Free Stock Reports

SG:Sticking with Singapore ’s Stalwarts- STE and SPH

2008-04-01T10:51:00.003-07:00

Summary: With the see-saw vacillation of the market expected over the next 1-3 quarters, following the domino effect from the subprime fallout, there is a de-rating of the market due to slowing growth. The increased risk premium will mean investors are less willing to pay higher multiples for uncertain growth stories. Investors are shifting into defensive stocks with high dividends, high earnings visibility and cash flow stability. We like tried-and-proven Singapore stalwarts such as ST Engineering and SPH as these have strong cash flow and an anticipated high dividend yield of >5% to ride out the choppy market. STE has historically returned all of its net profits to shareholders while SPH has historically paid out all of its recurring earnings from its print business. We upgrade our call to BUY as valuations now look attractive for STE (fair value: S$3.92) and maintain our BUY call for SPH (fair value: S$4.87).

Olam- preferential share offering

2008-04-01T10:51:00.001-07:00

Olam has announced that it will be undertaking a non-renounceable, non-transferable preferential offering of 155.6m new shares on the basis of one new share for every ten existing ordinary shares in the capital of Olam held on 8 April 2008 (Books closure date). The preferential offering issue price is S$1.97.

The net proceeds of the offering are expected to be approximately S$302.6m (if fully subscribed). Olam intends to use the proceeds to finance investments, joint ventures, mergers and acquisitions, discharge, reduce or retire certain bank borrowings and for general working capital and corporate purposes.

In connection with and to demonstrate support for the preferential offering, Kewalram Singapore Limited (KSL) and Sunny George Verghese have jointly and severally irrevocably undertaken to the company not to transfer, dispose of or otherwise reduce any of their respective interests between now and the books closure date and to subscribe and pay in full for such number of new shares representing 100% of their new share entitlements under the preferential offering.

KSL has also irrevocably and unconditionally undertaken to apply by way of excess application for the maximum number of additional new shares that, when aggregated with its current shareholdings and its entitlements under the preferential offering will not exceed such number of share representing not more than 29.99% of t he resultant enlarged issued share capital of Olam.

Sunny George Verghese, Olam's CEO and Managing director who currently owns 5.17% of Olam has also irrevocably and unconditionally undertaken to apply by way of excess application for a maximum number of 18.343m new shares, that when aggregated with his current shareholdings and entitlements under the preferential offering, amounts to 26.395m new shares.

Assuming that only the undertaking shareholders subscribe, the aggregate number of new shares which they will subscribe for will be 110.095m new shares, representing approximately 70.7% of the total number of new shares offered to entitled shareholders

We currently have a HOLD recommendation on Olam with a target price of S$2.88. Our target price and earnings forecasts are currently under review.

Li Heng Chemical Fibre Technologies Limited ("LHCF")

2008-04-01T10:50:00.005-07:00

We recently visited LHCF's plant and witnessed the production of its high-end nylon yarn products at Jinfeng and Binhai Industrial zone, PRC. LHCF, based in PRC, is principally engaged in the manufacture and sale of high-end nylon yarn products. Its two production facilities in Changle City, Fujian Province are strategically located amongst clusters of textile and garment manufacturing industries and related supporting service industries.
The Group's revenue grew at CAGR of 54% from FY04~06 and achieved gross profit margin of above 34%.

Sales and GPM Breakdown
Breakdown (%) FY05 FY06 1H07
Revenue RMB 'm % RMB 'm % RMB 'm %
HOY/POY 978.7 100.0 1,540.1 90.8 1,100.3 76.2
FDY - 0.0 55.5 3.3 161.4 11.2
DTY - 0.0 101.0 6.0 182.4 12.6
Total 978.7 100.0 1,696.6 100 1,444.1 100
GPM (%) % % %
HOY/POY 34.1 34.8 33.0
FDY - 38.4 38.2
DTY - 36.9 39.9
Total 34.1 35.0 34.4

Source: Prospectus

Production Capacity and Utilization – LHCF's maximum annual capacity increased 81% to 167,000 mt in 1Q08 from 92,400 mt in FY07. The group intends to further increase its capacity to 257,000 mt by 3Q09. The Group consistently achieved utilization rate of above 90% for FY04~06, as shown in the table below.
We understand from management that LHCF supplies between 20~50% of the each customer's demand and with each customer accounting for less than 5% of the Group's total revenue, we believe LHCF will be able to maintain a reasonably high utilization rate in FY08~09.

Year 2004 2005 2006 2007E 2008E 2009E
Maximum Annual Capacity (mt) 20,300 40,500 92,400 92,400 167,000 257,000
Utilization Rate (%) 91.2 93.7 95.8 - - -

Source: Prospectus

Upward integration - Polyamide Chip Plant with capacity of 80,000 mt by 3Q09. The Group plans to construct a polyamide chip plant, an essential feedstock for the production of nylon yarn, to reduce reliance on external suppliers of polyamide chips. We believe this will allow LHCF to have better control over the quality of polyamide chips used for the production of LHCF's nylon yarn products, leading to overall costs efficiency as well as better quality of LHCF nylon yarn products.

Valuation – LHCF, intends to pay dividend of at least 20% out of FY08~09 net profits, has the largest market capitalization and production capacity, which we believe LHCF should command a premium over its peers. We do not have a rating for this counter.

Swiber Holdings (S$2.63) - Extends visibility

2008-04-01T10:50:00.003-07:00

Swiber has raised S$100m from the domestic bond market. We believe the
funds could be used to finance part of the
equipment for its new deepwater drilling barge. A recent contract worth
a total of US$250m from CUEL Thailand for
offshore installation and engineering work has increased Swiber's
earnings visibility till 2013 and bringing its
order book to about US$760m, compared to only US$176m at end-1Q07. With
plans to expand its fleet to six vessels by
end-08, we believe Swiber could be grooming its 30% Indonesian-based
associate, OBT Holdings to tap into the strong
coal transhipment sector. Maintain Outperform. Our earnings estimates
remained intact and our target price of S$5.05
is still based on 15x CY09 earnings on the back of 59% 3-year CAGR
through to 2010.

Quick Takes

* Olam International (S$2.07) - Preferential offering at
S$1.97 per share
* Land Transport Sector - Cash for scrapping cars being
studied

News of the Day

* MAS likely to retain $ policy, or tighten it

* US Treasury to call for broad overhaul of financial
regulation
* Singapore sees small flow of QDII funds

* Swissport finds the going tough at Changi

* Cosco may quote contracts in yuan

* K-Reit may raise more funds after its rights issue

* Cash exit offer for ICIL 'not reasonable': Omega

Technical Trading Ideas

* STI Weekly Outlook, China Hongxing Sports and C&G Industrial
Holdings

Singapore Banking Sector

2008-04-01T10:50:00.001-07:00

The Monthly statistics bulletin released by the Monetary Authority of Singapore revealed the loan and deposit numbers ending February 2007.
‧ Total loans amounted to S$241.8 billion (+21.9% YoY, +2.1% MoM)
‧ Manufacturing loans grew to S$11.1 billion (+3.1% YoY, +6.7% MoM)
‧ Construction loans boosted to S$41.0 billion (+48.7% YoY, +4.3% MoM)
‧ Housing loans increased to S$74.0 billion (+16.0% YoY, +0.2% MoM)
‧ Deposit from non-bank customers swelled to S$323.7 billion (+14.0% YoY, +2.6% MoM). LDR ratio increased to 74.7%

Tee International: Order book explosion

2008-04-01T10:49:00.004-07:00

Summary: TEE recently announced a very large contract win from the Marina Bay Sands Integrated Resorts Development for electrical installation for the North and South Podiums worth S$109m, bringing TEE's total order book to approximately S$182m. As a pre-qualified contractor for this project, TEE has an edge over the other contenders for future contract works with Sands. TEE intends to launch the Rambai Road development on 12 April 08 and has indicated they plan to hold off all further launches till 2H08 based on the developments in the local property market. TEE has proposed a bonus issue of 3 bonus shares for every 20 shares together with a proposed warrants issue of 1 warrant for every 5 shares held. However, management has not fixed a date for book closure. We are raising our net profit projection for FY08 to S$4.2m taking into account the new contact win from Marina Bay Sands. The bulk of the earnings from the new contract would come in during FY09. We are also raising our fair value estimate from S$0.51 to S$0.525 based on blended 13x earnings. This presents an estimated 13% upside from current price, and hence we are upgrading TEE to a BUY. (Ritesh Menon)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Soilbuild Group Holdings Ltd: Building up for more growth

Summary: Soilbuild Group Holdings Ltd (Soilbuild) put up a record performance in FY07, with earnings surging 634% to S$52.4m. The good performance was partly due to its choice of target market. By targeting the premium residential market, Soilbuild lifted its gross profit margin by 20.6ppt to 33.1% in FY07. We remain positive on this market segment, and believe that the relatively lower price elasticity of the buyers in this segment should allow Soilbuild to pass on its rising construction costs. Soilbuild's pipeline of pre-sold projects amounted to approximately S$511m, to be recognised in FY08 and FY09. This suggests that its FY08 sales could more than double that of FY07 even without factoring in revenues from its business space and new projects. Management is building up its recurring income stream from rental of business spaces, and is confident that demand for business space properties will be buoyed by strong foreign investment commitments into Singapore. We do not have a rating on the stock. (Lee Wen Ching)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Eu Yan Sang International Ltd: Another step towards quality assurance

Summary: Eu Yan Sang International Ltd (EYS), together with Agrifood Technologies, an arm of the Agri-Food and Veterinary Authority (AVA) of Singapore, have come together to introduce a certification standard for Traditional Chinese Medicine (TCM) herbs. The purpose of this certification is for consumers to obtain independently-verified assurance of the quality of herbs that they are purchasing. While this latest development will not have a material financial impact on EYS, the company will enjoy intangible benefits in the form of brand awareness, and will be able to justify any price increments it may be planning. It may also capture a larger market share as consumers turn to safer and better quality products in light of food-safety concerns. We maintain our HOLD rating on EYS, with a fair value estimate of S$0.535. (Lee Wen Ching)

NEWS HEADLINES

- Keppel Corp has won a S$74.8m turnkey contract to design and build a waste-to-energy cogeneration plant for a paper-mill in Sweden.

- Banyan Tree hopes to close a fund aimed at raising up to US$400m for investments in Indochina by the end of this year.

- Neptune Orient Lines carried 10% more containers on its ships in the four weeks to March 7 compared with the same period a year ago.

- The past three months have seen S$105b or 13.2% wiped off the stock market value of Singapore-listed companies.

- The S$162.8m collective sale of Makeway View in the Newton area has been rescinded due to higher than expected development charges.

- Total loans made by Singapore banks hit S$241.8b at the end of February, up 21.9% YoY – the fastest pace of expansion since May 1995.

- The Urban Redevelopment Authority has put a 1.77ha hotel site in Balestier Road on the market.

- Vega Co, a wholly-owned subsidiary of The HSBC Private Equity Fund 6, is offering to buy Sing Lun Holdings for S$119.6m or S$0.46 per share. Its stake is now 71.32%.

- Pokka Corp posted a more than seven-fold jump in full-year net profit to S$7m thanks to better profit margins and double-digit revenue growth.

Parkway Holdings (S$3.59) - Rights issue at S$2.18 per share

2008-04-01T10:49:00.003-07:00

Parkway has proposed a renounceable underwritten rights issue of up to
360.4m new shares at S$2.18 per share, on the
basis of seven rights shares for every 15 existing shares, to raise net
proceeds of S$760.1m. Assuming that all the
new shares pursuant to the rights issue are subscribed, the company
will have an enlarged issued and paid-up share
capital of 1131.6m shares. The joint financial advisers and
underwriters have agreed to underwrite the rights issue,
while TPG Asia, who currently has aggregate shareholding interest of
24% in Parkway, has agreed to purchase and/or
procure of such number of rights shares not successfully applied for
under the rights issue.
We recommend accepting the offer as: 1) the offer price is at a 24%
discount to our target price of S$2.85; 2) the
offer P/E is below the lower-end of its 6-month historical forward P/E
range of 28.7 ? 45.1x; and 3) fundamentals
remain strong with population growth, aging population, rising
affluence and increase in medical tourism leading to
greater demand for quality healthcare in Singapore and the region.

Quick Takes

* Global Equity Technicals - Can Asia lead the way?

News of the Day

* Lehman to issue US$3 billion convertible preferred shares

* US$2 billion hedge fund Pardus suspends withdrawals

* Keppel wins 34m euro co-gen plant deal

* Pokka earnings soar seven-fold

* Letters shed light on why two Swissco independent directors
quit
* Vega's stake in Sing Lun now at 71.32%

* Banyan Tree to close Viet fund by end 2008

Technical Trading Ideas

* Luzhou Bio-Chem Technology

S-Chips Sector : The Calm After The Storm

2008-04-01T10:49:00.001-07:00

l We have upgraded S-chips from MARKET WEIGHT to OVERWEIGHT primarily on
attractive valuations. Compared with China domestic A-shares and
H-shares, S-chips have been trading at deep discounts after a severe
correction in 2H07. We believe investors' concerns over China's economic
slowdown have been overdone. It is time for smart money to move around.

l Beijing is finding it challenging to strike a balance between raging
inflation and an economic slowdown. The weak US dollar and skyrocketing
commodity prices add fuel to the fire. Thanks to its closed financial
system and strong domestic consumption, China will be able to ride out
this difficult period. We still believe China could achieve 10% GDP
growth and CPI growth of below 5.5%. A hard landing and hyperinflation
are unlikely to take place in China.

l We like two themes at this juncture, both of which are defensive in
nature and supported by the government. The first theme is consumer
plays and the other is agriculture-related companies. Companies in these
industries are likely to achieve fast-paced growth.

l For S-chips Corporate Day, we present you with nine companies that
are leaders in their respective industries. Though they undergo cyclical
growth, they have solid fundamentals and are growing rapidly. There is
no doubt a few of them will eventually become respectable global
enterprises.

Forward Target
Price PE Price
(S$) (x) (S$)

China Animal
Healthcare 0.16 n.a. n.a.
China Energy 0.38 n.a. n.a.
China XLX Fertiliser 0.505 6.9 1.84
China Sky 0.825 4.6 2.16
COSCO Corp (S) 2.97 14.8 7.00
China Hongxing 0.425 12.5 1.07
Li Heng Chemical 0.52 n.a. n.a.
Synear Food 0.395 5.8 1.20
Yangzijiang
Shipbuilding 0.785 n.a. n.a.

Interra Resources Limited

2008-04-01T10:48:00.000-07:00

Interra Resources Limited announced a full year net profit after tax of US$2.26m, recovering from a net loss of US$1.74m in FY2006. Revenue showed a 16% growth from US$13.1m to US$15.2m, a 16% increase. Gross profit showed a 42% increase from US$4.48m to US$6.37m. The favorable year on year results was due to higher oil prices and shareable production. The weighted average oil price in FY06 was US$64.41 per barrel compared with US$73.70 per barrel in FY07. Interra's share of shareable production increased by 4751 barrels from 276,423 barrels of oil in FY06 to 281,174 barrels of oil in FY2007

Boustead Singapore Limited

2008-03-28T14:43:00.001-07:00

Contracts win by Salcon

Two substantial water and wastewater engineering projects. Boustead recently announced (on 24 March 2008) that it's fully owned subsidiary, Salcon Pte Ltd, had secured two water and waste water engineering projects worth S$32 million.

Contracts awarded by major players speaks volume of Salcon's experience and expertise; more contracts expected. These contracts from Samsung and Toshiba further enhanced Salcon's credibility as one of Asia's leading water and wastewater engineering specialists. While we believe Salcon will win more contracts in the near term (within 6-12 months), we expect most of them to be of smaller sizes, with one or two significant projects of sizeable amount.

Still a BUY; fair value estimate revised down but fundamentals remain strong. Together with the collective S$24 million contracts awarded from the global oil and gas industries announced on 10 March 2008 by its Energy-Related Engineering Division, Boustead's total outstanding order book stands in excess of S$400 million (recognition expected over the period FY08-10). In view of its experience and strong technical expertise, we are confident that Boustead will continue to secure contracts, particularly from its Energy-Related Engineering Division and from Salcon.

Our FCFE valuation yields a fair value of S$2.47 which translates to a FY09 P/E of 13.0x and P/B of 3.1x. We maintain our earnings estimates for the period FY08-10 as our prior assumptions have already factored in potential contracts wins by Boustead (recognisable over the FY09-10 period) as well as rising costs environment. However, our valuation assumptions are tweaked to reflect current volatile market conditions and lower long term growth due to perceived slow down in the global economy. Although with a revised down fair value estimate, we continue to like Boustead in view of its experienced management, strong balance sheet, and net cash position. We reiterate our BUY recommendation on Boustead and would view further significant contracts win as catalyst for potential upgrade in our fair value estimate.

Singapore Exchange: Time for a relook

2008-03-28T14:42:00.005-07:00

Summary: Singapore Exchange (SGX) has also been hit by the recent volatility in the market. Its share price has fallen in line with its regional peers, down about 57% from its 52-week high. This is reflective of the generally weak sentiment in the market where trading volume has fallen in Feb and Mar this year. Taking these factors into account, we have imputed the drop in trading activities into our 2H FY08 estimates, and lowered FY08 earnings by 11.7% to S$428.6m and FY09 earnings by 12.4% to S$434.5m. Using lower valuation of 21x (versus 19x for its regional peers and 23x for its global peers), we are lowering our fair value estimate to S$8.20 (previous: $11.20). As SGX's stable revenue (terminal, listing, price information and other fees) is fairly secured, we believe that together with the attractive yield of 4.9% at current price level, the stock is starting to look attractive again, especially for medium to longer term holders as SGX continues to grow its suite of products and services to buoy its long term income. With recent volatile market conditions and on price weakness, SGX is a BUY. (Carmen Lee)

Rickmers Maritime: Key charterer moves into the shipping trust space

Summary: The world's third largest container shipping company CMA CGM SA (CMA) has spun off one of its units in a play that mirrors the shipping trust concept. According to the Wall Street Journal, it will retain a 34% stake in Global Ship Lease (GSL), which would be listed on NYSE. GSL owns 12 container ships with five more under contract from parent CMA, all of which are chartered back to CMA with an average term of 11 years. CMA currently charters six of Rickmers Maritime's (RMT) ten existing vessels – contributing about 60% of the trust's revenue. There is no immediate threat to RMT as CMA is locked in these charters until 2015. However, the future development of their relationship will depend on the extent of CMA's demand for vessels and the privileges it grants GSL (such as rights of first refusal). GSL would likely get first priority in a low-demand scenario. At the same time, RMT is aggressively diversifying its customer base. If its plans for 13 contracted acquisitions are approved at an upcoming EGM, CMA's share of its revenue would decline to about 21% in 2010. Maintain BUY at target price S$1.22. (Meenal Kumar)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- CapitaLand has granted CapitaCommercial Trust a call option to acquire office building 1 George Street for about S$1.2bn. CapitaLand said it would provide yield protection to the REIT at 4.25% for five years.

- A-REIT announced its property value gained S$483.6m at its annual valuation, an appreciation of about 14%.

- Lippo-Mapletree Indonesia Retail Trust said it will purchase Sun Plaza, a retail mall located in Medan, North Sumatra for S$147.4m.

- According to the BT, Allco REIT intends to reduce its leverage from 43% currently to about 30% over the next 12 months.

- Asia Pacific Breweries has raised the annual capacity of its Vietnam plant by more than 50% at cost of US$1m.

- Tee International has won contracts for electrical installation for the Marina Bay Sands IR worth S$109m.

- Abterra Ltd will buy 49.9% of Shanxi Loudong, a producer of coal and other by-products, for up to S$181m in new Abterra shares.

- Ausgroup has won a new offshore contract worth A$12m, taking its order book above A$190m.

- SP Ausnet has upgraded its earnings forecasts buoyed by higher revenues and a debt refinancing.

Please refer to the full report for more information and additional disclosures.

Singapore Exchange: Time for a relook

2008-03-28T14:42:00.004-07:00

China Hongxing Sports (S$0.49) - Growth after the Olympics

2008-03-28T14:42:00.003-07:00

We spoke to management recently regarding its growth strategy
post-Olympics. Hongxing plans to continue its retail
network expansion and A&P to raise brand visibility as it believes that
China's sporting market will continue to
grow, buttressed by other sporting events like the 16th Asian Games in
2010 and rising sports participation. In
addition, Hongxing has secured indicative orders worth Rm1bn during its
March trade fair. We have made no changes to
our earnings estimates and maintain our target price of S$0.86, based
on 16.5x CY09 earnings, or a 20% premium to
average valuations for the sports shoe sector. Reiterate Outperform on
the back of robust industry prospects.

Quick Takes

* Bukit Sembawang Estates (S$8.99) - Airview Towers falls
through
* Factory Output - All clusters contributed to February's
growth

News of the Day

* Rising tide of foreigners snapping up Singapore property

* Tuas Power plans Singapore's first coal-fired plant-paper

* CCT to buy 1 George Street for S$1.165 billion

* Maybank buys Temasek stake in Indonesian bank

* State Bank of India gets Singapore full bank license

* LMIR Trust makes maiden buy

Technical Trading Ideas

* Wheelock Properties (S)

Singapore market – Dragged down by poor US economic number

2008-03-28T14:42:00.001-07:00

• Singapore: Singapore market declined following a two day rally. Due to a lack of fresh buying leads, investors chose to lock in profits and wait at the sideline. This is despite the unexpected 10% increase in February factory output. Cues are still heavily dependent on US economic data. FTSE-STI down 4.97 or 0.2% to close at 2,995.22 points. Trading volume was 1.47 billion shares valued at S$1.57 billion and losers outnumbered gainers 370 to 253. Commodities supplier Olam International Ltd suffered a 14.1% lost to S$1.95 after its rating was cut to "sell" from "neutral" by Merrill Lynch.

• Wall Street: US market retreated after pessimistic numbers on February's durable goods orders. The Commerce Department released a 1.7% dip in last month's order for durable goods, which is indicative on business spending and consumer demand. This is its second consecutive shrink. Adding to worries, the Commerce Department also announced that sales of new homes slumped 1.8% in February, which dragged down sales for the fourth straight month to a 13-year low. Dow Jones slipped 109.74 or 0.9% to 12,422.86 points and Nasdaq dropped 16.69 or 0.7% to close at 2,324.36 points. However, crude oil soared US$4.58 to close at US$105.80 per barrel on NYMEX.

• Outlook: The mini-rally that started on Monday and moved the benchmark STI to the 3,000 level is likely to end earlier than our expectation. We have expected the market to rally towards the end of the week on expectation of better Singapore manufacturing number. True, the index for industrial productions has registered another month of double-digit growth, by 10% in February 2008 after growing 12.8% in January (see Chart). However, investors chose to remain at the sidelines pending further development in the US. Thus, the worst-than-expected US durable orders are likely to lead to some profit taking today. The US economy is probably in a recession now. However, the Singapore economy is expected to remain healthy, shown by the latest manufacturing numbers. With the backing of the Singapore economy, buy on weakness will still be the preferred investment strategy.

Company Highlights
SP Ausnet – Upgrades earnings forecasts
• SP Ausnet, a supplier of energy like electricity and gas, has guided an earnings increase for its 2008/09 financial year. Ausnet expects net profit to be about 15% higher than the forecast in its 2007 explanatory memorandum of A$147.5 million.

