Japan's Bank Lending Rate Fails to Accelerate

C&O Pharmaceutical Technology Ltd
BUY: Target Price: $0.55

C&O’s 1H07 results were in line with our expectations. Revenue for 1H07
grew by 100.2% to HKD 289 million half-on-half, boosted by the acquisition of
its x-distributor Shen Zhen Lian Cheng (SZLC). Net profit dropped significantly
by 89% to HKD 4.8 million over the same period, which is also due to the one
off accounting issue with SZLC. It still has a net cash position of 158 million
HKD in its balance sheet.
Going forward, we expect C&O to improve its gross and net profit margins, as
the one off accounting issue will not affect the third quarter COGS (and
onwards). C&O will also launch more new drugs in the second half of FY2007,
which will constitute another source of income for the group. Moreover since
C&O has been trying to bring in more imported foreign drugs into the market,
this is likely to show positive results soon. We believe C&O has a strong
growth momentum in 2H07.
Clinical trial applications for two category one drugs. As C&O is in a
favored position with regards to CPU – physical proximity as well as
collaborations, it is in an advantageous position to acquire good drugs. Low
Molecular Ganoderma Lucidum Polysaccharide (LMGLP, Ling Zhi Duo Dang)
Capsules, with a 20-year patent protection is one of them. This drug is believed
to have a 5 billion RMB market in China. Its direct competitor Lentinan (Xiang
Gu Duo Dang)‘s annual sales has exceeded 400 million RMB. Another
Category one drug PNA, a Hepatitis B treatment drug, also has huge potential
in China and Asia, as 1 out of every 10 person is HBV positive. According to
C&O’s management, PNA has shown better results compared to currently
available HBV treatment drugs in preclinical tests. Both these drugs are
expected to commence clinical trials in the second half of 2007.
Maintain BUY! My estimated fair value remains 55 cents, which is 13x FY08
PER. The one-off inventory issue provides a very good opportunity to enter the
market. 45% upside, BUY!

Source: Phillip Securities Research

Sino Techfibre
BUY
Current Price: S$1.48
Target Price: S$2.08

A Synthetic Leather Expert
Sino Techfibre is a China-based synthetic leather manufacturer that started
business with polyurethane (PU) synthetic leather in early-02. It added two
microfibre synthetic leather production lines in 2005.
Strong demand and abundant raw materials. Downstream industries,
including the automobile upholstery, footwear, apparel and luggage industries
are driven by both the booming domestic consumption and a global outsourcing
trend to China. Also, the capacity of PU resin has expanded aggressively and
helped stabilise Sino Techfibre’s cost.
Attractive ROE supported by R&D. Sino Techfibre has achieved a much
higher ROE of at least 35% than its industrial peers in recent years. This is
mainly due to its high gross margin and higher asset turnover ratio. Its research
and development (R&D) capability is the driving force that sustains high margins
as product diversification and upgrade help Sino Techfibre raise its ASPs over
time.
Taking over market share of overseas competitors. Chinese synthetic leather
producers are taking market share from synthetic leather makers in Japan,
Korea and Taiwan as the former have lower costs. Sino Techfibre is riding on
this trend and is acting as a market leader, picking up orders that used to go to
foreign competitors.
Valuation. Sales will be fuelled by higher value-added products like microfibre
synthetic leather and pattern moulding paper (PMP). Our DCF model gives a
target price of S$2.08, or 19.8x FY07 PE and 15.7x FY08 PE. If its PMP can be
launched successfully, the stock should see further re-rating. Initiate coverage
with BUY.

Global Testing
BUY
Current Price: S$0.235
Target Price: S$0.44

Wafer sorting business to recover starting 2Q07
New fabless customers and engineering services contract cushioned
impact of inventory adjustments in 4Q06. Global Testing was affected by
inventory adjustments at TSMC, Sunplus, Realtek and NXP (previously Philips
Semiconductor) in 4Q06. TSMC reported a 9.1% qoq decline in revenue in 4Q06
and is likely to have pulled wafer sorting requirements to in-house facilities.
Sunplus and Realtek reported 22.9% and 20.6% qoq decline in revenue
respectively in 4Q06.
Weakness mentioned above was partially offset by strong demand for LCD TV
controllers from Mstar and Techwell. Global Testing also secured a cluster of
new medium-sized fabless customers Global Unichip (system-on-chip), Airgo
(wireless network), Open Silicon (ASIC), Silicon Image (HDMI interface) and
Attansic (PC and networking). Overall utilisation was estimated at 70% in 4Q06,
lower than previous guidance of 80%. There was contribution from engineering
services contract from a US-based customer.
TSMC looks forward to recovery by Mar 07. TSMC expects inventory
correction to continue into 1Q07. It guided further sequential revenue contraction
of 14.6% to 17.3% in 1Q07 but business will begin to recover by Mar 07.
Loading from TSMC will increase from 2Q07 onwards as Global Testing gains
allocation from a Taiwan-based competitor.
Secured PC graphics business from Nvidia. Global Testing will commence
wafer sorting for PC graphics chips from Nvidia in Mar 07. Nvidia is gaining
market share after AMD acquired competitor ATi. The project provides higher
revenue per hour of test time due to high technical complexity requiring vertical
probe cards. Nvidia has also increased the requirements for pre-production
testing services at Global Testing’s facility at Sunnyvale, California.
More from Marvell in 3Q07. Global Testing’s largest customer Marvell has
acquired Intel’s communications and application processor business. The
business unit develops processors based on XScale technology for smart
phones and personal digital assistants (PDAs) such as Blackberry 8700, Palm
Treo and Motorola Q. Wafer sorting services for the new range of
Communications products will start contributing in 3Q07.
Recovery led by demand from PC industry. Utilisation will remain low in 1Q07
due to shutdown of nine days for Chinese New Year. Wafer sorting business will
see recovery starting Mar 07 driven by pick up in demand from the PC industry.
From a customer perspective, the recovery will be led by TSMC (gaining
allocation), Marvell (HDD controllers) and Nvidia (PC graphics). Global Testing
will ride the recovery in the semiconductor starting 2Q07 after excess inventory
are digested in 1Q07.
Reiterate BUY. Valuation remains a key attraction with FY07 PE at 6.2x and P/B
at 0.9x. Our Target price of S$0.44 is based on FY07 EV/EBITDA of 5x.

