8
Comm. Svs                              14.8              11.2          13.4               1.1          1.8            5.6           3.2               0.2          0.7
S/W & Svs                              12.5              11.2          12.0               0.9          1.0            8.5           3.7               0.4          0.6
H/C Eq/Svs                             12.4              11.8          12.1               0.9          1.7            6.9           3.6               0.3          0.6
Autos                                  16.4              16.7          16.5               1.5         -2.4            6.8           0.9              -0.3          0.6
Met & Min                               4.8               0.7           3.2              -0.4         12.8            2.8           9.0               1.6          0.6
Chemicals                               9.2               7.1           8.4               0.3          3.2            5.2           3.9               0.4          0.4
Energy                                  2.0               5.4           3.2              -0.4          8.7           -0.1           5.3               0.7          0.2
Fd Prd                                  2.9               8.1           4.8              -0.2          2.1            7.1           3.9               0.4          0.1
Insurance                               3.3              15.8           7.8               0.2          0.8            3.9           2.0               0.0          0.1
Cap Gds                                 4.2               8.8           5.9               0.0          1.6            4.0           2.5               0.1          0.0
Fd/Stpl Rtl                             4.1               5.7           4.7              -0.2          1.9            4.5           2.9               0.2          0.0
Cons Dur                                7.5              12.2           9.2               0.5         -4.7            8.1          -0.1              -0.5          0.0
Utilities                              -2.7               3.8          -0.3              -0.9          8.3            1.9           5.9               0.9          0.0
Transpt                                 2.2              16.2           7.2               0.2         -3.6            5.1          -0.4              -0.6         -0.2
Telecoms                                2.4               4.6           3.3              -0.4          1.1           -0.5           0.5              -0.4         -0.4
Media                                  11.6               7.5          10.0               0.6         -8.3            3.6          -4.0              -1.5         -0.4
Retailing                               8.2              11.1           9.3               0.5        -10.8            4.6          -5.3              -1.8         -0.6
Div Fin                                -9.0              11.7          -1.8              -1.2          1.2            1.0           1.1              -0.2         -0.7
Real Estate                            -6.8               4.2          -2.8              -1.3          1.1            2.6           1.7              -0.1         -0.7
Cons Svs                                6.8               8.9           7.6               0.2        -10.5            4.5          -5.2              -1.7         -0.8
Tech H/w                               -3.9               6.0          -0.3              -0.9          0.2           -2.6          -0.8              -0.7         -0.8
Banks                                 -13.5              13.4          -4.3              -1.5          0.9            1.4           1.1              -0.2         -0.9
Cons Mat                              -28.2              31.0         -10.0              -2.4         -1.4            5.3           1.1              -0.3         -1.3
Pap/For Prd                            -4.3               2.1          -2.0              -1.2        -10.2            0.8          -6.3              -2.0         -1.6

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



Figure 129: US sectors: household and personal products and beverages feature in the
segment of high growth and attractive valuation
                                                                                                                                            High growth /
                                                                                                                                      attractive valuation
                       1.2                                                                                                                                   H/H Pers Prd
                                                                                                              Insurance            Pharma
                       0.8                                                                  Telecoms                         Met & Min                       Beverages

                                                                                        Utilities
                                                                                                Media                             S/W & Svs
                       0.4
   Valuation z-score




                                                                                             Cons Dur         Fd/Stpl Rtl
                                                              Real Estate                                                H/C Eq/Svs
                                                                                        Transpt
                         0                                                                                                 Semis
                                                                                                                  Cap Gds Tobacco
                                                                                            Retailing
                       -0.4                                                          Tech H/w                               Chemicals
                                                                       Banks
                                                                                                          Fd Prd
                                                                                          Div Fin                          Autos
                       -0.8
                                                                                                                     Energy
                                     Pap/For Prd
                       -1.2
                                                                                     Cons Svs
                                                                     Cons Mat                                                     Comm. Svs
                       -1.6
                              -1.9             -1.5           -1.1            -0.7           -0.3        0.1                0.5           0.9          1.3         1.7
                                                                                              Growth z-score


Source: Thomson Reuters, Credit Suisse research




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Appendix 3: Outperform rated NJA growth stocks
and quality growth
Figure 130: Outperform-rated NJA growth stocks ranked by upside potential on HOLT
                                                                                                -----P/E (12m fwd) ------                ------ P/B -------                  2012e, %         HOLT       2012e Momentum, %
                                                                                                                                                                                                                                      Consensus         Share price,
                             Forecast CFROI                                                                          rel to mkt %                rel to mkt %                                 Price, %                             recommendation      local currency Credit Suisse
                                                 CFROI Median - Five
Name                         versus 3yr Hist.                        5-yr asset growth   Abs       rel to Industry   above/below       Abs       above/below           FCY          DY       change to   3m EPS        3m Sales     (1=Buy; 5=Sell)       (19 Nov) rating
                                                       Year
                                 Median                                                                                average                     average                                      best

Hyundai Mobis                     -3.2                  19.6               20.5          6.9           86%              -52%           1.9           35%               3.8          0.7       131.2       -1.7           1.3             1.7            267,500.0 Outperform
Cnooc                             -3.9                  15.8               12.8          9.0           85%              13%            2.3            0%               4.6          2.7       101.4       -4.1           1.0             2.5                 16.0    Outperform
United Tractors                    0.3                  11.9               18.6          12.7         109%              27%            3.0          -32%               3.1          2.9        97.5      -10.9           -7.4            2.8            19,600.0     Outperform
Hcl Technologies                   5.5                  16.8               12.2          12.9          94%              -4%            4.3            7%               4.3          1.6        90.8       19.0           3.8             2.1              616.2      Outperform
Kweichow Moutai 'A'               10.7                  30.8               26.0          13.9          86%              -39%           10.3          55%               na           1.7        88.7       5.9            6.4             1.3              214.1      Outperform
Hindustan Zinc                    -4.6                  17.6               17.8          8.8           77%              42%            2.2           27%               7.9          1.9        81.5       2.8            -2.4            2.0              133.9      Outperform
China Mobile                      -1.3                  12.0               10.6          11.2          93%              -19%           2.2          -39%               6.7          3.9        78.2       -2.0           -0.9            2.7                 85.2    Outperform
Luzhou Lao Jiao 'A'               10.4                  42.6                8.9          10.4          64%              -65%           7.7           33%               na           3.5        67.4       6.0            9.4             1.3                 33.1    Outperform
Samsung Engineering               -1.5                  22.5               24.3          9.4           81%               3%            4.0           54%               na           2.3        55.0       -8.2           -0.2            2.0            145,000.0 Outperform
China Shenhua En.Co.'H'            0.4                  11.7               12.6          10.9         103%               1%            2.4          -15%               3.4          3.3        51.9       -2.3           -0.1            2.0                 30.8    Outperform
Astra International                1.6                  14.5               12.4          14.7         183%              18%            5.3           13%               2.6          2.7        36.3       -0.6           0.3             2.1             7,800.0     Outperform
Coal India                        -0.3                  13.0                5.4          12.3         116%              13%            5.5            7%               5.9          2.6        19.7       -0.7           -0.1            2.2              351.5      Outperform
Tata Consultancy Svs.             -0.9                  30.1               18.4          17.9         131%              24%            8.8            7%               3.5          1.5        19.2       0.8            1.3             2.4             1,261.5     Outperform
Shanxi Xinghuacun Fen Wine         9.0                  16.9               11.5          20.8         128%              -2%            15.7         160%               -2.0         0.8        9.5        10.5           5.6             1.5                 35.7    Outperform
Fac. 'A'
Sembcorp Industries               -4.0                  13.7                6.0          11.2          97%               4%            2.3           13%               na           3.3        7.6        1.2            0.9             1.7                 4.8     Outperform
Singapore Telecom                 -2.7                   9.6                5.8          12.9         106%               8%            2.2          -34%               6.3          5.1        2.1        -3.1           -0.1            3.0                 3.2     Outperform
Digi.Com                           3.1                  15.5                9.1          23.1         191%               8%            28.3         336%               5.1          4.9        0.8        -0.6           0.2             3.3                 4.8     Outperform
Lg Chem                           -5.2                  12.6               10.3          11.2          87%              91%            2.2           42%               2.1          1.3        -5.9       -9.8           -2.7            1.7            300,000.0 Outperform
Kangwon Land                      -6.4                  17.9                8.6          13.8          82%              60%            2.5           -4%               9.7          3.3       -12.6       -4.8           -2.7            2.0            28,100.0     Outperform
Itc                               -0.7                  19.0                6.8          26.8         196%              77%            11.4         110%               2.2          1.9       -47.2       1.3            0.7             2.0              282.0      Outperform

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



Figure 131: Outperform-rated NJA quality growth stocks with potential upside on HOLT, ranked by upside potential on
HOLT
MSCI NJA median                5%               14%             15%            9%              6%              13%             14%            10%               10.9
                                                Analyst estimates                                               IBES estimates                                                                              12m fwd PE                         Share price,
                                                                                                                                                            Long-term HOLT price                                                 Rel mkt,         local
                                  EPS CAGR                        Sales CAGR                     EPS CAGR                           Sales CAGR                                                                                                                        CS rating
Company                                                                                                                                                    EPS growth to best (%)                 Abs            Rel            devn from       currency
                             2007-12        2012-14            2007-12     2012-14        2007-12           2012-14         2007-12          2012-14                                                                             average        (19 Nov)
Shimao Property Holdings       19%              17%             29%           16%           11%                17%             29%            14%               11.8                38             7.7           69%              -9%                 15.2              Outperform
Astra International            24%              26%             22%           15%           24%                15%             21%            14%               12.3                36            14.3          129%              52%             7,800.0               Outperform
Tencent Holdings               52%              35%             63%           31%           51%                26%             62%            28%               23.3                34            23.0          209%              -6%                 246.0             Outperform
Largan Precision               11%              21%             25%           18%           11%                25%             24%            20%               11.1                28            15.8          143%               8%                 694.0             Outperform
Lupin                          23%              19%             28%           24%           28%                17%             35%            15%               20.1                26            19.7          178%              38%                 562.1             Outperform
Ncsoft                         24%              68%             17%           21%           25%                60%             19%            23%               27.5                    -3        12.2          111%              -27%          156,000.0               Outperform
Ayala Land                     15%              21%             16%           18%           14%                20%             17%            20%               18.3                -11           29.2          264%              15%                 23.3              Outperform
Hyundai Engr.& Con.            16%              23%             18%           13%           13%                23%             17%            13%               8.1                 -16           10.0           90%              -4%            63,000.0               Outperform
Olam International             9%               48%             26%           14%           19%                28%             29%            15%               18.8                -24            9.6           87%              -44%                 1.7              Outperform
Belle International Hdg.       18%              16%             24%           16%           18%                17%             24%            16%               16.7                -29           17.7          160%              -9%                 14.8              Outperform
Godrej Consumer Products       27%              16%             39%           26%           29%                23%             46%            20%               22.0                -31           26.8          243%              48%                 677.9             Outperform
Hengan Intl.Gp.                26%              23%             28%           22%           25%                20%             28%            20%               24.7                -44           20.7          187%               9%                 70.2              Outperform
Tingyi Cymn.Isle.Hldg.         18%              32%             25%           18%           18%                20%             24%            18%               23.2                -53           28.4          257%              24%                 23.0              Outperform
Lg Hhld.& Hlth.Care            34%              19%             28%            9%           32%                20%             18%            12%               20.0                -63           27.2          246%              67%           641,000.0               Outperform

