Table of Contents
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