UOB Kayhian Report - 14 Jan 2008

US stocks headed south last Friday as lower-than- estimated profit forecasts at American Express Co. as well as Tiffany & Co. heightened concern that the US economy is shrinking, which resulted in Standard & Poor's 500 Index having its worst start since 1982. The S&P 500 fell 19.31 points or 1.4% to 1,401.02.

The benchmark indexes also plunged on Treasury Secretary Henry Paulson's warning that growth slowed ``rather materially'' at the end of last year. The DJIA tumbled 246.79 points or 1.9% to 12,606.30 while the Nasdaq was down 48.58 points or 2% to 2,439.94.

Some corporate news from the media:

a) Ezra Holdings posted a net profit of S$188.4m for 1Q ended 30 Nov 07, attributed to a massive one-time exceptional gain of S$197.9m from the partial divestment of a stake in Oslo-listed subsidiary EOC, which cut its stake from 88% to 48.9%. Excluding one-time items, recurrent income surged 270% to S$16.6m as revenue more than doubled from S$32m to S$67.2m from contributions by new vessels, including anchor handling, towing and supply (AHTS) ships coming onstream as well as higher charter rates due to continued expansion of the red-hot oil and gas industry.

b) Old Chang Kee is now launching a second wave of overseas expansion despite failed attempts to enter Japan, Myanmar, China, New Zealand and South Africa in the early 1990s. Having started three outlets in Chengdu, it plans to open a shop where customers can sit down and have a quick bite with food presented in cups rather than on skewers to differentiate it from the cheap, barbecued meat on skewers commonly sold in China, according to CEO William Lim. He added, curry meals might be introduced, “because Chengdu people perceive curries as good, expensive food”.

c) Singapore Press Holdings (SPH) announced that a wholly owned subsidiary of SPH Magazines, Lianhe Publishing, has sold its entire 49% stake in CittaBella Malaysia Sdn Bhd to Nanyang Press Sdn Bhd for RM650,000 (S$278,000), based on a willing buyer, willing seller basis. Citta Bella Malaysia will continue to be published by CittaBella Malaysia under a licence agreement with SPH Magazines. The transaction has no material impact on the earnings and net tangible assets per share of SPH for the financial year ending 31 Aug 08.

d) STATS ChipPAC plans to return up to US$813m to shareholders through a proposed capital reduction, which works out to 39 US cents a share based on present share capital but 37 US cents a share on a diluted basis, taking into consideration potential new shares to be issued under such schemes as share options and the possible conversion of convertible subordinated notes held by majority shareholder Temasek Holdings. Temasek stands to receive US$684m. Temasek and Singapore Technologies Semiconductors Pte Ltd (STSPL) have been in discussions on the proposed exercise and STATS ChipPAC expects Temasek, through STSPL, to vote in favour of the capital reduction.

e) Yanlord Land Group has launched another batch of apartments at its Shanghai Yanlord Riverside City Phase Two project. The latest batch of the pre-sold apartments commanded an average selling price (ASP) of about Rmb34,500 per square metre (S$6,805) vs around Rmb24,300 for similar apartments sold in Jul 07, driven by continued demand for high-end residential properties in the PRC. According to the company, this represents an increase of approximately 42% in terms of ASP.