CC8 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY HOME LOAN RATES

Disclaimer: The rates shown here are only indicative and are subject to changes by the respective banks responsible for any loss or damage arising directly or indirectly from the use of, or reliance on,
without prior notice. They are not to be taken as an offer of contract. The Edge Publishing Pte Ltd shall not be the information provided herein.

SOURCES: VARIOUS BANKS, EXPRESS HOME LOAN CONSULTANCY, THE EDGE SINGAPORE

HDB housing loan rates

BOARD 80% FINANCING 90% FINANCING

BANK NAME OF LOAN SCHEME RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%) BOARD RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%)
ABN Amro Fixed Rate Package (min $300k) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (HBR) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (HBR)
Flexible Rate Package 5.50 4.25 (HBR-1.25) 4.50 (HBR-1.00) 4.50 (HBR-1.00) 5.50 (HBR) 5.50 4.25 (HBR-1.25) 4.50 (HBR-1.00) 4.50 (HBR-1.00) 5.50 (HBR)

Hong Leong 2-Year Fixed Rate Package 4.25 3.48 (fixed) 3.48 (fixed) 3.98 (HBR-0.27) 3.98 (HBR-0.27) 4.25 4.48 (fixed) 4.70 (fixed) 4.75 (HBR+0.50) 4.75 (HBR+0.50)
Finance Variable Rate Package 4.25 3.18 (HBR-1.07) 3.38 (HBR-0.87) 3.88 (HBR-0.37) 3.98 (HBR-0.27) 4.25 3.98 (HBR-0.27) 4.20 (HBR-0.05) 4.75 (HBR+0.50) 4.75 (HBR+0.50)

HSBC 2-Year Fixed Rate Package (min $500k) NA 4.00 (fixed) 4.00 (fixed) 4.00 4.00 NA NA NA NA NA
50% of Loan on Fixed rate (2-yr lock-in)*** NA 2.8% (fixed) 2.8% (fixed) 3.40% (fixed) 3.80% (fixed) NA NA NA NA NA
Variable Rate Home Loan (min $100k, no lock-in) NA 3.50 3.50 3.70 3.80 NA NA NA NA NA
Variable Rate Home Loan (min $100k,
1-year lock-in) NA 3.30 3.50 3.70 3.80 NA NA NA NA NA
50% of Loan on Sibor Pegged Package (no lock-in) *** NA 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% NA NA NA NA NA

Maybank 1-Year Fixed Rate Package 3.75 2.68 (fixed) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
2-Year Fixed Rate Package 3.75 2.28 (fixed) 2.68(fixed) 2.98 (BR-0.77) 3.75 (HBR) NA NA NA NA NA
3-Year Fixed Rate Package** 3.75 1.68 (fixed) 2.68 (fixed) 3.38 (fixed) 3.75 (HBR) NA NA NA NA NA
3-Year Fixed 2.80% Cashback 3.75 2.48 (fixed) 3.68 (fixed) 4.38 (fixed) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (1-yr lock-in) 3.75 2.78 (BR-0.97) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (2-yr lock-in) 3.75 2.48 (BR-1.27) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (3-yr lock-in) 3.75 2.28 (BR-1.47) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (no lock-in) 3.75 2.98 (BR-0.77) 3.28 (BR-0.47) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable 2.80% Cashback 3.75 3.08 (BR-0.67) 3.88 (BR+0.13) 4.38 (BR+0.63) 3.75 (HBR) NA NA NA NA NA
OCBC 1-Year Fixed Rate Package 3.75 3.75 (fixed) 3.50 (HBR-0.25) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA
2-Year Fixed Rate Package 3.75 3.75 (fixed) 4.00 (fixed) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package 3.75 3.25 (HBR-0.50) 3.50 (HBR-0.25) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA

POSB Home Ideal package (pegged to CPF rate)** NA CPF Rate + 1.00 CPF Rate + 1.25 CPF Rate + 1.58 CPF Rate + 1.58 NA NA NA NA NA
3-Year Fixed Rate Package NA 3.88 (fixed) 3.88 (fixed) 3.88 (fixed) CPF Rate + 1.58 NA NA NA NA NA

Sing Investments Variable Rate Package 4.25 4.00 (HBR-0.25) 4.25 (HBR) 4.75 (HBR+0.50) 4.75 (HBR+0.50) NA NA NA NA NA
& Finance

Standard Floating Rate Package (min $100k) NA 3.25 3.50 3.75 3.75 NA NA NA NA NA
Chartered

UOB 1-Year Fixed Rate Package 4.50 4.25 (fixed) 4.25 (HBR-0.25) 4.25 (HBR-0.25) 4.25 (HBR-0.25) NA NA NA NA NA
2-Year Fixed Rate Package 4.50 4.10 (fixed) 4.10 (fixed) 4.10 (HBR-0.40) 4.10 (HBR-0.40) NA NA NA NA NA
3-Year Fixed Rate Package 4.50 3.98 (fixed) 3.98 (fixed) 3.98 (fixed) 3.98 (HBR-0.52) NA NA NA NA NA
Floating Rate Package 4.50 3.25 (HBR-1.25) 3.50 (HBR-1.00) 3.75 (HBR-0.75) 3.75 (HBR-0.75) NA NA NA NA NA

RHB 2-Year Fixed Rate Package 4.25 3.50 (fixed) 3.75 (fixed) 3.88 (HBR-0.37) 4.00 (HBR-0.25) NA NA NA NA NA
Variable Rate Package 4.25 3.25 (HBR-1.00) 3.50 (HBR-0.75) 3.75 (HBR-0.50) 4.25 (HBR) NA NA NA NA NA

HBR = HDB Housing Board Rate NA = Not available **CPF rate has remained at 2.5% per annum since July 1999

Private housing loan rates

BOARD 80% FINANCING 90% FINANCING
BANK NAME OF LOAN SCHEME RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%) BOARD RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%)

ABN Amro Fixed Rate Package (min $300k) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (BR) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (BR)
Flexible Rate Package 5.50 4.25 (BR-1.25) 4.50 (BR-1.00) 4.50 (BR-1.00) 5.50 (BR) 5.50 4.25 (BR-1.25) 4.50 (BR-1.00) 4.50 (BR-1.00) 5.50 (BR)

DBS Interbank Market Rate Package*

Nil Loyalty Period NA Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
1-Year Loyalty Period NA Sibor + 1.10 Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
2-Year Loyalty Period NA Sibor + 0.95 Sibor + 0.95 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
3-Year Loyalty Period NA Sibor + 0.80 Sibor + 0.80 Sibor + 0.80 Sibor + 1.25 NA NA NA NA NA

Hong Leong 2-Year Fixed Rate Package 7.25 3.88 (fixed) 4.18 (fixed) 4.00 (BR-3.25) 4.00 (BR-3.25) 7.25 4.58 (fixed) 4.78 (fixed) 4.75 (BR-2.50) 4.75 (BR-2.50)
Finance Variable Rate Package 7.25 3.38 (BR-3.87) 3.88 (BR-3.37) 4.00 (BR-3.25) 4.00 (BR-3.25) 7.25 4.18 (BR-3.07) 4.38 (BR-2.87) 4.75 (BR-2.50) 4.75 (BR-2.50)

HSBC 2-Year Fixed Rate Package (min $500k) NA 4.00 (fixed) 4.00 (fixed) 4.00 4.00 NA NA NA NA NA
50% of Loan on Fixed rate (2-yr lock-in)*** NA 2.8% (fixed) 2.8% (fixed) 3.40% (fixed) 3.80% (fixed) NA NA NA NA NA
Variable Rate Home Loan (min $200k, no lock-in) NA 3.50 3.50 3.70 3.80 NA NA NA NA NA
Variable Rate Home Loan (min $200k,
1-year lock-in) NA 3.30 3.50 3.70 3.80 NA NA NA NA NA
50% of Loan on Sibor Pegged Package (no lock-in)*** NA 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% NA NA NA NA NA

Maybank 1-Year Fixed Rate Package 3.75 2.68 (fixed) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.18 (fixed) 3.58 (BR-0.17) 3.88 (BR+0.13) 4.25 (BR+0.50)
2-Year Fixed Rate Package 3.75 2.28 (fixed) 2.68(fixed) 2.98 (BR-0.77) 3.75 (BR) 3.75 2.78 (fixed) 3.18 (fixed) 3.48 (BR-0.27) 4.25 (BR+0.50)
3-Year Fixed Rate Package** 3.75 1.68 (fixed) 2.68 (fixed) 3.38 (fixed) 3.75 (BR) 3.75 2.18 (fixed) 3.18 (fixed) 3.88 (fixed) 4.25 (BR+0.50)
3-Year Fixed 2.80% Cashback 3.75 2.48 (fixed) 3.68 (fixed) 4.38 (fixed) 3.75 (BR) 3.75 2.98 (fixed) 4.18 (fixed) 4.88 (fixed) 4.25 (BR+0.50)
Variable Rate Package (1-yr lock-in) 3.75 2.78 (BR-0.97) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.28 (BR-0.47) 3.58 (BR-0.17) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (2-yr lock-in) 3.75 2.48 (BR-1.27) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (BR) 3.75 2.98 (BR-0.77) 3.38 (BR-0.37) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (3-yr lock-in) 3.75 2.28 (BR-1.47) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (BR) 3.75 2.78 (BR-0.97) 3.38 (BR-0.37) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (no lock-in) 3.75 2.98 (BR-0.77) 3.28 (BR-0.47) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.48 (BR-0.27) 3.78 (BR+0.03) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable 2.80% Cashback 3.75 3.08 (BR-0.67) 3.88 (BR+0.13) 4.38 (BR+0.63) 3.75 (BR) 3.75 3.58 (BR-0.17) 4.38 (BR+0.63) 4.88 (BR+1.13) 4.25 (BR+0.50)

OCBC Fixed Rate Package 4.50 3.75 (fixed) 4.00 (fixed) 3.75 (BR-0.75) 3.75 (BR-0.75) NA NA NA NA NA
Variable Rate Package 4.50 3.25 (BR-1.25) 3.50 (BR-1.00) 3.75 (BR-0.75) 3.75 (BR-0.75) NA NA NA NA NA

Standard Floating Rate Package (min $200k) 5.00 3.25 (BR-1.75) 3.50 (BR-1.50) 3.75 (BR-1.25) 4.00 (BR-1.00) 3.85 4.10 (BR+0.25) 4.35 (BR+0.50) 4.60 (BR+0.75) 4.60 (BR+0.75)
Chartered MortgageOne Package (min $500k) 5.00 3.50 (BR-1.50) 3.75 (BR-1.25) 4.00 (BR-1.00) 4.25 (BR-0.75) 4.10 4.35 (BR+0.25) 4.60 (BR+0.50) 4.85 (BR+0.75) 4.85 (BR+0.75)

UOB 1-Year Fixed Rate Package 4.50 4.25 (fixed) 4.25 (BR-0.25) 4.25 (BR-0.25) 4.25 (BR-0.25) NA NA NA NA NA
2-Year Fixed Rate Package 4.50 4.10 (fixed) 4.10 (fixed) 4.10 (BR-0.40) 4.10 (BR-0.40) 4.50 4.50 (fixed) 4.50 (fixed) 4.50 (BR+0.25) 4.50 (BR+0.25)
3-Year Fixed Rate Package 4.50 3.98 (fixed) 3.98 (fixed) 3.98 (fixed) 3.98 (BR-0.52) NA NA NA NA NA
Floating Rate Package (UOB Home Plus) 4.50 3.50 (BR-1.00) 3.75 (BR-0.75) 4.00 (BR-0.50) 4.00 (BR-0.50) 4.50 4.25 (BR-0.25) 4.50 (BR) 5.00 (BR+0.50) 5.00 (BR+0.50)

Sing Investments Variable Rate Package 5.00 4.00 (BR-1.00) 4.25 (BR-0.75) 4.75 (BR-0.25) 4.75 (BR-0.25) 5.00 4.00 (BR-1.00) 4.25 (BR-0.75) 4.75 (BR-0.25) 4.75 (BR-0.25)
& Finance

RHB 2-Year Fixed Rate Package 5.75 3.50 (fixed) 3.75 (fixed) 3.90 (BR-1.85) 3.90 (BR-1.85) 5.75 4.25 (fixed) 4.25 (fixed) 4.50 (BR-1.25) 4.50 (BR-1.25)
Variable Rate Package 5.75 3.25 (BR-2.50) 3.50 (BR-2.25) 3.75 (BR-2.00) 3.75 (BR-2.00) 5.75 4.00 (BR-1.75) 4.25 (BR-1.50) 4.50 (BR-1.25) 4.50 (BR-1.25)

*The Interbank Market Rate refers to the 12-month Sibor. Sibor rate is $1.66250 as at Feb 28, 2008. BR = Board rate 90% financing available on a case-by-case basis based on bank’s discretion Tables updated as at Feb 28, 2008
**3-Year Fixed Rate valid until March 10, 2008 NA = Not available All board rates are variable
*** Package valid until March 22, 2008. For fixed rate loans go to www.hsbc.com.sg
 CC2 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY PROPERTY BRIEFS

Home

EDITOR/REGIONAL
MANAGING DIRECTOR
Tan Boon Kean
(bktan@bizedge.com)
SECTION EDITOR
Cecilia Chow
(cecilia.chow@bizedge.com)
COPY-EDITING DESK
Elaine Lim, Evelyn Tung,
Ng Bee Cheng, James Chong
PHOTO EDITOR
Samuel Isaac Chua
(samuelisaac.chua@bizedge.com)
PHOTOJOURNALIST
Gwyneth Yeo
(gwyneth.yeo@bizedge.com)
EDITORIAL COORDINATOR
Rahayu Mohamad
(rahayu.mohamad
@bizedge.com)
DESIGN DESK
Tan Siew Ching, Christine Ong,
Chan Yoke Lin, Jamy Gan
ADVERTISING +
MARKETING
REGIONAL GENERAL MANAGER |
Edward Stanislaus
(edward@bizedge.com)
SENIOR MANAGER |
Colin Tan
(colin.tan@bizedge.com)
MANAGERS | Simon Wong
(simon.wong@bizedge.com)
Cecilia Kay
(cecilia.kay@bizedge.com)
Jeffrey Wong
(jeffrey.wong@bizedge.com)
Windy Tan
(windy.tan@bizedge.com)
Faith Teo
CDL’s record year
Singapore’s leading property developer,
City Developments Ltd (CDL), posted
stellar 4Q2007 and full-year results. Net
profit in 4Q2007 amounted to $235 mil-
lion, up 71% y-o-y, while full-year profit
rang in at $725 million compared with
$200.7 million in FY2006 (if the $150
million profit from the sale of hotel as-
sets to CDL Hospitality Trusts is exclud-
ed). Total revenue for the year was $3.1
billion. In the local residential market,
CDL sold 1,655 units worth $3.38 billion
compared with last year’s 1,337 units to-
talling $2.77 billion. Slated for launch in
1H of the year are: the 77-unit Shelford
Suites; 100 of the 336-unit new condo
at the former Lok Cho Apartments site;
100 of the 228-unit The Quayside Isle
at Sentosa Cove; and the first phase of
150 units of the 724-unit Pasir Ris con-
dominium development.
Ho Bee has record $272mil
net profit
Property development group Ho Bee In-
vestment has announced record results
for FY2007. The group had a net profit
after tax and minority interest of $272
million for the full year ended Dec 31 —
up 176% from the previous year. This
was achieved on the back of record rev-
enue of $596 million — up 52% from its
previous peak of $393 million. Earnings
per share stand at 36.9 cents compared
with 14 cents previously, an increase of
163%. The company has proposed a
one-tier final dividend of two cents per
share. Y-o-y sales of properties were steep-
ly higher, rising 51% to $576.7 million,
compared with $382.2 million in 2006.
Income came from residential projects
including Coral Island, The Coasts and
Paradise Island at Sentosa Cove; Orange
Grove Residences at Orange Grove Road;
Montview at Mount Sinai; and Quinter-
ra at Holland Road.
Cityscape Asia returns to
Singapore
The world’s largest business-to-busi-
ness real estate event brand, Cityscape,
will hold Cityscape Asia at Suntec on
April 15 to 17. The inaugural event
last year featured more than 100 ex-
hibitors from 35 countries, selling out
more than 86,000 sq ft of space. This
year’s Cityscape Asia will highlight op-
portunities to an audience of regional
and international investors, real estate
developers, architects and designers,
government and senior professionals.
Major sponsors include Limitless — a
Dubai World company — and UK-list-
ed company Aseana Properties, which
is focused on developments in Malay-
sia and Vietnam.
OKP rides high on vibrant
construction sector
A strong economy and vibrant construc-
tion sector has seen infrastructure and
civil engineering firm OKP Holdings an-
nounce a record full-year net profit after
tax and minority interest of $11 million
— up 171% on 2006. The group has
declared a one-tier tax-exempt first and
final dividend of two cents per share.
Turnover for the year ended Dec 31 hit
a high of $124.7 million, up 70% from
the $73.3 million achieved in the pre-
vious financial year. OKP specialises in
the construction of airport runways and
taxiways, expressways, flyovers, vehicu-
lar bridges, and urban and arterial roads.
The bulk of group revenue was generat-
ed from its construction segment, which
saw a y-o-y surge of 95.9% from $53.4
million to contribute $104.7 million —
84% — to total revenue.
CapitaLand partners with
leading Australia developer
CapitaLand has entered into a joint ven-
ture with Australand Industrial and Lo-
gistics International, one of Australia’s
major diversified property groups. The
agreement, through CapitaLand sub-
sidiary CapitaLand Industrial & Logis-
tics Holdings (CIL), aims to establish a
Pan-Asian development platform in the
industrial and logistics sectors in Asia.
CIL will own a 51% stake in projects
and Australand the remaining 49%.
Australand is a leading industrial and
logistics property developer and man-
ager in Australia.
Koh Brothers reports huge
profit jump
Koh Brothers Group has reported full-
year net profit of $39.7 million — 877%
more than the 2006 result. Sales in 2007
were $285.5 million compared with
$259.6 million the previous year — a
10% increase. The real estate division
contributed $26.9 million, or 9% of the
group’s turnover. New sales contribu-
tion came from Bungalow @ Caldecott
and rental income from the Alocassia
Apartments. Turnover from the construc-
tion and building materials division in-
creased from $227.8 million in 2006 to
$251.2 million in 2007. The group’s net
profit attributable to shareholders has
increased 877% from $4.1 million in
2006 to $39.7 million last year, which
includes the net revaluation surplus of
$32.2 million.
URA launches two transitional
office sites at Scotts Road
URA has launched the sale of two tran-
sitional office sites at Scotts Road-An-
thony Road. Located next to the New-
ton MRT station, Land Parcel A has a
site area of 93,455 sq ft and can yield
a maximum gross floor (GFA) area of
140,193 sq ft. The adjacent land parcel
B has a site area of around 97,287 sq ft
and a maximum GFA of 145,920 sq ft.
Both parcels are being sold on short-term
leases of 15 years. The office buildings
on these sites — which could be amal-
gamated — are expected to be low-rise
developments of four storeys. Knight
Frank says the expected price for Parcel
A is $14 million to $18.2 million ($100 to
$130 per sq ft per plot ratio) and $14.6
million to $19 million ($100 to $130 psf
ppr) for Parcel B. Tenders for Parcel A
close at noon on April 24 and at noon
on April 30 for Parcel B.
$18 million revamp of
Tiong Bahru Plaza
Shopping mall management group, Asia-
Malls Management, the joint venture
between ARMF and SGX-listed Guthrie
Group, announced last week that it will
be repositioning Tiong Bahru Plaza
(above), one of the suburban malls in
its portfolio which includes six other
malls — Hougang Mall, White Sands,
Century Square, Liang Court, Central
Plaza and the upcoming Tampines 1.
Two floors of the Central Plaza office
tower (acquired early last year) located
next door to Tiong Bahru Plaza will be
converted to civic use. This allows the
latter to provide additional gross floor
area for retail use. Targeted for com-
pletion by 3Q2008, the estimated cost
of the revamp is $18 million, and will
add another 19,000 sq ft for retail and
F&B outlets, while the existing areas
will be reconfigured. — Compiled by
Mark Henderson E

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Julia Tan
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Offshore
CapitaLand to create $426mil fund for
Vietnam expansion
CapitaLand has strengthened its presence in Viet-
nam with several new business initiatives which
include a strategic partnership and a multi-million
dollar development fund. A statement of strategic
intent has been signed with CapitaLand’s local Vi-
etnamese partner Nam Thang Long Investment
Joint-Stock Company to form a strategic alliance to
seek further real estate business opportunities. The
partners will also develop residential properties and
commercial-residential mixed developments.
CapitaLand will also leverage on its real estate
and fund management expertise to set up its first
property fund to invest in Vietnam. It intends to
take a 30% sponsor stake in the targeted $426 mil-
lion fund. CapitaLand has signed a memorandum
of understanding with Citi Private Bank, one of the
world’s largest wealth managers, to explore real es-
tate investment opportunities in Vietnam. Capita-
Land believes the fund will follow the success of
its CapitaLand China Development Fund, which is
also co-marketed with Citi Private Bank in China.
The group is confident of doubling its residential
pipeline in Vietnam from the present 2,800 homes
to around 6,000 homes over the next three years.
CapitaLand is also looking for opportunities in the
office, retail, and integrated leisure, entertainment
and conventions sectors.
CapitaLand is in a strong financial position to tap
opportunities in Vietnam despite the tough global
financial landscape. In February, the group raised
$1.3 billion through a 10-year convertible bond issue
— the largest 10-year convertible bond transaction
ever done in Singapore. It also recently closed two
new funds — the CapitaRetail India Development
Fund has raised US$600 million to invest in retail
development projects in India, and the CapitaRe-
tail China Development Fund II which has US$600
million ($837.84 million).
Keppel Land unveils Saigon Centre
concept plans
Keppel Land, one of the largest property developers
in Vietnam, has unveiled concept plans for its Sai-
gon Centre. The 2ha mixed-use development fronts
Le Loi Boulevard, the main thoroughfare in Ho Chi
Minh City. Phase One, completed in 1996, is a 25-
storey building comprising a three-storey retail po-
dium, 11 levels of prime office space, 89 serviced
apartments and three levels of basement carpark.
Saigon Centre is the preferred address of the diplo-
matic corps, multinational companies, bank and fi-
nancial institutions. Keppel Land and local partners,
Sowatco and Resco, will embark on plans to develop
an iconic landmark development integrating subse-
quent phases of Saigon Centre. Skidmore, Owings
and Merrill, one of the world’s largest architectural
firms, will design the new concept plans.
More demand for Bangkok luxury apartments
CB Richard Ellis (CBRE) predicts Bangkok’s lux-
ury condominium market will become more ac-
tive this year and new supply will continue to
be limited. Freehold plots in prime central loca-
tions are very limited and the increase in land
prices has resulted in a drop in the new supply
of luxury units in these areas, while demand for
downtown city living is growing. Prices for new
downtown condominiums have risen by an aver-
age of 10% to 12% a year since 2003. CBRE says
investment in new luxury apartments in prime
locations has generated an average of 4% to 5%
yield per annum over the past four years along
with price appreciation. The average percentage
of foreigner buyers has increased to 32% over the
past three years from less than 20% a decade ago.
Tight supply and relative affordability is boosting
prices in downtown Bangkok. A luxury two-bed-
room unit with 970 to 1,300 sq ft sells for around
US$500,000 ($698,200).
Ascott to manage new Jakarta
serviced residence
The Ascott Group will manage Somerset Kunin-
gan, a new serviced residence in Jakarta’s CBD.
The contract was signed with PT Ciputra Adigra-
ha, a subsidiary of PT Ciputra Property Tbk, one
of Indonesia’s most established commercial proper-
ty developers. Somerset Kuningan will be part of a
large integrated development called Ciputra World
Jakarta. The 10ha project comprises a high-end re-
tail mall, office towers, condominiums and a five-
star hotel-luxury residence. The 153-unit serviced
residence is expected to open in 2H2012. — Com-
piled by Mark Henderson E

Phillip Investor Hub also houses
all of its 310 financial advisers,
some of its backroom staff,
and act as a satellite office
for its 150 remisiers
More than just a hub
| BY NOVA THERESIANTO |
H
omegrown financial servic-
es firm, PhillipCapital, has
been most aggressive at
bringing its financial serv-
ices nearer to its investors
— to the heartland districts. Over the
last eight years, it has planted investor
centres in major residential neighbour-
hoods from Ang Mo Kio, Marine Pa-
rade and Toa Payoh, to as far as Bukit
Batok, Yishun and Woodlands. It also
has two investor centres in the CBD,
namely Robinson Road and Raffles
City Tower. In fact, its first investor
centre was at Straits Trading Building
along Battery Road. Set up in 2000, it
has since been relocated to the cur-
rent Robinson Towers premise.
To date, it has nine investor cen-
tres. Two weeks ago, PhillipCapital
opened its first investor hub at the
former Moulmein Community Centre
at Shan Road, off Balestier Road. Un-
like the typical investor centres in the
heartlands, which tend to be housed
in shophouses of around 2,000 sq
ft, the flagship Phillip Investor Hub
is 10 times larger with a gross floor
area of 22,593 sq ft.
PhillipCapital spent about $1.8
million refurbishing the former com-
munity centre, which had been va-
cant for more than two years. Unlike
the other investor centres, the Phillip
Investor Hub is designed like a club-
house with a cafeteria and a rooftop
garden for client functions.
‘Comprehensive range
of services’
“We thought it was a good idea to do
something more significant, like a hub,
which we can plant in different major
parts of Singapore,” says Lim Hua Min,
executive chairman of PhillipCapital.
“And so hopefully, this first hub will
not be the last one, so that we will be
in a position to provide a more com-
prehensive range of services.”
Including the new investor hub
at the former Moulmein Communi-
ty Centre, PhillipCapital now has 10
THEEDGE SINGAPORE | MARCH 3, 2008 • CC3
CITY&COUNTRY
PICTURES: GWYNETH YEO/THE EDGE SINGAPORE
quarters occupies six floors in Raf-
fles City Tower, totalling 60,000 to
70,000 sq ft. “We are actually ex-
panding in Raffles City, not shrink-
ing,” emphasises Lim. “We still need
more space. [The new investor hub]
indirectly helps relieve some of the
space pressure that we have in Raf-
fles City.”
Rental costs
On top of that, it also helps reduce
overall rental costs. As of February,
asking rents at Raffles City Tower
is in the range of $16.20-$17.50 psf
Lim: We are actually expanding in Raffles per month, according to office leas-
City, not shrinking. We still need more ing specialists, Corporate Locations’
space.
such investor centres. “Our aim is to
have 20 [investor hubs and centres]
in time to come, [and] we are look-
latest rental guide. Meanwhile, Phil-
lipCapital had successfully bid to
lease the former Moulmein Commu-
nity Centre site for its investor hub
from the Singapore Land Author-
ing at three this year,” says Lisa Lee, ity for $35,000 per month in June
director of business development and last year. This works out to a rental
consumer services at PhillipCapital. rate of a mere $1.55 psf per month.
The rate of expansion will depend on The lease period is for three years,
the availability of sizeable properties with an option to renew for threep-
in strategic locations, for instance, in lus three years.
the regional centres of Jurong East in Unlike the other investor centres
the west and Tampines in the east. which follow regular office hours (in
The investor hub also helps cen- the heartlands they are opened from
tralise several functions. It houses 9am to 1pm on Saturdays), the new in-
all the 310 financial advisers who vestor hub will be opened seven days
were previously located in various a week from 11am to 5pm. “The CBD
investor centres. It also acts as a sat- gets really sleepy during the weekend,
ellite office for its 150 remisiers or therefore we are actually going into ar-
so-called “home sales force”. It will eas where these investors live,” says
also house some of PhillipCapital’s Lee. The company has also set up in-
backroom functions. vestor centres in Thailand, Indonesia
Currently, PhillipCapital’s head- and Hong Kong. E
CC4 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY
COVERSTORY

The
pric

1
1
1
1
1

The brand new super-lux-

MILLIONAIRES’
ury good class bungalow
at 39 Leedon Road and
the neighbouring 37
Leedon Road are on the
market with price tags of
$35 million each $1,
the

row in Singapore
er G
inc

in 2
psf
cen
While GCB transactions are expected to moderate this year after a record wit
to $
2007, sellers are still bullish with their asking prices aG
bou
Na
| BY CECILIA CHOW | two months of the year: only a hand- owner would not need to do any exten- for
ful of GCBs changed hands compared sive renovation works. The property is sim

T
he US subprime woes may have
dampened sentiment and slowed
the rate of sales, but it has yet
to put a dent on owners’ asking
prices, especially at the top-tier
of the luxury home market, the good
class bungalows (GCBs).
Last year was a record year for the
GCB market, with 117 transactions worth
$1.54 billion taking place, according
to Jones Lang LaSalle Research. How-
ever, the bulk of the sales of $1.4 bil-
lion (90%) were done in the first nine
months of the year. In 4Q when the US
subprime crisis started to have a knock-
on effect on global stock markets, mar-
ket sentiment in Singapore dipped, and
only nine GCBs changed hands over the
last three months of 2007.
“2008 is generally expected to see
a slower start to the year as fears of a
US recession continue to affect mar-
ket sentiment,” says David Batchelor,
associate director of investments at
Jones Lang LaSalle, and a specialist in
the GCB market.
While demand for GCBs remains
strong, actual transactions for 2008 is
expected to moderate. This is already
evident in terms of sales for the first
with the same period last year, which
saw around 20 transactions. The most
recent deal according to URA Realis da-
tabase of caveats lodged, was on Feb 4
when 32 White House Park with a land
area of 15,081 sq ft, changed hands for
$18 million or $1,194 psf.
However, unlike the luxury condo
market that has gone very quiet since
the last quarter of 2007, with develop-
ers holding back their launches until
sentiment improves, there is still activ-
ity in the landed homes segment, ob-
serves Shaun Poh, senior director of in-
vestment advisory services and auction
at DTZ Debenham Tie Leung.
More GCBs priced above $1,000 psf
Most recently, DTZ put up for sale by
private treaty a GCB at 5A Bishopsgate
(located off Grange Road and Nathan
Road) with an indicative price of $24
million. This translates to $1,423 psf
based on a land area of 16,861 sq ft.
The double-storey bungalow with a to-
tal built-up area of 9,800 sq ft has sev-
en bedrooms and a swimming pool.
Built 11 years ago, the house is still in
mint condition and was recently given
a fresh coat of paint. Hence, the new
currently tenanted at a monthly rental $19
rate of $40,000 a month, with the lease
expiring end-October 2009. Sep
Just next door, 7A Bishopsgate changed we
hands for $21 million or $1,202 psf in ma
December last year. “These days, the me
asking price for GCBs is above $1,000 ow
psf,” says Poh. and
There are also several properties that Roa
were put on the market last year at pric- his
es above $1,000 psf, and which are still
available for sale. One of them is 35 Lee- ter
don Road, which sits on a 43,927 sq ft Lan
freehold. The owners are not budging mo
from their asking price of $44 million or and
$1,001 psf. Another is 3 Wollerton Park
which has a land area of 26,326 sq ft Su
site and an indicative sale price of $32 bu
million to $33 million or $1,215 to 1,254 As
psf. The existing mansion has a built-up ma
area of 15,000 sq ft with six bedrooms the
and a basement. There’s also a separate the
wing for entertaining guests. 37
In the exclusive Chatsworth Park ope
enclave, the conservation bungalow at at t
No 5 Chatsworth Park was put up for lau
sale by private treaty in November. The gal
conservation house and an outhouse tran
sit on a sprawling 43,496 sq ft site and Lim: As you move up to the tip of the pyramid, there are fewer and fewer
the price tag is $45 million or close to people who can afford a home at this level bui
 THEEDGE SINGAPORE | MARCH 3, 2008 • CC5

CITY&COUNTRY
COVERSTORY
COVER STORY

PICTURES: SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

JONES LANG LASALLE RESEARCH, URA REALIS

Top 10 GCB transactions in 2007
NO DATE ADDRESS LAND AREA (SQ FT) SALE PRICE ($) PSF ($)
31 March 30 63 Dalvey Road 15,080 16,450,000 1,091
75 June 8 20B Nassim Road 24,186 24,183,480 1,000
94 July 25 10 Peirce Hill 16,926 17,200,000 1,016
96 Aug 2 15 White House Park 22,011 28,800,000 1,308
98 Aug 7 5A Bishopsgate 16,867 18,800,000 1,115
104 Sept 11 32G Nassim Road 13,292 19,998,000 1,505
106 Sept 18 32H Nassim Road 13,422 25,500,000 1,900
108 Sept 26 30 White House Park 14,811 15,500,000 1,047
112 Nov 9 7 Gallop Walk 15,202 15,350,000 1,010
117 Dec 21 7A Bishopsgate 17,472 21,000,000 1,202

Good class bungalows transactions in 2008 (to date)

NO DATE ADDRESS LAND AREA (SQ FT) SALE PRICE PSF ($)
1 Feb 4 32 White House Park 15,081 18,000,000 1,194
2 Feb 4 14 Mount Echo Park 18,568 13,250,000 714
3 Feb 4 20 Caldecott Close 17,400 10,080,000 579
4 Jan 16 5 Swettenham Green 15,817 12,682,760 802
5 Jan 22 85 Chestnut Drive 15,999 8,580,000 536

The good class bungalow at 5A Bishopsgate (located off Grange Road and Nathan Road) has an indicative
Total land area 82,865 sq ft
price of $24 million or $1,423 psf
Total transaction $62,592,760
Average psf $755 psf
JONES LANG LASALLE RESEARCH

JONES LANG LASALLE RESEARCH

GCB transactions High-end condos vs GCBs

Total transacted value ($mil) ($)
1,800 140 2,750 The property was put up for sale on Jan 15
1,600 Total transacted value 2,500 High end condo avg cap value
120
2,250 GCB avg $ per sq ft
with an indicative price tag of $41 million or
1,400 Total No sold
100 2,000 $893 psf. Colliers International, the marketing
1,200 1,750 agent for the property is said to be “in nego-
1,000 80 1,500
1,250
tiations with interested parties”. According to
800 60
1,000 Ho Eng Joo, executive director of investment
600
lux- 40 750 sales at Colliers International, who’s handling
400 500
low
200
20 the sale, interest has come mainly from buy-
250
and 0 0 0
ers who’re looking at buying the super-sized
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

g 37 GCB site for their own occupation.

the
s of
ach $1,035 psf. Given the size of the land, it has
the potential to be sub-divided into two small-
er GCB sites of over 21,000 sq ft each, which
includes the conservation bungalow.
According to Jones Lang LaSalle Research,
in 2007, 10 GCBs were sold at prices of $1,000
psf and above. Three of the deals were con-
centrated in the exclusive Nassim Road area,
with the highest price achieved there at close
to $1,900 psf, which is also a record price for
a GCB property. This was for one of two neigh-
bouring plots at Nassim Road, namely 32H
Nassim Road (a 13,422 sq ft site that was sold
for $25.5 million or $1,899 psf); and 32G Nas-
sim Road (a 13,292 sq ft site that was sold for
$19.998 million or $1,505 psf).
Both these properties were transacted in
September, and according to market sources,
were bought by Chew Hua Seng, the chair-
man and CEO of Raffles Education Corp (for-
merly Raffles LaSalle Ltd). Chew currently
owns 32K Nassim Road, just two doors away,
and sources say the two neighbouring Nassim
Road homes were likely to be purchased for
his family’s use.
“The rich are getting richer and have bet-
ter holding power than before,” observes Jones
Lang LaSalle’s Batchelor. “The GCB market is
more resilient than the luxury condo market,
and is a better hedge against inflation.”
Super-luxury, high-specification
bungalows at $35 million
As more GCBs start to cross the $1,000 psf
mark, more GCB owners will be willing to put
their homes on the market. The latest launch is
the brand new pair of “super-luxury” GCBs at
37 and 39 Leedon Road by niche luxury devel-
oper, George Lim of GLim Pte Ltd. Completed
at the end of December, the two homes were
launched in a glitzy event on Feb 21. Each bun-
galow carries a price tag of $35 million, which
translates to over $1,500 psf.
r No 37 has a land area of 22,000 sq ft and
built-up area of 10,000 sq ft. Meanwhile, No
As GCB prices continue to head north, buy-
ers have started to widen their search beyond
39 has a land area of 21,000 sq ft and built- the traditional prime residential districts in
up area of 11,000 sq ft. Both homes have five- the city centre. They are looking further out
bedrooms, an aquarium with exotic fish, a koi to locations like Chestnut Drive and Windsor
pond, swimming pool, a roof deck for outdoor Park where prices are still below the $1,000
entertaining, a separate guest house, a wine psf mark. This can be seen in the transactions
cellar to house 2,000 bottles of wine, a shoe this year. While 32 White House Park was sold
cupboard for up to 500 pairs of shoes, a gour- for $1,192 psf, the GCB at 83 Chestnut Drive
met kitchen with imported Viking profession- with a 15,999 sq ft site went for $8.58 million
al kitchen appliances, an internal lift, and a or $536 psf. At 20 Caldecott Close, the GCB on
basement car park for seven cars. a 17,400 sq ft site changed hands for $10.08
The two homes will appeal to the tech-sav- million or $579 psf.
vy. There is a home automation system that While the total value of sales in 2007 at
can be programmed to turn on lights and air- $1.54 billion exceeded 2006’s $1.3 billion, in
conditioning anywhere around the house ei- terms of the number of transactions, 2007’s
ther with the wall panels or remotely from your 117 were fewer than 2006’s 128. This reflects
mobile phone or PC; an entertainment system the sharp run-up in property prices last year.
with AMX movie on demand (up to 250 mov- The average price per square foot for GCBs
ies) and piped in music for every room and was $692 psf in 2007, compared with $503 psf
outdoor areas. There are also six plasma tel- Batchelor: The rich are getting richer and have bet- in 2006, which showed average capital values
evisions installed in the house — a ceiling- ter holding power than before. The GCB market is appreciating 37.6%. The average price for the
mounted 50” TV in the master bedroom and more resilient than the luxury condo market, and is five transactions in 2008 to date was $755 psf,
five others in the living and family rooms. The a better hedge against inflation. which is 9% higher than the average prices
kitchen also has a 28” high-definition TV. All recorded last year. Hence, while Batchelor ex-
the TVs are linked to surveillance cameras in Hence, most GCB buyers have shifted their fo- pects sales volume to moderate this year, he is
various parts of the house for security. cus from building their own dream GCBs to confident that in terms of value, it could po-
Lim has also installed a dehumidifier for looking for completed GCBs where little or no tentially remain on par with last year.
all the walk-in wardrobes as well as the shoe improvements are required, observes Batchelor. What’s worth noting is that while GCBs
cupboard. “Whenever I build a house, I always “Thus it is expected that [demand for] complet- remain sought-after investments and are still
ask myself, ‘What can I do to make the home ed GCBs will be stronger in 2008 as construc- coveted assets for newly minted millionaires,
more comfortable and convenient through tion costs continue to remain high.” it is now seeing stiff competition from Sentosa
home automation without making it too com- Cove, with 99-year leasehold waterfront bun-
plicated for the owner?’”. More owner occupiers and long-term galows. While land values of GCBs averaged at
Offers in the “$30-million range” have trick- investors as prices trend up $692 psf for the whole of last year, sea-front-
led in, but Lim is not biting. Will he consid- Over at 11 Ford Avenue, the tender for the sale ing bungalow parcels at Sentosa Cove were
er lowering his price tag if he doesn’t get his closed on Feb 21. This is one of the few large close to double that at $1,283 psf. Even lux-
asking price of $35 million? “There’s no rea- GCB sites left. With a sprawling 45,894 sq ft ury-end condos are seeing transaction prices
son why a property like this can’t be sold,” site, the property has the potential to be sub- that are much higher than GCBs, averaging
he comments. “As you move up to the tip of divided into three smaller GCBs. The own- $2,730 psf in 2007.
the pyramid, there are fewer and fewer people er of 11 Ford Avenue is believed to be the Eu “The GCB market is unique and caters to
who can afford a home at this level.” family of Singapore Exchange-listed Eu Yan the ultra-rich home buyers and sellers and will
A newly completed home like Lim’s will Sang. The traditional Chinese medicine em- generally continue to remain resilient against
likely appeal to homebuyers in the face of pire founded back in 1879 is already in the any recession in the US,” he adds. Transac-
skyrocketing construction costs over the past fourth generation of the family, and is head- tions of GCBs will remain active and record
year due to competition for scarce resources ed by Richard Eu, the great-great-grandson of prices are expected for the various GCB en-
and manpower amidst a construction boom. the founder, Eu Kong. claves in 2008.” E
CC6 • THEEDGE SINGAPORE | MARCH 3, 2008
CITY&COUNTRY
Train of collective sale hopefuls
continues unabated
| BY CECILIA CHOW |
T
he collective sale market may have
cooled considerably since 4Q2007, but
the ardour of collective sale hopefuls
apparently hasn’t. And it’s no longer
confined to the owners of condominium
and apartment blocks either. Jumping on the
bandwagon are owners of landed homes.
Last November, the owners of 15 terraced
houses along Jalan Bunga Raya in Balestier
banded together and sold their homes collec-
tively for $61 million to a Chinese developer
and a Singaporean partner. Each of the own-
ers walked away with $4 million.
More recently, the owners of a row of five
terraced houses along Essex Road, just off
Thomson Road, are hoping to reap an equally
profitable windfall. Unlike a collective sale of
a condominium project where only 80% of the
owners need to give their consent for a sale
to go through (for projects that are at least 10
years old), in the case of landed homes, all
the owners have to agree. However, as land-
ed homes, the collective sale does not need
Strata Title Board approval, which will make
the sale less cumbersome once all the own-
ers have agreed to the sale.
In the case of the Essex Road houses,
Knight Frank, the appointed marketing agent,
received approval from all the owners to pro-
ceed with the collective sale. This was made
easier because the owner of three of the five
houses is the person who also initiated the
sale process. He is Dr Lim, CEO of ASIAINSTI-
TUT OF MANAGEMENT (AM School of Busi-
ness Studies), who had purchased the houses
three years ago.
What’s also interesting is that the own-
ers have decided to opt for an auction sale in
the hope of achieving a speedier sale proc-
ess. Knight Frank will be putting up the prop-
erties for auction sale on March 20. Lim be-
lieves the potential of the row of Essex Road
terraced houses hinges on the possibility of
it being amalgamated with the neighbouring
strip of state land, the service road behind the
houses for the owners to park their cars, and
more importantly, with the apartment block
Lion Towers behind it, which is also pursu-
ing a collective sale.
He argues that such an amalgamation will
enhance the footprint of the existing Lion Tow-
ers site by another 80%, making it more at-
tractive to a developer looking for a freehold
The row of 16 terraced houses at Fort Terrace has an indicative price of $95 million or $1,238 psf ppr
development site in the prime residential en-
clave of Newton/Novena.
The en bloc sales committee of Lion Towers
at 2 Essex Road has recently appointed CB Ri-
chard Ellis (CBRE) as their marketing agent to
handle their collective sale. According to mar-
ket sources, it’s still in the process of drafting
the collective sale agreement.
Lion Towers
Built close to 30 years ago, Lion Towers has
52 apartments and sits on a 40,409 sq ft free-
hold site. With a plot ratio of 2.8 and a maxi-
mum height of 36-storeys under the 2003 Mas-
ter Plan, a developer will be able to build a
brand new 75-unit luxury condominium with
units averaging 1,500 sq ft each.
According to market sources, the indicative
price of Lion Towers is estimated to be close
to $200 million, which works out to around
$1,742.46 psf ppr. At that price, each owner
will pocket $3.8 million each. The owners are
said to have already applied to the Singapore
Land Authority (SLA) regarding the possible
annexation of the neighbouring state land to
be amalgamated with the Lion Towers site.
Meanwhile, the five houses at Essex Road
are sitting on a freehold site of 7,163 sq ft.
The land is zoned for residential development
GWYNETH YEO/THE EDGE SINGAPORE
COLLIERS INTERNATIONAL
with a plot ratio of 2.8 according to URA’s 2003
Master Plan, and has a maximum height of
36-storeys as well.
The owners’ asking price is $1,500 psf ppr
or around $30 million. If that price is achieved,
each owner will walk away with a cool $6 mil-
lion. This asking price is comparable to the
sale price of last year’s collective sale deals
in its immediate neighbourhood. Last Novem-
ber, contractor-cum-developer, Bravo Building
Construction Group, bought Makeway View
for $162.8 million through a collective sale,
which is equivalent to $1,583 psf ppr. In June
last year, a consortium led by Koh Brothers
bought Lincoln Lodge in a collective sale worth
$243 million or $1,449 psf ppr.
If the site of the Essex Road houses is com-
bined with the neighbouring state land and
service road, the total area would be over
30,000 sq ft, estimates Lim. If amalgamat-
ed with the Lion Towers site, he reckons that
the enlarged footprint would be over 70,000
sq ft and a developer could potentially build
a 100-unit luxury project with unit sizes av-
eraging 1,800 sq ft.
Another attraction of the site is the fact
that at the end of Essex Road is SJI Junior
(the former St Michael’s School). It is also
in the neighbourhood of other good schools
The row of five terraced houses at Essex Road has a
price tag of $30 million or $1,500 psf ppr
in Bukit Timah such as Nanyang Girls’ High
School, Hwa Chong High and National Jun-
ior College.
What’s more the Novena enclave is also
turning into a booming medical hub. Linked
to the Novena MRT station and located be-
hind Novena Square is Tan Tock Seng Hospital
and Far East Organization’s brand new Nove-
na Medical Centre. The area recently received
an added boost when Parkway Holdings bid
a record $1.25 billion ($1,600 psf ppr) for a
1.7ha, 99-year leasehold government site to
build a private hospital at Novena Terrace/Ir-
rawady Road.
It’s also a sought-after residential neigh-
bourhood given its proximity to the CBD and
Orchard Road. In the immediate neighbour-
hood of Parkway’s site is Frasers Centrepoint’s
new condominium development, the 417-unit
twin-tower Soleil@Sinaran that was launched
last year and is currently under construction.
The most recent transaction, according to the
caveats lodged on URA Realis, was for a 958
sq ft unit on the third floor which was sold
for $1.23 million ($1,285 psf). A 1,453 sq ft
apartment on the 16th floor changed hands
on the sub-sale market for over $2.32 million
($1,600 psf) at the end of last year.
Meanwhile, at 1 Essex Road is Far East Or-
ganization’s Strata, a 32-storey, 100-unit loft-
style apartment tower completed in 2006. Ac-
cording to the URA Realis database of caveats
lodged, three 506 sq ft apartments changed
hands on the resale market at prices ranging
from $650,000 ($1,285 psf) for the most recent
transaction on Sept 21 last year to $820,000
($1,621 psf) for a similar-sized unit also on
the second floor, which was sold in early Au-
gust last year.
Across the road and next to United Square
shopping mall is Allgreen Properties’ Viva,
a brand new condominium that’s yet to be
launched. Behind Viva is Keppel Land’s 486-
unit Park Infinia at Wee Nam, targeted for com-
pletion next year. A handful of units in the de-
velopment changed hands in January at prices
ranging from $1,410 to $1,600 psf.
The selling prices of new launches in the
area are even higher. Just down the street from
the row of Essex Road houses is the showflat
of Lucida, a 62-unit high-end condominium
project by boutique developer, Novelty Group.
Private previews at Lucida have yet to begin,
but marketing agents are citing an indicative
selling price of $1,700 to $2,000 psf.
Fort Terrace, another collective
sale hopeful
Meanwhile, over at the east coast, the own-
ers of a row of 16 terraced houses called Fort
Terrace at 29-59 Fort Road have also put their
properties up for collective sale. The freehold
residential site was put up for tender on Feb
27, and will close on March 26.
The rectangular freehold development site
has a total area of 47,886 sq ft and under the
2003 Master Plan, it is zoned for residential
use with a gross plot ratio of 2.1. Colliers In-
ternational, the marketing agent, has already
obtained 100% agreement from the owners to
proceed with the collective sale.
According to Ho Eng Joo, executive direc-
tor of investment sales at Colliers Internation-
al, the indicative price is $95 million. There’s
a development charge of $23 million, as well
as the cost of annexing a piece of 10,964 sq
ft state land, which is estimated at $6.4 mil-
lion. This will work out to $1,238 psf ppr. The
site has the potential to be redeveloped into a
high-rise condominium with 67 units averag-
ing 1,500 sq ft each. E

Unlike many other Western economies
swamped by the subprime backwash,
the Australian property scene still
looks bright
| BY MARK HENDERSON |
T
he fallout from the US subprime crisis
is hammering housing markets across
the US and Europe. Mortgage foreclos-
ures in the US are escalating as inflat-
ed home values sink. And the news
is also grim in the UK where homeowners are
watching their valuations slide.
But it’s not all doom and gloom on the West-
ern property front, claims Australian property
expert Ben Boyle. There are, he says, reliable
returns in strong growth areas Down Under,
such as Queensland.
Boyle is a director of Your Property Solu-
tions (YPS), a property consultancy service
based in Brisbane. He was recently in Singa-
pore and Hong Kong to market the company
to expatriates and locals while catching up
with clients.
The difference between YPS and most oth-
er agencies, says Boyle, is that the company
works exclusively for the buyer. “We use our
extensive knowledge and experience in the
Queensland market to source property to the
buyer’s requirements.”
YPS not only finds the property, it negotiates
price (which Boyle claims is typically 10% less
than the “fair market value”), arranges build-
ing and pest inspections, insurance and finance
services. The agency also operates a proper-
ty management service, which has more than
500 investment homes on its books. Around
70% of YPS’ clients are investors.
Boyle, a former captain in the Australian
Army, who served in East Timor and Iraq, says
his confidence in the Sunshine State’s residen-
tial market is backed by solid data.
Unlike many other Western economies
swamped by the subprime backwash, the Aus-
tralian property scene still looks bright. While
falling house prices elsewhere are undermin-
ing consumer wealth and confidence, Austral-
ia is tracking a different pattern.
A report by Macquarie Research Economics
in December 2007 points out that the Aussies
Apartments close to the city, says Boyle are
‘renting machines’. A new A$400,000 unit with
two bedrooms and two bathrooms rents for
A$380 to A$460 per week. A three-bedroom
townhouse costs A$500,000 and can fetch
A$450-plus a week in rents.
have already had their pain. The slowdown in
most of the Australian housing market took
place in 2004-05.
House prices in Adelaide and Brisbane have
bounced back over the past couple of years. In
Brisbane, the average cost of a three-bedroom
house has climbed from A$350,000 ($488,940)
to around A$450,000. Adelaide homes have ris-
en from A$300,000 to more than A$360,000.
Heavy demand
Demand for homes is outstripping supply. The
Reserve Bank of Australia currently estimates
180,000 homes a year are wanted, but only
150,000 are being built. Residential building
activity has been flat for five years, despite
increasing migration into Australia. That’s
putting pressure on the rental market. Rents
are rising fast in most capital cities. In Bris-
bane, rents for a family home have increased
by around A$50 per week (15%) over the past
12 months.
Boyle says the residential good times will
continue. Housing in Brisbane and Perth last
Buying property
in Australia’s Sunshine State
year led the way with 20%-plus capital gain.
“Key drivers are strong economic growth from
the mining-dominated economy — many of the
country’s mining giants operate in Queensland
— and strong population and wages growth,
particularly in Queensland. Around 50,000 peo-
ple a year are moving to the state. Many corpo-
rates are relocating to Brisbane from Sydney.
Brisbane has a broad-based economy, including
agriculture and information technology. The
city is no longer a big country town.”
Boyle believes median-priced properties
in median-priced suburbs are a solid bet for
long-term growth.
Around A$450,000 will buy a three-bed-
room, two-bathroom house on 6,400 sq ft of
House prices in Adelaide and Brisbane have bounced back over the past couple of years
land within 10km of central Brisbane. This
property will earn A$400 a week in rent for
a net 4% to 5% return, plus capital growth,
which was running at 20% last year. Capital
gain has averaged 10% annually over the past
10 years in southeast Queensland.
Apartments close to the city, says Boyle
THEEDGE SINGAPORE | MARCH 3, 2008 • CC7
PICTURES: YPS
CITY&COUNTRY
are “renting machines”. A new A$400,000
unit with two bedrooms and two bathrooms
rents for A$380 to A$460 per week. A three-
bedroom townhouse costs A$500,000 and can
fetch A$450-plus a week in rents.
Foreigners can only buy brand new hous-
es and apartments, but there is plenty of new
apartment stock in Brisbane, says Boyle. Inves-
tors are liable for capital gains tax at around
25% when they sell the property.
YPS charges a flat A$10,000 fee for sourc-
ing and negotiating the purchase of a proper-
ty on behalf of a client.
Andrew Powell, who works in an airline-
related industry, and has been living in Sin-
gapore for the last five years, recently bought
two houses near Brisbane using Boyle and
YPS. “I wanted someone with knowledge on
the ground,” says Powell.
He paid A$420,000 for the first property,
a three-bedroom house 5km from the city, in
2006. The house is now valued at A$550,000.
Last year, he shelled out A$1.15 million for a
sprawling five-bedroom, fully renovated tradi-
tional “Queenslander” colonial verandah house
“in a great suburb” 4km from Brisbane. That
property, he says, could now be confidently
listed at A$1.4 million.
Queensland’s appeal
“I used Ben because I didn’t have the time to
look myself,” says Powell. “The fee is a small
price to pay for local knowledge. It took me
four months to find an investment proper-
ty in Sydney a few years ago. Ben found my
first Brisbane buy on the same day it went to
market.”
Powell reckons that Queensland should ap-
peal to many investors from Asia. “The Aus-
tralian property market doesn’t have massive
swings; it is more predictable with less risk
over the long term.”
Further north, booming Townsville offers
investors some good opportunities, says Boyle.
Townsville has a large transient population
— mine workers on fly-in-fly-out contracts,
for example — so rents are relatively high.
Houses start from around A$300,000, up from
A$150,000 five years ago. Apartments along
the waterfront sell for A$400,000-plus.
Boyle says Perth, popular with Singapore-
ans, has peaked. “Perth has come off the boil.
After enjoying 20% capital growth over the
past two years, the residential market there
has slowed to around 4%.” E
GF2 (273mm) GF3 (276mm) pg 41 (279mm)

THEEDGE SINGAPORE | MARCH 3, 2008 • 41

 HIGHLIGHT
Natural Cool a late-cycle Strategist....................... 27 Insider Moves ............... 32
play on construction boom Brokers’ Digest ............. 28 FactSet Estimates .......... 35
Bloomberg .................... 31 Warrants ....................... 38
INVESTING IDEAS PG26

THEEDGE SINGAPORE | THE WEEK OF MARCH 3, 2008

HIGHS & LOWS

VOLUMEMOVERS COMPILED BY AUDRINA GAN

Volume (‘000) Price (S$)

1400000 0.025 Chasen Holdings (one cent), a logistics and 350 350 2000 3500
engineering services company, topped the list
1200000
0.02 of actives. The penny stock was heavily traded
1000000 despite the absence of positive news. In January,
800000
0.015 the company acquired a 63.7% stake in GKH
Group, a scaffolding equipment and services
600000
0.01 provider for the local marine and construction
400000
industries. The acquisition will allow Chasen to 0 0 0 0

0.005 diversify its revenue base from its current niche.