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




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Appendix 4: Full list of companies that our analysts
identified as growth in Europe and the US
Figure 132: European growth stocks (as selected by our analysts) – Outperform or Neutral rated
                                -----P/E (12m fwd) ------             ------ P/B -------           2012e, %      HOLT       2012e Momentum, %
                                                                                                                                                    Consensus        Share price,
                                                     rel to mkt %             rel to mkt %                       Price, %                        recommendation     local currency
Name                     Abs       rel to Industry   above/below    Abs       above/below    FCY          DY    change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov) Credit Suisse rating
                                                       average                  average                            best
Unibail-Rodamco          17.1          81%              17%         1.4           10%        6.0          4.8      na        1.0        3.9            2.9             169.0      Outperform
Edenred                  22.2         141%              40%         -5.0           na        5.0          3.3      na        -1.4       -1.7           2.5             23.8       Neutral
Aberdeen Asset Man.      13.2         130%              13%         3.7           63%        8.0          3.2     90.1       2.7        1.2            2.1             333.6      Outperform
Sberbank Of Russia       5.7           59%              -23%        1.6           20%        na           3.1     69.3       10.0       5.7            1.7             87.9       Outperform
SAP                      16.5         121%              -32%        5.4          -42%        3.6          1.5     58.2       -0.6       1.6            2.3             58.8       Outperform
Spectris                 12.3         118%              21%         3.5          -68%        6.9          2.1     56.8       -2.3       -1.7           2.2            1,819.0     Outperform
Perform Group            24.7         179%              26%         0.2           58%        na           0.0     48.4       0.5        1.6            1.8             397.0      Outperform
Sonova N                 18.3         142%              -10%        4.4          -22%        4.3          1.4     42.8       0.7        0.2            2.4             100.6      Outperform
Richemont                14.9          96%             133%         3.5           69%        3.0          1.1     25.4       5.2        2.9            2.4             68.6       Neutral
Rotork                   19.5         169%              54%         9.0           80%        4.0          1.9     19.0       0.6        1.6            2.8            2,426.0     Outperform
Capita                   13.2          84%              -41%        8.6          -36%        4.8          3.2     17.5       0.7        1.0            2.7             722.5      Outperform
The Swatch Group 'B'     14.0          89%              -52%        2.8           23%        4.0          1.7     9.0        1.8        0.9            2.3             432.2      Outperform
Paddy Power              20.8         124%              62%         12.0          99%        5.5          2.0     8.3        -0.2       3.3            2.9             57.3       Outperform
Johnson Matthey          13.7         107%              28%         3.2           40%        na           2.5     8.0        -5.4       -4.2           2.6            2,190.0     Outperform
Wpp                      10.5          76%              -18%        1.5          -86%        8.8          3.4     7.8        -1.2       -1.8           2.0             825.0      Outperform
Halma                    15.1         146%              35%         4.0           21%        5.3          2.4     7.2        -1.0       -1.0           2.9             419.5      Outperform
Compass Group            14.9          89%              28%         3.8           43%        4.8          3.1     3.5        -1.4       -0.3           2.5             699.5      Outperform
William Demant Hldg.     18.5         143%              -5%         8.7          -64%        4.2          0.0     3.2        -6.5       -0.4           3.3             463.6      Neutral
Aker Solutions           10.8         102%              29%         2.7          -10%        -4.3         3.0     0.0        4.1        5.8            1.9             104.7      Outperform
Lvmh                     16.4         105%               3%         2.9          -10%        4.1          2.3     -1.2       -1.2       1.8            2.0             129.0      Outperform
Partners Group Holding   17.4         171%              49%         8.8           22%        na           3.0     -2.7       -3.1       0.3            2.6             192.9      Neutral
Atlas Copco 'A'          14.7         127%              61%         7.1          120%        4.2          3.3     -3.0       -0.8       -1.3           2.9             167.6      Outperform
Subsea 7                 12.6         119%              -25%        1.3          -46%        4.2          1.9     -4.4       10.5       -0.9           2.0             128.7      Neutral
Hammerson                23.0         108%              28%         0.9           21%        4.1          3.6     -4.9       1.7        0.3            2.5             461.5      Outperform
Moneysupermarket         14.3         105%              34%         4.4           98%        5.4          3.7     -5.5       3.4        0.5            2.3             153.5      Outperform
Com Gp.
Fresenius Med.Care       16.3         126%               2%         2.6           19%        4.5          1.4    -11.3       -1.9       -1.1           2.4             51.6       Outperform
Sabmiller                16.7         103%              50%         1.7          -11%        5.5          2.3    -13.5       0.5        0.8            2.6            2,633.0     Outperform
Burberry Group           17.5         112%              35%         6.3           45%        4.4          2.1    -13.8       -6.2       -4.4           2.5            1,233.0     Outperform
Umicore                  14.9         131%              47%         2.7           75%        3.6          2.6    -14.4       -4.0       -2.3           2.7             39.4       Neutral
Diageo                   16.7         103%              47%         8.1           71%        4.2          2.5    -14.6       0.7        -1.5           2.1            1,846.0     Outperform
Eutelsat                 15.0         108%               6%         3.1            7%        1.9          4.2    -18.2       -1.7       -0.1           2.3             23.6       Outperform
Communications
Boss (Hugo)              15.4          99%              29%         10.9         137%        4.1          4.1    -18.8       -4.5       0.0            2.0             79.2       Neutral
Novo Nordisk 'B'         20.9         169%              34%         13.7         207%        3.5          1.8    -19.5       5.1        3.6            2.4             907.0      Neutral
Intertek Group           19.9         127%              60%         8.8          -51%        3.0          1.4    -20.1       2.0        1.7            2.8            2,898.0     Outperform
Spirax-Sarco             15.1         131%              41%         3.8           36%        4.9          2.7    -20.2       -4.9       -1.1           2.6            2,147.0     Neutral
Petroleum Geo            11.6         110%              -72%        2.1          -55%        2.8          1.4    -21.2       26.8       3.4            1.9             97.7       Outperform
Services
Vienna Insurance         9.5           98%              -23%        1.0          -54%        6.3          3.6    -21.2       -3.5       2.3            2.3             34.2       Neutral
Group A
Pernod-Ricard            15.4          95%              46%         2.0           14%        4.3          1.9    -22.5       -2.7       0.4            2.7             84.9       Outperform
Dassault Systemes        21.6         158%               3%         4.9          -33%        4.5          0.9    -23.5       2.3        1.8            2.7             83.5       Neutral
Assa Abloy 'B'           14.7         127%              -6%         3.5            5%        4.7          2.4    -24.1       -1.5       -1.7           2.9             231.9      Outperform
Aggreko                  19.8         126%              45%         9.5          111%        1.5          1.1    -26.0       -3.5       -3.3           2.3            2,153.0     Neutral
Deutsche Post            11.5          85%              42%         1.7          -19%        8.0          4.6    -26.5       0.1        1.1            1.9             15.3       Outperform
Coloplast 'B'            19.8         153%              24%         11.8          89%        4.3          1.4    -27.8       0.2        0.3            3.1            1,311.0     Outperform
Ryanair Holdings         13.2          98%              -10%        2.0          -31%        9.6          8.8    -28.9       -3.2       -0.6           2.2              4.6       Outperform
Sgs 'N'                  21.4         136%              51%         7.6           77%        2.2          3.1    -31.2       -2.2       0.0            2.8            2,012.0     Neutral
Saipem                   14.2         133%              18%         3.3           28%        6.2          2.1    -33.6       -2.9       1.5            2.1             32.5       Outperform
Prudential               11.4         118%               7%         2.4          -18%        5.9          3.1    -33.8       0.6        1.4            2.2             880.0      Outperform
Whitbread                15.4          92%              87%         3.4          129%        6.4          2.3    -34.1       1.4        1.4            2.6            2,361.0     Neutral
Kuehne+Nagel Intl.       20.3         151%              70%         5.7           66%        4.3          3.3    -36.7       -1.7       0.2            2.6             113.8      Outperform
St.James'S Place         16.6         171%              60%         2.9            4%        na           2.6    -38.1       -0.7       -2.6           2.3             396.9      Neutral
Reed Elsevier            11.9          86%               6%         6.5           17%        8.4          3.8    -40.3       1.2        -0.3           2.2             607.5      Neutral
Ictl.Htls.Gp.            15.7          94%              44%         8.1          -51%        6.1          2.6    -40.4       -1.1       0.1            2.6            1,650.0     Outperform
Easyjet                  10.0          74%              -12%        1.6           15%        7.1          1.9    -44.2       11.5       0.1            2.3             682.0      Outperform
Chr Hansen Holding       21.4         166%              45%         5.1           49%        na           1.9    -50.4       2.0        0.5            2.7             187.3      Outperform
Domino'S Pizza Group     22.1         132%              47%         15.0          16%        4.8          2.7    -62.8       -1.3      -12.7           2.5             525.0      Neutral

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




Global Equity Strategy                                                                                                                                                                          70
                                                                                                                                                                                       23 November 2012


And below we show the same for the US.