Source: UOB Kay Hian Research

In a move that brings regulations close to an internationally recognized framework.
Singapore will alter the capital adequacy requirements for banks. Tier 1 capital adequacy ratio (CAR) for banks and financial holding companies incorporated in Singapore will be lowered from 7% to 6%. The overall CAR will remain at 10%. Banks will be able to make more investments, loans or pay out higher levels in the form of dividends or conduct share buybacks.
Singapore banks currently exceed the required CAR substantially. OCBC has a CAR of 15.8% of which 12.9% is Tier 1. UOB has a CAR of 16.1% of which 10.8% is Tier 1. Assuming all freed funds are returned to shareholders, the impact on yield for UOB and OCBC is +0.4% and +0.3% respectively.
Bank stocks should react positively to the news, providing the STI will an uplift following yesterday’s pullback.

Ascott Residence Trust: Buy S$1.87; ART SP; Price Target : 12-Month S$ 2.20
Ascott Residence Trust (ART) has proposed to issue 117.1m new units to raise S$199m to buy five properties. New units will be offered to (1) its existing shareholders on a 1-for-10 basis; (2) institutional investors through private placement; and (3) the public. With the expanded portfolio, management projects 2007’s annualised DPU of 7.14 cents, an increase of 9.4% from the previous annualised DPU of 6.53 cents. The new units issued will increase stock free float value to 37.7% and lower gearing ratio to 27%. The expanded portfolio will consist of 2,904 units in 18 countries valued at S$1.2b ART provides investors an opportunity to invest in the growing demand for the short-term lodging sector in Asia. We have revised our 2007 DPU estimates upwards from 5.2 cents to 6.7 cents due to lower provision of income tax and minority interest. We expect earnings to continue to grow given the management’s plan to achieve property portfolio of S$2b by 2008. We maintain our fair value of S$2.20, backed by our DCF calculations. Maintain Buy.

Aztech Systems: BUY S$0.45 (Previously Strong BUY); AZ SP; Price Target : 12-Month S$ 0.67 (Prev S$ 0.56)
Aztech Systems reported FY06 earnings that exceeded our expectations. It announced a 1-cent final dividend, which is in addition to the 0.5cts that it declared in the interim. Group sales for the year expanded 34% y-o-y (DBSV: +36%) to S$239m while net income expanded 98% y-o-y (DBSV: +58%) to
S$20m. The Group achieved better profitability due to changes in product mix, tighter control on operating expenses and better economies of scale. This was however, mitigated by higher than expected tax rate. We have revised (+20% FY07, +8.1% FY08) our earnings expectations higher for the Group to incorporate higher margins, lower operating expenses and taxes. Consequently, we have revised upwards our year-end price target to S$0.67. This is still premised on a 10x P/E multiple. However, with the recent run-up in price and a valuation catch up, we have lowered our rating to BUY.

China EnerSave: HOLD S$0.19 (Downgrade from BUY); CHEN SP; Price Target : 12-Month S$ 0.23 (Prev S$ 0.26)
China EnerSave reported FY06 earnings that rose to S$4.8m from S$1.1m a year earlier on the back of revenue growth of 45.1% yoy to S$26.7m from S$18.4m in FY05. Revenues were 16% weaker than our expectations due largely to lower engineering projects. Net margins expanded to 17.9% from 5.9% in FY05 as a result of the AMIGOS contribution. However, net margins would have seen greater expansion if not for the increase in professional engineering staff. For FY07F, we are expecting net margins to contract as a result of higher operating expenses and increased minority interests attributable to Yima and AMIGOS. FY07F will be a crucial year to follow, as we will see the Group’s execution ability through the operation of the Huizhou plant. In addition, the biomass plant construction should commence in FY07F for FY08F completion, while we expect contributions from Yima and AMIGOS to continue We Downgrade to a HOLD (from BUY) recommendation with a reduced target price of S$0.23 based on sumof- parts valuation.

Inter-Roller Engineering: BUY S$0.91; IRL SP; Price Target : 12-Month S$ 1.15 (Prev S$ 1.05)
IRL reported results that were below our expectations but that were still very firm, with FY earnings growing by 52% yoy to S$25.7m on revenue growth of 46% yoy to S$148m. A 1.5ct dividend was also declared for 4Q06. Since reporting 3Q06 results, the Group has turned more positive on its outlook, stating that it expects to achieve a similar turnover in 2007 as compared to 2006 instead of revenue possibly being lower as previously cautioned. We share the Group’s optimism that it will register more contract wins this year and believe that it can return to growth once more in 2008, given the Group’s expanding presence in airport logistics systems worldwide and a continued boom in airport infrastructure spending, especially in China and the Middle East. We maintain our BUY recommendation with a raised target price of S$1.15, as we roll over our valuation multiple to 12x FY08 earnings. IRL is trading at undemanding 9.5x FY08 PE and offers an attractive prospective yield of >6%.

LMA International: BUY S$0.55; LMA SP; Price Target: 12-Month S$ 1.05
LMA reported FY06 results that were in line with our expectations. On a yearly basis, FY06 revenue grew 5% yoy to US$90.6m while the Group saw earnings turn positive to US$22.5m.Excluding the non-cash stock compensation charge, net profit was US$24.1m, in line with our estimates. We have taken into account the declining ASPs of single-use devices in our estimates. In 2007, LMA will continue growing its market share and defending its patents from infringement. We still like LMA’s business model and market position. Going forward, LMA will focus on emerging markets like China, India and Russia.
However we believe that the market will remain competitive for the Group in the near future with the ASP of single-use products declining. We maintain our BUY recommendation with a target price of S$1.05, based on 15x FY07 earnings.

Longcheer Holdings: BUY S$1.18; LHL SP; Price Target : 12-Month S$ 1.57 (Prev S$ 2.01)
Longcheer released 2QFY07 earnings that were far below our expectations. Higher unit shipment could not offset the sharp decline in selling prices and lower contribution from component sales during the quarter. Also, dividend payout was below expectations. Unit shipment expanded c.41% yoy and 7.4% qoq but due to the 18% decline in ASP, handset revenue only expanded 16% yoy and declined 6% qoq. Component sales also declined 82% yoy and 58% qoq. Profit margins were on the whole fairly stable at the Group level. The decline in profit growth is due mainly to lower sales from lower ASP and lower component sales. We are lowering our earnings expectations again as we have underestimated the magnitude of the ASP decline earlier. We also adjust our sales estimates for the volatile component sales after an earlier adjustment for slower handset growth due to the later than expected introduction of 3G services in China. On the back of these revisions, we are lowering our price target to S$1.57 based on 12x
FY07/08 blended earnings.

Pan-United Marine: BUY S$1.58; PANU SP; Price Target : 12-Month S$ 2.20 (Prev S$ 1.45)
Pan-United Marine’s (PANU) FY06 earnings was slightly above our expectations. Excluding exceptionals and other one-offs, net profit rose 66% yoy to S$32.4m. Final DPS of 10cts declared. Growth was led by robust earnings from both shiprepair and conversion, and shipbuilding divisions. Record order book of S$453m will underpin earnings growth over FY07-08. Share price is backed by cash per share of 51.6 Scts.
Excluding cash, PANU is trading at 9.6x and 8.1x over FY07-08. Yield is around 8.2%. Maintain BUY with a revised target price of S$2.20 based on 10x FY08 shiprepair and shipbuilding earnings.