• Key reasons for the upward revision include the decision on transmission charges by the Australian Engery Regulators and also higher capital expenditure allowances. On top of that, Ausnet will also see reduction in its interest cost due to the refinancing of A$1.55 billion debt and finalisation of new interest rate hedges.

Asia Pacific Breweries Ltd – Invested US$1m to increase beer production in Vietnam
• Asia Pacific Breweries ("APB"), leading brewery group in the Asia Pacific region, has invested some S$1.4 million to increase production capacity at its wholly-owned brewery in Hatay, located outside Hanoi in North Vietnam.

• Hatay Brewery can now produce 460,000 hectolitres of beer, up 50 percent from its initial capacity. The plant brews beer under the labels Tiger, Heineken, Anchor and Bivina.

• APB says Vietnam is a key part of its business in Indochina. The region is now APB's largest profit generator, accounting for 48% of pre-tax profit and 37% of revenue in FY07.

• APB's operations in Indochina comprise five breweries in Vietnam, one in Cambodia and one in Laos, which was officially opened two weeks ago.

Capitaland: Mixed development in Vietnam could contribute could contribute S$103m in

2008-03-28T14:41:00.005-07:00

Capitaland announced its plans to build approximately 1,400 apartments and commercial and retail space on the 6.7-hectare site in District 2 in Ho Chi Minh City (HCMC) in partnership with Thian Du Co Ltd. The total investment capital for the project is estimated at S$690m and will be developed in phases. CapitaLand's equity interest will be 60% and Thian Du holding the remaining 40% stake. Assuming at least a 20% development margin similar to its other projects in Vietnam, the project could potentially contribute more than S$103m in pre tax profits.
Capitaland plans to build high-rise condominium with 28 storeys on the site. The first phase of the project is expected to launch in 2Q09. The move by Capita Land is in line with its expansion and diversification strategy by setting up a strong presence in the Asia's growth cities and benefit from the property upcycle in that region. We have not incorporated the potential S$103m contribution at this point in time as it is small compared to the overall RNAV. We will incorporate it subsequently as we get more details on the project. We are reviewing our target price and recommendation.

HG Metal Manufacturing (S$0.30) - Shortage of steel

2008-03-28T14:41:00.003-07:00

We remain positive on HG Metal's near-term prospects as we believe it
will benefit from a combination of rising
steel prices, robust construction and marine and offshore sectors in
Singapore, and a weaker US$. We have kept our
FY08-10 EPS forecasts unchanged for the time being in view of the
volatility of steel prices. However, we believe
there could be upside surprises to our FY08 numbers if steel prices
stay at current levels in 2HFY08. We have rolled
over our target P/E from CY08 to CY09, using 8x instead of 9x to factor
in compressions in the market P/E. However,
our target price remains relatively unchanged at S$0.61. Maintain
Outperform, given the potential upside to our
numbers from any higher-than-expected ASPs.

Quick Takes

* CapitaCommercial Trust (S$2.11) - One George Street on the
cards
* STX Pan Ocean (S$2.86) - 1Q guidance substantially ahead of
expectations
* StarHub (S$3.07) - Wins additional 2G spectrum rights

News of the Day

* US GDP up a feeble 0.6% in Q4

* Private bank RBS Coutts looks to expand in Singapore

* $484m gain in value of A-Reit properties

* KSE bags US$130m charter deal

* Templeton wants 24% more for AsiaPharm

* FCT to buy $480m malls from parent

* Ezra inks US$77.6m worth of charter deals

Technical Trading Ideas

* Celestial NutriFoods

Singapore market – Continue to track US development

2008-03-28T14:41:00.001-07:00

• Singapore: Singapore market closed higher despite fall before mid-day. Investors went on bargain hunting and collected blue chips after earlier fall during the day due to weak US economic data on order for durable goods and low sales of new home. FTSE-STI dropped as much as 1.2% before mid-day, coming back toward the end of trading hours to close 29.98 or 1.0% higher at 3,025.20 points. Trading volume was 1.49 billion shares valued at S$1.63 billion and gainers took lead against decliners 398 to 248. Local bourse operator Singapore Exchange soared S$0.36 or 4.9% to S$7.76.

• Wall Street: US market retreated for the second day on weak financial results posted from technology giant Oracle Corp, and rumours that Lehman Brothers could be the next sub-prime casualty following Bear Stearns. Technology shares suffered ripples of sell-off after Oracle delivered weaker-than-expected quarterly revenue and made cautious statements on its outlook. Providing technology solution to a lot of different sectors in different countries, Oracle's cautious sales outlook could indicate softer business spending in the months to come. Dow Jones dropped 120.40 or 1.0% to 12,302.46 points and tech-heavy Nasdaq fell 43.53 or 1.9% to close at 2,280.83 points. Lehman's share plunged 8.9% to US$38.71. Crude oil up US$1.68 to close at US$107.58 per barrel on NYMEX.

• Outlook: Development in the US will continue to dominate local sentiments. For the pass three weeks, the opening price of STI has track the closing of the Dow without fail. When Dow was closed lower, STI opened down and when Dow closed higher, the STI opened up. No exception is expected for today. With the Dow dropped more than 100 points yesterday, STI is expected to open down. The reasons for investors to track the development in the US instead of focusing on Singapore economy were easy to understand. Singapore is an open economy and its performance will be easily affected by global economies, especially the world largest economy, the US. Investors' memory is still fresh. The most recent US slowdown in 2001 has dragged the Singapore economy down by 2.1% (See Chart). However, the 2001 Singapore recession was partly due to the hollowing out of the manufacturing sectors to cheap producing economies and the Singapore economy underwent restructuring. The Singapore economy has since emerged stronger. We believe it is likely to remain healthy during the current US slowdown or recession, just as it did during the 1982's and 1991's US recessions.

Company Highlights
OKP Holdings Limited – Awarded S$16.86m contract to widen CTE
• OKP Holdings Limited is a leading home-grown infrastructure and civil engineering company in the region, specialising in the construction of airport runways and taxiways, expressways, flyovers, vehicular bridges, urban and arterial roads, secured a S$16.86m contract to widen the stretch of the CTE between Ang Mo Kio Avenue 1 and Ang Mo Kio Avenue 3.

• OKP will be adding a lane in each direction along the 1.5 km stretch. Work is expected to be completed by end-August 2009.

• As at 26 February, the Group's order book based on secured contracts stood at S$209.2m.

KS Energy Services Limited – Secured US$130m time charter contract
• KS Energy Services Limited ("KS Energy"), a leading one-stop energy services provider to the global oil & gas ("O&G") and petrochemical industries, secured a firm 3 years drilling contract in excess of US$130m for the charter hire of a 300-feet drilling jackup rig.

• The contract is for the charter of the "KS MedStar-1", a 300-feet cantilever drilling jackup rig. The KS MedStar-1 will serve drilling activities in the Mediterranean Sea for a firm contract period of 3 years plus a renewal option for one year. If the renewal option for one year is exercised, the value of the contract will be increased to US$175.2m.

• Acquired in July 2007, KS Energy expects to take delivery of this rig in March 2008. The funding for the acquisition of the rig will come from a combination of debt financing and internal financial resources.

Best Regards,
Westcomb Research Team

Chartered Semiconductor: Reiterates 1Q08 guidance

2008-03-18T09:51:00.002-07:00

Summary: Chartered Semiconductor has expectedly reiterated its 1Q08 guidance, where it expects revenue to grow 2-6% QoQ to US$361-373m, and achieve breakeven (+/- US$5m) at the bottomline (before accretion to preference shareholders). Chartered has also recently announced that it has entered into a deal to acquire a 100% stake in Hitachi Semiconductor Singapore for US$233m. The deal also comes with a manufacturing agreement with existing HNS customer Renesas Technology Corp to provide some US$250-300m worth of future wafer fab services, but Chartered expects the buy to be neutral to its FY08 earnings. Management will be providing more details on the HNS' revenue contribution during its 1Q08 results briefing scheduled on 25 April. As such, we are leaving our numbers largely unchanged. But our fair value eases to S$0.74 (still based on 1.1x FY08F NTA), given a weaker USD assumption. We also see downside risk over the next few months, given the uncertain US economic outlook and softening semicon industry picture. As such, we retain our HOLD rating and will review our numbers more closely after its 1Q08 results. (Carey Wong)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Electrotech: Penang Plant Visit

Summary: We recently paid a visit to Electrotech Investments Limited (EIL) in Penang. EIL remains confident of expanding its Mechatronics and EMS business in Penang as management expects things to remain status quo i.e. still very business friendly, despite the recent change in state government. EIL runs its Mechatronics operations through Frencken Malaysia, which is not only an important internal support unit to the Frencken Group, but has also started to penetrate the Asian market on its own. As for its EMS business, EIL is in the process of changing its game plan. While EIL will retain Plastics as one of its core operations, it is working to reduce its dependency on its Keypad business. Instead, EIL wants to build up a critical mass of at least MYR100m in its OA (Office Automation) and AU (Automobile) businesses over the next two years to enhance long-term stability. However, this may come at the expense of short-term profit as EIL scales back its Keypad operations and retool some of the equipment for the OA and AU segment. EIL is sitting on a healthy cash hoard of S$44.0m, or S$0.14/share, which is more than adequate to fund its planned S$14m capex. We do not have a rating on the stock. (Carey Wong)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Pacific Shipping Trust: Changing of the guard

Summary: Pacific Shipping Trust (PST) just announced that it has appointed Alvin Cheng, formerly from APL Logistics, as its CEO with effect from May 1. Incumbent Capt Subhangshu Dutt will return to PST parent Pacific International Lines (PIL) where he had worked for 18 years previously. According to the announcement, Mr Cheng has more than 20 years of working experience in corporate and investment banking and the shipping industries. Capt Dutt has had a long-standing relationship with sponsor PIL, which has aided the development of the trustee-manager and the trust since PST's 2006 IPO. However, the trustee-manager is still 100% owned by PIL, and PIL will continue to deal closely with the trust as a charterer and a key source of future acquisitions. Consequently, we anticipate no far-reaching effects from the move and reiterate our BUY rating and fair value of US$0.55. (Meenal Kumar)

NEWS HEADLINES

- The Al-Futtaim Group has upped its bid for Robinson & Co to S$7 per share from S$6.25 previously.

- The number of new homes sold by developers dropped to just 170 units in February, the lowest since the Urban Redevelopment Authority began releasing monthly sales data in June 2007.

- SIA CEO Chew Choon Seng said that jet fuel prices were likely to stay high in the foreseeable future, but the airline's efforts to upgrade to more fuel-efficient new-generation planes would help mitigate fuel costs.

- Singapore's non-oil domestic exports rose 7.3% YoY in February.

- The Monetary Authority of Singapore told Reuters that Singapore banks' current liquidity positions are sound.

- India's Bharti Airtel, an associate company of SingTel, said it does not expect to make any aggressive tariff cuts to maintain market share, and believes that the growth rate for new subscribers would be sustainable.

- Swiber has been awarded a contract from CUEL Ltd in Thailand that is tenable for five years and estimated to be worth US$50m per year.

- Under a new MOU, Novo Group will supply HG Metal with at least 156,000 tons of steel products per year, about 9% of Novo's reported steel supply.

- Sinopipe has secured a three-year US$15m loan from three banks in Singapore. The interest rate is set at 1.5% a year over and above the 3-month US$ Libor.

What's on the table

2008-03-18T09:51:00.001-07:00

Ascott Residence Trust (S$1.26) ? Initiating coverage - In all the
right places
ART is a serviced residence real estate investment trust focusing on
serviced residences and rental housing markets
in Asia. The length of stay at ART's properties is above the industry
average, given ART's target market of business
and leisure travellers, as well as residential tenants. This largely
reduces the earnings fluctuations commonly seen
in the short-stay hospitality sector. ART is poised for growth via
acquisitions and growth in revenue per available
unit (REVPAU) from 2008 to 2010. We expect ART to acquire S$400m of
properties in 2008, to reach a target portfolio
of S$2bn by end-2008. In addition, its REVPAU is expected to increase
by 3-8% across the region from 2008 to 2010.
On this basis, we forecast a DPU CAGR of 9% for 2008-10. We initiate
coverage on Ascott Residence Trust with
Outperform and DDM-derived valuation of S$1.74. We arrive at our target
price of S$1.74 using DDM valuation
(discount rate at 8.4%, terminal growth rate at 3%). This represents a
total return of 45% from a forward yield of
6.5% in FY08 and potential price upside of 38%.

News of the Day

* Fed's emergency moves fail to quell Asian fears

* New home sales slump to 9-month low in Feb

* Al-Futtaim raises offer for Robinson to $7 a share

* Swiber clinches five-year contract worth US$250m

* Jet fuel prices set to stay high: SIA chief

* Bharti does not plan to make steep tariff cuts

* Anwell wins Blu-Ray manufacturing deal in Hong Kong

* Novo, HG Metal in MOU on steel supply

* DBS rolls out deal for social enterprises

Trading Ideas

* Fibrechem Technologies

Jackspeed Corporation: Aviation certification plans on track

2008-03-17T14:46:00.003-07:00

Summary: Jackspeed Corporation's (JS) aviation certification progress for the FAR 145 certification is on track, and management is targeting to obtain the certification within 6 months. We believe this certification should aid in enhancing its technical competency and could translate into better sales. Meanwhile, Thailand is on its way to reaching the 2m automotive units production target, at which Thailand will move up from its current 14th place ranking to become one of the top 10 auto manufacturing countries in the world. Thailand's growing auto assembly facilities and a large export and domestic auto market also present opportunities for Jackspeed's parts/accessories business in Thailand. In view of the still healthy macro environment for Thailand's auto industry and together with Jackspeed's growing technical expertise in the aviation business, we are maintaining our fair value of S$0.26 and reiterate our BUY rating. (Selena Leong)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- J.P. Morgan agreed to buy Bear Stearns for US$2 a share in a stock-swap transaction. The deal values Bear Stearns at just US$236m, while its stock-market value on Friday was about $3.54b.

- CapitaCommercial Trust has issued S$150m of fixed rate notes due in 2010, under the S$1b multi-currency medium-term note program established last year.

- A consortium involving a Midas JV has secured a RMB550.4m contract to supply metro train cars. Midas has a 32.5% stake in the JV.

- Singapore's retail sales rose 7.8% YoY in January, but only 1.5% after adjusting for inflation.

- Centraland said its 2007 net profit fell 9.4% YoY to RMB41m as higher costs offset the 5.6% rise in revenue to RMB292m.

- Beyonics Tech posted a 23.3% YoY drop in 2Q net profit to S$3.9m despite a 27.2% increase in revenue to S$255m.

- Popular Holdings saw higher expenses eat into its 3Q net profit, which fell 8.2% to S$8.9m.

- SNF Corp's net losses widened in FY07 to S$2.95m, up from S$769k in the previous year. The group said it expects its operating environment to remain challenging, citing the weakening USD, volatile oil prices and the uncertainty of the global economy.

- Tri-M Tech, which is on the SGX watchlist, said it has entered into an MOU to fully acquire Kingworld Resources, which is in the oil exploration and production business.

Telecommunications Sector - Robust fundamentals remain underappreciated

2008-03-17T14:46:00.001-07:00

We expect Singapore telcos to continue to outperform the STI in view of
an extended period of market risk aversion.
The sector offers robust free cash flows and the three telcos remain
below their targeted capital structures. This
is supportive of attractive yields of 4.5-10%. 2008 growth is expected
to be topline-driven on strong telco service
consumption. Margins are expected to be stable as competition
approaches a new equilibrium. In addition, we believe
concerns over risks from mobile number portability and the
Next-Generation Broadband Network are overdone. Maintain
Overweight with StarHub as our top pick, followed by SingTel and M1.
StarHub offers outstanding ARPU growth
potential with a robust yield of 10% while SingTel offers subscriber
share growth with a yield of 4.5%. M1 lacks
catalysts but offers a yield of 8%.

Quick Takes

* Global Equity Technicals - Building up to a "selling climax"

News of the Day

* Fed Cuts Discount Rate to 3.25%; Announces New Lending
Facility
* Convertible bond issues jump as stocks retreat

* HK houses going for HK$300m

* Stocks slide hits market for IPOs

* CCT MTN issues $150m fixed rate notes due 2010

Trading Ideas

* STI Weekly Outlook

JPMorgan Chase & Co. agreed to buy Bear Stearns Cos

2008-03-17T14:45:00.001-07:00

March 16 (Bloomberg) -- JPMorgan Chase & Co. agreed to buy
Bear Stearns Cos. for about $270 million after a run on the
company ended 85 years of independence for Wall Street's fifth-
largest securities firm and prompted a bailout by the Federal
Reserve.
The deal values New York-based Bear Stearns, with 14,000
employees, at $2 a share, compared with $30 at the close on
March 14. The central bank will provide financing for the
transaction, including support for as much as $30 billion of
Bear Stearns's ``less-liquid assets,'' the two companies said in
a statement today.
JPMorgan Chief Executive Officer Jamie Dimon had the upper
hand in negotiations after coming to the smaller firm's rescue
last week with a cash infusion engineered by the Federal Reserve
Bank of New York. Bear Stearns's CEO, Alan Schwartz, faced the
prospect of bankruptcy as clients pulled $17 billion in two days
last week and creditors stopped renewing loans.
``JPMorgan Chase stands behind Bear Stearns,'' Dimon said
in the statement. ``Bear Stearns's clients and counterparties
should feel secure that JPMorgan is guaranteeing Bear Stearns's
counterparty risk. We welcome their clients, counterparties and
employees to our firm, and we are glad to be their partner.''
Bear Stearns's sale to JPMorgan caps an eight-month slide
in the company's fortunes that began last July with the collapse
of two of its hedge funds. Those failures sparked a wider market
concern that called into doubt the value of any asset linked to
the mortgage market, Bear Stearns's biggest business.

Market Deterioration

Without a resolution this weekend, the situation would
probably have continued to deteriorate when markets resumed
trading tomorrow, according to analysts and investors including
Cambiar Investors LLC's Brian Barish.
``The past week has been an incredibly difficult time,''
Schwartz said in the statement. ``This transaction represents
the best outcome for all of our constituencies based upon the
current circumstances.''
The Fed's rescue attempt last week failed to avert a crisis
of confidence among Bear Stearns's customers and shareholders,
who drove the stock down a record 47 percent after the cash
infusion was announced.
Bear Stearns's profit exceeded $2 billion in 2006, yet the
price JPMorgan is paying is about one quarter the value of the
securities firm's headquarters building in midtown Manhattan.
The 1.2 million-square-foot, 45-story structure built in 2001 is
worth about $1.2 billion, based on the average $1,000 per-
square-foot that comparable office space in the city is
currently fetching.

Counterparty Risk

``If you're buying equity for free and the liabilities are
pretty well capped, it sounds like it's good for JPMorgan
shareholders,'' said Ben Wallace, who helps manage $800 million,
including shares of JPMorgan, at Grimes & Co. in Westborough,
Massachusetts. ``The thing that everybody's been worried about
has been the counterparty risk and if this gives people more
confidence, that will be good for the markets.''
Bear Stearns's prime brokerage unit, which provides loans
and processes trades for hedge funds, generated $1.2 billion in
revenue last year. That business is probably the only piece left
of the company with value after the mortgage market collapsed
last year, analysts have said.
The prime brokerage was the third-largest behind Goldman
Sachs Group Inc. and Morgan Stanley as of April 2007, according
to Sanford C. Bernstein & Co. About a sixth of the firm's income
came from packaging and trading mortgage bonds, a market that
has been almost completely frozen since July.

`A Lot of Value'

``As bad as things are at Bear Stearns, this is still a
franchise with a lot of value, particularly the prime brokerage
business, which is what JPMorgan is after,'' said William
Fitzpatrick, who helps manage $1.6 billion at Optique Capital
Management, including JPMorgan shares. ``That's the crown jewel,
and that would fit into JPMorgan's business extremely well.''
Dimon's New York-based firm has suffered fewer losses than
rivals during the credit-market contraction, which has prompted
$195 billion of writedowns and losses by Wall Streets biggest
banks and securities firms.
JPMorgan, the third-largest U.S. bank by assets, has posted
$3.7 billion in writedowns, a fraction of the $22.4 billion
reported by New York-based Citigroup Inc., the biggest U.S.
bank.

Crisis of Confidence

``It'll be perceived as a positive for the markets,'' said
E. William Stone, who oversees $77 billion as chief investment
strategist at PNC Wealth Management in Philadelphia. ``It puts a
floor under all the financials. The longer-term thesis is that
the Fed won't let good companies fail based on lack of liquidity
and a crisis of confidence.''
Treasury Secretary Henry Paulson defended the Fed's bailout
today, saying policy makers will do whatever is needed to
prevent disruptions in financial markets from hurting the
economy. Paulson said he was involved with the discussions on
Bear Stearns's future this weekend, without elaborating.
``There's always a decision to be made to say what's best
for the stability of the marketplace, the orderliness of the
marketplace,'' Paulson said. ``I think we made the right
decision.''
Bear Stearns, founded in 1923, survived the Great
Depression and first sold shares to the public in 1985.
Schwartz, an executive with more than 30 years of experience at
Bear Stearns, was the hand-picked choice of his predecessor,
James ``Jimmy'' Cayne, 74, who remains non-executive chairman of
the firm.

Bridge Game

Cayne stepped down after reporting an $854 million fourth-
quarter loss, the first in the company's history. He was at a
bridge tournament in Detroit last week as the firm faced
speculation about its cash position. Cayne came under fire last
July for playing golf and bridge while the hedge funds
collapsed.
On a conference call with analysts and investors after the
bailout announcement on March 14, Schwartz said the company's
book value was ``fundamentally'' unchanged. Clients continued to
withdraw funds, he said. The book value was about $80 a share at
the end of November.
When Bear Stearns invited potential buyers for detailed
presentations by department chiefs yesterday, only JPMorgan and
private equity firm J.C. Flowers & Co. showed up, according to
people familiar with the talks.

Other Buyers

Other potential buyers, such as Royal Bank of Scotland
Group Plc and HSBC Holdings Plc, which had expressed interest in
the past, didn't send representatives. Hundreds of Bear Stearns
employees went to work yesterday to help with the sale process
and the presentations.
Bear Stearns has offices in cities including London, Tokyo,
Hong Kong, Beijing, Shanghai, Singapore, Milan and Sao Paulo,
according to its Web site.
Joseph Lewis, the second-largest shareholder in Bear
Stearns Cos., wasn't planning to reduce his stake, a person
close to him said March 11. Lewis, a 71-year-old billionaire,
has put in more than $1 billion into the firm since September,
paying as much as $150 for a share.
JPMorgan's participation in the bailout follows a long
tradition at the bank of stepping in to rescue financial markets
from crisis, according to Charles Geisst, the author of ``100
Years on Wall Street.''
The bank has also profited from others' crises. JPMorgan
got at least $725 million of revenue for taking on half the
energy trades from collapsed hedge fund Amaranth Advisors LLC in
2006.

REITs Defensive amidst turbulent times

2008-03-17T14:44:00.002-07:00

Since 2H07, credit concerns and a US-led slowdown have cast a pall over the
market, both globally and domestically. To tide over this period, we
suggest investors take a look at the S-REIT counters, given their earnings
visibility, attractive yields and prospect of positive rental reversions.
With the 10-year SGS bond currently offering an all-time low of 2.08% and
S-REITs trading at a decent average yield of 6.4%, we believe that
investors should begin to place emphasis on the sector. Our key
recommendations are Suntec REIT, Frasers Centrepoint Trust and Cambridge
Industrial Trust.