Figure 133: US growth stocks (as selected by our analysts) – Outperform or Neutral rated
                                       -----P/E (12m fwd) ------                 ------ P/B -------           2012e, %         HOLT       2012e Momentum, %
                                                                                                                                                                  Consensus        Share price,
                                                            rel to mkt %                 rel to mkt %                          Price, %                        recommendation     local currency Credit Suisse
  Name                          Abs       rel to Industry   above/below    Abs           above/below    FCY              DY   change to   3m EPS    3m Sales    (1=Buy; 5=Sell)      (21 Nov)    rating
                                                              average                      average                               best
  Luxfer                        na             na               na          na                na        na               na      na        na         na             na               11.3      Outperform
  Manchester United Cl.A       29.7          177%              21%          na                na        0.8          0.0         na        na         na             2.0              13.2      Outperform
  Celgene                      13.3           80%             -72%          5.8              -60%       5.4          0.0       220.1       2.0        1.2            1.8              77.9      Neutral
  Broadcom 'A'                 11.1           79%             -69%          2.6              -54%       7.0          1.3       110.3       -2.1       -1.6           1.8              31.2      Outperform
  F5 Networks                  16.1          155%             -51%          5.9               9%        6.5          0.0        96.8       -1.5       -0.6           2.2              90.1      Outperform
  Qualcomm                     14.3          138%             -39%          3.7              -18%       5.5          1.6        93.1       -0.3       -0.4           1.9              62.1      Outperform
  Oracle                       11.3           83%             -40%          3.5              -56%       8.5          0.8        86.7       -0.1       -1.7           2.1              30.4      Outperform
  Emc                          13.1          126%             -47%          2.7              -40%       8.8          0.0        85.1       -2.4       -1.8           1.7              24.4      Outperform
  Apple                        11.2          107%             -58%          7.0             116%        8.1          1.7        82.1      -10.7       -2.7           1.7             561.7      Outperform
  Gilead Sciences              15.5           93%             -64%          7.5               6%        5.5          0.0        82.0       1.9        3.2            1.7              75.6      Neutral
  Mellanox                     19.2          185%              23%          7.2             162%        4.9          0.0        71.3       12.2       0.9            2.2              84.4      Neutral
  Check Point Sftw.Techs.      13.2           97%             -33%          3.0              -58%       8.2          0.0        62.7       -0.6       -1.1           2.0              45.5      Outperform
  Mastercard                   18.6          137%              26%         10.2              44%        4.3          0.2        57.9       -0.5       -2.5           1.9             479.4      Outperform
  Danaher                      15.0          130%               0%          2.1              -23%       7.8          0.2        56.6       -3.6       -2.2           1.8              53.0      Neutral
  Ihs 'A'                      19.0          121%               8%          4.2              27%        5.0          0.0        54.7       -3.8       -3.2           2.2              89.2      Outperform
  Salix Pharms.                12.6          102%             -71%          4.2               4%        4.7          0.0        37.9       10.7       -0.6           2.1              41.4      Outperform
  Teradata                     20.1          147%              38%          7.1              40%        4.6          0.0        37.2       3.6        -1.7           2.1              61.2      Outperform
  Google 'A'                   15.0          110%             -26%          3.8              -29%       5.9          0.0        35.1       -7.9       -3.1           1.9             665.9      Outperform
  Priceline.Com                17.4          104%             -34%         12.3              23%        4.7          0.0        34.1       -3.1       -4.3           2.1             639.6      Outperform
  Allergan                     19.5          157%               7%          5.3              -10%       -4.8         0.2        31.1       0.3        -0.9           1.9              90.9      Outperform
  Biogen Idec                  19.2          116%             -45%          5.2              10%        4.3          0.0        14.1       5.9        1.7            2.2             147.4      Outperform
  Mercadolibre                 28.1          206%             -17%         15.9              16%        3.0          0.5        11.2       4.4        -1.3           2.5              75.4      Neutral
  Jazz Pharmaceuticals          9.9           80%             -74%         11.9              -47%       na           0.0        10.6       3.0        1.9            1.4              52.0      Outperform
  Mead Johnson Nutrition       19.0          119%              18%         -73.9              na        2.9          1.8        9.9        -2.8       -4.3           2.2              66.1      Outperform
  Eog Res.                     21.1          199%              27%          2.5               2%        -4.4         0.6        6.4        12.4       2.0            1.9             118.1      Neutral
  Watson Pharms.               10.8           87%             -22%          3.1              28%        7.7          0.0        4.3        1.3        2.4            1.8              85.3      Outperform
  Nielsen Holdings Nv          14.4           92%              17%          2.3              13%        5.8          0.0        3.5        2.9        -1.1           2.1              28.1      Outperform
  Visa 'A'                     19.4          142%              32%          4.4              75%        4.4          0.7        1.5        3.3        1.0            1.9             146.7      Outperform
  Fmc Technologies             17.4          164%              20%          6.8              42%        -4.2         0.0        -0.7      -10.3       -0.6           2.3              41.0      Neutral
  Cabela'S                     14.4           86%              41%          2.6              76%        5.9          0.0        -0.8       3.4        0.9            2.1              46.5      Outperform
  Ralph Lauren Cl.A            18.6          119%              56%          4.1              63%        5.0          0.8        -2.5       -0.7       -1.4           2.4             156.5      Outperform
  Rockwell Automation          13.6          117%              41%          6.1              73%        5.3          2.4        -3.8       -3.2       -2.7           2.2              77.4      Outperform
  Hexcel                       14.2          123%             -40%          3.1              -75%       -1.7         0.0        -4.0       2.8        -1.7           2.1              25.1      Outperform
  Gardner Denver               13.6          117%              39%          2.8              63%        7.2          0.2        -6.2       0.2        -4.4           2.5              68.3      Outperform
  Fmc                          13.7          107%              89%          6.1              91%        3.1          0.6        -6.9       -0.2       0.6            2.3              53.9      Outperform
  Cytec Inds.                  15.0          116%              46%          1.9              -5%        na           0.8        -7.0      -33.1      -38.6           2.6              67.5      Outperform
  Nike 'B'                     16.9          108%              23%          4.2              22%        5.4          1.5       -11.2       1.3        -0.4           2.4              95.6      Neutral
  Mondelez International Inc    na             na               na          na                na        na               na    -11.7       na         na             na               25.4      Outperform
  Costco Wholesale             21.0          161%              31%          3.4              28%        4.4          1.1       -13.4       3.0        0.7            2.3              96.7      Outperform
  Carmax                       17.8          106%             -31%          3.0              43%        1.9          0.0       -14.1       -2.5       0.4            1.9              34.6      Outperform
  Dollar Tree                  14.3           86%              -5%          6.8              39%        4.3          0.0       -14.8       0.1        -0.9           2.3              41.5      Outperform
  Noble Energy                 15.5          146%             -13%          2.3              11%        -6.1         0.9       -15.0      -16.7       -4.9           2.0              95.3      Outperform
  Amazon.Com                   142.3         850%             163%         13.6              -58%       1.5          0.0       -18.1      -97.1       -1.9           2.0             238.0      Outperform
  Linear Tech.                 17.4          124%             -16%         10.1              -35%       7.3          3.1       -19.2      -18.0       -9.0           2.7              31.9      Outperform
  Dollar General               14.9           89%              27%          3.5              39%        4.0          0.0       -19.3       1.8        -0.1           1.8              48.0      Neutral
  Anadarko Petroleum           16.8          158%             -26%          1.9              -2%        2.4          0.5       -19.9       -3.5       -3.1           1.6              72.5      Outperform
  Acme Packet                  35.0          337%              41%          2.6              -42%       3.1          0.0       -20.8      -34.7       -8.1           2.9              18.3      Outperform
  Vmware                       27.7          203%             -14%          7.9              -2%        4.8          0.0       -23.2       4.6        0.2            2.3              88.1      Outperform
  Zumiez                       12.1           72%             -46%          2.4              -40%       3.6          0.0       -25.1       -5.4       -0.9           2.3              20.3      Neutral
  Yum! Brands                  19.7          117%              62%         18.2              -22%       4.0          1.7       -31.5       -0.1       -0.7           2.0              73.5      Outperform
  Nxp Semiconductors           10.6          102%              46%          5.6              28%        9.1          0.0       -32.8       -2.6       2.2            2.0              23.4      Outperform
  Edwards Lifesciences         27.7          214%              63%          7.5             111%        2.5          0.0       -33.6       -3.7       -3.3           2.3              83.7      Neutral
  Lululemon Athletica          32.2          206%              14%         16.7              59%        2.1          0.0       -35.5       12.7       0.7            2.2              70.0      Outperform
  Family Dollar Stores         15.1           90%              13%          5.9              70%        1.5          1.3       -35.8       2.5        2.5            2.4              68.8      Outperform
  Ignite Restaurant Group      15.8           94%               4%          na                na        -0.5         0.0       -36.1      -14.0       -1.5           1.8              12.9      Outperform
  Affiliated Managers          14.4          141%              36%          3.5              34%        na           0.0       -37.2       3.3        -1.2           1.9             126.7      Outperform
  Las Vegas Sands              17.5          104%             -44%          4.3              -35%       5.6          2.3       -38.7      -14.4       -5.4           2.1              43.7      Outperform
  Starbucks                    22.9          136%              -9%          8.6              57%        2.7          1.2       -39.1       -5.3       -1.1           2.0              50.5      Outperform
  Itc Holdings                 16.3          108%               1%          3.2              24%        -9.8         1.9       -39.7       3.1        0.7            2.3              77.2      Neutral
  Urban Outfitters             19.7          118%              35%          5.0              42%        2.9          0.0       -40.0       8.6        0.1            2.4              37.4      Neutral
  Chipotle Mexn.Grill          25.6          153%              -5%          7.9              45%        2.9          0.0       -40.0       0.0        -1.6           2.6             275.5      Neutral
  Panera Bread 'A'             24.1          144%              25%          7.6             134%        3.1          0.0       -40.8       3.3        1.9            2.4             161.3      Outperform
  Starwood Htls.& Rsts.        19.8          118%              14%          3.4              41%        4.6          2.0       -45.4       4.9        0.1            2.2              52.6      Outperform
  Worldwide
  Under Armour 'A'             35.7          229%              30%          8.8              53%        1.7          0.0       -48.4       1.7        0.9            2.6              52.3      Neutral
  Tumi Holdings                27.5          162%              31%          na                na        2.5          0.0       -49.4       6.4        1.1            1.6              21.6      Outperform
  Verisk Analytics Cl.A        22.0          140%              39%         -82.7              na        2.8          0.0       -50.8       1.1        1.3            2.2              48.4      Outperform
  Whole Foods Market           32.4          249%              58%          5.8              67%        2.4          0.6       -58.3       2.1        0.2            2.1              92.1      Neutral
  Heartware International      -32.1           nm               na          9.4              54%        na           0.0       -63.5       nm         3.1            2.1              81.6      Outperform
  Fusion-Io                    50.1          482%             -19%          4.9              -1%        0.3          0.0       -63.6       47.1       9.3            2.4              24.1      Outperform
  Volcano                      62.6          484%             -11%          4.5              30%        0.8          0.0       -65.8      -16.7       -1.8           1.9              26.9      Outperform
  Salesforce.Com               76.9          563%              16%         12.7              23%        2.6          0.0       -66.9       1.1        0.3            2.1             158.8      Outperform
  Marriott Intl.'A'
Source: MSCI, IBES, Factset, Thomson Reuters, Credit Suisse HOLT, Credit Suisse research
                       18.6    111%     24%      -15.7      na      7.1      1.2    -74.1                                                  0.7        0.5            2.3              34.8      Outperform
  Five Below                   52.0          311%              24%          na                na        0.8          0.0       -77.2       na         na             2.6              28.8      Neutral
  Netsuite                     208.0        1523%             171%         33.8             154%        0.9          0.0       -91.1       13.8       2.2            2.8              60.1      Outperform




