8/8/2019 $npd,Score for VE Forecast Portfolio

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November 18, 2010

Not a Star Chinese Drug Store Giant Nepstar Down More than 20%

ValuEngine Forecast Model Market Neutral Portfolio subscribers got a nicesurprise this morning due to the strong performance of short-side selection ChinaNepstar (NPD). China Nepstar is China's largest retail drugstore chain based on thenumber of directly operated stores.

Our Forecast Model selected NPD as a short due to its poor short-term forecastreturn figures last Friday. IT was included in the portfolio sent to subscribers on Tuesdaymorning. Then, yesterday morning China Nepstar reported Q3 net income that wassignificantly below Q3 2009 figures. The resulting sell off took @ 23% off the shares.

Our models have since re-calculated China Nepstar's valuation and forecastfigures. ValuEngine has issued a HOLD recommendation for China Nepstar on Nov.18, 2010. Based on the information we have gathered and our resulting research, wefeel that China Nepstar has the probability to ROUGHLY MATCH average market

performance for the next year. The company exhibits ATTRACTIVE expected EPSgrowth and company size, but UNATTRACTIVE momentum and 5-year annualizedreturn.

Even with yesterday's hair cut, based on available data as of Nov. 18, 2010, webelieve that NPD should be trading at $3.31. This makes NPD 19.81% overvalued. "Fair Value" indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For NPD, webase this on actual earnings per share (EPS) for the previous four quarters of $0.05,forecasted EPS for the next four quarters of $0.13, and correlations to the 30- year Treasury bond yield of 3.92%.

Subscribers can check out the latest figures on the China Nepstar from our modelsHERE

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8/8/2019 $npd,Score for VE Forecast Portfolio

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MARKET OVERVIEWSummary of VE Stock Universe

Stocks Undervalued 56.55%

Stocks Overvalued 43.45%Stocks Undervalued by 20% 25.53%

Stocks Overvalued by 20% 15.87%

SECTOR OVERVIEWSector Change MTD YTD Valuation Last 12-

MReturnP/E

RatioAerospace 1.01% -2.30% 12.43% 4.29% underval ued 21.88% 18.91

Auto-Tires-Trucks 0.96% 3.36% 38.42% 0.74% overvalued 39.63% 34.14

Basic Materials 0.72% 0.92% 19.72% 12.06% overvalued 50.42% 32.73

Business Services 0.11% 1.03% 5.69% 5.08% underval ued 14.22% 28.48

Computer and Technology 0.03% 0.39% 19.62% 4.84% underval ued 26.34% 39.24

Construction -0.11% 1.43% -0.14% 10.93% undervalued 0.48% 37.22

Consumer Discretionary 0.41% 0.45% 15.56% 5.73% undervalued 20.75% 29.8

Consumer Staples 0.36% 1.38% 5.42% 1.62% underval ued 14.00% 21.84

Finance -0.12% -0.18% 12.82% 0.08% undervalued 16.34% 29.3

Industrial Products 0.23% 1.21% 14.23% 1.50% underval ued 23.38% 26.47

Medical -0.10% 1.06% 10.58% 11.53% un derv al ued 16.31% 33.07

Multi-Sector Conglomerates -0.12% 0.63% 16.13% 3.80% overvalued 27.32% 32.18

Oils-Energy 0.29% 2.68% 8.87% 9.22% overvalued 34.99% 41.78

Retail-Wholesale 0.55% 2.35% 13.13% 0.92% underval ued 45.52% 25.16

Transportation 0.22% -0.49% 17.28% 0.12% overvalued 23.44% 39.18

Utilities 0.22% -0.29% 4.18% 0.93% underval ued 15.06% 26.89