HONG KONG (Standard & Poor''s) March 17, 2008

2008-03-17T14:44:00.001-07:00

Standard & Poor''s Ratings
Services today lowered its ratings on 14 tranches of two Asia-Pacific cash
flow CDO of ABS transactions; Raffles Place II Funding Ltd. and Singa
Funding Ltd. (see list).

The total issuance amount of the 14 downgraded tranches is approximately US$2 billion.

All lowered tranche ratings were on CreditWatch with negative implications
prior to today''s rating actions. The actions on the CDO ratings were taken
as a result of credit deterioration in the underlying CDO portfolios, which
consist primarily of residential mortgage-backed securities (RMBS) backed
by U.S. mortgages and of tranches from other CDO transactions.

Today''s CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime RMBS
securities (see "S&P Takes Action On 6,389 U.S. Subprime RMBS Ratings And
1,953 CDO Ratings," published Jan. 30, 2008, on RatingsDirect). They also
reflect changes that Standard & Poor''s has made to the recovery rate and
correlation assumptions it uses to assess U.S. RMBS held within CDO
collateral pools (see "Correlation And Recovery Assumptions Revised For
CDOs Of ABS Backed By RMBS," published Feb. 4, 2008, on RatingsDirect).

Standard & Poor''s will continue to monitor the CDO transactions it rates
and take rating actions when appropriate. Additionally, Standard & Poor''s
will continue to review its current criteria assumptions in light of the
recent performance of RMBS assets and CDOs. For information on Standard &
Poor''s residential mortgage-related rating actions on U.S. CDO
transactions, please visit RatingsDirect at www.ratingsdirect.com or
www.spviews.com, which is Standard & Poor''s special website for subprime
related issues. Transaction Class Rating to From Raffles Place II Funding
Ltd. A-1M CCC AAA/Watch Neg Raffles Place II Funding Ltd. A-1Q CCC
AAA/Watch Neg Raffles Place II Funding Ltd. A-2 CCC- AAA/Watch Neg Raffles
Place II Funding Ltd. A-3 CC AAA/Watch Neg Raffles Place II Funding Ltd.
A-4 CC A+/Watch Neg Raffles Place II Funding Ltd. B CC BBB/Watch Neg
Raffles Place II Funding Ltd. C1 CC BBB-/Watch Neg Raffles Place II Funding
Ltd. C2 CC BB/Watch Neg Singa Funding Ltd. A-1M CCC AAA/Watch Neg Singa
Funding Ltd. A-1Q CCC AAA/Watch Neg Singa Funding Ltd. A-2 CCC- AAA/Watch
Neg Singa Funding Ltd. A-3 CC AA-/Watch Neg Singa Funding Ltd. A-4 CC
A-/Watch Neg Singa Funding Ltd. B CC BBB-/Watch Neg

Ratings are statements of opinion, not statements of fact or
recommendations to buy, hold, or sell any securities. Standard & Poor''s
(Australia) Pty. Ltd. does not hold an Australian financial services
license under the Corporations Act 2001. Any rating and the information
contained in any research report published by Standard & Poor''s is of a
general nature. It has been prepared without taking into account any
recipient''s

Miyoshi Precision: Overall HDD outlook still positive

2008-03-14T18:05:00.006-07:00

Summary: We met up with Miyoshi Precision Limited (MPL) recently for an update and was told that its HDD business outlook remains modestly positive, still buoyed by good order flows from major customers Hitachi GST (HGST) and Fujitsu. HGST further expects Asia to feature prominently in its 2008 road map but MPL is not going to enjoy the full benefit of HGST's ramp up, given the delay in its new China factory. Separately, further weakness in the USD could result in lower reported SGD sales figures as well a lower gross margin as 40% of its COGS have USD exposure. Due to the weak USD trend and delay in its China plant, we have pared our FY08 estimates for revenue by 4.9% and earnings by 18.6%. We have also reduced our valuation from 9x FY08F to 8x to reflect a more cautious market outlook. Together, this eases our fair value from S$0.325 to S$0.265. However, we remain upbeat about MPL's prospects in the HDD industry and hence keep our BUY rating. (

Koda - Rolling along the Fairway

2008-03-14T18:05:00.005-07:00

Summary: We attended the annual International Furniture Fair Singapore 2008 at Expo this week, where international furniture wholesalers including Koda Ltd (Koda) showcased their products to global furniture buyers. Besides Singapore, Koda's road show extends to Malaysia, Vietnam and China. Management revealed that it received strong orders during the Furniture Fair this year, and in particular, its subsidiary Rossano saw a doubling of orders from last year. By pricing its products at a discount to Koda's, Rossano has been able to complement Koda's product range and has captured a new target market. Koda's key edge over its peers lies in the virtue of its low cost production base in Vietnam, where labour, rental and operating costs are cheaper than those in China. We are retaining our estimates for now, pending clarity on size of orders clinched from Koda's ongoing series of furniture fairs. Our rating remains a BUY, with a fair value estimate of S$1.01

Koda - Rolling along the Fairway

2008-03-14T18:05:00.003-07:00

USD/JPY's decline may accelerate below 100

2008-03-14T18:05:00.001-07:00

* USD/JPY has declined to around 100

* Although we maintain our USD/JPY target at 98 end-March, risks are
that
USD/JPY could slip well beyond 98

* EUR/JPY and Japanese exporters are the key

* Intervention is still unlikely

First Resources; BUY (Upgrade from Hold) S$0.95; Bloomberg: FR SP

2008-03-14T18:04:00.000-07:00

Uncertainties removed
Price Target : 12-month S$ 2.00 (Prev S$1.55)
By: Singapore Research Team +65 6533 9688

Story: First Resources has lodged an announcement with SGX today regarding
Indonesian news media reports on a press conference held by the Indonesian
Corruption Eradiation Commission (KPK) last night. In the press conference,
KPK was reported to have announced that the financial penalty of
approximately US$38.2 million to Mr. Martias in a separate corruption case,
had been fully paid; and that KPK would withdraw its intention to auction
off 19 properties (three of which belonging to First Resources) that it had
deemed to be belonging to or related to Martias.

Point: In a conference call today, Mr. Ciliandra Fangiono, First Resources
CEO, stated that there was no financial assistance given to Mr. Martias in
regards to the settlement and that as far as the Supreme Court judgment and
penalties go, "all the boxes have been ticked". An official announcement of
the KPK is expected to be published in Indonesian newspapers by tomorrow.

Relevance: Given this announcement, we believe uncertainties on the stock
have been removed. We have therefore upgraded our recommendation on the
stock to Buy from Hold and reinstated our target price to S$2.00 from
S$1.55.

LottVision LottVisionStock remains highly speculative

2008-02-15T10:39:00.001-08:00

3Q results. LottVision reported 3Q turnover of HK$1.2m (+1% yoy) and net profit of HK$24.4m. The net profit was due mainly to other net income of HK$45.4m. This included realised investment gain of HK$76.2m on disposal of 20% of PAL Development Ltd (PAL), which was offset by HK$32.0m goodwill impairment in the surveillance business arising from the shift of business focus of LottVision

SembCorp Marine Ltd (SMM SP/ SCMN.SI, OUTPERFORM- Upgraded, S$3.28 - Target: S$4.58)

2008-02-15T10:38:00.003-08:00

Quick takes - The coast is clear SembMarine has reached a settlement for US$208.7m with nine out of 11 banks involved in its earlier unauthorised forex transactions. This will be expensed in 4Q07. Our FY07 core earnings estimate has been cut by 45%. We believe the forex overhang should be lifted given that 80% of the amount has been expensed off. A strong net order book of S$6bn and positive order flow should continue to drive earnings till 2010. Our target price, still based on blended valuations, has been reduced from S$5.00 to S$4.58 as we lower our P/E target from 22x to 18x to reflect a mid-cycle valuation for the O&M industry and lower investor risk appetite. However, with the settlement of the forex debacle and restoration of investors' confidence, as well as upside potential of 39%, we upgrade the stock from Neutral to Outperform.

Swiber Holdings Yet another contract extension

2008-02-15T10:38:00.001-08:00

Story: Swiber repays our faith in its ability to win new orders with a new
Letter of Intent (LOI) to transport and instal three pipelines off the
coast of Indonesia. This project is worth US$35m. Swiber will start work on
the new contract in the second quarter and expected to be completed by end
2008.

Point: This is yet another contract extension in the past two months and we
think there are three points worth noting. First, Swiber has now firmly
gotten two oil majors as its recurring customer base, including Brunei
Shell, which we believe is crucial in ensuring a steady stream of larger
contracts to feed its enlarged capability. Indeed, this latest LOI is an
extension of an earlier order won in November 2007 from the same unnamed
oil major, and the combined orders won to-date from this customer is about
US$66m.

Secondly, we reckon that Swiber's execution risk with regard to successful
bids for new orders and execution of contracts is now lower as compared to
mid-2007. Swiber's record US$320m new orders win in 2007, and the two
recent contract extensions from the unnamed oil major and Brunei Shell -
who are known to have strict safety and technical requirements - support
this point.

Thirdly, we continue to believe that with two oil majors as its new
customers, it may result in a snowballing effect in attracting other oil
majors to come on board as Swiber's clients in Asia Pacific. As such, we
believe our new orders win assumption of US$400m in 2008 is achievable.

Relevance: Our fair value stays at S$3.49, using 15x FY08 PE. We expect the
contracts flow momentum to be strong through the rest of 1Q 2008, providing
price catalysts to the counter. Maintain BUY.

F & N Starting on a strong note

2008-02-15T10:37:00.003-08:00

Story: F&N's strong 1Q08 results were in line with our expectations.
Topline grew by 19% to S$1.32bn, from S$1.11bn. Attributable net profit
ended at S$108.6m, up by 40% from a year ago.

Point: All its business divisions, except for Printing and Publishing,
delivered growth. Its soft drinks (+12%), dairies (+140%), breweries (+17%)
and investment properties (+29%) divisions were the main contributors to
its topline growth.

Relevance: As highlighted in our previous report on 14 Nov, we expect the
Group to continue to deliver positive performances over the next few
quarters, backed by the progressive recognition of its sold-out development
property launches in the past year. In addition, we believe that the Group
is well-positioned in the mid-end residential market in Singapore with a
total landbank of close to 3,000 units. This is also complemented by its
relatively large landbanks of over 34 m sq ft overseas. Maintain BUY; TP:
S$7.18 (previously S$7.40) as we peg the listed entities at current market
values. Our TP is based on sum-of-the-parts with a 10% premium on its
property RNAV in lieu of its huge landbanks in Singapore and overseas.

China Fishery Group

2008-02-15T10:37:00.001-08:00

BUY S$1.78 Price Target : 12-Month S$ 2.72 (Prev S$ 2.89)
Netting higher profits

Story: CFG's 4Q/FY07 results came just a tad (4.3%) below our expectations
of US$92.4m. This was due to (i) some delays in shipment of fishmeal and
(ii) higher operating expenses than our forecast.

Point: Revenue surged 160% y-o-y to US$406m largely due to higher catch
volumes (from its 3rd and 4th Vessel Operating Agreements [VOAs]) and a
full year contribution from its fishmeal operations. Consequently, gross
profit was at US$141m, up 137% from FY06. However, operating expenses
increased by a much higher 228%, largely due to the addition of its
Peruvian fishmeal operations. As a result, net profit ended at US$88.5m, up
by almost 85% from US$48m last year.

Relevance: We have adjusted our forecasts in FY08F-09F down slightly by
about 6% to factor in higher operating expenses. Consequently, our TP is
revised down to S$2.72 (from S$2.89), still premised on 13x FY08F earnings.
Notwithstanding that, we still remain positive of the Group's prospects
over the longer term as we believe it is well poised to benefit from the
rising global demand for fish amid rising affluence and the growth of
aquaculture. On the fishmeal front, based on management's information and
industry reports, it seems that fishmeal prices have stabilised at around
US$900 – US$950/mt region. Catalysts for this counter would come if the
Group manages to re-negotiate its 4th VOA to a prepayment terms, higher
catch volumes and higher than expected fish and fishmeal prices. Maintain
BUY.

DBS 2007 Results Flash

2008-02-15T10:36:00.001-08:00

DBS : BUY (Target : S$25.00)

DBS reported 2007 net profit of S$2.28b, flat versus 2006's S$2.27b. This is marginally lower than our S$2.40b forecast, primarily due to higher allowances for credit and other losses.

Net interest margin narrowed 3 bps to 2.17%. Net interest income rose 14% to S$4.11b, driven by gross loan expansion of 25%. However, NIM narrowed 3 bps, due to lower interest margins in HK. The recent margin squeeze was more pronounced - 4Q07 NIM of 2.11% was down from 3Q07's 2.14%, due to lower HK prime lending rate, and lower interbank asset yields. Given the continued weak SIBOR, we expect margin to remain narrow in the quarters ahead. But DBS loans expansion could still drive net interest income expansion.

Non-interest income rose 11%. Fee & commission income (71% share of non-interest income) surged 27% to S$1.46b. The key contributors were a) stockbroking (+77% or S$109m); and b) wealth management (+46% or S$79m). Net income from financial investments was up 97% to S$450m. However, net trading income collapsed 66% to S$180m as the fallout from the US sub-prime mortgages impacted the credit trading portfolio and structured credit business. This was further compounded by marked-to-market losses from Rosa's CDOs.

Though specific allowances for loans fell to S$16m, specific allowances for non-loan assets was a high S$100m, inclusive of a S$117m charge for the S$267m of investment CDOs with exposure to US sub-prime mortgages. General allowances of S$66m included S$53m for investment CDOs with exposure to US sub-prime mortgages and another S$30m for the balance S$944m of investment CDOs.

DBS declared a final dividend of 20¢ ps (one-tier tax-exempt). Total 2007 dividends amounts to 80¢, which is more than 2006's 76¢.

China Essence Group New capacities onstream

2008-02-14T12:36:00.001-08:00

3Q/9M08 results were in line with our expectations.

Point: Revenue for 9M surged by 63% y-o-y to RMB588.8m from RMB361.2m a
year ago on higher ASPs and higher volumes for its potato starch. This was
largely due to its newly added 80,000 tpa capacities at its Sui Ling,
Heilongjiang and Ahlihe, Inner Mongolia plants (40,000 tpa each). Gross
profit rose by 57% to RMB268.3m. Due to higher costs of potatoes in this
harvest season (Aug – Nov'07) at RMB450/mt vis-à-vis the previous season's
average cost of RMB320/mt, gross margins were lower by 1.8ppt to 45.6%,
from 47.4% a year ago. However, net profit for 9M still ended at RMB174.7m,
up by 67% from RMB104.8m as a result of its lower effective tax rate.

Relevance: The Group also announced that construction of the production
lines for its two new products – potato fibre and potato protein – has
progressed well and is expected to commence production in 3QFY09. We have
adjusted our FY09F forecasts upwards by about 12.6% to take into account:
(i) contributions from potato fibre and potato protein; and (ii) higher
ASPs of its potato starch. However, in line with the general de-rating of
the market in recent weeks, we are pegging our valuations to a more
conservative 8x on FY09F earnings (instead of 12x previously). This is at
the lower end of the counter's historical trading band. Consequently, our
TP is revised to S$0.85.

China Dairy Group Ltd: Caught between a rock and a hard place

2008-02-14T12:35:00.002-08:00

Summary: We spoke to the management of China Dairy Group Ltd (CDG) recently, and the key takeaway was the rising heat from inflationary costs. Recent statistics from raw milk producer China Milk Products Group Ltd suggest that the cost of raw milk, a key component of CDG's cost of goods, could have risen by 27% in 2H07. Coupled with rising oil prices which will flow into higher operational costs, we expect a decline in the profitability of milk processors across the PRC, since they are generally unable to fully pass on costs to consumers. Furthermore, the PRC government has introduced curbs on price hikes for consumer products such as grain, milk and meat, adding to these food processors' woes of a margin squeeze. With various negative externalities inhibiting its growth, we have trimmed our estimates for CDG. We roll forward our valuation to FY08, but use a lower PER of 12x (previously 15x) to account for the lack of near term catalysts, translating to a fair value estimate of S$0.28. Downgrade to HOLD.

StarHub: Wins Uefa Broadcast Rights

Summary: StarHub has won the exclusive rights to broadcast the 2008 Uefa European Football Championship in Singapore, meaning that rival SingTel is still without a major sporting event to help draw more customers to its Mio pay-TV service. While StarHub did not disclose the price it paid for the broadcast rights, we do not expect it to come cheap. And as with the case of the 2006 World Cup broadcast, we expect StarHub to charge its sports viewers on a pay-per-view basis. We will have more updates when we see what sort of package StarHub intends to offer. Meanwhile, we are also leaving our numbers unchanged, pending the release of its FY07 results this evening. For now, we retain our BUY call and S$3.41 fair value.

NEWS HEADLINES

- Aztech Systems has secured a S$253m contract for the supply of construction material.

- China Essence Group posted an 85% YoY increase in 3Q08 net profit to RMB100.m as revenue almost doubled from RMB166m to RMB330.3m.

- Jade Tech is selling its wholly-owned, loss-making subsidiary Jade Precision Engineering to United Pacific Industries (UPI) for about S$6m in UPI shares and cash.

- Yoma Strategic Hldgs posted a S$21.06m net profit in 3Q08, a turnaround from a S$13.82m loss a year ago, thanks mainly to the completed acquisition of a 27% interest in Winner Sight Investments.

- Mercator Lines reported a 3Q08 net profit of US$14.4m, up sharply from US$2.4m a year ago. The company attributed the 106% YoY gain in revenue at US$43.1m to improved vessel day rates and an increase in the number of operating days.

- Vicom, the vehicle inspection unit of ComfortDelGro, posted a 31% YoY gain in FY07 net profit to S$13.5m.

- KTL Global has secured a 5-year contract to supply up to US$7m worth of wire ropes for crane equipment to the McDermott Group. It also announced a 24.6% YoY increase in 1H net profit to S$2.18m.

- Saizen REIT's 2Q08 net property income jumped 77.8% YoY to S$7.95m on the back of an 85% increase in gross revenue to S$11.23m.

DMG Daily 13 Feb 08 - NOL, DBS, Jade, Yoma, China Essence, Vicom, Mercator, Aztech, Robinson

2008-02-14T12:35:00.001-08:00

Market Outlook
It was a day for the bargain hunters as the STI opened up 0.9% at 2,895
over its previous close and barely looked back for the rest of the
session.
A positive open by the Hong Kong market further strengthened sentiment
on the local front as the STI eventually closed up 57.94 points or 2.02%
to
2,926.23 on Tuesday. The show that had been put on by the index was
easily one of the best performers in the region. On the scoreboard,
gainers beat losers 466 to 208 while volume traded also improved to
1.49bn shares that were worth some $1.55bn. Index heavyweight SingTel
continued to lend support to the STI as it jumped 21 cents or 5.6% to
$3.93 although the three local banks underperformed as investors
continued to shun financials.
A target price cut on UOB and DBS by a major foreign brokerage didn't
help as both lagged the broader market by inching up 1.2% and 0.7% to
$17.20 and
$16.78 respectively. For the week, expect the retail sales economic data
to be released on Wednesday in the US as one of the major events as
investors gauge the health of the US consumer.

Media Highlights
- NOL Q4 net up almost four times to US$196m
- DBS seen posting sharply lower Q407 earnings
- Jade Tech in deal to sell loss-making unit
- Yoma in the black with $21m Q3 profit
- China Essence reports 85% jump in Q3 net profit
- Vicom full-year net profit accelerates 31% to $13.5m
- Mercator's Q3 profit jumps to US$14.4m
- Aztech wins $253m material supply deal
- Robinson Q2 profit up 6.7% on higher sales

Economic Highlights
- Credit crisis spreading far beyond sub-prime loans
- Fed may have to cut rates to 1% or lower: Citigroup

Budget PreviewSingapre Market Focus

2008-02-14T12:34:00.001-08:00

Generous pro-individual budget expected

Managing rising inflation. The key thrust in this year's budget will not
be
significantly different from previous years. Amidst a backdrop of
growing
downside risks to growth and escalating inflation, the forthcoming
budget
will focus on sharing the fruits of growth, helping the lower income
group
cope with the escalating costs of living and enhancing the
competitiveness
of the economy so as to provide the platform for stronger growth in the
years ahead.

Fat surplus, generous budget for the individual: The key measures to be
announced would probably be cuts in the personal income tax. Top tier
personal income tax rate, presently at 20% could be aligned more closely
to
the existing corporate tax rate of 18% in order to make Singapore a more
attractive location for top foreign talents. To alleviate burden of
rising
costs of living on the lower income group, the budget is expected to be
"spiced" substantially with inflation offset measures.

Corporate tax cut unlikely. Following last years' 2pct cut in corporate
tax
rate to 18%, we do not expect another cut in corporate income tax rate
this year. However, the budget is expected to include measures which are
targeted at enhancing the competitiveness of businesses. With that in
mind,
further increase in the employers' share of the CPF contribution is
unlikely given that such a measure will increase the wage costs and
depress
margin at a time when growth is most likely to slow further.

No cheer for the stockmarket. Unlike 2007, we do not expect the budget
to
have any impact on the stockmarket, given the remote possibility of a
corporate tax cut. The upcoming budget is likely to be pro-individual,
given ongoing concerns of rising inflation and the fact that
pro-business
measures had been employed over the past few years. Focus will be on the
4Q
and final GDP growth rate for 2007, as well as the government's forecast
for 2008, to be released this Thursday. With the deteriorating growth
environment, there's downside risk to our current growth forecasts of
6.5%
for 2008, vs 7.5% for 2007(preliminary estimate).

StarHub Ltd: Eyes 10% revenue growth in FY08

2008-02-14T12:33:00.000-08:00

Summary: StarHub Ltd posted a good set of 4Q07 results, with revenue up 13.9% YoY and 5.0% QoQ to S$538.8m, aided by good performance from all its business units. Although net profit fell 30.5% YoY (+21.0% QoQ) to S$98.4m, we note that the year-ago quarter was boosted by S$57.6m tax credit versus S$6.7m in 4Q07 (none in 3Q07). StarHub also declared a final dividend of S$0.045/share (versus S$0.035 in 4Q06), bringing the total dividend for the year to S$0.16 (versus S$0.115 in FY06). For FY08, management remains confident that it can sustain revenue growth at 10%, and hold EBITDA margin on service revenue at about 33%. It also aims to pay a minimum cash dividend of S$0.18/share, or around S$0.045 per quarter. In line with the latest guidance, we have adjusted our FY08 estimates by around 4% higher. Again, we see StarHub as a good defensive stock, backed by an attractive dividend policy, hence we maintain our BUY rating with a revised fair value of S$3.51.

For more information on the above, visit www.ocbcresearch.com for detailed report.

