Investment thesis .............................................................................. 3
Outlook and feedback from China Chemicals Tour ...................................................................3
Valuation ..................................................................................................................................6
Risks ........................................................................................................................................6
China: Economic review.................................................................... 7
Chinese economy: A modest slowdown of growth expected..................................................7
Stimulus plan – shifting the focus inland and to the consumer...............................................11
Other issues...........................................................................................................................12
Petrochemicals in China.................................................................. 13
Capacity growth set to continue in China ...............................................................................13
Industrial gases summary............................................................... 18
Disciplined growth continues..................................................................................................18
China agriculture outlook ............................................................... 21
Long-term potential.................................................................................................................21
China automotive outlook .............................................................. 24
A strong recovery occurred through 2009 ..............................................................................24
Expect further growth for 2010...............................................................................................25
European companies....................................................................... 27
BASF (Buy, Target: Euro 51). Leveraging an early move advantage .......................................28
Bayer (Buy, Target: Euro 60): A leading low-cost position for MaterialScience ......................33
DSM (Hold, Target: Euro 36): Focusing on local R&D and consumer growth.........................38
Air Liquide (Hold, Target: Euro 84): Developing a strong platform in the region.....................41
AkzoNobel (Hold, Target: Euro 41): A strong focus on the margin .........................................45
Linde (Buy, Target: Euro 100): The leading gas position in China ...........................................47
Syngenta (Buy, Target: CHF 340): A leading position in a fragmented agrochemical market .50
Umicore (Sell, Target: Euro 18): Strong leverage to catalyst growth ......................................52
Chinese companies.......................................................................... 54
Sinofert (Buy, Target: HK$4.5). Leadership in fertilizer distribution .........................................55
Zhejiang Biok K.P. Chemical Company (Not Rated). Glyphosate producer in China...............56
US companies .................................................................................. 57
DuPont (Buy, Target: $38). Diverse competencies align with China’s long-term trends.........58
Dow Chemical (NR). Focus on Performance businesses but coal-to-olefins project takes
shape .....................................................................................................................................61
Praxair (Buy, Target: $90). Focusing on returns and profits ....................................................64
Air Products (Hold, Target: $75). Building a broader Asia growth platform............................67
Celanese (Buy, Target: $40). Low-cost Nanjing complex solidifies Asia centric strategy .......70
Appendix A: Global valuation......................................................... 72
Appendix B: Key economic indicators ........................................... 79