200000

0 0
Feb 23, 2007 Feb 29, 2008

300000

250000

200000

150000
Volume (‘000) Price (S$)
2.5
2.3
2.1
1.9
1.7
1.5
Synear Food Holdings (68.5 cents) was
heavily sold last week, following its FY2007
results announcement. Gross margin for the
Chinese dumplings and snacks manufacturer
dipped 1.4 percentage points to 32.2%, owing
to a 13% y-o-y increase in the prices of key raw
Results damper
ingredients such as pork, flour and packaging
100000
1.3
materials. With no let-up in China’s inflation, the Drop in property stocks spooks market
1.1 share prices of Chinese food companies have
50000
0.9 taken a beating in recent weeks. Deutsche Bank
0.685 has downgraded the stock to “hold”, citing
0 0.5 higher labour and pork prices, with a 12-month | BY GOOLA WARDEN | Analysts revise forecasts downwards
Feb 23, 2007 Feb 29, 2008
target price of 83 cents. Crane operator Tat Hong Holdings may be doing a roar-

P
roperty stocks fell across the board, although ing trade and still elicits a “buy” recommendation from
almost all showed strong, if not record, prof- Citigroup Research. Still, its target price was revised down-
Volume (‘000) Price (S$) Yangzijiang Shipbuilding ($1.08) fell 1.6% its last year as results came in last week. But wards from $4.15 to $3.15. No matter that it is higher than
700000 2.8
last Friday, its lowest since Jan 22, despite fears of an economic slowdown and expect- Tat Hong’s price last week. The market sold it off to $2.15
2.6
600000 reporting a 90% increase in net profit to 453 ed drop in property sales for the year caused from $2.30 on the downgrade.
2.4
500000 million renminbi ($89 million) on the back of more profit-taking, especially after the Straits Times In- Another significant downgrade occurred with Advance
2.2 2.3 billion renminbi in revenues. The bearish
400000 dex had also gained for several consecutive days ear- SCT, a company that was transformed into a copper smelt-
2.0 sentiment stems from worries that rising steel
1.8 costs will put a dent in the profits of Chinese ly in the week. er, when it issued a profit warning ahead of a set of nas-
300000
1.6 shipyards. With that, DBS Vickers has downgraded The reaction to other results announcements was little ty results. Net profits fell 36% to $4.9 million. Although
200000
1.4
the stock to “hold”, with a 12-month target different. Crude palm oil producer Wilmar net debt-to-equity is less than 50%, inter-
100000 price of $1.45. With more shipbuilding projects, International, a market darling, fell almost est expense of $7.7 million rose 66% y-o-
1.2
the cost of sales for mainly steel purchases at Straits Times
0 1.08
Yangzijiang have increased 62% to 2.9 billion 5% the day after it released results, despite 300
y. This, coupled with a large negative op-
April 20, 2007 Feb 29, 2008
renminbi, according to filings with the Singapore announcing a fivefold rise in net profits for erating cash flow of $41 million, triggered
volume (million)

Exchange. Yangzijiang had an order book of the three months to Dec 31, 2007 to US$234 a sharp sell off. At its closing price of 30.5
US$7 billion ($9.7 billion) as at Jan 31. million ($326 million). Its CEO Kuok Khoon cents, Advance SCT is a quarter of its value
Hong sounded downbeat in his assessment just four months ago. Dealers say there are
Volume (‘000) Price (S$) Golden Agri-Resources ($1.13) surged to of prospects in spite of sharply rising crude 0 plenty of margin calls on the counter.
700000 1.2
1.13
a year-high of $1.23 last Tuesday. A unit of palm oil prices. “One has to be a bit cau- Elsewhere, Synear Food Holdings was
600000 Indonesia’s largest oil palm grower, Sinar Mas tious,” he was quoted as saying. downgraded by Merrill Lynch. Earlier in the
500000
1.0 Group, Golden Agri-Resources is riding on No wonder dealers struck a cautious note as well on year, brokers had “buy” recommendations on the stock,
0.9 strong demand for palm oil, which is used as
400000 cooking oil and fuel. The share price of Golden the market. Asked what his outlook was for the week, and margin calls were aplenty as well, say dealers.
300000
0.8
Agri-Resources has more than doubled over the a dealer said he had no idea. At one point, it looked
0.7 past year. OCBC Investment Research’s analyst like the STI would be able to break out of 3,100, he What to look out for
200000 Selena Leong has upgraded FY2008 earnings to
0.6 said, but then it failed again. With billionaires moder- Roxy-Pacific Holdings starts trading on March 2. Al-
US$694.9 million ($968.4 million), up 50.3% on
100000 0.5 ating expectations, most punters say they would pre- though its IPO price of 30 cents is a 50% discount to net
the back of higher prices and increased demand
0 0.4
for crude palm oil. fer to remain largely on the sidelines. Thus traders are asset value, dealers are reporting no grey-market price. On
Feb 23, 2007 Feb 29, 2008
likely to be out within the day, says a dealer, because the other hand, Li Heng Chemical Fibre Technologies,
few want to hold positions overnight, much less over a nylon yarn manufacturer, has a grey-market price of 84
the weekend. cents, slightly above its offer price of 80 cents.
26 • THEEDGE SINGAPORE | MARCH 3, 2008
CAPITAL INVESTING IDEAS
Natural Cool Holdings
Air-con and switchgear supplier is a
late-cycle play on local construction boom
| BY ELLEN LOKAJAYA |
T
hese are heady times for Natural Cool
Holdings, a company that supplies and
installs air-conditioners and switchgears.
The construction boom has fuelled de-
mand for the services it provides, ena-
bling it to become picky about projects it takes
on. “Last time, the main contractors choose
their contractors — now it’s the contractors
who choose the main contractors,” says Steven
Chen, CEO of the company. “And, now, even
the main contractors are choosy also. They
will choose the good developers.”
The company began in 1989 as a sub-con-
tractor supplying and installing air-condition-
ers, and gradually built up its business. It later
added the switchgear division, and more re-
cently branched into the furniture and fitment
business. And, as property developers and con-
struction companies rush to complete apartment
blocks and office complexes in one of the coun-
try’s biggest building booms in decades, Natural
Cool is seeing a strong pick-up in business that
could last for the next couple of years.
Last year, the company saw its revenue jump
56% to $114.2 million, boosted by strong growth
in its three main businesses. Natural Cool’s air-
con business contributed 59% or $67 million
to the revenue in 2007, while switchgears con-
tributed 32%. Its fledgling building materials
business saw an eight-fold jump in revenue to
$10 million. However, the company’s margins
were squeezed by higher transport costs and
expansion initiatives, resulting in earnings ris-
Swissco International
Offshore vessel charterer is a value play
after steep slide, analysts say
| BY KANG WAN CHERN |
T
he offshore energy exploration and produc-
tion cycle isn’t showing any signs of slowing
down, yet shares in support vessel charterer
Swissco International are trading at what some
analysts are calling “distressed levels”.
Shares in the company have tumbled 33%
since the beginning of the year, weighed down
by the broad market sell-off and overlooked by
large investors because of its relatively small
market capitalisation of $151 million. But at
the current levels of 84 cents each, shares in
Swissco trade for less than they would be worth
if the company were to sell its vessels and oth-
er assets and wind itself up. “Stripping out
Swissco’s value add as an established offshore
vessel charterer, we estimate that the current
assets breakup value for Swissco to be worth
between $1.02 and $1.18 per share,” says a
report by DBS Vickers Securities.
There is, of course, no reason for Swissco
to consider selling all its assets. Business is
booming at the moment and the company is
actually busy expanding its fleet. It currently
Natural Cool Holdings
Volume (‘000) Price ($)
7000
6000
5000
4000
3000
2000
1000
0 0.3
Feb 23, 2007 Feb 29, 2008
ing by only 14% to $3.8 million.
Even so, things seem to be only just picking
up for late-cycle construction plays like Natural
Cool, and its stock doesn’t appear expensive.
Shares in the company are up 10% over the past
year to 34.5 cents last week. That’s about nine
times historical earnings. The company doesn’t
currently have any analyst coverage.
Natural Cool’s air-con business involves in-
stallation, replacement and maintenance serv-
ices for the residential and commercial sectors.
The company also recycles air-conditioners, says
Chen. In addition, the company makes its own
house-brand copper pipes and air-con brack-
ets. Among the air-con projects the company
has completed are condominiums like Scott
sHigh Park and Monterey Park, and institutions
like Anglo-Chinese School and Nanyang Girls
School. According to Chen, the company’s big-
gest contract so far comes from Hilltops con-
has a fleet of 26 vessels, all of which are less
than 2½ years old. And, it is scheduled to take
delivery of a further 11 vessels this year and
another nine next year.
Besides chartering its vessels to companies
in the oil and gas, and shipping and marine
infrastructure industries, Swissco is also a pi-
oneer in the Out-Port-Limit (OPL) business
in Singapore, which involves servicing ships
passing Singapore on their way to other ports.
The company is also a specialist in the pro-
vision of repairs and maintenance services to
a niche market of small tankers and vessels.
The company owns two slipways and a 3,000
dead weight tonne drydock.
In addition, the company holds a 9% stake
in listed integrated offshore service contractor
Swiber Holdings. Much like Swissco, shares
in Swiber have tumbled significantly since
the beginning of the year — by some 33%. It
now has a market capitalisation of just over
$1 billion. But analysts expect the company
to continue securing contracts and its stock to
recover over time. Last Friday, Swiber report-
ed a 126.4% rise in revenue to $151.2 million
DBS Cashline.
Cashline
For whatever, whenever
For whatever, whenever.
dominium, worth over $5 million.
Natural Cool’s switchgear division, called S
Team, started operations in 2003 and became
0.44
part of the group in 2005. S Team manufactures,
0.42 assembles and installs switchgears in commer-
0.4 cial and residential buildings. Switchgears are
0.38
used to manage the distribution of electricity
to different points in a building. Among the
0.36
notable deals S Team secured is a $1 million
0.345
contract for the Icon.
0.32 “Switchgears and air-cons actually comple-
ment each other because in any HDB block
or condominiums or factories or offices, you
need switchgears and you need air-cons,” says
Joseph Ang, executive director and founder of
S Team. But Natural Cool isn’t just dependent
on private developers, says Ang. The compa-
ny also gets significant recurring income from
the Housing Development Board’s upgrading
projects. According to Ang, the company has an
80% share of the switchgear market for HDB’s
upgrading projects in which electrical wiring
and switchgears are installed or replaced.
Natural Cool’s building materials segment was
added in 2007. In July, the company acquired J2
Pte Ltd, a systems furniture and fitment company
that sells office partitions, office chairs and tables
and wardrobes, for $900,000. That is proving to
be a timely move. According to Chen, the busi-
ness has huge potential with new office build-
ings in the Marina Bay Financial Centre nearing
completion. The company is currently participat-
ing in several tenders for systems furniture and
fitment contracts, Chen adds.
The company added another element to its
Swissco International
Volume (‘000) Price ($)
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0 0.5
Feb 23, 2007 Feb 29, 2008
for 2007, and a 309.4% jump in net earnings
to $49.7 million.
As an operating entity, DBS Vickers figures
that Swissco could be worth as much as $1.41
per share. The brokerage house obtains that
target price by valuing Swissco’s core charter-
ing business at 10 times forecast earnings for
2008, and its stake in Swiber at an estimated
“fair value” of $3.49 per share. DBS Vickers has
a “buy” recommendation on Swissco.
building material division last year. Last April,
it formed a joint venture called NC Steel Pte Ltd
with stainless steel supplier Jiang Yin Cheng
Iron Co Ltd. Natural Cool invested US$255,000
($355,937) and holds a 51% stake. The joint-
venture company will be the sole distributor of
Jiang Yin Cheng’s products in Singapore. It will
also distribute its products, such as steel sheet
piles and cold rolled steel, around Southeast
Asia. Chen expects the JV to be a money spin-
ner now that steel prices have gone up to $800
per tonne from $490 per tonne last year.
At the moment, Natural Cool has a small
presence outside of Singapore — specifically
in China, India, Cambodia and Vietnam. Last
year, the company generated revenue of $4 mil-
lion in China and $1.4 million in Cambodia.
Chen is laying the groundwork for an expan-
sion push in China in the years ahead. Last
August, Natural Cool signed a memorandum
of understanding to acquire a stake in Hart
Technologies Pte Ltd, which owns Beijing
Henji Construction Engineering Co Ltd, for
no more than $560,000. Chen says that hold-
ing a stake in Beijing Henji will be strategic
for the company because it has the necessary
licences to tender for projects worth up to 50
million renminbi ($10 million), and its location
will allow it to serve northern China.
For the next two years, however, Natural Cool
will have its hands full with the building boom
on its home-turf in Singapore, says Chen, who
owns 14.2% of the company. And, as it cherry
picks the best projects on offer, investors might
begin to take more notice of its shares. E
Even on a straight price-to-earnings basis,
shares in Swissco look reasonably priced. For
2007, Swissco reported a 23% rise in revenue
1.5
to $31.2 million, a 53.2% rise in gross profits to
1.4
$15.8 million. Net earnings surged 216% to $40.2
1.3
1.2 million, boosted by gains on the divestment of
1.1 a 5.9% stake in Swiber last June, which Swiss-
1.0 co intends to use to expand its fleet. The com-
0.9
0.84
pany is proposing a special interim dividend of
three cents per share, and has declared final or-
0.7
0.6
dinary and special dividends totalling one cent
per share. It is also proposing a bonus issue of
up to 18 million new ordinary shares on the ba-
sis of one bonus share credited as fully paid for
every 10 existing ordinary shares.
DBS Vickers is forecasting 52% growth in rev-
enue this year to $47 million and a further 4%
rise next year to $49 million. Net earnings are
forecast to come in at $12 million, or 6.8 cents
per share in 2008, and $13 million, or 7.1 cents
per share in 2009. On those forecasts, shares in
Swissco are trading at 12 times and 11.4 times
2008 and 2009 earnings respectively.
If there is such a thing as a value play in a
hot sector, this might be it. E
 THEEDGE SINGAPORE | MARCH 3, 2008 • 27

CAPITAL STRATEGIST

Cheap palm oil may overtake soy
on rising Asia demand
Feb 25: Palm oil, the world’s most-used
cooking oil, is also the cheapest, a dis-
crepancy that won’t last long as demand
rises across Asia’s biggest countries. An
ingredient in curries, stir-fries and Skittles
candy, Malaysian palm oil costs 15% less
than soybean oil on the Chicago Board of
Feb 22. It advanced to ¥86.81 from ¥86.67.
The kiwi rose 1.7% versus the yen last week
and the Australian dollar climbed 1% as US and
European stocks gained, encouraging investors
to seek higher returns. New Zealand’s record
8.25% benchmark rate is the highest after Ice-
land’s among Aaa-rated economies.
“Equity markets have been more stable and
we’ve seen an improvement in risk appetite,”
lowed to trade freely in 1985, Gordon said. Aus-
tralia’s benchmark interest rate of 7% compares
with 3% in the US and 0.5% in Japan. In a carry
trade, investors get funds in a country with low
borrowing costs and invest in one with higher
interest rates, earning the spread between the
borrowing and lending rate. The risk is that cur-
rency moves erase those profits.
Traders are assigning 89% odds the Reserve
Bank of Australia will raise its target rate a
quarter percentage point to 7.25% at its March
4 meeting, a Credit Suisse Group index based
on interest-rate swaps shows.
The odds were 6% that the Reserve Bank
of New Zealand will increase its benchmark
rate a quarter point to 8.5% at its March 6
meeting, a similar index showed. — Compiled
from Bloomberg LP E

Trade (CBOT). Tobin Gorey, a commodity said Michael Gordon, a currency strategist at
strategist at Commonwealth Bank of Aus- Westpac Banking Corp in Wellington. “We’ve The stories on this page are compiled from various news sources and directly from the firms. Disclaimer: Readers should
tralia Ltd in Sydney, said the two may soon seen a general move back toward high-yield- consult their adviser on the strategies and read the full reports. The Edge Singapore does not accept any liability what-
be even money, raising the prospect of at ers like the kiwi.” soever for any direct, indirect or consequential losses (including loss of profit) or damages that may arise from the use
of information or opinions published. Opinions expressed are subject to change without notice. The strategists may
least a US$1.5 million ($2.1 million) profit The New Zealand dollar may rise above 81.10
from time to time have positions in the products mentioned.
from a US$10 million investment. US cents, the highest since the currency was al-
Rising incomes mean billions of peo-
ple in Asia’s developing economies seek
palm oil for fried and processed foods, ac-
cording to the US Department of Agricul-
ture (USDA). Crude oil at US$100 a barrel
is boosting demand for alternative fuels
such as diesel from vegetable oil.
“We may have a case of mass short-
age of vegetable oil in China,” said Ru-
dolphe Roche, a manager at Schroders
plc’s US$6 billion agricultural commod-
ities fund in London on Feb 25. “This
means they will continue to import from
the rest of the world.” Palm oil, produced
in Malaysia and Indonesia, will benefit
the most because its proximity to China
lowers shipping costs, he said.
Rising prices will increase expenses at
Nissin Food Products Co, Japan’s biggest
instant-noodle maker, and increase profits
at Malaysia’s Sime Darby Bhd, the world’s
largest publicly traded owner of palm plan-
tations. About 36% of the world’s cooking
oil comes from oil palm, more than any
other plant, USDA data shows.
The last time palm oil was this cheap,
last April, prices rallied for two months
because of increasing demand, gaining
38% to RM2,855 ($1,246) a tonne on the
Malaysia Derivatives Exchange to reach
parity with Chicago prices. Contracts for
May delivery ended at RM3,698 a tonne
(52 US cents a pound) on Feb 22 in Ma-
laysia. May soybean oil finished at 63.02
US cents a pound on the CBOT.
Palm oil and soybean oil reached records
today. Palm oil rose as much as 5.8% to
RM3,914 a tonne and closed 4.5% high-
er at RM3,866, the biggest gain since Dec
26, 2006. Soybeans advanced as much as
2.4% to 64.52 US cents a pound and last
traded at 64.29 US cents. That narrowed
palm oil’s discount to 16% from 17%.

Australian, NZ dollars advance

on demand for yield
Feb 25: The Australian dollar traded near
a three-month high and the New Zea-
land dollar rose close to the strongest
level in 23 years on speculation inves-
tors will be drawn to the nations’ high-
er-yielding assets.
The Australian and New Zealand dol-
lars, also known as the Aussie and kiwi
respectively, are the second- and third-best
performers of the 16 most-active currencies
this month as traders bet the US Federal
Reserve will cut interest rates by half a per-
centage point to 2.5% in March. Australia’s
currency also traded near the highest this
year against the yen as rising stocks gave
investors confidence to buy Australian as-
sets funded with loans in Japan.
The Aussie bought 92.43 US cents as
at 4:45pm in Sydney today compared with
92.38 US cents late in New York on Feb 22,
when it reached 92.51 US cents, the most
since Nov 9. It will match a 23-year high
of 94 US cents in the next month, Mor-
riss said. The currency traded at ¥99.27
($1.29) from ¥99 Feb 22.
The kiwi rose to as high as 80.96 US
cents before buying 80.83 US cents, from
80.87 US cents in late New York trading on
28 • THEEDGE SINGAPORE | MARCH 3, 2008

CAPITAL BROKERS’ DIGEST

| COMPILED BY RAHAYU MOHAMAD |

Every week, The Edge Singapore brings you digested excerpts of research
reports of Singapore Exchange-listed companies available in the public domain
or received from brokers. Investors interested in research on companies are
also encouraged to register for free access to reports from stockbrokers that
participate in the SGX-Monetary Authority of Singapore Research Incentive Scheme
(www.research.sgx.com).
Disclaimer: The Edge Publishing Pte Ltd does not accept any liability whatsoever
AEM Holdings (Feb 28: 9.5 cents)
MAINTAIN HOLD. AEM turned in a disappointing set of
FY2007 results with a net loss of $3 million. This is due
to significantly higher assets write-off and impairment
provisions made to its precision and system integration
(PSI) division and materials and services (MNS) division.
Revenue slid 18.7% y-o-y to $192.8 million, due to a 49.1%
dive in contribution from its PSI division, coupled with
an 8.7% decrease from its MNS division. AEM’s focus
on its less cyclical Substrates & System Packaging (SSP)
division looks to be a beneficial move. AEM posted a net
loss of $4 million, compared to a net profit of $5.9 million
and $0.9 million in 2H2006 and 1H2007, respectively.
We pare our FY2008 estimates by 7% to 22% and ease
our valuation from eight times FY2008F PER to seven
times, thus lowering our fair value from 15 cents to 10
cents. — OCBC Investment Research (Feb 25)
Aqua-Terra Supply Co (Feb 28: 37 cents)
MAINTAIN BUY. The strong growth in revenue from
$155 million to $231 million was mainly supported
by the newly acquired subsidiaries and new income
stream from procurement and supply (P&S). Both new
subsidiaries and the P&S contracts together contributed
about $61.3 million. The net margin improved by 0.1
percentage point to 5.1%. Nonetheless, if share of profit
of associate and joint venture is excluded, net margin
would drop from 4% in FY2006 to 3.4% in FY2007. ATS
posted $11.8 million PATMI (profit after tax and minority
interest) for FY2007, below the consensus estimates
of $13 million (according to Bloomberg). Pegging its
valuation at an undemanding 12 times FY2008 EPS, we
derive a target price of 59 cents, at an upside potential
of 49%. — Westcomb Research (Feb 28)
Armstrong Industrial (Feb 28: 30 cents)
MAINTAIN OUTPERFORM. 4Q2007 net profit of $6.2
million (+90% y-o-y) was 26% ahead of consensus and our
estimates due to better-than-expected revenue growth and
margins. Full-year net profit was 9% ahead of consensus
and our forecasts. Sales jumped 36% y-o-y in 4Q2007.
EBITDA margins improved 3.8% pts y-o-y to 19.3% in
4Q2007, on the back of gross margin expansion. Net cash
widened from $14.5 million as at end-September 2007
to $21.1 million on the back of higher profitability and
proceeds from the disposal of its stake in Soon Lee. The
company declared a first and final dividend of 1.6 cents,
up from 1.05 cents a year ago, translating into a 5.3%
yield. We have rolled forward our 12 times target PER to
CY2009, lifting our target price from 55 cents to 61.5 cents
and providing 106% upside. — CIMB-GK (Feb 28)
Q-o-q — Quarter-on-quarter
y-o-y — Year-on-year
for any direct, indirect or consequential losses (including loss of profit) or damages DCF — Discounted cash flow
that may arise from the use of information or opinions in this publication. The Ebitda — Earnings before interest, tax, depreciation and amortisation M
EPS — Earnings per share
information and opinions in this publication are not to be considered as an offer to FY — Financial year t
sell or buy any of the securities discussed. Opinions expressed are subject to change NAV — Net asset value m
NTA — Net tangible assets
without notice. The brokers may, from time to time, have interests or positions P/BV — Price-to-book value d
in the securities mentioned. The Edge Singapore welcomes brokers submitting PEG — Price earnings to growth G
PER — Price-to-earnings ratio
their reports for investor information to theedgespore@bizedge.com. ROE — Return on equity f
o
e
W
C&O Pharmaceutical Technology CitySpring Infrastructure Trust (Feb 28: 76.5 cents) e
(Feb 28: 39.5 cents) OVERWEIGHT-V. We are changing our rating to Overweight- m
MAINTAIN BUY. C&O recently issued its 2Q2008 result. Its V and our price target to $1.00. We believe downside M
top line growth is in line with our expectation. However risk from here is limited in the near term. A F2008E C
due to higher sales and administration expenses, C&O’s dividend yield of 7.9% (tax free), Temasek support, and o
net profit is lower than our expectation. As the sales the yield-accretive acquisition of Basslink should all —
budget for calendar year 2008 is expected to be higher be reasons for the stock to outperform in the medium
than 2007, we adjusted down the net profit for FY2008 term. Near term, the stock might remain range-bound
and FY2009 to HK$109 million and HK$131 million owing to a potential equity fund raising for the Basslink
from HK$128 million and HK$158 million respectively. acquisition. We have removed the allocation of a 30%
However, compared to other manufacturing companies premium for the Temasek association. Post-Basslink,
in China, we still find drug companies more attractive we expect CitySpring to increase its annual distribution M
as they generally enjoy a much higher gross margin and to seven cents from the current DPU of $0.064. The m
are less affected by escalating costs. We retain our buy stock is currently trading at 13 times EV/Ebitda F2009e r
call on C&O, but cut our target value to 53 cents from (adjusted for lease receivable payment). — Morgan Stanley b
64.5 cents, based on 15 times forward twelve month Research (Feb 25) G
PER. — Phillip Securities Research (Feb 25) U
t
U
N
Cacola Furniture Int’l Ltd (Feb 28: 34.5 cents) Genting Int’l (Feb 28: 62 cents) p
MAINTAIN BUY. Cacola reported a 23.83% growth in MAINTAIN HOLD. GIL’s recurring earnings were below our W
revenue from 455.62 million renminbi ($89.39 million) expectations due to the weaker-than-expected performance v
in FY2006 to 564.18 million renminbi in FY2007. The of the UK casinos, following the gaming duty hike in i
group’s net profit grew by 63.96% from 75.21 million April 2007 and the smoking ban in July 2007. The main d
renminbi in FY2006 to 123.31 million renminbi in FY2007. interest in GIL is not on the existing operations, but R
The group’s overall gross profit margins increased by rather the Singapore integrated resort (Resorts World
1.80 percentage points (y-o-y) from 32% to 33.8% in at Sentosa). GIL reported a net loss of $381.5 million
FY2007, whereas their net profit margins increased by due to a $472.7 million impairment charge for its UK
5.35 percentage points (y-o-y) from 16.51% to 21.86% operations. Our target price continues to be based on
in FY2007. For FY2007, the group has proposed a first RNAV. We have valued the Sentosa project based on
and final dividend of 0.0713 renminbi per ordinary share, a combination of DCF with implied IRR of 15% and O
which translates to approximately 19.95% of their net EV/EBITDA (target 14times 2010 discounted at 15%). M
profit. We revised our estimates and revalued our fair Lower 12-month target price of 69 cents (previously 81 t
value estimate to 61 cents per share, derived from a PER cents). — Standard & Poor’s (Feb 26) u
of 5.8 times pegged to FY2008 earnings. This implies a t
76.81% upside. — Phillip Securities Research (Feb 27) i
S
e
f
China Energy (Feb 28: 89.5 cents) Ho Bee Investments (Feb 28: $1.23) 3
MAINTAIN BUY. China Energy reported FY2007 earnings MAINTAIN OUTPERFORM. FY2007 core net profit c
up 38% y-o-y and 110% q-o-q, earnings rebound in 4Q2007 (excluding revaluation gains) of $190 million came in b
was mainly driven by strong DME (dimethyl ether) sales below expectations, at 88% of our estimate. We believe a
volume ramp up on favourable product price spreads. the results were below consensus as well. 4Q2007 core p
Leveraging on the strong YTD Methanol-LPG spreads EPS of 3.8 cents made up 13% of our full year. Ho d
in China, we expect strong 1Q2008 earnings up 213% Bee declared a final dividend of two cents per share, i
y-o-y to 158 million renminbi ($31.01 million) or 31% representing a payout of 6.2% and a yield of 1.3%. f
of our full year estimate. While China Energy plans to FY2008-2009 EPS estimates have been raised by 3% to
increase its methanol capacity from 250k to 750k by end 4%. Our CY2008 RNAV estimate has also been increased
2008, we expect self sufficiency will not exceed 40% by from $2.22 to $2.59, on higher ASP forecasts. We now
FY2009 as additional DME capacities ramp up. We revise peg our target price at a 25% discount to RNAV (vs 10%
our target price to $1.5 per share based on 19 times discount previously), which is in line with Ho Bee’s
FY2008E earnings, at a 20% discount to the Bloomberg 10-year average to reflect a maturing cycle. Our target
Alternative Energy Index which reflects China Energy’s price thus declines from $2.22 to $1.94. — CIMB-GK
volatile earnings.— Citigroup Research (Feb 26) (Feb 28)

Bright World Precision Mach (Feb 28: 42 cents)
REDUCED TO FULLY VALUED. Stripping out 12 million
renminbi ($2.35 million) technical grant, Bright World’s
(BWPM) FY2007 net profit would have been in line with
our expectation, growing 15% y-o-y on 26% y-o-y higher
sales. BWPM did not declare dividends for FY2007, as
opposed to our expectation of a 30% dividend payout
like the past two years because it opted to retain earnings
for future development. The impact of rising material
cost was evident in 4Q2007, as gross margin shrank
10 percentage points y-o-y to 30.3%, worse than our
expectation of a 4.5 percentage points margin contraction.
We trimmed FY2008F and FY2009F earnings by 28% and
23%, respectively, after imputing 5.5 percentage points
and five percentage points lower gross margins. Reduced
target price of 40 cents, based on lower seven times
PER vs 11 times previously. — DBS Vickers Securities
(Feb 28)
China Haida (Feb 28: 17 cents)
DOWNGRADE TO HOLD. Revenue increased by 14.7%
to 444.6 million renminbi ($87.22) while cost of sales
increased at a higher rate of 19.9% to 365.9 million
renminbi. Gross profit fell 4.5% to 78.7 million renminbi
with gross margin dropping 3.6 percentage points from
21.3% in FY2006 to 17.7% FY2007. Profit after tatimes
fell 25.2% to 36.1 million renminbi. With uncertain
outlook, we have trimmed our FY2008 revenue growth
to 5.8%. Gross profit margin is likely to decrease further
due to expected higher aluminium prices in FY2008.
Gross profit are expected to fell 7.2% to 73.1 million
renminbi while net profit are expected to fall another
22.7% to 27.9 million renminbi. Given the pessimistic
outlook, we peg our target price at its 10% discount to
its current NTA per shares, works out to be 17.5 cents,
translating to eight times FY2008 PER. — Westcomb
Research (Feb 27)
Hongguo Int’l (Feb 28: 62.5 cents)
MAINTAIN BUY. Revenue increased 24% to 739 million
renminbi ($144.936) and net earnings were up 22% y-
o-y to 110 million renminbi. While gross profit was up
29% to 300 million renminbi, EBIT margin decreased
one percentage point y-o-y. Selling expense to sales
ratio increased to 16.4% in 2007 from 13.6% in 2006.
Management attributed the increase to rising staff and
AMP expenses. Hongguo declared a final dividend per
share of 97 US cents ($1.35), representing a payout of
27%. We increase our FY2008-2009 earnings by 5% to
9% after Hongguo reported a set of solid results. We raise
our target price to 82 HK cents (14.68 cents) to reflect
our earnings increase. We introduce our 2010 earnings
and forecast Hongguo will deliver an earnings CAGR of
23% over 2008-2010E. — Citigroup Research (Feb 26)

AD |
Midas Holdings (Feb 28: $1.22)
MAINTAIN BUY. FY2007 earnings grew by 25% y-o-y
to $32 million on top line growth of 34% y-o-y to $140
million. This was 10% below our estimate of $35.8m
due to (a) poorer than expected contribution from the
Group’s polyethylene pipe business, which suffered
from increasing competition; and (b) slower delivery
of aluminium extrusion products in 4Q2007 than we
expected. A final dividend of 0.5 cents was declared.
Whilst we have cut our FY2008 and FY2009 earnings
estimates by 34% and 18% respectively to factor in a
- more conservative delivery schedule for Nanjing Puzhen,
e Midas’ earnings are still projected to grow at a robust
E CAGR of 48% over the next two years. Target price
d of $1.60, based on 24 times FY2008/FY2009 earnings.
l — DBS Vickers Securities (Feb 28)
m upside of 49%. — Westcomb Research (Feb 26)
d
k
, Noble Group (Feb 28: $2.26)
n MAINTAIN BUY. Net profit surged 91.9% to US$258.1
e million ($359.52) on the back of a 70.7% growth in
e revenue to US$23.5 billion. Revenue grew across all its
y business segments, led by higher commodity prices.
Gross profit per metric ton of its commodities rose from
US$5.2 per metric ton in 2006 to US$6.4 per metric
ton in 2007. Fully diluted EPS climbed 83% to 9.96
US cents from 5.43 US cents in FY2006. To top it off,
Noble has proposed a cash dividend of 2.48 US cents
per ordinary share, as well as a one-for-five bonus issue.
r We roll forward our valuation to FY2008, but trim our
e valuation parameter to 15 times (from 17 times) to align
n it with the general de-rating of the market, leading us to
n derive a fair value estimate of $2.64. — OCBC Investment
t Research (Feb 27)
d
n
K
n
n
d OKP Holdings (Feb 28: 60 cents)
MAINTAIN BUY. OKP’s FY2007 net profit surged 171%
to $11 million (well above our forecast of $8.8 million)
underpinned by better margins and 70% uptick in revenue
to $124.7 million. Gross margin widened to 18% from 14%
in FY2006 as the group commenced work on ExxonMobil’s
Singapore Parallel Train project in conjunction with its
existing Universal Terminal project as well as benefited
from good cost management. Return on equity jumped to
35% while net cash position improved to $21.1 million (14
t cents per share). We have raised our FY2008 bottomline
n by 35% to $15.7 million based on potential contract
e awards. We have lowered our target price to 95 cents
e premised on nine times FY2008 PER, placing a 20%
o discount to peer valuation to factor in tight liquidity
, issue. Management is also declaring two cents dividend
for FY2007. — Kim Eng Research (Feb 28)
o of 25.5 cents. — Westcomb Research (Feb 28)
d
w
s
t
K
n
-
p
d
s
d
r
f
o
e
t
s
f
PSL Holdings (Feb 28: 22 cents)
MAINTAIN BUY. Revenue surged 113.3% in FY2007 to
$53 million, exceeding our forecast of $50.6 million,
contributed by the group’s core business segments, piling
and engineering services as well as trading and equipment
rental. Gross profit increased 113.5% to $12.9 million, in
line with the top line growth, maintaining gross profit
margin at 24.4%. Profit before tax (PBT) grew 157.4%
in FY2007 to $8.9 million, faster than top line growth,
mainly due to the group’s effective cost control. PSL
is currently trading at an attractive 3.4 times and 1.5
times FY2008’s price-to-earnings ratio and FY2007’s
price-to-book ratio respectively. We have projected sales
growth of 19.7% in FY2008. Price target of 29 cents
based on at five times FY2008 PER, accounting for its
small capitalisation and low trading depth, providing an
SC Global Developments (Feb 28: $1.76)
DOWNGRADE TO HOLD. SC Global reported FY2007
results that were below our expectations, due to lower
than expected revenue. Revenue declined 32% y-o-y to
$129.2 million while net profit increased 68% y-o-y to
$28.3 million. A final dividend of two cents per share
was declared. With the special interim dividend of 3.5
cents declared earlier, this works out to a yield of 2.7%
for FY2007. We expect SC Global to commence revenue
recognition for The Marq and Hilltops in FY2008. Given
the expected challenges in the high-end residential market
this year, we have lowered estimates for ASP, raised
construction costs and stretched sale periods for the two
projects. We ascribe a 30% discount to RNAV, lowering
our target price to $2.04. — DBS Vickers Securities (Feb
28)
Sing Holdings (Feb 28: 53 cents)
MAINTAIN BUY. Sing Holdings reported FY2007 revenue
of $95.7 million (+469.2% y-o-y) and net profit of $24.1
million (-24.1% y-o-y). The higher revenue was due to
the sale of 15 units at 38 Draycott Drive, recognition
of revenue from the sale of Meyer Residence based on
the progress of construction as well as the sale of units
in Eastgate that resulted in a net gain of $15.9 million.
However, FY2007 net profit was lower due to the absence
of gains from the divestment of Ocean Towers in Shanghai
in FY2006. We have reduced our fair value to 92 cents
by pegging our fair value to parity with RNAV. This is
because the construction costs of the residential projects
have increased and the expecting sales prices have been
reduced in our estimates to reflect the current cautious
property market sentiment. — Phillip Securities Research
(Feb 25)
THEEDGE SINGAPORE | MARCH 3, 2008 • 29
CAPITAL BROKERS’ DIGEST
ST Engineering (Feb 28: $3.47)
MAINTAIN BUY. STE posted a 13% rise in net profit to
$503.5 million, in line with our expectation of $504.1
million. Turnover grew 13% to $5,051 million. As expected,
aerospace remains the largest contributor to turnover,
accounting for 36% of sales. STE also declared a final
dividend of 14.88 cents, and total dividend for the year
was 16.88 cents, in line with its payout policy of 100% of
earnings. STE’s overall current order book stands at some
$9.49 billion. FY2008 and FY2009 forecast unchanged,
at $555.4 million and $605.2 million respectively. We
are also introducing our FY2010 net profit forecast of
$654.5 million. Three-year earnings compound annual
growth rate (CAGR) stands at 9.1%. STE’s consistent
dividend policy generates an outstanding yield of 5.1%
for FY2008. Our DCF-derived fair price target of $4.50
is maintained. — Kim Eng Research (Feb 27)
Techcomp Holdings (Feb 27: 44 cents)
MAINTAIN BUY. Net profit increased 38.2% y-o-y to
US$6 million in FY12/2007 on the back of 20% revenue
growth to US$65.8 million, in line with consensus and
our estimates. Excluding one-time gain of US$700,000
from disposal of properties, core earnings still rose by
a respectable 22.1% y-o-y. On a segmental basis, the
distribution and manufacturing business recorded sales
growth of 19.5% and 22.6%, respectively, driven by
robust demand in China (+21.7% y-o-y) and Indonesia
(+101.7% y-o-y). The Group has declared a final dividend
of $0.012 per share, implying a decent yield of about
3.1%. The counter is currently trading at a compelling
valuation of 6.3 times FY12/2008 PER and 4.8 times
FY12/2009 PER. Price target of 69 cents, pegged at 10
times FY12/08 PER. — SBI E2-Capital (Feb 27)
Tsit Wing Int’l Holdings (Feb 26: 29.5 cents)
MAINTAIN HOLD. Revenue grew 12.8% in FY2007 to
HK$362.8 million, in line with our forecast of $361 million,
mainly contributed by 83% growth in China market, of
which a significant portion of the growth came from sale
of blended tea and grocery products. Gross Profit Margin
(GPM) shrunk 4.3% in FY2007 to 38.5%, in line with our
expected GPM of 38.7%, as a result of the continuous
rise in the cost of raw coffee beans and tea leaves. Tsit
Wing declared a final dividend of HK$0.075 per share,
bringing total dividend to HK$0.11 for a yield of 6.7%.
Taking into account the surge in raw material prices in
early 2008, we are lowering our GPM to 35.5%, leading
to a 3.6% revision to our earnings forecast for FY2008 to
HK$36.7 million. We introduced our FY2009 forecast and
roll forward our valuations to FY2009E earnings, pegged
at seven times FY2009E earnings to arrive at a price target
E
30 • THEEDGE SINGAPORE | MARCH 3, 2008

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COMMODITIES

Gold powers to new heights,

crude oil goes all-time high Precious metals prices (Feb 29)
Feb 29: Gold powered to a new high near $980
METAL LAST CHANGE PCT CHG YTD PCT CHG TURNOVER
an ounce today after crude oil set an all-time
Sp Spot Gold 972.75 3.85 +0.40 16.82
high of above US$103 ($143.55) a barrel, igniting
inflation worries and another round of buying Spot Silver 19.82 0.08 +0.41 34.19
from investors and speculators. Spot Platinum 2161.00 26.00 +1.22 42.17
Palladium jumped to its highest level in more Spot Palladium 582.00 22.00 +3.93 58.15
than six years and silver hit a 27-year peak. TOCOM Gold 3291.00 -6.00 -0.18 7.55 91070
Platinum rebounded from its lows but given the TOCOM Platinum 7051.00 34.00 +0.48 32.07 40945
absence of new developments in South Africa’s TOCOM Silver 673.50 12.00 +1.81 24.49 2257
supply problems, gains are likely to be capped. TOCOM Palladium 2011.00 80.00 +4.14 48.85 24559
Gold jumped as high as US$975.90 an ounce, Euro/Dollar 1.5210
up from US$968.90/US$969.70 late in New York
Dollar/Yen 104.29
on Thursday. Gold has gained more than 16%
this year, and the next upside target pegged by TOCOM prices in yen per gram, except TOCOM silver which is
dealers is US$1,000. priced in yen per 10 grams. Spot prices in $ per ounce.
Record high oil and expectations of more
interest rate cuts in the US add to inflation
pressures, elevating gold’s appeal as a hedge
against rising prices, while volatile stock markets adjusted record is US$2,079 an ounce. Bernanke warned some small US banks could fail, mines in South Africa, accounting for 80% of
have encouraged investors to shift some of their “Most of the funds are buying inflation suggesting that interest rates may fall more. world output, were shut for five days at the
money into gold and other precious metals. hedges such as gold, silver and oil. It’s still Spot platinum rose to US$2,161/US$2,168 height of last month’s power crisis.
“The target is US$1,000. I personally hope it a bull market, where hedge funds and banks an ounce from US$2,135/US$2,140 an ounce The most active February 2009 contract on the
will be US$1,000 within a month,” said Yukuji buy precious metals,” said William Kwan, a late in New York to track a rebound in Tokyo Tokyo Commodity Exchange hit a low of ¥6,839
Sonoda, precious metals analyst at Daiichi Com- dealer at Phillip Futures in Singapore. futures. Platinum has dropped more than 1% ($91.66) per gram before funds bought on dips
modities in Tokyo, adding that gold was likely be “I think inflation is really getting out of since last week’s record high of US$2,192 and pushed up the contract to a high of ¥7,069. It
driven by movements in oil in coming weeks. hand. I am looking at US$955 for support and an ounce. Automakers, who had bought the ended at ¥7,051, up ¥34 from Thursday’s close.
Crude oil rallied to another record above resistance at US$985,” said Kwan, who pegged metal on fears of further price hikes and min- “This is driven by funds, and there’s no
US$103 a barrel as Ecuador shut a key export upside target for silver at US$20. ing disruptions in South Africa, were on the buying from the general public. What we’ve
pipeline and a fire hit a major European natural Silver rose as high as US$19.92 an ounce, its sidelines waiting for a correction, said Sonoda seen is purely a technical rebound,” said a
gas plant. highest in 27 years, up from US$19.74/US$19.79 of Daiichi Commodities. dealer in Tokyo.
While oil is at a record price in inflation-ad- an ounce in New York. “Car makers are waiting for the price to Palladium hit a high of US$582 an ounce,
justed as well as nominal terms, gold has lagged. The dollar tumbled to a three-year low versus decrease to US$2,000,” he said. its strongest in more than six years, up from
According to analysts at GFMS gold’s inflation- the yen and held near record troughs against Platinum, used in jewellery and auto cata- US$560/US$564 late in New York. — By Lewa
other currencies after Federal Reserve chief Ben lysts, has jumped more than 40% this year after Pardomuan

CDS GLOBAL MARKETS

Credit spreads widen as US economy fears mount Stocks slip, dollar tumbles on economy
Feb 29: European credit spreads widened on Friday, with indexes concerns Rates as at Feb 29 (%)
creeping towards record highs touched last week, after comments Feb 29: Stocks slipped and the dollar tumbled to historic
from US Federal Reserve chairman Ben Bernanke spooked markets DEPOSIT RATE GOV BOND
lows on Friday as the US Federal Reserve’s warning on the
about the state of the economy. health of domestic banks raised concerns over a US reces- 1M 3M 6M 1Y 10Y
Bernanke, in a second day of testimony before Congress on Thursday, sion, driving oil and safe-haven gold to record peaks. AUD 7.3700 7.7900 8.1300 8.4100 6.2150
said small banks that invested heavily in real estate could collapse as Fed chairman Ben Bernanke said on Thursday some CNY 3.3300 3.7800 4.1400 4.1298
the housing downturn drains their capital. small US banks could fail during the current market turmoil HKD 2.6800 2.3200 2.2200 2.1200 2.9040
By 0857 GMT, the investment-grade Markit iTraxx Europe index stemming from the fallout in US subprime mortgages, in IDR 4.3340 4.8700 4.9660 5.8510 10.2180
was at 122 basis points (bps), according to data from Markit, 8.5 bps remarks which fanned expectations for an aggressive inter- INR 1.1730 2.6920 3.0350 3.2700 7.5420
wider than late Thursday. est rate cut in March. JPY 0.7700 0.8500 0.8900 1.1100 1.3600
The Markit iTraxx Crossover index, made up of 50 mostly “junk”- However, Bernanke also acknowledged inflation could MYR 1.6140 1.4780 1.7460 2.0930 3.6780
rated credits, was at 594 bps, 16 bps wider. It had touched 600 bps in complicate the central bank’s effort to spur the economy,
early trade. Weak data has also stoked fears the fragile US economy NZD 8.5000 8.9400 8.8000 9.0000 6.4000
which weighed on risky assets.
will tip into recession. The FTSEurofirst 300 index was down 0.1% on the day, PHP 3.3340 3.6730 4.0430 2.1490 7.0690
Both of the major credit indexes have widened steadily since having hit a one-week low earlier in the day. The MSCI THB 6.1790 5.6550 4.8320 3.6220 4.4700
Wednesday, bringing a halt to a tentative rally earlier in the week. main world equity index fell a quarter percent. TWD 1.7090 1.7400 1.6110 1.6760 2.4550
They are close to record highs of 137 bps for the Europe index and The dollar fell to a three-year low of ¥104.23 while it hit USD 3.0400 3.0000 2.8100 2.8200 3.6431
levels above 600 bps on the Crossover. record lows of US$1.5238 per euro and tumbled to historic
In the cash bond market, the FTSE Euro Corporate Bond Index troughs against a basket of major currencies.
showed investment-grade corporate bonds in euros yielding an aver- Interest rate futures markets are pricing in an almost keen to cut interest rates to bolster the economy. This is in
age 122.1 bps more than similarly dated government bonds, 0.5 bps 40% chance of the Fed lowering the cost of borrowing by turn prompting investors to buy safe-haven gold and other
higher on the day. three-quarters of a percentage point in March. basic resources, creating a self-fulfilling cycle.
In underlying government bond markets, the yield on the interest Gold, a safe-haven asset, which offers an inflation hedge, Emerging sovereign spreads widened 2 basis points while
rate sensitive two-year Schatz was 3.219%, 4.8 bps lower on the day. rose as high as US$975 an ounce, bringing gains this year to emerging stocks were down 0.8%.
The 10-year Bund yielded 3.972%, 1.7 bps lower. more than 16% this year. The cost of corporate bond insurance rose after Bernanke’s
The 10-year euro swap rate was 4.376%. — By Natalie Harrison US light crude had risen to US$103.05 a barrel, before warning, with the iTraxx Crossover index, most-widely watched
eroding gains, after Ecuador shut a key export pipeline and a indicator for European credit market sentiment, widening to
fire hit a major European natural gas plant. 594 basis points.
GFI, CREDIT DERIVATIVES BROKER. EXCLUSIVELY FROM REUTERS

Surging energy, commodity and food prices are fanning The March Bund future rose 0.3%, capitalising on woes
The most active traded CDS (credit default inflation concerns which could tie the hands of central banks in stock markets. — By Natsuko Waki E

swap) in basis points (Feb 29)

NAME LAST CCY GV1 TEXT GV2 TEXT CLOSE SGDAUD -8.87%
WELLS FARGO 91 USD 5Y SENIOR 91
SGDCNY 0.68%
MEXICO 115 USD 5Y SENIOR 113
HSBC FINCE CORP 242 USD 5Y SENIOR 242 SGDHKD 9.18%
THOMSON 430 EUR 5Y SENIOR 420 SGDIDR 8.54%
CAPITAL ONE FNCL 405 USD 5Y SENIOR 405
SGDINR -0.68%
TURKEY 240 USD 5Y SENIOR 240
MERRILL LYNCH CO 200 USD 5Y SENIOR 200 SGDJPY -2.69%
RUSSIA 125 USD 5Y SENIOR 125 SGDMYR -0.17%
WACHOVIA CORP 160 USD 5Y SENIOR 160
SGDNZD -6.56%
UBS 140 EUR 5Y SENIOR 123
AMERICAN EXPRESS 0 USD 0 SGDPHP -8.75%
BRAZIL 142 USD 5Y SENIOR 130 2.76%
SGDTHB
RUSSIA 125 USD 5Y SENIOR 125
ELECTROLUX AB 130 EUR 5Y SENIOR 130 SGDTWD 3.02%
GAZPROM 252 USD 5Y SENIOR 252 SGDUSD 9.61%
JPMORGAN CHASE 89 USD 5Y SENIOR 89 -10.00% -5.00% 0.00% 5.00% 10.00%
Sing vs Asia currencies (y-o-y, Feb 29)