Tat Hong Holdings Ltd: 3Q08 results indicated signs of slower growth

Summary: Tat Hong Holdings Limited (THH) turned in a mixed bag of 3Q08 results yesterday. Though revenue increased 17% YoY to S$157.9m and net profit rose 20% YoY to S$21.2m, revenue slipped 1.4% QoQ and net profit fell 7.3% QoQ. We also note that the total fleet tonnage has decreased 3.5% from 43,416 tonnes in 2Q08 to 41,906 tonnes in 3Q08, implying that THH is facing a limitation in expanding fleet tonnage capacity in this tight equipment supply market. Nonetheless, we believe that there is still much to cheer about as a slew of local development projects are planned in 2008, although we foresee lower utilisation levels and that rental rates are likely to reach a plateau soon. In view of this, we are trimming our forecasted revenue and net profit estimates. We have not factored in a potential one-off gain from the listing of Fushun Yongmao in our FY08F valuations. Rolling forward our valuation parameter to FY09F earnings, our fair value estimate is now S$3.44 (from S$4.02 previously). Maintain BUY.

For more information on the above, visit www.ocbcresearch.com for detailed report.

SSH Corporation Ltd: Stellar set of 1H08 results

Summary: SSH Corporation Ltd (SSH) turned in a stellar set of 1H08 results yesterday. Both revenue and gross profit surged 48% YoY to S$114.7m and S$29.2m respectively. Consistent with that of 1H07, gross profit margin maintained at 26%. Stripping off the one-time extraordinary gains of approximately S$1.7m, SSH's recurring net profit of S$10.8m came close to our half-year expectations of S$10.6m. SSH has proposed an interim dividend of 0.7 cent (tax-exempt) per share. We believe that SSH should not have any problems maintaining our dividend payout projection of at least 1 cent for FY08, translating into a decent yield of at least 3.2% for FY08. We are maintaining our FY08 and FY09 earnings estimates. However, with the vulnerability in the global market sentiment, we are lowering our valuation parameter to 12x. Our fair value estimate is trimmed to S$0.54 (from previously S$0.60) based on 12x FY09 forecasted earnings. We reiterate our BUY rating.
For more information on the above, visit www.ocbcresearch.com for detailed report.

Rotary Engineering Limited: Seals US$62m deal to build storage tanks in Saudi Arabia

Summary: In our recent report dated 31 January, we had previously mentioned that Rotary Engineering Limited (Rotary) was in the running for several projects, both locally and in the Middle East. In line with this, Rotary announced yesterday that its join venture company, Petrol Steel Co Ltd (Petrol Steel) had secured a US$62m deal with Saudi Kayan Petrochemical Company to construct 24 tanks for its Saudi Kayan Petrochemical Complex in Al-Jubail, Kingdom of Saudi Arabia. Work would commence soon and is expected to be completed by end 2008. We view this award positively, as this is Petrol Steel's first significant win. We await Rotary's FY07 results on 26 Feb 2008 for more updates. In the meantime, we maintain our BUY rating for Rotary, with a fair value estimate of S$1.48.

Silverlake Axis: Good set of 2Q08 results

Summary: Silverlake Axis Limited (SAL) reported a good set of 2Q08 results as expected last night, with revenue up 30.3% YoY at MYR50.1m, while net profit jumped 78.4% to MYR44.3m, thanks to its recent SIBS licensing expansion into non-banking financial services sector. As a result, SIBS licensing contributed nearly 73.9% of total revenue, and because of its high margin, contributed 83.2% of gross profit. We were also heartened to see an associate contribution of MYR3.0m from Unifisoft, which marked a turnaround from a MYR0.5m loss in 1Q08. At the half way mark, SAL's revenue rose 67.6% to MYR107.6m, meeting nearly 58.1% of our FY08 estimate, while net profit jumped 69.5% to MYR76.9m, or 71.1% of our FY estimate. SAL has also declared an interim dividend of S$0.015/share, versus S$0.0075 last year. We will be meeting with management for an update later. For now, we retain our BUY rating and S$0.75 fair value.

Singapore Shipping Corporation Ltd: Weak set of 3Q results

Summary: Singapore Shipping Corporation Ltd (SSC) released a weaker set of 3Q08 results YoY as expected, with revenue down 52.1% YoY to S$3.1m due to the cessation of the manning service from January 2007 for third party vessels. Operating profit margin was relatively stable at 12.1% in 3Q08 versus 12% in 3Q07. While net profit fell by a steep 91.1% YoY to S$0.5m in 3Q08, we note that it was mainly due to a S$5.3m gain from the disposal of associated companies in 3Q07. On the balance sheet front, SSC's cash balance stands at S$38.1m as at Dec 07, attributable to Dec's special interim dividend payout of approximately S$52.3m (S$0.12/share). Hence, we revise our net assets projection for FY09 to S$94.9m, from S$105.6m previously. With SSC sourcing for suitable vessels to expand its current fleet and operations and all 3 vessels still out on charter, we expect organic growth in the near to medium term to remain stable based on existing operating assets. As such, we are maintaining the P/B ratio of 1x and our new fair value for SSC is S$0.22 (S$0.32 previously). As SSC is currently trading around S$0.39, we are maintaining our SELL rating.

StarHub -Strong Results; Excellent Dividend Play

2008-02-14T12:32:00.002-08:00

4Q and full-year results. StarHub reported 4Q operating revenue of S$538.8m (+13.9% yoy) and net profit of S$98.3m (-30.6% yoy). Moreover, EBITDA increased to S$157.4m (+7.8% yoy). It also declared a final dividend of S$0.045 per ordinary share, which was higher than the final dividend of S$0.035 last year. This brought the total annual dividend to S$0.16 (+39.1% yoy) per ordinary share for 2007 that is significantly higher than the total annual dividend of S$0.115 for 2006.

Tat Hong-A soaring crane still needs to rest

2008-02-14T12:32:00.001-08:00

Story: Tat Hong's revenue grew 17% y-o-y to S$157.9m in 3Q08, and 31% to
S$456.2m in 9M08. The crane utilization rate still stood at a high 81.2% as
of end 3Q08, slightly down q-o-q from 83.5%. Net profit subsequently jumped
20% y-o-y to S$21.2m in 3Q08 and 65% to S$61.4m in 9M08. This set of
results is roughly in line with expectation, and Tat Hong remains on target
to reach our net profit estimate of S$86.8m in FY08.

Point: Despite the strong outlook for construction and infrastructure
projects in Asia Pacific and its proven track record, we believe that the
lowered investors' risk appetite will make it increasingly hard for Tat
Hong to continue justifying a substantial valuation premium over its listed
peers and subsidiary in Singapore and Australia. Tat Hong currently trades
at 15x FY09 PE and 6.8x FY07 P/B, vs. its peers'average PE of 8x and P/B of
about 1.5x. Indeed, given that the market volatility is unlikely to subside
in the near term, we reckon the risk to Tat Hong's share price to be
increasingly tilted towards valuation compression, as compared to the lower
probability of share price re-rating.

Relevance: We have downgraded our fair value for Tat Hong to S$2.70, using
a downward revised 13x FY09 PE, vs. 16x previously. This is within the PE
range of 9x-25x since the group staged a profit turnaround in FY03, and is
roughly in line with Tat Hong's average PE of about 13.6x. While the
substantial valuation premium over its peers' corresponding 8x PE, at our
fair value, may still look huge, we believe that it is reasonable given Tat
Hong's proven track record in pursuing earnings growth and its
substantially bigger market capitalization. We have also downgraded Tat
Hong to Fully Valued.

Comparson between China Railway Group (390 HK) & China Railway Construction Corp

2008-02-14T12:31:00.002-08:00

According to local press, China Railway Construction Corporation (CRCC)
resumed the IPO process this week. The Group began investor education for
HK portion of its deal this week before a formal roadshow starts on 25th
Feb. A price range will be set on 22nd Feb. CRCC plans to sell to
investors 37.9% of company shares through the dual listing (A+H). The
proceeds from the IPO is about US$3-4b. The stellar share price
performance of the China Railway Group (CRG) has triggered greater
attention on the railway industry in China and CRCC's IPO.

We did a comparison between CRG and CRCC. There are a lot of similarities
between CRG and CRCC (such as revenue breakdown, industry outlook, company
background and profitability), as they are the two leading construction
companies in China. Infrastructure construction division accounted for
over 90% of CRG's and CRCC's turnover in 2006. Railway construction
accounted for about 40% of both CRG's and CRCC's turnover at the
infrastructure construction division. CRG has a higher exposure to China
property sector as property division accounted for 1.2% of total turnover
and 11.6% of operating profit in 2006. Property division only accounted for
0.4% and 3.1% of CRCC's total turnover and operating profit in 2006. CRG's
overall margin appears to be higher than CRCC as CRG achieved better
operating performance at the property division and equipment manufacturing
division. CRCC achieved higher operating efficiency as CRCC's sales and
net profit per staff were higher.

We consider both CRG and CRCC are high quality railway plays in China. The
industry outlook for both companies is favourable given the government's
plan to expand the railway network aggressively in the coming years. In
view of their proven track records and dominant market position, both
companies are well-positioned to benefit from the rapid growth in the
railway industry. Apart from railway construction, there are other growth
drivers, including a.) expansion into overseas markets, b.) expansion into
other business and c.) improvement in operating efficiency.

Without an indicative price range, it is impossible to do a comparison
between CRG and CRCC based on valuation (such as PER, EV/EBITDA or PEG).
However, we believe that CRCC is likely to price attractively in order to
lure investors given the current market environment.

Differences between China Railway Group (CRC) and China Railway
Construction Corporation (CRCC)

China Railway Group China Railway Construction Corporation

Ticker 390 HK

FY06 Turnover
breakdown (%)

Infrastructure 91.4 95.3
Construction

Survey, Design 2.7 2.2
and Consulting
Services

Equipment 2.7 0.9
manufacturing

Property 1.2 0.4

Others 4.1 1.9

FY06 Operating
profit breakdown
(%)

Infrastructure 60.5 85.8
Construction

Survey, Design 9.5 3.3
and Consulting
Services

Equipment 12.1 0.7
manufacturing

Property 11.6 3.1

Others 4.9 7.1

FY06 Operating
margin (%)

Infrastructure 1.6 1.4
Construction

Survey, Design 8.5 2.4
and Consulting
Services

Equipment 10.9 1.3
manufacturing

Property 22.7 13.2

Others 2.9 5.8

FY06 turnover Railway (43.7%) Railway (42.0%)
Breakdown of Highway (30.0%) Highway (38.9%)
Infrastructure Municipal works (26.3%) Municipal works (19.1%)
Construction
division

Survey & design 1 2
institutes

Equipment Largest manufacturers of Largest large track maintenance
manufacturing turnouts. machinery manufacturer
Sole developer and manufacturer
currently producing high
manganese steel welded frogs
and the only manufacturer
currently producing
acceleration turnouts in China

Property 6.3m 5.4m
development (GFA Beijing, Chengdu, Shenzhen, Guiyang, Changsha,Xuzhou, Baoding,
m2) Guiyang, Guangzhou, Wuhan Hebei, Chongqing, Laixi, Beijing
Location Shijizhuang and Anging Qingdao and Linan.

Other business 3 gold mines (1 in Inner Potential investment in cement
Mongoia and two in Congo), 1 production in Nigeria
cobalt mine in Congo

Ranking in China 1 2

Listed China Raiwlay Erju Nil
subsidiaries

No. of staff 276,504 183,308
Sales per staff 555,392 837,989
(Rmb) 7,400 6,628
Net profit per
staff (Rmb)

Future growth Property development, overseas Cement production, margin improvement
drivers projects, margin improvement, especially at the survey, design and
mining and BT and BOT projects consulting services division and
equipment manufacturing division

(FY08 PER) 36 n.a.

Mkt cap. (US$m) 12,301 4,000.

Major subsidiaries under CRG and CRCC

China Railway Group China Railway Construction
Corporation

China Overseas Engineering Group China Civil Engineering
Construction Corp

China Railway No.1 Engineering Group China Railway 11th Construction
Bureau Corp

China Railway No.2 Engineering Group China Railway 12th Construction
Bureau Corp

China Railway No.3 Engineering Group China Railway 13th Construction
Bureau Corp

China Railway No.4 Engineering Group China Railway 14th Construction
Bureau Corp

China Railway No.5 Engineering Group China Railway 15th Construction
Bureau Corp

China Railway No.6 Engineering Group China Railway 16th Construction
Bureau Corp

China Railway No.7 Engineering Group China Railway 17th Construction
Bureau Corp

China Railway No.8 Engineering Group China Railway 18th Construction
Bureau Corp

China Railway No.9 Engineering Group China Railway 19th Construction
Bureau Corp

China Railway No.10 Engineering Group China Railway 20th Construction
Bureau Corp

China Railway Major Bridge Engineering China Railway 21th Construction
Group Bureau Corp

China Railway Tunnel Group China Railway 22th Construction
Bureau Corp

China Railway Electrification Engineering China Railway 23th Construction
Group Bureau Corp

China railway Construction Group (CRCG) China Railway 24th Construction
Bureau Corp

China Railway Eryuan Engineering Goup China Railway 25th Construction
Bureau Corp

The Third Railway Survey and Design Zhong-Tie Construction Group
Institute Corp

China Railway Engineering Consulting Group China Railway Material Corp

China Railway Major Bridge Reconnaissance
Design Institute

Huatie Engineering Cosulting Co

Martech Marine & China Railway Engineering

China Railway Shanhaiguan Bridge Group

Baoji China Railway Turnout & Bridge
Development

China Railway Baoji Machinery

China Railway heavy Machinery

China Railway Northwest Research Institute

China Railway Southwest Research Institute

China Railway Engineering Machinery
Research & Design Institute

HangRan Management Institute

China Railway Engineering Institute

Singapore market – Market advances further

2008-02-14T12:31:00.001-08:00

• Market Preview: Straits Times Index (STI) secured another 23.31 or 0.8% gain to 2,949.54 points after Dow's overnight increase with Warren Buffett's rescue plan for the troubled bond insurers. Buffett's offer to reinsure up to US$800 billion in municipal bonds has brought about certain level of reassurance to investors. Trading volume went up 1.7 billion shares valued at S$1.8 billion. Gainers led losers 346 to 304. Property giants saw bigger gains following recent heavy sell-down. CapitaLand up 18 cents or 3.2% to S$5.86 while Keppel Land added 12 cents or 2.1% to close at S$5.89.
• The market is likely to cheer the improvement over the US economic outlook rather than the slight downgrading of Singapore outlook. As Singapore is an open economy, its performance will depend on external economies. As such, market is likely to react more positively to a better US numbers. Going forward, we may see more mixed US numbers. Investors who have acted on our accumulate call earlier may consider taking some profit.
• In this morning's Singapore 4Q07 GDP release, the Ministry of Trade and Industry (MTI) has lowered the 2008 Singapore GDP forecast by half a percentage point to 4%-6%. The 4Q07 GDP growth rate grew at year-on-year rate of 5.4% (see Table), slightly lower than the 6% reported in the advanced estimate. Manufacturing sector achieved a lower growth rate of 0.2%, lower than the fresh estimate growth rate of 0.5%. Construction sector's performance was inline with the fresh estimate, growing at 24.3%. Finance sector was the second best performing sector, growing at 15.9%. Overall, the Singapore economy grew at 7.7% in 2007, better than the fresh estimate of 7.5%. This was due to adjustment in prior quarters' numbers. Despite MTI's downgrading, we keep our GDP forecast for 2008 at 4.8% as we have already factored in a negative 1% growth in the manufacturing sector. We believe the strong construction and business services sectors are likely to power the economy in 2008.

• Wall Street: US shares moved up sharply on unexpected increase in retail sales figures last month. The Commerce Department announced a 0.3% rise in January retail sales, beating analyst's expectation of a 0.3% decline. The surprise increase lifted some of the market's worries that consumers are not willing to spend in this uncertain economic where fuel prices are rising and real estate sector experiencing a downfall. Dow gained 178.83 or 1.4% to 12,552.24 while Nasdaq grabbed of 53.89 or 2.3% to 2,379.93 points. Applied materials, the largest maker of semiconductor equipment, closed 10.2% higher at US$19.91 after it reported a surge in orders for machines that make flat screen.
• Crude Oil rose US$0.49 to close at US$93.27 per barrel on NYMEX.

Company Highlights

Australand- FY07 operating profit after tax up 5% to S$163.2 million
• Australand Holdings Limited announced a FY07 net profit of S$269.2 million, including unrealized gains in property revaluations while the full year operating profit after tax, excluding unrealized gains in property revaluations, was S$163.2 million, up 5% on the prior year.
• Earnings per Stapled Security, on operating profit after tax, was up 2% to S$17.6 while dividends up 3% to S$0.17 per stapled security.
Rotary Engineering – seals US$62 million deal
• Rotary Engineering announced that it is increasing stake in its joint venture company, Petrol Steel Co. Ltd. in Saudi Arabia to 51%.
• The joint venture has secured a US$62 million deal with Saudi Kayan Petrochemical Company to construct 24 tanks. Work is due to commerce and is expected to be completed by end of the year

What's on the table

2008-02-14T12:30:00.001-08:00

Straits Asia Resources (S$3.35) - Thermal coal prices reaching new
heights
We are raising our benchmark thermal coal price assumptions to
US$100/tonne
(+US$10/tonne) for FY08, US$90/tonne (+US$10/tonne) for FY09and
US$80/tonne
(+US$10/tonne) for FY10 onwards. This follows last week's jump in
Barlow Jonker
spot pricing to US$122.4.tonne (+23.8/tonne, +4.1%), and this week's
news of
further weather-related problems in Australia. We have adjusted our
assumed
pricing for Straits Asia to account for benchmark coal quality (6,000
kcal/kg GAR
for Sebuku, 5,600 kcal/kg GAR for Jembayan) and for FY08 forward sales.
Following
this upgrade, our FY08-09 EPS for Straits Asia increase by 13-16% and
our
DCF-based target price rises to S$4.32 (previously S$3.57). This offers
28%
upside from the company's current share price, which is below the 37%
upside to
our STI target of 4,100. However, we maintain our Trading Buy
recommendation
given further possible earnings upgrades following yesterday's
announcement of
sizeable upgrades in Straits Asia's coal resources.

Quick Takes

* Coal Sector - Outlook remains strong

* Tat Hong Holdings (S$3.09) - 3QFY08 results - Head and
shoulders above

* Bukit Sembawang (S$8.96) - 3QFY08 results - Looking to time
the market

* StarHub (S$3.12) - 4QFY07 results - ARPU growth story
unfolds
* Rotary Engineering (S$0.93) - Arabian knight

Corporate News

* DBS appoints Richard Stanley as new CEO

* China XLX completes construction of power generation systems

* Sincere Q3 profit more than doubles

* CitySpring's Q3 DPU of 1.6cents beats projections

Trading Ideas

China Resources Land Limited (1109.HK) Benefit from parent companys asset injection, performance outburst growth

2008-02-14T12:29:00.000-08:00

Summary
With projects in Beijing, Shanghai, Shenzhen, Chengdu and other cities progressing smoothly, state participating large property developer China Resources Land (CRL) enjoyed a rapid development in 2007. In first half of 2007, the groups turnover and net profit respectively rose by 80.8% and 62.9% to HK$1.81 billion and HK$ 575 million. The annual turnover in 2007 is expected to reach HK $6.9 billion, with about HK$ 2.01 billion net profit. The parent company, China Resources Group, through the model of land acquisition, completion of first class land development and injection into listed company, fully guaranteed CRLs land bank. With an optimistic view on future development of CRL, we rate the group with "Buy", and target price at HK$ 18.02, representing 36% premium increase than current price.
Land bank benefited from parent companys asset injection
Parent company, China Resources Group injected cultivated land into CRL is an important way for the group getting access to land bank. The basic procedure is: the parent company usually buys new land at the land auction a year ago and finishes the first class land development, shoulders the risks and capital cost in early period, and then injects into listed company at the project to be producing or generating cash flow. Relatively low cash flow risks and faster turnover rate would benefit CRL.

China Resources Group has massively injected land assets into CRL in 2005 and 2006. In December 2007, with RMB 4.53 billion, CRL purchased the high quality land in Dalian Economic and Technological Development Zone, Hangzhou and Wuxi, with GFA amounts to 1.5 million sq.m.. As return, this transaction involved 269 million newly issued stocks, with RMB 16.83 per share payment, increased China Resources Groups shareholding from 59.36% to 62.07%.
In 2007, by means of large shareholders asset injection and market acquisition, CRL increased land bank by 4.926 million sq.m., amount to around 15 million sq.m. up to now. The 5.4 million sq.m. land bank of China Resources Group will be successively injected into CRL in 2-3 years.
2007-2008 performance outburst growth
CRL would have a sustained great growth on sales in 2007-2008. It is estimated that GFA sold of CR Land is approximately 0.65 million sq.m., with sales volume totals RMB 7.05 billion. GFA booked in 2007 has reached to 0.59 million sq.m., rose 47.5% than 2006. The sales turnover has reached RMB 6.4 billion, 115% increase than 2006. And with the open of Shenzhen MIXc, the groups rental income of investment property will soar, and is estimated to reach RMB 1.02 billion.
In 2008, CRL will accomplish many projects, among which a large portion was already sold in 2006-2007. The GFA completed is expected to more than 1.8 million sq.m., GFA booked with 1.44 million sq.m., sales turnover with RMB 1.39 billion

Gradually optimizing financial index
Light asset, high turnover is the rapid development strategy for many property developers lately, while in recent years development for CRL, the investment property income contributed for a large proportion in the groups performance, and relatively low property sales turnover directly effected the groups performance and returns to shareholders. (see Fig. 3) We believe that the groups stable expansion strategy and major shareholder China Resources Groups integration on the property business were the main reasons for such situation generated. The property asset successively injected by China Resources Group includes land, commercial property and other various type assets, for which not only influenced the capital structure of CRL, but also the groups development strategy. The merit for this strategy is comparatively low debt level, and significantly decreased financial risks. According to statistics, the average asset-liability ratio for CRL in 2002-2006 was about 51%, and10% lower than the industrial level. With the adjustment of development strategy, and the gradual release for property development performance in 2007-2008, the groups financial index would be gradually optimized.

Evaluation
We anticipate in 2007 and 2008, CRL will finish 0.59 million and 1.44 million sq.m. GFA booked respectively, generating RMB 6.4 billion and RMB 13.9 billion prime operating income, with RMB 1.86 billion and RMB 3.63 billion net profit, equals HK$2.008 billion and HK$ 3.919 billion.
We forecast that after acquiring the projects in Dalian, Wuxi and Hangzhou, NAV per share for CRL will reach HK$ 16.43 at the end of 2007. Then, the group would further be rewarded with China Resources Groups investment, with possible prospect of reaching NAV HK$ 18.96 per share at the end of 2008. Taking into consideration of the impact of macro control and the groups own feature, we give 5% discount. The 12-month target price for CRL is HK$ 18.02, 36% premium increase than present price, and 18.56 times of EPS in 2008. We give CRL "Buy" rating.

Keppel Corporation Ltd: Record performance

2008-02-01T10:20:00.004-08:00

Keppel Corporation Ltd: Record performance

Summary: Keppel Corporation (Keppel) yesterday posted unprecedented
full-year net profit after tax of S$1.03b (+36.6% YoY) buoyed by a surge in
revenue to S$10.4b (+37.2%) for 2007. All business segments performed
better. The contracts secured by Keppel O&M tipped the S$7b mark for a
second year, giving rise to a net order book of S$12.2b and extended
earnings visibility into 2011. However, there are growing threats of margin
erosions and forex hedging concerns as a result of cost escalations and
weakening of the USD. Keppel proposed final and special dividends of a
total of 30 cents. In view of potential margin erosions and slowdown in
order momentum, we are revising down our FY08 earnings estimates to S$963m.
Based on the current market weakness, we derive a fair value of S$14.80
(from S$17.10 previously) from sum-of-the-part valuation. We reiterate our
BUY rating on Keppel.