Source: DBS Vickers Securities Research

MMI Holdings
BUY: Price $1.42 Target $1.62

Company update
Analyst: Gregory YAP

Shedding More Light
Long-term potential of new O&G customer looks promising
Beginning in Q406, revenue contributions could reach US$30-50m in two to
three years, according to management. We estimate first year revenue of US$5-
10m. MMI will be making oilfield production tools for the customer, which is a
global oilfield services company. The top three names in this space include
Halliburton, Baker Hughes and Schlumberger. As oilfield production tools are
consumable items, orders are likely to be more stable and not tied to the
exploration capex cycle which is more vulnerable to falling oil prices.
Well within MMI’s capabilities
We do not think MMI is venturing beyond its core capabilities with the O&G
diversification. Instead, we believe the company is redefining its accessible
markets and industries based on its expertise as a precision machining house
that specialises in difficult-to-manufacture parts that require specific domain
knowledge (i.e. oilfield consumables that operate in high heat, high pressure
environments will certainly require considerable knowledge of materials
science).
JDSU relationship poised for new high
If MMI succeeds in landing an outsourcing contract for solid state lasers, its
photonics business could double from 8% of sales now. We estimate solid state
lasers make up half of JDSU’s commercial laser revenue, with lower unit
volume but much higher ASPs. Lasers used to be JDSU’s largest profit
contributor, but with Communications Test & Measurement catching up in
recent quarters, that is no longer the case (see table on the next page). As
such, we believe that JDSU urgently needs to outsource this part of its laser
business. However, MMI’s margins for this product are still likely to be above
corporate average, given JDSU’s substantial gross margin of over 40%.
Seeking M&A opportunities
MMI is interested in buying non-HDD businesses primarily because
management believes this will reduce its reliance on a single major customer
(Seagate), a move that should help boost stock valuations. Geographically,
there are plenty of M&A targets in Western countries (e.g. US and Canada,
where small EMS suppliers are threatened by the Asian outsourcing trend), with
revenues of between US$20-30m. We understand that MMI is in discussions
with a number of potential targets.

Singapore Telecom
BUY: Price: $3.44 Target: $4.08

3QFY07 Results
Analyst: Stephanie WONG

Big Is Beautiful
Results within expectations
No surprises from this set of results as underlying net profit rose by
9.6%yoy to $850m. For the 9 months ended Dec-06, group earnings has
improved 12.4% to $2.79b, on track to achieve our full-year earnings
forecast of $3.74b. Singapore operations remained resilience while
Optus managed to defend market share without compromising
profitability. Regional associates are still growth drivers.
Domestic operations revitalised
Despite intense competition, SingTel retained its domestic market leadership.
Revenue grew 4.3%yoy to $1.06b, largely underpinned by the 8.8% growth in
mobile communications revenue and 4.1% rise in Data & Internet revenue.
With the recent award of a nationwide license from the government to provide
commercial IPTV services, the group’s fixed line operations will be poised for
revitalization. Bundling options for mobile, fixed line and broadband
customers could prevent churn and boost domestic revenue in the medium
term.
Regional associates remained growth drivers
Share of pre-tax profit from associates in 3QFY07 increased by 17%yoy to
$506m, accounting for 47% of the group’s pre-tax profit before exceptionals.
Key growth drivers were Bharti Telecoms (+106.6%yoy) and Telkomsel
(+8.6%yoy). The slower growth in Telkomsel was due to additional
depreciation arising from the accelerated roll out of base stations into the
rural areas.
Room to improve capital structure
Free cash flow for 3Q amounted to $476m, with 70% coming from Singapore
and 28% from Australia. In view of the strong and sustainable cash flow, we
are inclined to believe there is still room for more capital management
initiatives over the next 12 months. Potential divestment of non-core assets
or listing of its associates could further boost cash flow.
Laggard no more
Share price has surged some 40% since 3Q2006 as concerns for Optus’
performance diminished. In view of the revitalised domestic operations and
prospects of ROE enhancement from capital management, we have revised
our DCF from $3.02 to $4.08. Maintain BUY

Source: Kim Eng Securities Research

What’s on the table
Singapore Banking Sector - Lowering capital requirements in anticipation of Basel II
The MAS has announced that it will be lowering minimum Tier-I requirements for banks
from 7% to 6%. The overall CAR requirement remains at 10%. The latest CAR relaxation
comes with no such strings attached and we view it as a move in anticipation of Basel II.
The move is positive for banks though we do not expect big capital distributions just
because of this. Theoretically, DBS stands to gain the most. An additional 1% capital
released would amount to S$0.93 for DBS (or a potential special dividend yield of 4.1%),
S$0.24 for OCBC (2.8%) and S$0.69 for UOB (3.5%).

Quick Takes
• Surface Mount Technology (S$0.345) - No reprieve in near term
• Cosco Corporation (S$2.95) - Visibility and diversity
• The Ascott Group (S$1.70) - Expanding global footprint
• Inter-Roller Engineering (S$0.91) - Rosier outlook
• Longcheer Holdings (S$1.18) - New business models need to ramp up faster
• LMA International N.V. (S$0.55) - Low expectations priced in
• Biosensors International (S$0.925) - Costly delay
• Singapore Telecommunications (S$3.46) - Upside risks on costs
• Singapore Budget 2007 - Honing the competitive edge

News of the Day
• Pan-United Marine reported a sterling set of FY06 results
• Tiong Woon posted a 129% rise in net profit to S$7.1m in 1H07
• Chemoil signs JV agreement to build oil terminal in UAE
• Noble acquires sugar mill in Brazil
• Youcan launches new range of ice cream
• Best World takes initial steps into China