Global Equity Strategy                                                                                                                                                                                           71
                                                                            23 November 2012



Companies Mentioned (Price as of 22-Nov-2012)
Luzhou Laojiao (000568.SZ, Rmb32.18)
Hyundai E&C (000720.KS, W63,200, OUTPERFORM, TP W78,000)
Hyundai Mobis (012330.KS, W263,500, OUTPERFORM, TP W402,000)
Asiana Airlines (020560.KS, W5,980, UNDERPERFORM, TP W6,750)
Samsung Engineering Co Ltd (028050.KS, W145,500, OUTPERFORM, TP W210,000)
Cathay Pacific (0293.HK, HK$13.96)
Tingyi (0322.HK, HK$21.7)
Kangwon Land Inc. (035250.KS, W27,800, OUTPERFORM, TP W32,000)
NC Soft (036570.KS, W159,500, OUTPERFORM[V], TP W275,000)
LG Household & Healthcare (051900.KS, W659,000, OUTPERFORM, TP W745,000)
LG Chem Ltd. (051910.KS, W296,500, OUTPERFORM[V], TP W432,000)
China Eastern Airlines (0670.HK, HK$2.66)
Tencent Holdings (0700.HK, HK$259.6)
Air China (0753.HK, HK$5.13)
Shimao Property Holdings Ltd (0813.HK, HK$15.38)
CNOOC Ltd (0883.HK, HK$16.36)
China Mobile Limited (0941.HK, HK$88.2)
Lenovo Group Ltd (0992.HK, HK$6.99)
Hengan International (1044.HK, HK$69.9)
China Southern Airlines (1055.HK, HK$3.41)
China Shenhua Energy Company Limited (1088.HK, HK$31.75)
Sinopharm Group Co (1099.HK, HK$24.7)
AIA Group (1299.HK, HK$30.45)
Belle International Holdings Ltd (1880.HK, HK$15.14)
Ping An (2318.HK, HK$58.8)
Taiwan Semiconductor Manufacturing (2330.TW, NT$91.3)
Foxconn Technology Corp (2354.TW, NT$93.6)
Asustek (2357.TW, NT$314.0)
China Airlines (2610.TW, NT$11.0)
EVA Air (2618.TW, NT$16.3)
China Life (2628.HK, HK$22.5)
Largan Precision (3008.TW, NT$692.0)
Moutai (600519.SS, Rmb217.29)
Shanxi Xinghuacun Fen Wine (600809.SS, Rmb36.76)
Nabtesco Corporation (6268.T, ¥1,641)
SMC (6273.T, ¥13,640)
NTN (6472.T, ¥172)
THK (6481.T, ¥1,454)
Toshiba (6502.T, ¥290)
Mitsubishi Electric (6503.T, ¥647)
Yaskawa Electric Corporation (6506.T, ¥664)
Keyence (6861.T, ¥21,950)
Fanuc (6954.T, ¥14,000)
Apple Inc (AAPL.OQ, $561.7)
ABB (ABBN.VX, SFr17.16)
Abbott Laboratories (ABT.N, $63.33)
Aberdeen Asset Managers (ADN.L, 333.6p)
Activision Blizzard, Inc (ATVI.OQ, $11.35)
Adidas AG (ADSGn.F, €65.0)
Aggreko (AGGK.L, 2153.0p)
Allergan Inc. (AGN.N, $90.92)
AirAsia (AIRA.KL, RM2.85)
Air Liquide (AIRP.PA, €93.22)
Aker Solutions (AKSO.OL, k104.7)
Ayala Land (ALI.PS, P23.1)
Alesco Corporation (ALS.AX, A$1.91)
AMEC (AMEC.L, 1022.0p)
Affiliated Managers Group (AMG.N, $126.74)
American Express Co. (AXP.N, $55.98)
Amgen Inc. (AMGN.OQ, $86.65)
Amazon com Inc. (AMZN.OQ, $238.03)
Anadarko Petroleum Corp. (APC.N, $72.51)
Acme Packet Inc. (APKT.OQ, $18.27)
Astra International (ASII.JK, Rp7,750)
ASML Holding N.V. (ASML.AS, €42.98)
Assa Abloy (ASSAb.ST, Skr231.9)
Atlas Copco (ATCOa.ST, Skr167.6)
Activision Blizzard, Inc (ATVI.OQ, $11.35)
American Express Co. (AXP.N, $55.98)
AstraZeneca (AZN.L, 2841.5p)
Boeing (BA.N, $73.15)
Bayer (BAYGn.DE, €67.75)
Bed Bath & Beyond (BBBY.OQ, $58.95)
Bank Central Asia (BBCA.JK, Rp8,900)
Bank Negara Indonesia (BBNI.JK, Rp3,575)
Bank Rakyat Indonesia (BBRI.JK, Rp7,100)
Biogen Idec (BIIB.OQ, $147.36)
Bank Mandiri (Persero) (BMRI.JK, Rp8,600)
BMW (BMWG.F, €66.19)
Bristol Myers Squibb Co. (BMY.N, $32.41)
Hugo Boss (BOSSn.DE, €79.21)
Bank of Philippine Islands (BPI.PS, P90.0)




Global Equity Strategy                                                                   72
                                                          23 November 2012



Burberry Group (BRBY.L, 1233.0p)
Broadcom Corp. (BRCM.OQ, $31.19)
Bureau Veritas (BVI.PA, €83.61)
BorgWarner, Inc. (BWA.N, $63.72)
Cabelas (CAB.N, $46.53)
Cameron International Corp. (CAM.N, $53.12)
Celgene Corp. (CELG.OQ, $77.86)
Compagnie Financiere Richemont SA (CFR.VX, SFr68.55)
Check Point Software Technologies Ltd. (CHKP.OQ, $45.5)
Christian Hansen Holding (CHRH.CO, Dkr187.3)
Cobalt International Energy (CIE.N, $21.68)
Chipotle Mexican (CMG.N, $275.46)
Cigna Corp. (CI.N, $52.01)
Coal India (COAL.BO, Rs354.75)
Colgate-Palmolive India (COLG.BO, Rs1330.7)
Coloplast B (COLOb.CO, Dkr1311.0)
Continental (CONG.DE, €80.03)
Costco Wholesale Corporation (COST.OQ, $96.74)
Compass (CPG.L, 699.5p)
Capita (CPI.L, 722.5p)
Cree (CREE.OQ, $30.85)
Salesforce.com Inc. (CRM.N, $158.78)
Cisco Systems Inc. (CSCO.OQ, $18.48)
Cognizant Technology Solutions Corp. (CTSH.OQ, $65.51)
CVS Caremark Corporation (CVS.N, $45.74)
Cytec (CYT.N, $67.46)
Daikin Industries (6367.T, ¥2,480)
Danone (DANO.PA, €48.94)
Dassault Systemes (DAST.PA, €83.5)
Deere & Co. (DE.N, $82.83)
Dollar General (DG.N, $48.0)
Diageo (DGE.L, 1846.0p)
Danaher Corporation (DHR.N, $53.04)
Walt Disney Company (DIS.N, $48.68)
Discovery Communications, Inc. (DISCA.OQ, $57.38)
Dollar Tree (DLTR.OQ, $41.47)
Domino’s Pizza Group (DOM.L, 525.0p)
Deutsche Post DHL (DPWGn.DE, €15.26)
DiGi.Com (DSOM.KL, RM4.77)
DSV (DSV.CO, Dkr133.0)
Dufry (DUFN.S, SFr124.3)
Edenred (EDEN.PA, €23.82)
Eli Lilly & Co. (LLY.N, $47.42)
EMC Corp (EMC.N, $24.35)
Emerson (EMR.N, $48.55)
EOG Resources (EOG.N, $118.14)
Energy Recovery Inc. (ERII.OQ, $2.91)
Eutelsat Communications (ETL.PA, €23.58)
Eaton Corporation (ETN.N, $50.73)
Edwards LifeSciences Corp. (EW.N, $83.7)
Expeditors International of Washington (EXPD.OQ, $36.8)
Experian (EXPN.L, 1020.0p)
EasyJet (EZJ.L, 682.0p)
Freeport-McMoRan Copper & Gold (FCX.N, $38.27)
Family Dollar (FDO.N, $68.83)
FedEx Corporation (FDX.N, $87.65)
F5 Networks (FFIV.OQ, $90.05)
Fusion-io (FIO.N, $24.11)
Five Below, Inc. (FIVE.OQ, $28.77)
Flowserve Corp. (FLS.N, $138.16)
FMC Corporation (FMC.N, $53.88)
Fresenius Medical Care AG & Co. (FMEG.DE, €51.55)
Fresenius (FREG.DE, €84.25)
FMC Technologies, Inc. (FTI.N, $41.0)
General Dynamics Corporation (GD.N, $64.36)
Gardner Denver, Inc. (GDI.N, $68.31)
G.F. Inbursa (GFINBURO.MX, $34.91)
PT Garuda Indonesia Tbk (GIAA.JK, Rp700)
Gilead Sciences Inc. (GILD.OQ, $75.55)
Godrej Consumer Products Ltd (GOCP.BO, Rs669.95)
Google, Inc. (GOOG.OQ, $665.87)
GlaxoSmithKline plc (GSK.L, 1334.5p)
G.U.D. Holdings (GUD.AX, A$8.09)
WW Grainger Inc. (GWW.N, $190.39)
Halliburton (HAL.N, $31.7)
HCL Technologies (HCLT.BO, Rs627.0)
Hikma Pharmaceuticals Plc (HIK.L, 738.0p)
Halma (HLMA.L, 419.5p)
Hammerson Property (HMSO.L, 461.5p)
Honeywell International Inc. (HON.N, $60.59)
Starwood Hotels & Resorts Worldwide (HOT.N, $52.64)
Hargreaves Lansdown (HRGV.L, 770.5p)
Hermes International (HRMS.PA, €232.0)
HeartWare International Inc (HTWR.OQ, $81.64)