Chartered Semiconductor: Good headline 4Q07 numbers

Summary: Chartered Semiconductor posted its 4Q07 results this morning, with
revenue just down 0.6% QoQ (+4% YoY) at US$352.6m, while net profit (before
accretion to preference shareholders) came in at US$5.9m (+9.0% YoY, down
94.9% QoQ). Chartered had earlier guided for revenue to fall 2-6% QoQ to
US$334-346m, while net profit is expected to come in at US$1-11m. We were
looking for 4Q07 revenue of US$346.5m and net profit of US$2.9m. Chartered
attributed the better top-line number to strength in the communications
sector (+74.5% YoY, +16.8% QoQ), which made up for weakness in computer
(down 57.5% YoY, -25.5% QoQ). Nevertheless, we note that the bottom-line
strength came mainly from a tax credit of US$14.6m, and the foundry
actually made a PBT loss of US$8.7m, versus a profit of US$6.3m in 4Q06 and
US$7.1m in 3Q07. Going forward, Chartered is looking at a pretty upbeat
1Q08, as it is guiding for revenue to grow 2-6% QoQ to US$361-373m and net
profit to come in flat (+/- US$5m). Utilization rate is also expected to
improve from 81% in 4Q07 to 82-88%, although ASPs could down 2-6% to
US$845-885/wafer. We will be making some adjustments to our numbers after
the conference call this morning. For now, we retain our HOLD rating.

GP Batteries: Another loss in 3Q08

Summary: GP Batteries (GPB) posted another set of disappointing 3Q08
results. Although revenue rose 28.0% YoY to S$257.9m, it was down 11.5%
QoQ. Nevertheless, management noted that sales across all markets
registered growth, particularly Europe and North & South America, where
growth in each market rose over 40% YoY. However, it was not enough to
prevent GPB from slipping into the red to the tune of S$2.1m from a net
profit of S$3.0m in the year ago period. For 9M08, the net loss came up to
S$7.7m versus a net profit of S$8.0m in the year-ago period, despite a
26.9% rise in revenue to S$779.1m. Although revenue met nearly 90% of our
FY08 estimate, our previous earnings estimate of S$5.7m looks unlikely to
be met. We will be revising down our earnings estimates both for FY08 and
FY09 after our meeting with management later. For now, we retain our SELL
rating.

NEWS HEADLINES

- CSC Holdings Ltd has won 4 foundation works contracts totaling S$118m in
the past weeks, including one for the Marina Bay Financial Centre.

- The Hour Glass Ltd's 3Q net profit jumped 58% YoY to S$8.2m, with sales
rising 22% to S$132.2m.

- The Strata Titles Board overturned Allgreen Properties' S$34m purchase of
condominium site Regent Garden due to problems with the valuation of the
site.

- CapitaLand will issue S$1.3b of 10-year convertible bonds. Proceeds will
be used to refinance its existing borrowings, finance new investments and
for working capital.

- Brazil's largest energy company Petrobras will lease 36% of Chemoil's
newly opened Helios Terminal.

- Datacraft reported a 51% YoY rise in 1Q net profit to US$9.4m on the back
of a 35% growth in revenue to US$173.2m.

- Australian regulators have finalized their agreement with SP Ausnet for
the operation of its transmission network in Victoria, securing over 40% of
the company's total revenue for the next 6 years.

- Azeus Systems warned of substantially lower profits compared to FY07, as
its gross margin was impacted by intensive price competition in the Hong
Kong public sector market.

- Fragrance Group saw net profit more than doubled from S$14.8m to S$30.4m.

Please refer to the full report for more information and additional
disclosures.

Numbers in line

2008-02-01T10:20:00.003-08:00

Keppel Corporation reported a strong set of FY07 numbers that were in line
with expectations. Revenue rose 37% to over S$10bn for the first time
while net profit of S$1.1bn set a new record.

Offshore has legs

The offshore and marine division led the way with a 17% rise in profit to
S$522mn. Management revealed the figure could have been higher if not for
provisions from an earlier Brazilian rig contract. Margins were also
impacted but should improve as the latest contracts have included clauses
for cost escalation. Management remains optimistic on the outlook for
2008.

Property full steam ahead

Despite the current slowdown, management remains optimistic on the long
term prospects of the property division. The Marina Bay Financial Centre
has already secured over 50% commitment two years ahead of its completion
on high rentals. Meanwhile, the group will be launching over 18,000 homes
in the region during 2008-09.

Other divisions also doing well

The infrastructure arm has turned the corner with the commencement of
water, cogen and waste projects in Singapore and Qatar. Keppel's
investment in SPC also continues to do well, with regional expansion
significantly increasing the group's production baseload in Oyong and
Bohai Bay during 2H07.

Maintain Buy

Valuations are attractive after the recent correction. We expect Keppel to
have another record year in 2008. 2008 P/E of about 15x is close to the
lows achieved two years ago. Maintain Buy.

What's on the table

2008-02-01T10:20:00.001-08:00

Keppel Corp (S$11.32) - 4QFY07 results - Bumper dividend

KepCorp's 4Q07 core net profit of S$268.0m (up 46% yoy) was 25% below
our expectation and 9% below consensus due to
margin pressure faced by Offshore & Marine from rising labour costs.
The O&M net order book stood at S$12.2bn (up
16% yoy) with S$7.4bn of new orders secured in 2007. Dividend payout
hit a record 98% or S$0.64/share. Our earnings
estimates have been cut by 9.7% and 7.6% for FY08-09 to reflect further
margin pressure in O&M and slower growth for
Infrastructure for FY08. Our target price has been cut to S$13.70 from
S$17.90, still based on sum-of-the-parts
valuation, following our earnings downgrade and lower fair values for
its listed subsidiaries. Nevertheless,
maintain Outperform as we continue to like Keppel for its strong order
book with predictable earnings that could
provide some buffer against a global recession.

Quick Takes

* Singapore Land - Excessive sell-down unwarranted

* Regional Coal Sector - Benchmark spot price surges

* Singapore Banks - Booming loans an antidote to margin
squeeze
* HDD Sector - Off to a good start

* Regional Coal Sector - Thermal coal decoupling from crude
oil

Corporate News

* Chartered Semicon posts Q4 profit of US$3.42m

* Hour Glass Q3 profit up 58% at $8.2m

* STATS ChipPAC Q4 net jumps 46% to US$41.3m

* Petrobras leases 36% of Chemoil's terminal

* CapitaLand backs Youth Olympics bid in big way

Trading Ideas

* Suntec Real Estate Investment Trust

Real Estate Fund Mgmt Guru ARA Asset Management

2008-02-01T10:19:00.003-08:00

Story: ARA is an Asian real estate fund management company that focuses on
public listed REITs and private real estate funds. We believe that it is
one of the largest REIT managers in Asia (ex - Japan) in terms of real
estate assets under management. It manages REITs listed in Singapore, Hong
Kong and Malaysia, private real estate funds that invest in Singapore, Hong
Kong, Malaysia and China and a specialist equity fund that invests in REITs
and listed infrastructure and utility trusts in the Asia-Pacific region.

Point: We believe ARA can offer the following: (i) an opportunity to invest
in a stable fee-income business backed by real estate assets; (ii) this in
turn provides an alternative exposure to the asset reflation theme of the
Asian real estate market upturn; (iii) the real estate fund management
business is highly scalable and diversified. There are abundant
opportunities for the setting up of new REITs and private real estate funds
as developers pursue asset light business models and regional property
development opportunities.

Relevance: We have a target price of S$1.13 based on 14x PER (pegged to
its closest peer APN Property fund with FY09 earnings, PEG ratio of 0.40.
Following the recent price weakness, stock is currently trading at 8.0x
FY08 and 6.9x FY09 earnings. Therefore, valuation remains undemanding and
we are initiating with a Buy recommendation. We have assumed a 70% dividend
payout ratio in our forecasts.

Real Estate Fund Mgmt Guru ARA Asset Management

2008-02-01T10:19:00.002-08:00

Jiutian affected by snowstorm

2008-02-01T10:19:00.001-08:00

Snowstorm hits China. China has experienced snowstorm since 10 Jan, which
affected 78m people in certain parts of 14 provinces (Anhui, Jiangxi,
Henan, Hubei, Hunan, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Shaanxi,
Qinghai, Gansu, Xinjiang). It is reported that the northern China and
northeastern China are generally out of the disaster, while Xinhua News
reported that the snowstorm might only start to slowly fades away after 3
February.

Transportation and energy cuts are main problems caused by the snowstorm.
Xinhua News reported that certain production materials, coal, and goods may
have difficulties reaching the designated places, and there is also
electricity usage cuts in certain places. The affected products are mainly
agricultural products like vegetables, and sugarcane, while non-winter
crops like soybean, corn and cotton are not affected.

Snowstorm in China generally has negligible impact on S-Chips' earnings.
Our analysis of various S-Chips under coverage shows that the impact of the
ongoing snowstorm in China has negligible impact on their results in 1Q
2008. This is due to: 1) typical plant shutdown in the Lunar New Year
period, 2) enough inventories to cover possible delays in shipment of
products to customers, 3) main production plants are not located in the
affected areas, and 4) any possible temporary production delay can be
covered by subsequent production ramp-up.

Jiutian is the only S-Chip stock whose earnings are likely to be affected
by the snowstorm. Jiutian is shutting down its new 120k DMF plant for a
month, attributed to recent snowstorm that causes plants shutdown for some
of its PU customers. Whilst the new plant would only resume operations in
mid February, the old 30k tpa plant will however be running as per normal.

Coupled with our assumption of a possible slower ramp up of the new plant
upon resumption of production, we have cut our FY08 output estimates by
21.5k tonnes to 118k tonnes. We have also factored in an overhead expense
of RMB3m for the month of February, and our FY08 earnings is revised
downwards by 14.5% to RM136.1m. Following the earnings cut, our TP is
adjusted down to S$0.37 accordingly, still pegged to 12x FY08/09 PER.

Construction Sector Benefiting from more spending on infrastructure

2008-02-01T10:18:00.000-08:00

New Land Transport initiatives to benefit Construction Sector. As part of
the government's plans to ease congestion and improve the rail network, a
total of S$50bn is slated to be spent by the government to build new
highways and rail lines over the next 10-12 years, which should help keep
overall demand robust in the construction sector.

New Expressways and Rail lines. Some S$40bn will be spent on doubling
Singapore's rail network to 278km by 2020. Whilst some of this would be
used on trains and related operating systems, the bulk of it should be
spent on infrastructure development. The government has also given the
green light to build a new 21km North-South Expressway to be completed by
2020, estimated to cost S$7-8bn. Add to that the Marina Coastal Expressway,
which costs S$2.5bn, it appears that some S$10bn will be spent on new
expressways alone up to 2020.

Maintain Overweight for Construction sector. We believe that the biggest
beneficiaries of this increase in infrastructure spending would be building
material suppliers like Hong Leong Asia (BUY, TP S$4.30) and Pan United
Corp (BUY, TP S$1.16).

Market Outlook

2008-01-31T15:29:00.001-08:00

It was another day for the shortists as the STI ended up in the red
again despite having witnessed some sparks during early morning. While
the index had opened up almost flat from the previous day, the effects
from the positive closing on Wall Street on Tuesday seemed to gradually
filter into our local market as the STI was pushed up to 3,072 (or a
0.75% gain) within the first hour of trading. The script that had been
seen for the week so far then repeated itself as the STI was then bashed
to an intraday low of
2,984 before recovering some 16 points during the last hour of trading.
For Wednesday, the STI lost 49.87 points or 1.64% to 3,000.03 as
investors remained jittery over the size of the potential rate cut by
the Fed. Losers outnumbered gainers to 453 to 249 while market breadth
improved slightly as 1.42bn shares that were worth some $1.75bn changed
hands. Defensive plays were the flavour of the day as StarHub increased
2.3% to $3.05 (with only three other STI-component counters registering
gains) while SMRT jumped 7 cents or 4.3% to $1.69. Look for the non-farm
payrolls report on Friday to be the major market mover for the week
after the announcement of the Fed decision.

Media Highlights
- SPC net profit soars 78.6% to record $508m in 2007
- CDLHT Q4 distributable income up 83.4%
- SingPost: New players will squeeze margins
- GuocoLand posts 26% drop in Q2 earnings
- MMP Reit posts 15.7% rise in distributable income for Q4
- Wee Hur's strong debut
- New China printing deals to double Xpress' revenue
- Citi sees good returns from global equities

Economic Highlights
- US House clears US$146b aid package
- Record drop in US 10-city home prices

Singapore Petroleum Cheapest valuations - highest dividend yield

2008-01-31T15:28:00.003-08:00

Story: SPC share price has tumbled 23% YTD, sharply underperforming the
FSSTI's 12% decline. The falling share price was partly due to the broad
market selldown but mainly reflecting investors' concern about the current
soft refining margin.

Point: We remain positive on the refining industry outlook. Although
current refining margin (Reuters' Singapore complex refining margin) of
US$4-5/bbl is significantly below US$7.6/bbl averaged in 2007, this is just
the volatile nature of the industry. We expect the margin to resume to
US$6-8/bbl over the next few months as oil traders start to build up
inventory for the summer driving season. We expect refining margin to
average US$7.2/bbl in 2008, softening slightly from US$7.6/bbl in 2007.

Relevance: At current price, SPC's 6.1x 2008 PE is the cheapest among
regional peers and its 8.2% dividend yield for 2008 is the highest. The
counter is at 34% below last year's peak. Although it has recovered 9%
during the past few days, SPC share still offers 24% upside to our revised
target price of S$7.27 (sum-of-parts). We upgrade our recommendation from
Fully Valued to Buy.

China Sports International Ltd- Capitalising on fragmentation

2008-01-31T15:28:00.001-08:00

Summary: China Sports International (Csports) posted good FY07 results yesterday, with topline growing 74.9% YoY to RMB1.2b and net profit accelerating 111% YoY to RMB155.1m. Csports stuck to its strategy on addressing the mid-tier markets through increased advertising and stayed out of the competitive high- and low-end markets. Although selling & distribution costs and admin expenses rose much faster than we forecasted, this secured better brand equity which in turn produced better ASPs and margins. Though a relatively new entrant in the market, it continues to be able to command exclusivity with its distributors, sell products on a non-consignment basis and strictly regulate product prices by the distributors. Our adjusted numbers factor the better sales in the future but are mitigated by the faster-than-expected rise in marketing expenses. Along with volatile market conditions, peer valuations have also been lowered. We now peg Csports at 18x FY08 PER (prev. 20x) with a fair value of S$2.04 (prev. S$2.48). Csports still trades at a 37% discount to its Asian sports peers' FY08 PER. Maintain BUY with 56% upside.

Rotary Engineering: In the running for more contracts

2008-01-31T15:27:00.003-08:00

Summary: We met Rotary Engineering (Rotary) for an update. The S$535m UT project has been fully completed on schedule and budget. While order flow had not been as visible in recent months, we understand that Rotary is currently in the running for several sizeable local and Middle East projects, notably ExxonMobil's Singapore Parallel Train cracker project, Nexsol's biodiesel process plants, Jubail refineries, and Saudi Aramco's projects. Given the updated status on the completion of UT project, we expect Rotary to recognize the remaining UT contract value. As such, we are raising our earnings forecasts to S$61.2m and S$69.7m for FY07 and FY08, respectively. We are also expecting dividend yield of 6.3% (or a total dividend payout of 5.4 Scents per share). However, in view of the present market weakness, we are trimming our fair value to S$1.48 (from previously S$1.60) based on 12x FY08 PER (prev: 18x). Maintain BUY. (Serene Lim)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Macquarie MEAG Prime REIT: Update on FY07 results

Summary: Macquarie MEAG Prime REIT (MMP) reported 4Q results that enjoyed a nice boost from MMP's acquisition spree in Japan and China last year. For FY07, revenue grew 14.6% YoY to S$103m, with net property income (NPI) lagging at 10.9% YoY growth to S$76.8m. DPU for the year was 6.19 cents, + 6.9% YoY. NPI was hit by higher operating expenses, including higher property taxes and higher commission paid to renew leases at higher rates. For 4Q07, revenue grew 32.1% YoY and 14.2% QoQ to S$29.8m, with NPI growing 29.1% YoY and 14.4% QoQ to S$22.2m. DPU came in at 1.68 cents, +14.3% YoY and +9.1% QoQ. 4Q also saw a S$339m fair value gain, taking MMP's total asset portfolio to S$2.2b. MMP plans to enhance its earnings through: 1) the first S-REIT unit buy-back scheme, which allows MMP to redeem 10% of all units in issue, 2) significant rental reversions expected in 2008 and beyond, with office space up for renewal in 2008 radically under-rented at around S$5psf versus market rates in the mid teens and 3) various asset enhancement programs. MMP, which has recently set up new debt facilities, is geared at 29%, with a lot of room to grow and fund programs including its buy-back scheme, which can be launched at any time now. MMP is currently trading at a P/B of about 0.64x and yield of 6.5% based on annualized 4Q DPU. Due to a change in analyst, we are currently reviewing our rating on MMP. (Meenal Kumar)

Suntec REIT: 1Q08 results saw maiden contribution from ORQ

Summery: Maiden contributions from One Raffles Quay (ORQ) and positive rental renewals drove Suntec REIT's (Suntec) 1Q08 results with revenue up 18.3% YoY and 6.5% QoQ to S$54.3m. The impact was dampened by NPI margin falling from 71% to 69% due to higher property taxes. Distributable income was S$33.5m, +24% YoY and +10.2% QoQ. DPU for the quarter was 2.279 cents, +16.1% YoY and +7.5% QoQ. With the acquisition completed on 31 Oct, 1Q reflected only about 2 months of earnings from ORQ, and the full impact should be seen in 2Q. Because of its fixed-lease structure, ORQ will see considerable upside potential only in the medium term. Suntec has recently acquired an additional 28,000 sqft of Suntec City strata-titled office space, and plans to continue on this buy-back path to growth. Its retail space will also benefit from further asset enhancements. Opportunities for organic growth stem from the 49% of Suntec's office leases that are expiring in FY08-09. Note that the existing rents are below S$5psf, with recent leases secured at much higher levels of S$11-14 psf. Suntec is trading at a yield of 6.2% based on annualized 1Q DPU. Due to a change in analyst, we are currently reviewing our rating on Suntec REIT. (Meenal Kumar)

NEWS HEADLINES

- India's Bharti Airtel, 31%-owned by SingTel, posted a better than generally expected 42% increase in quarterly net profit as it won new users.

- CDL Hospitality Trusts saw 4Q distributable income rose 83.4% YoY to S$22.7m. It is hoping to acquire Copthorne Orchid in the Bukit Timah area from its parent this year.

- The Singapore Land Authority said it expects to release another 32.3k sqft of space for potential office use in the current quarter, earmarking properties such as the former Siglap-Changi Community Centre.

- Singapore Petroleum's FY07 net profit surged to a record S$508.3m, +78.6% YoY, helped by high oil refining margins that it sees staying healthy in 2008.

- Singapore Post posted a 3Q net profit of S$36.8m, up almost 8% YoY. It warned that Singapore's liberalization of basic mail services and the entry of new players will squeeze its margins.

- GuocoLand saw a 26% YoY slide in 2Q net profit to S$32.9m, because of a non-recurring profit of S$19.3m in the previous corresponding period. Gross profit rose 145% to S$40.2m.

- SIA will start A380 flights to London on March 18, its second A380 destination after Sydney.

Transport Sector Land Transport Review

2008-01-31T15:27:00.001-08:00

Land Transport Review. Over the last 2 weeks and over three speeches, Mr.
Raymond Lim, Minister for Transport and second Minister for Foreign
Affairs, reviewed Singapore's Land transport development over the last 10
years and also outlined a new roadmap for the next 10 to 15 years.

The main aim is to increase public transport usage. In a nutshell, the
Government aims to increase and promote public transport usage to ease
congestion to support future growth, by a) improving the quantity and
quality of bus services available to the public, b) improving the standards
and doubling of the rail network by 2020 and last but not least, c)
ensuring smooth flowing roads by adjusting ERP rate structures and lowering
vehicle growth rates.

This should benefit land transport operators in the long-term. Whilst the
new roadmap also involves the potential introduction of new operators, we
are of the view that the current incumbents, given their high level of
efficiency and scale, should continue to dominate their existing spheres of
influence for some time to come. In the long run, higher public transport
usage should be positive for both although immediate impact from this piece
of news is immaterial. We prefer ComfortDelgro (BUY, TP S$2.33) over SMRT
(HOLD, TP S$1.78), as the former offers a more attractive yield at 6.1%.

Singapore market – Remain Volatile

2008-01-31T15:26:00.003-08:00

• Market Preview: Straits Times Index (STI) dropped 49.87 points to close at 3,000.03, barely holding the psychological 3,000 support point. In fact the index saw an intraday low of 2,984.69 and a high of 3,072.90 points. Volatility resulted from nervous investor's sell-off ahead of the US Federal Reserve's expected interest rate cut later in the day. Trading volume went up to 1.42 billion shares valued at S$1.75 billion. Decliners led rising issues 453 to 249.
• As expected, the Fed cut its Fed fund rate by half a percentage point. Unexpected, the US economy grew at a lower rate of 0.6% in 4Q2007, half of what market is expecting. Concerns over the US economy remain. The US economy was dragged down by the retraction in gross private domestic investments (see Chart), due mainly to the housing problem. The housing problem is likely to drag the private investments down in this and the next few quarters. What the Bush's administration and the Fed is try to do now is to prevent a slowdown or even a contraction in private consumption. Even if they succeed, the effect will only be felt in the second half of this year. There is still very high possibility that we may witness negative GDP number in this or next quarter or both.

• The Singapore economy is at a better shape now compared to the US recession in 2001. There is no excess supply in the residential properties, office space and industrial buildings. Contracts awarded for the construction sectors are likely to achieve a record this year. And the banking sectors are likely to be supported by domestic demand and not being affected by the US subprime problem. Thus, we are likely to see positive Singapore GDP number even the US is entering a recession. While Singapore fundamental remain strong, market is likely to remain volatile due to concerns over the health of the US economy. Buy and hold may not be a preferred strategy now. We advise investor to buy on weakness and sell into strength.
• Wall Street: US shares fell after comments that the two biggest bond insurers will lose their top credit rating, Ambac Financial Group Inc. and MBIA Inc. Both insurers finished down more than 10%. The remark came in the last hour of trading, collapsing the nearly 1.5% gain wracked up earlier from the aggressively interest rate cut by the US Federal Reserves. Dow was down 0.3% or 37.47 points to 12,442.83 while Nasdaq dropped 0.38% or 9.06 points to close at 2,349.00 points.
• Crude Oil rose US$0.11 to close at US$91.75 per barrel on NYMEX.