Trading Ideas
• UTAC and Super Coffeemix Manufacturing

Quick Takes
Surface Mount Technology (S$0.345) - No reprieve in near term
Margin pressure to persist in near term
Project delays caused HK$70m “loss” in potential sales in 3Q07. According to SMT,
sales would have improved marginally yoy if not for delays in the production schedules of
certain projects in the data storage, power supply and sensor sectors, caused by
customers’ engineering design changes and component shortages. Also, sales were hurt
by weaker-than-expected demand for computer peripherals (largely LG optical drives and
floppy disk drives) and telecommunication products. This in turn affected its manufacturing
efficiency. Together with rising wages and fuel prices, gross margins were eroded by 2.8%
pts yoy. According to SMT, production for most of the delayed projects has started in early
2007, and the group should be able to recognise the bulk of the HK$70m “lost” sales in
4QFY07.
Margin pressure and rising costs are our main concerns, not revenue. SMT
highlighted rising wages and other operating costs as one of its main challenges in 2007. It
is trying to address these by: 1) continuing its cost-control programmes; 2) computerising
shop-floor control to reduce wastage and cycle time; 3) increasing the use of automation to
lower headcount; 4) simplifying business processes; and 5) improving logistics and
material management. However, we believe these measures may take a longer time to
filter through the system, and sense that declining gross margins and high operating costs
are not likely to go away in the near term (at least next 1-2 quarters). This is especially true
with its aggressive expansion in several new sties in China, most of which are expected to
be ready in FY08.
Continues to secure new programmes and customers. As expected, SMT continues to
reveal several new programmes for both existing and potential new customers, which could
help drive its revenue growth further down the road. It also plans to set up an office in
Japan to accelerate its marketing efforts there, targeting new accounts and the SME
market. In addition, it plans to widen its services to include ODM, initially targeting
automotive electronics (through its tie-up with FAW’s subsidiary) and power modules. We
believe the move into ODM could further strengthen its relationships with existing and
potential customers.
Pan-China production network still on track...but may increase pressure on margins
in near term. The new 100,000 sf Changchun plant, where it has formed a strategic
alliance with China FAW Group to serve the automotive industry, is expected to be
operational in 1QFY08. In Tianjin, construction of a new 200,000 sf plant is expected to
start this year, with commercial production targeted for 4QFY08. SMT plans to use this
plant to support its existing Korean customers and new customers in the automotive,
handset, home appliances, and computer industries. In Suzhou, construction of a new
180,000 sf plant will begin in 2007, which should be operational by 2QFY08. SMT is also
expanding its existing facilities, including Phase 2 of Tangxia (operational in 1QFY08), and
a central warehouse in Dalingshan (operational in 4QFY07). Although the above
aggressive expansion reflects management’s confidence in the EMS industry in China, our
concern is their start-up costs, when operations begin in FY08.
Valuation and recommendation
Earnings cut, maintain Neutral. We have cut our full-year EPS forecast by 25% to adjust
for the lower-than-expected 3Q07 numbers as well as our lowered 4QFY07 expectations.
We have also cut our FY08-09 EPS numbers by 9% to factor in lower margin and sales
assumptions. Accordingly, our target price has been shaved from 41cts to 35cts, still
pegging SMT at 5x CY07 earnings, at the low end of its historical trading band, in view of
its near-term uncertainties. Maintain Neutral for its attractive yield of more than 7% and low
P/BV of 0.6x.

Cosco Corporation (S$2.95) - Visibility and diversity
Wins US$185.2m contract
Cosco has won a contract for four 30k dwt MPP heavy lift vessels, adding S$287m to its
order book and taking it to about S$1.8bn. This has stretched visibility till FY10. The client
is the Chinese Polish Joint Stock Company (Chipolbrok), a JV between the governments of
China and Poland set up in 1951. Chipolbrok runs break-bulk transportation services.
Under this contract, Chipolbrok has an option that must be exercised on or before 31 Mar
08 for two more such heavy lift vessels. These vessels will be built in Cosco’s Dalian
shipyard and will be delivered between Mar 09 and Apr 10.
Increased visibility and diversity. This contract win is within our order-book assumptions
for Cosco. The key positives are increased earnings visibility and diversification for its order
book. The order book now comprises contracts for high-valued vessels, conversion jobs
and offshore oil and gas vessels.
Shifting FY07 recognition into FY08. We have lowered our FY07 EPS estimate by 9%
and raised FY08 estimate by 8%, as we shift order-book recognition to FY08. While this
contract has stretched work into FY10, we believe this was a deliberate move by Cosco to
leave ample capacity in the nearer term for more critical oil & gas units. These units are the
ones facing strong demand and tight yard capacity globally currently.
Valuation and recommendation
Raising target price from S$3.15 to S$4.22, still based on sum-of-the-parts valuation.
With rising visibility, we find it more relevant to value Cosco on FY08 numbers and as such,
are rolling forward our valuation basis by one year. Its contract win momentum is far from
spent, supported by massive capacity expansion at its Zhoushan yard (increasing group
capacity by 30% by mid-FY07). This momentum is expected to catalyse the stock,
especially with more orders for lucrative offshore units. Maintain Outperform.

The Ascott Group (S$1.70) - Expanding global footprint
• FY06 within expectations Full-year EPS of 9.5cts is slightly ahead of our forecast of
9.4cts but 6% below consensus estimate of 10.1cts. The wide variance, we believe,
reflects a difference in the treatment of one-offs. While the reported numbers have
been inflated by divestment gains, we note positives such as RevPAU growth in most
markets and the turnaround at its Australian/New Zealand operations.
• Political tensions affected Thai operations. RevPAU in Thailand was down 5% yoy
in FY06 due to recent political tensions between Singapore and Thailand. Average
occupancy of the group’s properties in Thailand, however, remained above average at
85%. The situation in Thailand appears to be stabilising. Citadines Bangkok Sukhumvit
16 (79 units), which opened in January this year, achieved higher-than-expected
occupancy and rates after just three weeks of operation. We expect the Thai operations
to improve this year.
• Footprint extends into Russia. Ascott will be partnering Amtel Properties in a 50:50
JV to acquire and develop serviced residence properties in Russia with an initial fund
size of US$100m. The focus for now is on the two gateway cities of Moscow and St.
Petersburg, where there is pent-up demand for hospitality services of international
standards. The JV plans to launch 1,000 units in Russia by 2010, contributing to
Ascott’s goal of 25,000 units worldwide by then.
• Initiating FY09 EPS forecast of 7.2cts. Our FY07-08 EPS forecasts have been raised
by 25-30%. RevPAU growth is expected to remain strong in most of the markets, such
as Singapore and Vietnam, where the group’s new serviced residence units are
expected to come on stream over the next 2-3 years.
• Maintain Outperform. Our sum-of-the-parts target price has been raised to S$1.84
from S$1.40, to reflect: 1) FY08 serviced residence EBITDA of S$177m; 2) a DDM-fair
value estimate of S$2.30 for Ascott Residence Trust (ART SP, S$1.88, NR)’ and 3)
ART’s FY08 AUM target of S$2bn. Our target price translates into 37x CY07 P/E, vs.
the average 30x that global hotel chains are trading at. In view of Ascott’s rapid
expansion into high-growth markets and management’s execution track record, we
believe the premium is justified.