Global Equity Strategy                                                 73
                                                           23 November 2012



Hexcel Corporation (HXL.N, $25.1)
Hyflux Ltd (HYFL.SI, S$1.3)
Hindustan Zinc Limited (HZNC.BO, Rs132.75)
Intercontinental Hotels (IHG.L, 1650.0p)
IHS (IHS.N, $89.16)
Imperial Tobacco (IMT.L, 2472.0p)
Intel Corp. (INTC.OQ, $19.36)
Ignite Restaurant Group (IRG.OQ, $12.92)
ITC Ltd (ITC.BO, Rs288.95)
ITC Holdings Corp (ITC.N, $77.15)
Intertek (ITRK.L, 2898.0p)
Illinois Tool Works, Inc. (ITW.N, $59.77)
IVRCL Infrastructures and Projects Ltd (IVRC.BO, Rs39.7)
Jazz Pharmaceuticals (JAZZ.OQ, $52.02)
Johnson Controls (JCI.N, $26.76)
Johnson Matthey (JMAT.L, 2190.0p)
Johnson & Johnson (JNJ.N, $69.59)
KLA-Tencor Corp. (KLAC.OQ, $44.13)
CarMax Inc. (KMX.N, $34.62)
Kuehne + Nagel (KNIN.VX, SFr113.8)
Kraft Foods Group (KRFT.OQ, $44.51)
Life Technologies Corporation (LIFE.OQ, $49.22)
Linear Technology Corp. (LLTC.OQ, $31.9)
Eli Lilly & Co. (LLY.N, $47.42)
lululemon athletica Inc. (LULU.OQ, $69.98)
Lupin Ltd (LUPN.BO, Rs564.45)
LVMH (LVMH.PA, €129.0)
Las Vegas Sands Corp. (LVS.N, $43.72)
Luxfer (LXFR.N, $11.33)
MasterCard Inc. (MA.N, $479.43)
Malaysia Airports (MAHB.KL, RM5.53)
Manchester United (MANU.N, $13.15)
Metropolitan Bank & Trust (MBT.PS, P95.0)
McDonald's Corp (MCD.N, $86.01)
Mondelez (MDLZ.OQ, $25.41)
MercadoLibre Inc. (MELI.OQ, $75.4)
Metso (MEO1V.HE, €27.7)
Mead Johnson Nutrition Co. (MJN.N, $66.12)
Millennium & Copthorne (MLC.L, 461.0p)
Mellanox Technologies Ltd. (MLNX.OQ, $84.41)
Moneysupermarket.com (MONY.L, 153.5p)
Mindray Medical International Ltd (MR.N, $33.77)
Merck & Co., Inc. (MRK.N, $43.89)
Microsoft Corporation (MSFT.OQ, $26.95)
NetSuite Inc. (N.N, $60.09)
Noble Energy (NBL.N, $95.31)
Nestle (NESN.VX, SFr59.25)
NiSource Inc. (NI.N, $23.93)
Nike Inc. (NKE.N, $95.6)
Nielsen Holdings (NLSN.N, $28.05)
Novartis (NOVN.VX, SFr55.65)
Novo Nordisk A/S (NOVOb.CO, Dkr907.0)
NXP Semiconductors N.V. (NXPI.OQ, $23.35)
Melrose (NYN.L, 209.5p)
Olam (OLAM.SI, S$1.68)
Oracle Corporation (ORCL.OQ, $30.39)
L'Oreal (OREP.PA, €102.95)
O'Reilly Automotive, Inc. (ORLY.OQ, $91.55)
Paddy Power (PAP.I, €57.3)
Priceline.com (PCLN.OQ, $639.58)
Precision Castparts (PCP.N, $176.92)
Perform Group Plc (PER.L, 397.0p)
Pernod-Ricard (PERP.PA, €84.94)
Petrofac (PFC.L, 1590.0p)
Pfizer (PFE.N, $24.35)
Partners Group (PGHN.S, SFr192.9)
Petroleum Geo Services (PGS.OL, k97.65)
Parker Hannifin Corporation (PH.N, $80.1)
Philips (PHG.AS, €19.88)
Pall Corporation (PLL.N, $60.52)
Panera Bread (PNRA.OQ, $161.28)
Prudential (PRU.L, 880.0p)
Pearson (PSON.L, 1182.0p)
Quanta Services (PWR.N, $25.2)
Panalpina (PWTN.S, SFr86.35)
QUALCOMM Inc. (QCOM.OQ, $62.14)
Reckitt Benckiser (RB.L, 3845.0p)
Reed Elsevier PLC (REL.L, 607.5p)
Robinsons Land Corporation (RLC.PS, P18.26)
Roche (ROG.VX, SFr177.7)
Rockwell Automation (ROK.N, $77.4)
Rotork plc (ROR.L, 2426.0p)
Ryanair (RYA.I, €4.58)
SABMiller (SAB.L, 2633.0p)




Global Equity Strategy                                                  74
                                                                                                                                       23 November 2012



SAP (SAPG.F, €58.83)
Sanofi (SASY.PA, €68.08)
Sberbank (SBER.MM, Rbl87.86)
Sabesp (SBSP3.SA, R$80.54)
Starbucks (SBUX.OQ, $50.51)
Schlumberger (SLB.N, $70.21)
Schneider (SCHN.PA, €51.64)
Sembcorp Industries Limited (SCIL.SI, S$4.98)
Security Bank Corporation (SECB.PS, P164.0)
SGS Surveillance (SGSN.VX, SFr2012.0)
Shire Pharmaceuticals (SHP.L, 1787.0p)
Siemens (SIEGn.DE, €77.6)
St. James's Place (SJP.L, 396.9p)
Standard Life (SL.L, 308.4p)
Schlumberger (SLB.N, $70.21)
Salix Pharmaceuticals, Ltd (SLXP.OQ, $41.43)
Smiths Group (SMIN.L, 1052.0p)
Sonova Holding (SOON.VX, SFr100.6)
Saipem (SPMI.MI, €32.52)
Spirax Sarco (SPX.L, 2147.0p)
Singapore Telecom (STEL.SI, S$3.14)
St Jude Medical (STJ.N, $31.37)
Subsea 7 S.A. (SUBC.OL, k128.7)
Stanley Black & Decker, Inc. (SWK.N, $70.03)
SPECTRIS (SXS.L, 1819.0p)
Stryker Corporation (SYK.N, $53.5)
Tata Consultancy Services (TCS.BO, Rs1278.1)
Teradata Corp (TDC.N, $61.18)
TransDigm (TDG.N, $131.52)
Technip (TECF.PA, €86.12)
Thoratec Corp. (THOR.OQ, $37.24)
Thermo Fisher Scientific Inc (TMO.N, $61.16)
TNT Express (TNTE.AS, €7.2)
Tumi Holdings (TUMI.N, $21.6)
Under Armour, Inc. (UA.N, $52.34)
Swatch Group (UHR.VX, SFr432.2)
Umicore (UMI.BR, €39.36)
Unibail Rodamco (UNBP.PA, €168.95)
United Health Group (UNH.N, $53.53)
Union Pacific (UNP.N, $120.04)
United Tractors (UNTR.JK, Rp19,400)
Unilever (UNc.AS, €28.44)
United Parcel Service Inc. (UPS.N, $71.4)
United Technologies Corp (UTX.N, $77.33)
Urban Outfitters (URBN.OQ, $37.35)
Visa Inc. (V.N, $146.66)
VF Corporation (VFC.N, $156.83)
Vienna Insurance Group (VIGR.VI, €34.21)
Vivendi (VIV.PA, €16.36)
VMware Inc. (VMW.N, $88.06)
Volcano Corporation (VOLC.OQ, $26.9)
Verisk Analytics (VRSK.OQ, $48.36)
Verizon (VZ.N, $43.16)
William Demant (WDH.CO, Dkr463.6)
Whole Foods Market (WFM.OQ, $92.07)
Watson Pharmaceuticals (WPI.N, $85.26)
WPP (WPP.L, 825.0p)
Whitbread (WTB.L, 2361.0p)
Xerox (XRX.N, $6.46)
Yum! Brands, Inc. (YUM.N, $73.53)
Zumiez (ZUMZ.OQ, $20.3)




                                                            Disclosure Appendix
Important Global Disclosures
The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views
expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.




Global Equity Strategy                                                                                                                                  75
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Price and Rating History for Hyundai E&C (000720.KS)


000720.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
03-Feb-10                 62,700           67,000                 N
27-Apr-10                 58,200           64,000
27-Jul-10                 62,600           67,000
29-Sep-10                 73,500           75,000
25-Oct-10                 76,400           81,000
18-Nov-10                 59,800           77,000                O
05-Jan-11                 80,000           86,000
07-Feb-11                 89,700           92,000                N
02-May-11                 90,900           90,000
01-Aug-11                 85,500           87,000                             N EU T RA L
05-Oct-11                 52,200           65,000                       O U T PERFO RM

28-Oct-11                 72,800           70,000
26-Mar-12                 83,500           87,000
30-Apr-12                 71,400           81,000
03-Jul-12                 66,600           88,000                O
27-Jul-12                 58,200           81,000
29-Oct-12                 63,900           78,000
* Asterisk signifies initiation or assumption of coverage.