SEE BLOOMBERG TELEVISION ON STARHUB CABLE TV, CHANNEL 25.
SINGAPORE
FSSTI Straits Times Index ranked returns (per cent change)
SINGAPORE equity movers
Property companies are worst-perform-
ing stocks
Feb 29 — The Straits Times Index fell 47.70, or
1.6%, to 3,026.45 at the close of trading. The
index fell for a fourth straight month, declining
0.8% this month, it longest losing streak since
the four months to Feb 28, 2003.
City Developments Ltd, Singapore’s sec-
ond-largest developer, lost 52 cents, or 4.2%,
WORLD
Equity indices: Ranked returns
BEST & WORST PERFORMING MEMBERS FOR THE WEEK OF FEB 22–29, 2008
Oil may fall as US supplies grow
and demand drops, survey shows
C
rude oil may fall this week because of
rising US inventories and weakening fuel
demand as the nation’s economy slows
and refineries perform maintenance.
Twenty-one of 34 analysts surveyed by
Bloomberg News, or 62%, said prices will drop
through March 7. Six of the respondents, or
18%, said futures will rise and seven forecast
that prices will be little changed. Two weeks
FEB 22–29, 2008
to $11.96, the third-worst performing stock
on the index. CapitaLand Ltd, the city-state’s
largest developer, fell 33 cents to $6.30, the
second-worst performing stock on the index.
Keppel Land Ltd, the third largest, declined 20
cents to $5.90.
ABN Amro Holding NV expects the prices
of luxury property to decline 10% to 20% by
year-end. The prices for mass-market property
Currencies: Per cent change
BEST & WORST PERFORMING MEMBERS FOR THE WEEK OF FEB 22–29, 2008
ago, 69% said oil would drop.
Crude-oil supplies have jumped 25.7 mil-
lion barrels, or 9.1%, in the past seven weeks,
according to an Energy Department report last
Wednesday. Total implied fuel demand aver-
aged 20.6 million barrels a day in the past four
weeks, down 2.4% from a year earlier, the re-
port showed.
Oil surged to a record the past two days af-
FSSTI Straits Times Index equity index movers
will climb 10%, analyst Fera Wirawan said.
Advance SCT Ltd, provider of printed-circuit-
board testing services, tumbled 6.5 cents, or
16%, to 34.5 cents, the second worst-performing
stock on the broader FTSE Straits Times All Share
Index. The company reported 2007 net income
dropped 47% to $4.2 million as administrative
expenses surged 85%.
UOB KayHian Holdings Ltd, Singapore’s big-
ter the US dollar dropped to an all-time low
against the euro, prompting investors to buy
commodities as an inflation hedge.
“If the US dollar ever manages an upward
correction to its downtrend, we think crude-
oil traders will be surprised to discover that
there is little in the way of physical tight-
ness to help cushion the downside,” says
Tim Evans, an energy analyst at Citigroup
THEEDGE SINGAPORE | MARCH 3, 2008 • 31
CAPITAL
Bloomberg Financial Markets Commodities News
Tel: (65) 6212 1000 | Fax: (65) 6212 1111
FEB 29, 2008
gest brokerage by market value, rose three cents
to $2.04. The company reported 4Q profit surged
81% to $62 million and commission income rose
56% to $159 million, it said.
Suntec Real Estate Investment Trust fell
nine cents, or 5.6%, to $1.51, its biggest drop
since Jan 22.
Wilmar International Ltd, fell 12 cents, or
2.7%, to $4.39, its fourth day of declines. E
MALAYSIAN equity movers
AirAsia, IGB fall
Feb 29 — Malaysia’s Kuala Lumpur Com-
posite Index fell 10.87, or 0.8%, to close
at 1,357.40, the lowest since Jan. 22. The
measure fell 2.6% this month, taking a
two-month decline to 6.1%.
AirAsia Bhd dropped three sen (1.3
cents) to RM1.56. IGB Corp fell nine sen
to RM1.92, its biggest decline since Jan
22, after the developer said profit in 4Q
fell 35% to RM19.2 million.
OSK Holdings Bhd rose six sen to
RM1.95 after the brokerage said fourth-
quarter profit climbed 14% to RM40.7
million from a year earlier. Malaysian
Resources Corp added 11 sen to RM2.01,
snapping a seven-day losing streak.
Malaysian Airline System Bhd, the
national carrier, fell 16 sen to RM4.12 on
speculation that record crude oil prices
would erode earnings. E
Global Markets Inc in New York.
Crude oil for April delivery rose US$3.78
($5.27), or 3.8%, to US$102.59 a barrel last week
on the New York Mercantile Exchange. Futures
reached US$102.97 a barrel last Thursday, the
highest price since trading began in 1983.
The oil survey has correctly predicted the
direction of prices 52% of the time since its
introduction. — Bloomberg LP E
32 • THEEDGE SINGAPORE | MARCH 3, 2008

CAPITAL INSIDER MOVES

Tat Hong increases stake in associate Yongmao

| BY JOAN NG | the back of revenue of 278.3 million Venture Partners. Salim now has a
renminbi. And for 1Q2008, net profit 50.8% stake in Gallant.
Gallant Venture Yongmao Holdings

T
at Hong Holdings, the larg- was 38.6 million renminbi while rev- Gallant runs industrial parks on the 70000
Volume (’000) Price ($) 1.5 60000
Volume (’000) Price ($) 0.465
est crane rental company in enue rose to 158.3 million renmin- Indonesian islands of Batam and Bin- 1.4
60000 50000
Singapore, last week bought bi. Business is brisk and Yongmao’s tan and it owns 18,200ha — roughly 1.3 0.46
50000
nine million shares in its new- facilities in China are already being one-third the size of Singapore — of re- 1.2 40000
0.455
40000 1.1
ly-listed associate Yongmao worked at full capacity. The company sort and industrial land on Bintan that 30000
30000 1.0
Holdings. The move, which follows hopes to raise its manufacturing ca- it plans to sell. Buoyed by excitement 0.9 20000
0.45
20000
a similar open market purchase of pacity to 600 cranes a year from the on the company’s prospects in Indone- 0.8 0.445
10000 10000
9.8 million shares on Feb 22, takes present 200. Construction on a new sia, the stock had soared from its 2006 0.675
Tat Hong’s stake in the China-based facility in the province of Liaoning IPO price of 50 cents a share to a high 0 0.6 0 0.44

tower crane manufacturer to 20% has already begun and is expected of $1.50 in February last year. Feb 3, 2007 Feb 28, 2008 Feb 21, 2008 Feb 28, 2008
from 18% previously. Prior to the to be completed by year end. Yong- However, in March last year, it

BLOOMBERG

BLOOMBERG
IPO, Tat Hong had a 21.1% stake mao plans to use about 60% of the emerged that an Indonesian com- Net profit FY Dec 2007 $14.7 mil Net profit FY March 2007 59.2 mil
in Yongmao, which was reduced to IPO proceeds to help in the construc- pany PT Raflesia Matrawisata was FY Dec 2006 $29.0 mil renminbi
15% post-IPO. tion of this facility and another 30% claiming ownership of some portions Share price Feb 28, 2008 67.5 cents Share price Feb 28, 2008 44.5 cents
Yongmao was listed on the main to buy new machinery. of Gallant’s land in Bintan. The idea 52-week high Jul 5, 2007 $1.45 52-week high Feb 27, 2008 49.5 cents
board of the Singapore Exchange ear- Meanwhile, Anthoni Salim of In- of a potential legal squabble sent in- 52-week low Feb 26, 2008 66 cents 52-week low Feb 20, 2008 35 cents
lier this month. The company offered donesian conglomerate the Salim vestors running for cover and shares PER (times) FY2007 110.7 PER (times) FY2007 0.1
111.6 million shares at 35 cents each. Group — the world’s largest instant of Gallant took a plunge. FY2008 (est) 14.1 Gross dividend yield —
The stock surged 11 cents or 31% noodles maker — has been increas- Gallant has since provided re- Gross dividend yield —
to 46 cents on its first day of trad- ing his stake in Gallant Venture. Last assurance that the land ownership
ing and was the most actively-trad- week, Salim purchased one million claims by PT Raflesia have been
ed by volume. Since then, however, shares in Gallant on the open mar- rejected by both the district court
interest in the stock has died down ket through Dornier Profits, a com- and, on appeal, the high court. lant’s less than stellar earnings. to lower land sale revenue and lower
and Yongmao closed last Thursday pany in which he holds a more than However, the stock has showed For FY2007, the company reported rental revenue, adding that the sub-
at 44.5 cents. 50% stake. Earlier this month, Salim no sign of recovering, falling to a a 9.5% drop in revenue to $234.3 prime crisis and potential recession
For FY2007 ended March, Yong- also increased his stake in Gallant by 52-week intraday low of 66 cents million while net profit was down in the US have affected investment
mao recorded a net profit of 59.2 buying two million shares through last Tuesday. The weakness could 30.4% to $14.7 million. sentiment in Bintan, which may re-
million renminbi ($11.6 million) on Dornier Profits as well as Parallax have something to do with Gal- Management attributed the decline sult in lower land sales. E

FILING COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD AFTER CHANGE REASON
DATE (DISPOSED) SHAREHOLDER DIRECT DEEMED

FEB 22 ADAMPAK LTD -2,126,000 PRUDENTIAL ASSET MANAGEMENT (S) LTD — 12,874,000 SALES IN OPEN MARKET AT OWN DISCRETION (20/2)
FEB 20 AEI CORP LTD 100,000 ONG CHIN YEW 16,920,000 — OPEN MARKET PURCHASE (19/2)
FEB 22 APEX-PAL INT’L LTD 100,000 DOUGLAS FOO PEOW YONG 91,584,640 — OPEN MARKET PURCHASE (22/2)
FEB 22 APEX-PAL INT’L LTD 82,000 ANDY ONG SIEW KWEE 1,108,400 — OPEN MARKET PURCHASE (22/2)
FEB 27 APOLLO ENTERPRISES LTD 65,000 NG WEI YEOW 5,532,322 85,350,128 OPEN MARKET PURCHASE (25/2)
FEB 21 ARA ASSET MANAGEMENT LTD 10,000 LIM HOW TECK 300,000 10,000 OPEN MARKET PURCHASE (21/2)
FEB 20 ASA GROUP HLDGS LTD 71,000 POH CHOO BIN 14,516,000 — OPEN MARKET PURCHASE (20/2)
FEB 21 ASA GROUP HLDGS LTD 100,000 NG SHEK YAM 200,000 10,700,000 OPEN MARKET PURCHASE (21/2)
FEB 26 ASA GROUP HLDGS LTD 50,000 POH CHOO BIN 14,566,000 — OPEN MARKET PURCHASE (26/2)
FEB 21 ASCENDAS INDIA TRUST 7,009,900 THE CAPITAL GROUP OF COMPANIES — 67,939,900 OPEN MARKET PURCHASE (21/2)
FEB 21 ASIA DEKOR HLDGS LTD 10,018,000 VALUE PARTNERS LTD — 58,150,000 PURCHASE OF SHARES (20/2)
FEB 20 ASIA POWER CORP LTD 78,000 HE JUN — 78,000 OPEN MARKET PURCHASE (12/2/07)
FEB 27 ASIA POWER CORP LTD 40,000,000 ADDYSON XUE 1,500,000 — PLACEMENT OF SHARES (5/2)
FEB 25 ASPIAL CORP LTD 105,000 KOH WEE SENG 14,190,800 69,958,500 OPEN MARKET PURCHASE (25/2)
FEB 27 ASPIAL CORP LTD 26,000 TAN SU LAN @ TAN SOO LUNG 4,030,300 71,403,200 OPEN MARKET PURCHASE (25/2)
FEB 26 ASPIAL CORP LTD 100,000 KOH WEE SENG 14,290,800 69,958,500 OPEN MARKET PURCHASE (26/2)
FEB 22 AUSTON INT’L GROUP LTD -6,000,000 HONG BO EDUCATION DEVT HLDGS LTD 34,000,000 — SALES IN OPEN MARKET AT OWN DISCRETION (22/2)
FEB 21 AVI-TECH ELECTRONICS LTD 200,000 LIM ENG HONG 79,638,350 26,390,000 OPEN MARKET PURCHASE (21/2)
FEB 21 AVI-TECH ELECTRONICS LTD 100,000 WONG WEE LIM, WILLIAM 5,780,000 — OPEN MARKET PURCHASE (21/2)
FEB 22 AZTECH SYSTEMS LTD 53,000 NG TECK SIM, COLIN 563,000 — OPEN MARKET PURCHASE (21/2)
FEB 22 AZTECH SYSTEMS LTD 47,000 NG TECK SIM, COLIN 610,000 — OPEN MARKET PURCHASE (22/2)
FEB 22 BABCOCK & BROWN STRUCTURED FINANCE FUND LTD 160,963 EVEREST BABCOCK & BROWN LTD — 27,134,310 SALE OF SHARES AND ALLOTMENT OF NEW CAPITAL (20/2)
FEB 25 BH GLOBAL MARINE LTD 95,051,200 BENG HUI HLDGS (S) PTE LTD 282,828,600 — OTHERS (21/2)
FEB 21 C & O PHARM TECH (HLDGS) LTD 661,000 GAO BIN 449,000 363,162,000 OPEN MARKET PURCHASE (20/2)
FEB 22 C & O PHARM TECH (HLDGS) LTD 1,000,000 GAO BIN 449,000 364,162,000 OPEN MARKET PURCHASE (21/2)
FEB 22 CHARTERED SEMICONDUCTOR MFG LTD 40,000 ANDRE BORREL 76,060 — EXERCISE OF SHARE OPTIONS/CONVERTIBLES (12/2)
FEB 26 CHASEN HLDGS LTD -500,000,000 YAP KOON BEE @ LOUIS YAP 2,996,316,920 — SALES IN OPEN MARKET AT OWN DISCRETION (25/2)
FEB 25 CHINA PRECISION TECHNOLOGY LTD 10,000,000 DYNAMIC GOAL FINANCE LTD 224,192,592 — MARRIED DEAL (25/2)
FEB 25 CHINA PRECISION TECHNOLOGY LTD -30,000,000 JHT INVESTMENTS PTE LTD 50,000,000 — SALES IN OPEN MARKET AT OWN DISCRETION (25/2)
FEB 19 CHINA SUNSINE CHEM HLDGS LTD -612,000 TOE TEOW HENG — 25,208,097 SALES IN OPEN MARKET AT OWN DISCRETION (19/2)
FEB 27 CITYNEON HLDGS LTD 1,442,000 STANLEY TAN POH LENG 10,424,000 — OPEN MARKET PURCHASE (25/2)
FEB 22 COSCO CORP (S) LTD 50,000 POH HEE BOON 177,000 35,000 OPEN MARKET PURCHASE (22/2)
FEB 20 CYBER VILLAGE HLDGS LTD -997,000 JUSTIN LEONG MING LOONG — 15,090,000 SALES IN OPEN MARKET AT OWN DISCRETION (15/2)
FEB 20 CYBER VILLAGE HLDGS LTD -1,000,000 JUSTIN LEONG MING LOONG — 14,090,000 SALES IN OPEN MARKET AT OWN DISCRETION (18/2)
FEB 20 CYBER VILLAGE HLDGS LTD -500,000 JUSTIN LEONG MING LOONG — 13,590,000 SALES IN OPEN MARKET AT OWN DISCRETION (19/2)
FEB 20 DAYEN ENVIRONMENTAL LTD -500,000 JOHN LEE THIAN GUAN 39,904,750 — MARRIED DEAL (20/2)
FEB 25 DAYEN ENVIRONMENTAL LTD -925,000 KOR HOCK LAI 22,038,000 — SALES IN OPEN MARKET AT OWN DISCRETION (22/2)
FEB 21 DBS GROUP HLDGS LTD 7,782,000 THE BANK OF NEW YORK MELLON CORP — 76,895,315 OTHERS (24/1)
FEB 25 DELONG HLDGS LTD -53,557,498 ZHAO JING — 358,817,502 OTHERS (25/2)
FEB 19 DEVOTION ENERGY GROUP LTD 210,000 HE JUN JOSEPH — 210,000 OPEN MARKET PURCHASE (28/12/07)
FEB 20 EXCELPOINT TECHNOLOGY LTD 25,000 ALBERT PHUAY YONG HEN 237,779,520 12,990,840 OPEN MARKET PURCHASE (19/2)
FEB 21 FORTUNE REAL ESTATE INV TRUST -1,199,000 LIM HWEE CHIANG — 12,696,899 OTHERS (21/2)
FEB 20 FRAGRANCE GROUP LTD 10,000 KOH WEE MENG 610,665,000 91,825,000 OPEN MARKET PURCHASE (20/2)
FEB 26 FRAGRANCE GROUP LTD 150,000 KOH WEE MENG 610,815,000 91,825,000 OPEN MARKET PURCHASE (26/2)
FEB 21 GALLANT VENTURE LTD 1,000,000 ANTHONI SALIM — 1,222,411,776 PURCHASE OF SHARES (20/2)
FEB 21 GALLANT VENTURE LTD 1,000,000 DORNIER PROFITS LTD 85,000,000 628,293,350 OPEN MARKET PURCHASE (21/2)
FEB 21 GALLANT VENTURE LTD 1,000,000 ANTHONI SALIM — 1,223,411,776 PURCHASE OF SHARES (21/2)
FEB 26 GALLANT VENTURE LTD 1,000,000 DORNIER PROFITS LTD 86,000,000 628,293,350 OPEN MARKET PURCHASE (26/2)

The information in Insider Moves is provided as a service to readers. The explanations filed are at times abridged, indirect interest declarations summarised together with direct interests and figures totalled for space. While every effort is made to ensure accuracy, the information presented
is not the official record of shareholder filings. Readers who are interested should check the original filings filed with the SGX.
 THEEDGE SINGAPORE | MARCH 3, 2008 • 33

CAPITAL INSIDER MOVES

FILING COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD AFTER CHANGE REASON
DATE (DISPOSED) SHAREHOLDER DIRECT DEEMED

FEB 26 GALLANT VENTURE LTD 1,000,000 ANTHONI SALIM — 1,224,411,776 PURCHASE OF SHARES (26/2)
FEB 20 GEMS TV HLDGS LTD -4,264,000 EAGLE EYE ASSOCIATES LTD — 104,957,250 SALE OF SHARES (18/2)
FEB 21 GEMS TV HLDGS LTD -30,198,000 EAGLE EYE ASSOCIATES LTD — 74,759,250 SALE OF SHARES (19/2)
FEB 22 GEMS TV HLDGS LTD -4,783,000 EAGLE EYE ASSOCIATES LTD — 69,976,250 SALE OF SHARES (20/2)
FEB 22 GEMS TV HLDGS LTD -2,657,000 EAGLE EYE ASSOCIATES LTD — 67,319,250 SALE OF SHARES (21/2)
FEB 25 GEMS TV HLDGS LTD -3,317,000 EAGLE EYE ASSOCIATES LTD — 64,002,250 SALE OF SHARES (22/2)
0.465
FEB 21 GREAT EASTERN HLDGS LTD 2,000 MICHAEL WONG PAKSHONG 2,000 — OPEN MARKET PURCHASE (21/2)
0.46 FEB 27 GREAT EASTERN HLDGS LTD 3,000 MICHAEL WONG PAKSHONG 5,000 — OPEN MARKET PURCHASE (26/2)
FEB 22 GUL TECHNOLOGIES SINGAPORE LTD 50,000 TAN KIM LEONG 50,000 — OPEN MARKET PURCHASE (23/2)
0.455
FEB 25 HIAP SENG ENGINEERING LTD 300,000 M RAJARAM 300,000 — OPEN MARKET PURCHASE (25/2)
0.45 FEB 21 HONGGUO INT’L HLDGS LTD -600,000 SCHRODER INVESTMENT MANAGEMENT GROUP — 19,632,000 OTHERS (19/2)
FEB 21 IDT HLDGS (S) LTD 390,000 YEO SENG CHONG 802,000 8,150,000 OPEN MARKET PURCHASE (21/2)
0.445
FEB 26 ISDN HLDGS LTD 500,000 KARL-WALTER BRAUN 18,500,000 — OPEN MARKET PURCHASE (22/2)
0.44 FEB 27 ISDN HLDGS LTD 850,000 KARL-WALTER BRAUN 19,350,000 — OPEN MARKET PURCHASE (26/2)
FEB 20 KIAN ANN ENGINEERING LTD 100,000 LAU HWEE BENG 51,824,770 10,236,500 OPEN MARKET PURCHASE (18/2)
FEB 22 KING’S SAFETWEAR LTD 90,000 YEO LOY KIANG 1,797,000 — OPEN MARKET PURCHASE (21/2)
BLOOMBERG

FEB 25 LIANG HUAT ALUMINIUM LTD 45,267 BENJAMIN TAN HAI SENG — 1,800,045,267 OTHERS (17/9/07)
FEB 26 LEEDEN LTD 35,000 ONG NAI PEW — 9,733,000 OPEN MARKET PURCHASE (25/2)
ts FEB 22 LMA INT’L N V 4,914,000 PORTER ORLIN LLC — 88,012,000 OPEN MARKET PURCHASE (20/2)
ts FEB 25 MAP TECHNOLOGY HLDGS LTD 197,000 DAVID LEE KUO CHUEN — 28,600,115 OPEN MARKET PURCHASE (21/2)
FEB 26 MAP TECHNOLOGY HLDGS LTD 141,000 DAVID LEE KUO CHUEN — 28,741,115 OPEN MARKET PURCHASE (22/2)
FEB 27 MAP TECHNOLOGY HLDGS LTD 124,000 DAVID LEE KUO CHUEN — 28,865,115 OPEN MARKET PURCHASE (26/2)
FEB 26 MERMAID MARITIME PUBLIC CO LTD 30,000 M L CHANDCHUTHA CHANDRATAT 140,000 — OPEN MARKET PURCHASE (26/2)
FEB 26 MIDSOUTH HLDGS LTD 3,544,000 LEE CHONG MIN — 59,091,000 OPEN MARKET PURCHASE (22/2)
FEB 27 OLAM INT’L LTD 500,000 SUNNY GEORGE VERGHESE 80,022,630 15,000,000 OPEN MARKET PURCHASE (27/2)
FEB 20 PACIFIC SHIPPING TRUST 100,000 PACIFIC INT’L LINES (PTE) LTD 116,643,000 220,000 OPEN MARKET PURCHASE (19/2)
FEB 15 PT BERLIAN LAJU TANKER TBK 2,926,000 PT TUNGGALADHI BASKARA 2,232,807,764 138,000,000 OPEN MARKET PURCHASE (14/2)
wer FEB 18 PT BERLIAN LAJU TANKER TBK 2,982,000 PT TUNGGALADHI BASKARA 2,235,789,764 138,000,000 OPEN MARKET PURCHASE (15/2)
ub- FEB 19 PT BERLIAN LAJU TANKER TBK 3,831,000 PT TUNGGALADHI BASKARA 2,239,620,764 138,000,000 OPEN MARKET PURCHASE (18/2)
ion FEB 20 PT BERLIAN LAJU TANKER TBK 3,515,000 PT TUNGGALADHI BASKARA 2,243,135,764 138,000,000 OPEN MARKET PURCHASE (19/2)
ent FEB 21 PT BERLIAN LAJU TANKER TBK 2,500,000 PT TUNGGALADHI BASKARA 2,245,635,764 138,000,000 OPEN MARKET PURCHASE (20/2)
re- FEB 21 RICKMERS MARITIME 50,000 LIM HOW TECK 350,000 — OPEN MARKET PURCHASE (20/2)
E FEB 21 RICKMERS MARITIME 10,000 LIM HOW TECK 350,000 10,000 OPEN MARKET PURCHASE (21/2)
FEB 26 RICKMERS MARITIME 33,000 LEE SUET FERN 333,000 — OPEN MARKET PURCHASE (25/2)
FEB 25 SAIZEN REAL ESTATE INV TRUST 944,094 ARNOLD IP TIN CHEE — 1,273,094 OTHERS (21/2)
FEB 20 SCORPIO EAST HLDGS LTD 15,000 ANG SIN LIU 8,330,738 — OPEN MARKET PURCHASE (18/2)
FEB 20 SCORPIO EAST HLDGS LTD 316,000 ANG SIN LIU 8,646,738 — OPEN MARKET PURCHASE (19/2)
FEB 22 SCORPIO EAST HLDGS LTD 180,000 ANG SIN LIU 8,826,738 — OPEN MARKET PURCHASE (21/2)
FEB 22 SCORPIO EAST HLDGS LTD 134,000 ANG SIN LIU 8,960,738 — OPEN MARKET PURCHASE (22/2)
FEB 20 SIM LIAN GROUP LTD 404,000 KUIK AH HAN 5,305,480 347,455,480 OPEN MARKET PURCHASE (20/2)
FEB 21 SIM LIAN GROUP LTD 360,000 KUIK AH HAN 5,305,480 347,816,480 OPEN MARKET PURCHASE (21/2)
FEB 20 SING INVESTMENTS & FINANCE LTD 20,000 AW KIM CHEN — 12,065,780 OPEN MARKET PURCHASE (19/2)
FEB 21 SING INVESTMENTS & FINANCE LTD 40,000 AW KIM CHEN — 12,105,780 OPEN MARKET PURCHASE (20/2)
FEB 26 SNF CORP LTD -1,461,000 NG HOCK CHING 9,942,670 — SALES IN OPEN MARKET AT OWN DISCRETION (22/2)
FEB 21 STAMFORD TYRES CORP LTD 40,000 WEE KOK WAH 26,065,554 53,768,319 OPEN MARKET PURCHASE (20/2)
FEB 22 STAMFORD TYRES CORP LTD 40,000 WEE KOK WAH 26,065,554 53,808,319 OPEN MARKET PURCHASE (21/2)
FEB 22 STRAITS TRADING CO LTD 3,427,493 THE CAIRNS PTE LTD 78,530,446 — OPEN MARKET PURCHASE (21/2)
FEB 22 STX PAN OCEAN CO LTD 3,180,000 MORGAN STANLEY 4,819,000 101,288,032 OPEN MARKET PURCHASE (20/2)
FEB 27 SYNEAR FOOD HLDGS LTD 7,360,000 LI WEI — 457,460,000 PURCHASE AND SALE OF SHARES (26/2)
FEB 20 THE ASCOTT GROUP LTD 19,016,523 SOMERSET CAPITAL PTE LTD 1,021,040,470 — OTHERS (20/2)
FEB 21 THE ASCOTT GROUP LTD 34,603,549 SOMERSET CAPITAL PTE LTD 1,055,644,019 — OTHERS (21/2)
FEB 22 THE ASCOTT GROUP LTD 63,005,884 SOMERSET CAPITAL PTE LTD 1,118,649,903 — OTHERS (22/2)
FEB 25 THE ASCOTT GROUP LTD 18,047,075 SOMERSET CAPITAL PTE LTD 1,136,696,978 — OTHERS (25/2)
FEB 26 THE ASCOTT GROUP LTD 20,161,781 SOMERSET CAPITAL PTE LTD 1,156,858,759 — OTHERS (26/2)
FEB 26 TTL HLDGS LTD 2,142,000 TAN KEE LIANG 31,562,000 — OPEN MARKET PURCHASE (26/2)
FEB 25 UMS HLDGS LTD -1,446,000 ARISAIG ASEAN FUND LTD 43,725,000 43,725,000 SALES IN OPEN MARKET AT OWN DISCRETION (21/2)
FEB 21 UNISTEEL TECHNOLOGY LTD -452,000 FMR LLC ON BEHALF OF THE MANAGED ACCOUNTS OF ITS
DIRECT AND INDIRECT SUBSIDIARIES & FIDELITY INT’L LTD — 27,779,500 MARKET TRANSACTION (20/2)
FEB 25 WILLAS-ARRAY ELEC (HLDGS) LTD 581,000 YEO SENG CHONG 1,050,000 17,985,000 OPEN MARKET PURCHASE (25/2)
FEB 20 YANGZIJIANG SHIPBUILDING HLDGS LTD -731,000 FMR LLC ON BEHALF OF THE MANAGED ACCOUNTS OF ITS
DIRECT AND INDIRECT SUBSIDIARIES & FIDELITY INT’L LTD — 164,393,000 SALES IN OPEN MARKET AT OWN DISCRETION (18/2)
FEB 22 YONGMAO HLDGS LTD 9,770,000 TAT HONG HLDGS LTD 79,749,369 — OPEN MARKET PURCHASE (22/2)
FEB 27 YONGMAO HLDGS LTD 9,006,000 TAT HONG HLDGS LTD 88,755,369 — OPEN MARKET PURCHASE (27/2)

Share buybacks
DATE COMPANY SHARES ACQUIRED SHARE PRICE CUMULATIVE DATE COMPANY SHARES ACQUIRED SHARE PRICE CUMULATIVE
HIGH LOW NET OUTSTANDING HIGH LOW NET OUTSTANDING
TREASURY SHARES TREASURY SHARES

FEB 12 AZTECH SYSTEMS LTD 305,000 0.260 0.260 10,098,000 FEB 27 SINO-ENVIRONMENT TECH GRP LTD 1,000,000 1.313 1.313 3,550,000
FEB 15 AZTECH SYSTEMS LTD 120,000 0.265 0.265 10,218,000 FEB 11 UNITED OVERSEAS BANK LTD 210,000 17.400 17.000 15,937,000
FEB 19 AZTECH SYSTEMS LTD 100,000 0.255 0.255 10,318,000 FEB 12 UNITED OVERSEAS BANK LTD 200,000 17.200 17.040 16,137,000
FEB 20 AZTECH SYSTEMS LTD 110,000 0.250 0.250 10,428,000 FEB 13 UNITED OVERSEAS BANK LTD 200,000 17.640 17.260 16,337,000
FEB 22 AZTECH SYSTEMS LTD 50,000 0.245 0.245 10,578,000 FEB 14 UNITED OVERSEAS BANK LTD 200,000 17.960 17.700 16,537,000
FEB 26 AZTECH SYSTEMS LTD 290,000 0.250 0.235 10,868,000 FEB 15 UNITED OVERSEAS BANK LTD 200,000 18.220 17.660 16,737,000
FEB 27 AZTECH SYSTEMS LTD 150,000 0.245 0.240 11,018,000 FEB 18 UNITED OVERSEAS BANK LTD 200,000 18.360 17.800 16,937,000
FEB 25 CHINA PRECISION TECHNOLOGY LTD 19,900,000 0.270 0.270 21,291,000 FEB 19 UNITED OVERSEAS BANK LTD 150,000 18.440 18.200 17,087,000
FEB 26 CHUAN HUP HLDGS LTD 201,000 0.360 0.350 43,213,000 FEB 20 UNITED OVERSEAS BANK LTD 200,000 18.120 17.860 17,287,000
FEB 27 CHUAN HUP HLDGS LTD 258,000 0.360 0.350 43,471,000 FEB 22 UNITED OVERSEAS BANK LTD 150,000 18.680 18.080 17,587,000
FEB 22 DBS GROUP HLDGS LTD 50,000 17.900 17.780 1,505,000 FEB 25 UNITED OVERSEAS BANK LTD 150,000 18.860 18.720 17,737,000
FEB 26 INNOTEK LTD 359,000 0.790 0.750 10,435,000 FEB 26 UNITED OVERSEAS BANK LTD 150,000 18.900 18.480 17,887,000
FEB 27 INNOTEK LTD 149,000 0.795 0.785 10,584,000 FEB 27 UNITED OVERSEAS BANK LTD 150,000 18.900 18.420 18,037,000
FEB 25 SEMBCORP MARINE LTD 2,400,000 3.650 3.600 2,400,000 FEB 11 WING TAI HLDGS LTD 500,000 2.040 2.040 1,867,000
FEB 27 SEMBCORP MARINE LTD 1,358,000 3.760 3.700 3,758,000
nted
34 • THEEDGE SINGAPORE | MARCH 3, 2008

CAPITAL THOMSON FIRST CALL EARNINGS ESTIMATES REGIONAL

Thomson First Call Real Time Earnings Estimates
database features more than 200 data items, including
\ current and previous individual earnings estimates,
recommendations, growth rates and Thomson First Call
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About Thomson First Call companies in 60 countries and is updated by analysts
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Glossary to First Call
• Net Profit Estimates Up Last 1 Month: The number
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of brokers who have revised downward their net
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• Last Price: The last quoted price corresponding to the
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• 52 Week High: Highest share price during the 52
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• EPS FY1: The reported earnings per share (EPS) or
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• EPS FY2: The reported EPS or the arithmetic average
of all the estimates
• PE FY1: Price-Earnings Ratio (price divided by EPS)
• PE FY2: Price-Earnings Ratio (price divided by EPS)
• No of Brokers’ Estimates: The number of brokers’
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COMPANY LONG NAME COUNTRY NAME MARKET CAP CURRENCY PRICE EPS FY1 EPS FY1 COMPANY LONG NAME COUNTRY NAME MARKET CAP CURRENCY PRICE EPS FY1 EPS FY1
(US$ MIL) (LATEST) MEAN P/E (US$ MIL) (LATEST) MEAN P/E

BASIC INDUSTRIES CHINA SHENHUA ENERGY CO LTD Hong Kong 17,833.92 HKD 40.90 1.26 32.48
RIO TINTO LTD Australia 57,828.83 AUD 136.20 8.05 16.91 PT BUMI RESOURCES TBK Indonesia 16,869.33 IDR 7,900.00 314.21 25.14
POSCO Korea 49,978.83 KRW 543,000.00 46,850.96 11.59 INDIAN OIL CORP LTD India 16,298.22 INR 545.45 85.93 6.35
BAOSHAN IRON & STEEL CO LTD China 42,299.87 CNY 17.29 0.82 21.01 PTT EXPLORATION & PRODUCTION PCL Thailand 15,844.94 THB 155.00 10.96 14.15
ALUMINUM CORP OF CHINA (CHALCO) China 39,690.93 CNY 31.77 0.89 35.72 HUANENG POWER INTERNATIONAL INC China 15,238.89 CNY 12.12 0.51 23.82
WUHAN IRON & STEEL CO LTD China 27,361.28 CNY 19.99 0.83 23.96 CHINA OILFIELD SERVICES LTD China 13,499.52 CNY 32.64 0.48 67.61
FORMOSA PETROCHEMICAL CORP Taiwan 26,008.27 TWD 87.70 7.42 11.82 SK ENERGY CO LTD Korea 12,787.53 KRW 131,000.00 13,467.88 9.73
STEEL AUTHORITY OF INDIA (SAIL) India 25,188.15 INR 243.35 18.65 13.05 SUZLON ENERGY LTD India 11,392.53 INR 303.70 8.08 37.59
SIME DARBY BHD Malaysia 22,443.35 MYR 12.00 0.57 20.95 CAIRN INDIA India 10,040.68 INR 225.30 1.52 148.27
FORTESCUE METALS GROUP LTD Australia 21,488.65 AUD 8.25 -0.04 — OIL & GAS DEVELOPMENT CO LTD Pakistan 8,886.73 PKR 129.15 12.88 10.02
ANGANG STEEL CO LTD China 20,994.94 CNY 24.44 1.27 19.20 WORLEYPARSONS LTD Australia 8,761.96 AUD 40.94 1.48 27.73
WESFARMERS LTD Australia 20,517.83 AUD 40.50 1.85 21.87 FINANCE
NAN YA PLASTICS CORP Taiwan 18,358.61 TWD 75.10 7.79 9.64 INDUSTRIAL & COMMERCIAL BANK OF China 229,295.02 CNY 6.54 0.25 26.62
CHINA STEEL CORP Taiwan 17,324.06 TWD 47.00 4.52 10.40 CHINA LIFE INSURANCE CO LTD China 112,466.84 HKD 42.10 1.43 29.42
NEWCREST MINING LTD Australia 16,016.34 AUD 38.00 1.14 33.37 COMMONWEALTH BANK OF AUSTRALIA Australia 56,765.60 AUD 46.41 3.73 12.44
IOI CORP BHD Malaysia 15,783.64 MYR 8.30 0.33 25.03 CHINA MERCHANTS BANK CO LTD China 53,569.60 CNY 31.84 1.00 31.95
FORMOSA PLASTICS CORP Taiwan 15,775.05 TWD 86.00 8.26 10.42 PING AN INSURANCE COMPANY China 48,024.58 CNY 71.82 2.24 32.06
TATA STEEL LTD India 14,848.78 INR 811.05 100.87 8.04 NATIONAL AUSTRALIA BANK LTD Australia 47,411.03 AUD 31.33 3.01 10.40
STERLITE INDUSTRIES INDIA LTD India 14,582.02 INR 821.40 58.08 14.14 SUN HUNG KAI PROPERTIES LTD Hong Kong 45,665.65 HKD 138.80 5.58 24.87
LG CORP Korea 12,460.18 KRW 68,400.00 4,308.05 15.88 WESTPAC BANKING CORP Australia 42,858.18 AUD 24.55 2.05 11.96
HINDUSTAN UNILEVER LTD India 11,999.10 INR 219.90 9.52 23.11 AUSTRALIA & NEW ZEALAND BANKING Australia 42,045.93 AUD 23.55 2.18 10.81
CAPITAL GOODS CHINA PACIFIC INSURANCE GROUP CO China 38,209.56 CNY 35.52 0.85 41.69
SAMSUNG ELECTRONICS Korea 89,880.20 KRW 578,000.00 46,350.15 12.47 HANG SENG BANK LTD Hong Kong 35,689.53 HKD 145.50 8.31 17.50
HON HAI PRECISION INDUSTRY Taiwan 38,729.79 TWD 192.00 11.74 16.35 DLF LTD India 35,241.61 INR 824.90 40.04 20.60
CHINA UNITED TELECOMMUNICATIONS China 31,655.72 CNY 10.69 0.23 47.24 CHEUNG KONG HLDGS LTD Hong Kong 35,184.12 HKD 118.40 11.21 10.56
HYUNDAI HEAVY INDUSTRIES Korea 30,809.18 KRW 384,000.00 24,173.58 15.89 BANK OF CHINA LTD Hong Kong 33,161.48 CNY 3.12 0.21 14.84
LARSEN & TOUBRO India 26,568.19 INR 3,630.95 87.39 41.55 CHINA CITIC BANK China 33,001.06 CNY 8.87 0.20 43.84
CHINA YANGTZE POWER CO LTD China 23,142.32 CNY 17.60 0.57 31.01 WESTFIELD GROUP Australia 32,583.39 AUD 18.05 1.06 17.01
CHINA RAILWAY GROUP LTD China 23,066.97 CNY 9.66 0.16 60.75 ICICI BANK LTD India 30,561.50 INR 1,113.75 38.40 29.01
CHINA STATE SHIPBUILDING CO LTD China 16,835.12 CNY 181.88 4.59 39.60 INDUSTRIAL BANK CO LTD China 30,357.64 CNY 43.46 1.69 25.75
LG ELECTRONICS INC Korea 15,804.75 KRW 103,500.00 7,704.36 13.43 CITIC SECURITIES CO LTD China 29,377.66 CNY 63.43 3.56 17.84
DOOSAN HEAVY INDUSTRIES Korea 14,815.41 KRW 134,000.00 2,584.67 51.84 STATE BANK OF INDIA India 29,110.47 INR 2,082.55 117.16 17.78
KEPPEL CORP LTD Singapore 12,537.38 SGD 11.10 0.79 14.11 HEALTHCARE
LEIGHTON HLDGS LTD Australia 12,458.20 AUD 48.20 2.18 22.10 WILMAR INTERNATIONAL LTD Singapore 22,078.33 SGD 4.86 0.13 37.35
CITIC PACIFIC LTD Hong Kong 11,936.91 HKD 42.35 2.95 14.36 CSL LTD Australia 19,887.16 AUD 38.88 1.27 30.52
CHINA COMMUNICATIONS CONSTRUCTION Hong Kong 11,815.38 CNY 19.10 0.39 48.90 SUN PHARMACEUTICALS INDS LTD India 5,987.53 INR 1,192.65 51.00 23.39
FOXCONN INTERNATIONAL HLDGS Hong Kong 11,744.67 HKD 12.98 0.89 14.59 SONIC HEALTHCARE LTD Australia 4,574.87 AUD 14.76 0.75 19.58
ANHUI CONCH CEMENT CO LTD China 10,100.63 CNY 63.80 1.57 40.55 HENGAN INTL GROUP CO LTD Hong Kong 4,379.76 HKD 29.90 0.84 35.45
HYUNDAI ENGINEERING & CONSTRUCTION Korea 10,066.90 KRW 86,000.00 2,925.59 29.40 RANBAXY LABORATORIES LTD India 4,080.33 INR 436.35 19.54 22.33
CHEUNG KONG INFRASTRUCTURE Hong Kong 9,081.33 HKD 31.40 2.22 14.17 CIPLA LTD India 3,925.90 INR 201.55 8.79 22.94
GMR INFRASTRUCTURE LTD India 8,137.19 INR 178.35 1.08 165.63 GLENMARK PHARMACEUTICALS LTD India 3,199.29 INR 513.60 23.14 22.19
GS ENGINEERING Korea 8,049.09 KRW 149,500.00 7,847.27 19.05 JIANGSU HENRUI MEDICINE CO LTD China 3,112.89 CNY 51.69 0.88 58.89
CONSUMER DURABLES COCHLEAR LTD Australia 2,889.96 AUD 55.90 2.15 25.95
SAIC MOTOR CORP LTD China 17,251.59 CNY 18.85 0.76 24.72 HARBIN PHARMACEUTICAL GROUP China 2,888.99 CNY 16.65 0.40 41.21
HYUNDAI MOTOR CO LTD Korea 15,691.18 KRW 67,600.00 7,696.75 8.78 SHANGHAI FOSUN INDUSTRIAL CO LTD China 2,841.11 CNY 16.43 0.35 47.01
PT ASTRA INTERNATIONAL INC Indonesia 12,452.02 IDR 27,950.00 1,483.23 18.84 YUNNAN BAIYAO GROUP CO LTD China 2,587.96 CNY 38.27 0.65 58.56
GUANGDONG MIDEA ELECTRIC APPLIANCE China 8,207.49 CNY 46.60 1.33 35.09 SYMBION HEALTH LTD Australia 2,465.82 AUD 4.10 0.18 23.40
MARUTI SUZUKI INDIA LTD India 6,024.36 INR 832.10 65.74 12.66 SHANDONG DONG-E-EJIAO COMPANY LTD China 2,334.18 CNY 31.90 0.40 79.68
BAJAJ AUTO LTD India 5,518.50 INR 2,176.40 128.43 16.95 DR REDDY’S LABORATORIES LTD India 2,280.62 INR 541.55 28.85 18.77
JARDINE CYCLE & CARRIAGE LTD Singapore 5,154.39 SGD 20.96 1.36 15.40 DIVI’S LABORATORIES LTD India 2,244.74 INR 1,387.55 52.42 26.47
FAW CAR CO LTD China 4,831.57 CNY 21.25 0.38 56.07 GLAXOSMITHKLINE PHARMACEUTICALS India 2,208.16 INR 1,040.30 47.41 21.94
MAHINDRA & MAHINDRA India 4,056.12 INR 658.65 66.53 9.90 DABUR INDIA LTD India 2,173.86 INR 100.40 3.97 25.31
DENWAY MOTORS LTD Hong Kong 4,003.28 HKD 4.15 0.30 13.61 BEIJING DOUBLE CRANE PHARMACEUTI China 1,987.86 CNY 32.26 0.64 50.41
QINGDAO HAIER COMPANY LTD China 3,872.69 CNY 20.71 0.52 40.06 PUBLIC UTILITIES
KIA MOTORS CORP Korea 3,614.35 KRW 9,860.00 236.41 41.71 CHINA MOBILE LTD Hong Kong 308,180.78 CNY 110.11 4.14 26.59
HERO HONDA India 3,604.93 INR 720.40 44.05 16.36 TELSTRA CORP LTD Australia 57,016.52 AUD 4.93 0.30 16.35
BOSCH LTD India 3,277.02 INR 4,080.05 170.40 23.94 SINGAPORE TELECOMMUNICATIONS Singapore 44,397.09 SGD 3.92 0.23 16.83
LEE & MAN PAPER MANUFACTURING LTD Hong Kong 3,195.77 HKD 21.90 1.33 16.47 BHARTI AIRTEL LTD India 40,029.15 INR 841.65 34.78 24.20
TIANJIN FAW XIALI AUTOMOBILE CO China 2,850.28 CNY 12.79 0.20 64.60 CHINA UNICOM Hong Kong 31,941.77 CNY 16.77 0.56 29.83
SINOTRUK (HONG KONG) LTD Hong Kong 2,644.68 HKD 9.06 0.55 16.59 RELIANCE COMMUNICATION LTD India 30,281.53 INR 585.45 24.31 24.08
DONGFENG AUTOMOBILE CO LTD China 2,165.41 CNY 7.75 0.28 27.90 BHARAT HEAVY ELECTRICALS India 27,759.30 INR 2,262.90 66.33 34.11
XINJIANG GUANGHUI INDUSTRY CO LTD China 2,156.08 CNY 17.82 0.45 39.22 CHUNGHWA TELECOM CO LTD Taiwan 23,591.45 TWD 76.10 5.08 14.98
YULON MOTOR COMPANY Taiwan 2,041.62 TWD 43.10 — — KOREA ELECTRIC POWER (KEPCO) Korea 23,434.41 KRW 34,600.00 3,103.89 11.15
CONSUMER NON-DURABLES TELEKOMUNIKASI INDONESIA TBK PT Indonesia 22,407.39 IDR 10,100.00 674.70 14.97
RELIANCE INDUSTRIES LTD India 94,258.58 INR 2,587.55 101.28 25.55 CHINA NETCOM GROUP CORP HK LTD China 21,579.12 HKD 25.20 1.66 15.16
KWEICHOW MOUTAI DISTILLERY GROUP China 25,339.41 CNY 192.18 2.35 81.72 CLP HLDGS LTD Hong Kong 19,264.73 HKD 62.35 4.53 13.77
YIBIN WULIANGYE CO LTD China 19,329.84 CNY 36.45 0.44 82.93 DATANG INTERNATIONAL POWER GENER China 19,097.43 CNY 16.15 0.31 51.73
ITC LTD India 19,046.44 INR 201.75 8.40 24.03 HONG KONG & CHINA GAS CO Hong Kong 17,959.08 HKD 23.10 1.21 19.16
FORMOSA CHEMICAL & FIBRE Taiwan 13,800.31 TWD 77.90 8.40 9.27 SK TELECOM CO LTD Korea 16,757.32 KRW 195,500.00 20,782.73 9.41
KT&G CORP Korea 11,990.41 KRW 80,700.00 4,832.78 16.70 PHILIPPINE LONG DISTANCE TEL Philippines 13,501.17 PHP 2,895.00 187.84 15.41
FOSTER’S GROUP LTD Australia 9,608.24 AUD 5.38 0.37 14.37 KT CORP Korea 13,465.96 KRW 46,350.00 4,214.09 11.00
LUZHOU LAOJIAO CO LTD China 8,521.65 CNY 70.00 0.80 87.83 HONGKONG ELECTRIC HLDGS Hong Kong 12,459.04 HKD 45.50 3.31 13.76
GOLDEN AGRI-RESOURCES LTD Singapore 8,303.49 USD 0.83 0.03 24.06 TELEKOM MALAYSIA Malaysia 12,311.80 MYR 11.50 0.71 16.24
FAR EASTERN TEXTILE CO Taiwan 7,427.50 TWD 51.70 2.34 22.06 TENAGA NASIONAL Malaysia 12,272.27 MYR 9.10 0.82 11.08
TINGYI (CAYMAN ISLN) HLDG CO Hong Kong 7,342.38 USD 1.31 0.03 37.58 TECHNOLOGY
COCA-COLA AMATIL LTD Australia 6,734.47 AUD 9.88 0.55 17.91 TAIWAN SEMICONDUCTOR MANUFACTURING Taiwan 53,892.98 TWD 63.60 4.05 15.72
COSCO CORP LTD Singapore 6,687.66 SGD 4.20 0.23 18.18 INFOSYS TECHNOLOGIES LTD India 23,164.33 INR 1,617.40 81.00 19.97
YOUNGOR GROUP CO LTD China 6,566.61 CNY 21.11 0.90 23.57 TATA CONSULTANCY SERVICES LTD India 21,524.28 INR 877.70 52.15 16.83
DAIRY FARM INTERNATIONAL Hong Kong 6,519.43 USD 4.84 0.19 26.16 LG PHILIPS LCD Korea 16,639.52 KRW 44,050.00 3,651.71 12.06
GREE ELECTRICAL APPLIANCES INC China 6,102.76 CNY 52.32 1.33 39.33 AU OPTRONICS CORP Taiwan 15,366.68 TWD 61.30 6.81 9.00
UNILEVER INDONESIA TBK PT Indonesia 5,751.68 IDR 6,850.00 272.09 25.18 HIGH TECH COMPUTER CORP Taiwan 12,239.69 TWD 666.00 47.36 14.06
NORTHEAST SECURITIES CO LTD China 5,638.50 CNY 38.58 2.22 17.37 HYNIX SEMICONDUCTOR Korea 12,097.00 KRW 24,950.00 738.64 33.78
PT ASTRA AGRO LESTARI TBK Indonesia 5,606.14 IDR 32,350.00 1,158.71 27.92 MEDIATEK INCORPORATED Taiwan 11,881.74 TWD 356.00 22.83 15.59
UNI-PRESIDENT ENTERPRISES CO Taiwan 5,221.45 TWD 45.80 — — ASUSTEK COMPUTER INC Taiwan 10,520.60 TWD 88.00 7.07 12.45
XINJIANG GOLDWIND SCI & TECH CO China 10,363.23 CNY 74.18 0.85 87.79
CONSUMER SERVICES
CHI MEI OPTOELECTRONICS CORP Taiwan 9,260.47 TWD 42.55 5.00 8.51
HUTCHISON WHAMPOA LTD Hong Kong 41,078.89 HKD 75.10 7.82 9.60 INNOLUX DISPLAY CORP Taiwan 8,239.14 TWD 93.40 5.74 16.27
WOOLWORTHS LTD Australia 33,877.95 AUD 30.01 1.32 22.78 UNITED MICROELECTRONICS CORP Taiwan 7,923.78 TWD 18.70 0.87 21.38
HAITONG SECURITIES CO LTD China 24,644.38 CNY 42.88 1.32 32.59 SATYAM COMPUTER SERVICES LTD India 7,338.75 INR 437.10 25.37 17.23
JARDINE STRATEGIC HLDGS LTD Hong Kong 17,122.68 USD 15.82 1.04 15.14 LENOVO GROUP LTD Hong Kong 6,192.77 HKD 5.39 0.34 15.75
WIPRO LTD India 16,103.78 INR 439.90 22.34 19.69 SILICONWARE PRECISION INDS Taiwan 5,320.43 TWD 54.00 5.71 9.45
ESPRIT HLDGS LTD Hong Kong 16,086.98 HKD 100.90 5.25 19.20 ADVANCED SEMICONDUCTOR ENGINEERING Taiwan 5,144.32 TWD 29.45 2.89 10.19
BRAMBLES LTD Australia 13,806.05 AUD 10.50 0.50 20.92 FOXCONN TECHNOLOGY CO LTD Taiwan 4,952.46 TWD 203.50 12.14 16.77
LI & FUNG LTD Hong Kong 13,060.38 HKD 29.50 0.95 31.14 HCL TECHNOLOGIES LTD India 4,799.20 INR 288.30 19.18 15.03
SUNING APPLIANCE CO LTD China 12,989.24 CNY 64.50 0.90 71.84 COMPUTERSHARE LTD Australia 4,720.38 AUD 9.14 0.57 16.00
SHINSEGAE CO LTD(P) Korea 11,627.90 KRW 584,000.00 29,343.52 19.90 TRANSPORTATION
TENCENT HLDGS LTD Hong Kong 11,439.26 HKD 49.85 0.86 58.00 CHINA COSCO HLDGS CO LTD China 40,215.83 CNY 37.70 1.97 19.15
SWIRE PACIFIC LTD Hong Kong 10,895.03 HKD 92.75 6.59 14.08 DAQIN RAILWAY COMPANY LTD China 36,221.79 CNY 19.98 0.46 43.37
LOTTE SHOPPING CO Korea 10,056.72 KRW 328,000.00 25,624.48 12.80 SHANGHAI INTL PORT GROUP CO LTD China 23,401.19 CNY 7.98 0.17 46.71
SAMSUNG CORP Korea 9,730.11 KRW 59,000.00 2,935.59 20.10 MTR CORP Hong Kong 21,417.45 HKD 29.75 1.13 26.41
SHANGRI-LA ASIA LTD Hong Kong 8,576.90 USD 2.98 0.09 34.68 AIR CHINA LTD China 20,715.75 CNY 18.90 0.32 58.33
GENTING BERHAD Malaysia 8,184.13 MYR 7.10 0.42 16.81 SINGAPORE AIRLINES LTD Singapore 13,332.06 SGD 15.80 1.62 9.77
CROWN LTD Australia 7,625.61 AUD 12.06 0.58 20.82 CHINA MERCHANTS HLDGS INTERNATIONAL Hong Kong 13,119.89 HKD 42.50 1.36 31.26
TABCORP HLDGS LTD Australia 7,415.98 AUD 15.20 0.97 15.65 CHINA SHIPPING DEVELOPMENT CO LTD China 10,286.13 CNY 36.27 1.37 26.44
GOME ELECTRICAL APPLIANCES HLDG Hong Kong 7,254.28 HKD 17.24 0.45 38.12 MISC BERHAD Malaysia 10,246.02 MYR 8.85 0.66 13.44
SHENZHEN OVERSEAS CHINESE TOWN H China 6,951.33 CNY 42.85 0.64 66.51 CHINA SHIPPING CONTAINER LINES China 10,084.15 CNY 9.10 0.29 31.93
ENERGY CHINA SOUTHERN AIRLINES CO LTD China 8,829.28 CNY 19.75 0.48 41.55
PETROCHINA CO LTD China 510,785.21 CNY 22.58 0.79 28.45 CATHAY PACIFIC AIRWAYS Hong Kong 8,421.70 HKD 16.66 1.49 11.20
CHINA PETROLEUM & CHEMICAL ‘H’ China 167,722.81 CNY 17.17 0.72 23.94 SHANGHAI INTERNATIONAL AIRPORT China 8,224.17 CNY 30.55 0.91 33.47
BHP BILLITON LTD Australia 124,304.51 AUD 39.85 2.91 13.71 QANTAS AIRWAYS LTD Australia 8,178.41 AUD 4.63 0.56 8.23
CNOOC LTD Hong Kong 76,774.14 CNY 12.40 0.71 17.50 MUNDRA PORT SPECIAL ECONOMIC ZON India 7,483.92 INR 745.35 8.47 88.03
OIL & NATURAL GAS CORP India 55,651.96 INR 1,038.30 100.92 10.29 CHINA EASTERN AIRLINES ‘H’ China 6,864.63 CNY 14.89 -0.05 —
NTPC LTD India 41,811.04 INR 202.35 9.18 22.05 TATA MOTORS LTD India 6,834.12 INR 707.45 50.11 14.12
WOODSIDE PETROLEUM LTD Australia 36,639.56 AUD 57.27 2.79 20.53 GUANGSHEN RAILWAY ‘H’ China 6,269.73 CNY 7.94 0.23 34.22
PTT PUBLIC COMPANY LTD Thailand 29,164.97 THB 334.00 34.91 9.57 NWS HLDGS LTD Hong Kong 6,094.57 HKD 23.40 2.11 11.11
RELIANCE PETROLEUM LTD India 18,657.44 INR 165.45 -0.03 — MACQUARIE AIRPORTS Australia 5,990.25 AUD 3.75 0.19 19.36
 THEEDGE SINGAPORE | MARCH 3, 2008 • 35