Inter-Roller Engineering (S$0.91) - Rosier outlook
• Below expectations, albeit yoy growth. FY06 net profit of S$25.7m came in 11%
and 8% below our expectation and consensus, as major projects in Beijing and Dubai
reached the delivery stage and incurred higher installation costs. Revenue grew 46%
yoy to S$147.6m mainly from the completion of projects. This was, again, below our
S$163m projection. Operating margins were stable at 21%.
• Good start in FY07 with S$28m of orders already in the bag. In January, the
group secured contracts worth S$28m from China, the Middle East, South Asia,
South-East Asia and North America. Including these contracts, order book is now
S$114m, largely to be recognised in FY07.
• Outlook more promising. Management has guided that new orders will be
substantially higher in FY07. With active marketing strategies, management suggests
that FY07 revenue can exceed that of FY06. We believe FY06 is an execution year for
Inter-Roller, completing major contracts secured in FY04-05. We maintain our view
that the worst is over and orders will pick up in FY07, mainly from the Middle East,
China and India. We expect contracts to come from the new Doha International
Airport (with an estimated value of S$50m) and have assumed new orders of S$145m
for FY07.
• No change to forecasts; maintain Outperform and target price of S$1.17. Our
target price, based on blended valuations, is pegged at 12x CY07 P/E comparable to
valuations for Singapore engineering peers as well as international player, FKI
London. Inter-Roller has declared a tax-exempt 4Q dividend of 1.5cts, bringing FY06
dividend to 6cts, for a total payout of 67%.

Longcheer Holdings (S$1.18) - New business models need to ramp up faster
• Disappointing quarterly results. Net profit for 2QFY07 of Rmb57m was
disappointing, down 5% yoy. Design revenue was 19% below forecast, growing 16%
yoy, but falling 6% qoq. The unexpected decline was caused by a sharp fall in ASP to
Rmb248 per unit, from Rmb283 qoq and Rmb302 yoy - we had previously expected
ASP to decline only slightly. The drop was exacerbated by sales volume that was 10%
lower than expected at 2.1m units, although this still represented growth of +41% yoy
and +7% qoq. Gross margin for design came in at 15.5%, down 0.4% pts qoq and 3.1%
pts yoy. Overall 1HFY07 net profit growth of 14% yoy was 16% below expectations.
• More cautious outlook as business model changes. Without reading too much into
a single quarter’s results, the weakness in ASP reinforces our worries that the decline
in the 2G business model could come faster than our expectation of 1Q-2QFY08. While
falling ASP is partly attributable to increasing contribution from low-cost handsets, we
expect this will only increase going forward putting pressure on revenue, without a
resulting volume increase - management maintain their target of 8m units in FY07, 5%
lower than our revised forecast of 8.5m units. However, management report progress is
being made with new exports to Eastern Europe, 3G phones to support the extended
TD-SCDMA trial and sales of mobile-TV handsets. These new business models need
to ramp-up faster, in order to offset slowing growth in 2G revenues.
• Reducing forecasts. Due to the disappointing results, we have cut our estimated FY07
sales volume for handset solutions by 8% to 8.5m units. We also expect ASP to remain
weak going forward and have reduced our full year FY07 ASP assumption by 8% to
Rmb250 per unit. As a result, our forecast FY07 handset solution revenue falls by
15%., indicating full year FY07 net profit growth of 27% yoy, compared with our
previous growth estimate of 50% yoy. Our FY07 earnings estimates are cut 17%.
However, we have maintained our FY08-09 forecasts ahead of the analysts’ briefing on
Monday. Our valuation benchmark remains pegged at the peer average of 12.5x CY07
earnings. With the cut in FY07 earnings, our target price declines to S$1.49. Maintain
OUTPERFORM ahead of the analysts briefing, with some share price weakness
expected in the near-term.
LMA International N.V. (S$0.55) - Low expectations priced in
• Below expectations. Full year FY06 earnings of US$22.5m came in 12.5% below ours
and consensus expectation. Excluding stock compensation charges, core earnings
were flat at US$24m yoy.
• Revenues in-line. Revenues grew 5% yoy to US$90.6m. Full year sales volume
(single-use devices grew 13% yoy, reusable devices declined 9% yoy) was slightly
ahead of expectations but this was offset by greater than expected ASP decline for
single-use devices due to aggressive pricing by Ambu. New product revenue
contribution of US$5m from LMA CTrach and Stonebreaker was within expectations.
• Margins were below expectation. FY06 gross margin of 71% (vs FY05’s 74%) was
in-line with expectations. EBIT margins compressed by 620bps to 26.5% as SG&A
expense grew by 13% yoy. This was due to start-up costs at LMA Urology JV,
restructuring of sales organisation and legal costs for patent infringement.
• Revising earnings estimates downwards. We cut our FY07-08 earnings by 15-16%
to reflect weaker top-line growth and lower gross margins due to ASP pressure from
Ambu. We expect 9.7% revenue growth as well as support for margins in FY07 from
new products - LMA CTrach, Stonebreaker and LMA Supreme. Contribution from the
consolidation of recently acquired PacMed and improved sales from international
markets have been factored in our topline growth estimate. We also introduce our FY09
estimates.
• Reducing target price to S$0.71 from S$0.91 but maintain Outperform. Our target
price based on DCF valuation (WACC: 10%, five year CAGR: 5%, terminal growth rate:
2%) strongly suggests that LMA is undervalued. Downside should be limited from here
as management is seeking mandate for share-buyback at its upcoming AGM in Mar 07.
Key catalysts to our price target include evidence of management’s ability to reignite
steady earnings growth over the next few quarters and a significant acquisition by LMA.

Singapore Telecommunications (S$3.46) - Upside risks on costs
• Generally in line, but costs rose. Annualised 3QFY07 core net profit was 5% and 3%
below CIMB-GK and market estimates, respectively. Key characteristics of the results
are: 1) higher subscriber retention and acquisition costs in Singapore. 2) slow
turnaround at Optus; 3) lower qoq associate contribution.
• Higher costs in Singapore. Group EBITDA margins slipped 1.3%-pts qoq to 30.7% in
3Q due to an unexpectedly sharp 3.8%-pts drop in Singapore’s EBITDA margin to
42.7%, due to higher subscriber retention and acquisition costs. We believe this
reflected SingTel’s aggressive push to retain subscribers ahead of mobile number
portability (MNP), which should be introduced in 4Q07.
• Slow turnaround at Optus. 3Q revenue rose 3% qoq while EBITDA margin was
unchanged from the previous quarter, indicating that competition remains intense.
• Strong cash generation. Cash rose S$801m qoq to S$1,544m thanks to steady
operating cashflow and the sale of assets, property and trading instruments.
• Mixed performance by associates. Associate contributions fell 4% qoq despite a 37%
qoq surge in Bharti’s contributions due to: 1) a 4% qoq decline at Telkomsel, because
of higher opex and depreciation from rolling out to rural areas; 2) 30% qoq decline at
Globe Telecom from accelerating its depreciation; 3) a surge in Pacific Bangladesh
Telecom’s losses from S$4m in 2Q to S$21m in 3Q.
• Upside risks for costs. Going forward, we are concerned over: 1) upside risks of
subscriber retention and acquisition costs in Singapore, running up to MNP; and 2)
Optus’s higher opex and subscriber acquisition costs from the aggressive rollout of its
3G network are likely to depress its margins despite revenue beginning to turn around.
Note that Optus is upping its 3G capex to be spent in rural areas, where the ROI is
lower.
• Maintaining NEUTRAL, but cutting FY07-09 estimates by 1-6% and sum-of-the-parts
target price from S$3.88 to S$3.57 from: 1) lower margins for Singapore and Australia,
mainly felt in FY08; and 2) updating our currency assumptions to account for the
stronger S$. Margin concerns are likely to keep the stock from outperforming, despite
Bharti and Telkomsel’s solid fundamentals.