Price and Rating History for Hyundai Mobis (012330.KS)


012330.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
28-Apr-10                179,500          206,000                 O
02-Aug-10                222,000          237,000
05-Nov-10                282,000          327,000
28-Jan-11                276,000          372,000
29-Jul-11                380,000          490,600
28-Oct-11                344,000          473,000
27-Jan-12                303,000          430,000
30-Apr-12                307,500          456,000
26-Oct-12                277,000          402,000
* Asterisk signifies initiation or assumption of coverage.              O U T PERFO RM



Price and Rating History for Asiana Airlines (020560.KS)


020560.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
19-Oct-10                  9,650           12,200               O*
15-Jun-12                  6,880            8,010                 *
22-Aug-12                  7,790            6,750                 U
* Asterisk signifies initiation or assumption of coverage.




                                                                         O U T PERFO RM
                                                                      U N D ERPERFO RM




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                                                                                          23 November 2012




Price and Rating History for Samsung Engineering Co Ltd (028050.KS)


028050.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
29-Jan-10                113,500          120,000                 N
22-Jul-10                123,500          150,000                 O
29-Sep-10                151,000          170,000
26-Nov-10                183,500          200,000
31-Jan-11                197,000          220,000
20-Apr-11                228,500          250,000
26-Jul-11                259,000          300,000
04-Aug-11                229,000          270,000
05-Oct-11                200,000          250,000
24-Oct-11                237,500          300,000                           N EU T RA L
19-Jan-12                219,000          290,000                     O U T PERFO RM

24-Apr-12                222,500          270,000
03-Jul-12                185,500          240,000
26-Oct-12                145,500          210,000
* Asterisk signifies initiation or assumption of coverage.

Price and Rating History for Kangwon Land Inc. (035250.KS)


035250.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
27-Jan-10                 15,700           18,000                 O
08-Feb-10                 15,450           19,000
10-May-10                 16,650           20,000
22-Jun-10                 19,000           22,000
09-Aug-10                 21,400           25,000
08-Nov-10                 26,400           28,000                N
14-Feb-11                 24,500           25,000
18-Nov-12                 26,400           32,000                O
* Asterisk signifies initiation or assumption of coverage.
                                                                      O U T PERFO RM
                                                                            N EU T RA L



Price and Rating History for NC Soft (036570.KS)


036570.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
24-May-10                181,000          250,000                 O
05-Nov-10                264,000          330,000
12-Jul-11                309,000          400,000
15-Nov-11                336,000          435,000
12-Jan-12                277,000          390,000
23-Jul-12                212,500          320,000
08-Nov-12                185,500          275,000
* Asterisk signifies initiation or assumption of coverage.

                                                                      O U T PERFO RM




Global Equity Strategy                                                                                 77
                                                                                                                                                     23 November 2012




Price and Rating History for LG Household & Healthcare (051900.KS)


051900.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
01-Dec-09                278,500          350,000                 O
08-Jun-10                335,500          350,000                 N
06-Oct-10                406,000          440,000
01-Nov-10                395,000          440,000                O
26-Jan-11                404,500          480,000
26-Jul-11                474,000          540,000
27-Oct-11                532,000          600,000
24-Apr-12                578,000          680,000
24-Oct-12                653,000          745,000
* Asterisk signifies initiation or assumption of coverage.              O U T PERFO RM
                                                                              N EU T RA L



Price and Rating History for LG Chem Ltd. (051910.KS)


051910.KS           Closing Price     Target Price
Date                         (W)              (W)            Rating
23-Jun-10                314,000          380,000                 O
06-Dec-10                385,000          450,000
08-Apr-11                479,000          570,000
20-Apr-11                549,000          600,000
21-Oct-11                343,000          530,000
27-Mar-12                358,000          490,000
19-Apr-12                347,500          465,000
22-Oct-12                323,000          432,000
* Asterisk signifies initiation or assumption of coverage.
                                                                        O U T PERFO RM


The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of October 2, 2012 Analysts’ stock rating are defined as follows :
Outperform (O) :The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% or more, (depending on perceived
risk) over the next 12 months.
Neutral (N) :The stock's total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months.
Underperform (U) :The stock's total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months.
*Relevant benchmark by region: As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s t otal return relative to the analyst's
coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the
less attractive, and Underperforms the least attractive investment opportunities. For Latin American, Japanese, and non -Japan Asia stocks, ratings are based on a
stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zeala nd are, and prior to 2nd October 2012 U.S.
and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return
potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation
and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds
replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively.
Restricted (R) :In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.

Volatility Indicator [V]:A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.

Analysts' sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or
valuation of the sector* relative to the group’s historic fundamentals and/or valuation::
Overweight:The analyst's expectation for the sector's fundamentals and/or valuation is favorable over the next 12 months.
Market Weight:The analyst's expectation for the sector's fundamentals and/or valuation is neutral over the next 12 months.
Underweight:The analyst's expectation for the sector's fundamentals and/or valuation is cautious over the next 12 months.
*An analyst's coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.




Global Equity Strategy                                                                                                                                                78
                                                                                                                                                     23 November 2012




Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution
Rating                                                                                    Versus universe(%)                             Of which banking clients (%)
Outperform/Buy*                                                                                             42%                                      (52% banking clients)
Neutral/Hold*                                                                                               40%                                      (48% banking clients)
Underperform/Sell*                                                                                          15%                                      (41% banking clients)
Restricted                                                                                                   3%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and
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Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (051900.KS, 051910.KS, 000720.KS, 028050.KS, 020560.KS, RYA.I, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK,
0293.HK, BRBY.L, AIRA.KL, OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DGE.L, BVI.PA, NXPI.OQ, PCLN.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA,
HZNC.BO, JNJ.N, 1299.HK, AAPL.OQ, CONG.DE, 000568.SZ, CPG.L, TNTE.AS, BPI.PS, 0322.HK, GIAA.JK, SCHN.PA, BAYGn.DE, HYFL.SI,
SLXP.OQ, ATCOa.ST, 1044.HK, SIEGn.DE, MJN.N, SPMI.MI, PRU.L, UNH.N, SGSN.VX, SECB.PS, LVS.N, MBT.PS, BBNI.JK, ADSGn.F,
BMWG.F, 2610.TW, DUFN.S, BRCM.OQ, 2354.TW, UNBP.PA, LLY.N, HTWR.OQ, DPWGn.DE, LVMH.PA, HRGV.L, KLAC.OQ, MLC.L, HRMS.PA,
HLMA.L, EZJ.L, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, WPI.N, PWTN.S, MONY.L, SHP.L, ROG.VX, GFINBURO.MX, SBER.MM, SAPG.F, 2357.TW,
IMT.L, 6273.T, DOM.L, ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, PSON.L, 1099.HK, 1088.HK, 0753.HK, ABBN.VX,
MEO1V.HE, 2330.TW, 1880.HK, GOOG.OQ, MAHB.KL, FMEG.DE, GSK.L, HCLT.BO, FDX.N, LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, EXPD.OQ,
CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, FCX.N, BBCA.JK, PHG.AS, SMIN.L, SL.L, CFR.VX, BBRI.JK, 0992.HK, MR.N, 2318.HK,
MLNX.OQ, DE.N, EOG.N, DG.N, MSFT.OQ, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, ABT.N, EMR.N,
IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, REL.L, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, INTC.OQ,
UPS.N, COST.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, ITW.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, SLB.N, HOT.N,
ITC.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, IRG.OQ, APC.N, ORCL.OQ, 6861.T, THOR.OQ,
SOON.VX, TDC.N, STEL.SI, AMG.N, KRFT.OQ, NESN.VX, DANO.PA, CI.N, AXP.N, SLB.N, LLY.N, UTX.N, 6367.T, CHRH.CO) currently is, or was
during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the subject company (051900.KS, 051910.KS, 000720.KS, 0883.HK, EXPN.L, 0700.HK,
0941.HK, AIRA.KL, OLAM.SI, TUMI.N, DGE.L, NXPI.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, HZNC.BO, JNJ.N, 1299.HK, CONG.DE, 000568.SZ,
CPG.L, TNTE.AS, GIAA.JK, SCHN.PA, SIEGn.DE, MJN.N, PRU.L, UNH.N, LVS.N, BBNI.JK, BMWG.F, DUFN.S, LLY.N, LVMH.PA, FIO.N,
CSCO.OQ, DSOM.KL, SAB.L, MONY.L, SBER.MM, IMT.L, DOM.L, ETL.PA, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, PSON.L, 1099.HK, ABBN.VX,
MEO1V.HE, 1880.HK, GOOG.OQ, MAHB.KL, GSK.L, CELG.OQ, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, BBCA.JK, PHG.AS, BBRI.JK,
0992.HK, MR.N, MLNX.OQ, DE.N, EOG.N, MSFT.OQ, PFE.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, BA.N, CHKP.OQ, SWK.N, UNP.N,
AXP.N, DIS.N, CIE.N, INTC.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, SLB.N, HOT.N, ETN.N,
FIVE.OQ, 6502.T, AMGN.OQ, MRK.N, MCD.N, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, SOON.VX, STEL.SI, KRFT.OQ, NESN.VX, AXP.N, SLB.N,
LLY.N, UTX.N, CHRH.CO) within the past 12 months.
Credit Suisse provided non-investment banking services to the subject company (020560.KS, RYA.I, 0700.HK, 0293.HK, DGE.L, 2628.HK, BMRI.JK,
VIV.PA, AAPL.OQ, CONG.DE, CPG.L, BAYGn.DE, ATCOa.ST, SIEGn.DE, PRU.L, SECB.PS, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW,
BRCM.OQ, LLY.N, DPWGn.DE, LVMH.PA, HRGV.L, HRMS.PA, EZJ.L, CSCO.OQ, SHP.L, ROG.VX, GFINBURO.MX, IMT.L, 6273.T, TCS.BO,
AZN.L, DISCA.OQ, NOVN.VX, PSON.L, ABBN.VX, FMEG.DE, GSK.L, FDX.N, FDO.N, ADN.L, PGHN.S, BBCA.JK, SMIN.L, SL.L, CFR.VX,
0992.HK, 2318.HK, DE.N, EOG.N, MSFT.OQ, TMO.N, PFE.N, CVS.N, VZ.N, EMC.N, EMR.N, BA.N, CHKP.OQ, AXP.N, DIS.N, INTC.OQ, HAL.N,
BMY.N, NBL.N, HON.N, HOT.N, ITC.N, AMGN.OQ, MRK.N, MCD.N, APC.N, 6861.T, AMG.N, NESN.VX, DANO.PA, CI.N, AXP.N, LLY.N) within the
past 12 months
Credit Suisse has managed or co-managed a public offering of securities for the subject company (000720.KS, 0883.HK, 0700.HK, OLAM.SI,
TUMI.N, DGE.L, 2628.HK, 1299.HK, CONG.DE, SIEGn.DE, PRU.L, UNH.N, BBNI.JK, BMWG.F, DUFN.S, LVMH.PA, DSOM.KL, SBER.MM, DOM.L,
ETL.PA, DISCA.OQ, XRX.N, ABBN.VX, MAHB.KL, GSK.L, ADN.L, PGHN.S, BBCA.JK, PHG.AS, 0992.HK, DE.N, EOG.N, MANU.N, SWK.N,
UNP.N, AXP.N, DIS.N, CIE.N, BMY.N, TDG.N, MDLZ.OQ, HOT.N, FIVE.OQ, AMGN.OQ, IRG.OQ, STEL.SI, KRFT.OQ, NESN.VX, AXP.N,
CHRH.CO) within the past 12 months.