CAPITAL FACTSET ESTIMATES CONSENSUS SINGAPORE

COMPANY PRICE MARKET RECOMMENDATION RECOMMENDATION NO OF P/E 2008 2008 EPS 2008 EPS 2008 EPS 6-MONTH 6-MONTH
CAPITALISATION
($ MIL)
CONSENSUS 75 DAYS CONSENSUS 75 DAYS
AS OF 26/02/08 AS OF 04/12/07
ESTIMATES (X)
(75 DAYS)
(75 DAYS) (45 DAYS) GROWTH (%) PERFORMANCE
(%)
PERFORMANCE
RELATIVE TO STI (%) /
ADVANCE SCT LTD 0.64 201.10 1.00 1.00 2 5.66 0.11 0.11 77.36 -22.42 -14.26
ALLCO COMMERCIAL REAL ESTATE
INVESTMENT TRUST 0.86 604.65 1.25 1.25 5 12.29 0.07 0.07 16.67 -14.85 -5.89 The Edge/FactSet Estimates Consensus Table
ALLGREEN PROPERTIES 1.23 1,956.16 1.93 1.83 6 10.65 0.12 0.15 18.89 -26.35 -18.60
AMARA HLDGS LTD 0.57 331.74 1.50 1.17 1 20.54 0.03 0.03 64.71 -6.50 3.33 presents the earnings forecast of Singaporean eq-
AQUA-TERRA SUPPLY CO LTD 0.40 140.40 1.00 1.50 1 7.02 0.06 0.06 46.91 -9.09 0.48
ARMSTRONG INDUSTRIAL CORP 0.31 152.69 1.00 1.13 1 8.24 0.04 0.04 85.00 -24.69 -16.77 uities using the latest and more robust FactSet
ASCENDAS INDIA TRUST 1.08 812.22 1.33 1.17 3 15.43 0.07 0.07 40.00 -21.17 -12.87
ASCENDAS REAL ESTATE 2.29 3,035.52 1.50 1.68 6 15.90 0.14 0.14 8.91 -4.18 5.90 methodology that provides more timely and useful
ASCOTT RESIDENCE TRUST 1.41 855.57 1.21 1.08 6 21.12 0.07 0.07 11.54 -14.55 -5.55
ASIA ENTERPRISES HLDGS LTD 0.43 119.63 1.25 1.50 2 5.40 0.08 0.08 12.78 0.00 10.52 information.
ASIA ENVIRONMENT HLDGS LTD 0.60 212.70 1.50 1.25 1 8.45 0.07 0.07 42.84 -1.65 8.70
ASIA PACIFIC BREWERIES 13.40 3,459.24 3.00 3.00 1 22.71 0.59 0.59 11.32 0.00 10.52 FactSet utilises only the latest estimates in
ASIAPHARM 0.70 344.93 1.83 1.50 3 12.24 0.06 0.05 24.43 26.13 39.40
ASL MARINE HLDGS LTD 1.28 380.37 1.00 1.00 2 5.45 0.24 0.24 20.66 -14.67 -5.69 calculating the consensus. Any estimates that
AUSGROUP LTD 1.10 433.35 1.00 1.00 2 8.96 0.12 0.12 48.55 -36.05 -29.32
AZTECH SYSTEMS LTD 0.25 102.86 2.50 1.33 2 7.42 0.03 0.03 -21.38 -55.45 -50.77 are more than 75 days old are discarded to avoid
BANYAN TREE HLDGS LTD 1.31 997.43 1.50 1.00 1 19.28 0.07 0.07 -28.45 -35.78 -29.03
BEAUTY CHINA HLDGS LTD 1.10 376.60 1.25 1.13 2 10.11 0.11 0.11 20.13 -7.56 2.16 the possibility of old forecasts polluting the
BENG KUANG MARINE LTD 0.25 94.25 1.25 1.00 2 11.31 0.02 0.02 46.92 -0.68 9.78
BIOSENSORS INTERNATIONAL GROUP LTD 0.89 938.95 1.13 1.25 3 NA -0.01 -0.01 R+ 31.85 45.73 consensus.
BIO-TREAT TECHNOLOGY 0.63 565.99 1.75 1.83 2 8.26 0.08 0.08 16.88 -15.33 -6.42
BOUSTEAD SPORE LTD 2.30 588.74 1.00 1.25 1 12.11 0.19 0.19 5.56 -4.56 5.48 The latest 45-day forecast EPS not only gives
BROADWAY INDUSTRIAL GROUP 0.85 175.23 1.25 1.25 2 4.43 0.19 0.19 36.48 18.88 31.39
BUKIT SEMBAWANG ESTATES 9.30 1,003.46 1.25 1.17 2 6.84 1.36 0.75 79.20 -7.00 2.79 you the more robust consensus but also a glimpse
C&G INDUSTRIAL HLDGS LTD 0.37 170.82 1.25 1.25 2 4.23 0.09 0.09 26.70 -37.07 -30.45
CAMBRIDGE INDUSTRIAL TRUST 0.69 551.83 1.13 1.25 3 12.55 0.06 0.06 0.00 -13.66 -4.58 of the earnings trend, while the Recommendation
CAPITACOMMERCIAL TRUST 2.18 3,020.19 1.46 1.44 11 21.80 0.10 0.10 17.35 -16.15 -7.33
CAPITALAND LTD 6.30 17,681.96 1.71 1.69 16 19.46 0.32 0.33 -50.82 -14.29 -5.27 Consensus Rating is the scale that measures how
CAPITAMALL TRUST 3.30 5,501.18 1.20 1.44 12 23.23 0.14 0.14 9.54 -1.79 8.55
CAPITARETAIL CHINA TRUST 1.62 999.66 2.50 1.50 2 22.93 0.07 0.07 6.24 -38.87 -32.43 the analysts feel about a stock.
CDL HOSPITALITY TRUSTS 2.20 1,812.90 1.31 1.25 8 22.00 0.10 0.10 25.00 -1.35 9.04
CH OFFSHORE LTD 0.63 444.21 2.00 1.50 1 18.20 0.03 0.03 -60.80 -19.23 -10.73 FactSet offers instant access to accurate fi-
CHARTERED SEMICONDUCTOR 0.76 1,942.86 2.00 2.18 18 46.69 0.02 0.02 R+ -29.82 -22.43
CHINA AUTO ELECTRONICS GROUP LTD 0.28 162.00 1.00 1.00 1 3.80 0.08 0.08 120.59 -38.04 -31.52 nancial data and analytics to thousands of in-
CHINA DAIRY GROUP LTD 0.27 118.70 1.50 1.50 1 11.74 0.02 0.02 -14.81 -34.94 -28.09
CHINA ENERGY LTD 0.94 1,146.70 1.00 1.30 1 9.88 0.10 0.10 116.12 -35.17 -28.35 vestment professionals around the world. Our
CHINA FISHERY GROUP LTD 1.72 1,345.18 1.50 1.50 3 8.25 0.21 0.21 24.76 -14.00 -4.95
CHINA MILK PRODUCTS GROUP LTD 0.88 649.97 1.00 1.25 1 5.50 0.16 0.16 60.00 -18.52 -9.94 company combines more than 200 databases
CHINA SKY CHEMICAL FIBRE CO LTD 1.53 1,213.89 1.30 1.25 5 8.39 0.18 0.18 19.29 -20.73 -12.38
CHINA SPORTS INTERNATIONAL LTD 1.23 414.33 1.07 1.00 7 10.25 0.12 0.12 36.71 11.82 23.58 from industry-leading suppliers and clients’ own
CHINA SUNSINE CHEMICAL HLDGS LTD 0.27 132.76 1.25 1.50 2 1.40 0.19 0.19 148.87 -14.29 -5.27
CHINA XLX FERTILISER LTD 0.83 835.00 1.25 1.25 2 11.03 0.08 0.08 14.55 -14.36 -5.35 proprietary data into a single powerful informa-
CITY DEVELOPMENTS LTD 11.66 10,602.36 1.50 1.50 11 14.95 0.78 0.84 20.00 -22.27 -14.09
CITY SPRING INFRASTRUCTURE TRUST 0.78 382.17 1.50 1.83 2 NA 0.00 0.00 R- -22.00 -13.79 tion system, making FactSet a one-stop source
COMFORTDELGRO CORP LTD 1.63 3,398.15 1.45 1.45 12 13.58 0.12 0.12 8.03 -16.41 -7.61
COSCO CORP SINGAPORE LTD 4.28 9,579.54 1.25 1.10 11 17.61 0.24 0.24 64.29 -14.40 -5.39 for financial information.
CREATIVE TECHNOLOGY LTD 7.00 598.18 1.90 2.50 4 35.60 0.20 0.29 -17.40 16.67 28.94
CSE GLOBAL LTD 0.97 491.64 1.33 1.17 3 8.90 0.11 0.11 37.51 -16.38 -7.58
DATACRAFT ASIA LTD 1.12 498.83 1.30 1.17 4 14.65 0.08 0.08 14.45 -5.08 4.90
DBS GROUP HLDG LTD 17.94 27,235.61 1.47 1.30 19 10.94 1.64 1.64 7.96 -11.63 -2.33 Glossary to FactSet Estimates Consensus Table
DELONG HLDGS LTD 3.13 1,674.22 1.80 1.50 5 8.91 0.35 0.30 41.85 3.64 14.55
EOC LTD 19.90 2,207.97 1.50 1.00 1 11.17 1.78 1.78 220.60 -17.08 -8.36
EPURE INTERNATIONAL LTD 1.98 851.40 1.00 1.13 3 16.45 0.12 0.12 65.79 16.47 28.73 • Price: Closing price as of stated date
EU YAN SANG INTL LTD 0.55 198.24 2.00 2.00 1 11.96 0.05 0.05 6.98 -3.51 6.65
EZRA HLDGS LTD 2.31 1,353.28 1.08 1.07 6 13.75 0.17 0.16 109.69 -12.00 -2.74 • Market Capitalisation ($): Market capitalisa-
FEDERAL INTL 2000 LTD 0.54 170.10 1.00 1.00 1 7.94 0.07 0.07 -32.00 -22.30 -14.13
FERROCHINA LTD 1.57 1,254.70 1.13 1.33 4 5.25 0.30 0.28 67.50 -16.49 -7.70 tion ($) in millions
FIBRECHEM TECHNOLOGIES LTD 0.83 754.21 1.10 1.13 5 7.69 0.11 0.11 3.13 -33.73 -26.76
FIRST REAL ESTATE INVESTMENT
TRUST (INDONESIA) 0.74 216.31 1.00 1.00 1 10.58 0.07 0.07 8.20 0.00 10.52 • Recommendation Consensus Rating: The
FIRST SHIP LEASE TRUST 1.12 560.00 1.00 1.00 2 56.21 0.02 0.02 -20.22 30.23 43.94
FJ BENJAMIN HLDGS LTD 0.54 307.11 1.67 1.17 3 10.80 0.05 0.05 31.58 -3.05 7.15 following rating is assigned to each type of
FORTUNE REAL ESTATE INV TRUST 5.60 4,548.68 1.00 1.00 2 15.34 0.37 0.37 -14.37 5.66 16.78
FRASER & NEAVE LTD 4.95 6,870.29 2.00 2.00 3 15.85 0.31 0.31 14.29 -1.00 9.42 recommendation provided by participating
FRASERS CENTREPOINT TRUST 1.30 804.05 1.75 1.25 2 21.82 0.06 0.06 4.71 -10.35 -0.91
GALLANT VENTURE LTD 0.70 1,688.73 1.25 1.50 2 0.12 5.78 5.78 5,566.67 -30.69 -23.40 brokers:
GEMS TV HLDGS LTD 0.25 262.87 2.50 1.50 1 8.96 0.03 0.03 R+ -56.03 -51.41
GOLDEN AGRI RESSOURCES 1.17 11,671.70 1.00 1.10 2 13.56 0.09 0.09 58.62 123.92 147.49 1 = positive (strong buy)
GOODPACK 1.65 763.81 1.33 2.00 3 12.96 0.13 0.13 22.98 -22.54 -14.38
GP BATTERIES INTL LTD 0.95 104.20 2.00 2.50 1 31.67 0.03 0.03 R+ -29.10 -21.64 1.5 = overweight
GREAT EASTERN HLDGS LTD 16.20 7,667.77 2.00 2.00 3 15.73 1.03 1.03 -6.90 -10.50 -1.08
GUOCOLAND LTD 4.07 3,612.25 1.75 1.40 2 10.00 0.41 0.41 88.81 -9.56 -0.04 2 = neutral
HG METAL MANUFACTURING LTD 0.35 153.78 1.00 1.50 1 5.08 0.07 0.07 37.80 9.80 21.36
HIAP SENG ENGINEERING LTD 0.40 121.50 2.00 1.67 1 5.63 0.07 0.07 54.28 -48.05 -42.59 2.5 = underweight
HI-P INTERNATIONAL LTD 0.50 443.58 1.90 1.92 5 6.76 0.07 0.07 48.00 -30.56 -23.25
HO BEE INVESTMENT LTD 1.29 951.16 1.75 1.63 2 3.44 0.38 0.42 -2.61 -31.75 -24.56 3 = negative (strong sell)
HONG LEONG ASIA LTD 2.99 1,140.24 1.25 1.36 2 10.03 0.30 0.30 20.35 -3.55 6.60
HONG LEONG FINANCE LTD 3.80 1,669.36 1.25 1.33 6 12.75 0.30 0.30 10.43 4.40 15.38
HONGKONG LAND HLDGS LTD 4.20 9,639.90 1.50 1.80 1 21.99 0.19 0.19 26.49 7.69 19.02 – = no recommendation from brokers at that
HOTEL PROPERTIES LTD 3.19 1,608.43 1.50 1.17 2 12.39 0.26 0.26 81.66 -27.17 -19.50
HOUR GLASS LTD 0.91 210.85 1.00 1.00 2 8.23 0.11 0.13 11.42 30.94 44.71 point of time
HUAN HSIN HLDGS LTD 0.58 232.00 2.00 1.67 2 7.41 0.08 0.06 -0.17 5.45 16.55
HUPSTEEL LTD 0.32 203.91 1.25 1.00 2 5.54 0.06 0.06 -0.38 -12.89 -3.73 The average of all recommendations is then calcu-
HYFLUX 3.33 1,743.54 1.25 1.70 2 17.08 0.20 0.20 391.67 31.10 44.90
INDOFOOD AGRI RESOURCES LTD 2.77 4,010.34 1.25 1.25 4 18.68 0.15 0.16 50.54 190.05 220.57 lated to give the consensus rating
INTER ROLLER ENGINEERING 0.58 194.69 2.00 2.20 1 9.23 0.06 0.06 -7.46 -24.52 -16.57
JARDINE CYCLE & CARRIAGE LTD 21.60 7,595.88 1.00 1.25 1 16.36 1.32 1.32 24.53 45.95 61.30 • No of Estimates (75 days): Number of esti-
JARDINE MATHESON HLDGS LTD 27.86 17,295.77 1.00 1.25 1 12.72 2.19 2.19 12.31 13.71 25.68
JARDINE STRATEGIC HLDGS LTD 15.04 16,278.28 1.00 1.00 1 10.37 1.45 1.45 15.08 9.78 21.33 mates that are less than 75 days old and are
JAYA HLDG LTD 1.38 1,061.99 1.25 1.50 2 7.05 0.20 0.22 11.94 -22.03 -13.83
JIUTIAN CHEMICAL GROUP LTD 0.23 317.30 1.50 1.50 2 7.64 0.03 0.03 85.98 -42.50 -36.45 included in the consensus calculation
JURONG TECHNOLOGIES IND 0.40 243.03 2.10 2.05 6 3.33 0.12 0.13 14.92 -36.92 -30.28
K REAL ESTATE INVESTMENT TRUST ASIA 1.63 404.36 2.33 1.14 4 32.96 0.05 0.05 -41.87 -32.92 -25.86 • PE 2008: The forecast PE ratio for year 2008
KEPPEL CORP LTD 10.60 16,828.14 1.32 1.33 18 13.17 0.81 0.80 23.39 -15.87 -7.02
KEPPEL LAND LTD 5.96 4,293.27 1.67 1.66 14 10.93 0.55 0.55 -8.02 -25.50 -17.66 (NA — unable to calculate, for example nega-
LIAN BENG GROUP 0.56 296.67 1.00 1.25 1 5.33 0.11 0.11 144.19 43.59 58.70
LIZHONG WHEEL GROUP LTD 0.63 148.07 1.00 1.33 3 6.12 0.10 0.10 32.11 -34.03 -27.09 tive earnings per share figures)
LMA INTERNATIONAL 0.25 149.88 2.00 1.70 3 4.40 0.06 0.06 48.15 -56.03 -51.41
LONGCHEER HLDGS LTD 0.46 182.47 2.00 1.50 1 5.62 0.08 0.08 12.25 -22.69 -14.55
LUZHOU BIO-CHEM TECHNOLOGY LTD 0.24 95.04 2.50 2.00 1 6.79 0.04 0.04 41.55 -38.46 -31.99 • EPS 2008 (75 days): The forecast earnings per
MACARTHURCOOK INDUSTRIAL
REAL ESTATE INVESTMENT TR 1.00 260.75 1.00 1.25 1 12.50 0.08 0.08 -68.87 -13.04 -3.89 share for year 2008 using estimates from the
MACQUARIE MEAG PRIME
REAL ESTATE INVESTMENT TRUST 1.26 1,200.32 1.33 1.13 5 18.36 0.07 0.07 14.23 8.62 20.05 latest 75 days
MAN WAH HLDGS LTD 0.26 176.54 1.00 1.40 2 4.27 0.06 0.06 30.79 34.18 48.30
MANDARIN ORIENTAL INTL 1.90 1,882.47 1.50 1.25 2 16.99 0.11 0.11 11.18 -9.95 -0.48 • EPS 2008 (45 days): The forecast earnings per
MAPLETREE LOGISTICS TRUST 0.94 1,047.23 1.69 1.44 9 14.03 0.07 0.07 0.00 -18.53 -9.96
MEIBAN GROUP LTD 0.41 137.80 1.00 1.50 1 6.01 0.07 0.07 4.55 -25.23 -17.36 share for year 2008 using estimates from the
MICRO-MECHANICS (HLDGS) LTD 0.68 94.17 1.00 1.00 1 7.53 0.09 0.09 19.20 0.00 10.52
MIDAS HLDGS LTD 1.38 1,166.32 1.00 1.40 2 25.09 0.06 0.05 38.41 4.54 15.55 latest 45 days
MOBILEONE LTD 2.01 1,797.29 1.56 1.81 15 11.01 0.18 0.18 0.00 -5.19 4.79
NEPTUNE ORIENT LINES LTD 3.45 5,076.81 1.94 2.17 8 7.22 0.48 0.48 -1.90 -27.52 -19.89 • EPS Growth: Earnings per share growth com-
NERA TELECOM 0.41 146.57 1.50 1.25 1 11.25 0.04 0.04 20.00 15.71 27.89
NOBLE GROUP LTD 1.95 5,068.85 1.25 1.08 2 15.53 0.13 0.13 22.35 19.63 32.22 pared to last year (R = Recovery)
OLAM INTERNATIONAL LTD 2.56 3,983.75 1.36 1.50 7 21.69 0.12 0.12 38.82 -12.03 -2.77
OSIM INTL 0.38 208.35 2.38 1.50 4 10.13 0.04 0.03 135.19 -35.83 -29.08 • 6-month performance: Six-month price per-
OVERSEAS-CHINESE BANKING CORP 7.57 23,920.90 1.56 1.47 18 11.96 0.63 0.64 -1.55 -12.49 -3.28
PACIFIC ANDES HLDG 0.52 708.81 1.25 1.33 2 5.44 0.10 0.10 37.38 -27.08 -19.41 formance for that equity
PAN UNITED CORP 0.69 379.74 1.00 1.50 2 10.55 0.07 0.07 22.56 -14.81 -5.85
PARKWAY HLDGS LTD 2.84 2,188.76 1.83 1.92 6 20.93 0.14 0.15 10.12 -29.00 -21.53
PARKWAY LIFE REAL ESTATE INVESTMENT TRUST 1.18 709.99 1.00 1.17 2 18.53 0.06 0.06 103.67 0.00 10.52 • 6-month performance relative to STI: Six-
PEOPLE’S FOOD HLDGS 0.98 1,107.71 2.00 1.67 3 8.00 0.12 0.12 37.62 -24.03 -16.04
PETRA FOODS LTD 1.28 681.31 2.17 2.00 3 13.17 0.10 0.10 18.72 -11.72 -2.44 month price performance relative to the Straits
RAFFLES EDUCATION 2.70 3,077.81 1.50 1.38 4 25.15 0.11 0.11 35.82 45.16 60.44
RAFFLES MEDICAL GROUP 1.32 680.47 1.50 1.38 5 22.00 0.06 0.06 -11.83 -9.59 -0.08 Times Index.
RICKMERS MARITIME TRUST 1.09 425.36 1.00 1.17 2 12.51 0.09 0.08 56.81 -31.01 -23.75
ROBINSON & CO LTD 6.40 550.00 2.00 1.50 1 11.17 0.57 0.57 10.40 40.97 55.80
ROTARY ENGRG LTD 1.00 567.84 1.25 1.17 3 8.93 0.11 0.12 13.89 -13.79 -4.72
SAMUDERA SHIPPING LINE 0.34 183.30 1.00 2.00 1 6.42 0.05 0.05 1.92 -11.69 -2.39 Disclaimer
SC GLOBAL DEVT LTD 1.79 707.86 1.00 1.20 2 4.54 0.39 0.39 236.82 -33.08 -26.04
SEMBCORP INDUSTRIES LTD 5.00 8,922.05 1.50 1.38 3 15.77 0.32 0.32 10.43 -6.54 3.29 In no event will FactSet or The Edge be responsible
SEMBCORP MARINE LTD 3.65 7,559.37 1.21 1.62 13 15.87 0.23 0.23 38.46 -6.24 3.63
SIA ENGINEERING CIE 3.92 4,209.77 1.40 1.33 5 13.52 0.29 0.29 11.54 -12.89 -3.72 for special, indirect, incidental or consequential
SILVERLAKE AXIS LTD 0.55 617.05 1.00 1.17 4 9.29 0.06 0.06 21.92 -29.03 -21.56
SINCERE WATCH LTD 2.38 491.90 2.00 1.67 1 19.08 0.12 0.12 6.08 60.81 77.73 damages that may be incurred or experienced on
SING HLDGS LTD 0.53 142.21 1.00 1.00 2 4.51 0.12 0.12 29.12 -37.65 -31.09
SINGAPORE AIRLINES LTD 15.74 18,668.62 1.36 1.39 14 10.56 1.49 1.49 -6.54 -19.28 -10.79 account of entering into or relying on the data.
SINGAPORE AIRPORT TERMINAL 2.40 2,577.14 1.50 1.50 2 12.69 0.19 0.20 -1.01 -10.45 -1.02
SINGAPORE EXCHANGE LTD 8.76 9,337.90 1.92 2.21 12 18.06 0.49 0.49 7.27 -7.30 2.45 FactSet acts solely as a transmitter of informa-
SINGAPORE FOOD INDUSTRIES 0.79 405.07 1.33 1.00 2 10.50 0.07 0.06 7.34 -3.68 6.45
SINGAPORE LAND 6.95 2,866.71 1.50 1.13 1 16.46 0.42 0.42 29.90 -26.84 -19.14 tion provided by certain brokers, certain corpora-
SINGAPORE PETROLEUM CO LTD 7.15 3,691.67 1.00 1.67 3 7.45 0.96 0.96 -2.04 18.18 30.62
SINGAPORE POST LTD 1.12 2,155.14 1.50 1.67 6 14.00 0.08 0.08 0.00 -8.20 1.46 tions and certain other sources.
SINGAPORE PRESS HLDG LTD 4.40 7,000.62 1.50 1.60 12 12.98 0.34 0.34 6.25 1.38 12.05
SINGAPORE SHIPPING CORP 0.40 172.23 3.00 3.00 1 26.79 0.01 0.01 0.28 27.16 40.54 Neither FactSet, any source or any third par-
SINGAPORE TECH ENGINEERING 3.62 10,811.32 1.38 1.40 4 18.30 0.20 0.20 11.08 -2.16 8.13
SINGAPORE TELECOM 3.89 61,928.80 1.41 1.42 17 14.96 0.26 0.26 10.06 6.87 18.11 ty which FactSet contracts to effect transmission
SINO ENVIRONMENT TECHNOLOGY GROUP LTD 1.41 488.18 1.67 2.17 3 9.02 0.16 0.16 61.44 -46.99 -41.41
SINOMEM TECHNOLOGY LTD 0.81 374.04 2.00 2.13 3 13.50 0.06 0.07 33.33 -33.06 -26.01 makes any warranty of merchantability or fitness
SMRT 1.74 2,636.33 1.71 1.85 12 17.19 0.10 0.10 8.23 -0.57 9.89
SNP CORP LTD 1.16 136.59 1.00 1.00 1 8.20 0.14 0.14 -8.72 12.62 24.47 for a particular purpose with respect to the FactSet
SP CHEMICALS LTD 0.71 259.64 1.50 2.00 2 3.51 0.20 0.20 42.23 -20.22 -11.83
SSH CORP LTD 0.31 170.22 1.00 1.00 3 8.08 0.04 0.04 18.18 -14.87 -5.91 financial information, nor shall any of them be li-
STARHUB LTD 2.96 5,050.56 1.63 1.61 15 14.24 0.21 0.21 10.53 0.34 10.90
STATS CHIPPAC LTD 1.24 2,548.14 1.79 1.86 9 14.11 0.09 0.09 38.75 -16.22 -7.40 able for any error or omission in the information
STRAITS ASIA RESOURCES LTD 3.89 4,237.65 1.80 1.80 6 20.17 0.19 0.20 246.92 206.30 238.53
SUNNINGDALE TECH LTD 0.20 147.13 1.00 1.00 1 5.88 0.03 0.03 10.59 -41.18 -34.99 supplied to The Edge or its subscribers or the accu-
SUNTEC REAL ESTATE INVESTMENT TRUST 1.60 2,383.54 1.36 1.35 9 17.78 0.09 0.09 18.25 -11.60 -2.30
SWIBER HLDGS LTD 2.53 1,073.60 1.50 1.50 1 5.93 0.43 0.43 62.89 -5.60 4.34 racy, completeness or timeliness of the data. E
SWISSCO INTERNATIONAL LTD 0.86 153.33 1.50 1.50 1 12.61 0.07 0.07 -68.01 -25.65 -17.83
TAT HONG HLDGS 2.31 1,147.19 1.30 1.38 5 10.74 0.22 0.22 29.47 13.79 25.77
THE ASCOTT LTD 1.84 2,961.44 1.67 1.33 3 41.82 0.04 0.05 -39.04 24.32 37.41
THOMSON MEDICAL CENTRE LTD 0.61 176.65 1.00 1.17 1 15.13 0.04 0.04 33.33 -9.02 0.55
TIONG WOON CORP HLDG 0.75 253.18 1.13 1.25 4 7.73 0.10 0.10 34.35 -23.08 -14.98 To contact FactSet:
TOTAL ACCESS COMMUNICATION PCL 1.36 3,220.25 1.30 1.31 24 12.93 0.11 0.10 38.65 13.33 25.26
UNISTEEL TECHNOLOGY 1.50 603.95 1.22 1.30 9 9.54 0.16 0.16 29.06 -27.54 -19.91
UNITED ENGINEERS 3.68 812.24 1.50 1.50 1 5.47 0.67 0.67 140.69 12.20 24.00
UNITED OVERSEAS BANK LTD 18.74 28,555.48 1.79 1.47 13 12.70 1.48 1.49 7.07 -9.03 0.54 FactSet Pacific Inc
UOL GROUP LTD 4.02 3,200.13 1.20 1.20 5 11.82 0.34 0.35 60.69 -17.62 -8.95
VENTURE CORP LTD 10.78 2,956.42 1.20 1.36 15 9.19 1.17 1.17 9.62 -30.45 -23.13
VERIGY LTD 19.99 1,198.53 1.25 1.00 9 15.50 1.29 1.25 -27.93 -20.01 -11.59 25/F, Bank of China Tower, 1 Garden Road,
WHEELOCK PROPERTIES (SINGAPORE) LTD 2.01 2,405.07 1.67 2.00 3 9.57 0.21 0.34 85.27 -20.24 -11.84
WILMAR INTERNATIONAL LTD 5.00 31,928.40 1.36 1.50 7 28.78 0.17 0.17 36.36 66.67 84.21 Central Hong Kong
WING TAI HLDGS LTD 2.20 1,745.28 1.75 1.80 4 5.73 0.38 0.38 58.64 -26.43 -18.68
YANLORD LAND GROUP LTD 2.60 4,747.09 1.63 1.17 5 13.68 0.19 0.21 50.79 -13.33 -4.21 General line: 852 2251 1833 Fax: 852 2251 1837
YANTAI RAFFLES SHIPYARD PTE LTD 16.00 4,376.00 2.00 2.00 1 6.71 2.38 2.38 88.81 -40.19 -33.89
YELLOW PAGES (SINGAPORE) LTD 0.87 137.52 1.50 2.00 3 10.88 0.08 0.08 6.34 -26.89 -19.20 contribution@factset.com
YONGNAM HLDGS 0.25 304.44 2.00 1.50 1 12.50 0.02 0.02 100.00 -35.06 -28.23
36 • THEEDGE SINGAPORE | MARCH 3, 2008

CAPITAL RIGHT TIMING

Chart A Chart B Chart C

STI tests support the decline in long-term indicators haven’t

quite run their course. Quarterly momentum
may be trying to bottom, but other long-term
indicators are falling.
Its executive chairman was quoted as saying
that he would defer residential launches this
year. The counter fell 52 cents last Friday and
closed at $11.96. China food stocks suffered a
Punters are heaving a huge sigh Outlook Annual momentum broke below its equilib- sell down. On the whole though, declines are
of relief as corporates rushed to Short-term stochastics is actually rium line last month in a negative move. 24- getting shallower, volume lighter, and interest
release results last week. That’s falling, and may start to bottom lat- month ROC turned down last December and is in stocks lower. Almost always, at bottoms, in-
because the market kept reacting er this week. The uncertain direc- now clearly tracing out a declining trend. These terest in the market tends to be low. And that
negatively to results announce- tion of the market is being reflect- underminings will probably prevent the STI from can only be good for the market.
ments. Analysts were busy re- ed in the ADX indicator, which is a definitive break above the ascending triangle.
vising targets and profits down- falling and is below 20. Its creator Near-term moves may remain within the 3,000 Commodity uptrend continues
wards while maintaining “buy” J Welles Wilder said a reading be- to 3,100 range. The earlier breakdown level at Commodity prices have been on a tear. Crude
or “hold” recommendations. No low 20 indicates a market with no 3,300 indicated a target of 2,100 but there’s an palm oil (CPO) for instance is up 87% over the
wonder traders were confused. trend and advised traders to stay outside chance that this may not be met. last 12 months, and that is not counting the
Many simply chose to stay on clear. ADX was originally created to The 3,000 psychological level has turned gains it made in 2006. Indeed, since 3Q2006,
the sidelines and that’s the rea- take a trader into the market when out to be a benchmark of sorts. It was retested prices have doubled to RM3,827 ($1,669.51)
son the market eased. Perhaps it started trending and out of the again last Friday when the STI touched a low per tonne. Which is why we’re paying more
with all the good news out of the | BY GOOLA WARDEN | market when it stopped trending. of 3,002 before rebounding to close higher. For for cooking oil in the supermarket — and go-
way, prices can rise? The direction wasn’t the main cri- now, that looks like support. Note though, that ing by the charts, a major correction isn’t quite
teria as traders can sell short. it has been breached previously. Since stochas- on the cards just yet. While annual momen-
STI (3,022) For the STI now, its DIs are negatively placed, tics may not turn up this week, the likelihood of tum may be peaking, it hasn’t turned down,
but with a low ADX, the index is unlikely to move a rally from current levels may not materialise. nor is it displaying any negative divergence
Long-term: down; medium term: rebound; much in either direction. True to form, the in- Part of the reason is the falling ADX. It means with price. In addition, the CPO chart pattern
short term: downturn dex eased 22 points during the week to close at that the market lacks a trend (and this also im- is still very much an uptrend with no visible
3,026, down from 3,048 a week earlier. Quarterly plies an uptrend as well as a downtrend). top formation. Support is at RM3,300 per tonne
Short term momentum is rising, as is 21-day RSI. While RSI If the STI is unable to fall much further it in the event of a correction.
RSI (Chart B) is still in a rising mode after may ease later this week as it hits its equilibri- implies that the ascending triangle is part of a
turning up from an oversold low but should um line and turns down, quarterly momentum base formation. The breakout from the triangle China blues
meet with resistance this week. may continue to move up because the market occurs if the index betters 3,150. A successful The Shanghai Composite (4,348) is hanging on
ADX (Chart B) is falling and the DIs remain was falling sharply three months ago. breakout indicates an upside of 450 points or to support at 4,300 by a thread. A break be-
negative. The STI’s chart pattern looks like an ascend- 3,600. That possibility looks remote, because low this would trigger a decline to 3,600 based
Stochastics (Chart B) is turning down. ing triangle. Last week, the index approached the ascending triangles are usually continuation on a measured move. Annual momentum is
top of the triangle when it tested 3,100 — as op- patterns and the market’s trend is still down. falling, but quarterly momentum is trying to
Medium term posed to 3,150 on the triangle — and eased. bottom, and that has halted the downtrend
Quarterly momentum (Chart A) may have The rest of the market temporarily. Last year, the Shanghai Compos-
bottomed and could be building a base. No change in downtrend for long-term Overall, selling appears to have dried up, in ite broke below a double top at 5,500, and in
Annual momentum is falling after breaking in the indicators particular for the blue chips. This is despite January this year, the index fell through the
wake of a negative divergence with the index. Long-term indicators continue to fall. While some property stocks falling last week in reac- thrice-tested 4,800 level. Any rebound is like-
24-month ROC is falling. medium-term indicators have lightened up, tion to a results briefing by City Developments. ly to find resistance at 4,800. E

GETTING TECHNICAL

Despite gains in the US market, caution is still the watchword

ESIGNAL

| BY MICHAEL KAHN | ing volume. is important because border. The healing process is still
Many pundits have been looking Dow Jones Industrial Average it did not give both in progress.

T
he US stock market finally made
a move higher this week as it
latched on to good news and
shrugged off bad. Many view the ac-
tion as a breakout from the market’s
recent range, but there are still a few
obstacles looming overhead.
For now, the evidence points to
continued strength in the short term.
Some sectors of the market have le-
gitimate technical breakouts in place
but the broader market indexes still
have some work to do. They are close,
but with so many crosscurrents in the
market this month, long-term inves-
tors need more proof that the danger
in the market is truly past.
Conflicting evidence pits funda-
mentals. On the charts, this week’s
strength is impressive in light of
soaring commodities prices, a dol-
lar plumbing new depths versus
the euro and rather mediocre trad-
for a retest of the January lows, cit-
ing among other reasons the need for
a final washout of bullish sentiment.
Those low levels would most likely
scare the collective pants off investors
to clear the decks for a new rally.
Unfortunately, when such views
are widespread the market tends to
not accommodate them. A selling pan-
ic back down to 11,700 on the Dow
Jones Industrial Average would have
given off too obvious of a signal: the
proverbial bell ringing at the bottom.
We all know that there is no bell.
Then as the market moved most-
ly sideways for several weeks, a very
obvious coiling, or triangle pattern
emerged on all the major indexes in-
cluding the Standard & Poor’s 500 (see
chart). What is obvious is known by
everyone, and what everyone knows
is just not worth knowing when it
comes to the markets.
bulls and bears suf- Another reason to remain a little
($SPX,D) Dynamic, 0:00-24:00 ficient time to think cautious is that volume remains on the
1550.00
things through, lose decline. Consolidation patterns such
1550.00
the emotions and place as triangles are usually accompanied
1450.00
1405
1400.00
their bets.Because the by falling volume as both bulls and
1375.26
1350.00
borders of the triangle bears become unsure of their convic-
1300.00 were so steep, they tions. Since volume is still in a declin-
squeezed price action ing trend from last month’s high lev-
NYSE vo um
volume -1,794,967,296294
1,616,137,086.4 so tightly that there els, we have to again think that the
946,410,930 was no place left for consolidation is still going on.
0
July 2, 2007 Feb 25, 2008 the market to go but The market is in a better place
outside the pattern. than it was last week. Should pric-
The passage of time es continue to edge higher and vol-
So this week, all of these trian- and not a sea of change in the sup- ume starts to pick up, we’ll know
gle patterns were broken to the up- ply and demand balance is partially that demand is back to bolster the
side. Voila! A breakout! Time to buy, to blame for the breakout. bullish case.
right? Well, not exactly. From a pure- That is not the spirit of a techni- The best we can say about the
ly technical point of view, the trian- cal breakout. Chart watchers now market is so far, so good. Technical-
gle on the S&P 500 was not as good can assume that the original pattern ly, there are too many problems on
as it first appeared to be. The reason was too small and is morphing into the charts to believe that it is safe. So
is that it was out of proportion with something a bit bigger. In this case, enjoy the possibility of a few strong
very large price swings within a rel- the S&P is still in a triangle forma- weeks coming up. Just stay alert.
atively compact period of time. This tion although with a different upper — © 2008 Dow Jones & Co, Inc E

Chinese takeaways for thought
Who pays for rising food prices? We thought we, the consumer had to. But, companies which
manufacture food are in the same frying pan. With rising costs of raw materials, margins are
being squeezed. Margin calls are also causing the China food stocks listed on the Singapore
SYNEAR FOOD — Accelerated fall
Synear Food’s (68 cents) freefall has been halted — albeit temporarily — by a bounce last
Friday. A sign that selling is drying up is of course falling volume but this hasn’t quite hap-
pened yet. Unfortunately, the break below $1 was accompanied by a gap — possibly a
breakaway gap — and a surge in volume. This is probably because the stock was on the buy
lists of several brokers at the start of the year, on the back of the Beijing Olympics frenzy.
However, the breakdown actually indicates a target of 50 cents, and this may well be met
before the stock builds a base and recovers in 2H2008. The rebound that started last Friday
may not last, and the breakdown level of $1 will likely provide formidable resistance.
CHINA MILK — No bull in a china shop
China Milk (85.5 cents) is drifting lower, on the back of falling short-term indicators. The
good thing about this drift downwards is the dwindling volume, which suggests a lack of
sellers — technically then, prices are oversold. Last week, the counter made a new one-
year low of 84 cents, just pipping the January low of 85 cents. If these levels aren’t bro-
ken in the next two days, prices could be in a base formation. By then, stochastics may
have turned up with a rebound in the offing. The move would also cause a positive diver-
gence between momentum and price. Any rebound finds resistance at 96 cents.
CELESTIAL NUTRIFOODS — Nothing celestial in the short term
Celestial NutriFoods (63.5 cents) is in a base formation. In the short term, however, fall-
ing stochastics may dampen sentiment and this will likely cause prices to ease. Support
is at the twice-tested 56-cent level. A breakdown below $1 in last December indicated a
target of 50 cents. This has yet to be met, but prices may touch this level on an intra-day
basis as quarterly momentum attempts to create positive divergence. Food stocks have
been savaged over the past week. For Celestial, the moves could be part of a bottoming
process. Unfortunately, the soya bean producer may be hit by rising costs and this is af-
fecting investor perception, despite the company reporting a 27% growth in net profits to
131 million renmimbi ($25.67 million).
THEEDGE SINGAPORE | MARCH 3, 2008 • 37
CAPITAL HOT STOCKS
Exchange to fall. Selected counters, though, are showing signs of strength. The strongest is
People’s Food, long maligned because their pigs regularly fall sick. Now though, with rising
meat prices, pigs are ready to fly. The counter too, has just broken out of a base.
PEOPLE’S FOOD — Pigs try to fly
People’s Food ($1.08) has not quite broken out of a downtrend. Interestingly though,
quarterly momentum, which is meant to identify latent strength (and weakness), is sug-
gesting that prices could strengthen. Momentum has turned up and broken above both
its own moving average and a failure swing. This is a bullish signal. The break above $1
seems to confirm the probability of a further rally. The move indicates an initial target of
$1.26 and a subsequent upside of $1.36. Support has been established at 84 cents.
CHINA DAIRY — Early stage base formation
China Dairy (26 cents), a milk processing company actually looks like it could strength-
en despite an uninspiring set of 2H2007 results. This came in about 20% below analyst
expectations because of spiralling costs. Quarterly momentum is attempting to turn up.
Note though, that no positive divergence exists between quarterly momentum and price.
In addition, five-day stochastics is falling and that could lead to short-term weakness. In
addition, moving averages are still declining. However, with volume dwindling, current
moves are probably the initial part of a base formation. Support has been established at
25 cents and the breakout level is at 28 cents.
CHINA ESSENCE — Likely to ease short term
China Essence (68 cents), a mainland Chinese potato starch producer, hit resistance at its
50-day moving average at 75 cents last week, causing it to retreat. Five-day stochastics is
falling, and quarterly momentum has turned down after a temporary rebound. So far, the
stock is bearing up well, but weak sentiment on China plays coupled with a downturn
by the counter’s medium- and short-term indicators could exaggerate a decline. Support
is at 55 cents for the time being. Since volume is dwindling on the down days, current
moves could be part of a broader base formation.
38 • THEEDGE SINGAPORE | MARCH 3, 2008

CAPITAL WARRANTS UPDATE SINGAPORE

About Société Générale

Warrants update (as at Feb 28, 2008) Data provided by
Société Générale is one of the largest financial services
groups in the eurozone. The group employs 151,000
TOP VOLUME people worldwide in three key businesses:
WARRANT NAME WARRANT AVERAGE 5-DAY EXERCISE MOTHER EXPIRY DATE CONVERSION PREMIUM GEARING • Retail Banking & Financial Services: Société Géné-
PRICE VOLUME PRICE SHARE PRICE RATIO rale serves 27 million individual customers world-
wide;
MACQ BK-CW08 HANG SENG INDE 0.7 42475800 24000 24591.69 3/28/2008 500 5.53 12.60
• Global Investment Management & Services: So-
MACQ BK-CW08 SINGAPORE TELE 0.19 13521600 4.2000 3.86 6/3/2008 1 13.73 20.32 ciété Générale is one of the largest banks in the
MACQ BK-CW08 CAPITALAND LTD 0.18 12954400 6.8000 6.63 6/2/2008 3 10.71 12.28 eurozone in terms of assets under custody (€2,583
billion, December 2007) and under management
MACQ BK-PW08 HANG SENG INDE 0.425 12597600 23400 24591.69 3/28/2008 500 9.66 20.76 (€434.6 billion, December 2007); and
DEUTSCHE-CW08 DBS GROUP HOLD 0.125 11738200 18.9000 17.52 7/21/2008 10 15.01 14.02 • Corporate & Investment Banking: Société Générale
ranks among the leading banks worldwide in
MACQ BK-CW08 DBS GROUP HOLD 0.17 9360200 18.5000 17.52 6/6/2008 6 11.42 17.18
euro capital markets, derivatives and structured
SOC GEN-CW08 HANG SENG INDE 0.77 9001200 24000 24591.69 4/29/2008 500 6.32 11.46 finance.
DEUTSCHE-CW08 COSCO CORP SIN 0.075 8272800 5.5000 4.14 7/7/2008 5 41.91 11.04 Société Générale is included in the five major socially-
responsible investment indexes. (www.socgen.com)
MACQ BK-CW08 COSCO CORP SIN 0.12 8163400 5.0000 4.14 6/6/2008 3 29.47 11.50
SOC GEN-CW08 STRAITS TIMES 0.225 6763200 3100 3074.15 3/28/2008 600 5.23 22.77 Disclaimer
The prices of warrants may rise or fall and the war-
DEUTSCHE-CW08 CAPITALAND LTD 0.265 6544000 6.6000 6.63 6/23/2008 3 11.54 8.34
rants may expire worthless, resulting in a total loss of
BNP PAR-PW08 STRAITS TIMES 0.085 6517600 2900 3074.15 3/28/2008 800 7.88 45.21 investment. The investor should make an independent
MACQ BK-CW08 HANG SENG INDE 0.055 5674200 24800 24591.69 2/28/2008 500 1.47 160.40
appraisal of the risks and consult to the extent neces-
sary his own legal, financial, tax, accounting and other
MACQ BK-CW08 SINGAPORE EXCH 0.135 5161400 10.0000 8.62 6/6/2008 6 25.41 10.64 professional advisors prior to any subscription or acqui-
SOC GEN-CW08 HANG SENG INDE 0.09 5122000 26600 24591.69 3/28/2008 1000 10.21 49.01 sition. Société Générale and its associated and connected
persons, their directors, officers and/or employees, in-
MACQ BK-CW08 UNITED OVERSEA 0.2 5047000 19.0000 18.34 6/3/2008 6 10.14 15.28 cluding persons involved in the preparation or issuance
BNP PAR-PW08 STRAITS TIMES 0.18 4962200 3100 3074.15 3/28/2008 800 3.84 21.35 of this material, may have positions or other interests
in, and may, as principal or agent, effect transactions
BNP PAR-PW08 HANG SENG INDE 0.23 4403600 24000 24591.69 4/29/2008 1500 10.23 12.79
in securities mentioned herein, and may also perform
RABOBANK-CW08 DBS GROUP HOLD 0.15 4228800 17.8000 17.52 6/30/2008 10 10.16 11.68 or seek to perform broking, investment banking and
MACQ BK-CW08 CAPITALAND LTD 0.36 4048200 5.8000 6.63 6/6/2008 3 3.77 6.14 other banking or financial services for the issuer of any
securities referred to herein. The information is provided
on a without liability basis. While Société Générale
reasonably believes that the information is accurate,
Société Générale does not warrant the accuracy thereof
and shall not be liable for any loss or damage howsoever
TOP GAINERS
WARRANT NAME WARRANT % GAIN EXERCISE MOTHER EXPIRY DATE CONVERSION PREMIUM GEARING
suffered in reliance on the said information.
PRICE (1 WEEK) PRICE SHARE PRICE RATIO

MACQ BK-CW08 NOBLE GROUP LT 0.04 300.0 2.5000 2.26 3/7/2008 1 12.39 56.50
RABOBANK-CW08 KEPPEL CORP LT 0.03 100.0 13.8800 10.98 7/7/2008 10 29.14 36.60
The week’s top volume:
DEUTSCHE-CW08 NOBLE GROUP LT 0.14 86.7 2.6800 2.26 6/30/2008 2 30.97 8.07 MACQ BK-CW08 Hang Seng Inde
SOC GEN-CW08 NOBLE GROUP LT 0.19 81.0 2.1000 2.26 4/28/2008 2 9.73 5.95
Price ($)
0.7
DEUTSCHE-CW08 CAPITALAND LTD 0.045 80.0 6.8000 6.63 3/17/2008 5 5.96 29.47
0.7
SOC GEN-CW08 CITY DEVELOPME 0.08 77.8 14.7000 12.48 5/20/2008 8 22.92 19.50
0.65
SOC GEN-CW08 NOBLE GROUP LT 0.21 75.0 2.5000 2.26 6/30/2008 2 29.20 5.38
DEUTSCHE-CW08 SINGAPORE PETR 0.19 72.7 8.0000 6.99 6/30/2008 3 22.60 12.26 0.6
MACQ BK-CW08 NOBLE GROUP LT 0.18 71.4 2.2000 2.26 5/5/2008 2 13.27 6.28
0.55
BNP PAR-PW08 DBS GROUP HOLD 0.11 69.2 18.6200 17.52 3/10/2008 10 0.00 15.93
SOC GEN-CW08 SINGAPORE PETR 0.165 57.1 7.8800 6.99 7/7/2008 5 24.54 8.47 0.5
RABOBANK-CW08 SEMBCORP MARIN 0.185 54.2 3.7710 3.72 6/23/2008 2.857 15.58 7.04
SOC GEN-CW08 NOBLE GROUP LT 0.115 53.3 2.3200 2.26 4/7/2008 2 12.83 9.83 0.45

MACQ BK-CW08 CAPITALAND LTD 0.475 53.2 6.4000 6.63 4/1/2008 1 3.70 13.96
Feb 21, 2008 Feb 28, 2008
SOC GEN-CW08 SEMBCORP MARIN 0.09 50.0 3.5715 3.72 3/10/2008 2.857 2.92 14.47
DEUTSCHE-CW08 SINGAPORE EXCH 0.015 50.0 16.7000 8.62 5/26/2008 10 95.48 57.47
RABOBANK-CW08 CAPITALAND LTD 0.105 50.0 6.8000 6.63 6/2/2008 5 10.48 12.63 The week’s top gainer:
SOC GEN-CW08 SINGAPORE TECH 0.065 44.4 3.9400 3.47 4/14/2008 2 17.29 26.69 MACQ BK-CW08 Noble Group LT
BNP PAR-CW08 SEMBCORP MARIN 0.065 44.4 4.4300 3.72 6/6/2008 4 26.08 14.31
Price ($)
SOC GEN-CW08 SEMBCORP MARIN 0.05 42.9 3.9644 3.72 3/24/2008 2.857 10.41 26.04 0.04
0.04
0.035
0.03
0.025
TOP LOSERS 0.02
WARRANT NAME WARRANT % LOSS EXERCISE MOTHER EXPIRY DATE CONVERSION PREMIUM GEARING
PRICE (1 WEEK) PRICE SHARE PRICE RATIO 0.015

SOC GEN-CW08 COSCO CORP SIN 0.01 -86.7 5.1000 4.14 3/17/2008 5 24.40 82.80 0.01

MACQ BK-CW08 HANG SENG INDE 0.005 -85.7 28600 24591.69 2/28/2008 500 16.36 1,764.44 0.005

RABOBANK-CW08 YANGZIJIANG SH 0.005 -83.3 2.5500 1.16 4/22/2008 2 120.69 116.00 0

BNP PAR-CW08 DBS GROUP HOLD 0.005 -75.0 18.0800 17.52 2/29/2008 15 3.62 233.60 Feb 21, 2008 Feb 27, 2008
MACQ BK-CW08 ALIBABA.COM LT 0.005 -75.0 40.0000 19.08 4/3/2008 2 109.94 342.25
SOC GEN-CW08 COSCO CORP SIN 0.03 -70.0 4.1000 4.14 3/3/2008 5 2.66 27.60
SOC GEN-CW08 PUBLIC BANK BH 0.065 -68.3 10.9274 10.40 4/11/2008 1.987 7.92 35.10 The week’s top loser:
BNP PAR-CW08 DBS GROUP HOLD 0.005 -66.7 19.3800 17.52 3/10/2008 10 10.90 350.40
SOC GEN-CW08 Cosco Corp Sin
BNP PAR-CW08 YANGZIJIANG SH 0.04 -66.7 1.2800 1.16 3/28/2008 2 17.24 14.50
DEUTSCHE-CW08 SINGAPORE EXCH 0.01 -60.0 10.1000 8.62 3/10/2008 8 18.10 107.75 Price ($)
0.08
DEUTSCHE-CW08 CITY DEVELOPME 0.05 -56.5 14.5000 12.48 6/2/2008 10 20.19 24.96 0.07
SOC GEN-CW08 HANG SENG INDE 0.035 -56.3 28600 24591.69 3/28/2008 800 16.93 157.54 0.06
SOC GEN-PW08 STRAITS TIMES 0.07 -54.8 2700 3074.15 3/28/2008 500 13.31 87.83 0.05
SOC GEN-PW08 HANG SENG INDE 0.125 -51.9 22400 24591.69 3/28/2008 800 11.18 44.11 0.04
RABOBANK-CW08 YANGZIJIANG SH 0.055 -50.0 1.8800 1.16 6/6/2008 1 66.81 21.09 0.03
BNP PAR-CW08 STRAITS TIMES 0.005 -50.0 3800 3074.15 3/28/2008 800 23.74 768.54 0.02
BNP PAR-CW08 OVERSEA-CHINES 0.005 -50.0 8.9800 7.69 3/18/2008 6 17.17 256.33
0.01 0.01
DEUTSCHE-CW08 COSCO CORP SIN 0.005 -50.0 7.2000 4.14 4/7/2008 5 74.52 165.60
0
BNP PAR-CW08 HANG SENG INDE 0.005 -50.0 33000 24591.69 2/28/2008 2000 34.42 441.11 Feb 15, 2008 Feb 27, 2008
MACQ BK-CW08 COSCO CORP SIN 0.05 -50.0 6.5000 4.14 6/5/2008 3 60.63 27.60

HIGHEST PREMIUM HIGHEST DISCOUNT

WARRANT NAME WARRANT EXERCISE MOTHER EXPIRY DATE CONVERSION PREMIUM GEARING WARRANT NAME WARRANT EXERCISE MOTHER EXPIRY DATE CONVERSION PREMIUM/ GEARING
PRICE PRICE SHARE PRICE RATIO PRICE PRICE SHARE PRICE RATIO (DISCOUNT)

MACQ BK-CW08 SYNEAR FOOD HO 0.005 2.5000 0.645 3/3/2008 2 289.15 64.50 DEUTSCHE-PW08 SINGAPORE EXCH 0.685 16.4000 8.62 6/23/2008 10 -10.79 1.26
MACQ BK-CW08 SYNEAR FOOD HO 0.06 2.0000 0.645 6/5/2008 2 228.68 5.38 MACQ BK-PW08 SINGAPORE EXCH 0.94 15.0000 8.62 6/18/2008 6.000 -8.58 1.53
MACQ BK-CW08 CELESTIAL NUTR 0.035 1.8000 0.615 3/3/2008 2 204.07 8.79 MACQ BK-CW08 CHINA RAILWAY 1.2 6.5000 9.40 3/4/2008 0.33 -7.37 4.26
DEUTSCHE-CW08 YANGZIJIANG SH 0.02 3.1800 1.16 6/30/2008 2 177.59 29.00 BNP PAR-PW08 DBS GROUP HOLD 0.1 19.8000 17.52 2/29/2008 15 -4.45 11.68
BNP PAR-CW08 YANGZIJIANG SH 0.005 3.2000 1.16 3/28/2008 3.000 177.16 77.33 SOC GEN-PW08 DBS GROUP HOLD 0.405 22.3000 17.52 3/10/2008 10 -4.17 4.33
MACQ BK-CW08 YANGZIJIANG SH 0.015 3.0000 1.16 4/3/2008 3.000 162.50 25.78 SOC GEN-CW08 TELEKOM MALAYS 0.095 10.3831 11.40 3/3/2008 2.884 -3.41 18.14
DEUTSCHE-CW08 YANGZIJIANG SH 0.01 2.8800 1.16 6/2/2008 2 150.00 58.00 BNP PAR-PW08 COSCO CORP SIN 0.505 6.8000 4.14 2/28/2008 5 -3.26 1.64
MERRILL-CW08 YANGZIJIANG SH 0.01 2.7000 1.16 3/28/2008 2 134.48 58.00 SOC GEN-PW08 SINGAPORE EXCH 0.7 15.9000 8.62 4/7/2008 10 -3.25 1.23
MERRILL-CW08 CHINA OILFIELD 0.02 1.1000 0.48 4/28/2008 1 133.33 24.00 BNP PAR-CW08 CAPITALAND LTD 0.685 4.3800 6.63 6/26/2008 3 -2.94 3.23
MACQ BK-CW08 FERROCHINA LIM 0.04 3.0000 1.34 4/3/2008 2 129.85 16.75 DEUTSCHE-PW08 DBS GROUP HOLD 0.16 19.6000 17.52 3/3/2008 10 -2.74 10.95
 THEEDGE SINGAPORE | MARCH 3, 2008 • 39

WeekinPictures
CORPORATEMOVES
PICTURES: BLOOMBERG

Companies are invited to submit notices of senior corporate appointments and changes. Photographs (in jpeg
format) are welcomed. Announcements will be edited for brevity. Please e-mail rahayu.mohamad@bizedge.com;
attention: editorial coordinator, Rahayu Mohamad.