Biosensors International (S$0.925) - Costly delay
• Losses came in lower than expected. Annualised 9MFY07 loss of US$26.3m was
18% above our expectations. This was primarily due to lower than expected R&D
expense for 9MFY07 of S$16m.
• DES revenue continued to decline. 3QFY07 DES sales fell 16% qoq (-24% yoy) to
US$2.6m but this was offset by growth for Interventional Cardiology products, resulting
in flat overall growth qoq.
• Margins also continued to decline. Overall gross margin dropped by another 400bps
to 39% in 3QFY07, following 2QFY07’s gross margin decline of 500bps. Biosensors is
clearly facing a highly competitive environment for its current product offerings, notably
the DES and interventional cardiology products that saw the sharpest margin declines.
• Costly delay. Delay obtaining the CE Mark for BioMatrix is clearly hurting Biosensors.
In the near term, losses continue to pile up as the company waits for BioMatrix revenue
to flow in. A longer term cost of the delay is that it is giving competitors, such as Conor
that obtained CE Mark in 1H06, significant first mover advantage in securing market
share. Conor is at present a more formidable competitor as it leverages on the Johnson
and Johnson marketing platform. As a result, we see rising risks for the successful
commercialisation of BioMatrix.
• Reducing earnings estimates. We cut our FY07 and FY08 earnings estimates by 6%
and 90% respectively to reflect: (1) lower revenue in FY07 due to price erosion of
existing product portfolio and delay in obtaining CE Mark for BioMatrix; (2) some FY07
R&D expenses pushed out to FY08.
• Maintain Underperform and target price of S$0.76. Target price is based on
probability-based DCF valuation (10% WACC and flat terminal growth). We have
assumed that Biosensors will receive CE Mark in CY07 and that it will capture 5%
market share in Europe. We continue to believe that risks (USFDA approval risk and
commercialisation risk) continue to outweigh potential growth opportunities offered by
BioMatrix at current valuations. Maintain Underperform.

Singapore Budget 2007 - Honing the competitive edge
• Much has already been revealed about this year’s budget. Last year, the Prime
Minister, who is also the Finance Minister, was in a generous mood, doling out about
S$3.6bn worth of goodies largely for heartlanders in the 2006 Budget. With the general
election behind, the PAP-led government can focus on the business sector again.
However, there may not be that many surprises this year as the government has
already signalled its intent to raise the Goods and Services Tax (GST), cut income tax
rates as well as raise employers’ contributions to workers’ CPF in Budget 2007. The
only questions are when and how much.
• Another year of budget deficit? With the Singapore economy growing by a strongerthan-
expected 7.7% last year vs. the government’s year-ago forecast of 4-6%,
operating revenue growth for FY06 should exceed the government’s 4% yoy growth
projection (we estimate +7.1% yoy). We estimate that the FY06 headline budget deficit
will be about S$1.8bn (0.8% of GDP) vs. the year-ago estimate of S$2.9bn (1.3% of
GDP). Allowing for revenue lost from proposed tax measures and spending on the
household sector, we expect the government to report a FY07 budget deficit of around
S$1.0bn (0.4% of GDP).
• Giving with the right hand, taking from the left. Minister Mentor Mr Lee has already
flagged that Singapore’s corporate tax rate will be cut by at least 1%, from the present
20%. We think there is room for a cut of up to 2% pts, to 18% for Year of Assessment
2007 (YA2007). Last year, the government did not cut individual income tax rates BUT
promised that these will be reduced to 20% from YA2007. Back in Oct 03, the
government cut employers’ CPF contribution rates by 3% pts to 13%. We are assuming
a partial restoration of perhaps 1.5% pts to 14.5%, with possible effect from Mar 07.
Finally, the GST will be raised by 2% pts to 7% (from 1 Apr 07?). However, we do not
expect new "sin" taxes this year because of the hike in GST. The impact of the GST
hike on private consumption is expected to be confined to the months immediately
before and after implementation. In the medium to longer term, private consumption
should remain a function of the state of the local economy, rather than consumption
taxes.
• Impact on corporate earnings is positive. Companies with a large portion of
Singapore-domiciled earnings should benefit the most from the corporate tax cuts. We
believe SingPost, M1, SPH, SIA, SGX, CSM, STE, Singland, UOL and Allgreen will be
among the biggest beneficiaries. Companies which have greater regional diversification
or already enjoy some form of tax incentives would gain less. In the first category, we
have SingTel, CapitaLand, Keppel Land, ComfortDelgro, smaller tech companies and
to a lesser extent, KepCorp and SembCorp. In the latter category, banks, REITs, Hyflux
and UTAC come to mind. Gains from the tax cuts should be offset by marginal staffcost
increases from the CPF hike, but the net effect should still be positive.

Sector / Economic news
Govt will ensure adequate labour and infrastructure. AMID the building boom in multibillion-
dollar petrochemical complexes, Singapore is taking steps to manage critical issues
such as labour and materials to ensure its own projects are implemented smoothly. Trade
and Industry Minister Lim Hng Kiang said this yesterday at the ground-breaking for Jurong
Rock Cavern, which he noted coincided with that for Marina Bay Sands integrated resort.
(BT)

Tourism board sets new targets for '07. Confidence in the tourism sector has prompted
the Singapore Tourism Board (STB) to set bold targets for this year. A tourism receipts
target of $13.6bn and visitor arrivals target of 10.2m was announced by Minister for Trade
and Industry Lim Hng Kiang at STB's Tourism Industry Night yesterday. These represent a
10% and 5% gain respectively over last year's figures. (BT)