Company Highlights
Singapore Petroleum Company Ltd. – FY07 net profit hit record high of S$508 million
• Singapore Petroleum Company Ltd. ("SPC"), an international oil refiner and trader, posted all-time record net profit of S$508 million for its FY07 results, a 78.6% jump from FY06.
• Oil refining/retailing activities contributed about 90% of its operating profit but the group sees an increasing growth in its exploration and production business. Refining margin rebounded to US$7 in 4Q07. 3Q07 margin was US$5 as margins took a hit from reduced product demand. Average refining margin for FY07 is about US$7. SPC expects refining margin to remain relatively healthy this year.
• Earnings per share up 78.5% to 98.78 cents and the group is paying a final ordinary dividend of 40 cents per share. Including the interim dividend of 20 cents at mid-year, payout ratio for FY07 is 60.7%. Based on last traded price of $6.10, dividend yield works out to 9.8%.

CDL Hospitality Trusts – registers 65.2% revenue increase
• CDLTH registered gross revenue of S$27.96 million for fourth quarter of FY07, representing a 65.2% increase over the same period last year.
• Full year gross revenue performance improved 61.1% over projections because of a 26.4% growth in H-REIT's IPO portfolio and 34.7% growth from H-REIT's acquisitions of Rendezvous Hotel Auckland in New Zealand and Novotel Clarke Quay in Singapore after its IPO in July 2006.
• Income available for distribution increased 83.4% to S$22.8 million.

Keppel Corp: Hong Bao surprises? : Kim Eng

2008-01-31T15:26:00.001-08:00

Keppel Corp will be releasing its FY07 results this evening. Kelive
expects the group to turn in pre-exceptional net profit of S$1,030m
(4Q:
S$272m), which is slightly below market consensus estimates of
S$1,050m.
Including exceptional gains from revaluation of investment properties
will lift earnings to a whopping S$1.22bn.

Capital structure remains sub-optimal given its low net debt/capital
ratio of 0.08x, down from 0.24x in FY06. With a record profit already
in
the bag, we believe Keppel can well afford to give out bumper
dividends
without contraining its funding requirements. If we assume Keppel
increase
its payout ratio from 53% to 85% this year, we think it will have
no problems paying out final dividends of $0.56 per share versus
consensus
of $0.11-0.43 per share - net of the declared interim dividend of
$0.09/share
in 1H07.

SM Goh is currently in Doha, Qatar from 28-31 Jan to officiate the
groundbreaking of Keppel's $1.5bn Doha North Sewerage Treatment Works
and we note that he will be be leaving after Keppel Corp unveils its
full-year results on Thurs. Keppel spearheads Singapore's interests
in
Qatar and we do not discount the possibility of the group announcing
a
major deal or JV in the presence of SM.

On technicals, there is a gap following Keppel Corp sharp fall on 16
Jan. We
expect Keppel Corp to cover this gap in near term, suggesting a
possible
upmove toward $11.94 in near term.

DJ MARKET TALK: DBS Likely To "Clear Decks" With 4Q Results - DB

2008-01-31T15:25:00.000-08:00

0752 GMT [Dow Jones] STOCK CALL: DBS (D05.SG) set to use 4Q07 as a

quarter to "clear the decks" for new CEO, Deutsche Bank says in report.

Expects S$150 million in CDO-related provisions (vs S$200 net

exposure), S$57 million writedown of its TMB (TMB.TH) investment. "With

Jackson Tai already having left the bank, and a new CEO yet to be

announced, we believe DBS has every reason to be as conservative as

possible in valuing its ABS CDO portfolio." Says unlike pre-3Q07

results, no guidance from bank that CDO losses would not be material to

earnings, suggesting larger writedowns more likely than not. Notes,

however, forecasted S$150 million ABS CDO writedown equates to only 5%

of FY07E earnings, 0.6% of FY07E book value. "While sentiment could be

adversely impacted in the near term, this may present an opportunity

for long-term investors to accumulate DBS given cheap valuations and

strong loan growth." Keeps at Buy with S$28.20 target price. Share down

1.9% at S$17.72; STI down 1.9%. (LES)

Cambridge Industrial Trust - Still Attractive

2008-01-30T08:03:00.002-08:00

CIT reported its FY07 results that were largely in-line with our projections, backed by properties acquired during the past year. Gross revenue came in at S$53 million and net property income is S$45.8 million. CIT achieved a full year DPU of 6.262 cents. Net asset value increased from $0.67 to $0.76.

WesTech Electronics Limited: Expecting A Good Show From Display Solutions

2008-01-30T08:03:00.001-08:00

Summary: We met with WesTech Electronics Limited's (WesTech) management recently for a brief update on its developments. WesTech is also slated to announce its FY07 results in the last week of Feb 08. We expect WesTech to attain a 45.8% YoY jump in FY07 net profit to S$8.8m on the back of a 18.2% gain in turnover to S$390.2m, with its Display Technology (DT) division contributing a significant portion. Aside from the upcoming Beijing Olympics in Aug 08, management believes that another positive trend for its DT business is the official switch from analog to digital broadcasting in the United States as of 17 Feb 09. However, we are a bit more cautious about the outlook of its electronic components distribution and system & equipment division, given the concerns of a possible recession in the US. Nonetheless, we remain optimistic about its growing DT business. With an expected 6.4% dividend yield for FY08 on the cards, we retain our BUY rating and maintain our fair value of S$0.40, based on 1x FY08F NTA. (Brandon Lee)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Lion Teck Chiang Ltd: Update on profit warning

Summary: Lion Teck Chiang Ltd (LTC) issued a profit warning for its 1H08 results recently. We met with management yesterday to obtain clarification on the matter. LTC is making a provision pertaining to its steel division in accordance to accounting standards. LTC is impacted by the volatility and upward trend of steel prices and hence provided for all "unrealized losses" - the difference between the average cost per ton of stocks and committed purchases of steel and the selling price per ton, for each outstanding sales contract. Steel prices have risen from approximately US$440/ton in Jan to US$585/ton by Dec 07 and US$690/ton by Jan 08. Noteworthy is that this provision is the worst-case scenario as at 1H08 since any "unrealized profits" are excluded. In addition, this provision is a non-cash item that does not impact cashflow. LTC's cash balance as at 30 Jun 07 was a healthy $12.3m, of which there was an increase in cash of S$7.2m for FY07. As LTC is releasing its 1H08 results on 4 Feb, it is currently in the blackout period and we were not able to assess the financial impact of the provisioning. Once the amount is known next week, we would review our earnings estimates. Till then, we are suspending our rating on the stock. (Selena Leong)

NEWS HEADLINES

- Keppel Land posted a 7-fold rise in 4Q net profit to S$572.3m, driven by strong home sales and property divestment gains. Revenue hit a record S$1.4b or a 48.5% YoY gain. It also announced that it would delay the launch of Marina Bay Suites, citing "market conditions".

- China Sky Chemical Fibre will acquire Qingdao ZhongDa Chemical Fibre for RMB450m.

- SIA Engineering reported a 3.1% drop YoY in 3Q net profit to S$53.6m, with revenue growing 1.1% to S$248.6m.

- Singapore has signed open sky agreements with Denmark, Norway and Sweden that allow their respective airlines, including SIA, unlimited access to each other's markets.

- Fortune REIT announced distribution income of HK$284.8m for 2007, up 3% from a year ago, with DPU for the year rising 2.5% to HK$0.3512.

- SGX has cleared US$4.7b worth of trades in the oil derivates market in 2007 – a 12-fold increase in value – through SGX AsiaClear.

- Pan-United Corp has been awarded 2 contracts worth a combined S$30m to supply ready-mixed concrete for Singapore's new MRT downtown line Stage 1.

- Rokko Hldgs reported FY07 revenue at S$33.3m, up 11.1% YoY; while net profits gained 18.3% to S$5.1m.

- Wee Hur Hldgs will debut on the SGX Mainboard today. It IPO was 1.4x subscribed

China Sky Closing a good deal

2008-01-30T08:02:00.004-08:00

Story: China Sky ("CSCF") announced that it has entered into an agreement
to acquire Qingdao Zhongda Chemical Fibre ("Zhongda"), a leading producer
of nylon DTY, for RMB450m.

Point: CSCF's horizontal expansion put the Group on the fast growth track
as the move would: (I) give an immediate boost to the Group's earnings;
(II) open up the market in Northern China and Europe by leveraging on
Zhongda's strong branding; and (III) provide the Group with additional land
space for further expansion into DTY and SR nylon.

Relevance: We have raised FY08 and FY09 earnings by 8% and 12% respectively
to account for new contributions from the acquired plant, which will come
onstream from Mar08. Nonetheless, in view of the recent textile sector
de-rating amid US's sub-par growth and high oil price environment, we have
lowered our PE multiple to 12x as opposed to 15x previously. Consequently,
our target price is reduced to S$2.85, still pegged to blended FY08/09
diluted EPS (factored in maximum new share issued based on price of S$1.70
for the acquisition). Maintain Buy.

Keppel Land (KPLD SP) - Asset recycling in transition

2008-01-30T08:02:00.003-08:00

Kepland's FY07 results were in line with expectations. Revenue grew by
48.5% from S$948m to S$1,407.9m and net profit rose by 289.2% y-o-y to
S$779.7m for FY07. Dividend of 20 cents was declared for FY07.

Healthy revenue and bottomline growth were mainly attributed to
contributions from newly launched projects in FY07 including Six Avenue
Residences and China projects Villa Riviera and The Arcadia, as well as
existing projects. Associates income rose on maiden sales of Reflections
at Keppel Bay and Marina Bay Residences. Net profit was further boosted by
S$235m surplus from ORQ transaction and S$334m revaluation gains of the
office portfolio.

Post asset divestment and revaluation, net gearing improved to 0.41x,
enabling KepLand to undertake large-scale developments in the future.

Keppel Land (KPLD SP) - Asset recycling in transition

2008-01-30T08:02:00.001-08:00

China Sky Chemical Fibre (S$1.35) - M&A finally

2008-01-30T08:01:00.001-08:00

China Sky announced its M&A finally. As expected, the first acquisition
is another premium nylon producer based in
Shandong. The key positive of the purchase is that is enarlges China
Sky's client base to the north-east, the
auxilliary positive is that it provides lots of space for China Sky to
expand in futre. Consolidating Zhongda
contributions for 9M in 2008, we raise our CY08 and CY09 EPS by 37-38%.
Our target price also goes up from S$3.29 to
S$3.41, despite more conservative COE assumptions. Our new target price
implies 9x CY09 P/E, not expensive by any
means. Unlike the other fibre companies, we see no reason for China
Sky's share price to be as weak as peers
recently. Maintain Outperform.

Quick Takes

* SP Chemicals (S$0.75) - Squeezed from both ends

* Keppel Land (S$6.45) - 4QFY07 results - Expect greater
regional contributions
* SIA Engineering (S$3.82) -3QFY08 results- Strong
contributions by associates

Corporate News

* Inter-Roller secures in-flight system contract worth S$17m

* CIT distributable income for Q4 surges 59%

* SGX AsiaClear's trade values top US$4.7bn

* New business line from Creative in March

* Fortune Reit distribution income up 3% in 2007

* Chinese shipbuilder mulls Singapore listing

* Ascendas REIT acquires Acer Building and Sim Siang Choon
Building

Trading Ideas

* Ascott Residence Trust

Link to full report including important disclosures [ Click here ]

S-REITs Head for safer ground

2008-01-30T08:00:00.002-08:00

Amid heightened market volatility stemming from the global fallout
from
the US sub-prime mortgage crisis and looming recesionary fears,
we
advocate investors to switch from the developers to Reits, which
offer
both property exposure and yield security. In view of the
current
difficulty in equity fund raising, we favour Reits with room for
upward
rent reversions, good quality asset portfolio, prudent
capital
management, low gearing and trading below NAV. In particular, we
like
Cambridge Industrial Trust (industrial segment), Ascott Residence
Trust
(hospitality) and Suntec Reit (office/retail).

Market Outlook

2008-01-30T08:00:00.001-08:00

The STI was one of the worst performers in the region as not even a
1.45% rise in the DOW overnight could prop up sentiment. The day,
however, had started off on a positive note as it opened up at 3,092
which reflected a 1.7% gain from the day before. Unfortunately, that was
to be almost the intraday high for the whole trading session as
shortists began selling into the market thereafter, not too dissimilar
to the trading pattern seen on Monday save for the smaller trading
range. By the end of the day, not even a positive lead given from the
Hong Kong market could inspire the local traders as the STI finished
essentially flat at 3,049.90 that was near its intraday low. Losers
almost matched gainers 314 to 355 on the scoreboard with 1.3bn shares
that were worth some $1.41bn changing hands. All eyes are now on the
Federal Reserve meeting that ends on 30 Jan with the market expecting
anything from a 25 to 75 basis point cut while the Fed futures signal
for a 50 basis point reduction.

Media Highlights
- Singapore's SWFs make global inroads
- KepLand revenue, profit hit record
- CIT distributable income for Q4 surges 59%
- Less rosy outlook for Asian airlines
- SIAEC Q3 net profit dips 3.1% to $53.6m
- SGX AsiaClear's trade values top US$4.7b
- New business line from Creative in March
- Fireworks and magic at OCBC bash

Economic Highlights
- U.S. Economy: Durable Orders Gain, Home Prices Fall
- Fed May Cut Rate to Below Inflation, Risking New Asset Bubbles

OIL : Oil Tops $92, Eyes on Fed, Steady OPEC : Reuters

2008-01-30T07:58:00.000-08:00

SINGAPORE, Jan 30 (Reuters) - Oil climbed to a two-week high above $92 a barrel on Wednesday, as investors anticipate that a second U.S. interest rate cut this week will overshadow news of a a build in U.S. crude stockpiles.

Expectations OPEC will leave production levels unchanged when it meets in Vienna this week also bolstered prices.

U.S. crude rose 75 cents to $92.39 a barrel by 0208 GMT, extending gains of 65 cents a day ago. London Brent crude were up 57 cents to $92.57 a barrel.

The U.S. Federal Reserve began a two-day meeting on Tuesday that was expected to end with the second interest rate cut in just over a week.

Following the cut on Jan. 22, investors have widely bet the Fed would keep slashing to head off a recession, given the worsening financial market conditions. [nN29609260]

"There are expectations for a rate cut, which will give an incentive to the U.S. economy," said Tetsu Emori, a fund manager at Japan's Astmax Co Ltd.

U.S. economic data released Tuesday was mixed, with stronger-than-expected orders for U.S.-made durable goods in December countering a record fall in house prices in November.

With the potential for a Fed cut looming, investors put a forecast for a rise in crude supply in the United States on the backburner.

A Reuters poll of analysts ahead of weekly U.S. government inventory data forecast a 2.4 million barrel rise in crude stocks, a 1.9-million-barrel build in gasoline stockpiles and a 1.7-million-barrel distillate draw. [EIA/S]

Expectations OPEC will leave production levels unchanged when it meets this week in Vienna, despite calls from the U.S. and other consumers for the cartel to open the taps to bring down prices, added to the bullish sentiment.

Ecuador's oil minister said on Tuesday oil supplies to global markets were adequate and there was no need for OPEC to change output at its upcoming meeting.

U.S. Energy Secretary Sam Bodman reiterated calls for OPEC to increase output to help rebuild global inventories.

Iran Oil Minister Gholamhossein Nozari told an Iranian newspaper "there was no need to supply more oil as the market was supplied sufficiently and its conditions were stable."

Prices nudged up on news that output from the giant Cantarell oil field in Mexico, one of the top suppliers to the U.S., was expected to fall this year by 200,000 barrels per day (bpd). Production at the field was running at around 1.26 million bpd in December.

Singapore market – Sell into strength

2008-01-29T14:58:00.001-08:00

• Market Preview: Singapore shares ended negatively, tracking Wall Street's loss on Friday and investors prefer not holding position ahead of today's Federal Reserve meeting. STI closed down 118.42 points or 3.7% at 3,041.06. The trading volume declined to 1.4 billion valued at S$1.6 billion. The losers outnumbered gainers 593 to 190. Among the hot stocks, Straits Asia Resource rose 7.4% to S$3.35 on the back of soaring coal price and Straits Trading rose 10.9% to S$6.53 as Tecity Group has raised its buyout offer to S$6.50.
• Market is likely to rebound from yesterday sell-down as hopes of another round of Fed fund rate cut increases. During the US 2001 recession, there were three unscheduled cuts in the Fed funds rate by 50 basis points each and all were followed by another round of similar cuts on the immediate scheduled meeting (see Table below). We expect the Fed to cut the Fed funds rate by 50 basis points during this coming Federal Open Market Committee meeting on 29/30 January. Further cut in the Fed fund rate could indicate that the US economy is going down at a more rapid rate or at lease what the Fed thinks the economy would be. If the US and Singapore markets continue to rise on the hope of further rate cut, we are likely to witness selling off after the Fed action.

2001
January February March April May June

3 20 11 15 26/27
Unscheduled -0.50% Unscheduled -0.50% -0.25%
-0.50% 5.00% 4.00% 3.75%
6.00%
30/31 18
-0.50% Unscheduled
5.50% -0.50%
4.50%
July August September October November December

21 13 2 6 11
-0.25% Unscheduled -0.50% -0.50% -0.25%
3.50% 2.50% 2.00% 1.75%

17
Unscheduled
-0.50%
3.00%

Source: US Federal Reserve

• Wall Street: US shares rose after odds increased that the Federal Reserve will cut its benchmark lending rate by half a percentage point this week to prop up the economy. Dow was up 176.72 points or 1.4% while Nasdaq climbed 23.71 points or 1.0% to 2,349.91. According to Fed funds futures, traders see a 86% chance the central bank will cut its benchmark lending rate to 3% from 3.5% on Jan. 30.
• Crude Oil rose US$0.28 to close at US$90.99 per barrel on NYMEX.

Company Highlights
Creative Technology Ltd – Remains profitable with 2Q FY08 net profit of US$7.63m
• Creative Technology Ltd ("Creative"), a computer soundcard and MP3 device manufacturer, posted net profit of US$7.63 million for its 2Q FY08 results, its second profitable quarter in FY08.
• Excluding the 2Q FY07 US$82 million Apple Inc payout, 2Q FY08 net profit saw a YoY decline of 24.5% on falling revenue. Revenue for 2Q FY08 dropped 19.1% to US$262.54 million compared to previous corresponding quarter.
• Creative recently launched a new product in an entirely new category called inPerson. inPerson brings video conferencing to a different level, outside of the boardroom.
• The group targets to further improve their gross margins and achieve overall profitability for its coming third fiscal quarter.
Keppel Telecommunications and Transportation – FY07 profit up 18.8%
• Keppel Telecommunications and Transportation ("Keppel T&T"), an investment and management company, finished its 2007 race with an increase in net profit of 18.8% to S$51.45 million YoY.
• Revenue registered a 10.9% growth to $103.1 million attributed mainly to improved performance in its logistics business segment. Earnings per share rose 17.7% to 9.3 cents.
• The group expects domestic logistics market to grow moderately this year but is optimistic that China's domestic growth outlook will remain strong to provide good backdrop for its logistics operations.
• Keppel T&T recommended a first and final dividend of 6 cents per share tax exempt one-tier, a payout ratio of 64.5%.

China Retail Market Outlook – Our top market pick

2008-01-29T14:57:00.000-08:00

The PRC government policy today aims to rebalance the contribution, which is to encourage more domestic consumption instead of continue to rely heavily on exports. Under the growing emphasis of domestic consumption together with the growing affluent especially not only in the coastal cities but also in a good progress to extend to the second and third tier cities, we are very optimistic towards the consumer sector in the year of 2008.
Retail Sales in China, reflecting a strong domestic consumption
With the continuous strong increase of consumer goods spending, we expect the consumer sector will be directly benefited from such rising trend. According to the National Bureau of Statistics of China, total sales of consumer goods reached 826.3 billion yuan, representing 18.1% yoy increase. In the urban area, total retail sales of consumer goods were 559.8 billion yuan, increased by 18.6% compared to the same period last year. In addition, the retail sales for clothing, shoes, hats and textiles increased by 32.6 % yoy. According to the National Bureau of Statistics of China, for the first ten months of 2007, cumulative total retail sales of consumer goods reached 7,209 billion yuan, representing a yoy increase of 16.1%.
Olympic Game- We expect a strong spending effect
The long-waiting Beijing Olympic Game will be held in August 2008, we expect the whole country will be overwhelmed by the game. We believe that June to August will be the peak season for retail sales especially in those provinces with Olympic arenas. Among all the consumer shares, our first top pick is sportswear share with direct relationship with the Olympic Game. In addition, department stores with the benefit from strong surge of tourists during, and the beverage sectors are also our favorites
Investment Recommendations
Given the expected Olympic spending effect, accelerating RMB appreciation, and government policies to boost domestic consumption in the nation, consumer sector is one of our most favorable sectors in 2008. We expect that big retail name will be benefited the most because of their stronger bargaining power to pass increasing costs to customers. And we also expect the consolidation in this industry will go further in 2008, which implies that there will be growing M&A activities in the consumer sector. Our stock pick for this year are those with strong brand name and market leadership position in China. It includes Li Ning (2331.HK), China Mengniu (2319.HK), Tingyi (322.HK), and Parkson (3368.HK).

DMG Daily 29 Jan 08 - SATS, Keppel T&T, Creative, TSMC, Ascott, BBR, SPH

2008-01-29T14:53:00.000-08:00

Market Outlook
The 1.38% fall in the DOW over the weekend was clearly not welcomed by
local investors as the STI opened at 3,109 on Monday which equated to a
1.6% loss, although traders who short-sold the market during the start
of the day got the trend correct as the opening turned out to be the
intraday high of the whole trading session. Shortists were further
encouraged when the Hong Kong market opened and started diving that
eventually pushed the STI to its intraday low of 3,004 that reflected a
4.9% deficit. Short covering then ensued during the mid-afternoon
session as the index eventually ended the day at 3,041.06, equivalent to
a 118.42 point or 3.75% loss. Some respite was offered in the form of
volume and value traded that saw 1.35bn shares that were worth some
$1.64bn change hands, a substantial decline as compared to Friday. On
the scoreboard, losers trashed gainers
593 to 190 while all STI-component counters were in the red. Looking
ahead, expect such wild swings that have been prevalent in these recent
days to continue.

Media Highlights
- SATS Q3 profit flat at $50m
- Keppel T&T full-year profit up 18.8%
- Creative posts second profitable quarter in a row
- TSMC set to post record profits for Q4
- Ascott secures deal to manage Shenzhen property
- BBR wins $95.3m Ascendas contract
- SPH MBO, SPC in digital ad tie-up

Economic Highlights
- Goldman says 60% chance of Japan sliding into recession
- Goldman tells investors to sell S'pore banks
- HK economy will slow this year after 6% growth

The worst market crisis in 60 years

2008-01-29T14:07:00.000-08:00

The worst market crisis in 60 years
By George Soros --- Published: January 23 2008
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.
Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.
Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.
The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.
Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks' commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of i! nstitutions than ever befor e. That made the crisis more severe than any since the second world war.
Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate! the economy comes to an en d.
Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
The writer is chairman of Soros Fund Management
The Financial Times Article

Man Wah Holdings Ltd: More reasons to cheer

2008-01-28T10:53:00.001-08:00

Summary: Man Wah Holdings Ltd (MWH) recently revealed its 3Q08 performance. Top-line grew 60.4% to HK$403.4m, bringing its 9M08 revenue to HK$1.1b, largely in line with our forecasts. MWH opened 25 new Cheers stores in 3Q08, bringing the total tally to 195 stores as at December 2007. This puts it on track to meet its target of opening 220 stores by FY08. Its increased retail penetration, together with improvement in same store sales, will continue to drive revenue growth. MWH posted notable improvements in sales across all its geographical segments. While the PRC segment posted the most impressive performance with a 128.6% surge in sales, the North America, Europe and Hong Kong segments shone with sales growth of 52.5%, 27.3% and 70.5%, respectively. Having seen a steep correction in line with the recent market volatility, MWH is trading at a mere 5.1x FY08 PER, which is undemanding given its strong growth prospects. We maintain our BUY rating and fair value estimate of S$0.99. (Lee Wen Ching)

For more information on the above, visit www.ocbcresearch.com for detailed report.