ArianeCorp Ltd Hongwei Technologies Ltd

Yeo Kan Yen has been appointed COO wef
Feb 25
Work experience: MD, CarrierNet Corp (S) Pte
Ltd; regional sales manager, Nagamei Marine
Pte Ltd
Barclays Global Investors
Drew Corbett has been appointed head of
distribution, iShares Asia ex-Japan wef Feb-
ruary 2008
Work experience: Head of ETF trading for Citi-
Ma Ying-jeou, presidential candidate of the opposition Kuomintang, delivers a speech during the group and for Merrill Lynch
“228” memorial concert, in Taipei, Taiwan, last Thursday. Jane Leung has been appointed head of prod-
uct, iShares Asia ex-Japan wef February 2008
Work experience: Oversaw the management
of US and non-US equity iShares with BGI in
San Francisco
Paul So has been appointed head of portfolio
management, iShares Asia ex-Japan wef Feb-
ruary 2008
Work experience: Led transition management
and equity index portfolio management for
BGI in Canada.
China Energy Ltd
Li Qiang has been appointed deputy CEO wef
Feb 22
Work experience: GM, Jiutai Energy (Guangzhou)
Co Ltd
Courts Singapore Ltd
Howard Lester Bryant has been appointed
non-executive director wef Feb 26
Puma AG CEO Jochen Zeitz (left) shakes hands with British-based Cypriot fashion designer Hussein
Work experience: Director, Tesco Stores Thai-
Chalayan during a news conference in Paris last Thursday. Puma AG, the German sporting-goods
land; commercial director, Tesco Lotus
maker controlled by PPR SA, hired Chalayan to be the company’s creative director and acquired a
majority stake in the British designer’s fashion brand.
Gavin Anderson
James Weeks (top right) has
been promoted to executive
chairman, Asia Pacific wef Feb-
ruary 2008
Work experience: President/
CEO, Gavin Anderson
Deborah Hayden has been ap-
pointed CEO, Japan wef Feb-
ruary 2008
Work experience: Deputy CEO,
Gavin Anderson
Lam Tin Faat, Tony has been appointed CFO
wef Feb 23
Work experience: Has worked with local Hong
Kong audit firm and consulting firms in mana-
gerial positions
Tsai Hungching resigned as ED wef Feb 23
Jets Technics Int’l Holdings Ltd
Au Chun Kwok, Augustus has resigned as inde-
pendent non-executive director wef Feb 18
Rotol Singapore Ltd
Phua Tian How @ Phua Tin Wei has been
appointed non-executive independent director
wef Feb 26
Work experience: President/CEO, TranSil Corp
Pte Ltd; group president, Straco Corp Ltd; ED,
SBS Transit Ltd
Sapphire Corp Ltd
Toh Ewe Kok has been appointed COO wef
March 1
Work experience: Director, Sapphire Mineral Re-
sources Pte Ltd; GM, Sapphire Offshore Engi-
neering Pte Ltd
Seksun Corp Ltd
Mak Bang Mui has been appointed non-execu-
tive director wef Feb 15
Work experience: Director, Centurion Investment
Management Pte Ltd; associate director, UOB
Kay Hian Pte Ltd
Yeo Boon Hing has been appointed non-execu-
tive director wef Feb 15
Work experience: CEO, Summit CD Manufacture
Pte Ltd; regional sales manager —
sales and marketing, Honeywell In-
formation Systems
Choo Soo Kwang has been ap-
pointed CFO wef Feb 21
Work experience: Founder, SLM
Consulting Pte Ltd; partner, Chia
Wong & Partners
Victor Loh Kwok Hoong has re-
signed as non-executive director
wef Feb 15
Leong Horn Kee has resigned as
non-executive director wef Feb 15

A model poses with

GUL Technologies Springboard Research
a RAZR 2 mobile Singapore Ltd Michael Barnes (bottom left) has
Kik Teng Guan has been ap- been appointed VP of software re-
phone launched
pointed ED wef Feb 22 search wef February 2008
by Motorola Korea
Work experience: CEO, Gul Work experience: Over 13 years of
Inc in Seoul last
Technologies Singapore Ltd; research experience in informa-
Thursday
senior VP — business devel- tion and communications technol-
opment and customer relation- ogy software and services markets,
ships (Asia), Sanmina-Sci Sys- worked with META Group, Hurwitz
tems Singapore Pte Ltd Group and Prudential Insurance
William Liem has resigned as
ED wef Feb 22 Synear Food Holdings Ltd
Li Wenjun has been appointed ED
Hi-P Int’l Ltd wef Feb 25
Zhou Wei Dong has been appointed MD, wire- Work experience: Director, Henan Synear; pur-
less strategic business unit wef Feb 26 chasing manager, Synear Frozen
Work experience: GM, wireless business unit,
Hi-P Int’l Ltd; operations manager, Hi-P Int’l Transpac Industrial Holdings Ltd
Ltd; engineering manager, Uniplas (Shang- Vince Feng has been appointed non-executive
hai) Co Ltd independent director wef Mar 1
Alan Ong will resign as MD, computing & auto- Work experience: MD, General Atlantic LLC
motive strategic business unit wef March 31
Yong Xin Int’l Holdings Ltd
Hongguo Int’l Holdings Ltd Yuan Xuanli has been appointed ED/COO
Xu Tingyu has been appointed ED wef wef Feb 28
March 1 Work experience: Assistant to general coordina-
Work experience: CFO, Hongguo Int’l Hold- tor/head of cold rolling workship, Yongxin Pre-
ings Ltd; senior supervisor, China Orient As- cision Material (Wuxi) Co Ltd; GM, ChangShu
set Mgmt Company, Nanjing ChangJiang Stainless Steel Material Co Ltd
Thaksin Shinawatra, former Prime Minister of Thailand and owner of the Manchester City football club, Gui Zuhua has resigned as non-executive di- Wu Jie has resigned as ED/COO wef Feb 28
greets a crowd as he arrives at the airport in Bangkok last Thursday. Shinawatra, deposed in a coup 18 rector wef March 1 — Compiled by Rahayu Mohamad
months ago, returned home from exile saying he will never return to public life.
40 • THEEDGE SINGAPORE | MARCH 3, 2008

MARKETDIARY LISTINGS
Monday, March 3 CORPORATE/CAPITAL MARKETS Asian Development Bank, Vietnam Resident Venue: The Raffles Hotel, Singapore
Singapore March 3 to 5 Mission Hanoi Organisers: Hill Int’l, CIOB
CH Offshore Ltd Dividend: $0.005 Topic: 7th Annual Investor Conference 2008 Time: 10am to 11.30am Tel: 6338 2455/6429 0304
interim tax exempt; Venue: Seminar Room II, ISEAS Email: ajay@eastwestpr.com
– India Unlimited
record date: March
Highlights: Incisive, insightful analysis from Organiser: Institute of Southeast Asian
5; payable date:
more than 70 leading corporates, including Studies March 8
March 18
Tai Sin Electric Ltd Dividend: $0.01 Bharti Airtel, Educomp, ICICI Bank, etc Tel: 6870 2413 Topic: Technology Commercialisation in the
interim one-tier tax; Venue: The Ritz-Carlton, Millenia Singapore Email: karthi@iseas.edu.sg Bio-Tech Industry: What (Really) Works!
record date: March Organiser: ICICI Securities Time: 11am to 1pm
5; payable date: Tel: 91 22 6637 7249 INDUSTRY/TECHNOLOGY Venue: SIM University, 461 Clementi Road,
March 18 Email: singconf@isecltd.com March 5 and 6 Level 4
Topic: Delay & Disruption in Construction Organisers: SIM University, The Institute of
March 7 Contracts Engineers, Singapore
Tuesday, March 4 Topic: Changes in Vietnam – Challenges and Highlights: Reduce cost, improve efficiency, Tel: 6248 9211
Singapore manage risks, analyse delay, disruption and Email: pltan@unisim.edu.sg
Opportunities
Purchasing Managers Index (Feb)
Speaker: Ayumi Konishi, country director, cost, obtain the latest knowledge Website: www.unisim.edu.sg
Electronic Sector Index (Feb)
Epure Int’l Ltd Stock split offer of
3 for 1
Pertama Holdings Ltd Dividend: $0.008
interim tax exempt;
record date: March
6; payable date:
German tax probe yields
confessions as search widens
March 20
US Total Vehicle Sales

Wednesday, March 5

Singapore
Automobile COE
Open Bid Cat, A, B, E
Raffles Education Corp Ltd EGM
Sunway Int’l Holdings Ltd AGM
US ABC Consumer Confidence
US MBA Mortgage Applications
Thursday, March 6
Singapore
F J Benjamin Holdings Ltd
Transview Holdings Ltd
Friday, March 7
Singapore
Foreign Reserves (Feb)
US Unemployment rate
— Compiled by Rahayu Mohamad
IPOWATCH
G
erman authorities said 195 people
confessed to tax evasion since their
probe of Liechtenstein bank accounts
began two weeks ago, as the investigation
widened to at least 13 countries including
the US. German investigators have already
searched the homes and offices of 150 peo-
ple, with 91 of them confessing and agree-
ing to pay €27.8 million ($58.84 million) in
taxes, prosecutor Hans-Ulrich Krueck said.
Another 104 have voluntarily gone to tax
Dividend: (First authorities, four German states said.
interim) $0.009 The US Internal Revenue Service said
interim one-tier tax; last Tuesday it would pursue more than
record date: March 100 Americans who may be avoiding pay-
10; payable date: ing taxes by hiding money in Liechtenstein
March 27 accounts. The UK, France, Ireland, Neth-
Dividend: $0.006 erlands, Norway and Sweden announced
first and final tax their own crackdowns, and Swedish au-
exempt; record thorities said another five countries have
date: March 10; information on tax avoiders with Liechten-
payable date: stein accounts.
March 28 “The pressure is building on all sides,”
Sylvia Schenk, the chairwoman of Trans-
parency International in Germany, said in
a phone interview from Frankfurt. “Public
expectations are huge now that these cases
will be investigated and be punished.”
The German probe, focused on €200 mil-
lion deposited in Liechtenstein, has already
led to the resignation of Deutsche Post AG
CEO Klaus Zumwinkel. The investigation
has centred on information from LGT Group,
the Liechtenstein bank owned by the prin-
cipality’s ruling family, which said yester-
day stolen records passed to Germany con-
tain data from 1,400 clients.
Bochum prosecutors now have data
from a second Liechtenstein bank and are
reviewing whether they need to investigate
additional banks in the principality, Eduard
Gueroff, a spokesman for the Bochum pros-
ecutor’s office, said.
The amount of money that people are
paying back in taxes is “increasing daily,”
Krueck said during a press conference in the
German city of Bochum, which is heading
the investigation. “We’ve been informed al-
ready of additional voluntary payments” in
a similar magnitude received so far.
The US federal tax collection agency
said it would work together with the gov-
ernments of Australia, Canada, France, It-
aly, New Zealand, Sweden and the United
Kingdom to obtain the records and prose-
cute tax fraud.
“Combating off-shore tax avoidance and
evasion are high priorities,” IRS Acting Com-
missioner Linda Stiff said in a statement.
“We will use all our authority to fairly and
effectively enforce our tax laws.”
German prosecutors have also searched
banks in the country where either suspects
in the probe had accounts or employees
assisted customers to set up Liechtenstein
trusts to avoid taxes.
Bankhaus Metzler, Dresdner Bank AG,
the banking unit of Allianz SE, private bank
Hauck & Aufhaeuser, UBS AG and Ham-
burg-based Berenberg Bank have confirmed
searches at their offices.
Bayerische Landesbank, German’s sec-
ond-biggest state bank, said last Tuesday it
may retreat from Liechtenstein by selling its
stake in a unit located in the principality.
The Munich-based bank bought a major-
ity stake in Austria’s Hypo Alpe Adria Bank
International AG last year and through it an
indirect holding in Hypo Alpe Adria Liech-
tenstein AG.
The German government paid as much
as €5 million for information on German
account holders in Liechtenstein on a disk
provided by an informant to the Federal In-
telligence Service. It’s open to sharing this
information with other countries, the Fi-
nance Ministry said last Monday.
Germany has threatened to “tighten
the thumb screws” on Liechtenstein if an
agreement to stem illegal cash flows can’t
be reached, and Chancellor Angela Merkel
warned the previous week that “the clock
is ticking.”
Merkel discussed her concerns that Ger-
mans are evading taxes by hiding money in
safe havens with Monaco’s Prince Albert dur-
ing his visit to Berlin last Wednesday. Mona-
co, Liechtenstein and Andorra are on a list
of “uncooperative tax havens” published by
the Paris-based Organization for Economic
Cooperation and Development.
Sweden is investigating about 100 Swedes
with questionable accounts, Mats Sjoestrand,
the Swedish Tax Agency’s director general, said
in an opinion article published last Tuesday
in the Swedish newspaper Dagens Nyheter
that the tax agency later confirmed.
Ireland plans to ask Germany for details
on any Irish citizens uncovered in its probe,
while France has already received informa-
tion on its citizens that may have evaded
taxes in Liechtenstein, the tax collection of-
fices in the two countries said last Tuesday.
E
—Bloomberg LP

Friday, Feb 22
Grand Pacific Properties Ltd
Status: Lodged (preliminary prospectus)
Lodged date: Feb 22
Core business: The group is an Indonesian-
based real estate group principally focused on
Stanchart moves Asia CEO to Hong
developing and investing in commercial and
residential properties in strategically select-
ed key cities in Indonesia. Its aim is to devel-
Kong from Singapore
op premium quality residential and commer-
cial properties. Apart from developing its own | BY CHIA-PECK WONG | tered’s pretax profit last year. “It than a third of the bank’s total London-based bank received bids
property projects, the group has also invested makes a huge amount of busi- of US$4.04 billion. Profit from for its Indian mutual fund unit

S
in Grade A commercial buildings. tandard Chartered Plc, the
Underwriter: HL Bank UK bank that makes most
Issue manager: HL Bank, Hong Leong of its profit in Asia, relo-
Finance Ltd cated its CEO for the region to
Issue size: NA Hong Kong from Singapore. The
Public offer: NA move will bring Asia CEO Jaspal
Issue price: NA Bindra closer to the Greater Chi-
na region that was the biggest
contributor to Standard Char-
ness sense for the Asian CEO
to be headquartered in Hong
Kong,” Bindra told reporters in
the city last Thursday. “Greater
China is the bank’s biggest fo-
cus for our group.”
With pretax profit of US$1.19
billion ($1.66 billion) last year,
Hong Kong accounted for more
China jumped 73% to US$498
million, helping drive a 25% in-
crease in Standard Chartered’s
net income.
Other executives based in
Singapore, including the Asian
heads of wholesale banking and
human resources, will also move
to Hong Kong, Bindra said. The
higher than the US$120 million
indicated late last year, and ex-
pects to complete the sale this
year, Bindra said.
He didn’t identify any bid-
ders. “All the bids we are getting
are quite generous; we think it
will happen in 2008,” he said.
—Bloomberg LP E
 CC2 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY PROPERTY BRIEFS

Home

EDITOR/REGIONAL
MANAGING DIRECTOR
Tan Boon Kean
(bktan@bizedge.com)
SECTION EDITOR
Cecilia Chow
(cecilia.chow@bizedge.com)
COPY-EDITING DESK
Elaine Lim, Evelyn Tung,
Ng Bee Cheng, James Chong
PHOTO EDITOR
Samuel Isaac Chua
(samuelisaac.chua@bizedge.com)
PHOTOJOURNALIST
Gwyneth Yeo
(gwyneth.yeo@bizedge.com)
EDITORIAL COORDINATOR
Rahayu Mohamad
(rahayu.mohamad
@bizedge.com)
DESIGN DESK
Tan Siew Ching, Christine Ong,
Chan Yoke Lin, Jamy Gan
ADVERTISING +
MARKETING
REGIONAL GENERAL MANAGER |
Edward Stanislaus
(edward@bizedge.com)
SENIOR MANAGER |
Colin Tan
(colin.tan@bizedge.com)
MANAGERS | Simon Wong
(simon.wong@bizedge.com)
Cecilia Kay
(cecilia.kay@bizedge.com)
Jeffrey Wong
(jeffrey.wong@bizedge.com)
Windy Tan
(windy.tan@bizedge.com)
Faith Teo
CDL’s record year
Singapore’s leading property developer,
City Developments Ltd (CDL), posted
stellar 4Q2007 and full-year results. Net
profit in 4Q2007 amounted to $235 mil-
lion, up 71% y-o-y, while full-year profit
rang in at $725 million compared with
$200.7 million in FY2006 (if the $150
million profit from the sale of hotel as-
sets to CDL Hospitality Trusts is exclud-
ed). Total revenue for the year was $3.1
billion. In the local residential market,
CDL sold 1,655 units worth $3.38 billion
compared with last year’s 1,337 units to-
talling $2.77 billion. Slated for launch in
1H of the year are: the 77-unit Shelford
Suites; 100 of the 336-unit new condo
at the former Lok Cho Apartments site;
100 of the 228-unit The Quayside Isle
at Sentosa Cove; and the first phase of
150 units of the 724-unit Pasir Ris con-
dominium development.
Ho Bee has record $272mil
net profit
Property development group Ho Bee In-
vestment has announced record results
for FY2007. The group had a net profit
after tax and minority interest of $272
million for the full year ended Dec 31 —
up 176% from the previous year. This
was achieved on the back of record rev-
enue of $596 million — up 52% from its
previous peak of $393 million. Earnings
per share stand at 36.9 cents compared
with 14 cents previously, an increase of
163%. The company has proposed a
one-tier final dividend of two cents per
share. Y-o-y sales of properties were steep-
ly higher, rising 51% to $576.7 million,
compared with $382.2 million in 2006.
Income came from residential projects
including Coral Island, The Coasts and
Paradise Island at Sentosa Cove; Orange
Grove Residences at Orange Grove Road;
Montview at Mount Sinai; and Quinter-
ra at Holland Road.
Cityscape Asia returns to
Singapore
The world’s largest business-to-busi-
ness real estate event brand, Cityscape,
will hold Cityscape Asia at Suntec on
April 15 to 17. The inaugural event
last year featured more than 100 ex-
hibitors from 35 countries, selling out
more than 86,000 sq ft of space. This
year’s Cityscape Asia will highlight op-
portunities to an audience of regional
and international investors, real estate
developers, architects and designers,
government and senior professionals.
Major sponsors include Limitless — a
Dubai World company — and UK-list-
ed company Aseana Properties, which
is focused on developments in Malay-
sia and Vietnam.
OKP rides high on vibrant
construction sector
A strong economy and vibrant construc-
tion sector has seen infrastructure and
civil engineering firm OKP Holdings an-
nounce a record full-year net profit after
tax and minority interest of $11 million
— up 171% on 2006. The group has
declared a one-tier tax-exempt first and
final dividend of two cents per share.
Turnover for the year ended Dec 31 hit
a high of $124.7 million, up 70% from
the $73.3 million achieved in the pre-
vious financial year. OKP specialises in
the construction of airport runways and
taxiways, expressways, flyovers, vehicu-
lar bridges, and urban and arterial roads.
The bulk of group revenue was generat-
ed from its construction segment, which
saw a y-o-y surge of 95.9% from $53.4
million to contribute $104.7 million —
84% — to total revenue.
CapitaLand partners with
leading Australia developer
CapitaLand has entered into a joint ven-
ture with Australand Industrial and Lo-
gistics International, one of Australia’s
major diversified property groups. The
agreement, through CapitaLand sub-
sidiary CapitaLand Industrial & Logis-
tics Holdings (CIL), aims to establish a
Pan-Asian development platform in the
industrial and logistics sectors in Asia.
CIL will own a 51% stake in projects
and Australand the remaining 49%.
Australand is a leading industrial and
logistics property developer and man-
ager in Australia.
Koh Brothers reports huge
profit jump
Koh Brothers Group has reported full-
year net profit of $39.7 million — 877%
more than the 2006 result. Sales in 2007
were $285.5 million compared with
$259.6 million the previous year — a
10% increase. The real estate division
contributed $26.9 million, or 9% of the
group’s turnover. New sales contribu-
tion came from Bungalow @ Caldecott
and rental income from the Alocassia
Apartments. Turnover from the construc-
tion and building materials division in-
creased from $227.8 million in 2006 to
$251.2 million in 2007. The group’s net
profit attributable to shareholders has
increased 877% from $4.1 million in
2006 to $39.7 million last year, which
includes the net revaluation surplus of
$32.2 million.
URA launches two transitional
office sites at Scotts Road
URA has launched the sale of two tran-
sitional office sites at Scotts Road-An-
thony Road. Located next to the New-
ton MRT station, Land Parcel A has a
site area of 93,455 sq ft and can yield
a maximum gross floor (GFA) area of
140,193 sq ft. The adjacent land parcel
B has a site area of around 97,287 sq ft
and a maximum GFA of 145,920 sq ft.
Both parcels are being sold on short-term
leases of 15 years. The office buildings
on these sites — which could be amal-
gamated — are expected to be low-rise
developments of four storeys. Knight
Frank says the expected price for Parcel
A is $14 million to $18.2 million ($100 to
$130 per sq ft per plot ratio) and $14.6
million to $19 million ($100 to $130 psf
ppr) for Parcel B. Tenders for Parcel A
close at noon on April 24 and at noon
on April 30 for Parcel B.
$18 million revamp of
Tiong Bahru Plaza
Shopping mall management group, Asia-
Malls Management, the joint venture
between ARMF and SGX-listed Guthrie
Group, announced last week that it will
be repositioning Tiong Bahru Plaza
(above), one of the suburban malls in
its portfolio which includes six other
malls — Hougang Mall, White Sands,
Century Square, Liang Court, Central
Plaza and the upcoming Tampines 1.
Two floors of the Central Plaza office
tower (acquired early last year) located
next door to Tiong Bahru Plaza will be
converted to civic use. This allows the
latter to provide additional gross floor
area for retail use. Targeted for com-
pletion by 3Q2008, the estimated cost
of the revamp is $18 million, and will
add another 19,000 sq ft for retail and
F&B outlets, while the existing areas
will be reconfigured. — Compiled by
Mark Henderson E

(faith.teo@bizedge.com)
Julia Tan
(julia.tan@bizedge.com)
COORDINATOR | Nor Aisah Bte Asmain
(nor.asmain@bizedge.com)
MALAYSIA REPRESENTATIVE |
Helen John Corry
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CIRCULATION-
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REGIONAL SENIOR MANAGER |
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ASSISTANT MANAGER | Naziela Nasir
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ASSISTANTS | Juliana Ibrahim
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Iryanti Zainol
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Offshore
CapitaLand to create $426mil fund for
Vietnam expansion
CapitaLand has strengthened its presence in Viet-
nam with several new business initiatives which
include a strategic partnership and a multi-million
dollar development fund. A statement of strategic
intent has been signed with CapitaLand’s local Vi-
etnamese partner Nam Thang Long Investment
Joint-Stock Company to form a strategic alliance to
seek further real estate business opportunities. The
partners will also develop residential properties and
commercial-residential mixed developments.
CapitaLand will also leverage on its real estate
and fund management expertise to set up its first
property fund to invest in Vietnam. It intends to
take a 30% sponsor stake in the targeted $426 mil-
lion fund. CapitaLand has signed a memorandum
of understanding with Citi Private Bank, one of the
world’s largest wealth managers, to explore real es-
tate investment opportunities in Vietnam. Capita-
Land believes the fund will follow the success of
its CapitaLand China Development Fund, which is
also co-marketed with Citi Private Bank in China.
The group is confident of doubling its residential
pipeline in Vietnam from the present 2,800 homes
to around 6,000 homes over the next three years.
CapitaLand is also looking for opportunities in the
office, retail, and integrated leisure, entertainment
and conventions sectors.
CapitaLand is in a strong financial position to tap
opportunities in Vietnam despite the tough global
financial landscape. In February, the group raised
$1.3 billion through a 10-year convertible bond issue
— the largest 10-year convertible bond transaction
ever done in Singapore. It also recently closed two
new funds — the CapitaRetail India Development
Fund has raised US$600 million to invest in retail
development projects in India, and the CapitaRe-
tail China Development Fund II which has US$600
million ($837.84 million).
Keppel Land unveils Saigon Centre
concept plans
Keppel Land, one of the largest property developers
in Vietnam, has unveiled concept plans for its Sai-
gon Centre. The 2ha mixed-use development fronts
Le Loi Boulevard, the main thoroughfare in Ho Chi
Minh City. Phase One, completed in 1996, is a 25-
storey building comprising a three-storey retail po-
dium, 11 levels of prime office space, 89 serviced
apartments and three levels of basement carpark.
Saigon Centre is the preferred address of the diplo-
matic corps, multinational companies, bank and fi-
nancial institutions. Keppel Land and local partners,
Sowatco and Resco, will embark on plans to develop
an iconic landmark development integrating subse-
quent phases of Saigon Centre. Skidmore, Owings
and Merrill, one of the world’s largest architectural
firms, will design the new concept plans.
More demand for Bangkok luxury apartments
CB Richard Ellis (CBRE) predicts Bangkok’s lux-
ury condominium market will become more ac-
tive this year and new supply will continue to
be limited. Freehold plots in prime central loca-
tions are very limited and the increase in land
prices has resulted in a drop in the new supply
of luxury units in these areas, while demand for
downtown city living is growing. Prices for new
downtown condominiums have risen by an aver-
age of 10% to 12% a year since 2003. CBRE says
investment in new luxury apartments in prime
locations has generated an average of 4% to 5%
yield per annum over the past four years along
with price appreciation. The average percentage
of foreigner buyers has increased to 32% over the
past three years from less than 20% a decade ago.
Tight supply and relative affordability is boosting
prices in downtown Bangkok. A luxury two-bed-
room unit with 970 to 1,300 sq ft sells for around
US$500,000 ($698,200).
Ascott to manage new Jakarta
serviced residence
The Ascott Group will manage Somerset Kunin-
gan, a new serviced residence in Jakarta’s CBD.
The contract was signed with PT Ciputra Adigra-
ha, a subsidiary of PT Ciputra Property Tbk, one
of Indonesia’s most established commercial proper-
ty developers. Somerset Kuningan will be part of a
large integrated development called Ciputra World
Jakarta. The 10ha project comprises a high-end re-
tail mall, office towers, condominiums and a five-
star hotel-luxury residence. The 153-unit serviced
residence is expected to open in 2H2012. — Com-
piled by Mark Henderson E

Phillip Investor Hub also houses
all of its 310 financial advisers,
some of its backroom staff,
and act as a satellite office
for its 150 remisiers
More than just a hub
| BY NOVA THERESIANTO |
H
omegrown financial servic-
es firm, PhillipCapital, has
been most aggressive at
bringing its financial serv-
ices nearer to its investors
— to the heartland districts. Over the
last eight years, it has planted investor
centres in major residential neighbour-
hoods from Ang Mo Kio, Marine Pa-
rade and Toa Payoh, to as far as Bukit
Batok, Yishun and Woodlands. It also
has two investor centres in the CBD,
namely Robinson Road and Raffles
City Tower. In fact, its first investor
centre was at Straits Trading Building
along Battery Road. Set up in 2000, it
has since been relocated to the cur-
rent Robinson Towers premise.
To date, it has nine investor cen-
tres. Two weeks ago, PhillipCapital
opened its first investor hub at the
former Moulmein Community Centre
at Shan Road, off Balestier Road. Un-
like the typical investor centres in the
heartlands, which tend to be housed
in shophouses of around 2,000 sq
ft, the flagship Phillip Investor Hub
is 10 times larger with a gross floor
area of 22,593 sq ft.
PhillipCapital spent about $1.8
million refurbishing the former com-
munity centre, which had been va-
cant for more than two years. Unlike
the other investor centres, the Phillip
Investor Hub is designed like a club-
house with a cafeteria and a rooftop
garden for client functions.
‘Comprehensive range
of services’
“We thought it was a good idea to do
something more significant, like a hub,
which we can plant in different major
parts of Singapore,” says Lim Hua Min,
executive chairman of PhillipCapital.
“And so hopefully, this first hub will
not be the last one, so that we will be
in a position to provide a more com-
prehensive range of services.”
Including the new investor hub
at the former Moulmein Communi-
ty Centre, PhillipCapital now has 10
THEEDGE SINGAPORE | MARCH 3, 2008 • CC3
CITY&COUNTRY
PICTURES: GWYNETH YEO/THE EDGE SINGAPORE
quarters occupies six floors in Raf-
fles City Tower, totalling 60,000 to
70,000 sq ft. “We are actually ex-
panding in Raffles City, not shrink-
ing,” emphasises Lim. “We still need
more space. [The new investor hub]
indirectly helps relieve some of the
space pressure that we have in Raf-
fles City.”
Rental costs
On top of that, it also helps reduce
overall rental costs. As of February,
asking rents at Raffles City Tower
is in the range of $16.20-$17.50 psf
Lim: We are actually expanding in Raffles per month, according to office leas-
City, not shrinking. We still need more ing specialists, Corporate Locations’
space.
such investor centres. “Our aim is to
have 20 [investor hubs and centres]
in time to come, [and] we are look-
latest rental guide. Meanwhile, Phil-
lipCapital had successfully bid to
lease the former Moulmein Commu-
nity Centre site for its investor hub
from the Singapore Land Author-
ing at three this year,” says Lisa Lee, ity for $35,000 per month in June
director of business development and last year. This works out to a rental
consumer services at PhillipCapital. rate of a mere $1.55 psf per month.
The rate of expansion will depend on The lease period is for three years,
the availability of sizeable properties with an option to renew for threep-
in strategic locations, for instance, in lus three years.
the regional centres of Jurong East in Unlike the other investor centres
the west and Tampines in the east. which follow regular office hours (in
The investor hub also helps cen- the heartlands they are opened from
tralise several functions. It houses 9am to 1pm on Saturdays), the new in-
all the 310 financial advisers who vestor hub will be opened seven days
were previously located in various a week from 11am to 5pm. “The CBD
investor centres. It also acts as a sat- gets really sleepy during the weekend,
ellite office for its 150 remisiers or therefore we are actually going into ar-
so-called “home sales force”. It will eas where these investors live,” says
also house some of PhillipCapital’s Lee. The company has also set up in-
backroom functions. vestor centres in Thailand, Indonesia
Currently, PhillipCapital’s head- and Hong Kong. E
CC4 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY
COVERSTORY

The
pric

1
1
1
1
1

The brand new super-lux-

MILLIONAIRES’
ury good class bungalow
at 39 Leedon Road and
the neighbouring 37
Leedon Road are on the
market with price tags of
$35 million each $1,
the

row in Singapore
er G
inc

in 2
psf
cen
While GCB transactions are expected to moderate this year after a record wit
to $
2007, sellers are still bullish with their asking prices aG
bou
Na
| BY CECILIA CHOW | two months of the year: only a hand- owner would not need to do any exten- for
ful of GCBs changed hands compared sive renovation works. The property is sim

T
he US subprime woes may have
dampened sentiment and slowed
the rate of sales, but it has yet
to put a dent on owners’ asking
prices, especially at the top-tier
of the luxury home market, the good
class bungalows (GCBs).
Last year was a record year for the
GCB market, with 117 transactions worth
$1.54 billion taking place, according
to Jones Lang LaSalle Research. How-
ever, the bulk of the sales of $1.4 bil-
lion (90%) were done in the first nine
months of the year. In 4Q when the US
subprime crisis started to have a knock-
on effect on global stock markets, mar-
ket sentiment in Singapore dipped, and
only nine GCBs changed hands over the
last three months of 2007.
“2008 is generally expected to see
a slower start to the year as fears of a
US recession continue to affect mar-
ket sentiment,” says David Batchelor,
associate director of investments at
Jones Lang LaSalle, and a specialist in
the GCB market.
While demand for GCBs remains
strong, actual transactions for 2008 is
expected to moderate. This is already
evident in terms of sales for the first
with the same period last year, which
saw around 20 transactions. The most
recent deal according to URA Realis da-
tabase of caveats lodged, was on Feb 4
when 32 White House Park with a land
area of 15,081 sq ft, changed hands for
$18 million or $1,194 psf.
However, unlike the luxury condo
market that has gone very quiet since
the last quarter of 2007, with develop-
ers holding back their launches until
sentiment improves, there is still activ-
ity in the landed homes segment, ob-
serves Shaun Poh, senior director of in-
vestment advisory services and auction
at DTZ Debenham Tie Leung.
More GCBs priced above $1,000 psf
Most recently, DTZ put up for sale by
private treaty a GCB at 5A Bishopsgate
(located off Grange Road and Nathan
Road) with an indicative price of $24
million. This translates to $1,423 psf
based on a land area of 16,861 sq ft.
The double-storey bungalow with a to-
tal built-up area of 9,800 sq ft has sev-
en bedrooms and a swimming pool.
Built 11 years ago, the house is still in
mint condition and was recently given
a fresh coat of paint. Hence, the new
currently tenanted at a monthly rental $19
rate of $40,000 a month, with the lease
expiring end-October 2009. Sep
Just next door, 7A Bishopsgate changed we
hands for $21 million or $1,202 psf in ma
December last year. “These days, the me
asking price for GCBs is above $1,000 ow
psf,” says Poh. and
There are also several properties that Roa
were put on the market last year at pric- his
es above $1,000 psf, and which are still
available for sale. One of them is 35 Lee- ter
don Road, which sits on a 43,927 sq ft Lan
freehold. The owners are not budging mo
from their asking price of $44 million or and
$1,001 psf. Another is 3 Wollerton Park
which has a land area of 26,326 sq ft Su
site and an indicative sale price of $32 bu
million to $33 million or $1,215 to 1,254 As
psf. The existing mansion has a built-up ma
area of 15,000 sq ft with six bedrooms the
and a basement. There’s also a separate the
wing for entertaining guests. 37
In the exclusive Chatsworth Park ope
enclave, the conservation bungalow at at t
No 5 Chatsworth Park was put up for lau
sale by private treaty in November. The gal
conservation house and an outhouse tran
sit on a sprawling 43,496 sq ft site and Lim: As you move up to the tip of the pyramid, there are fewer and fewer
the price tag is $45 million or close to people who can afford a home at this level bui
 THEEDGE SINGAPORE | MARCH 3, 2008 • CC5

CITY&COUNTRY
COVERSTORY
COVER STORY

PICTURES: SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

JONES LANG LASALLE RESEARCH, URA REALIS

Top 10 GCB transactions in 2007
NO DATE ADDRESS LAND AREA (SQ FT) SALE PRICE ($) PSF ($)
31 March 30 63 Dalvey Road 15,080 16,450,000 1,091
75 June 8 20B Nassim Road 24,186 24,183,480 1,000
94 July 25 10 Peirce Hill 16,926 17,200,000 1,016
96 Aug 2 15 White House Park 22,011 28,800,000 1,308
98 Aug 7 5A Bishopsgate 16,867 18,800,000 1,115
104 Sept 11 32G Nassim Road 13,292 19,998,000 1,505
106 Sept 18 32H Nassim Road 13,422 25,500,000 1,900
108 Sept 26 30 White House Park 14,811 15,500,000 1,047
112 Nov 9 7 Gallop Walk 15,202 15,350,000 1,010
117 Dec 21 7A Bishopsgate 17,472 21,000,000 1,202

Good class bungalows transactions in 2008 (to date)

NO DATE ADDRESS LAND AREA (SQ FT) SALE PRICE PSF ($)
1 Feb 4 32 White House Park 15,081 18,000,000 1,194
2 Feb 4 14 Mount Echo Park 18,568 13,250,000 714
3 Feb 4 20 Caldecott Close 17,400 10,080,000 579
4 Jan 16 5 Swettenham Green 15,817 12,682,760 802
5 Jan 22 85 Chestnut Drive 15,999 8,580,000 536

The good class bungalow at 5A Bishopsgate (located off Grange Road and Nathan Road) has an indicative
Total land area 82,865 sq ft
price of $24 million or $1,423 psf
Total transaction $62,592,760
Average psf $755 psf
JONES LANG LASALLE RESEARCH

JONES LANG LASALLE RESEARCH

GCB transactions High-end condos vs GCBs

Total transacted value ($mil) ($)
1,800 140 2,750 The property was put up for sale on Jan 15
1,600 Total transacted value 2,500 High end condo avg cap value
120
2,250 GCB avg $ per sq ft
with an indicative price tag of $41 million or
1,400 Total No sold
100 2,000 $893 psf. Colliers International, the marketing
1,200 1,750 agent for the property is said to be “in nego-
1,000 80 1,500
1,250
tiations with interested parties”. According to
800 60
1,000 Ho Eng Joo, executive director of investment
600
lux- 40 750 sales at Colliers International, who’s handling
400 500
low
200
20 the sale, interest has come mainly from buy-
250
and 0 0 0
ers who’re looking at buying the super-sized
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

g 37 GCB site for their own occupation.

the
s of
ach $1,035 psf. Given the size of the land, it has
the potential to be sub-divided into two small-
er GCB sites of over 21,000 sq ft each, which
includes the conservation bungalow.
According to Jones Lang LaSalle Research,
in 2007, 10 GCBs were sold at prices of $1,000
psf and above. Three of the deals were con-
centrated in the exclusive Nassim Road area,
with the highest price achieved there at close
to $1,900 psf, which is also a record price for
a GCB property. This was for one of two neigh-
bouring plots at Nassim Road, namely 32H
Nassim Road (a 13,422 sq ft site that was sold
for $25.5 million or $1,899 psf); and 32G Nas-
sim Road (a 13,292 sq ft site that was sold for
$19.998 million or $1,505 psf).
Both these properties were transacted in
September, and according to market sources,
were bought by Chew Hua Seng, the chair-
man and CEO of Raffles Education Corp (for-
merly Raffles LaSalle Ltd). Chew currently
owns 32K Nassim Road, just two doors away,
and sources say the two neighbouring Nassim
Road homes were likely to be purchased for
his family’s use.
“The rich are getting richer and have bet-
ter holding power than before,” observes Jones
Lang LaSalle’s Batchelor. “The GCB market is
more resilient than the luxury condo market,
and is a better hedge against inflation.”
Super-luxury, high-specification
bungalows at $35 million
As more GCBs start to cross the $1,000 psf
mark, more GCB owners will be willing to put
their homes on the market. The latest launch is
the brand new pair of “super-luxury” GCBs at
37 and 39 Leedon Road by niche luxury devel-
oper, George Lim of GLim Pte Ltd. Completed
at the end of December, the two homes were
launched in a glitzy event on Feb 21. Each bun-
galow carries a price tag of $35 million, which
translates to over $1,500 psf.
r No 37 has a land area of 22,000 sq ft and
built-up area of 10,000 sq ft. Meanwhile, No
As GCB prices continue to head north, buy-
ers have started to widen their search beyond
39 has a land area of 21,000 sq ft and built- the traditional prime residential districts in
up area of 11,000 sq ft. Both homes have five- the city centre. They are looking further out
bedrooms, an aquarium with exotic fish, a koi to locations like Chestnut Drive and Windsor
pond, swimming pool, a roof deck for outdoor Park where prices are still below the $1,000
entertaining, a separate guest house, a wine psf mark. This can be seen in the transactions
cellar to house 2,000 bottles of wine, a shoe this year. While 32 White House Park was sold
cupboard for up to 500 pairs of shoes, a gour- for $1,192 psf, the GCB at 83 Chestnut Drive
met kitchen with imported Viking profession- with a 15,999 sq ft site went for $8.58 million
al kitchen appliances, an internal lift, and a or $536 psf. At 20 Caldecott Close, the GCB on
basement car park for seven cars. a 17,400 sq ft site changed hands for $10.08
The two homes will appeal to the tech-sav- million or $579 psf.
vy. There is a home automation system that While the total value of sales in 2007 at
can be programmed to turn on lights and air- $1.54 billion exceeded 2006’s $1.3 billion, in
conditioning anywhere around the house ei- terms of the number of transactions, 2007’s
ther with the wall panels or remotely from your 117 were fewer than 2006’s 128. This reflects
mobile phone or PC; an entertainment system the sharp run-up in property prices last year.
with AMX movie on demand (up to 250 mov- The average price per square foot for GCBs
ies) and piped in music for every room and was $692 psf in 2007, compared with $503 psf
outdoor areas. There are also six plasma tel- Batchelor: The rich are getting richer and have bet- in 2006, which showed average capital values
evisions installed in the house — a ceiling- ter holding power than before. The GCB market is appreciating 37.6%. The average price for the
mounted 50” TV in the master bedroom and more resilient than the luxury condo market, and is five transactions in 2008 to date was $755 psf,
five others in the living and family rooms. The a better hedge against inflation. which is 9% higher than the average prices
kitchen also has a 28” high-definition TV. All recorded last year. Hence, while Batchelor ex-
the TVs are linked to surveillance cameras in Hence, most GCB buyers have shifted their fo- pects sales volume to moderate this year, he is
various parts of the house for security. cus from building their own dream GCBs to confident that in terms of value, it could po-
Lim has also installed a dehumidifier for looking for completed GCBs where little or no tentially remain on par with last year.
all the walk-in wardrobes as well as the shoe improvements are required, observes Batchelor. What’s worth noting is that while GCBs
cupboard. “Whenever I build a house, I always “Thus it is expected that [demand for] complet- remain sought-after investments and are still
ask myself, ‘What can I do to make the home ed GCBs will be stronger in 2008 as construc- coveted assets for newly minted millionaires,
more comfortable and convenient through tion costs continue to remain high.” it is now seeing stiff competition from Sentosa
home automation without making it too com- Cove, with 99-year leasehold waterfront bun-
plicated for the owner?’”. More owner occupiers and long-term galows. While land values of GCBs averaged at
Offers in the “$30-million range” have trick- investors as prices trend up $692 psf for the whole of last year, sea-front-
led in, but Lim is not biting. Will he consid- Over at 11 Ford Avenue, the tender for the sale ing bungalow parcels at Sentosa Cove were
er lowering his price tag if he doesn’t get his closed on Feb 21. This is one of the few large close to double that at $1,283 psf. Even lux-
asking price of $35 million? “There’s no rea- GCB sites left. With a sprawling 45,894 sq ft ury-end condos are seeing transaction prices
son why a property like this can’t be sold,” site, the property has the potential to be sub- that are much higher than GCBs, averaging
he comments. “As you move up to the tip of divided into three smaller GCBs. The own- $2,730 psf in 2007.
the pyramid, there are fewer and fewer people er of 11 Ford Avenue is believed to be the Eu “The GCB market is unique and caters to
who can afford a home at this level.” family of Singapore Exchange-listed Eu Yan the ultra-rich home buyers and sellers and will
A newly completed home like Lim’s will Sang. The traditional Chinese medicine em- generally continue to remain resilient against
likely appeal to homebuyers in the face of pire founded back in 1879 is already in the any recession in the US,” he adds. Transac-
skyrocketing construction costs over the past fourth generation of the family, and is head- tions of GCBs will remain active and record
year due to competition for scarce resources ed by Richard Eu, the great-great-grandson of prices are expected for the various GCB en-
and manpower amidst a construction boom. the founder, Eu Kong. claves in 2008.” E
CC6 • THEEDGE SINGAPORE | MARCH 3, 2008
CITY&COUNTRY
Train of collective sale hopefuls
continues unabated
| BY CECILIA CHOW |
T
he collective sale market may have
cooled considerably since 4Q2007, but
the ardour of collective sale hopefuls
apparently hasn’t. And it’s no longer
confined to the owners of condominium
and apartment blocks either. Jumping on the
bandwagon are owners of landed homes.
Last November, the owners of 15 terraced
houses along Jalan Bunga Raya in Balestier
banded together and sold their homes collec-
tively for $61 million to a Chinese developer
and a Singaporean partner. Each of the own-
ers walked away with $4 million.
More recently, the owners of a row of five
terraced houses along Essex Road, just off
Thomson Road, are hoping to reap an equally
profitable windfall. Unlike a collective sale of
a condominium project where only 80% of the
owners need to give their consent for a sale
to go through (for projects that are at least 10
years old), in the case of landed homes, all
the owners have to agree. However, as land-
ed homes, the collective sale does not need
Strata Title Board approval, which will make
the sale less cumbersome once all the own-
ers have agreed to the sale.
In the case of the Essex Road houses,
Knight Frank, the appointed marketing agent,
received approval from all the owners to pro-
ceed with the collective sale. This was made
easier because the owner of three of the five
houses is the person who also initiated the
sale process. He is Dr Lim, CEO of ASIAINSTI-
TUT OF MANAGEMENT (AM School of Busi-
ness Studies), who had purchased the houses
three years ago.
What’s also interesting is that the own-
ers have decided to opt for an auction sale in
the hope of achieving a speedier sale proc-
ess. Knight Frank will be putting up the prop-
erties for auction sale on March 20. Lim be-
lieves the potential of the row of Essex Road
terraced houses hinges on the possibility of
it being amalgamated with the neighbouring
strip of state land, the service road behind the
houses for the owners to park their cars, and
more importantly, with the apartment block
Lion Towers behind it, which is also pursu-
ing a collective sale.
He argues that such an amalgamation will
enhance the footprint of the existing Lion Tow-
ers site by another 80%, making it more at-
tractive to a developer looking for a freehold
The row of 16 terraced houses at Fort Terrace has an indicative price of $95 million or $1,238 psf ppr
development site in the prime residential en-
clave of Newton/Novena.
The en bloc sales committee of Lion Towers
at 2 Essex Road has recently appointed CB Ri-
chard Ellis (CBRE) as their marketing agent to
handle their collective sale. According to mar-
ket sources, it’s still in the process of drafting
the collective sale agreement.
Lion Towers
Built close to 30 years ago, Lion Towers has
52 apartments and sits on a 40,409 sq ft free-
hold site. With a plot ratio of 2.8 and a maxi-
mum height of 36-storeys under the 2003 Mas-
ter Plan, a developer will be able to build a
brand new 75-unit luxury condominium with
units averaging 1,500 sq ft each.
According to market sources, the indicative
price of Lion Towers is estimated to be close
to $200 million, which works out to around
$1,742.46 psf ppr. At that price, each owner
will pocket $3.8 million each. The owners are
said to have already applied to the Singapore
Land Authority (SLA) regarding the possible
annexation of the neighbouring state land to
be amalgamated with the Lion Towers site.
Meanwhile, the five houses at Essex Road
are sitting on a freehold site of 7,163 sq ft.
The land is zoned for residential development
GWYNETH YEO/THE EDGE SINGAPORE
COLLIERS INTERNATIONAL
with a plot ratio of 2.8 according to URA’s 2003
Master Plan, and has a maximum height of
36-storeys as well.
The owners’ asking price is $1,500 psf ppr
or around $30 million. If that price is achieved,
each owner will walk away with a cool $6 mil-
lion. This asking price is comparable to the
sale price of last year’s collective sale deals
in its immediate neighbourhood. Last Novem-
ber, contractor-cum-developer, Bravo Building
Construction Group, bought Makeway View
for $162.8 million through a collective sale,
which is equivalent to $1,583 psf ppr. In June
last year, a consortium led by Koh Brothers
bought Lincoln Lodge in a collective sale worth
$243 million or $1,449 psf ppr.
If the site of the Essex Road houses is com-
bined with the neighbouring state land and
service road, the total area would be over
30,000 sq ft, estimates Lim. If amalgamat-
ed with the Lion Towers site, he reckons that
the enlarged footprint would be over 70,000
sq ft and a developer could potentially build
a 100-unit luxury project with unit sizes av-
eraging 1,800 sq ft.
Another attraction of the site is the fact
that at the end of Essex Road is SJI Junior
(the former St Michael’s School). It is also
in the neighbourhood of other good schools
The row of five terraced houses at Essex Road has a
price tag of $30 million or $1,500 psf ppr
in Bukit Timah such as Nanyang Girls’ High
School, Hwa Chong High and National Jun-
ior College.
What’s more the Novena enclave is also
turning into a booming medical hub. Linked
to the Novena MRT station and located be-
hind Novena Square is Tan Tock Seng Hospital
and Far East Organization’s brand new Nove-
na Medical Centre. The area recently received
an added boost when Parkway Holdings bid
a record $1.25 billion ($1,600 psf ppr) for a
1.7ha, 99-year leasehold government site to
build a private hospital at Novena Terrace/Ir-
rawady Road.
It’s also a sought-after residential neigh-
bourhood given its proximity to the CBD and
Orchard Road. In the immediate neighbour-
hood of Parkway’s site is Frasers Centrepoint’s
new condominium development, the 417-unit
twin-tower Soleil@Sinaran that was launched
last year and is currently under construction.
The most recent transaction, according to the
caveats lodged on URA Realis, was for a 958
sq ft unit on the third floor which was sold
for $1.23 million ($1,285 psf). A 1,453 sq ft
apartment on the 16th floor changed hands
on the sub-sale market for over $2.32 million
($1,600 psf) at the end of last year.
Meanwhile, at 1 Essex Road is Far East Or-
ganization’s Strata, a 32-storey, 100-unit loft-
style apartment tower completed in 2006. Ac-
cording to the URA Realis database of caveats
lodged, three 506 sq ft apartments changed
hands on the resale market at prices ranging
from $650,000 ($1,285 psf) for the most recent
transaction on Sept 21 last year to $820,000
($1,621 psf) for a similar-sized unit also on
the second floor, which was sold in early Au-
gust last year.
Across the road and next to United Square
shopping mall is Allgreen Properties’ Viva,
a brand new condominium that’s yet to be
launched. Behind Viva is Keppel Land’s 486-
unit Park Infinia at Wee Nam, targeted for com-
pletion next year. A handful of units in the de-
velopment changed hands in January at prices
ranging from $1,410 to $1,600 psf.
The selling prices of new launches in the
area are even higher. Just down the street from
the row of Essex Road houses is the showflat
of Lucida, a 62-unit high-end condominium
project by boutique developer, Novelty Group.
Private previews at Lucida have yet to begin,
but marketing agents are citing an indicative
selling price of $1,700 to $2,000 psf.
Fort Terrace, another collective
sale hopeful
Meanwhile, over at the east coast, the own-
ers of a row of 16 terraced houses called Fort
Terrace at 29-59 Fort Road have also put their
properties up for collective sale. The freehold
residential site was put up for tender on Feb
27, and will close on March 26.
The rectangular freehold development site
has a total area of 47,886 sq ft and under the
2003 Master Plan, it is zoned for residential
use with a gross plot ratio of 2.1. Colliers In-
ternational, the marketing agent, has already
obtained 100% agreement from the owners to
proceed with the collective sale.
According to Ho Eng Joo, executive direc-
tor of investment sales at Colliers Internation-
al, the indicative price is $95 million. There’s
a development charge of $23 million, as well
as the cost of annexing a piece of 10,964 sq
ft state land, which is estimated at $6.4 mil-
lion. This will work out to $1,238 psf ppr. The
site has the potential to be redeveloped into a
high-rise condominium with 67 units averag-
ing 1,500 sq ft each. E

Unlike many other Western economies
swamped by the subprime backwash,
the Australian property scene still
looks bright
| BY MARK HENDERSON |
T
he fallout from the US subprime crisis
is hammering housing markets across
the US and Europe. Mortgage foreclos-
ures in the US are escalating as inflat-
ed home values sink. And the news
is also grim in the UK where homeowners are
watching their valuations slide.
But it’s not all doom and gloom on the West-
ern property front, claims Australian property
expert Ben Boyle. There are, he says, reliable
returns in strong growth areas Down Under,
such as Queensland.
Boyle is a director of Your Property Solu-
tions (YPS), a property consultancy service
based in Brisbane. He was recently in Singa-
pore and Hong Kong to market the company
to expatriates and locals while catching up
with clients.
The difference between YPS and most oth-
er agencies, says Boyle, is that the company
works exclusively for the buyer. “We use our
extensive knowledge and experience in the
Queensland market to source property to the
buyer’s requirements.”
YPS not only finds the property, it negotiates
price (which Boyle claims is typically 10% less
than the “fair market value”), arranges build-
ing and pest inspections, insurance and finance
services. The agency also operates a proper-
ty management service, which has more than
500 investment homes on its books. Around
70% of YPS’ clients are investors.
Boyle, a former captain in the Australian
Army, who served in East Timor and Iraq, says
his confidence in the Sunshine State’s residen-
tial market is backed by solid data.
Unlike many other Western economies
swamped by the subprime backwash, the Aus-
tralian property scene still looks bright. While
falling house prices elsewhere are undermin-
ing consumer wealth and confidence, Austral-
ia is tracking a different pattern.
A report by Macquarie Research Economics
in December 2007 points out that the Aussies
Apartments close to the city, says Boyle are
‘renting machines’. A new A$400,000 unit with
two bedrooms and two bathrooms rents for
A$380 to A$460 per week. A three-bedroom
townhouse costs A$500,000 and can fetch
A$450-plus a week in rents.
have already had their pain. The slowdown in
most of the Australian housing market took
place in 2004-05.
House prices in Adelaide and Brisbane have
bounced back over the past couple of years. In
Brisbane, the average cost of a three-bedroom
house has climbed from A$350,000 ($488,940)
to around A$450,000. Adelaide homes have ris-
en from A$300,000 to more than A$360,000.
Heavy demand
Demand for homes is outstripping supply. The
Reserve Bank of Australia currently estimates
180,000 homes a year are wanted, but only
150,000 are being built. Residential building
activity has been flat for five years, despite
increasing migration into Australia. That’s
putting pressure on the rental market. Rents
are rising fast in most capital cities. In Bris-
bane, rents for a family home have increased
by around A$50 per week (15%) over the past
12 months.
Boyle says the residential good times will
continue. Housing in Brisbane and Perth last
Buying property
in Australia’s Sunshine State
year led the way with 20%-plus capital gain.
“Key drivers are strong economic growth from
the mining-dominated economy — many of the
country’s mining giants operate in Queensland
— and strong population and wages growth,
particularly in Queensland. Around 50,000 peo-
ple a year are moving to the state. Many corpo-
rates are relocating to Brisbane from Sydney.
Brisbane has a broad-based economy, including
agriculture and information technology. The
city is no longer a big country town.”
Boyle believes median-priced properties
in median-priced suburbs are a solid bet for
long-term growth.
Around A$450,000 will buy a three-bed-
room, two-bathroom house on 6,400 sq ft of
House prices in Adelaide and Brisbane have bounced back over the past couple of years
land within 10km of central Brisbane. This
property will earn A$400 a week in rent for
a net 4% to 5% return, plus capital growth,
which was running at 20% last year. Capital
gain has averaged 10% annually over the past
10 years in southeast Queensland.
Apartments close to the city, says Boyle
THEEDGE SINGAPORE | MARCH 3, 2008 • CC7
PICTURES: YPS
CITY&COUNTRY
are “renting machines”. A new A$400,000
unit with two bedrooms and two bathrooms
rents for A$380 to A$460 per week. A three-
bedroom townhouse costs A$500,000 and can
fetch A$450-plus a week in rents.
Foreigners can only buy brand new hous-
es and apartments, but there is plenty of new
apartment stock in Brisbane, says Boyle. Inves-
tors are liable for capital gains tax at around
25% when they sell the property.
YPS charges a flat A$10,000 fee for sourc-
ing and negotiating the purchase of a proper-
ty on behalf of a client.
Andrew Powell, who works in an airline-
related industry, and has been living in Sin-
gapore for the last five years, recently bought
two houses near Brisbane using Boyle and
YPS. “I wanted someone with knowledge on
the ground,” says Powell.
He paid A$420,000 for the first property,
a three-bedroom house 5km from the city, in
2006. The house is now valued at A$550,000.
Last year, he shelled out A$1.15 million for a
sprawling five-bedroom, fully renovated tradi-
tional “Queenslander” colonial verandah house
“in a great suburb” 4km from Brisbane. That
property, he says, could now be confidently
listed at A$1.4 million.
Queensland’s appeal
“I used Ben because I didn’t have the time to
look myself,” says Powell. “The fee is a small
price to pay for local knowledge. It took me
four months to find an investment proper-
ty in Sydney a few years ago. Ben found my
first Brisbane buy on the same day it went to
market.”
Powell reckons that Queensland should ap-
peal to many investors from Asia. “The Aus-
tralian property market doesn’t have massive
swings; it is more predictable with less risk
over the long term.”
Further north, booming Townsville offers
investors some good opportunities, says Boyle.
Townsville has a large transient population
— mine workers on fly-in-fly-out contracts,
for example — so rents are relatively high.
Houses start from around A$300,000, up from
A$150,000 five years ago. Apartments along
the waterfront sell for A$400,000-plus.
Boyle says Perth, popular with Singapore-
ans, has peaked. “Perth has come off the boil.
After enjoying 20% capital growth over the
past two years, the residential market there
has slowed to around 4%.” E
CC8 • THEEDGE SINGAPORE | MARCH 3, 2008

CITY&COUNTRY HOME LOAN RATES

Disclaimer: The rates shown here are only indicative and are subject to changes by the respective banks responsible for any loss or damage arising directly or indirectly from the use of, or reliance on,
without prior notice. They are not to be taken as an offer of contract. The Edge Publishing Pte Ltd shall not be the information provided herein.