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Credit Suisse has received investment banking related compensation from the subject company (051900.KS, 051910.KS, 000720.KS, 0883.HK,
EXPN.L, 0700.HK, 0941.HK, AIRA.KL, OLAM.SI, TUMI.N, DGE.L, NXPI.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, HZNC.BO, JNJ.N, 1299.HK,
CONG.DE, 000568.SZ, CPG.L, TNTE.AS, GIAA.JK, SCHN.PA, SIEGn.DE, MJN.N, PRU.L, UNH.N, LVS.N, BBNI.JK, BMWG.F, DUFN.S, LLY.N,
LVMH.PA, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, MONY.L, SBER.MM, IMT.L, DOM.L, ETL.PA, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, PSON.L,
1099.HK, ABBN.VX, MEO1V.HE, 1880.HK, GOOG.OQ, MAHB.KL, GSK.L, CELG.OQ, CTSH.OQ, ADN.L, PGHN.S, BIIB.OQ, FREG.DE, BBCA.JK,
PHG.AS, BBRI.JK, 0992.HK, MR.N, MLNX.OQ, DE.N, EOG.N, MSFT.OQ, PFE.N, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N, BA.N, CHKP.OQ,
SWK.N, UNP.N, AXP.N, DIS.N, CIE.N, INTC.OQ, HAL.N, GILD.OQ, CMG.N, AMZN.OQ, BMY.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, SLB.N,
HOT.N, ETN.N, FIVE.OQ, 6502.T, AMGN.OQ, MRK.N, MCD.N, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, SOON.VX, STEL.SI, KRFT.OQ, NESN.VX,
AXP.N, SLB.N, LLY.N, UTX.N, CHRH.CO) within the past 12 months
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (051900.KS, 036570.KS,
051910.KS, 000720.KS, 028050.KS, 020560.KS, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK, 0293.HK, BRBY.L, DLTR.OQ, AIRA.KL,
OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DGE.L, BVI.PA, NXPI.OQ, PCLN.OQ, 2628.HK, BMRI.JK, ERII.OQ, VIV.PA, PERP.PA, HZNC.BO, JNJ.N,
1299.HK, AAPL.OQ, CONG.DE, 000568.SZ, CPG.L, BPI.PS, 0322.HK, GIAA.JK, SCHN.PA, BAYGn.DE, HYFL.SI, EDEN.PA, SLXP.OQ, 1044.HK,
SIEGn.DE, BWA.N, MJN.N, SPMI.MI, PRU.L, UNH.N, SGSN.VX, SECB.PS, COAL.BO, LVS.N, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW,
DUFN.S, BRCM.OQ, UNBP.PA, LLY.N, HTWR.OQ, DPWGn.DE, LVMH.PA, KLAC.OQ, IVRC.BO, MLC.L, HLMA.L, FIO.N, CSCO.OQ, DSOM.KL,
SAB.L, HMSO.L, WPI.N, PWTN.S, MONY.L, LUPN.BO, UNTR.JK, KMX.N, GFINBURO.MX, SBER.MM, SAPG.F, 2357.TW, IMT.L, 6273.T, DOM.L,
ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, VRSK.OQ, PSON.L, 1099.HK, 1088.HK, 0753.HK, ABBN.VX, MEO1V.HE,
1880.HK, GOOG.OQ, MAHB.KL, GSK.L, HCLT.BO, 1055.HK, FDX.N, LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, VIGR.VI, AKSO.OL, CTSH.OQ,
ADN.L, PGHN.S, BIIB.OQ, FREG.DE, FCX.N, BBCA.JK, SBUX.OQ, QCOM.OQ, PHG.AS, 3008.TW, SL.L, ZUMZ.OQ, CFR.VX, BBRI.JK, 0992.HK,
MR.N, UMI.BR, 2318.HK, MLNX.OQ, JCI.N, DE.N, EOG.N, FTI.N, MSFT.OQ, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N,
NI.N, VZ.N, MANU.N, EMC.N, ABT.N, EMR.N, IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, STJ.N, REL.L, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N,
AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N, INTC.OQ, UPS.N, COST.OQ, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N,
AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N, NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N,
ETN.N, VFC.N, FIVE.OQ, 6502.T, 6503.T, URBN.OQ, AMGN.OQ, MRK.N, MCD.N, MELI.OQ, IRG.OQ, APC.N, ORCL.OQ, THOR.OQ, CRM.N,
SOON.VX, TDC.N, STEL.SI, AMG.N, UA.N, KRFT.OQ, NESN.VX, COLG.BO, CI.N, ATVI.OQ, AXP.N, SLB.N, LLY.N, UTX.N, 6367.T, CHRH.CO)
within the next 3 months.
Credit Suisse has received compensation for products and services other than investment banking services from the subject company (020560.KS,
RYA.I, 0700.HK, 0293.HK, DGE.L, 2628.HK, BMRI.JK, VIV.PA, AAPL.OQ, CONG.DE, CPG.L, BAYGn.DE, ATCOa.ST, SIEGn.DE, PRU.L,
SECB.PS, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, BRCM.OQ, LLY.N, DPWGn.DE, LVMH.PA, HRGV.L, HRMS.PA, EZJ.L, CSCO.OQ,
SHP.L, ROG.VX, GFINBURO.MX, IMT.L, 6273.T, TCS.BO, AZN.L, DISCA.OQ, NOVN.VX, PSON.L, ABBN.VX, FMEG.DE, GSK.L, FDX.N, FDO.N,
ADN.L, PGHN.S, BBCA.JK, SMIN.L, SL.L, CFR.VX, 0992.HK, 2318.HK, DE.N, EOG.N, MSFT.OQ, TMO.N, PFE.N, CVS.N, VZ.N, EMC.N, EMR.N,
BA.N, CHKP.OQ, AXP.N, DIS.N, INTC.OQ, HAL.N, BMY.N, NBL.N, HON.N, HOT.N, ITC.N, AMGN.OQ, MRK.N, MCD.N, APC.N, 6861.T, AMG.N,
NESN.VX, DANO.PA, CI.N, AXP.N, LLY.N) within the past 12 months
As of the date of this report, Credit Suisse makes a market in the following subject companies (NLSN.N, GDI.N, GWW.N, DLTR.OQ, FFIV.OQ,
TUMI.N, NXPI.OQ, PCLN.OQ, ERII.OQ, JNJ.N, AAPL.OQ, SLXP.OQ, BWA.N, MJN.N, VMW.N, UNH.N, LVS.N, BRCM.OQ, ORLY.OQ, LLY.N,
HTWR.OQ, KLAC.OQ, PNRA.OQ, LXFR.N, FIO.N, CSCO.OQ, WPI.N, KMX.N, DISCA.OQ, XRX.N, BBBY.OQ, VRSK.OQ, GOOG.OQ, FDX.N,
LLTC.OQ, FDO.N, CELG.OQ, APKT.OQ, EXPD.OQ, CTSH.OQ, BIIB.OQ, FCX.N, SBUX.OQ, QCOM.OQ, ZUMZ.OQ, MR.N, MLNX.OQ, JCI.N,
DE.N, EOG.N, DG.N, FTI.N, MSFT.OQ, ROK.N, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N, NI.N, VZ.N, MANU.N, EMC.N,
ABT.N, EMR.N, IHS.N, NKE.N, HXL.N, BA.N, STJ.N, CHKP.OQ, DHR.N, SWK.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N,
INTC.OQ, UPS.N, COST.OQ, MA.N, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N, AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N,
NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, URBN.OQ,
AMGN.OQ, MRK.N, MCD.N, MELI.OQ, LIFE.OQ, IRG.OQ, JAZZ.OQ, APC.N, ORCL.OQ, THOR.OQ, CRM.N, TDC.N, V.N, AMG.N, UA.N,
KRFT.OQ, CI.N, N.N, ATVI.OQ, AXP.N, SLB.N, LLY.N, UTX.N).
Credit Suisse may have interest in (AIRA.KL, DSOM.KL, MAHB.KL)
As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (051910.KS, RYA.I,
EXPN.L, 2628.HK, AMEC.L, VIV.PA, JMAT.L, CPG.L, SASY.PA, TNTE.AS, PGS.OL, BAYGn.DE, SIEGn.DE, PRU.L, DUFN.S, 2354.TW, UNBP.PA,
EZJ.L, HMSO.L, MONY.L, SHP.L, SAPG.F, 2357.TW, IMT.L, NOVN.VX, 1099.HK, 1088.HK, ABBN.VX, 2330.TW, WPP.L, PHG.AS, SMIN.L,
3008.TW, 2318.HK, CHKP.OQ, ASML.AS, SOON.VX, NESN.VX, DANO.PA).
Credit Suisse has a material conflict of interest with the subject company (0883.HK). Credit Suisse is acting as financial advisor to both CNOOC Ltd.
and SINOPEC on the acquisition of Marathon Oil Corporation's 20% interest in Block 32, offshore Angola.
Credit Suisse has a material conflict of interest with the subject company (0293.HK). Jack So, a Senior Advisor of Credit Suisse, is an Independent
Non-Executive Director of Cathay Pacific Airways Limited.
Credit Suisse has a material conflict of interest with the subject company (FFIV.OQ). As of the date of this report, an analyst involved in the
preparation of this report has a long position in the common equity of F5 Networks.
Credit Suisse has a material conflict of interest with the subject company (DUFN.S). Credit Suisse has acted as Joint Bookrunner in the CHF 294m
accelerated bookbuild of primary shares in Dufry. Proceeds from the capital increase will be used to finance the acqusition of 51% of Folli Follie?s
Travel Retail Business.