There is enough capacity for gaming in Asia to build 8-10 Las Vegas-type developments,
says Sheldon Adelson, chairman of Las Vegas Sands (LVS).
• He said the Marina Bay IR be the first of its kind in Asia and hopes that LVS will be able
to achieve the occupancy rate of more than 95% that it enjoys in Las Vegas, partly due
to its MICE business.
• “There's a market here which we never really thought of before, and it's called
weddings. So the wedding and social business could be very good business and
almost the equivalent of Mice, but the idea is that we want new tourism, we don't want
to recycle old tourism,” Mr Adelson said.
• Officials from Japan and Israel had cited Singapore as an example to follow, “What
they said was, 'if it's good enough for Singapore, it's good enough for us’”. (SBT)

ERA seeks to offer guaranteed sale to HDB flats. Company president Jack Chua says it
has yet to discuss plan with HDB. ERA Real Estate Singapore wants to extend its
guaranteed sale plan to Housing & Development Board flats.
The firm said last week that under a Sellers Security Plan it will guarantee to pay 90% of a
pre-agreed price for any private property it cannot sell.
ERA president Jack Chua said yesterday the firm would like to offer a similar deal to
owners of public flat. It has not begun talks with HDB but everything would have to be
'legal' and above board, Mr Chua said. A key issue to be tackled is that companies are not
allowed to own HDB flats. (BT)

Japan's bank lending rate fails to accelerate in Jan. Japan’s bank lending failed to
accelerate, adding to signs that the economy may not be strong enough to withstand an
increase in interest rates. Loans excluding trusts rose 1.8 per cent in January from a year
earlier, matching the increase in December, the Bank of Japan said yesterday. (BT)

Train, bus operating hours to be extended. Operating hours for trains and some buses
will be extended during the Lunar New Year celebrations. They include SBS Transit's North
East Line, SMRT's North-South and East-West Lines, SBS Transit's Sengkang LRT and
SBS Transit's direct services to Chinatown. On the night of Feb 16, for example, the last
northbound train towards Punggol Station will leave Chinatown Station at 1am. The last
southbound train towards Harbour Front Station will also leave Chinatown Station at 1am.
Similarly, the last east and westbound trains will depart Outram Park Station at 1.12am on
Feb 17 morning, while the last north and southbound trains depart Dhoby Ghaut Station at
1.12am and 1.03am respectively. (BT)

Corporate news
COSCO Corporation has secured a contract from Chinese-Polish Joint Stock Company
(Chipolbrok) to build four 30,000dwt MPP heavy lift vessels (HLV) The contract is valued at
US$185.2m (S$287m). Under the contract, Chipolbrok has secured the option for two
additional heavy lift vessels. Chipolbrok must exercise the option on or before 31 March
2008. The vessels will be built at the group’s Dalian shipyard from mid 2007 onwards. The
first four vessels will be delivered between March 2009 and April 2010. (Cosco Corp)

Pan-United Marine reported a sterling set of results on the back of a strong newbuilding
orderbook and higher valued ship repair and conversion jobs. FY06 revenue rose 44% to
S$350.6m while net profit soared 3.4x to S$56.2m. It delivered six new vessels in the full
year of 2006 and work-in-progress was recognised on ten other projects as compared to
five new deliveries and seven work-in-progress projects in FY05.
Outlook: Pan-United Marine is of the view that the industry will remain strong over the next
12 months. Including the five new shipbuilding contracts, its first FPSO conversion job
secured in the fourth quarter and another shipbuilding contract in January 2007, the
outstanding order book of the group stands at about S$513.0m, which compares
favourably with that as at end of 2005. (Pan-United Marine)

Tiong Woon Corporation has posted a net profit of S$7.1m in 1H07, an increase of 129%
yoy. Turnover stands at S$44.1m, up 52% yoy. This was mainly due to contributions from
all its three business segments – Heavy Lift and Haulage, Marine Transportation and
Trading – all of which recorded good growth.
Outlook: Going forward, TWC would be looking to grow in a new business area as an oil
and gas service provider. In November last year, TWC bought a 65-hectare fabrication
yard in Bintan, Indonesia, with a view to supporting its current fleet of heavy lift equipment,
tugs and barges, and in due course, growing a new income stream from fabrication and
engineering projects. (Tiong Woon Corporation)

Intraco reports 5.4% rise in net profit. Intraco Ltd reported a 5.4% rise in net profit to $6m
on a 11.4% growth in sales for the year ended Dec 31, 2006. Turnover for the period was
$407.7m while EPS stood at 6.16 cents. (BT)

SGX leads race for 5% stake in Mumbai bourse. The Singapore Stock Exchange (SGX)
has emerged as the frontrunner for a 5% stake in the Bombay Stock Exchange ahead of its
initial public offer in May, says a report in Business Standard newspaper. The stock market
regulator has stipulated that a single investor can pick up a maximum of 5% in an Indian
stock exchange. (BT)

Chemoil Energy has signed a 40:60 JV Agreement with Gulf Petrol Supplies (GPS) to
invest in a JV Company. The JV Company will be involved in the development and
operation of an oil storage terminal in Fujairah, United Arab Emirates (UAE). The issued
and paid up share capital of the JV Company will be AED 50m (USD13.7m). The new oil
storage terminal is expected to be fully operational by January 2009 and will have a total
capacity of 326,000 cbm per month, of which 226,000 cbm will be for bunker fuel with the
remainder 100,000 cbm intended for clean fuel. (Chemoil Energy)

Noble Group has acquired 100% of Usina Petribu Paulista (UPP), a sugar mill company in
South Brazil, Sao Paulo State, with a total crushing capacity of 2 million tons of sugar cane
and capable of producing both sugar and ethanol. The mill has been designed for an easy
upgrade to 4 million tons of sugar cane crushing capacity within a short period of time, or
600,000 tons of sugar or 88 million gallons of ethanol annually. Noble will invest up to
US$200m in this project over the next few years and will expand its crushing capacity to up
10 million metric tons of cane. (Noble Group)

Westcomb Financial Group expects revenue and net profits for FY06 to be substantially
lower in comparison to FY05. It attributes this decline in revenue and profits principally to a
decrease in the number of IPO engagements in FY06 which resulted in lower IPO revenue
compared to FY05. Its performance was adversely affected by the process enhancement
exercise undertaken in late 2005 to strengthen and raise standards during which time, it did
not accept any new project mandates and this resulted in fewer IPO engagements and
other corporate finance activities in 2006. (Westcomb)

Youcan Foods International has launched another innovative range of ice cream products
in Hangzhou city. The introduction of this new range is in tandem with the group’s strategy
to continually develop innovative quality frozen food products and is testament to the its
strong R&D capabilities. (Youcan)

Best World International has taken the initiatives to establish its first Regional Centre in
the PRC. The Regional Centre is expected to be fully operational within the fiscal year of
2007. (Best World)