SOURCES: VARIOUS BANKS, EXPRESS HOME LOAN CONSULTANCY, THE EDGE SINGAPORE

HDB housing loan rates

BOARD 80% FINANCING 90% FINANCING

BANK NAME OF LOAN SCHEME RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%) BOARD RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%)
ABN Amro Fixed Rate Package (min $300k) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (HBR) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (HBR)
Flexible Rate Package 5.50 4.25 (HBR-1.25) 4.50 (HBR-1.00) 4.50 (HBR-1.00) 5.50 (HBR) 5.50 4.25 (HBR-1.25) 4.50 (HBR-1.00) 4.50 (HBR-1.00) 5.50 (HBR)

Hong Leong 2-Year Fixed Rate Package 4.25 3.48 (fixed) 3.48 (fixed) 3.98 (HBR-0.27) 3.98 (HBR-0.27) 4.25 4.48 (fixed) 4.70 (fixed) 4.75 (HBR+0.50) 4.75 (HBR+0.50)
Finance Variable Rate Package 4.25 3.18 (HBR-1.07) 3.38 (HBR-0.87) 3.88 (HBR-0.37) 3.98 (HBR-0.27) 4.25 3.98 (HBR-0.27) 4.20 (HBR-0.05) 4.75 (HBR+0.50) 4.75 (HBR+0.50)

HSBC 2-Year Fixed Rate Package (min $500k) NA 4.00 (fixed) 4.00 (fixed) 4.00 4.00 NA NA NA NA NA
50% of Loan on Fixed rate (2-yr lock-in)*** NA 2.8% (fixed) 2.8% (fixed) 3.40% (fixed) 3.80% (fixed) NA NA NA NA NA
Variable Rate Home Loan (min $100k, no lock-in) NA 3.50 3.50 3.70 3.80 NA NA NA NA NA
Variable Rate Home Loan (min $100k,
1-year lock-in) NA 3.30 3.50 3.70 3.80 NA NA NA NA NA
50% of Loan on Sibor Pegged Package (no lock-in) *** NA 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% NA NA NA NA NA

Maybank 1-Year Fixed Rate Package 3.75 2.68 (fixed) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
2-Year Fixed Rate Package 3.75 2.28 (fixed) 2.68(fixed) 2.98 (BR-0.77) 3.75 (HBR) NA NA NA NA NA
3-Year Fixed Rate Package** 3.75 1.68 (fixed) 2.68 (fixed) 3.38 (fixed) 3.75 (HBR) NA NA NA NA NA
3-Year Fixed 2.80% Cashback 3.75 2.48 (fixed) 3.68 (fixed) 4.38 (fixed) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (1-yr lock-in) 3.75 2.78 (BR-0.97) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (2-yr lock-in) 3.75 2.48 (BR-1.27) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (3-yr lock-in) 3.75 2.28 (BR-1.47) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package (no lock-in) 3.75 2.98 (BR-0.77) 3.28 (BR-0.47) 3.38 (BR-0.37) 3.75 (HBR) NA NA NA NA NA
Variable 2.80% Cashback 3.75 3.08 (BR-0.67) 3.88 (BR+0.13) 4.38 (BR+0.63) 3.75 (HBR) NA NA NA NA NA
OCBC 1-Year Fixed Rate Package 3.75 3.75 (fixed) 3.50 (HBR-0.25) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA
2-Year Fixed Rate Package 3.75 3.75 (fixed) 4.00 (fixed) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA
Variable Rate Package 3.75 3.25 (HBR-0.50) 3.50 (HBR-0.25) 3.75 (HBR) 3.75 (HBR) NA NA NA NA NA

POSB Home Ideal package (pegged to CPF rate)** NA CPF Rate + 1.00 CPF Rate + 1.25 CPF Rate + 1.58 CPF Rate + 1.58 NA NA NA NA NA
3-Year Fixed Rate Package NA 3.88 (fixed) 3.88 (fixed) 3.88 (fixed) CPF Rate + 1.58 NA NA NA NA NA

Sing Investments Variable Rate Package 4.25 4.00 (HBR-0.25) 4.25 (HBR) 4.75 (HBR+0.50) 4.75 (HBR+0.50) NA NA NA NA NA
& Finance

Standard Floating Rate Package (min $100k) NA 3.25 3.50 3.75 3.75 NA NA NA NA NA
Chartered

UOB 1-Year Fixed Rate Package 4.50 4.25 (fixed) 4.25 (HBR-0.25) 4.25 (HBR-0.25) 4.25 (HBR-0.25) NA NA NA NA NA
2-Year Fixed Rate Package 4.50 4.10 (fixed) 4.10 (fixed) 4.10 (HBR-0.40) 4.10 (HBR-0.40) NA NA NA NA NA
3-Year Fixed Rate Package 4.50 3.98 (fixed) 3.98 (fixed) 3.98 (fixed) 3.98 (HBR-0.52) NA NA NA NA NA
Floating Rate Package 4.50 3.25 (HBR-1.25) 3.50 (HBR-1.00) 3.75 (HBR-0.75) 3.75 (HBR-0.75) NA NA NA NA NA

RHB 2-Year Fixed Rate Package 4.25 3.50 (fixed) 3.75 (fixed) 3.88 (HBR-0.37) 4.00 (HBR-0.25) NA NA NA NA NA
Variable Rate Package 4.25 3.25 (HBR-1.00) 3.50 (HBR-0.75) 3.75 (HBR-0.50) 4.25 (HBR) NA NA NA NA NA

HBR = HDB Housing Board Rate NA = Not available **CPF rate has remained at 2.5% per annum since July 1999

Private housing loan rates

BOARD 80% FINANCING 90% FINANCING
BANK NAME OF LOAN SCHEME RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%) BOARD RATE (%) FIRST YEAR (%) SECOND YEAR (%) THIRD YEAR (%) THEREAFTER (%)

ABN Amro Fixed Rate Package (min $300k) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (BR) 5.50 4.25 (fixed) 4.50 (fixed) 4.50 (fixed) 5.50 (BR)
Flexible Rate Package 5.50 4.25 (BR-1.25) 4.50 (BR-1.00) 4.50 (BR-1.00) 5.50 (BR) 5.50 4.25 (BR-1.25) 4.50 (BR-1.00) 4.50 (BR-1.00) 5.50 (BR)

DBS Interbank Market Rate Package*

Nil Loyalty Period NA Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
1-Year Loyalty Period NA Sibor + 1.10 Sibor + 1.25 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
2-Year Loyalty Period NA Sibor + 0.95 Sibor + 0.95 Sibor + 1.25 Sibor + 1.25 NA NA NA NA NA
3-Year Loyalty Period NA Sibor + 0.80 Sibor + 0.80 Sibor + 0.80 Sibor + 1.25 NA NA NA NA NA

Hong Leong 2-Year Fixed Rate Package 7.25 3.88 (fixed) 4.18 (fixed) 4.00 (BR-3.25) 4.00 (BR-3.25) 7.25 4.58 (fixed) 4.78 (fixed) 4.75 (BR-2.50) 4.75 (BR-2.50)
Finance Variable Rate Package 7.25 3.38 (BR-3.87) 3.88 (BR-3.37) 4.00 (BR-3.25) 4.00 (BR-3.25) 7.25 4.18 (BR-3.07) 4.38 (BR-2.87) 4.75 (BR-2.50) 4.75 (BR-2.50)

HSBC 2-Year Fixed Rate Package (min $500k) NA 4.00 (fixed) 4.00 (fixed) 4.00 4.00 NA NA NA NA NA
50% of Loan on Fixed rate (2-yr lock-in)*** NA 2.8% (fixed) 2.8% (fixed) 3.40% (fixed) 3.80% (fixed) NA NA NA NA NA
Variable Rate Home Loan (min $200k, no lock-in) NA 3.50 3.50 3.70 3.80 NA NA NA NA NA
Variable Rate Home Loan (min $200k,
1-year lock-in) NA 3.30 3.50 3.70 3.80 NA NA NA NA NA
50% of Loan on Sibor Pegged Package (no lock-in)*** NA 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% 3mth Sibor +0.7% NA NA NA NA NA

Maybank 1-Year Fixed Rate Package 3.75 2.68 (fixed) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.18 (fixed) 3.58 (BR-0.17) 3.88 (BR+0.13) 4.25 (BR+0.50)
2-Year Fixed Rate Package 3.75 2.28 (fixed) 2.68(fixed) 2.98 (BR-0.77) 3.75 (BR) 3.75 2.78 (fixed) 3.18 (fixed) 3.48 (BR-0.27) 4.25 (BR+0.50)
3-Year Fixed Rate Package** 3.75 1.68 (fixed) 2.68 (fixed) 3.38 (fixed) 3.75 (BR) 3.75 2.18 (fixed) 3.18 (fixed) 3.88 (fixed) 4.25 (BR+0.50)
3-Year Fixed 2.80% Cashback 3.75 2.48 (fixed) 3.68 (fixed) 4.38 (fixed) 3.75 (BR) 3.75 2.98 (fixed) 4.18 (fixed) 4.88 (fixed) 4.25 (BR+0.50)
Variable Rate Package (1-yr lock-in) 3.75 2.78 (BR-0.97) 3.08 (BR-0.67) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.28 (BR-0.47) 3.58 (BR-0.17) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (2-yr lock-in) 3.75 2.48 (BR-1.27) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (BR) 3.75 2.98 (BR-0.77) 3.38 (BR-0.37) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (3-yr lock-in) 3.75 2.28 (BR-1.47) 2.88 (BR-0.87) 3.38 (BR-0.37) 3.75 (BR) 3.75 2.78 (BR-0.97) 3.38 (BR-0.37) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable Rate Package (no lock-in) 3.75 2.98 (BR-0.77) 3.28 (BR-0.47) 3.38 (BR-0.37) 3.75 (BR) 3.75 3.48 (BR-0.27) 3.78 (BR+0.03) 3.88 (BR+0.13) 4.25 (BR+0.50)
Variable 2.80% Cashback 3.75 3.08 (BR-0.67) 3.88 (BR+0.13) 4.38 (BR+0.63) 3.75 (BR) 3.75 3.58 (BR-0.17) 4.38 (BR+0.63) 4.88 (BR+1.13) 4.25 (BR+0.50)

OCBC Fixed Rate Package 4.50 3.75 (fixed) 4.00 (fixed) 3.75 (BR-0.75) 3.75 (BR-0.75) NA NA NA NA NA
Variable Rate Package 4.50 3.25 (BR-1.25) 3.50 (BR-1.00) 3.75 (BR-0.75) 3.75 (BR-0.75) NA NA NA NA NA

Standard Floating Rate Package (min $200k) 5.00 3.25 (BR-1.75) 3.50 (BR-1.50) 3.75 (BR-1.25) 4.00 (BR-1.00) 3.85 4.10 (BR+0.25) 4.35 (BR+0.50) 4.60 (BR+0.75) 4.60 (BR+0.75)
Chartered MortgageOne Package (min $500k) 5.00 3.50 (BR-1.50) 3.75 (BR-1.25) 4.00 (BR-1.00) 4.25 (BR-0.75) 4.10 4.35 (BR+0.25) 4.60 (BR+0.50) 4.85 (BR+0.75) 4.85 (BR+0.75)

UOB 1-Year Fixed Rate Package 4.50 4.25 (fixed) 4.25 (BR-0.25) 4.25 (BR-0.25) 4.25 (BR-0.25) NA NA NA NA NA
2-Year Fixed Rate Package 4.50 4.10 (fixed) 4.10 (fixed) 4.10 (BR-0.40) 4.10 (BR-0.40) 4.50 4.50 (fixed) 4.50 (fixed) 4.50 (BR+0.25) 4.50 (BR+0.25)
3-Year Fixed Rate Package 4.50 3.98 (fixed) 3.98 (fixed) 3.98 (fixed) 3.98 (BR-0.52) NA NA NA NA NA
Floating Rate Package (UOB Home Plus) 4.50 3.50 (BR-1.00) 3.75 (BR-0.75) 4.00 (BR-0.50) 4.00 (BR-0.50) 4.50 4.25 (BR-0.25) 4.50 (BR) 5.00 (BR+0.50) 5.00 (BR+0.50)

Sing Investments Variable Rate Package 5.00 4.00 (BR-1.00) 4.25 (BR-0.75) 4.75 (BR-0.25) 4.75 (BR-0.25) 5.00 4.00 (BR-1.00) 4.25 (BR-0.75) 4.75 (BR-0.25) 4.75 (BR-0.25)
& Finance

RHB 2-Year Fixed Rate Package 5.75 3.50 (fixed) 3.75 (fixed) 3.90 (BR-1.85) 3.90 (BR-1.85) 5.75 4.25 (fixed) 4.25 (fixed) 4.50 (BR-1.25) 4.50 (BR-1.25)
Variable Rate Package 5.75 3.25 (BR-2.50) 3.50 (BR-2.25) 3.75 (BR-2.00) 3.75 (BR-2.00) 5.75 4.00 (BR-1.75) 4.25 (BR-1.50) 4.50 (BR-1.25) 4.50 (BR-1.25)

*The Interbank Market Rate refers to the 12-month Sibor. Sibor rate is $1.66250 as at Feb 28, 2008. BR = Board rate 90% financing available on a case-by-case basis based on bank’s discretion Tables updated as at Feb 28, 2008
**3-Year Fixed Rate valid until March 10, 2008 NA = Not available All board rates are variable
*** Package valid until March 22, 2008. For fixed rate loans go to www.hsbc.com.sg
 WEEK OF MARCH 3, 2008

Jumping on
the wagon
Collective sale
hopefuls in landed
homes

Queensland’s
allure
The Sunshine
State’s housing
market is still bright

The $35 million newly

completed Good Class
Bungalow at 37 Leedon Road

MILLIONAIRES’
row in Singapore
While GCB transactions are expected to moderate this year after
a record 2007, sellers are still bullish with their asking prices
 2 • THEEDGE SINGAPORE | MARCH 3, 2008

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

BUSINESS & INVESTMENT • EVERY WEEK

T H E W E E K O F MARCH 3, 2008 308

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Kwek, one of Singa-
pore’s leading property
developers, addressing
analysts and journalists
at CDL’s FY2007 results
briefing at M Hotel last
Thursday
High-end property at a crossroads
Last week’s earnings results showed “So, sentiment is more important the entire property market will be now a project that’s currently under
Singapore property developers than supply and demand. The higher affected,” says a property consultant construction, he would be able to
reporting strong and, for some, record prices go, the more people want to who declined to be named. “Then collect a 30% deposit from buyers
profits for FY2007 on the back of the buy. The lower they go — [as they prices starting from the top end will instead of the 20% down payment he
biggest property boom in years. But say] in Chinese — in crisis, there’s start to drop.” would get from launching the same
the continuing US subprime crisis opportunity.” But Kwek believes otherwise. project today. “So, why do I need to
has dampened market sentiment, Kwek said the property market “Many of you are frightened that the be in a hurry to launch?” he says.
and developers are now bracing is unlikely to collapse; instead, high end has collapsed,” he said at He believes that the “next big
themselves for a difficult year ahead. homebuyers and investors are the results briefing. “The high-end wave” in the property market will
Kwek Leng Beng, executive adopting a “wait-and-see attitude” in [buyers] are usually rich people [and] come in 2010, when the integrated
chairman of one of Singapore’s largest view of the current uncertainty. they have better holding power.” resorts at Marina Bay and on Sentosa
property developers, City Developments Others say that prices, especially Instead of launching new Island are completed and operating.
Ltd (CDL), voiced the feelings of many, at the luxury end, will soften this year developments, CDL will now proceed With a record-year in 2007 and given
saying at a results briefing last Thursday: as they saw the steepest increase last with the construction of some of that CDL chalked up $7.6 billion
“Sentiment is the most important year, compared with the mid-end and their projects where it has struck “a in residential property sales in the
element in buying and selling. When mass market. Luxury condo prices good bargain with the construction market upturn of 2005 to 2007, it is
you don’t have a good feeling about leapt more than 57% last year versus company”. As piling and foundation likely to have a strong cash flow in
the market, you don’t buy. You want to the residential property price index, works for condo projects typically the year ahead. “Don’t worry if we
sell, but you can’t sell because you want which saw a 31.2% increase. “If the take a year to complete, Kwek says don’t launch anything [this year]”,
to sell at a higher price. US subprime crisis worsens, then if he were to launch a year from says Kwek. — By Cecilia Chow
United Engineers Ltd said full-year profit to $50 million, the statement said. HSIL is a The Thai baht weakened in offshore trading,
rose 406%, owing to a gain in fair value of unit of HSBC Holdings plc. moving closer to onshore levels for the currency,
$186 million for UE Square, gains from par- after the central bank announced capital
tial divestment of the group’s short-term in- Hyflux Ltd, Singapore’s biggest publicly controls would be lifted from Monday.
vestments in Yongnam and other investment traded water-treatment company, said its In offshore deals, the baht moved to 30.90 per
properties. Net profit surged to $172.9 mil- order book may increase 20% to 30% this US dollar from levels near 30.05 traded before
lion for the year ended Dec 31, 2007, from year as it wins more wastewater treatment the announcement. In onshore trading, the baht
$59 million a year earlier, the company said and water recycling projects. Hyflux’s order moved up to 31.35 from levels of 31.90 prior to
in a statement last Friday. Sales dipped 12% book almost doubled to $863 million as at the Bank of Thailand press conference.
to $539.8 million. December, and the company will bid for more In December 2006, the central bank imposed
contracts in China and the Middle East, said controls to check speculation on a rising
Wilmar International Ltd fell for a fourth Sam Ong, Hyflux’s deputy chief executive baht, with heavy restrictions on how much
day as analysts downgraded the stock amid and chief financial officer. money foreigners could bring into the country
concern that the biggest palm oil trader and specifying a minimum period for most
may lose money on its retail business in Mapletree Treasury Services Ltd, a unit of investments.
China unless authorities approve price hikes. Mapletree Logistics Trust, will sell $75 million Bank of Thailand Governor Tarisa Watanagase
Wilmar was the seventh-worst performer worth of two-year bonds with a coupon rate said on Friday the country would allow Thai
on the Straits Times Index, which fell 1.6% of 2.6%, a source familiar with the deal said. companies to invest more offshore, and that the
last Friday. In January, China named Wilmar The coupon for the fixed-rate bond will be ceiling on bank borrowings from non-residents
among companies that must seek permission paid on March 3, the source said, adding the would be lifted. While announcing the removal of
from the National Development and Reform deal size was increased by $45 million after capital controls, she also said the authorities had
Commission before raising prices to help combat demand was strong. The swap offered rate for alternative measures to stabilise the baht, Asia’s
inflation. The curbs were “understandable”, the two-year bond was last quoted at 1.67% top performer in 2006 against the US dollar. The
Wilmar said last Thursday in a presentation on Friday, according to Reuters data. onshore baht gained 7% against the dollar last
that accompanied 4Q profit data. year. — Compiled by Nova Theresianto E

Suntec Real Estate Investment Trust, controlled

THE EDGE COMMITMENT
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undergird success in an industry that is built around serving the
public interest. We believe the interest of the investing public
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The Board of Directors, The Edge Publishing Pte Ltd
Banyan Tree Holdings Ltd, an operator of by Hong Kong tycoon Li Ka-shing’s Cheung
luxury resorts and hotels, said it plans to raise Kong (Holdings), launched a convertible bond Quoteworthy
as much as US$400 million ($557 million) issue on Thursday worth up to $300 million, a This is the Bernanke shock, causing
for a fund that will invest in properties in source familiar with the deal said. The property much faster dollar depreciation than
Vietnam, Cambodia and Laos. The Banyan Tree trust was selling five-year convertible bonds expected
Hospitality Fund LP will have assets of about worth $250 million, with an over-allotment — Michiyoshi Kato, senior vice-president of
$300 million to $400 million when it closes option for a further $50 million, in a deal currency sales in Tokyo at Mizuho Corporate
this year, the company said in a statement to handled by Citigroup and Deutsche Bank. Bank. The US dollar fell to the lowest in almost
the Singapore Exchange. Banyan Tree, HSIL The bonds have a coupon rate of 3.25%, a three years versus the yen and a record against
the euro since the currency’s inception in
Investments Ltd and Hong Kong-based Nan conversion premium of 23% to 28% and a 1999 last Friday, on growing signs that the US
Fung Group have each agreed to invest $33.33 reference price of $1.60, which was where economy is slipping into a recession.
million in the fund and may increase the sum the REIT’s unit closed on Thursday.
 THEEDGE SINGAPORE | MARCH 3, 2008 • 3

EDGEWISE

Auric primes balance sheet at $72 million. That is affordable.

Is the battle for the control of retailer Robinson
& Co nearing an end? On Feb 20, Mainboard-
listed conglomerate Auric Pacific Group sold
One Phillip Street, an office building, for $99
million to a fund managed by New Star As-
But Al-Futaim might have other ideas.
Building a war chest by selling assets is
easy but winning a battle of nerves with
deep-pocketed predators like Al Futaim can
be a hard slog. E
Is Auric Pacific Group building
a hefty war chest to acquire
Robinson & Co?

set Management. A deal like that would nor-

mally attract little attention. But Auric Pacific
is no ordinary company. It’s the local flagship
of the Indonesian Riady family, which has a
49% stake. Through Auric, the Riadys assert
control over listed local retail group Robinson
& Co through a 29.9% stake held by their ve-
hicle Red Oasis.
Is Auric’s latest sale part of a larger exercise
to build a war chest? Last year, it sold a five-
storey shopping centre in Malaysia. Now the
office block sale has gotten tongues wagging
that the cornered Lippo Group is serious
about doing what it takes to keep control of
Robinson. According to an announcement
released by the company, $25 million of the
proceeds from the sale of Philip Street block
will be used to pay off the mortgage on the
building, leaving Auric with $74 million, which
could be used to settle some of its $125 million
debt. The money, could also be used “to fund
any future investments or acquisitions that
the company may undertake” notes Auric in
a release to the Singapore Exchange.
Aside from the 29.99% stake in Robinson
(held through the 60-40 Red Oasis joint
venture with Sulaiman Holdings), the latest
sale leaves Auric with just a 29.9% stake in
listed Food Junction and assets related to
manufacturing and distributing Sunshine
Bread and bakery products as well as SCS
Butter. Auric’s net profit last year was $51.5
million, which included a revaluation gain
of $44.8 million from One Phillip Street
and a $2.5 million revaluation gain from
its penthouse at Pebble Bay. In general,
the company’s largest profit contribution
(61%) is from rental income and without
its main property, the company would lose
its main source of earnings. The sale of the
two buildings in the past year, say analysts,
puts pressure on Auric to seriously hunt
for new income streams.
It’s almost sitting on one. Robinson made
a net profit of $15.8 million for the three
months to Dec 31, 2007, its second quarter.
Could Auric possibly be interested in raising
its stake in Robinson’s to over 50% so that
its own bottom line gets a shot in the arm?
Perhaps. But Robinson might already be
spoken for. On Jan 20, Al Futaim Global
offered $6.25 per Robinson share after
receiving irrevocable undertakings from
Silchester International Investors (11.3%),
Aberdeen Asset Management Asia (8.78%)
and Tecity (3.13%) for their stakes. The No
3 banking group, OCBC, owns 6.05%.
David Conner, CEO of OCBC told an
analyst briefing two weeks ago that he
hasn’t decided what to do with the bank’s
stake even though it is a non-core holding.
OCBC had earlier sold 29% of Robinson to
Auric in compliance with MAS rules. The
$6.25 per share offer that Al Futaim made
might just be its opening shot. Indeed, it
may be readying its next move.
If Auric wants to counter bid for Robinson,
how would the deal be done? At its close
last Friday of $6.70, Robinson’s market
capitalisation was $575.8 million. Red Oasis
would need to find funding for at least
$403 million to take Robinson private. If
the acquisition uses equity and debt in a
ratio of 30:70, then Red Oasis would need
to cough up $121 million with Auric’s share
4 • THEEDGE SINGAPORE | MARCH 3, 2008
ECONOMY WATCH
Petrodollar tsunami warning
| BY STEPHEN JEN AND
CHARLES ST-ARNAUD |
O
il prices just breached the psycholog-
ical US$100 ($140) a barrel thresh-
old. High oil prices will clearly boost
the global capital flows into petro-
dollars: After all, high energy prices
lead to transfers from oil importers to oil ex-
porters. Investment decisions — both physical
and financial — made by the owners of petro-
dollars will obviously be more important the
higher oil prices are.
In this note, we remind ourselves of the
broad magnitudes of the key factors we need
to consider in this discussion. At US$100 a bar-
rel, the value of the total proven oil reserves
in the world is US$121 trillion, US$48 trillion
of which belongs to the GCC (Gulf Coopera-
tion Council) countries. On a flow basis, an-
nual oil export receipts of Opec (Organization
of Petroleum Exporting Countries) members
total some US$1.3 trillion, at US$100 a barrel.
High oil prices, in short, will lead to a signifi-
cant transfer of financial power to the petro-
dollar holders.
The meaning of ‘one trillion dollars’
Before we get started, we should familiarise
ourselves with the concept of “a trillion dol-
lars”: What may have been vaguely referred to
as “gazillion” not too long ago is now a unit
investors need to fully comprehend, just as we
had to be indoctrinated with the concept of “a
billion dollars” when we were in school.
The total GDP of Africa is US$1.3 trillion.
The size of South Korea and Russia’s GDP are
about US$1 trillion and US$1.2 trillion, respec-
tively; that of the UK is about US$2.7 trillion;
and that of the US is about US$14 trillion. The
total market capitalisation of publicly traded
equities is about US$50 trillion, and that of the
bond markets is about the same size. The to-
tal world’s official foreign reserves are around
US$6.4 trillion.
Understanding the true meaning of “one
trillion dollars” is essential in this discussion,
as it will be the primary unit of account when
it comes to petrodollars.
The basic numbers
How big are petrodollars? They are big, and
getting bigger with the rise of oil prices. We
can look at this issue in terms of the mone-
tary worth of the stocks of proven oil reserves
underground, or in terms of flows, that is, the
BLOOMBERG
value of the annual oil exports. At Likely impact on
US$100 a barrel, the total value of finnancial markets
the world’s proven oil reserves un- Using our calculations, for the
derground is around US$121 tril- GCC countries, cumulative oil
lion: US$48 trillion of this belongs export receipts could reach US$5
to the GCC member countries, the trillion by 2013 (at US$100 a
rest of the Opec owns another US$44 barrel) and US$10 trillion by
trillion, while the non-Opec coun- 2020. The global total petro-
tries (Canada, Norway, Mexico and dollar flows should be rough-
Russia) own another US$12 trillion ly three times this size (US$15
worth of oil reserves. trillion) for the next five years
At the current pace of produc- or so, before some of the non-
tion and exports, and at US$100 Opec countries start to experi-
a barrel, the GCC, non-GCC Opec ence output declines.
and “other” oil-exporting coun- First, the financial arguments
tries are projected to earn a to- for transforming underground oil
tal of US$2.1 trillion annually, wealth into above-ground finan-
with the shares of these receipts cial (equities) wealth are quite
roughly evenly split between the compelling. These oil-exporting
three categories of countries. Since countries, with the exception of
“other” oil exporters are produc- Russia, cannot fully spend the
ing at a more rapid pace relative oil receipts, and therefore much
to their proven stocks of oil re- of these trade surpluses will be
serves, they are, collectively, ex- channelled into the global finan-
pected to run out of oil in about cial markets.
15 years’ time, while the GCC and Second, a good part — we
the non-GCC Opec countries could guesstimate half or so — of these
continue to export oil for anoth- cumulative receipts will be recy-
er 65 to 70 years, at the current cled through sovereign wealth
pace of extraction, assuming no funds. Thus, while there might
new discoveries. be a lot of focus on foreign sov-
ereign entities acquiring strate-
Scope for domestic gic assets, the root cause of this
investment in infrastructure trend is high oil prices.
Such large windfall receipts/prof- Third, bulging petrodollars
its could be invested in domestic will keep global long-term inter-
physical infrastructure, as has been The Abu Dhabi Investment Authority building in the United Arab Emirates. Petro- est rates artificially low, in our
the case in Qatar and Iran. But, dollars are building up SWFs into a force to be reckoned with. view. As the US savings-invest-
compared with most of the Asian ment deficit shrinks, excess glo-
economies, the investment-to-GDP ratios of ample, will run out of oil and gas in bal savings are likely to intensify, forcing the
most of the oil exporters look low. While five years’ time. Oman’s oil reserves could world’s cost of capital lower.
Norway may not have much need for large last “only” until 2027, at the current level
infrastructure spending, the same cannot be of production. Bottom line
said about Russia or Saudi Arabia. For coun- A boost of 5% to 10% of GDP’s worth of High oil prices will obviously increase the
tries like the United Arab Emirates, Qatar, investment in the coming years would not flow of petrodollars. The stock of the world’s
Oman and Bahrain that have been trying to be unreasonable, provided that these coun- proven oil reserves is now worth some US$121
become regional financial and tourism cen- tries can control the inflation consequenc- trillion — close to the combined market cap-
tres, considerable further investment spend- es. Five to 10% of GDP is only US$35 billion italisation of global equities and bonds, with
ing is needed in the coming years. to US$70 billion — equivalent to about 10% annual flows (oil export receipts) of US$2 tril-
Physical investment is a necessary, though of the annual oil revenues of the GCC coun- lion. While up to 10% of these receipts may
insufficient, way to help these economies de- tries. In short, part of the oil receipts will be be spent on infrastructure and other invest-
velop a more diversified structure away from diverted to domestic investments in many of ments, the rest will be invested in the global
the energy sector. On this issue, it should be these oil-exporting countries. However, the financial markets. A tsunami is coming. E
stressed that there is considerable dispari- bulk of the petrodollar windfalls will still not
ty among the GCC members regarding the be spent, and will wait to be invested in the This article is taken from a Morgan Stanley re-
size of the energy reserves. Bahrain, for ex- global financial markets. port dated Feb 22
6 • THEEDGE SINGAPORE | MARCH 3 , 2008
CORPORATE
Equipment supplier Federal International
expands energy interests
| BY ELLEN LOKAJAYA |
F
ederal International (2000) Ltd has long
derived the bulk of its earnings from
selling oil and gas equipment such as
valves. Business continues to be brisk,
with oil prices finding new legs and
leaping to a new high of US$101 ($140) per
barrel last week. However, it isn’t the trading
business that is occupying much of chief op-
erating officer Sanjeev Gupta’s time and en-
ergy at the moment. Gupta, who joined the
company last April, has his hands full steer-
ing the company into several new areas in the
energy sector.
Since the second half of last year, Feder-
al has added a slew of new businesses to its
portfolio. These are marine logistics, where
the company charters out floating, storage
and offloading (FSO) vessels; power plants,
where the company has so far inked deals
to build and operate three; water treatment;
and coal mining. “The [energy] market is
very hot. We have to strike at the right time,”
Gupta says in a recent interview with The
Edge Singapore.
However, as most of these new businesses
are at an early stage of development, equipment
trading looks set to stay as Federal’s primary
business until earnings from power generation
and coal mining kick in. Marine logistics has
started contributing, accounting for 8.1% of
revenue for the year to Dec 31, 2007, but the
trading business remains dominant and made
up 83.2% of revenue last year.
Its venture into marine logistics began in
2006 when an FSO vessel became available
on the market. Management decided to move
into the business, emboldened by the sector’s
good charter rates. It secured a 10-year char-
ter worth US$91 million with PetroChina for
that FSO, named Federal I. The company re-
cently announced that it had purchased a sec-
ond FSO vessel, Federal II, for US$31.5 mil-
lion, with the expectation that it would also
be chartered in a long-term contract. Gupta
is confident of leasing out the vessel, given
still-buoyant conditions in the market. And
although management’s plan is to build up a
fleet of such vessels, tight demand and sup-
ply conditions have kept vessels in short sup-
ply and prices lofty. “It is difficult to get ves-
sels at this time,” he says.
Recurrent earnings
Vessel chartering introduces an element of
long-term, recurrent earnings to a compa-
ny that is better acquainted with the vagar-
ies and slim margins of the trading business.
This shift towards long-term earnings sources
should pick up pace as the company’s utili-
ties-related projects take off. The company
has clinched four deals to build, operate and
transfer (BOT) or build, operate and own
GWYNETH YEO/THE EDGE SINGAPORE
(BOO) power plants — three in 100,000 tonnes a month.
Indonesia and one in Singapore. Federal is also tapping the
Last June, Federal said it would Chinese water treatment indus-
build a 5MW cogeneration plant try. The company partnered
on Jurong Island for $21 mil- IESE Water (Asia) Pte Ltd to
lion. It also signed a contract form a JV company, Federal-
to provide electricity and steam IESE Environment Technolo-
to a biodiesel plant being built gy (Shanghai) Co Ltd. The JV
on Jurong Island by Austral- company, in which Federal has a
ian-listed Natural Fuel Ltd. 90% stake, will take on BOO or
The deal is for 12 years and BOT water and waste treatment
will see Federal getting at least and management projects and
$54 million, which works out also supply specialty chemicals
to $4.5 million a year. Gupta used in the treatment plants.
explains that this is the fixed- Federal-IESE will focus on cit-
cost component and that, even ies such as Shanghai, Jiangsu
if no steam or power is deliv- and Guangdong.
ered, Federal will receive the Besides diversifying its busi-
money. On top of that, the ness, Federal is broadening its
company stands to earn reve- geographical footprint and head-
nues of $300 million from the ing towards the Middle Eastern
supply of steam and electrici- market by establishing a trad-
ty over the 12 years. The plant ing post in the United Arab
has started producing steam Emirates. “The Middle East
and is due to start producing is where we have to go. And
electricity by end-April. we have not taken that mar-
Those numbers were struck ket very seriously in the past,”
in the middle of last year, how- says Gupta. The company has
ever, when biodiesel seemed in the past hauled in sales of
like a much healthier busi- oil and gas-related equipment
ness. This year, palm oil pric- there but Gupta sees the poten-
es have soared to new heights, tial for much more, noting that
making it very difficult to turn the Middle East market for oil
a profit in the business. That’s and gas equipment is in the bil-
something its customer Natu- lions. Gupta says the ultimate
ral Fuel is quickly finding out. goal for Federal is to get 3% to
On Feb 20, its CEO was quot- 4% of that market but, for this
ed as saying it would indefi- year, his goal is to start with
nitely delay the start-up of the sales of US$10 million.
newly completed Phase One of
the plant in Jurong Island. It Risks from fast expansion
is also understood to be hold- If Gupta and his team deliver
ing back plans for Phases Two on these targets and numbers,
and Three. Federal could be a very different
When asked about Natu- The [energy] market is very hot. We animal in the next two years.
ral Fuel’s biodiesel dilemma, However, its rapid expansion
Gupta acknowledges that it have to strike at the right time. is leaving some in the invest-
makes no sense to produce bio- ment community a little cau-
diesel at these palm oil prices — Gupta tious. In a Jan 24 report, analyst
but points out that the Natural Serene Lim from OCBC Invest-
Fuel plant is producing glycer- ment Research, says Federal’s
ine, a byproduct of the feedstock. He also un- The plant will cost US$4.4 million and the JV expansion into different businesses at such a
derstands that the biodiesel plant is able to company has an agreement to supply electrici- short time “raises the issue of execution risks
run not just on palm oil but canola oil and ja- ty over 25 years to PT PLN (Persero) Distribusi as most of these ventures are new or at the
tropha as well. for US$56 million. Federal expects the project infancy stage”.
to be completed by June 2009. She also expects that “the gestation periods
Power, coal and water Prior to that, in December, Federal said it for these projects may stretch longer due to the
Meanwhile, Federal continues with its power would build a 12MW integrated gas processing initial learning curve”. Still, Lim continues to rate
projects in Indonesia, all of which are being and power plant in Tuban, East Java. It will cost the shares a “buy” and has a target price of 81
undertaken on a joint-venture basis, in which US$25.9 million and is expected to generate an- cents. Federal closed at 49 cents last Thursday,
its stake will be 60%. Two weeks ago, the com- nual revenue of US$20 million to US$30 million down 23% since the start of the year.
pany announced its third project in Indonesia, over the next six years. Last August, the com- For his part, Gupta doesn’t feel the compa-
where it will build a 4MW mini-hydro plant in pany said it would build a 6MW power plant in ny is stretching itself too thin as it moves into
Bengkulu, in the southwest coast of Sumatra. Jambi, Sumatra. To cost US$18.8 million, it will these new areas. “We are pretty strong finan-
supply electricity to PT Lontar Papyrus Pulp cially. We have built up our balance sheet. We
and Paper Industry in a 10-year deal that will have all the requisite resources,” he says. For
net the JV US$178 million in total. The plant is the year to Dec 31, 2007, the company report-
expected to be completed in August. ed a 2.7% rise in revenue to $154.5 million,
Aside from this, Federal is stepping into while earnings jumped 165.6% to $27.2 mil-
the coal business. This is being done through lion, boosted by the $16.6 million gain from
a 51% subsidiary and in partnership with two the divestment of a subsidiary. As at end-De-
Singaporeans — Lim Lee Leng and Gary Ng cember, it had a gearing ratio of 13%.
— who have been working in the Indonesian Gupta and his team spent the better part of
coal industry. The company is now in negoti- last year laying the groundwork for new busi-
ations with mine concession owners in Kali- nesses that could transform Federal into a di-
mantan to operate three mines and sell coal. versified player in energy and resources. The
Gupta says the company expects revenue from challenge now is to take these projects to the
the mines to reach more than $15 million an- next stage of their development and demon-
nually, which he considers a conservative fig- strate to investors that Federal is no longer just
ure. The mines are expected to produce about a seller of oil and gas equipment. E
8 • THEEDGE SINGAPORE | MARCH 3 , 2008
CORPORATE
ST Engineering plans diversification
moves to sidestep possible US slowdown
| BY JOAN NG |
A
mong the exhibits at the Singapore
Airshow 2008 earlier this month was
a truck with an enlarged body that
could fit several tables, half a doz-
en computers, a server and four flat-
panel television screens — and still have room
for 20 personnel. Dubbed the Mobile Command
Hub (MCH), the vehicle was outfitted by ST
Electronics, a unit of the locally listed Singa-
pore Technologies Engineering.
While the MCH had very little to do with
the aerospace industry or the airshow, it has
everything to do with ST Engineering’s posi-
tioning strategy: having a wide range of prod-
ucts that work with each other to form part of
an integrated solution.
At this year’s airshow, ST Engineering’s dis-
play aimed to demonstrate how the four ma-
jor units of the company — ST Aerospace, ST
Electronics, ST Kinetics and ST Marine — have
products that work together as part of a total
solution, for instance, for disaster relief.
Alongside the MCH, which can receive live
data feeds of the overall operations situation
from the FanTail 5000 — an aerial sensor built
by ST Aerospace — ST Kinetics displayed its
Commercial Articulated Vehicle (CAV), a lighter
version of its popular all-terrain vehicle called
the Bronco. Ideal for rescue missions, the am-
phibious CAV can be transported to the disas-
ter site on board the 141m Landing Ship Tank,
a miniature of which was on display at ST Ma-
rine’s corner of the exhibition.
The integrated presentation of its products
may have helped to boost ST Engineering’s
success in winning contracts at the airshow
this year. It announced close to US$500 million
($700 million) worth of deals during the show,
held from Feb 19 to 24, which CEO Tan Pheng
Hock says is much more than last year.
But the underlying principle of diversifica-
tion and integration has had far-reaching effects
on the company’s growth and bottom line. Last
week, announcing its results for FY2007, ST
Engineering reported double-digit growth for
the third consecutive year. Both turnover and
net profit rose 13% to $5.1 billion and $503.5
million respectively.
Aerospace unit performing well
The group’s aerospace unit, which makes up
53% of group profit before tax (PBT), showed
a 10% rise in turnover and a 12% increase in
PBT. ST Aerospace is the world’s largest inde-
pendent third-party provider of maintenance,
repair and overhaul (MRO) services for the avi-
ation sector. PBT margins for the aerospace di-
vision rose one percentage point to 19%, while
margins for all other sectors held stable.
The results are noteworthy in view of the
disappointing results of SIA Engineering Co,
which competes with ST Aerospace in the MRO
sector. In January, SIA Engineering reported a
With a greater variety of products that showcase the group’s total engineering capabilities, Tan hopes the
company will be in a better position to bid on tenders
3.1% decline in net profit for its 3Q2008 ended
Dec 31, 2007 and a 1.1% increase in revenue
for the period, while its PBT margin fell close
to two percentage points. DBS Vickers analyst
Janice Chua cut her price target for SIA Engi-
neering by 23.5% to $3.77 from $4.93 previous-
ly, citing pressure on operating margins. Chua
also cut forward earnings by 8% to 10%.
CEO Tan believes that the secret to ST Aer-
ospace’s improving margins is a wide mix of
products that it markets along with MRO services
as part of an integrated package. “Today, we do
what we call total aviation support, [which in-
cludes] components and engines. I like to call it
a choice of an à la carte menu or a buffet menu,
where we can package more services together,”
Tan says. “This means we can move into higher-
value-added services.” ST Aerospace’s capabili-
ties extend beyond MRO into the development
of avionics hardware, flight software solutions
and various other complex solutions.
Looking ahead to FY2008, Tan says the MRO
business is looking healthy. As the number of
ageing aircraft crossing the skies increases, car-
riers are increasingly turning to the MRO in-
dustry. Hiccups at Airbus and The Boeing Co
in the manufacture of their aircraft have de-
SAMUEL ISAAC CHUA/THE EDGE SINGAPORE
to the analysts. Of the nine that issued updates
following the results, five have downgraded their
target prices for the stock. One of the analysts to
do so was CIMB-GK’s Lim Siew Khee, who cut
her price target from $4.36 to $4.01. “While we
are comforted by its strong order book of $9.49
billion, we remain cautious, given the weaken-
ing US dollar and softening US market, which
could hurt its US operations,” Lim wrote in a
note to clients on Feb 27.
On the other hand, Citigroup analyst Lim
Jit Soon was very positive about ST Engineer-
ing’s strong fundamentals and good earnings
visibility, saying in a report: “We believe order
momentum can be sustained, given ST Engi-
neering’s established track record and repu-
tation, noting a series of recent contract wins
from existing and new customers.”
Preparing for a slowdown
Tan is preparing to prove that track record with
a four-pronged game plan to insulate ST Engi-
neering: cutting costs, finding new customers in
new markets, diversifying its product base and
improving its material sourcing process.
He says the company has already begun
streamlining its business operations to cut over-
head costs. “For example, we have shifted a
product made in two localities to one, for effi-
cient production, and we closed down an out-
fit that was marginal,” explains Tan. For plant
materials, it has begun using global procure-
ment to help lower costs, sourcing beyond North
America, in China and other parts of Asia, for
instance, for cheaper materials.
It’s not just parts that will have to come from
outside the US. ST Engineering is even now pur-
suing contracts in emerging markets such as Af-
layed delivery of new planes, and a slowing rica, Central Asia, Latin America and the Middle
US economy may lead some carriers to put ex- East. At the airshow, the company managed to
isting orders on hold. secure a US$60 million contract to provide air-
Meanwhile, a growing number of aircraft craft engine maintenance to South African air-
owners is seeking to add value to or improve line Comair and a US$31.6 million defence export
the performance of their aircraft through over- contract from a Middle Eastern customer.
haul works. And as higher oil prices drive com- The deal from the Middle East proves that
mercial players to cut costs, outsourcing MRO ST Engineering has what it takes to do busi-
work will become all the more attractive. ness with other governments despite the sen-
sitive nature of the defence business, says Tan.
High US earnings a vulnerability And being able to tap into this revenue stream
In preparation for this anticipated rise in demand, should provide some stability because, while
ST Engineering is rapidly increasing its MRO ca- the appetite for commercial deals may decline
pacity. A fortnight ago, the company announced somewhat, government defence budgets, some
a new hangar at the Seletar Aerospace Park that of which have better margins, will continue to
can accommodate up to two narrow-body air- rise. The defence business contributed 33% of
craft. It also opened a new engine test facility the group’s revenue last year.
in Paya Lebar. And in December, it announced Meanwhile, Tan says, the company will
a joint venture with a Chinese firm to set up an continue to develop new products and rede-
engine MRO facility in Xiamen, China. sign old ones to provide total solutions like the
But even as this expansion takes place, one displayed at the airshow. With a greater
the company will have to deal with the pros- variety of products that showcase the group’s
pect of a falling US dollar and the impact of a total engineering capabilities, Tan hopes the
slower US economy on its businesses in that company will be in a better position to bid on
part of the world. Turnover from its US busi- tenders. “If there’s a tender where they may
ness crossed US$1 billion for the first time in not want to buy a standard product but would
FY2007, making up 28.1% of total group turn- rather use your base unit to design some chang-
over. And PBT would have been $15 million es, this is where we come in and add value,”
higher if not for the weaker US dollar. he says, adding that being able to spread an
In the light of economic uncertainty, ST En- order out over a wider base would improve
gineering is guiding for a softer year with turn- economies of scale.
over growth in the mid-single digits. But Tan If Tan’s game plan works, ST Engineering’s
says the guidance is not so much a reflection shareholders will have a great deal to cheer
of a perceived slowdown in orders as a prefer- about. The company has distributed all its net
ence to err on the side of caution. “I like to be earnings as dividends for five straight years,
proven wrong when it comes to this. But in to- with the total dividend for FY2007 coming to
day’s uncertain environment, it’s a bit dicey to 16.9 cents, a yield of close to 5%. For a stock
say I’m going to [achieve double-digit growth with a market capitalisation of $10.8 billion,
again]. You really can’t see too far. There’s al- that figure is impressive, and all the more so
ways a possibility that owners negotiate and then as the company has continued to show dou-
decide to postpone the deal,” he says. ble-digit growth. Amid the present market tur-
Tan’s cautious leanings have filtered down bulence, that’s quite a comfort. E
 THEEDGE SINGAPORE | MARCH 3, 2008 • 9

CORPORATE

Oculus Penguin Boat International

Small-company 350000

300000
Volume (‘000) Price ($)
0.45
0.4
0.35
250000

200000
Volume (‘000) Price ($)
0.4

0.35

financier DB Zwirn
250000
0.3 150000 0.3
200000
0.25
150000 100000 0.25
0.2
100000
0.135

winds down funds

50000 0.2
50000 0.1 0.185

0 0.05 0 0.15
Feb 23, 2007 Feb 29, 2008 Feb 23, 2007 Feb 29, 2008

| BY DESMOND WONG |

N
ew York-based DB Zwirn & Co
(DBZ) is a relatively obscure name
in the world of private equity
funds, but it was an active fin-
ancier of small-cap companies in
Singapore last year. And, news over the last
fortnight that it is winding down its princi-
pal funds after its investors — spooked by
alleged accounting irregularities — pulled
out some US$2 billion ($2.79 billion) could
have an impact on the local market. Accord-
ing to media reports, DBZ is likely to see its
funds under management shrink from US$5
billion to just US$1 billion after it completes
the closure of several funds. It is currently
under investigation by the US Securities and
Exchanges Commission.
GWYNETH YEO/THE EDGE SINGAPORE

We are not worried

at all, as they said
they would honour
the agreements and
convert [the bonds]
— Low
Going by filings with the Singapore Ex-
change, DBZ provided financing to at least six
small-cap companies between last March and
August, extending $30 million to $100 million
to each through convertible bond arrange-
ments. Among the recipients of the cash were
former eye-care company Oculus Ltd, fire-ex-
tinguisher company Asiatic Group (Holdings)
and shipbuilder cum ferry operator Penguin
Boat International.
CONTINUES NEXT PAGE
10 • THEEDGE SINGAPORE | MARCH 3, 2008
CORPORATE
DBZ reassures small-cap customers
FROM PREVIOUS PAGE
DBZ officials in Singapore and New York
declined to speak to The Edge Singapore. But
executives at companies that DBZ has fund-
ed say representatives from the private equi-
ty firm had been sent to Singapore to assure
them it wasn’t going to pull out of its deals.
“We are not worried at all, as they said they
would honour the agreements and convert
[the bonds],” says Low Shiong Jin, executive
director of Oculus Ltd.
Oculus had raised $100 million from DBZ
to help fund the $600 million purchase of car-
bon credit developer and trader Aretae in a re-
verse takeover deal that it proposed last year.
That deal has since stalled, and Oculus is now
proposing to buy patents and licensing con-
tracts from an ophthalmic drugs and devices
company in Australia to remain listed while
it scouts around for other RTO opportunities.
“Given that the redemption [of investor funds
from DBZ] will take three years or so, we are
not too concerned,” Low adds.
Even if DBZ does change its mind, some of
the companies it had financing arrangements
with aren’t worried. “The convertible bond is-
sues were just another funding facility,” says
George Tan, CEO of Asiatic Group. “You have
banks, and everything else. There are all sorts
of ways to raise funds.”
Last July, Asiatic Group agreed to issue $30
million worth of convertible bonds to DBZ. It
planned to use the funds for building its pow-
er generation business, beginning with power
plants in Cambodia.
Meanwhile, Penguin Boat says it has com-
pleted its dealings with DBZ. The company is-
sued $30 million worth of convertible bonds to
DBZ in January last year, which DBZ converted
into shares in June and July. “Going forward,
they are not our only source [of funding],” a
spokesman for Penguin Boat says.
Funding high-risk growth
Nevertheless, DBZ’s troubles could mean it
won’t be as active a financier of small local
companies in the future. While small compa-
nies do have access to a variety of sources of
funds, DBZ was providing them with money
for ventures that probably couldn’t have been
funded any other way. “If they could get mon-
ey from the banks, they would have done so,”
says a consultant at boutique corporate finance
firm Prime Partners.
To be sure, the risks were high. But DBZ’s
money produced some spectacular results.
Asiatic posted a 120% jump in revenue to
$22 million for the six months to September
(it has a March year-end), and a 95% increase
in earnings to $923,000. This was achieved on
the back of revenue gained as the power plant
projects in Cambodia came onstream.
Penguin Boat was another success. The
company reported a 46% jump in turnover
to $81.3 million last year, and a 563% leap
in earnings to $7.8 million, driven primarily
by new shipbuilding contracts. Last year, the
company scored US$69 million worth of ship-
building deals, including US$23 million from
the Abu Dhabi National Oil Co for the con-
struction of three ships.
Meanwhile, electrical generator company
VibroPower Corp, which obtained $30 mil-
lion in convertible loans from DBZ last year,
expanded to take on larger generator supply
contracts in Russia and India.
For 2007, the company reported a 29.9%
increase in revenue to $67.3 million, and a
302.6% jump in earnings to $3.5 million. At
end-September, the company’s order book
stood at $78.6 million.
Vibropower Corp
Volume (‘000) Price ($)
20000 0.11
18000 0.1
16000
0.09
14000
12000 0.08
10000 0.07
8000 0.065
6000
0.05
4000
2000 0.04
0 0.03
Feb 23, 2007 Feb 29, 2008
Asiatic Group
40000
Volume (‘000) Price ($) 0.25
35000 0.23
30000 0.21
0.19
25000
0.17
20000
0.15
15000
0.13
10000 0.11
5000
0.085
0 0.07
Feb 23, 2007 Feb 29, 2008
More limited upside now
Will other hedge fund players move in to take
DBZ’s place? Perhaps. “The local funds, the
boutique ones, might be interested,” says the
consultant at Prime Partners. “They might not
be as affected by global trends as the bigger
players, who might also have a shorter invest-
ment horizon.”
But any hedge fund that steps into the mar-
ket is likely to be a lot more selective now amid
the nervousness in the stock market, because
the potential returns might not be worth the
high risk. Last year, even the mere hint of a
corporate deal or acquisition often sent share
prices of small companies through the roof,
making it easy for a convertible bond finan-
cier to quickly cash out.
In the case of Penguin Boat, for example,
DBZ’s loan was convertible into new shares
priced at 16 cents each. But when it cashed
out in the middle of last year, shares in Pen-
guin Boat were trading at more than twice
that, at 37 cents.
“It would be much harder for [small com-
panies] to attract that kind of attention from
the hedge fund guys,” says the consultant from
Prime Partners. “Because the markets are much
weaker, private equity will see very little up-
side in terms of share price.” E
 THEEDGE SINGAPORE | MARCH 3, 2008 • 11

This is the third of a five-part series on the Singapore furniture industry

Success, made-to-measure
A
sian property markets are booming, and Singapore’s
furniture industry is riding along, and is set to do
so. But the success of this industry did not occur
by chance. Singapore’s furniture companies have
worked hard at being the best, and have devel-
oped the knack for anticipating new trends and understand-
ing what appeals to the overseas markets. industry branding programme on March 9, in conjunction
To help Singapore’s furniture companies catch a bigger with the International Furniture Fair Singapore/Asean Fur-
share of this growing pie, the Singapore Furniture Indus- niture Show 2008.
tries Council (SFIC) — together with the lead agency for the This week, we zoom in on two furniture companies that
furniture industry, SPRING Singapore and International En- have helped their customers to stay ahead of the competition
terprise Singapore — is jointly launching a local furniture through their keen eye for design and customisation.