Micro-Mechanics: Good growth continues in 2Q08

Summary: Micro-Mechanics Holdings (MMH) posted a good set of 2Q08 results over the weekend, extending its bright start to FY08, with revenue up 10.4% YoY (+1.4% QoQ) at S$9.7m, while net profit jumped by a larger 19.6% YoY (+1.1% QoQ) to S$2.5m. For the first half, revenue rose 8.7% to S$19.2m and earnings increased 13.9% to S$5.0m, both meeting 48.1% of our FY08 estimates. MMH also declared an interim dividend of S$0.02/share, versus S$0.015 for 1H07. Going forward, the semicon industry outlook remains cautiously optimistic, with industry watchers looking at 6-11% growth, versus just 3% in 2007, but there is a risk that this growth can be derailed by a recession in the US. We will be meeting with management later to find out more about its growth strategies and measures it will take to combat any hiccups. Our fair value remains at $0.78, based on an undemanding 10x FY08 PER, and we see room for further upgrade if the semicon industry recovers strongly as expected. We also retain our BUY rating. (Carey Wong)

NEWS HEADLINES

- SMRT Corp's 3Q net profit fell 5.3% YoY to S$38.3m, largely because the previous corresponding period's profits included exceptional items.

- Wing Tai Holdings reported a 19% YoY drop in 2Q net profit to S$43.6m, with revenue falling a whopping 59% to S$110.7m.

- Singapore's monthly factory output unexpectedly fell a seasonally adjusted 4.7% in December. This has taken 2007 manufacturing growth to 5.8%, half the pace of 11.5% in 2006.

- Youcan Foods International has launched a new range of 23 ice cream products in China, extending its reach to new cities in line with its nationwide expansion plans.

- The Ascott Group's 4Q net profits more than tripled on the back of divestment gains to S$45.4m from S$13.6m a year ago. 4Q revenue rose 14% YoY to S$116.5m.

- Approximately 136m new units in CapitaRetail China Trust were fully subscribed, under a private placement at an issue price of S$1.36 per unit.

- Beng Kuang Marine said it has secured orders worth S$4.4m from key customers.

- According to Reuters, China-based crane manufacturer Yongmao Holdings has priced its Singapore IPO at S$0.35, below its indicative price range of S$0.36-0.40. Yongmao, a unit of crane operator Tat Hong Holdings, seeks to raise about S$39m from the IPO.

SMRT Steadily on Track

2008-01-28T10:52:00.000-08:00

Story: 3Q08 results were within expectations as SMRT's bottom line fell by
5.3% to S$38.3m even as operating revenue rose by 7.3% yoy to S$202m. YTD,
9M08 earnings were up by 17% yoy to S$115.8m on top line growth of 6.7% to
S$594m.

Point: We remain sanguine about SMRT's prospects, as it continues to
benefit from Singapore's strong economy. Ridership should continue to
increase modestly whilst fares remain relatively stable and we believe that
the Group can register high single digit earnings growth over the next few
years.

Relevance: We maintain our HOLD call for SMRT as we believe it is fairly
valued, offering a prospective yield of less than 5%. Our S$1.78 target
price is based on target 4.5% net yield for FY09.

MobileOne Ltd- Steady State in 2008

2008-01-25T15:02:00.003-08:00

China Oilfield Technology- Stock battered but fundamentals unshaken

2008-01-25T15:02:00.001-08:00

Summary: We visited China Oilfield Technology (COT) recently and believe the potential for enhanced oil recovery and COT's core business remains more than intact because of the mismatch between China's strong and growing demand for oil and its peaking domestic supply. COT has successfully delivered its RMB 100m order book for 4Q07, which is in line with our projection. We also expect to see more order visibility for FY08 as the year progresses. With its expertise in its core business and a strong asset base, we believe COT can sustain growth by 1) expanding its portfolio of services or 2) entering into a strategic alliance. We believe COT's fundamental story remains compelling, which is why we are maintaining our fair value estimate of S$1.01. COT is currently trading at S$0.49 or 52% below our fair value estimate. We reiterate our BUY rating.

RTRS-DIARY - Singapore Q4 2007 corporate earnings

2008-01-24T20:37:00.003-08:00

DATE COMPANY NAME RIC PERIOD
----------------------------------------------------------------
Jan 23 K-REIT Asia < KASA.SI> Q4
Jan 24 CapitaCommercial Trust Q4
Jan 24 MobileOne < MONE.SI> Q4
Jan 25 Ascott Group Q4
Jan 25 SMRT Corp < SMRT.SI> Q3
Jan 29 Fortune REIT (HK$) Q4
Jan 29 Keppel Land < KLAN.SI> Q4
Jan 30 Singapore Petroleum Corp Q4
*Jan 30 Singapore Post < SPOS.SI> Q3
Jan 31 Keppel Corp Q4
*Jan 31 Creative Technology < CREA.SI> Q2
*Jan 31 GuocoLand Q2
Feb 1 Chartered Semiconductor Manufacturing < CSMF.SI> Q4
Feb 1 Datacraft Asia (US$) Q1
Feb 1 SIA Engineering < SIAE.SI> Q3
Feb 1 Singapore Airlines Q3
Feb 1 Singapore Airport Terminal Services < SIAT.SI> Q3
Feb 5 Singapore Telecommunications Q3
*Feb 9 Asia Pacific Breweries < APBB.SI> Q1
*Feb 9 Fraser & Neave Q1
*Feb 9 Singapore Food Inds < SFIL.SI> Q4
Feb 12 Neptune Orient Lines (US$) Q4
*Feb 12 Cosco Corp (Singapore) < COSC.SI> Q4
Feb 13 StarHub Q4
*Feb 13 Olam International < OLAM.SI> Q2
*Feb 13 Singapore Technologies Engineering Q4
*Feb 14 CapitaLand < CATL.SI> Q4
Feb 15 ComfortDelgro Q4
Feb 15 DBS Group Holdings < DBSM.SI> Q4
Feb 15 Venture Corp Q4
*Feb 15 Wilmar (US$) < WLIL.SI> Q4
*Feb 15 SembCorp Marine Q4
*Feb 16 SembCorp Industries < SCIL.SI> Q4
Feb 19 Great Eastern Holdings Q4
*Feb 20 Overseas Union Enterprise < OVES.SI> Q4
*Feb 20 United Overseas Land Q4
Feb 21 Oversea-Chinese Banking Corp < OCBC.SI> Q4
*Feb 22 Haw Par Corp Q4
*Feb 23 United Industrial Corp < UICS.SI> Q4
Feb 26 Noble Group Q4
*Feb 26 Allgreen Properties < AGRN.SI> Q4
*Feb 26 Parkway Holdings Q4
*Feb 27 China Aviation Oil (Singapore) < CNAO.SI> Q4
*Feb 27 Thai Beverage (Thai baht) Q4
*Feb 28 City Developments < CTDM.SI> Q4
*Feb 28 Hyflux Q4
*Feb 28 People's Food Holdings < PPFH.SI> Q4
*Feb 28 STX Pan Ocean (US$) Q4
*Feb 28 United Overseas Bank < UOBH.SI> Q4
*Feb 28 Yanlord Land Q4
*Mar 1 Jardine Cycle & Carriage (US$) < JCYC.SI> Q4
* Yangzijiang Shipbuilding Q4

________________________________________
Companies that have released their earnings data so far:

Jan 14 Singapore Press Hldgs Q1
Jan 15 Singapore Exchange < SGXL.SI> Q2
Jan 18 Ascendas REIT Q3
Jan 22 CapitaMall Trust Management < CMLT.SI> Q4
________________________________________

COMPANY NAME DATE PERIOD
---------------------------------------------------------
Allgreen Properties *Feb 26 Q4
Ascendas REIT Jan 18 Q3
Ascott Group Jan 25 Q4
Asia Pacific Breweries *Feb 9 Q1
CapitaCommercial Trust Jan 24 Q4
CapitaLand *Feb 14 Q4
CapitaMall Trust Management Jan 22 Q4
Chartered Semiconductor Mfg Feb 1 Q4
China Aviation Oil (Singapore) *Feb 27 Q4
City Developments *Feb 28 Q4
ComfortDelgro Feb 15 Q4
Cosco Corp (Singapore) *Feb 12 Q4
Creative Technology *Jan 31 Q2
Datacraft Asia (US$) Feb 1 Q1
DBS Group Holdings Feb 15 Q4
Fortune REIT (HK$) Jan 29 Q4
Fraser & Neave *Feb 9 Q1
Great Eastern Holdings Feb 19 Q4
GuocoLand *Jan 31 Q2
Haw Par Corp *Feb 22 Q4
Hyflux *Feb 28 Q4
Jardine Cycle & Carriage (US$) *Mar 1 Q4
K-REIT Jan 23 Q4
Keppel Corp Jan 31 Q4
Keppel Land Jan 29 Q4
MobileOne Jan 24 Q4
Neptune Orient Lines (US$) Feb 12 Q4
Noble Group Feb 26 Q4
Olam International *Feb 13 Q2
Oversea-Chinese Banking Corp Feb 21 Q4
Overseas Union Enterprise *Feb 20 Q4
Parkway Holdings *Feb 26 Q4
People's Food Holdings *Feb 28 Q4
SembCorp Industries *Feb 16 Q4
SembCorp Marine *Feb 15 Q4
SIA Engineering Feb 1 Q3
Singapore Airlines Feb 1 Q3
Singapore Airport Terminal Svcs Feb 1 Q3
Singapore Exchange Jan 15 Q2
Singapore Food Inds *Feb 9 Q4
Singapore Petroleum Corp Jan 30 Q4
Singapore Post *Jan 30 Q3
Singapore Press Hldgs Jan 14 Q1
Singapore Technologies Engg *Feb 13 Q4
Singapore Telecommunications Feb 5 Q3
SMRT Corp Jan 25 Q3
StarHub Feb 13 Q4
STX Pan Ocean (US$) *Feb 28 Q4
Thai Beverage (Thai baht) *Feb 27 Q4
United Industrial Corp *Feb 23 Q4
United Overseas Bank *Feb 28 Q4
United Overseas Land *Feb 20 Q4
Venture Corp Feb 15 Q4
Wilmar (US$) *Feb 15 Q4
Yangzijiang Shipbuilding * Q4
Yanlord Land *Feb 28 Q4

COSCO Corporation (S)

2008-01-24T20:37:00.001-08:00

Secures first new building contracts for shuttle tankers

COSCO Corporation (S) (COS (S)) has announced that it's 51% owned subsidiary COSCO Shipyard Group (CSG) has secured US$422m worth of building and conversion contracts.

First shuttle tanker newbuilding contracts for CSG
CSG's COSCO Nantong will be undertaking the construction of two new shuttle tankers for US$171.6m. These contracts are significant as they are CSG's first tanker new building contracts. In FY07, about 70% of CSG's orderbook was driven by dry bulk new builds. We see this diversification into other shipbuilding projects as a strong positive for COS (S). The two tankers are expected to be delivered in 2010 and 2011 hence we should see significant contributions to COS (S)'s earnings from these contracts only between FY09-11.

The usual conversion contracts
In addition to the new building contracts, CSG has secured US$250m worth of conversion contracts. These are the usual tanker to ore/ FPSO contracts they have been undertaking for the past two years and they are expected to be completed within FY08 and should contribute positively to FY08 earnings.

Maintain BUY. Target price raised to S$8.60. We continue to like COS (S) given its exceptional order flow, aggressive expansion plans and strong earnings momentum. Other potential earnings catalysts we could see are interests by QDII funds, future M&A activities as well as a Shanghai 'A' share listing. We maintain our BUY recommendation on COS (S) with a target price of S$8.60.

Federal International (2000) Limited: Valuation hit by weak market sentiment

2008-01-24T20:36:00.002-08:00

Summary: Federal International (2000) Limited (Federal) announced last week that it would be expanding its geographical focus to the Middle East market in its distribution and trading business division. There has been a shift towards a recurring and sustainable income stream over the past two years. This included the chartering of the FSO contract to PetroChina and the BOO CoGen facility projects both locally and regionally. This strategy towards attaining a recurring income stream was further augmented through the divestment of HP&T Products Inc last November. In view of present lower market and sector valuations, we are adjusting our valuation parameter from 15x to 12x, while keeping our FY07 and FY08 forecasted earnings estimates. Our fair value estimate has been revised to S$0.81 (from S$1.02 previously). Maintain BUY. (Serene Lim)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- K-Reit Asia, which posted a 62.6% YoY gain in 4Q07 distributable income to S$6.9m and annualized DPU of S$0.0882, has proposed a rights issue to raise up to S$700m.

- Mapletree Logistics Trust, which posted a 77.9% YoY jump in FY07 distributable income to S$71.8m and a 29.8% gain in DPU to S$0.0657, has deferred its proposed S$500m rights issue.

- Ascott Residence Trust reported a 54% YoY rise in 4Q07 distributable income to S$12.8m and a 28% gain in DPU to S$0.0212, on the back of new acquisitions and strong operating performance.

- Ascendas India Trust posted 3Q08 distributable income of $11.3m, net property income of S$15.7m (+57% YoY) and a DPU of S$0.015, due to continued high portfolio occupancy of 99%, rising average rental rate and constant focus on cost efficiency.

- Cosco Corporation (S) Ltd has won conversion and tanker building contracts totaling US$422m.

- Sino-Environment Tech has secured two desulphurization contracts in China totaling S$35.9m.

- A unit of Keppel Offshore and Marine has won an S$145m contract for the integration and completion of a 'Bully' rig design drill-ship.

- Parkway Holdings Ltd, which already owns 60% of World Link, has signed a deal to purchase the remaining stake for US$28m.

Societe Generale to Seek EU5.5 Billion After Fraud, W

2008-01-24T20:36:00.001-08:00

Jan. 24 (Bloomberg) -- Societe Generale SA said it will seek
5.5 billion euros ($8.1 billion) in new capital after discovering
a case of trading fraud and taking further writedowns linked to
the U.S. subprime mortgage market crash.
The bank discovered last weekend that a trader in Paris had
secretly set up positions that will cost the company 4.9 billion
euros before tax, Societe Generale said in an e-mailed statement
today. The trader, who wasn't identified, went beyond permitted
limits on futures linked to European stock indexes.
Societe Generale will also take 2.05 billion euros in
writedowns related to credit market turbulence. The bank said it
will still make a profit of between 600 million euros and 800
million euros for 2007. An offer by Chairman Daniel Bouton to
resign was rejected by the board, the bank said.
Societe Generale yesterday fell 4.1 percent to 79.08 euros,
its lowest since May 2005, valuing the bank at 36 billion euros.
The shares have fallen 20 percent since the start of the year,
hurt by expectations of further writedowns.
The company said it plans to raise the capital by selling
shares in a rights offer underwritten by JPMorgan Chase & Co. and
Morgan Stanley.

Oops! The Baltic Dry Index breaks 6000

2008-01-24T20:35:00.005-08:00

Last night the Baltic Dry Index (BDI) fell 298 points and broke the crucial 6000 mark to close at 5948. The BDI is a proxy to dry bulk shipping freight rates.

I reiterate my view that investors who are looking to buy dry bulk shipping stocks for 2H08's potential freight rate rebound (after a seasonally low in early part of the year) should wait for the BDI to stabilise before entering the stocks. At this juncture, it is hard to predict where dry bulk shipping rates are going to land.

I continue to hold the view that dry bulk shipping stocks at best are trading stocks in 2008. Investors should look to trim these stocks as 2009 approaches. The current large ship orderbook of 56% of global fleet is indeed a concern and will lead to excess fleet capacity from 2009 onwards.

Be careful on China XLX.

2008-01-24T20:35:00.003-08:00

Jan. 24, 2008 (China Knowledge) - The National Development and Reform
Commission
(NDRC), China's top economic planner, has announced yesterday at a warning
conference on price control of fertilizer, that it will extend a price
control
policy to fertilizer, a move to protect farmers' welfare and China's food
security.

According to the NDRC senior official who made the announcement, fertilizer
makers run by the central government should not raise the ex-factory prices
of
urea while fertilizer manufacturers run by local governments should
strictly
control their ex-factory prices of urea, phosphate fertilizer as well as
compound fertilizer. Private companies are required to seek official
approval
when they intend to raise prices.

The interim price intervention covers the spring plowing period.

Prior to this decision to extend price intervention to fertilizer, it was
predicted to have continuous price rises.

Statistics show the ex-factory prices of urea and compound fertilizer have
risen
to RMB 1,725 (US$238.6) per ton and RMB 2,600 (US$359.6) per ton,
respectively,
both up more than 30% year-on-year.

Analysts attributed these price rises to international price interaction,
cost
increase and China's lack of phosphorus and potassium resources.

Fertilizer is one of the most important means of production for farming, so
farmers may suffer from the rising costs especially since the plowing
season is
coming.

The government thus faces a dilemma of having to curb the agricultural
product
prices to tackle inflation on the one hand, and maintain the farmers'
enthusiasm
on

Mercator - Initiate coverage by DB

2008-01-24T20:35:00.001-08:00

Strong share price gains expected. Initiate with Buy.

Mercator Lines (MLS) distinguishes itself from other dry bulk shipping
companies

we cover due to its significant exposure to the Indian market and its
aggressive

growth targets. We expect a continued strong rate environment in the dry
bulk

sector over the next 18 months and see MLS registering EPS growth of 147%
in

FY09 and 67% in FY10. We think P/Es of 2.6x and 1.6x FYMar09-10 and P/B of

0.8x versus 37% ROE for FY09 look attractive. The market has over-punished
this

stock because of the recent BDI decline, in our view.(See attached file:
Mercator 25 Jan 08 DB.pdf)

Market Outlook

2008-01-24T20:34:00.002-08:00

As trading started on Thursday the STI rose 4.33%, continuing from
its
rebound on Wednesday. At midday, the blue chip index was 129.31
points
higher at 3,112.93 after dropping 7.76% during the first two days of
the
week. However, as the afternoon session started the STI came off from
its
early morning surge. The STI closed 66.47 points higher at 3,050.09
with a total volume of 2.4b shares traded worth $3.4b. Gainers beat
losers 594 to
288 respectively. Leading the STI up were SGX, DBS, UOB, and Cosco.
With their efforts they pushed the STI up a total of 41.53 points.
Leading the STI down was Singtel which lowered the index by 6.6
points. SGX closed
$0.91 up at $10.10, DBS gained $0.66 and closed $18.46 higher, UOB
closed
$0.56 higher at $17.58, and Cosco rose $0.48 closing at $4.68.
Singtel lost $0.07 and finished at $3.69. With the strong surge in
the STI on Thursday we expect our local market to remain
volatile, and strongly supported by the blue chips.

Media Highlights

- M1 posts 4.8% fall in Q4 net profit to $37.9m
- CCT posts 14.5% rise in Q4 distributable income
- Winstedt Chong makes offer after raising Vita stake
- SIA proves luckier than smart by losing China Eastern deal
- BH Global rides high on regional demand
- GuocoLeisure net hits US$15.8m
- Evergro hit by lower divestment gain

Economic Highlights

- China economy expands 11.4%
- US$1 US farm subsidy cut could lead to pact: India

MobileOne Ltd: Steady State in 2008

2008-01-24T20:34:00.001-08:00

Summary : Although MobileOne's (M1) 4Q07 revenue of S$206.9m (+2.9% YoY, +3.3% QoQ) came in 16.5% ahead of our forecast of S$177.6m, net profit of S$37.9m (-4.8% YoY, -13.1% QoQ) fell about 9.4% from our S$41.9m estimate, damped by higher cost of sales. For the full year, M1 posted a 3.9% YoY rise in revenue to S$803.3m and a 4.4% increase in net profit to S$171.8m. M1 also declared a final dividend of S$0.083, bringing the total dividend to S$0.108. Going forward, M1 believes its operations should enter a "steady state", where it should be able to maintain its EBITDA margin at 45-46% as well as a payout ratio of at least 80%. Thanks to its fairly resilient business and high payout ratio, we continue to like M1 as a defensive stock, especially in the current volatile market. We maintain our S$2.33 fair value and BUY rating. (Carey Wong)

For more information on the above, visit www.ocbcresearch.com for detailed report.

China Oilfield Technology: Stock battered but fundamentals unshaken

Summary : We visited China Oilfield Technology (COT) recently and believe the potential for enhanced oil recovery and COT's core business remains more than intact because of the mismatch between China's strong and growing demand for oil and its peaking domestic supply. COT has successfully delivered its RMB 100m order book for 4Q07, which is in line with our projection. We also expect to see more order visibility for FY08 as the year progresses. With its expertise in its core business and a strong asset base, we believe COT can sustain growth by 1) expanding its portfolio of services or 2) entering into a strategic alliance. We believe COT's fundamental story remains compelling, which is why we are maintaining our fair value estimate of S$1.01. COT is currently trading at S$0.49 or 52% below our fair value estimate. We reiterate our BUY rating. (Meenal Kumar)

For more information on the above, visit www.ocbcresearch.com for detailed report.

S-Shares: Boost from liquidity influx

Summary: China has recently signed a MOU that will allow its banks to invest in Singapore investments including stocks. This long-awaited move frees up an estimated S$23.2b pool of funds that could potentially be pumped into locally listed stocks. We expect this potential influx of liquidity to spark an upward re-rating of S-Shares. In our strategy report dated 14 December 2007, we highlighted our stock picks among the S-Shares universe. We continue to favour the China consumer sector for its ability to leverage on China's strong consumption growth, and the Manufacturing sector for its strategic advantage of having a low cost manufacturing base. Our stock picks remain as: Cacola Furniture International Ltd (BUY, fair value estimate of S$0.75), Man Wah Holdings Ltd (BUY, S$0.99), China Sports International Ltd (BUY, S$2.48), and Pacific Andes Holdings Ltd (BUY, S$0.87) for the consumer sector, and Bright World Precision Machinery Ltd (BUY, S$0.76), Dutech Holdings Ltd (BUY, S$0.535), Midas Holdings Ltd (BUY, S$1.85) and Midsouth Holdings Ltd (BUY, S$0.90) for the manufacturing sector. (Lee Wen Ching)

NEWS HEADLINES

- CapitaCommercial Trust posted a 53% YoY jump in FY07 distributable income to S$120.4m and 19% gain in DPU to S$0.087, due to consolidation of its 60% interest in the Raffles City complex and higher rental, car park & other income from its properties.

- GuocoLeisure posted a 464% YoY surge in 2Q08 net profit to S$15.8m and 31% gain in revenue to US$134.8m, attributable to better occupancy & room rates from its Thistle hotel chain in UK, higher sales of properties in Fiji and the strong British pound.

- BH Global Marine registered a 56% YoY gain in FY07 net profit to S$17.5m and 39% increase in revenue to S$81.9m, helped by regional strong demand for its products & services.

- Dayen Environmental Limited has secured two contracts totaling S$4.1m from the Public Utilities Board.

- Hyflux Ltd has clinched three municipal water treatment plant projects in China totaling some S$41m in investments.