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Credit Suisse has a material conflict of interest with the subject company (SHP.L). Susan Kilsby, an employee of Credit-Suisse, is a member of the
Board of Directors of Shire PLC.
Credit Suisse has a material conflict of interest with the subject company (KNIN.VX). .
Credit Suisse has a material conflict of interest with the subject company (VRSK.OQ). Credit Suisse has a material conflict of interest with the
subject company (VRSK). As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of
interest with the subject company (VRSK). An analyst or a member of the analyst's household has a long position in the common stock of Verisk
Analytics.
Credit Suisse has a material conflict of interest with the subject company (GSK.L). Credit Suisse Securities (USA) LLC is acting as an advisor to
Human Genome Sciences, Inc. (HGSI) in an announced potential transaction with Glaxo SmithKline (GSK).
Credit Suisse has a material conflict of interest with the subject company (PFE.N). A Credit Suisse analyst involved in the preparation of this report
has a (long/short) position in the common stock of PFE.
Credit Suisse has a material conflict of interest with the subject company (GILD.OQ). A Credit Suisse analyst involved in the preparation of this
report has a long position in the common stock of GILD.
Credit Suisse has a material conflict of interest with the subject company (CAM.N). Credit Suisse Securities (USA) LLC is acting as financial advisor
to Cameron in connection with its announced joint venture with Schlumberger.
Credit Suisse has a material conflict of interest with the subject company (UTX.N). Credit Suisse Securities (USA) LLC is acting as an advisor to
Goodrich (GR) in a potential transaction with United Technologies Corp.
Credit Suisse has a material conflict of interest with the subject company (6502.T). Credit Suisse Securities (USA) LLC is acting as an advisor to
Landis+Gyr on the announced acquisition by Toshiba Corporation. This acquisition remains subject to regulatory approvals and other customary
closing conditions.
As of the date of this report, an analyst involved in the preparation of this report has the following material conflict of interest with the subject
company (FFIV.OQ). As of the date of this report, an analyst involved in the preparation of this report has a long position in the common equity of F5
Networks.

Important Regional Disclosures
Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.
The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (051900.KS, 036570.KS,
012330.KS, 051910.KS, 000720.KS, 028050.KS, 020560.KS, 035250.KS, RYA.I, NLSN.N, 0883.HK, EXPN.L, 0700.HK, GDI.N, GWW.N, 0941.HK,
0293.HK, ASSAb.ST, BRBY.L, 0670.HK, DLTR.OQ, AIRA.KL, OLAM.SI, ALI.PS, FFIV.OQ, TUMI.N, DAST.PA, DGE.L, BVI.PA, NXPI.OQ,
PCLN.OQ, 2628.HK, AMEC.L, BMRI.JK, ERII.OQ, VIV.PA, PERP.PA, ALS.AX, HZNC.BO, JNJ.N, 0813.HK, 1299.HK, 2618.TW, JMAT.L, WTB.L,
ITC.BO, CONG.DE, 000568.SZ, SBSP3.SA, CPI.L, CPG.L, 6481.T, SASY.PA, ASII.JK, TNTE.AS, BPI.PS, 0322.HK, GIAA.JK, PGS.OL, SCHN.PA,
BAYGn.DE, GOCP.BO, HYFL.SI, PER.L, EDEN.PA, SLXP.OQ, ATCOa.ST, 1044.HK, SIEGn.DE, BWA.N, MJN.N, SPMI.MI, AIRP.PA, PRU.L,
VMW.N, UNH.N, SGSN.VX, SECB.PS, COAL.BO, SUBC.OL, LVS.N, MBT.PS, BBNI.JK, ADSGn.F, BMWG.F, 2610.TW, ITRK.L, DUFN.S, HIK.L,
BRCM.OQ, ORLY.OQ, 2354.TW, UNBP.PA, LLY.N, HTWR.OQ, BOSSn.DE, DPWGn.DE, SJP.L, LVMH.PA, HRGV.L, KLAC.OQ, IVRC.BO,
PNRA.OQ, LXFR.N, MLC.L, HRMS.PA, HLMA.L, EZJ.L, FIO.N, CSCO.OQ, DSOM.KL, SAB.L, SCIL.SI, AGGK.L, HMSO.L, WPI.N, PWTN.S,
MONY.L, TECF.PA, LUPN.BO, WDH.CO, UHR.VX, SHP.L, ROG.VX, UNTR.JK, KMX.N, GFINBURO.MX, SXS.L, SBER.MM, SAPG.F, 2357.TW,
IMT.L, KNIN.VX, ROR.L, 6273.T, DOM.L, ETL.PA, TCS.BO, AZN.L, DISCA.OQ, XRX.N, NOVN.VX, BBBY.OQ, VRSK.OQ, 6954.T, PSON.L,
1099.HK, IHG.L, 1088.HK, 0753.HK, 600809.SS, ABBN.VX, MEO1V.HE, 2330.TW, 6268.T, 1880.HK, GOOG.OQ, MAHB.KL, FMEG.DE, GSK.L,
PFC.L, HCLT.BO, 1055.HK, FDX.N, WPP.L, LLTC.OQ, 6506.T, FDO.N, CELG.OQ, GUD.AX, APKT.OQ, VIGR.VI, EXPD.OQ, AKSO.OL, CTSH.OQ,
ADN.L, PGHN.S, BIIB.OQ, FREG.DE, NOVOb.CO, FCX.N, BBCA.JK, SBUX.OQ, QCOM.OQ, PHG.AS, SMIN.L, 3008.TW, SL.L, ZUMZ.OQ,
600519.SS, COLOb.CO, PAP.I, CFR.VX, BBRI.JK, SPX.L, 0992.HK, MR.N, NYN.L, UMI.BR, 2318.HK, MLNX.OQ, JCI.N, DE.N, EOG.N, DG.N,
FTI.N, MSFT.OQ, ROK.N, SYK.N, TMO.N, PWR.N, PFE.N, EW.N, LULU.OQ, CVS.N, GD.N, NI.N, VZ.N, MANU.N, 6472.T, EMC.N, ABT.N, EMR.N,
IHS.N, NKE.N, RLC.PS, HXL.N, BA.N, STJ.N, REL.L, CHKP.OQ, DHR.N, AGN.N, UNP.N, AXP.N, CREE.OQ, DIS.N, CYT.N, CIE.N, PLL.N,
INTC.OQ, UPS.N, COST.OQ, MA.N, WFM.OQ, HAL.N, GILD.OQ, ATVI.OQ, VOLC.OQ, CMG.N, AMZN.OQ, FMC.N, BMY.N, ITW.N, PH.N, FLS.N,
NBL.N, TDG.N, CAM.N, MDLZ.OQ, HON.N, CAB.N, PCP.N, SLB.N, HOT.N, ITC.N, YUM.N, ETN.N, VFC.N, FIVE.OQ, 6502.T, 6503.T, URBN.OQ,
AMGN.OQ, MRK.N, MCD.N, MELI.OQ, LIFE.OQ, IRG.OQ, JAZZ.OQ, APC.N, ORCL.OQ, ASML.AS, 6861.T, THOR.OQ, CRM.N, SOON.VX, TDC.N,
STEL.SI, V.N, AMG.N, UA.N, KRFT.OQ, DSV.CO, NESN.VX, OREP.PA, DANO.PA, UNc.AS, RB.L, COLG.BO, CI.N, N.N, ATVI.OQ, AXP.N, SLB.N,
LLY.N, UTX.N, 6367.T, CHRH.CO) within the past 12 months
An analyst involved in the preparation of this report has visited certain material operations of the subject company (AAPL.OQ, SWK.N) within the
past 12 months
The travel expenses of the analyst in connection with such visits were not paid or reimbursed by the subject company, other than de minimus local
travel expenses.
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares;
SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not
contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.




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For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit
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The following disclosed European company/ies have estimates that comply with IFRS: (RYA.I, EXPN.L, ASSAb.ST, DAST.PA, DGE.L, VIV.PA,
PERP.PA, JMAT.L, CONG.DE, CPG.L, SASY.PA, SCHN.PA, ATCOa.ST, SIEGn.DE, SPMI.MI, PRU.L, SGSN.VX, ADSGn.F, BMWG.F, ITRK.L,
DUFN.S, HIK.L, BOSSn.DE, DPWGn.DE, MLC.L, HLMA.L, EZJ.L, SAB.L, HMSO.L, PWTN.S, TECF.PA, WDH.CO, SBER.MM, SAPG.F, IMT.L,
KNIN.VX, AZN.L, PSON.L, IHG.L, ABBN.VX, MEO1V.HE, FMEG.DE, PFC.L, WPP.L, VIGR.VI, ADN.L, PGHN.S, FREG.DE, PHG.AS, SMIN.L, SL.L,
SPX.L, REL.L, BMY.N, ASML.AS, SOON.VX, NESN.VX, OREP.PA, DANO.PA, UNc.AS, RB.L).
As of the end of the preceding month, the subject company (SWK.N) beneficially owned 5% or more of the total issued share capital of Credit Suisse
Group.
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Credit Suisse Securities (Europe) Limited. Andrew Garthwaite ; Marina Pronina ; Mark Richards ; Robert Griffiths ; Sebastian Raedler ; Nicolas
Wylenzek

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