Kingsmen Creative Nobel Design

‘To be an elite global player’ Sunrise, not sunset

PICTURES: GWYNETH YEO/THE EDGE SINGAPORE

F N
ounded in 1976, Kingsmen Crea- obel Design, another Singapore-listed gauge its customers’ needs, Nobel’s design-
tives is an established Singapore- company, is a diversified interior de- ers can then work to develop the most suit-
listed communications design and sign and furnishing company with the able products.
production group. The company spe- capabilities to meet the customer demands The company’s special project services
cialises in the design and production across a broad market spectrum. Be it a mass- involve servicing high-end designers and
of temporary installations for exhibits market retailer, or a high-end brand, Nobel architects that are involved in projects such
and event displays. It also provides in- is equipped to serve their needs. as Changi Airport’s Terminal Three, and the
terior design and fit-out services for mid Currently, its business focus includes re- show flat for Reflection, a Keppel Land con-
to high-end retail outlets and commer- tail, export, special project services for de- dominium project.
cial showrooms. signers and customised interior design. In addition, Nobel is in the business of
As at Dec 31, 2006, Kingsmen had a providing customised interior design
turnover of around $109 million. The services, where the company’s design-
company has a regional network of 16 ers work with mid-end home upgraders
offices in the Asia-Pacific and Middle to help them turn their dream homes
East regions, as well as markets in the into reality.
US and Europe, making it a solid, cred- Through comprehensive feedback,
ible regional player in this space. market analysis, good customer relation-
Kingsmen’s four main business are- ship management, and close monitor-
as are: research and design; exhibitions ing of design trends in the market, No-
and museums; retail and commercial in- bel Design is able to identify the types
teriors; and integrated marketing com- of designs that will work well with its
munications. range of customers, says managing di-
Through years of experience in the rector Bert Choong.
business, the company has gained a “We also have 25 years of experience
thorough understanding of its custom- Ong: Our long-term goal is to be the leader in Asia-Pacific and ample knowledge of the market as
ers’ business and culture. This has en- and an elite global player in whatever we do well as good contacts with top-end de-
abled the company to come up with signers who are the trendsetters in the
styles and designs that best fit their custom- With a dedicated workforce of more than industry,” he says. “We are a team of
ers’ requirements. This in turn translates into 1,000 including a team of 150 well-trained de- designers, manufacturers, retailers and
products that are able to illustrate the busi- signers, Kingsmen differentiates itself from its exporters. We know our stuff.”
ness concept and brand image that custom- peers by providing customers with seamless Choong, who is also an executive
ers want to portray. “one-stop” design and production services. committee member of the SFIC, says
Over the years, Kingsmen has chalked up These range from research and design, project business is great and will continue to do
a sterling roster of customers. They include management, specialised production and lo- better because of the property boom.
local brands like Robinsons and Raoul, as gistics management to after sales services. “In 2007, Singapore’s total trade was
well as international retailers such as Guess?, Managing director Simon Ong says Kings- Choong: We are a team of designers, manufacturers, around 1% of the world’s total trade.
Banana Republic, Esprit, GAP and Tag Heu- men lives by the “never say die” approach retailers and exporters. We know our stuff. There is a big opportunity for us to in-
er. Other high-end brands such as Burberry, and a shared vision of being a design-led, and crease our market share to perhaps 2%,”
Gucci, Polo Ralph Lauren and Chanel have quality- and service-driven company. “Our Nobel’s retail business involves the sourc- he says. “Many years ago, the local furniture
also engaged the company’s services. long-term goal is to be the leader in Asia-Pa- ing of appropriate furniture of suitable qual- industry was perceived as a sunset industry,
In addition, Kingsmen has designed na- cific and an elite global player in whatever ity and price from international markets. Its but owing to the entrepreneurship of our de-
tional pavilions for international trade shows we do,” he says. retail products include home2be, a selection signers, we have proved everyone wrong. We
and exhibits for museums and visitor cen- Ong also believes that the combined ef- of trendy, Italian-inspired designs at budget are a sunrise, not sunset industry.
tres, such as the Singapore Science Centre forts of SPRING, SFIC and IE Singapore in prices for first-time home owners, and Mi- “With the support of SPRING Singapore
and Maritime Experience in Sentosa. launching the local furniture industry brand- notti by Marquis Interiors, a luxury brand on our Furniture Industry Branding Project,
The company has also picked up a string ing programme is timely. “Singapore’s furni- carrying high-end Italian designer furniture, we are confident that furniture exporters
of accolades including the Singapore Prom- ture industry is still small,” he says. “How- which the company currently displays at its like us will enjoy better business results at
ising Brand Award (Most Distinctive Brand), ever, the country’s infrastructure and reliable Minotti showroom on Hill Street. international exhibitions and in our business
the President Design Award and the Interior reputation are positive factors that compa- Nobel has also collaborated with buyers dealings worldwide. Our industry is very
Builders Award. Recently, it also won first nies can leverage on, thus the branding ex- such as JC Penny in the US to form buylat- resilient. Even if it may take us some time,
place in the ISP/VM+SD design award in ercise will certainly help push the promising eral.com, an online catalogue business car- I believe that if we walk the talk, we can go
New York for its work on Robinsons’ flag- furniture companies in Singapore to great- rying the company’s products. By working a long way in making Singapore’s furniture
ship store in Malaysia. er heights.” closely with the designers from JC Penny to known on a global front.”

Catch the launch of a New Identity

for our Singapore Furniture Industry!
Find out more at the International Furniture Fair Singapore/
ASEAN Furniture Show 2008
9-12 March 2008 Singapore Expo, 1 Expo Drive
 12 • THEEDGE SINGAPORE | MARCH 3, 2008
CORPORATE
Celestial NutriFoods continues expansion
despite escalating soybean prices
| BY NOVA THERESIANTO |
I
f Zhao Xianghua is sweating about
the sky-high price of soybeans, he
certainly isn’t displaying it. The
executive director of Celestial Nu-
triFoods Ltd, which makes soy-
bean-based food products, is a picture
of calm in the face of the highest soy-
bean prices he has ever seen. Already
up some 90% last year, soybean pric-
es on the global market have contin-
ued to climb this year, rising by just
over a fifth.
Those record-smashing prices are
causing investors in the China-based
company, whose biggest product is a
soy-based protein powder, to swoon.
Fearful of further margin compression,
they have deserted the shares, which
have tumbled 38.3% since the start
of the year. From last July, when soy-
bean prices began to rally, the shares
have fallen nearly two-thirds as at last
Wednesday.
Rising global demand for soybean
has shrunk soybean stockpiles and
pushed its price to a record. Howev-
er, from Zhao’s perspective, soybean
prices have run up too much and he
believes that the Chinese government
will tap into its inventory of the com-
modity to alleviate the current tightness
in the market. By the end of the year,
he sees soybean prices coming down
by as much as 20% to 30%.
Chinese food companies like Ce-
AAAA
SAMUEL ISAAC CHUA/THE EDGE SINGAPROE
lestial are partly shielded from ness, which was first mooted
the global inflation in agricul- in September 2006. Last Fri-
tural commodities as a result of day, Celestial has completed a
the country’s price controls on biodiesel plant in Heilongjiang
such items. In Celestial’s case, and installed all the necessary
the average cost of its soybean machinery. The plant is a joint
purchases rose 24.6% last year venture with Daiki-Axis Co Ltd
from 2,241 renminbi ($439.97) and Shanghai Nikki Environment
per tonne in 2006 to 2,792 ren- System Inc, in which Celestial
minbi per tonne in 2007, far more has an 80% stake. Costing 430
moderate than the price escala- million renminbi, it will churn
tions on the global market. out 100,000 tonnes of biodiesel
Based in China’s most north- a year. But unlike most biodie-
ern province, Heilongjiang, Ce- sel plants, Zhao says this plant
lestial sources soybeans from is flexible and will be able to
local farmers, processes them use not just soybean oil but oth-
to make protein powders, high- er vegetable oils and waste oil.
protein biscuits and canned pro- Zhao, who has a degree in com-
tein beverages and sells them mercial accounting and masters
under its house brand “Sun in business administration, is
Moon Star” to the domestic confident it will be able to turn
market. It also processes soy a profit, despite high raw mate-
protein isolate, soy functional rial prices.
protein and biochemical feed-
stuff for other food manufac- Zhao sees soybean prices coming down by as much as 20% to 30% by year-end Forecasts cut
turing companies. Analysts covering Celestial are
However, high soybean prices still sively expanded its industrial prod- margins shrank to 39% from 44.3% still calling its shares a “buy” despite
dented its margins as it wasn’t able to ucts output — products which have the previous year. the continuing climate of agri-infla-
pass on the higher costs to custom- lower gross profit margins of about tion. They have, however, lowered
ers. In November, it raised its average 30% compared to retail products such Soy noodles and pastries their target prices. “As the prices are
selling price for its retail products by as its protein F&B products, which The company’s strategy, amid high- likely to stay high, we have raised
15% to 20%. For its industrial prod- have much fatter gross margins of er soybean costs, is to forge ahead our assumed soybean costs by 35%
ucts, such as soy protein isolate, av- about 50%. So, although Celestial with its expansion plans. It plans to 4,500 renminbi per tonne, which
erage selling prices were gradually was able to grow its sales by 55.4% to increase the utilisation rate at its represents a 60% increase from 2007
raised by about 10% over the course last year to 1.8 billion renminbi, its “Soybean Zone” plant, currently run- average costs,” says Merrill Lynch ana-
of last year. bottom line was up a slimmer 13.3% ning at about 75%. Celestial is also lyst Eddy Loh in a Feb 25 report. “We
On top of that, Celestial aggres- to 419 million renminbi. Gross profit launching four new high-protein nu- believe the group could pass on only
trient products. This will be broken part of the higher costs.” With this,
down into two phases and will cost Loh forecasts an eight percentage point
405 million renminbi. drop for this year’s gross profit mar-
The first phase, which will be com- gins to 31% and has cut his earnings
pleted in 2Q2008 (Celestial has a De- forecast for this year by 14%.
cember year-end), is expected to pro- DBS Vickers’ Andy Sim has low-
duce 15,000 tonnes of fruit-flavoured ered his FY2008 earnings numbers
protein beverages and 5,000 tonnes of by 4% to factor in lower gross mar-
high-protein nutrient powders a year. gins. However, he is maintaining his
The second phase, which will be com- “buy” call as he is optimistic of the
pleted in 4Q2008, is expected to pro- company’s long-term prospects and
duce 10,000 tonnes of high-protein management’s ability to deliver. He
nutrient noodles and 5,000 tonnes of has a target of $1.59 for the shares,
high-protein nutrient pastries a year. currently the highest price target for
Soy-based pastries and noodles will Celestial. The shares closed at 63.5
be a first for Celestial, which domi- cents last Wednesday.
nates the market for soy-based protein However, he cautions that the
powders. Mixed with water, the pow- share price in the short term would
der becomes a health beverage and is likely move sideways, given the mar-
popular among the Chinese. ket’s concerns on the unprecedented
Upon completion of both phas- rise in soybean prices. Shareholders
es, the plant’s utilisation rate will in- must certainly be hoping that Zhao’s
crease to 95%. conviction that soybean prices will
Aside from this, Celestial is go- moderate from their peaks will come
ing ahead with its biodiesel busi- through this year. E
CELESTIAL NUTRIFOODS
High-protein biscuits produced at Celestial’s factory in Heilongjiang province
 THEEDGE SINGAPORE | MARCH 3, 2008 • 13

BLOOMBERG
CORPORATE

Singapore dollar The island state’s

advances to currency strength-

ened 9.4% in the
past six months,
making it the

highest in 12 years third-best per-

former among the
10-most actively

on inflation
traded currencies
in Asia outside
Japan

T
he Singapore dollar rose to the high-
est in 12 years on speculation the
central bank will seek faster curren-
cy gains to quell accelerating infla-
tion. The US dollar’s drop against all
15 most-active currencies the past five days
also boosted the Singapore dollar.
Trade Minister Lim Hng Kiang said on Feb
27 there is a limit on how far the currency
can gain without hurting growth.
A stronger exchange rate may help slow
price increases, at the fastest pace since 1982
last month, by reducing imports costs.
“There is more room for the Singapore
dollar to appreciate amid accelerating infla-
tion,” said Osamu Takashima, chief analyst
for global market sales and trading at Bank
of Tokyo-Mitsubishi UFJ Ltd in Tokyo. “Sin-
gapore accepts the trend of global US dollar
weakness, because that helps Singapore to
fight price increases.”

Strongest gain since 1996

The Singapore dollar gained 0.1% to $1.395
as of last Friday, the strongest since Febru-
ary 1996, according to data compiled by
Bloomberg. The currency may climb to as
high as $1.35 by the end of March, Takashi-
ma said.
The island’s currency strengthened 9.4%
in the past six months, making it the third-
best performer among the 10-most active-
ly traded currencies in Asia outside Ja-
pan. The Monetary Authority of Singapore
(MAS), which allows its dollar to rise and
fall within an undisclosed band based on
a trade-weighted index of currencies of its
biggest trading partners, said in October it
would “increase slightly the slope of the
policy band”.
“While the MAS exchange-rate policy
stance has helped to keep inflation down
by dampening some of the higher import
costs, we cannot insulate ourselves com-
pletely from the effects of higher global pric-
es,” Lim said in parliament on Feb 27. He is
also deputy chairman of the MAS.
A government report this week showed
consumer prices rose 6.6% in January from
a year earlier, increasing pressure on the
central bank to let its currency strengthen
further to curb rising import prices.

SGD could appreciate further

“It is important to recognise there is a limit
to how fast the Singapore dollar can appreci-
ate without hurting our growth, and eventu-
ally causing employment and wages to fall,”
said Lim. Singapore’s dollar may extend this
month’s 1.6% gain versus the US dollar as
the central bank may let the currency rise at
a quicker pace to contain inflation, accord-
ing to United Overseas Bank Ltd.
“The MAS could actually allow the
Singapore dollar to appreciate faster on a
trade-weighted basis,” said Ho Woei Chin,
an economist at United Overseas Bank.
The Singapore dollar “could continue to
strengthen.”
United Overseas Bank forecasts the Sin-
gapore dollar at $1.380 at the end of Sep-
tember and the end of December, Ho said.
— Bloomberg LP E
14 • THEEDGE SINGAPORE | MARCH 3, 2008
CORPORATE
Roxy-Pacific launches IPO, sees steady
income from hotel
| BY AUDRINA GAN |
R
oxy-Pacific Holdings will
be the second property
company to list on the
Singapore Exchange this
year, amid widespread con-
cerns about flagging property pric-
es and stock-market weakness. The
first to list was China-based Centra-
Land, which actually did reasona-
bly well with its stock now trading
8% above its IPO price.
Roxy-Pacific — which has a mar-
ket cap of $190 million at its IPO
price of 30 cents a share — hopes
to pull off a similar start with the
help of eight new local residential
projects aimed at the current sweet
spot of middle-income families, and
the 4½-star Grand Mercure Roxy
on East Coast Road.
The homegrown property devel-
opment and investment company
reported net profit of $1.5 million,
$2.2 million, $5.2 million and $7.7
million in FY2004, FY2005, FY2006
and 1H2007 respectively. Over the
same periods, it generated rev-
enues of $38 million, $30.9 mil-
lion, $48.8 million and $42.4 mil-
lion. As at 1H2007 ended June 30,
its book value stood at 8.67 cents
a share.
With such consistent growth, Teo
Hong Lim, executive chairman of
Roxy-Pacific Holdings, is not worried
about listing the company founded
by his father 40 years ago despite
the uncertainty in the property sec-
tor and stock market. “Everyone’s
sitting on the fence now,” says Teo.
But he is sanguine about the ebb
and flow of the stock and proper-
ty markets. “People will flock back
into the market once they see sta-
bility. There are a lot of such spurts
in Singapore,” he says calmly.
People will flock back into
the market once they see
stability. There are a lot of
such spurts in Singapore.
— Teo
With a focus on developing small-
to medium-sized developments that
target middle-income families, Roxy-
Pacific has, over the past few years,
developed nine freehold projects and
sold 279 units, mainly in the east of
Singapore, including three in Telok
Kurau, The TreeLine, The Montage
and The Medley; St Patrick’s Loft on
St Patrick’s Road; Axis@Siglap at
East Coast Terrace; and Marque@
Irrawaddy on Shan Road. All the
units in the nine projects have been
sold, except for three units at The
Veranda in Telok Kurau.
Over the next six to eight months,
Roxy-Pacific will progressively launch
eight new development projects in-
cluding The Ambrosia, The Adara
and The Florentine, which are locat-
ed in the East Coast, Thomson and
Novena areas, with average selling
prices ranging from $850 to $1,100
psf. Targeted at the mid-tier and
mass markets, the projects should
benefit from the pent-up demand,
which property indicators are al-
ready pointing to.
GWYNETH YEO/THE EDGE SINGAPORE
months to Oct 31, 2007.
The hotel’s location near Changi
has also helped, as a significant por-
tion of its guests comes from the
nearby aviation and logistics-relat-
ed businesses like FedEx as well as
factories of companies like IBM Corp
and Matsushita. Between 2004 and
2006, the hotel hit high average oc-
cupancy rates of 85.5%.
To enhance its yield, the Grand
Mercure Roxy has also undergone a
$5 million makeover over the past
three years to add more guestrooms
and expand its facilities for hold-
ing big functions like weddings and
corporate events. The renovations
have paid off handsomely. Despite
the current squeeze on hotel rooms,
the enhancements have brought
about a 31.5% y-o-y increase in rev-
enue per available room to $135.20
a night in 1H2007.
Looking ahead, Teo expects Sin-
gapore’s low interest rates, strong
economy and long-term population
target of 6.5 million to help drive
growth in the property market de-
spite “near-term uncertainties”. He
believes, however, that local resi-
dential property prices spiked up
“too fast” last year, otherwise “the
momentum would have been sus-
tainable”. But “everything should
Teo’s optimism also stems from be all right over the next one to
the group’s ownership of the 558- two years”, he adds.
room Grand Mercure Roxy Hotel, Furthermore, Roxy-Pacific’s ear-
a 4½-star hotel currently managed ly entry into the property industry
by French hospitality group Accor before the current boom has al-
Hotels & Resorts. Last May, the lowed it to acquire land at attrac-
Grand Mercure was valued at $270 tive prices when others have had
million, and Teo expects its value to pay much more. Land costs are
to gradually rise, given the buoy- the largest direct-cost component
ant demand for hotel sites. for property developers and account
“We’ve received enquiries from for 40% to 60% of Roxy-Pacific’s
prospective buyers but the interest total development cost.
level [for our hotel] is not high,” That has enabled the group to
he says. “The hotel is a key asset generate bigger profits and main-
we acquired at an attractive price tain a profit margin of 20% as it
back in the 1970s.” sold its properties at an average
Revenue for Roxy-Pacific’s ho- price of $1,000 psf.
tel ownership and investment busi- As a rule of thumb, developers
ness — via the 31% ownership of with comparable projects break even
the strata-titled The Roxy Square selling their properties at $700 psf,
Shopping Centre — came to $22.5 says Teo. To maximise yield, Roxy-
million, $25.5 million, $30.8 mil- Pacific prefers to build bigger apart-
lion and $18.2 million in FY2004, ments with three to four bedrooms
FY2005, FY2006 and 1H2007 re- in prime areas.
spectively, according to the pro- Last year, the group sold 138
spectus. apartments from Jan 1 to June
Located close to Parkway Pa- 30, for a total of $125.8 million,
rade, the seven-year-old hotel has which will be progressively recog-
been a source of constant income nised up to FY2010, says the IPO
as well as capital appreciation for prospectus.
the group, even as it rides the tour- Along with revenue generated
ism boom in Singapore. And there from its existing and upcoming
will be more good years to come projects, Roxy-Pacific expects to
for the industry. derive more than half of its earn-
According to the Singapore Tour- ings from the property development
ism Board, thanks to the upcoming business over the next two years.
Formula 1 night races, mega resorts Property development account-
in Sentosa and Marina Bay, and ed for 68.5%, 38.3%, 64.8% and
Youth Olympics in 2010, the city- 80.3% of total revenue in FY2004,
state should see tourism receipts FY2005, FY2006 and 1H2007 re-
of $30 billion and 17 million visi- spectively.
tors by 2015. So, are investors covinced Roxy-
With more tourists dropping into Pacific can sustain its growth mo-
town and a dearth of hotel rooms, mentum? Their response when the
the occupancy rate at Grand Mer- stock starts trading on March 12
cure Roxy exceeded 92% for the 10 should give some indication. E
 THEEDGE SINGAPORE | MARCH 3 , 2008 • 15

CORPORATE

Dumpling maker Synear slumps,

highlights risks for China stocks
| BY KANG WAN CHERN | which have increased more than 70% y-o-y alysts are already bracing themselves for bad renmimbi, while earnings soared 94% to 416
following the “blue-ear” pig virus outbreak on news from other hot China stocks. While “ag- million renmimbi. Analysts are forecasting

T
he spectacular crash of shares in Chi- the Mainland last August, leaving pig breed- flation” puts Synear and other food-related earnings growth of 30% per annum for the
na-based frozen dumpling maker Syn- ers reeling. On top of that, higher selling and companies like Celestial Nutrifoods, Pine next two years, slower than past years but
ear Food Holdings following an ex- distribution costs as well as an unexpected Agritech and Youcan Foods in an especial- strong nevertheless. Local brokerage house
pectedly dismal earnings report last tax squeezed its earnings. The reaction from ly dangerous position, analysts are also go- DBS Vickers Securities has a “buy” recom-
week could be a wake-up call for ana- investors was swift and severe. Shares in Syn- ing cold on a variety of other China-based mendation on the stock and a price target
lysts and investors on the earnings risks that ear dropped 26% on massive trading volume companies because of rising inflation. And, of $1, which reflects a valuation of 20 times
many companies face in 2008. the day after its results were reported. And, even companies that don’t disappoint on the 2009 earnings.
Synear isn’t a small, obscure company. It they kept sliding after that, closing last Friday earnings front might suffer lower and lower Amid the uncertainty about growth and
is one of China’s top-three frozen food com- at 68 cents, down 34% for the week and 72% market valuations. inflation, however, investors might wait for
panies and, before the slump a week ago, below the high of $2.44 set in October. Case in point: sportswear maker China those forward earnings to be delivered before
it had a market value of $1.4 billion. It had Hongxing Sports. Last Monday, the compa- bidding higher for shares in China Hongxing
snared the rights to be the exclusive supplier Tighter margins, lower valuations ny reported a robust set of results for 2007, Sports. Shares in the company edged up 1.5%
of frozen foods to the 2008 Beijing Olympics, It is unlikely that Synear is the only compa- which were above analysts’ expectations. last week following its robust results, closing
and it had Hong Kong action-superstar Jack- ny affected by rising costs in China, and an- Revenue for the year was up 45% to 2 billion CONTINUES NEXT PAGE
ie Chan endorsing its products. While every-
one knew that raw food prices were spiral-
ing higher, analysts figured that China’s one
billion-plus population of increasingly afflu-
ent consumers made this company a slam-
dunk growth play.
Then, last week, Synear announced that its
revenue for 4Q to December had only inched
up 1.3% to 596.6 million renminbi ($117.2
million), while its earnings had slumped
50.3% to 63.8 million renminbi, well below
expectations. For the full year, Synear’s rev-
enue was up 18.9% to 2.2 billion renminbi,
while earnings increased 17.2% to 475.8 mil-
lion renminbi. In 2006, the company’s rev-
enue and earnings had increased by a more
robust 25.4% and 67.1% respectively.
Synear’s officials are blaming its disap-
pointing results on skyrocketing pork prices,

Synear
Volume (‘000) Price ($)
300000 2.5
2.3
250000
2.1
1.9
200000
1.7
150000 1.5
1.3
100000
1.1
0.9
50000
0.68
0 0.5
Feb 23, 2007 Feb 29, 2008

China Hongxing
Volume (‘000) Price ($)
350000 1.4
1.3
300000
1.2
250000 1.1

200000 1
0.9
150000 0.8
100000 0.7
0.66
50000
0.5
0 0.4
Feb 23, 2007 Feb 29, 2008

Yangzijiang
Volume (‘000) Price ($)
700000 2.8
2.6
600000
2.4
500000
2.2
400000 2
300000 1.8
1.6
200000
1.4
100000 1.2
0 1.08

April 20, 2007 Feb 29, 2008

16 • THEEDGE SINGAPORE | MARCH 3 , 2008
CORPORATE
‘The worst could be over’
FROM PREVIOUS PAGE
last Friday at 66 cents, which is about 12.5
times 2009 earnings.
Elsewhere in the market, China-based
shipbuilder Yangzijiang is another hot Chi-
na play that could be hit by lower profita-
bility this year. “Going forward, we believe
margins have peaked and forward margins
will be impacted by rising steel and labour
costs and the strengthening of the yuan
against the US dollar given that the bulk of
its contracts are in the US dollar,” says a re-
port by DBS Vickers dated Feb 26. “These
unfavourable conditions put Yangzijiang at
greater risk as vessel prices are contracted
now but deliveries are scheduled up to five
years from now.”
For the financial year ended Dec 31, 2007,
Yangzijiang’s revenue was up 66% and earn-
ings were up 91%. Instead of seeing a boost
in its share price, however, the shipbuilder’s
shares fell by two cents to $1.21 immediate-
ly after its results were out. DBS Vickers has
cut its recommendation on the company to
“hold” from “buy”, and reduced its price tar-
get to $1.45 from $3.04.
Is there anywhere to hide from the rising cost
of food and other commodities? Some market
watchers suggest that companies producing al-
ternative foods could be interesting. One such
company is China Kangda, which produces
rabbit and chicken meat, potential alternatives
to the pork that is in short supply. The compa-
ny is also the largest Chinese exporter of rab-
bit meat to Europe, Russia and Japan.
Last Tuesday, the company announced that
earnings for 2007, were up 26.6% to 109 mil-
lion renmimbi, on a 43.7% increase in sales
to 728 million renmimbi. Shares in the com-
pany have climbed 25% since the beginning
of the month to 34.5 cents last week. At cur-
rent levels, the stock is being valued at less
than six times forward earnings.
However, even if the company sees strong-
er growth at the expense of pork producers
in China, it is likely to be hampered by ris-
ing labour and transport costs that are pres-
suring other companies. And, shares in Chi-
na Kangda don’t look much cheaper than
most other food-related companies in China.
Synear is now trading at a forward price-to-
earnings ratio (PER) of eight times. Celes-
tial Nutrifoods and Youcan Foods, are trad-
ing at forward PER of 4.6 times and 10 times
respectively.
Will Synear bounce back?
In fact, some analysts see shares in Synear
recovering from the lows they hit last week.
“With pork costs likely to peak in 1Q2008F,
we believe the worst could be over for Syn-
ear,” says a report by Nomura dated Feb 25.
Other brokerage houses like UOBKayHian have
“buy” calls on the stock too. CIMB called the
stock a “trading sell” last week, but its low-
ered price target of $1.14 is still 43% more
than Synear’s current market price.
Terence Wong, head of research at DMG
& Partners, reckons that the plunge in Chi-
While ‘agflation’ puts
Synear and other food-
related companies in
an especially danger-
ous position, analysts
are also going cold on a
variety of other China-
based companies be-
cause of rising inflation
na-based stocks over the past fortnight is
temporary. “The market has been punishing
S-chips since their peak in Oct 2007, and Syn-
ear’s crash has been a strong catalyst lead-
ing to the heavy sell out this week,” he tells
The Edge Singapore. “Investors shouldn’t
be perturbed by languishing S-chips, rather,
they should delve into the fundamentals of
each company and use this time as a buy-
ing opportunity.”
Perhaps indicating that the market has
overreacted to its poor 4Q results, Synear’s
CEO Li Wei picked up 7.3 million shares in
his company on Feb 26, according to share-
holder filings with Singapore Exchange. Li
now owns 33.27% of the company after the
purchase. “Growing urbanisation and chang-
ing consumer lifestyles in China, are expected
to drive popularity and demand for conven-
ience-food products,” Synear’s officials say,
responding to questions from The Edge Sin-
gapore by e-mail. “We are therefore increasing
utilisation of our Chengdu plant in Sichuan
Province, while our Huzhou and Guangdong
plants are also expected to commence oper-
ations in 2008.”
But nervous investors might just prefer to
wait until the impact of this growing demand
on Synear’s bottom line becomes clearer. E
 18 • THEEDGE SINGAPORE | MARCH 3, 2008

COVERSTORY
PICTURES: SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

por
ly
uni
ty a
at p
cos
ITs

ITs
gre
DP
in t
jus
stro
er y
of t
sio
dou
por
also
futu
the
exi
For
Lim: The REIT cia
model is in
definitely still psf
viable. It’s a The
product that the

SURVIVING
has a part
to play in two
the property ove
market here. 24
last
dra

the crunch
firm
REI
acc
gro
com
prim
fina
and
ITs
| STORIES BY GOOLA WARDEN | ARA Asset Management has emerged unscathed from the funding enue comes from base management, equ
performance, acquisition and divest- acq
crunch in the REIT market. Now, CEO John Lim wants to double its assets

J
ohn Lim isn’t losing any sleep
over the convulsions that real
estate investment trusts (RE-
ITs) have gone through re-
cently. Instead, the CEO of
ARA Asset Management — the only
manager of REITs and property funds
listed in Singapore — has been on
the prowl for opportunities to dou-
ble his company’s $10 billion worth
of assets under management (AUM)
within three years. He has also been
on road shows to promote shares in
the company.
ARA Asset Management manages
five privately held property funds as
well as four public-listed REITs: Sun-
tec REIT and Fortune REIT, which are
listed on the Singapore Exchange;
Prosperity REIT, on the Hong Kong
Stock Exchange; and AmFIRST REIT
on Bursa Malaysia. “As long as you
have quality assets and quality lend-
ers, I don’t see a problem,” Lim says,
in a recent interview with The Edge
Singapore.
Tell that to investors in the many
REITs that have been bashed down
over the last eight months after being
forced to shelve equity-capital-raising
exercises amid the turmoil in finan-
cial markets. While they are off their
lows set six weeks ago, at least 12
of 20 REITs (and one trust) listed in
Singapore are trading at discounts to
their net asset values (NAVs) — with
three at discounts of at least 50%.
Five of them offer forward yields of
more than 8%.
That slump in valuations of RE-
ITs already appears to be having
under management within three years to $20 billion, a level that would
rival CapitaLand’s real estate asset management business. No wonder
institutional investors are excited about the stock.
an impact on their managers and
shareholders. On Feb 19, the CEO
of MacarthurCook Industrial Trust,
Chris Calvert, resigned just eight
weeks after the REIT dropped plans
to raise fresh equity capital. Earli-
er that month, Macquarie Bank in
Australia was reported to be con-
templating selling its 26% stake in
Macquarie MEAG Prime REIT (MMP
REIT). The manager of MMP REIT,
Macquarie Pacific Star Prime REIT
Management, which is 50%-owned
by Macquarie Bank, has since said it
is planning a strategic review of the
REIT. Meanwhile, Chan Wang Kin, a
major shareholder of Cambridge In-
dustrial Trust Management, has sold
his stake in the REIT management
company to Oxley Capital.
However, Lim isn’t worried about
ARA succumbing to the crunch. He
says the recent developments in the
sector are just a passing squall, the
result of excessive optimism built
up over the last few years, when the
real estate market was on a tear and
REITs came to be viewed as invest-
ment instruments offering growth in-
stead of just high yields. Once every-
one adjusts their expectations, REITs
will prove to be viable securitisation
vehicles again, and ARA will face little
Suntec REIT
Volume (‘000) Price ($) 2.1
120000
100000 2 100000
80000
1.9
1.8
60000
1.7
40000
1.6
20000 1.5
0 1.4
March 2, 2007 Feb 28, 2008
difficulty in expanding its AUM. “The
REIT model is definitely still viable,”
Lim says. “It’s a product that has a
part to play in the property market
here. In most REITs, the assets are
performing, but there’s a perceived
weakness in the structure.”
Indeed, this could well be a good
time for investors with the stomach
for risk to wade into REITs, say sev-
eral industry watchers. “The irra-
tionality of the market has dragged
down REITs even though they are a
proxy for direct real estate,” says Pe-
ter Mitchell, CEO of the Asian Pub-
lic Real Estate Association (Aprea).
“This is creating excellent buying
opportunities for highly capitalised,
lowly geared players.” REITs have
ment fees from its four REITs. The rest wit
comes from fees from managing pri- wo
vate real estate funds. These include tha
portfolio management fees, perform- last
ance fees and return on seed capital. REI
“It’s a very low-capital, knowledge- and
intensive, high-ROE business,” says
Lim. “A lot of people tried to dupli- the
cate it — but can’t.” dea
ARA REIT For the 12 months to Dec 31, 2007, ass
ARA made a net profit of $34 million tor
120000
Volume (‘000) Price ($) 1.45
on revenues of $62.1 million. Ana-
1.35
1.25 lysts forecast a 9% rise in earnings
80000 1.15 this year to $37 million, and a further R
1.05 27% next year to $47 million. They
60000 0.95
0.85 expect the company to declare div- N
40000 0.795 idends of 4.5 cents and 5.7 cents a
20000 0.65 share for 2008 and 2009 respective- C
0.55
0 0.45
ly. At current levels, shares in ARA C
Jan 11, 2007 Feb 28, 2008 are trading at 11 times and 8.8 times A
forecast earnings for 2008 and 2009 S
respectively, and at a forward divi- C
staged a strong recovery over the last dend yield of 5%. A
fortnight, with some of the hardest
hit bouncing the most. Coping with tough markets A
Lim says ARA received a warm A former Prudential Real Estate ex- F
reception from institutional inves- ecutive director and DBS Land em- P
tors during a road show over the last ployee, Lim formed ARA in part- K
couple of weeks. Shares in ARA have nership with Hong Kong’s Cheung M
risen strongly from their recent lows Kong Holdings in 2002. Justin Chiu, C
of 56 cents four weeks ago, partly be- Cheung Kong executive director and M
cause of the investor road show, Lim chairman of ARA, regularly attends F
adds. “We were received very well ARA events. Lim listed the company L
and our share price rose 20%,” he on the SGX last December, following
says. Analysts think the stock could an IPO at $1.15 cents a share that A
go higher. Brokerage houses such as raised $236 million, hitting the mar- C
Credit Suisse and DBS Group Research ket just as the sentiment on REITs S
have “buy” recommendations on the was turning sour. Until last year, RE- M
stock, with price targets of $1.15 and ITs were easily raising cash from in- F
$1.14 respectively. vestors and lenders, and facing little
About 60% of the company’s rev- difficulty expanding their investment
 THEEDGE SINGAPORE | MARCH 3, 2008 • 19

COVERSTORY
portfolios on terms that immediate- One Raffles Quay (ORQ), a top-end “Now we talk about 100-basis-point
ly enhanced their distribution per commercial building in the CBD. spreads or maybe higher.”
unit (DPU). That’s because proper- Comprising 1.3 million sq ft of let-
ty assets were being offered for sale table space, ORQ was completed in Unwinding the excesses
at prices that yielded more than the 2005, just as it was becoming clear Why didn’t Cheung Kong and Keppel
cost of the debt and equity the RE- that Singapore faced an acute short- Land simply hold on to the property
ITs needed to raise. age of prime office space. However, until all its tenant leases had been re-
In that heady environment, RE- many of ORQ’s early tenants had newed at higher rents? Because the
ITs expanded their portfolios ag- locked in rentals of as low as $5.50 advent of property securitisation vehi-
gressively, and their fast-growing psf versus $12 psf for similar proper- cles like REITs had got them used to
DPUs attracted investors interested ties in the area last year. That meant being able to quickly monetise their
in their growth potential rather than ORQ, which was equally owned by developments and use the funds for
just their yields. REITs seen to offer Keppel Land, Cheung Kong Holdings other projects. “Cheung Kong is not
strong growth potential traded at low- and Hongkong Land, wouldn’t gener- in the business to invest — they build
er yields than others, driving many ate much income compared with its and sell,” Lim says, when asked about
of them to adopt aggressive expan- market value for some years. it. Moreover, the managers of REITs
sion strategies. Besides targeting to However, that didn’t deter two and property funds were hungry for
double or even triple the size of their of ORQ’s three owners from push- assets to bulk up and grow. “It’s a
portfolios, the rush for DPU growth ing ahead with plans to securitise great asset and we’re very proud to
also prompted some REITs to bet on their stakes. In simultaneous deals own it,” Lim adds.
future rental potential of the assets last year, Keppel Land agreed to Nevertheless, the result of the bor-
they were buying rather than their sell its one-third stake in ORQ to K- rowing and growth binge in which
existing cash-generation potential. REIT Asia for $941.5 million in late some REITs indulged could mean sig-
For instance, when Allco Commer- July, while Cheung Kong Holdings nificantly slower asset growth for the
T cial Trust acquired 55 Market Street offloaded its one-third stake in the sector in the immediate future, some
in 2006 for $72.5 million, or $981 building at the same price to Sun- market watchers say. With gearing
ll psf, it was with vacant possession. tec REIT — one of four managed by levels nudging the 60% regulatory
The trust upgraded the property and ARA. In addition, both Keppel Land ceiling, and their units trading at a
then leased it to tenants. and Cheung Kong agreed to provide fraction of their NAVs, some REITs
As chronicled in our Cover Story the two REITs with “rental support” actually have no room to raise mon-
two months ago (“Funding crunch payments of $103.4 million each ey for more acquisitions in the short
overshadows REITs”, Issue 299, Dec over a period of 54 months to com- term. Among the REITs in this pre-
24 to 30), the situation changed late pensate for the initial few years of The securitisation of stakes in One Raffles Quay triggered a re-assessment of risk dicament are K-REIT Asia, Maple-
last year. Property prices had soared low rental income. While analysts in the REIT sector tree Logistics Trust and Allco Com-
dramatically and interest rates were called the 54-month stretch of rental mercial REIT.
firming, making it more difficult for support to make the deal work “ag- before the purchase and a balance ther one-third of its debt matures at One way out is to persuade their
REITs to acquire properties on yield- gressive”, some still thought Keppel sheet that had a low gearing of 23%, end-March. shareholders to pump in fresh eq-
accretive terms and deliver the lofty Land and Cheung Kong weren’t get- it easily digested its one-third stake Lim doubts that Suntec REIT will uity capital to reduce their gearing.
growth in DPUs that investors had ting maximum value for ORQ. in ORQ. “We didn’t have an issue,” face difficulty refinancing its debts. However, with many REITs trading
come to expect. Then, the US sub- Within months, it became clear Lim says. “For Suntec REIT, ORQ “We have already lined up all the at yields that are higher than the
prime mortgage bust struck, rattling that K-REIT Asia had bitten off more was only 20% of our asset size. It financing for the $178 million that yields on the property assets they
financial markets around the world than it could chew. The purchase of was very easy to finance. We just comes due in April,” he says. Last own, it will be tough trying to con-
and scuppering plans by several RE- a one-third stake in ORQ was its first used debt.” Following the acquisi- Thursday, the manager of Suntec vince investors to come up with
ITs to prime their balance sheets with acquisition since listing in April 2006. tion, Suntec REIT’s gearing is still a REIT, announced it will issue $250 the money. Still, with determined-
ent, equity-raising exercises for ongoing Almost equivalent to the size of its manageable 35%. million worth of bonds of five-year enough backers, some of them might
est- acquisitions. That left some of them existing portfolio, the deal was es- Even so, units in Suntec REIT were maturity, convertible into cash and succeed.
rest with higher gearing levels than they pecially ambitious. Amid the doubts also battered by nervous investors in new ordinary units. For instance, K-REIT is attempting
pri- would have liked. Among the REITs about whether the acquisition would 2H2007. Early last month, Moody’s But Lim concedes that funding it to raise some $700 million through a
ude that dropped plans to raise equity late be immediately yield-accretive be- downgraded its outlook on the REIT’s is becoming more expensive. With rights issue now to repay the bridg-
rm- last year were Allco Commercial, K- cause of the turmoil in financial mar- “Baa1” credit rating to negative, cit- units in Suntec REIT trading at forward ing loan from Keppel Corp. The
tal. REIT Asia, Mapletree Logistics Trust kets, units in K-REIT were savaged ing near-term refinancing risks, giv- yields of 6% to 7% now versus prop- rights issue is effectively being un-
ge- and MacarthurCook Industrial REIT. and it was unable to raise the funds en the tough conditions in the cred- erty yields of 4.5% to 5%, it doesn’t derwritten by Keppel Corp and Kep-
ays ARA was relatively unscathed in it needed from the market. It eventu- it markets. About 40% of its total make sense to raise equity, he says. pel Land, which together own more
pli- the slump. But it was involved in a ally fell back on a $942 million bridg- debt is related to a bridging facili- In addition, lenders are more selec- than 70% of K-REIT. If other share-
deal that helped trigger a broad re- ing loan from Keppel Corp. ty for the purchase of its one-third tive now, and borrowing costs have holders of K-REIT don’t pony up
07, assessment of risk in the REIT sec- Suntec REIT fared much better. stake in ORQ, which falls due in eight gone up. “We use to borrow at 40 to for their portion of their rights, the
ion tor — the securitisation of stakes in With an asset size of $3.9 billion months, according to Moody’s. A fur- 50 basis points [above Sibor],” he says. CONTINUES NEXT PAGE
na-
CITIGROUP RESEARCH, BLOOMBERG
ngs
her REIT valuations (as at Feb 26)
hey
div- NAME PRICE MARKET NAV GEARING DPU ($) YIELD (%) MANAGER MAJOR SHAREHOLDERS
sa ($) CAP ($ MIL) ($) (%) FY2007 FY2008E FY2007 FY2008
ve- CapitaMall Trust 3.300 5,389.0 2.240 34.7 0.13 0.14 4.03 4.24 CapitalMall Trust Mgmt CapitaLand (29.3%)
RA CapitaCommercial Trust 2.150 2,978.0 2.840 23.9 0.09 0.10 4.05 4.79 CapitaCommercial Trust Mgmt CapitaLand (29.8%), PGGM (10.6%)
mes Ascendas REIT 2.270 2,916.0 1.490 28.9 0.13 0.14 5.59 6.08 Ascendas MGM Funds Mgmt Ascendas Land (17%), MGM Singapore (6.3%), Macquarie Bank (4.9%)
009 Suntec REIT 1.580 2,353.0 2.530 35.6 0.08 0.11 5.19 7.15 ARA Trust Mgmt Asean Investment (5%)
ivi- CDL Hospitality Trust 2.210 1,821.0 1.610 18.7 0.09 0.11 4.07 5.02 M&C REIT Mgmt M&C (38%), Istithmar Hotels (8%), Siong Lim (8%)
Ascendas India Trust 1.080 812.0 1.850 4.0 NA 0.06 NA 5.19 Ascendas Property Fund Trustees Ascendas Land (17%), General Electric (11.9%), JPMorgan (8.3%),
Capital Group (8.2%), Great Eastern Life (6.2%)
Ascott Residence Trust 1.360 606.8 1.600 33.1 0.08 0.10 5.66 6.99 Ascott Residence Trust Mgmt CapitaLand (27%), The Ascott Group (18%)
ex- Frasers Centrepoint Trust 1.350 822.0 1.160 29.2 0.07 0.07 4.81 4.89 Frasers Centrepoint Asset Mgmt FCL (51.2%), PGGM (6%), Standard Life (6%), AIG (5%)
em- Parkway Life REIT 1.180 710.0 1.360 4.0 0.02 0.07 1.95 5.68 Parkway Trust Mgmt Parkway Group (35%), Symphony International (6%), Matthews Intl (5%)
art- K-REIT Asia 1.610 399.0 3.780 53.9 0.09 0.09 5.47 5.34 K-REIT Asia Mgmt Keppel Land (42%), Keppel Real Estate Investment (30.6%), JPMorgan (5%)
ung Mapletree Logistics Trust 0.945 1,047.0 0.940 54.6 0.07 0.07 6.98 7.41 Mapletree Logistics Trust Mgmt Temasek Holdings (30%), UBS (6.9%)
hiu, CapitaRetail China Trust 1.580 974.9 1.010 29.7 0.07 0.08 4.24 5.00 CapitaRetail China Trust Mgmt CapitaLand (20%), CapitaMall Trust (20%)
and Macquarie MEAG Prime REIT 1.250 1,190.0 1.610 29.0 0.06 0.07 4.96 5.60 Macquarie Pacific Star Prime Mgmt Macquarie Bank (26%), AIG (11%), Morgan Stanley (10%)
nds Fortune REIT (HK$) 5.500 4,467.0 9.010 23.5 0.35 0.36 6.38 6.53 ARA Asset Mgmt Cheung Kong (32.4%), PGGM (14.8%), DBS (6.5%)
any Lippo Mapletree Retail Trust 0.690 731.7 0.910 0 0.03 0.06 3.91 8.41 Lippo-Mapletree Indonesia Lanius (27.1%), Mapletree Investments (12%), CPI Capital (8.6%)
ing Retail Trust Management
hat Allco Commercial REIT 0.860 607.1 1.500 43.6 0.07 0.08 7.79 9.19 Allco (Singapore) Allco Finance Group (17.3%), Capital Research (6.5%)
mar- Cambridge Industrial Trust 0.700 355.8 0.760 35.1 0.06 0.07 9.00 9.29 Cambridge Industrial Trust Mgmt Capital Research (6.6%), Schroders (6%)
ITs Saizen REIT 0.825 372.0 0.728 30.0 0.06 0.06 7.15 6.91 Japan Residential Assets Manager JHYP (35.4%), Argyle Street (12%), Japan Opportunities (11.7%)
RE- MacarthurCook Industrial REIT 1.010 263.0 1.300 7.8 0.07 0.09 7.33 8.81 MacathurCook Investment Managers UBS (19.6%), Lion Capital (9.1%), USS (8.4%), Indus Capital (5.8%)
in- First REIT 0.740 201.5 0.960 15.5 0.07 0.07 9.73 9.86 Bowsprit Capital Corp PT Lippo Karawaci (20.2%)
ttle
ent
20 • THEEDGE SINGAPORE | MARCH 3, 2008