SingTel CEO Lee Hsien Yang was mum yesterday about his plans after he leaves the
telco on March 31. But he did at least say he will not stay in the industry and compete with
SingTel.
And unlike some other corporate chieftains, he will not stay on as a consultant or adviser
either. SingTel's recent market outperformance, Mr Lee, who has had his share of bad
press during his 12 years at the helm of Singapore's largest company by market
capitalisation, said: 'It's quite nice that our share price has performed strongly . . . our
underlying results are good.' (BT)

SingTel said that it wants to invest in Vietnam's telecommunications sector. "Vietnam is in
our area of interest," SingTel's deputy CEO, Chua Sock Koong, told a news conference.
The government in Hanoi has been considering liberalizing the country's
telecommunications sector for some time but no decisions have been made.
• "The timing (of the liberalization) is entirely up to the Vietnamese government," said
Chua, who is due to take over from Lee Hsien Yang as chief executive in April.
• She also reiterated that SingTel would like to increase its 30.5% stake in India's Bharti
Airtel Ltd. if U.K. telecommunications company Vodafone Group PLC sells its 10%
holding in the Indian phone operator.
• "Our objective is to increase our stakes in associates... and Bharti is one of them. But
it's not clear if Vodafone will sell its stake," (BT)
Vietnam is the last large and underpenetrated market in this region that has not been
liberalised. Competition among foreign telcos hoping a piece of the action will be intense,
and therefore, valuations are likely to be rich. Vodafone's 10% stake in Bharti is worth
US$3.3bn or S$5.05bn vs SingTel's cash hoard of only S$1.54bn. More importantly, it is
not cheap, estimated at 25x and 20x CY07 and CY08 P/E, essentially pricing in growth for
the next 3-4 years.

Tiger Airways is setting up its first overseas base in Brisbane, Australia, and may move at
least five of its current fleet of nine A320 planes to its new base there.
• Tiger's expansion into Australia seems to be in line with its stated aim of growing via
setting up cross border subsidiaries and associates outside of Singapore. The budget
airline last year tied up with the Philippines's SEAir.
• The Brisbane operation may not involve any partners and could be funded entirely by
the airline's existing shareholders.
• Tiger recently confirmed a purchase of eight Airbus 320 aircraft worth more than
US$500m at list prices which will boost its fleet to 20 aircraft by 2010. (BT)

The Media Development Authority (MDA) said high definition TV (HDTV) may take at
least 5 years to take off. This is the amount of time that may be needed to confince half the
homes to junk their old TV sets for new ones that tune in to sharper HDTV images, based
on the take-up overseas. The United States, for example, has between 40 and 50% of
homes on HDTV, after more than five years since the launch of HDTV services. MDA said
said a lack of content has also been preventing HDTV from taking off faster. It costs 10-
20% more to produce content in HDTV format. (ST)
We believe HDTV content will be confined mainly to sports and documentary programming
for now.

The Marina Bay integrated resort (IR) will open on schedule and issues concerning sand
will not be an impediment. Las Vegas Sands (LVS) COO Bill Weidner said: “I believe there
is a strategic stockpile that we can be utilising to make sure we stay on course”.
• LVS chairman Sheldon Adelson is equally upbeat. “We have built into our budget a
contingency of between 5-10%, so the contingency for unforeseen costs is already built
into the budget”.
• Mr Weidner said the Marina Bay IR is on track to open in 3Q2009 before Genting
International's Sentosa IR. “We certainly intend to open the best, and open the best
first. It is important to be first mover and our intention is to be first mover, and to really
maximise the advantage of first-mover status”, Mr Weidner said. (SBT)

Las Vegas Sands (LVS) plans to boost its headcount here by about 500 in the next few
months and chairman Sheldon Adelson is not shy about hiring people in their 40s and 50s.
• COO William Weidner said the company now has 155 people 'on the ground' in various
roles. “We will be moving to 650 people over the next few months as we fully staff up”.
• George Tanasijevich, who heads the LVS IR development, said most of the 10,000-
plus staff for the resort will be hired 18 months or so from the planned opening in 2009.
• As for MICE, LVS is negotiating with 15 international organisations on hosting their
events at its IR and has already received enquiries stretching to 2013. Mr Adelson
hinted that Sands could consider expanding its MICE capacity. (SBT)

Trading Ideas
Spotlight on United Test and Assembly Center
At a glance
Last Price 0.845
YTD (%) +15.8
Issued shares (m) 1,496.51
Market cap (S$ m) 1,264.55
52-wk range (S$) 0.645 - 1.10
3M avg volume (m) 13.52
2007 P/E (x)* 9.1
P/BV (x) 1.4
*CIMB-GK Estimates

Cementing its position

Description: United Test and Assembly Center (UTAC) provides test and assembly
services for a wide range of semiconductor devices that includes memory, mixed-signal
and logic integrated circuits.
Immediate outlook: Based on its indicators and price movements now, we are beginning
to see strong underlying support for the stock above the S$0.80. Maintaining Technical
Buy at S$0.81-0.84 and place a stop at below its 200-day SMA at S$0.77. The breakout
target is at S$0.92.
Medium-term outlook (2-6 months): From our new perspective, the medium term outlook
for the stock is now neutral with a strong bullish bias. Its long term uptrend channel is very
much intact. The MACD has just crossed into the positive territory while the RSI just broke
out above its resistance. There is a good chance the stock will continue to scale higher
and test the middle band resistance at the S$0.92 level, followed by the upper band at
S$1.05. Long term investors should start buying now.

Spotlight on Super Coffeemix Manufacturing
At a glance
Last Price (S$) 0.965
YTD (%) +52.0
Issued shares (m) 542.54
Market cap (S$ m) 523.55
52-wk range (S$) 0.44 - 0.99
3M avg volume (m) 0.13
2007 P/E (x)* N/A
P/BV (x) 2.8
*Bloomberg Consensus

Sideways for now
Description: Super Coffeemix Manufacturing (Super) manufactures, packages, and
distributes instant cereal flakes, instant beverages, instant coffee powder, and other
convenience food products. The company also provides vending machine services.
Immediate outlook: Since our last Technical Buy call (see Trading Ideas 19 Dec), the
stock has risen more than 46%. The stock is currently consolidating in a sideways band
after the strong rally. Technical indicators are taking a turn for the better but nothing is
concrete yet. Hence, we think the stock expect the stock to continue to consolidate. Wait
for lower level to get in. Technical Buy at S$0.90-0.945. Investors should place a stop
loss at S$0.865. The ST target for the stock is at S$1.06.
Medium-term outlook (2-6 months): The stock is now consolidating after a strong rally
since November last year. Both the weekly MACD and RSI are still positive which supports
the bullish view. A buy on weakness is a good strategy right now. The stock has a LT
target of S$1.25.

Source: CIMB-GK Securities Research