Chartered Semiconductor: Reiterates 1Q08 guidance

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)

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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)

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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.