- Bio-Treat Technology is raising funds of up to S$303m in notes, warrants and a loan from Precious Wise Group to fund projects and redeem its convertible bonds. Also, it entered into a securities purchase agreement with Abax Lotus for RMB434m in notes and warrants.

- Vita Holdings Ltd's major shareholder Winstedt Chong Thim Pheng upped his stake from 29.74% to 36.05%, triggering a mandatory conditional cash offer for the remaining shares.

Please refer to the full report for more information and additional disclosures

The Federal Reserve cut the benchmark interest rate by three quarters of a percentage point

2008-01-23T10:33:00.000-08:00

Jan. 22 (Bloomberg) -- The Federal Reserve cut the benchmark interest rate by three quarters of a percentage point, its first emergency reduction since 2001, after stock markets tumbled from Hong Kong to London amid increasing signs of a U.S. recession.
The central bank cut the target overnight lending rate to 3.5 percent from 4.25 percent, the Federal Open Market Committee said in a statement in Washington. Policy makers weren't scheduled to gather until next week. It's the biggest single reduction since the Fed began using the rate as the principal tool of monetary policy around 1990.
``Broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households,'' the Fed said in a statement in Washington. The FOMC took the action ``in view of a weakening of the economic outlook and increasing downside risks to growth.''
Policy makers set aside concerns about inflation to lower borrowing costs for the fourth time since September after retail sales fell, the unemployment rate climbed and global stocks slumped. Chairman Ben S. Bernanke shifted the Fed's stance to a more aggressive approach in remarks this month citing a need for ``decisive and timely'' action.
The dollar slid and Treasury securities rallied after the announcement. Stocks retreated as some investors questioned whether the Fed would be able to avert a recession, and then recouped more than half the losses. The Standard & Poor's 500 Index fell 1.1 percent to 1,310.50 in New York, the fifth straight drop, extending its decline to 11 percent this year.
Bear Market
Yesterday, almost half of the world's biggest stock indexes fell into a bear market as mounting concern about a U.S. recession dragged down banking and retail shares across Asia, Europe and Latin America.
``The bottom line was that financial conditions were tightening sharply'' and affecting the economic outlook, said former Fed economist Brian Sack, who is now with Macroeconomic Advisers LLC in Washington. ``The view so far has been that they're somewhat behind the curve and needed to adopt a somewhat more aggressive approach.''
Economists differed over what the Fed will do when it meets next week. Deutsche Bank forecast a half-point reduction in the benchmark rate, while Morgan Stanley and Lehman Brothers Holdings Inc. predicted a quarter-point cut. Goldman Sachs Group Inc. said the Fed will leave the rate unchanged, then changed its call to a half point. Traders see a half-point reduction as more likely, based on futures prices.
`Smell Blood'
``The markets smell blood right now,'' said Stephen Stanley, chief U.S. economist at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``I don't think the Fed can afford to disappoint.''
The Bank of Canada, in a scheduled meeting, lowered its main interest rate by a quarter point today to 4 percent and signaled it will act again to shield Canada from the U.S. slowdown. The Bank of England said it has no plans to change the date of its next rate decision. The bank's policy makers are due to begin a two-day meeting in London on Feb. 7.
Treasury Secretary Henry Paulson called the Fed's move ``very constructive'' and a ``confidence builder.'' He also said it was a sign to the rest of the world that the U.S. central bank is ``nimble.''
Negotiating Stimulus
Paulson, charged by President George W. Bush last week with negotiating a fiscal stimulus plan with lawmakers, said a package ``must be enacted quickly.'' White House spokeswoman Dana Perino told reporters that the administration hasn't ruled out a proposal exceeding $150 billion.
The Fed Board of Governors, in a related move, lowered the so-called discount rate on direct loans to commercial banks by a 0.75 percentage point to 4 percent. The Chicago and Minneapolis district banks had requested the reduction, the Fed said. In August, the Fed made an emergency half-point cut in the discount rate without lowering the federal funds target.
``Appreciable downside risks to growth remain,'' the Fed statement said. ``The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.''
Traders had anticipated 75 basis points of rate cuts this month, according to futures prices on the Chicago Board of Trade.
The FOMC vote was 8-1, with St. Louis Fed President William Poole preferring to wait until the regularly scheduled meeting. Fed Governor Frederic Mishkin was absent and not voting.
Video Conference
Fed officials met by video conference at about 6 p.m. yesterday, spokeswoman Michelle Smith said. Mishkin was traveling and unable to participate, she said. The voting members were the same as in 2007 because the presidents don't rotate in until the first regular meeting, Smith said.
Poole declined to comment, said his spokesman, Joe Elstner.
Today's so-called inter-meeting rate cut is the first for the federal funds rate since Sept. 17, 2001, when the Fed lowered borrowing costs in the aftermath of the terrorist attacks six days before. That was the third emergency reduction in a year which saw the last U.S. recession.
Bernanke warned in a Jan. 10 speech and again in testimony to Congress Jan. 17 that the 2008 economic outlook had worsened and ``the downside risks to growth have become more pronounced.'' Still, he said the Fed wasn't forecasting a recession this year.
Faltering Economy
Retail sales fell last month, unemployment rose, and housing markets are mired in the worst slump in 16 years. Homebuilders broke ground on the fewest homes since 1991 last month, Commerce Department figures showed Jan. 17. Building permits, a sign of future construction, declined by the most in 12 years, suggesting the housing slump will deepen.
Bernanke told legislators at the House Budget Committee that banks were trying to protect asset quality and funding, and tightening credit conditions for the rest of the economy as a result. ``Banks have also evidently become more restrictive in their lending to firms and households,'' he said. The Fed statement reprised the remarks today.
Fed policy makers have warned that housing will continue to be a damper on growth. Richmond Fed President Jeffrey Lacker said Jan. 18 that didn't expect homebuilding to ``bottom out'' in 2008. Bernanke said the day before that housing markets ``may continue to be a drag on growth for a good part of this year.''

Pine Agritech

2008-01-23T10:31:00.000-08:00

Continuing high soybean cost lead to short-term pressure
High soybean costs rocketed up in 4Q07. Soybean cost soared over 60%
yoy in 4Q07 and reached a historical high level of around Rmb3.6-4/kg. We
believe the upward trend to continue into 1H08 due to several reasons: 1)
Planting area reduced. Due to the low planting profitability, many farmers
abandoned the low price soybeans and changed to grow corns. According to the
statistics of Ministry of Agriculture, the countrywide planting area of soybeans
decreased 6% yoy in 2007; 2) Soybean output reduced. In general, the soybean
output of Hei Longjiang Province accounts for 40% of overall output. However,
due to the unwonted droughty and weather, the output of soybean in Hei
Longjiang Province in 2007 reduced 30% compared with common annual value;
3) Import soybean price hike. Currently, only 36% of the overall annual demand
of soybean in China is domestically produced. The reduction of international
planting area and the cut-down of export of developed countries result in the
persisting high soybean price.
Expected margin squeezing continued. Continuing pork price hike and
nationwide pig supply shortage in 4Q07 cause the operation environment for
domestic meat processed companies to remain tough. Therefore, we expect
demand for Pine’s soy protein isolates (SPI) products may lower compared with
that in 3Q07. Although Pine raised its ASP for SPI by 5-8% in 4Q07, this can
not fully pass on the cost pressure to customer since soybean cost accounts for
80-90% of COGS in terms of its SPI products. On the other hand, weak demand
from its exclusive distributor, Shenji is expected to continue in 4Q07, revealing
a lower sales of soy oligosaccharide syrup (SOS). With less contribution from
this higher margin product, Pine’s profitability improvement in 4Q07 is still under
pressure. Therefore we lower our gross margin forecast for FY07-09 to 42.6%,
42.9% and 43.2% respectively from 45.1%, 45.8% and 45.7% respectively.
Launch TV commercials to enhance awareness. Pine has started the TV
commercials on local and provincial TV channels to promote its new products,
soybean peptide and Ditiang from the end of Sep FY07. By the end of 2007, TV
commercials had been expanded to other channels with national coverage, such
as CCTV and PhoenixTV. The Group expects to spend approximately
Rmb15m/month in the remaining months of FY07 and Rmb150m in FY08 for TV
commercials. We believe these heavy marketing campaigns will gradually
increase the Group’s brand awareness and promoted the demand for its
products. However, it will erode the Group’s net margin as well.
Key adjustments that lead to potential turnaround. 1) Anticipating that
soybean price will remain high and ever increase in the future, Pine stocked up
soybean inventory around 160,000 tons in Oct 2007. In view of the fact that Pine
needs approximately 200,000 tons of soybean for annual production, the Group
can offset some parts of the cost pressure with these low-cost inventory in FY08.
2) Nationwide pig supply shortage is expected to ease in 2H08, hence the
demand for SPI products would increase onwards. 3) Small soybean
manufacturers are expected to experience a tougher time as they do not have
enough funds to build up inventory. Therefore, Pine Agritech might receive some

Market Commentary

2008-01-23T10:20:00.000-08:00

After days of aggressive selling, the US Federal Reserve, in an unusual move, cut its benchmark fed funds rate by 0.75% to 3.5% in an effort to fend off a recession. This is its first emergency reduction since 2001 and the biggest single cut since 1990 as global equities plummeted over the past few days. The policy makers will be meeting again next week.

With the deterioration in global markets, this has recently raised more questions of defaults and tighter credit. In the US, retail sales fell last month and unemployment rose in the midst of the US housing slump, and there are increasing worries of a slowdown in consumer demand.

While US stocks managed to par losses from intra-day lows in overnight trading, key indices still closed lower despite the interest rate cut. The Dow Jones Industrial Average gyrated widely intra-day, swinging from -7 points to -465 points before closing down 128 points to 11971.19.

The Singapore market fell in line with the region, down for a massive 12 sessions in the past 15 sessions since the start of the year. According to some reports, the selling pressure of the past few days since the start of 2008 has wiped off close to US$1 trillion from global markets.

With concern over a US recession mounting, the cautious undertone is likely to remain for a while more and this will translate into volatility in the market. In the Fed statement, it mentioned that "appreciable downside risks to growth remain'' and that it will continue to assess the situation and "will act in a timely manner as needed to address those risks.''

With the rate cut, there could be some bargain hunting this morning, but we expect the tone to remain cautious after the past few days of selling and with margin calls, this has taken a toll on retail as well as institutional investors. Corporate earnings will remain in focus, especially with market watchers looking to US MNCs for direction. On this front, analysts are expecting 4Q earnings for the S&P 500 companies to drop an average 17%, dragged down by the financial institutions according to a Bloomberg survey.

But is it time to bottom fish? As volatility remains in the market, there could be more downside as investors stay away from the market. However, for the bargain hunters, we advocate sticking with the blue chips, which are better cushioned to ride out any medium term uncertainty. The 30-stock STI index is down 17.3% for the year (faring better than most of the sub-indices). For the individual stocks within the STI, the decline ranged from -6.4% (for SPH) to -39.5% (for Yangzijiang), with StarHub being the only STI stock that is still up for the year. Banking stocks have taken a big hit from their 52-week highs and look attractive on price weaknesses. We continue to favour the oil & gas stocks (KepCorp, Ezra, etc) and the defensive companies (SPH, ST Engineering, StarHub, MobileOne). (Carmen Lee)

Karin Technology: Expansion of ASEAN footprint

Summary: Karin Technology officially opened its 70%-owned subsidiary, IMI Kabel Pte Limited (IMI Kabel) in Singapore on Monday, which marks yet another milestone for the group, as Karin intends to use it as a launch pad to venture into Singapore and other ASEAN markets. We understand that IMI Kabel has plans to set up sales offices in Malaysia, Indonesia, Korea and Japan this year, where it will not only market control cables but also complementary electronic components from Karin. And as these cable products typically command better gross margins (>20%) versus its present 9.7% gross margin, we expect further sales expansion to give Karin's meaningful bottom line boost. Nevertheless, we have already factored in IMI Kabel's contribution in our forecasts, hence we retain our S$0.44 fair value (based on an undemanding 8x FY08F PER), which still offers >100% upside from here. We also maintain our BUY call. (Carey Wong)

For more information on the above, visit www.ocbcresearch.com for detailed report.

NEWS HEADLINES

- CapitaMall Trust registered a 24.7% YoY gain in FY07 distributable income to S$211.19m, on the back of a full-year's contribution from its 40% stake in Raffles City and contributions from the three malls in the CapitaRetail Singapore portfolio.

- CapitaLand plans to create a REIT or a listed vehicle holding Indian malls for retail projects that it will develop jointly with two separate Indian partners - Prestige Group and Advance India Projects Ltd. The separate JVs will develop/invest in and manage an initial portfolio of 15 retail or predominantly retail projects worth over S$2.12b.

- First REIT posted a distributable income of S$4.8m and DPU of S$0.0176 for 4Q07, which exceed its forecasts by 9.1% and 9.3% respectively.

- Pacific Shipping Trust will be distributing 1.1 US cents per unit for 4Q07, which is 6% YoY higher. The rise in DPU came on the back of higher income distribution for 4Q07.

- Singapore Press Holdings, which has a mandate to buy back up to 158.46m of its own shares, purchased 1m shares yesterday at an average price of S$4.1942 each.

- Anwell Technologies will install its first Blu-ray Disc (BD) replication system for its California-based customer - CD Video, in 1Q08. Also, the Chinese government had awarded it an additional RMB3m in funding for R&D in BD technology.

- Sarin Technologies is paying US$3.4m to acquire a 23% stake in IDEX Online SA, which operates a business-to-business polished diamond traders' network.

Samudera Shipping Line Ltd: Upgrade to Buy

2008-01-22T12:55:00.001-08:00

Summary: We met with Samudera Shipping's management for an update. Management is still bullish about the container and industrial shipping segments in the longer term, with a view that consumption of raw materials like coal and manufactured goods by China, Europe and USA is sustainable in the longer term. Since January, management has acquired 3 more new vessels. The 2 bulk carriers would enable Samudera to gear up for the dry bulk boom, in view of the upsurge in demand for global resources. In addition, owing the vessels would help in providing some stability in approximately 60% to 70% of Samudera's overall vessel operating costs. As Samudera's operating environment has not altered significantly since our last report, we are maintaining our fair value at S$0.40. With the recent correction in the stock market, the stock last traded at S$0.35. Hence, we are upgrading our rating to a BUY (from Hold) from a valuation perspective.

NEWS HEADLINES

- Bright Orient (Holding) Ltd has entered into a conditional agreement to purchase Golden Oriental Pte Ltd in an S$160.5m reverse takeover deal, which would see it acquiring a bulk carrier & port operation business while giving up its clothing manufacturing operation.

- Marco Polo Marine Ltd has inked a binding letter of intent to enter into a 50:50 JV with ST Shipping and Transport to jointly own and operate a fleet of transshipment tugboats and barges.

- Chip Eng Seng Corporation Ltd has been awarded an S$188m contract by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown.

- Raffles Education intends to seek a Hong Kong mainboard listing for part of its China operations.

- Wee Hur Holdings Ltd is seeking a mainboard listing with an IPO offer of about 83.65m shares at S$0.25 each.

- Sky China Petroleum Services Ltd is considering a proposal to take up exclusive development and operating rights to an oilfield located in Songliao Basin, China.

- Sinobest Technology Holdings has warned of an unaudited consolidated loss for FY07, due mainly to a fall in sales and gross profit amid continuing fierce competition.

Ascendas REIT Slowly and steadily

2008-01-21T11:34:00.001-08:00

A-REIT reported 15% higher net income available for distribution yoy at
S$47.2, on the back of 13% increase in gross revenues to S$80.2m. This was
mainly due to additional rental income from completed acquisitions and
positive rental reversions from its high-tech industrials and business as
well as science parks. Average occupancy levels rose to 98.7% as at 31 Dec
07 compared to 96.1% a year ago. Leverage at 38.6%. As at end Dec 07,
AREIT had an aggregate gearing of 38.6%, which was 88% fixed at 3.39% and
an average weighted term of 3.92 years. Interest cover ratio was 5.32x.

Yanlord Land Group - Demand for high-end residences remains strong

2008-01-21T11:33:00.002-08:00

Story: We hosted Yanlord at our recent Pulse of Asia Conference. The
management remains confident of the outlook for high-end residences in
China, with their most recent launch of another batch of apartments in
Yanlord Riverside City (Phase 2) over the first two weekends of January
experiencing high take-up rates and healthy ASP growth.

Point: This came on the back of some concern about a perceived softening of
the PRC real estate market. The media had reported lower property
transaction volumes and declining prices for developments towards the end
of 2007, as the mortgage policy on second homes tightens.

Relevance: While we have incorporated the development surplus on their most
recent site acquisitions, our target price has been revised downwards
slightly to S$4.21 (at par to RNAV) as we factor in higher Land Appreciate
Tax (LAT) charges. With an upside of 52% on this stock at current price
levels, we see value emerging. This also translates into PE of around 14x
and 11x on FY08F and FY09F EPS respectively. Maintain BUY.

Singapore Strategy

2008-01-21T11:33:00.001-08:00

We completed our Singapore Navigator marketing in five cities in Europe. Clients generally agreed with our cautious views on Singapore. Most agreed with our Overweight stance in Transport & Telcos and our Underweight stance in Manfacturing and Property, though significant falls in property stocks triggered queries on entry levels for selected property stocks. Reception to our bullishness on Multi-Industry was mixed, clients generally agreed that the fundamentals of the sector remained bright though concern stemmed from the relative large ownership levels in this sector. Clients also agreed on our views on Financials - that it was cheap but not time yet. With STI having fallen 14% ytd, valuations are starting to look interesting and we suggest that investors should look for entry levels now rather than continue to pile into defensives.

HK : Navigator : Alot of Bargains (19-21 Jan)

2008-01-21T11:32:00.000-08:00

past two weeks. The HSI closed Friday at 25,202, down a hefty 1,665 points or 6% for the week. The weekly loss for the HSCEI was 8%.

Our View
The market has shown some signs that genuine investors have returned, given the bargain hunting on banking stocks, which suffered the first attack in the latest global equity market sell-off. The subprime crisis may actually result in a consolidation that should benefit the survivors in the next up-market. We hold our view that the rapid correction in the past two weeks is offering a good opportunity to buy quality stocks at good prices in the local market. We expect a reviving market as lower interest rates and low core inflation are on the backdrop.

Non-Oil Domestic Trade

2008-01-18T17:55:00.003-08:00

seasonally adjusted, the fourth straight month of contraction. Yoy, NODX was below consensus and our expectations, falling 4.5% (Nov 07: -3.4% yoy). Full-year NODX grew 2.3% yoy in 2007, the slowest since 2002. For 2008, the government has projected growth of 4-6% (we are looking for 4.5%), on the assumption of a recovery in tech exports in 2H08. We expect stronger contributions from non-tech exports in 2008: drugs on the back of capacity expansion and more rig deliveries. 2007 NODX growth to the US slowed to +2.7% yoy from +14.4% in 2006 and the US accounted for 0.4% pt of overall NODX. 2008 NODX to the US is expected to decelerate further. We are looking for stronger contributions from China/Hong Kong, Indonesia, the EU and India to bring NODX growth to 4.5%, hopefully with the help of stronger pharma and lumpy items such as rigs/vessels.

Construction demand expected to bulldoze ahead

2008-01-18T17:55:00.001-08:00

Construction demand hit S$24.5bn, just marginally ahead of the 1997 peak of
S$24.4 bn. With the ongoing construction of mega-projects like the BFC, two
IRs, and various residential and commercial projects, the outlook for
construction sector remains robust. BCA forecasts construction demand to
hit a new zenith of $23-27bn in 2008. Construction output in terms of
certified progress payment is projected to hit S$19-21 bn in 2008 from
$16.5bn in 2007.

Prices for cement, granite, ready-mixed concrete (RMC) and steel bars have
increased between 25-35% since the beginning of 2007, and are expected to
remain firm in 2008. BCA expects demand for cement and RMC to grow 26% and
38% respectively in 2008. Prices are expected to grow in tandem with
robust demand, posing challenges for certain players.

We are positive on Building Material suppliers like Hong Leong Asia (BUY,
TP S$4.30) and Pan-United Corp (BUY, TP S$1.16), which should benefit from
higher prices and increase in construction activity. High material costs
lead us to be selective on niche subcontractors like KSH (BUY, TP $0.82)
who should be able to pass on the higher building material prices to the
developers. We also like Tat Hong (BUY, TP S$3.32), a company that is
leveraged on the higher construction activity but is not exposed to higher
material prices.

Credit Suisse Keeps Wilmar At Neutral; Tgt S$4.30

2008-01-18T17:54:00.001-08:00

0236 GMT [Dow Jones] STOCK CALL: Credit Suisse keeps Wilmar (F34.SG) at Neutral with target price unchanged at S$4.30 after China announces measures to curb inflation on range of food products, including cooking oil; measure requires company to seek approval from government for price increases. Notes uncertainty over whether measure in place for Chinese New Year or until food inflation ceases to be a concern. Estimates 25%-30% of Wilmar's total pretax profit comes from China cooking oil business. "If palm oil prices continue to be on an upward trend, there is a strong possibility that Wilmar will find it more difficult to increase selling prices or there could be a time lag between rising raw material costs and passing the increased cost to the end consumers. This would result in a margin squeeze for Wilmar." Says believes palm oil's upward price momentum intact, leading to downside risk to FY08-09 earnings projections; says if FY08-09 cooking oil division profit is half of forecasts, Wilmar's forecasts may be cut 15%-16%. Share down 8% at S$4.13; STI down 3.1%. (LES)

Man Wah Holdings Furnishing a positive update on business outlook

2008-01-17T14:13:00.001-08:00

Story: Man Wah announced last evening that group sales grew 60% y-o-y to
HK$403.4m in 3Q08, and group gross margin has remained above 30%. This is
in line with our expectation, and we believe Man Wah is on target to meet
our 95% y-o-y net profit growth estimate in FY08 (financial year ended
March).

Point: Man Wah's share price has declined in line with the general equity
market weakness, and now trades at 4.7x FYMar08 PE and 3.4x FY09 PE. We
believe that the low valuation is unjustified, due to Man Wah's outlook as
a premier domestic sofa brand in China, and its gain of about 40-50% in new
customers among Top 30 US retailers during the furniture trade fair in
North Carolina, USA, in October 2007.

Relevance: We are retaining our above-market-consensus net profit estimates
at HK$176.7m in FY08 and HK$243.6m in FY09. Our fair value remains at
S$1.18, using 10x blended FY08/09 PE (financial year ended March). There is
also potential for fair value re-rating, as we may roll over to FY09 PE
upon further evidence of good earnings visibility. Maintain BUY.

China Fishery

2008-01-17T14:12:00.001-08:00

Fishmeal prices have recovered to around US$900/tonne on demand from rising live-pig stock and a switch back to fishmeal after a relentless rise in soymeal prices. Meanwhile, the Russian authorities have announced an increase in the Total Allowable Catch for Alaskan Pollock to 1.46m tonnes, and doubled the renewable quota share term to 10 years beginning 2008, potentially boosting long-term trawling revenues and reducing the risk of purchasing quota rights for China Fishery. We have adjusted our FY07-09 EPS estimates by - 2.5% to 1.4% to take into account new fishmeal prices and trawling revenues. Our target price remains S$3.30, based on 14.0x CY09 P/E. Maintain Outperform.