COVERSTORY
Managers of MMP REIT contemplate M&A deal

THE EDGE SINGAPORE

W
isma Atria and Ngee Ann City on Or-
chard Road are among the best known
and most visited shopping malls in Sin-
gapore. But the real estate investment trust
(REIT) that owns them, as well as the manage-
ment company that runs it, might soon become
distant memories.
Amid the funding crunch that has sparked
a reassessment of risk and return across the
REIT sector, units in Macquarie MEAG Prime
REIT (MMP REIT) had been knocked down by
some 16% from their highs of $1.26 set last
April to $1.06 last month. Unhappy with this
low valuation, Australia’s Macquarie Bank be-
gan pushing the manager of the property trust,
Macquarie Pacific Star Prime REIT Management,
to do something to realise the value of its un-
derlying assets. Macquarie Bank owns 26% of
MMP REIT and 50% of the management com-
pany, and it is reportedly prepared to sell its
stake in the REIT.
Last week, MMP REIT’s manager announced
it would conduct a “strategic review” and come
up with a solution. “This exercise could see the
possibility of an asset sale, or a merger with an-
other REIT or company,” says Franklin Heng,
CEO of Macquarie Pacific Star Prime REIT Man-
agement. Or, it could simply involve the entire
REIT being sold to another party, he adds.
“It is Macquarie’s belief that everyone togeth-
er could get a higher price,” says Heng. “The
benefit of this exercise is such that it would
close the value gap between the market price of
MMP REIT’s units and its NAV.” In fact, units of
MMP REIT have recovered to the highs they set
in April on news of a possible sale. At current
levels, units in MMP REIT are trading at a 23%
discount to its NAV (net asset value) per share
of $1.61, and offer forward yields of 5.6%.
MMP REIT owns 27% of Ngee Ann City, a
Heng: This exercise could see the possibility of an as-
set sale, or a merger with another REIT or company
leasehold property expiring in 2072; and 74.2%
of Wisma Atria, also a leasehold property that
expires in 2061. Last year, MMP REIT acquired
seven properties in Tokyo and a retail mall in
Chengdu. As at Dec 31, 2007, the REIT had an
asset size of $2.2 billion. That’s well above its
market capitalisation of $1.18 billion.
While the sale of MMP REIT to another par-
ty is potentially bad news for its manager, Heng
says he is fully behind efforts to realise the value
of the REIT because he has a large investment
in it. “The public market has not accorded us
the right valuation and there is a disconnect,”
he says. “This gives us an opportunity to seek
a transaction that can close the gap.”
MMP REIT
Volume (‘000) Price ($)
60000
50000
40000
30000
20000
10000
0 0.95
March 2, 2007 Feb 27, 2008
In the past, Heng and his team had attempted
to improve MMP REIT’s value by expanding its
portfolio and distribution per unit (DPU). How-
ever, soaring property values and higher fund-
ing costs have made it tough to find yield-accre-
tive acquisitions now. In fact, with MMP REIT’s
units yielding more than 5% on the properties
it owns, it would be better off divesting its as-
sets and returning money to its investors. The
REIT initiated a share buyback programme last
December, but it is now on hold because of the
strategic review it is undertaking.
Heng says he had been approached with of-
fers for large stakes in MMP REIT in the past.
But these offers were contingent on the acquir-
er’s gaining management rights over the REIT.
“When it came to a management rights discus-
sion, I could never deliver because it was relat-
ed to our shareholders,” he says. With Macqurie
Bank now willing to cede control, Heng has more
flexibility to cut a deal. “In this exercise, I can
now freely discuss management control with any
strategic partner. If they can take 100% of the
company, we can unlock further value.”
A spokeswoman for Macquarie Bank con-
firms that it has received offers for its stake in
MMP REIT, but that it will make no decisions
until the REIT completes a review of its op-
1.3 tions. “Also, in respect of confidentiality, we
1.24
are unable to disclose whom we have received
1.2 offers from,” she says.
A sale won’t be easy to pull off, though. If
1.15
the REIT is sold to a company or a property
1.1
fund, there would be corporate tax and stamp
1.05 duty to consider. “If there are any leakages in
1 the sale, it would reduce the value to MMP
REIT’s unitholders,” says Heng. Selling MMP
REIT to another REIT would be more tax-effi-
cient, but many REITs are now facing difficul-
ty raising money for acquisitions. “You’ve seen
the deferral of equity raisings by some REITs.
They have demonstrated it is not easy to raise
money. It’s tax-efficient, but it is unclear wheth-
er REITs have the capital in place.”
One property group with the financial mus-
cle and motive to buy MMP REIT is CapitaLand,
some market watchers say. The real estate gi-
ant is jointly developing ION Orchard with Sun
Hung Kai Properties, which is adjacent to Wis-
ma Atria. Meanwhile, John Lim, CEO of ARA
Asset Management, says he would be interest-
ed in any opportunity at the right price. “As a
fund manager, we would take a look at MMP’s
assets,” he says. “Most Singapore REITs have
good assets.”
Despite the strong likelihood that MMP REIT
will soon be bought out, Heng still believes that
REITs are viable securitisation instruments. “REITs
are about making quality investible proper-
ties available to retail investors,” he says. The
problem is that investors have pursued REITs
that offered growth potential instead of judg-
ing them on the tax-free, stable yield they of-
fer, he adds. “Now, with [the] subprime [cri-
sis], we’ve come back to reality.” E

ARA’s Lim unfazed by competition

FROM PREVIOUS PAGE
REIT might end up being more than
90%-owned by the Keppel group.
That could result in its being taken
private by its parent companies on
the cheap. K-REIT is currently trad-
ing at a hefty 57% discount to its
NAV and a forecast yield of 5.3%.
Its property yields based on infor-
mation in its latest financial state-
ment are 4% to 4.5%.
Alternatively, debt-laden REITs
could just sell some of their proper-
ties to raise cash or agree to a take-
over by another better-capitalised
REIT or property fund. Analysts reck-
on that this year could be consolida-
tion time for REITs. “With no clear
growth strategy and the rising cost
of capital, some REITs are trading at
hefty discounts to their NAVs as well
as offering high single- and double-
digit yields,” says Wendy Koh, an an-
alyst at Citigroup, in a recent report.
“This makes them potential takeover
targets, especially if they have loose
shareholding structures.” Among the
REITs that might be sold or disman-
tled are MMP REIT, Allco Commer-
cial and MacarthurCook Industrial,
say analysts.
ARA’s Suntec REIT was once con-
sidered a possible takeover target be-
cause of its loose shareholding. (Te-
masek Holdings owns 5.98%, UBS
5.2%, Asean Investment Corp 5%,
Macquarie 3.4% and Perennial Invest-
ment Partners [Australia] 6.2%.) To-
day, however, its size — it is the sec-
ond-largest REIT listed on the SGX,
behind CapitaMall Trust — and rela-
tively low gearing make it a poten-
tial acquirer rather than a takeover
target. “I can’t see any constraint to
our growth if there’s an opportuni-
ty to buy,” Lim says. Are Suntec and
ARA eyeing the assets of any partic-
ular REIT? “We will leave that to the
market to decide,” says Lim, with a
nervous laugh. “We have our view
but it’s not convenient to share.”
ARA hunts for assets
Whatever it is that Lim is consider-
ing buying, he might find it more
convenient to use a property fund
backed by private-equity money rath-
er than a public-listed REIT. With the
higher cost of debt and equity and
the stock market likely to remain
volatile, it could be tough to organ-
ise an acquisition that is immediate-
ly yield-accretive to a REIT. That is
especially so with the intense com-
petition for property assets in Asia,
says some industry players. “There
are very few quality assets we can
acquire, especially when we have a
lot of funds coming to Asia, paying
top dollar for assets,” says Franklin
Heng, CEO of Macquarie Pacific Star
Prime REIT Management.
As it happens, ARA has been rais-
ing money for new property funds
recently. In December, the compa-
ny closed its Asia Dragon Fund with
US$1.2 billion ($1.7 billion). The larg-
est investor in the fund is US-based
pension fund CalPERS, which put
in some US$500 million. Eight oth-
er US pension funds invested a total
of US$296 million.
Lim is coy at first about exactly
what it will do, only letting on that
distressed assets are his first love and
he has been looking for opportuni-
ties in China, Vietnam and Thailand.
When pressed, however, he says the
fund has committed to the acquisi-
tion of a prime residential property
in Singapore but has yet to complete
the transaction. “It was a sizeable
acquisition,” he says. “It is under
construction. We believe the gov-
ernment will be successful in trans-
forming the economy and I cannot
see why the residential market can-
not continue to grow. I’m one who
doesn’t believe that the residential
market will come down.”
He is less optimistic about com-
mercial property, though, especial-
ly after the steep run in rentals and
capital values over the last couple of
years. “I wouldn’t buy a building now
because of the limited upside of 5%
to 10%,” he says. “We won’t see the
type of gain we saw in the last three
years.” But he adds that he doesn’t
think the market for office properties
will weaken much either.
However, Lim is careful to explain
that these private pools of capital
that ARA manages are targeting as-
sets that its REITs couldn’t purchase
because they wouldn’t be immedi-
ately yield-accretive. “Yields are not
the driving factor for funds,” Lim
notes. “Our strategy [for the funds]
is development, repositioning assets
or factors that don’t compete with
REITs, such as assets without yields
which have to be worked on.” Once
the assets mature and begin produc-
ing income, they could be sold to a
REIT managed by ARA. “But at the
outset, our funds are not competing
with our REITs,” Lim stresses.
Besides property funds, ARA is
working on bringing two more REITs
to market soon. Lim hopes to list
them when stock-market conditions
improve. “We don’t have a hospital-
ity trust and an industrial REIT,” he
hints, when asked about the kind of
assets they will own.
ARA is by no means the only play-
er in this field. The 900-pound gorilla
in the sector is none other than Cap-
itaLand. The property behemoth has
five listed REITs, four trading on the
SGX and one on Bursa Malaysia. It
also manages and co-owns at least 15
property funds. Its total AUM stood
at $17.7 billion at end-2007. Accord-
ing to CapitaLand’s CEO Liew Mun
Leong, the group wants to grow its
AUM to $25 billion within the next
three to five years. It is looking at
launching five new REITs, including
a warehouse and logistics trust, and
has just launched a US$300 million
Vietnam fund.
Lim is unfazed by the competition.
In fact, he has larger ambitions than
just matching his competitors in Asia.
“If Blackstone can go to US$100 bil-
lion, why can’t we?” he says, refer-
ring to the asset size of the US-based
private-equity-fund group. Could the
turbulence in financial markets and
a possible economic recession cloud
ARA’s outlook? Lim thinks not. The
reason is that the company operates
a fee-based business. While its fee
income could contract if its AUM
shrinks, Lim says the assets held by
most REITs and property funds are
conservatively valued.
“No REIT [asset] has a valuation
that is going to collapse tomorrow,
especially in Singapore and Hong
Kong,” he says. After the tailspin
the sector has been through, that’s
good to know. E

With a massive land bank of 1.3 million ha
— roughly 18.5 times the size of Singapore
— Golden Agri effectively has the world’s largest
amount of land for new plantations
Golden Agri-Resources plants up,
seeks to close valuation gap
| BY SUNITA SUE LENG |
F
ranky Oesman Widjaja, chairman and
CEO of Golden Agri-Resources Ltd, and
scion of one of Indonesia’s richest fami-
lies, made a rare appearance before the
media at the Fullerton Hotel last Monday.
Widjaja heads Indonesia’s largest oil palm plan-
tation company and unveiled what had been a
record year for the company. Those numbers,
which put its net profit in the billion-dollar
league for the first time, come as the company
is rapidly scaling up and attempting to reassert
its dominance of the palm oil industry.
Growers and producers of palm oil like Gold-
en Agri have not had it so good in years. The
crop, used largely to make cooking oil, is now
the most consumed edible oil in the world.
Swelling demand from fast-growing countries
like China and India as well as new demand
in recent times from producers of biodiesel is
warring with tight supply. This has kept palm
oil prices at levels that have astonished even
the most seasoned industry players. “Every day
is a new record,” says Widjaja, 50, who has
a degree in commerce from Japan’s Aoyama
Gakuin University.
Despite racing up some 55% last year,
palm oil prices have run up a further 23% this
year, hitting a new high of RM3,827 ($1,646)
a tonne last Wednesday. For the year to Dec
31, 2007, Golden Agri saw its revenue rise two
thirds to US$1.87 billion ($2.62 billion) and
its net profit rocket 2.5 times to US$1.17 bil-
lion. Gross profit margins swelled from 24%
to 35%. Shareholders would not have been
disappointed: The company doubled its divi-
dends for a payout ratio of 21% and commit-
ted, for the first time, to pay up to 30% of un-
derlying profit each year.
These bumper times are bolstering the
cash coffers of plantation companies in Ma-
laysia and Indonesia, which together account
for some 86% of all palm oil produced global-
ly. Because this is a business that thrives on
economies of scale, they are wasting no time
planting new trees and expanding their land
bank. Widjaja has grand plans for Golden
Agri, which is 48%-owned by the Sinar Mas
group, whose 84-year-old founder Eka Tjipta
Widjaja is listed by Forbes as Indonesia’s fifth-
richest man.
Oil palm plantation companies are reaping bumper profits
and Golden Agri, the world’s second-largest, is on a planting
spree in a concerted move to become No 1 again. Yet, its
shares still trade at a discount to its smaller peers.
Widjaja: We hope to catch up [with Sime Darby]. We are determined to do it.
Largest plantation land bank globally
The younger Widjaja, one of Eka’s many chil-
dren, wants to make Golden Agri the world’s
biggest oil palm plantation again. It held this
title until Malaysian conglomerate Sime Dar-
by merged its plantation business with Golden
Hope and Kumpulan Guthrie last year, swiftly
catapulting Sime Darby to top spot, with its
planted areas covering some 540,000ha.
In comparison, Golden Agri has 360,000ha
of land planted. That makes it not only Indone-
sia’s largest plantation firm but also 1.5 times
larger than its closest competitor, Astra Agro
Lestari. Golden Agri’s trump card, however,
is its massive land bank. Spanning 1.3 million
ha — roughly 18.5 times the size of Singapore
— Golden Agri effectively has the world’s larg-
est amount of land for new plantations. And
that, it reckons, will allow it to regain its lead-
ership position in the world.
Last year, it planted up 53,000ha, increas-
ing its hectarage by about a fifth. This year,
THEEDGE SINGAPORE | MARCH 3 , 2008 • 21
GOLDEN AGRI-RESOURCES
CORPORATE
palm oil production stands to increase 7% this
year in Malaysia. In Indonesia, production is
due to rise a sharp 19% this year — the larg-
est annual rise in absolute terms based on
available records.
However, even if prices moderate from their
current lofty levels, plantation CEOs like Wid-
jaja aren’t ruffled. That’s because with costs
in Indonesia running at US$200 to US$300 a
its goal is to plant anoth- tonne, margins from the plantations business
SAMUEL ISAAC CHUA/THE EDGE SINGAPORE
er 60,000ha. “We hope to are at levels not seen in years. Golden Agri
catch up [with Sime Dar- produced two million tonnes of palm prod-
by]. We are determined to ucts last year and crude palm oil accounted
do it,” Widjaja says, refer- for 43% of its revenue.
ring to the company’s aim It operates 31 mills that can process eight
to regain its size leadership million tonnes of crude palm oil. It also proc-
in the industry. Golden esses and sells palm kernel produces, refined
Agri’s plantation land is palm products such as cooking oil and mar-
located mostly in Sumat- garine and soybean products such as soy-
ra and Kalimantan. “With bean meal for animal feed and soybean oil.
its aggressive planting pro- This year, it has earmarked between US$350
gramme of 60,000ha a year, million and US$500 million to expand its oil
Golden Agri will become palm plantations and add two new refineries
the world’s largest planta- in Kalimantan.
tion company in planted Aside from its sheer heft in Indonesia, the
hectarage in two to three company lays claim to having yields up to 30%
years’ time,” says Alvin Tai higher than the industry average and high-
of Malaysia’s OSK Research er than those chalked up by companies like
in a Feb 26 report. Sime Darby or Wilmar International, among
the top five plantation companies in Indone-
Are record palm oil prices sustainable? sia and currently the world’s largest refiner of
In the meantime, as Golden Agri and its peers palm oil. Golden Agri also has a robust bal-
rush to grow trees, the current tight demand- ance sheet, with a net debt-to-equity ratio of
supply equation may slacken, especially if the just 0.1 time as at end-2007.
global economy starts to lose some steam. At
a well-attended industry conference in Kua- Valuation gap
la Lumpur last week, James Fry, managing Despite this, Golden Agri doesn’t command
director at research outfit LMC International the sort of valuations that smaller plantation
Ltd, predicted that palm oil futures in Malay- stocks do. In fact, it has long traded well be-
sia may fall below RM2,900 this year. “In one low the sector’s multiples. On consensus fore-
to three months’ time, I think this party will casts for 2008, Golden Agri is on a price-to-
be over,’’ he said, noting that high prices were earnings ratio of 12.6 times. Much smaller
affecting demand for food and fuel. Indofood Agri is at 15.5 times and Astra Agro
In a Feb 13 report, ABN Amro analyst Nir- is at a high 19.4 times. Wilmar, which draws
gunan Tiruchelvam says a “sharp correction the highest ratings in the sector, boasts a PER
is in the offing” for palm oil. He expects prices of 23.1 times for this year.
to fall to US$900 on average between 2008 and All are listed on the Singapore Exchange
2010 and cites factors like diminishing biodie- except for Astra Agro, which trades in Indo-
sel demand (as palm-based biodiesel becomes nesia. In Malaysia, IOI Corp, another inves-
economically unviable) and rising supply. tor favourite, trades at 24.5 times for its fiscal
According to Oil World, an independent re- year to June 30, 2008 while peer KL Kepong
search house for the oilseeds industry, crude CONTINUES NEXT PAGE
22 • THEEDGE SINGAPORE | MARCH 3 , 2008

CORPORATE

Metal goods maker Joyas hopes to tap

growth in Europe and China

GWYNETH YEO/THE EDGE SINGAPORE

| BY JOAN NG | more expensive, companies are look- design the company manufactures.
ing to outsource their work to Chi- Lau believes the company should

P
eter Lau, the Hong Kong-
born founder and manag-
ing director of Joyas Inter-
national Holdings, grew up
surrounded by things that
glittered. His father was a goldsmith
who made jewellery and all his broth-
ers learned the trade as well. So,
when Lau graduated from univer-
sity, it was only natural that he too
should join the family business.
Lau never learnt to make the
jewellery, spending his days work-
ing the shop front instead. But his
immediate surroundings, he be-
lieves, helped groom his taste for
what he does now: making metal
gift products such as business card
cases, photo frames and cufflinks
for premium customers like Lam-
borghini, Folli Follie and Marks &
Spencer. Today, he says, his taste
has helped place Joyas among the
leading manufacturers of premium
metal gift products in Asia.
Now, Lau wants to expand his
business in a big way and is look-
ing to raise $6.6 million in an IPO
on the Singapore Exchange. That’s
not a lot of money but Lau says the
listing is more for a public profile
than anything else. “I want to build
up a platform so that we can have
joint ventures or mergers with Eu-
ropean manufacturers, doing work
for high-end brands and metal ac-
cessories,” he says.
At the moment, most of Joyas’
revenue (about 40%) comes from
customers in the US, with only about
25% coming from Europe. But as
manufacturing in Europe becomes
na, where Joyas has a 3,291 sq m
production facility in Shenzhen that
is capable of making about eight
million pieces of gift items a year.
“The European manufacturers are
moving their production to China
now, but they are not able to find
any manufacturers in China that
are good enough. In order to se-
cure their business, I would like to
be able to have joint ventures with
them.” Being a listed company, he
says, should make this easier.
European roots
Lau’s first customer was a promi-
nent US retail chain where one of
his friends worked. In casual conver-
sation one day, the friend happened
to mention that his company needed
a manufacturer to make some metal
gift items. And despite having no ex-
perience or expertise, Lau decided to
take the plunge and told his friend
he would like to attempt it.
His offer was accepted and Lau
found to his horror that he had just
2½ months to make over 100,000
pieces of a gold-plated metal razors.
“I was one of the first to hire Viet-
namese refugees,” he says. Working
24 hours a day, Lau successfully de-
livered his shipment, which led him
to think of bigger things. He packed
his bags and went to Europe to sur-
vey the gift business there and on
coming home, he hired some de-
signers to make a few crude sam-
ples for him to market.
That was the start to what Lau
believes was the first metal gift man-
ufacturing business in Asia. To his
I want to build up a platform so that
we can have joint ventures or mergers
with European manufacturers, doing
work for high-end brands and metal
accessories — Lau
surprise, orders began coming in
so strongly he was soon forced to
begin turning people away. “At my
first exhibition in Frankfurt, I had to
go without lunch and toilet breaks
for four days,” he says.
have little problem penetrating the
Europe market. He adds that there
has been growing demand among
luxury European brands for metal
accessories such as handbag clasps
and cosmetic casings.
To capitalise on this trend, Joy-
as is expanding its product range
into the metal accessories segment.
To keep up with growing demand,
the company is also expanding its
production facilities. Joyas has a
112,559 sq m plot in Guangdong,
China, and is currently construct-
ing the first phase of a new produc-
tion facility there, which will start
operations at the end of March and
will increase annual production ca-
pacity to 12 million pieces. Fund-
ing for the plant’s machinery will
come from the IPO. Joyas is offer-
ing 28.8 million shares at 29 cents
a piece.
Lau is also expanding in antici-
pation of rising demand from within
China. With rising affluence, sec-
tors such as private banking or re-
tail will grow and many of Joyas’
products go to these industries —
as promotional gifts for high-net-
worth clients or packaged with lux-
ury goods for the well-heeled.
All this should help boost Joyas’
gross profit, which has been rising
at a respectable compound annual
growth rate of 35.6% from 2004 to
Expansion plans 2006. And hopefully, the scale will
Those European roots played a prom- allow the company to improve gross
inent role in determining Lau’s de- profit margins that, despite hav-
sign tastes, which he describes as ing risen steadily for the last three
distinctly continental. To this day, years, dipped slightly for 1H2007 to
he still personally approves each 36.5% from 39% in FY2006. E

‘Golden Agri too significant to ignore’

FROM PREVIOUS PAGE
is at 18.9 times for the year to Sept 30, 2008.
Sime Darby is not a strict comparable as the
conglomerate also derives earnings from prop-
erty, motor and utilities.
Legacy hangover
The reason Golden Agri trades at a discount to
its peers is that “the controlling family has some
association with very poor corporate govern-
ance”, says ABN Amro’s Tiruchelvam, pointing
to the storied bankruptcy of Asia Pulp & Paper.
“That has been a weight on the shares.” The Si-
nar Mas group built one of the largest pulp and
paper businesses in the region on a mountain
of debt, which eventually led to the collapse of
New York-listed Asia Pulp & Paper in 2001. The
group’s Bank Internasional Indonesia, which had
loaned large sums to related companies such as
Asia Pulp & Paper, was hobbled during the Asian
financial crisis and had to be recapitalised.
Amid all that, the group took its planta-
tion arm, Golden Agri, public in Singapore in
1999. Almost a decade on, investors haven’t
altogether dismissed the past corporate fail-
ures of the Widjaja family, whose net worth
today is estimated at US$2.8 billion. However,
the sector’s golden age, coupled with the com-
pany’s move to introduce more transparency
through analyst and media briefings, appears
GOLDEN AGRI-RESOURCES
to be starting to draw some interest back to
the stock. On Feb 20, the company also car-
ried out a one-for-two stock split to improve
liquidity for retail investors.
Tiruchelvam does not cover Golden Agri
but says the plantation company is a “well-
managed enterprise and has a huge land
bank”. OSK’s Tai, in his report on the compa-
ny, reckons that “the company is too big and
too significant a plantation player for inves-
tors to ignore”.

In recent months, Golden Agri has sent its

How the plantation companies stack up management to meet with investors in the capi-
‘000 ha
tal markets of Europe, North America and East
Indonesia Malaysia Asia. Richard Fung, its director of investor rela-
375
Immature tions, says reception has been positive and that
59 Sime Darby Mature
the valuation gap between Golden Agri and its
300
peers “is not as big as it used to be”. At end-
21
2006, Golden Agri traded at a 62% discount to
225
43 its peers. The figure is currently about 41%.
64 33 13 However, with its ratings still trailing the
150 9
293 22 sector and analyst coverage a fraction of that
249 15
185 8
for Wilmar, CEO Widjaja and his team may
15 172 7
75 160 157 140 have to persevere with the investor road
101 84
85 68 72 shows — and roll out industry-beating num-
0 bers each quarter if Golden Agri hopes to cease
Golden Indo Agri Kumpulan being the cheapest large-cap plantation play
Agri- Astra Agro Wilmar Lonsum (incl Lonsum) Sampoerna Guthrie Golden Hope Sime Darby IOI KLK Tradewinds
Resources in the region. E

Del Monte Pacific emphasises brand
strength, moves up value chain
| BY GOOLA WARDEN |
C
omparing fruits to electronics may
seem like comparing the proverbial
“apples to oranges”, but that’s not
how plantation company Del Mon-
te Pacific sees it.
Like an original equipment manufacturer
(OEM) in the electronics industry seeking to
move up the value chain by selling products un-
der its own brand name, Singapore Exchange-
listed Del Monte Pacific wants to put pineap-
ples grown at its plantation in the Philippines
into cans labelled with its own S&W brand to
reach consumers all over the world. And, like
companies in high-tech industries, Del Monte
Pacific is innovating and creating better prod-
ucts. Among its recent successes is an ultra-
sweet strain of pineapple called MD2.
Last November, Del Monte Pacific bought
the S&W brand from its US affiliate Del Mon-
te Foods Inc for US$10 million ($13.9million),
which it plans to use as a vehicle to expand its
market around the world. Despite its name, Del
Monte Pacific can only sell its canned fruits,
juices and condiments under the Del Mon-
te brand in the Philippines and India. Under
a deal struck decades ago, Del Monte-brand
foods elsewhere in the world are sold by its
US and European affiliates. Del Monte Pacific
supplies these affiliates with pineapples and
other produce.
“We have this portfolio of products under the
Del Monte brand, which we can only distribute
in limited markets,” explains Joselito Campos,
CEO of Del Monte Pacific. But with the 112-year-
old S&W brand under its belt now, the compa-
ny will be able to re-brand its products under
the S&W label for sale in all markets around the
world except North and South America, Austral-
ia and New Zealand. (In Europe, its US affiliate
Del Monte Foods will continue to sell Del Monte
brand canned food products under a perpetual
royalty-free licence from Del Monte Pacific.) “We
would duplicate our product portfolio and gain
access into more markets,” Campos says.
It may even allow Del Monte Pacific to catch
up with its closest competitor, Dole Food Co of
the US, according to company officials. Although
both rivals own fruit plantations of about the
same size, Del Monte Pacific lags behind Dole
because it lacked a global brand.
Another corporate investment that’s bear-
ing fruit for Del Monte Pacific is its purchase of
a 40.1% stake in India’s FieldFresh Foods for
US$22.5 million last September. The other major
shareholder of FieldFresh is Bharti Enterprises,
a unit of India’s Bharti Group, one of the coun-
try’s leading business groups with interests in tel-
ecommunications, agri business, insurance and
retailing. FieldFresh has around 300ha of land in
northern India, where it grows fresh fruits and
vegetables for export to Europe as well as for sale
in the Indian market. FieldFresh grows mainly
mangoes, grapes and pomegranates.
India is already a fast growing market for
Del Monte Pacific’s products. With the invest-
ment in FieldFresh, officials at Del Monte Pa-
cific say its operations in the country could be-
come a business pillar for the company that’s
as significant as its home market of the Phil-
ippines and the S&W brand.
“India is a big opportunity for us while S&W
gives us the global reach,” says Luis Alejandro,
chief operating officer at Del Monte. “If you look
at [our] business today, it is predominantly the
Philippines and the exports, but we are going
through a transformation right now.” In that trans-
formation, Del Monte Pacific will turn itself into
a global consumer brand by using the S&W label
Alejandro: We’re looking at increasing our hectarage
by 30% over the next three years and fresh pineap-
ple contributions to 20% of revenue
and expand in India using the Bharti-Del Monte
Pacific joint venture, says Alejandro.
How much will FieldFresh and S&W contrib-
ute? “If we have the Philippines as one of our
strongest legs today, we want to have Bharti-
Del Monte and S&W as the other two legs to
the same degree in the future, because of the
vastness of the India market and the global
reach of S&W,” says Alejandro.
Expanding plantations
To match its global ambitions, Del Monte Pa-
cific is planning to increase the size of its plan-
tation in the Philippines, currently measuring
19,000ha in size. While Del Monte Pacific sourc-
es raw materials from all over the world to cut
the cost of investing in plantations, it is still the
largest producer of pineapples in the world with
about a 20% market share. “The area we cover
is 40km by 80km,” says Campos, referring to its
pineapple plantation in Mindanao. That’s more
than the land area of Singapore.
As a non-Philippines registered company,
Del Monte Pacific cannot own more than 3ha
of land. To get around this, most of the land
is leased from a cooperative that is made up
of employees of the company. “The remaining
part is managed through different farmers from
whom we lease the land and we give them a
different fee,” says Alejandro.
He maintains there is no danger of these
contract growers being offered a better rate by
other companies because Del Monte Pacific
provides additional sweeteners for the farm-
ers, such as providing them new technology
and helping them with the harvest. “This is
exclusively contracted to us,” Alejandro in-
sists. “We’re looking at increasing our hec-
tarage by 30% over the next three years and
Del Monte Pacific
Volume (‘000) Price ($)
80
70
60
50
40
30
20
10
0 0.35
Feb 13, 2007 Feb 29, 2008
Campos: We would duplicate our product portfolio
and gain access into more markets with S&W
that will come from contract growers,” he
adds. To quickly process the harvested fruits,
the company’s cannery is just a half-hour’s
drive from the plantation and is situated ad-
jacent to its own port, which has docking fa-
cilities for transport.
Del Monte Pacific’s plantations are a legacy
from the US occupation of the Philippines. “Even
Filipinos cannot own more than 1,024ha of farm-
ing land,” says Rolando Gapud, chairman of Del
Monte Pacific, referring to the Philippines’ Land
Reform Act instituted in the 1960s. “But this plan-
tation was started by the Americans 80 years ago
when the Philippines was still a commonwealth
of the US. That’s really the reason we were able
to get the lease over such a large area.”
In future, Del Monte Pacific wants 20% of
its revenues to come from fresh produce like
pineapples, which at the moment, makes up a
negligible part of the business. The company
plans to market this fresh produce globally under
the S&W brand as margins are usually higher
for fresh fruits than for processed fruit.
So, Del Monte Pacific’s R&D department has
come up with a new pineapple strain called
MD2. “It is 30 times sweeter than the ordinary
fruit,” says Campos, “and the flesh is very yel-
low.” On the brix scale of sweetness in a fruit,
explains Campos, MD2 is 15 brix compared
to the 12 brix in the chempaka variety that is
the most common variety of pineapple at Del
Monte’s plantations.
More than just a ‘grower’
Understated and eloquent, the Cornell-educat-
ed Campos is the head of the NutriAsia group,
a maker of sauces and condiments that churns
out 90% of the banana ketchup consumed in
the Philippines. In January 2006, a unit of Cam-
pos’ corporate group bought a controlling stake
in Del Monte Pacific, marking the first time in
almost two decades that the company had the
backing of a single controlling shareholder.
Campos currently controls a 79% stake in Del
0.80
0.75 Monte Pacific. The company has a market cap
0.70 of $633 million.
0.65 Since taking over, Campos has trimmed
0.60 the workforce, raised the number of distri-
0.585
bution centres from two to 18 in the Philip-
0.50 pines, and increased the company’s outlets
0.45 from 28,000 stores in May last year to 64,000
0.40
by December. He has also introduced a slew
of new products to help drive the company’s
revenue and earnings.
THEEDGE SINGAPORE | MARCH 3, 2008 • 23
CORPORATE
PICTURES: GWYNETH YEO/THE EDGE SINGAPORE
Gapud: Del Monte is no longer just a plantation com-
pany. We’re going to consumer branded products and
we’re almost completely global. As the market digests
this change, our share price could appreciate more
Among them is “Fit n Right”, a pineapple
drink that contains L-Carnitine, an FDA-approved
protein that helps to reduce body fat. Introduced
in 4Q2007, the drink retails for the equivalent of
60 cents per pack and has been a runaway hit.
“Forty per cent of college students in the Phil-
ippines switched from taking soft drinks to Fit
n Right,” says Campos. Indeed, the doubling of
the company’s beverage sales in the Philippines
in 4Q is due, in no small part, to the launch of
Fit n Right, adds Alejandro.
For 2007, Del Monte Pacific reported a 19%
rise in revenue to US$289 million and a 37%
increase in net earnings to US$29 million. Most
of the improved earnings came from cost cut-
ting, tax savings and an expanded range of
products, says Gapud. “For the three years
since Campos has taken over, the income of
the company has grown by double-digits.
The Philippines market was the major driv-
er of the company’s growth in 4Q and the full
year. Additionally, in November 2007, the com-
pany secured a special-economic-zone tax in-
centive and started enjoying reduced tax rates
of 5% of gross profit instead of 35% of profit
before tax. Gapud says it has no plans to raise
equity with its current negligible gearing ra-
tio. “We want to keep our shareholders happy
and we’re paying out 75% of profits in divi-
dends,” he adds.
Not everything is hunky dory though. For
one thing, the strengthening Philippine peso
is eating into the company’s profits. According
to Del Monte Pacific’s officials, a 12% appre-
ciation in the peso decreases profits by US$1
million each quarter. The other challenge is
the lack of investor interest in the company.
Del Monte Pacific’s share price hasn’t fallen
this year largely because it is seen as a dull,
defensive stock and isn’t widely owned. But
if Campos and his team follow through with
their plans for India and the S&W brand, that
might soon change.
While acknowledging that Del Monte Pa-
cific is a “grower” and benefits from rising
food prices, chairman Gapud brings up the
analogy of the electronics industry to empha-
sise that it is now more than just a plantation
company. “We’re no longer an OEM suppli-
er,” he says. “We now have a brand. We’re
going into consumer-branded products and
we’re almost completely global. As the mar-
ket digests this change, our share price could
appreciate more.” E
24 • THEEDGE SINGAPORE | MARCH 3, 2008
CORPORATE
Money in looming global water crisis
A
dventure capitalist, invest-
ment biker, and self-con-
fessed China and commod-
ities bull Jim Rogers has a
new investment theme. The
former hedge fund guru co-founded
and successfully built the Quantum
Fund with George Soros, only to quit
Wall Street in the prime of his life
to travel around the world.
Outspoken Rogers, who sold his
US$15 million ($21 million) New York
town house last year and now calls Sin-
gapore home, isn’t talking of new fron-
tiers like Africa or exotic asset classes
like private equity and derivatives. He
is talking of something more common
and oft underestimated: water.
Indeed, Rogers actually believes
if there is one thing that can derail
China and India’s dream run over
the next few years, it won’t be their
burgeoning property or stock market
bubbles or overvaluation of other as-
sets, but water.
“Think about it: What is the scarc-
est resource in the world today?” Rog-
ers asked his audience at a seminar
recently. “It is not oil, it’s not coal
or sugar or wheat that dramatically
alters their growth momentum but
something even more fundamental
to human survival: water.” Nations
have gone to war, people have fought
for hundreds of years over access to
water. More recently, actor George
Clooney has articulated the plight of
Darfur in Sudan, where tribal fight-
Appetite for food stocks shrinks
I
n the north of China, dumplings
filled with pork and cabbage are
a staple at meal times. Synear
Food Holdings has grown fat on
this, churning out frozen versions
of these dumplings as well as other
popular offerings such as glutinous
rice dumplings. The company is no
small fry: revenue hit 2.2 billion ren-
minbi ($429 million) last year and the
company has an estimated 15% to
20% of the quick freeze food prod-
ucts market. And when the Beijing
Olympics kicks off in August, the Chi-
nese company will be the exclusive
supplier of such frozen dumplings
and snacks at the sports fest.
But like most converters of food
along the food chain, Synear has
been buffeted by “agflation” or agri-
cultural price inflation. Never mind
the subprime bust or a US recession.
Commodity prices continue to shoot
through the roof, taking food prices
along with them. Wheat is at a new
record as stockpiles have sunk to a 60-
year low (brace yourselves for higher
bread prices). Soybean is also at a new
peak while corn is at levels not seen
in over a decade. Farmers have been
channelling the yellow crop towards
biodiesel refineries, leaving less for live-
stock. Pork prices have soared.
For Synear, that combination of
higher meat and flour prices has been
compounded by a rise in packaging
costs. And, that has pushed up its
BIG MONEY
ing has raged over water and crop-
land in the country’s arid west re-
gion, leaving hundreds of thousands
of people dead.
For his part, Rogers brings his own
unique perspective as a globetrotter
with two record-breaking around-
the-world tours across Asia, Africa
and Latin America. “I have seen first
hand what water does to land and
people. It can cause destruction of
unimaginable scale and render huge
swathes of land unliveable,” he said.
That’s a good enough reason for him
to bet on water.
Water covers more than 70% of
the Earth’s surface. However, most
of it is saltwater and unfit for peo-
ple to drink. A mere 2.6% of all the
water on Earth is actually potable
freshwater. But here’s the real rub: A
large share of that small percentage
is frozen in the polar icecaps, while
part of the freshwater supply is bur-
ied so deep in the earth’s crust that
it cannot be extracted. Little won-
der, then, that, water ranks as one of
the world’s scarcest natural resourc-
es. Only 0.26% of the total amount
of fresh water is potentially availa-
ble above ground in lakes and river
systems. A recent Credit Suisse re-
port noted that roughly 80 countries
were unable to provide their popula-
tions with a sufficient supply of wa-
ter without great difficulty.
What’s causing this water crisis?
First, there is the boom in China, India
| BY SUNITA SUE LENG |
as i
call it
raw material prices by about 13% in
2007. But when it came to passing
on this inflation, it was only able to
hike its average selling prices by ap-
proximately 8% last year following
a price adjustment in April 2007. As
a result, its overall gross profit mar-
gin dipped to 32.2% last year versus
33.6% the year before.
On its own, this wasn’t too shab-
by a performance. However, and more
tellingly, Synear’s FY2007 numbers,
released last Monday, showed that
growth was braking in 4Q. As bro-
kerage CIMB-GK points out in a Feb
26 note, its sales volume actually fell
6.7% in 4Q2007, despite that quarter
| BY ASSIF SHAMEEN |
and other emerging markets, which
means the world is using far more
water than it did five years ago. Add
in climate change, environmental deg-
radation, low water tables in North-
ern China, the US and India, and the
picture becomes grimmer.
Owing to the rapid spread of ur-
banisation and the use of water-in-
tensive agricultural products, the cur-
rent rate of increase in water usage is
double that of the world’s population
growth, according to the UN’s Food
and Agriculture Organization (FAO).
However, this strong surge in water
usage has not been met by a corre-
sponding growth in water supply.
Global warming, or climate change,
is another reason water is becoming
scarcer on earth. Scientists say the
water-holding capacity of the atmos-
phere increases as Earth’s tempera-
ture rise. Moreover, this is happening
just as the duration and frequency
being a strong one seasonally. On top
of that, analysts were caught off guard
by a spike in selling and distributing
costs and a surprise tax charge. Syn-
ear’s FY2007 profit came in some 14%
below consensus forecasts.
Investors promptly sold down the
shares the next day, taking it down by
26.2%. Put another way, a whopping
$371.3 million was wiped off its mar-
ket capitalisation. The shares closed
at a new low of 64.5 last Thursday
and since the start of the year are
down just over 60%.
Higher soybean prices also hurt Pine
Agritech, which makes soybean health
products and food ingredients. The
company said last Thursday its gross
profit for 2007 fell 6.6% due primarily
to higher soybean costs, which rose by
over a third last year. The shares are
down some 37% year-to-date. Shares
of Celestial NutriFoods, which makes
soybean-based health beverages and
Commodity prices continue to shoot
through the roof, taking food prices
along with them. Wheat is at a new
record as stockpiles have sunk to a
60-year low (brace yourselves for
higher bread prices).
of rains are falling, which means it
now takes longer in warmer climate
to recharge the atmosphere with rain-
forming vapours.
Whether you are a Clooney fan
or pretend to understand the intrica-
cies of the Darfur crisis, all you need
to know is that water is likely to be
key to more of the world’s conflicts.
Forget Iraq or the Middle East, the
water crisis could be the biggest se-
curity threat since Al-Qaeda. Reams
of paper have been wasted in recent
months on editorials about agri or
food inflation. But consider this: If
the current global water crunch deep-
ens, water will soon become an even
more expensive commodity and, be-
cause everything we eat or drink or
grow uses water in some form, infla-
tion pushed by scarcer water could
wreak real havoc.
We don’t need a Nobel Prize and
Academy Award-winning former Vice-
President of the US to warn us of an
impending global economic calam-
ity. Even if the water crisis doesn’t
lead to food costs spiralling, there are
likely to be ripple effects aplenty on
the global economy. Rogers believes
that “without water, there is no Chi-
na growth story, there is no India
growth story”. Without the boom in
China, India and emerging markets,
the global growth train is likely to be
derailed. India and China have been
the engines of global growth in re-
cent years. To ensure China’s growth
food, also retreated last week after the
company reported a drop in gross prof-
it margins for 2007.
In a slowing world, the Chinese
consumer was thought to be one
pocket of resilience. After all, sales of
consumer goods rose 16.8% last year
even as inflation swelled by 4.8% in
China. However, 4Q numbers from
companies indicate that consump-
tion demand may indeed be taking a
dent, a casualty of the increase most
people have seen in food prices from
the wet markets to the hypermarkets
to eating places.
This makes it all the more difficult
to pass on agflation to end-consum-
ers — especially when the govern-
ment has adopted a hawkish stance
in relation to consumer prices. In
mid-January, the Chinese authorities
introduced temporary price control
measures on daily necessities such
as processed grains, edible oil, meat,
story stays on track, the world needs
to ensure there is plenty of water to
fuel the growth and lubricate those
tracks. “By the way, India has more
severe water problems in most areas
than China,” says Rogers.
For investors, there is money to
be made from water. GHD, a glo-
bal environmental consultancy, es-
timates that revenue generated by
the global water sector is expected to
grow from to US$342 billion by 2010
to more than double what it gener-
ated in 2004. It says the key drivers
of that growth will be China, India
and other emerging markets. Two
listed Singapore water firms Hyflux
and Epure figure in lists of global
water stocks.
Even legendary billionaire inves-
tor T Boone Pickens, who made his
money from oil, is hopping on the
water bandwagon. Pickens’ firm,
Mesa Water, recently acquired water
rights for 200,000 acres in Texas and
is busy buying water rights across
the US the way oil companies were
buying drilling rights decades ago.
Pickens has said oil and water are
the two big commodities he is bull-
ish about for the long term. General
Electric’s CEO Jeff Immelt recently
mentioned water as the one sector
that the world’s biggest conglomer-
ate was looking to increase its ex-
posure in. Rogers, Pickens, Immelt
and others can’t be wrong. Water’s
time has come. E
dairy products and eggs.
According to the new rules, big pro-
ducers have to obtain governmental
approval before raising their prices.
Wilmar International, which is the
leading player in China’s edible oil
market, has held off asking for a price
hike as it has covered its raw materi-
al prices very well, the company said
at its results briefing last Thursday.
However, it expects to do so “soon”.
The question is: Will the government
allow it to raise prices?
In its results statement, Wilmar
cautioned that consumption of edible
oils in China might be affected by high
prices. The company, however, isn’t al-
together wringing its hands at record-
breaking soybean and palm oil prices.
That’s because it is reaping bumper
gains from growing oil palm. And, for
the most part, sells its processed oil to
industrial users, who absorb high raw
material prices more readily than con-
sumers. Agflation hurts when you’re
not vertically integrated.
This latest bout of commodity price
increases — which stretches from
the humble soybean to fuel such as
coal and crude oil — is stoking al-
ready high inflation. Today, the rise
in the cost of everyday life has be-
come the No 1 issue on almost every-
one’s plate. That’s starting to crimp
appetites, both for the shares of food
producers and even for staple items
like savoury dumplings. E
 SINGAPORE (INCLUSIVE OF GST) S$3.00
OTHER HIGHLIGHTS
THE ASCOTT INTERVIEW
Millionaires’ row Petrodollar Concord CEO
in Singapore tsunami warning sparks revolution
CITY&COUNTRY ECONOMY WATCH OPTIONS

MICA (P) No. 075/08/2007 PPS 1519/09/2008 (000599) BUSINESS & INVESTMENT WEEKLY THE WEEK OF MARCH 3 — MARCH 9, 2008 308
3

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

NOTEWORTHY

The best of the best:

THE EDGE-LIPPER
SINGAPORE FUND
AWARD WINNERS
2008
ASSIF SHAMEEN:
Money in
looming global
SURVIVING
the crunch
water crisis

SUNITA SUE LENG:

Appetite for
food stocks
shrinks

ST Engineering plans
ARA Asset Management has emerged
diversification to sidestep unscathed from the funding squeeze in the REIT
possible US slowdown
Golden Agri plants up,
market. Now, CEO John Lim wants to double its
seeks to close valuation gap assets under management within three years to
Del Monte emphasises
brand strength, $20 billion, a level that would rival CapitaLand’s
moves up value chain real estate asset management business. Turn to
Celestial NutriFoods
continues expanding, our Cover Story for why institutional investors
squeezed by high
soybean prices
are excited about the stock.
Federal International makes
rash of energy investments
Small-cap financier DB
Zwirn winds down funds
Synear Food, China Milk,
Celestial NutriFoods,
People’s Food, China Dairy,
China Essence
Hot stocks

8 885002 090004 PLUS: Managers of MMP REIT contemplate M&A deal

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 SINGAPORE (INCLUSIVE OF GST) S$3.00
OTHER HIGHLIGHTS
THE ASCOTT INTERVIEW
Millionaires’ row Petrodollar Concord CEO
in Singapore tsunami warning sparks revolution
CITY&COUNTRY ECONOMY WATCH OPTIONS

MICA (P) No. 075/08/2007 PPS 1519/09/2008 (000599) BUSINESS & INVESTMENT WEEKLY THE WEEK OF MARCH 3 — MARCH 9, 2008 308
3

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

NOTEWORTHY

The best of the best:

THE EDGE-LIPPER
SINGAPORE FUND
AWARD WINNERS
2008
ASSIF SHAMEEN:
Money in
looming global
SURVIVING
the crunch
water crisis

SUNITA SUE LENG:

Appetite for
food stocks
shrinks

ST Engineering plans
ARA Asset Management has emerged
diversification to sidestep unscathed from the funding squeeze in the REIT
possible US slowdown
Golden Agri plants up,
market. Now, CEO John Lim wants to double its
seeks to close valuation gap assets under management within three years to
Del Monte emphasises
brand strength, $20 billion, a level that would rival CapitaLand’s
moves up value chain real estate asset management business. Turn to
Celestial NutriFoods
continues expanding, our Cover Story for why institutional investors
squeezed by high
soybean prices
are excited about the stock.
Federal International makes
rash of energy investments
Small-cap financier DB
Zwirn winds down funds
Synear Food, China Milk,
Celestial NutriFoods,
People’s Food, China Dairy,
China Essence
Hot stocks

8 885002 090004 PLUS: Managers of MMP REIT contemplate M&A deal

563/
%"3,
Turmoil in financial markets doesn’t necessarily have to spell trouble

for your investments. Hedge with stock and index-tracking CFDs on
SaxoTrader to preserve the value of your portfolio.
C A P I T A L
M A R K E T S

4,*&4
50
So trade up to SaxoTrader and enjoy access to over 5,000 CFDs – many of which allow
you to short-sell. Some other benefits include:

#-6&
• More efficient intra-day stock trading with live prices
• Leverage investments up to 10 times
• Diversify with CFDs from 23 major exchanges globally
• Low entry cost of CFDs on 15 major stock indices

Get your free demo account; visit www.saxomarkets.com.sg,

email ps@saxomarkets.com.sg or call +65 6303 7788.

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XBSOJOH
-FWFSBHFE
JOWFTUNFOUT
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GPSFJHO
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 OP2 • THEEDGE SINGAPORE | MARCH 3, 2008

BUY RIGHT
| BY AUDREY SIMON |

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

Charmed life
The YSL charm bracelet
is adorned with YSL’s
iconic items such as the
Downtown bag, the Up-
town bag and the Trib-
EDITOR/REGIONAL MANAGING
DIRECTOR ute heels. Available at
Tan Boon Kean YSL boutiques.
(bktan@bizedge.com)

SECTION EDITOR
Audrey Simon
(audrey.simon@bizedge.com)

CONTRIBUTORS
Grace Chin, Jamie Nonis,
Leela Barrock, Felix Cheong,
Tony Watts

COPY-EDITING DESK
Elaine Lim, Evelyn Tung, Like a ballerina
Ng Bee Cheng, James Chong Flat shoes are hot this
PHOTO EDITOR
season. Lanvin has just
Samuel Isaac Chua released its collection Scent for life
(samuelisaac.chua@bizedge.com) of Ballerina flats that Diesel’s Fuel for Life fragrance for men has been
PHOTOJOURNALIST
are so comfortable, touted as a body balm: The ingredients that go into
Gwyneth Yeo you won’t want to take it are star anise, heliotrope, raspberry, tangerine and
(gwyneth.yeo@bizedge.com) them off. They cost be- pink grapefruit. This deliciously energetic fragrance
tween $729 and $899 has a female version as well so you and your part-
EDITORIAL COORDINATOR
Rahayu Mohamad and are available at 02- ner can complement your scents. Available at lead-
(rahayu.mohamad@bizedge.com) 47 Wisma Atria. ing department stores.
DESIGN DESK
Tan Siew Ching, Christine Ong,
Chan Yoke Lin, Jamy Gan
Nature lovers
ADVERTISING +
MARKETING
Franck Muller draws in-
REGIONAL GENERAL MANAGER | spiration from the humble
Edward Stanislaus pebble for its latest collection
(edward@bizedge.com) of timepieces. Called the Galet,
SENIOR MANAGER |
Colin Tan French for pebble, the watch
(colin.tan@bizedge.com) shows off its purity and
MANAGERS | Simon Wong smooth lines, just like the
(simon.wong@bizedge.com)
Cecilia Kay
pebble that has been pol-
(cecilia.kay@bizedge.com) ished and shaped through
Jeffrey Wong years of erosion by water.
(jeffrey.wong@bizedge.com)
Windy Tan
It is minimalist, elegant
(windy.tan@bizedge.com) and will remain a
Faith Teo classic. Available
(faith.teo@bizedge.com) at authorised
Julia Tan
(julia.tan@bizedge.com) retailers. Get organised
COORDINATOR | Savvy travellers will love
Nor Aisah Bte Asmain the new Solana collection by
(nor.asmain@bizedge.com)
MALAYSIA REPRESENTATIVE |
luggage specialist Samsonite. It is er-
Helen John Corry gonomically designed and comes with
(helen.johncorry@bizedge.com) extras such as a toiletry kit, a remova-
CIRCULATION-SUBSCRIPTIONS
ble suit compartment and more space so
REGIONAL SENIOR MANAGER | you need not worry about wrinkling your
Suresh Kumar clothes. The luggage can be expanded by
(suresh@bizedge.com) 5cm, a plus for those who love to shop while
ASSISTANT MANAGER | Naziela Nasir
(naziela.nasir@bizedge.com) overseas. Available at Samsonite boutiques
ASSISTANTS | Juliana Ibrahim and leading department stores.
(juliana.ibrahim@bizedge.com)
Iryanti Zainol
(iryanti.zainol@bizedge.com)
This month, Armani/Casa is filled with some of the finest furniture
PUBLISHER
THE EDGE PUBLISHING PTE LTD
150, CECIL STREET #13-00
SINGAPORE 069543
HOME, SWEET HOME you will ever set your eyes on. They are available in limited quantities,
so you can be sure of exclusivity and guests to your home will be
impressed. Here are highlights: Antoinette (left and centre) is a dream
TEL: (65) 6232 8622
FAX: (65) 6232 8620
Imagine your love nest filled with limited dressing table for the woman who takes time and effort to look
her best. At a glance, the dressing table set looks like a round table
PRINTER
items from designer Giorgio Armani but take it apart and you will see the table with the mirror and a
KHL Printing Co Pte Ltd comfortable seat. Aida is a desk covered in gilded lizard print. Adelchi
57 Loyang Drive (right), also a desk, has a satin finish with glossy metal tiles.
Singapore 508968
Tel: (65) 6543 2222
All items area available at Armani/Casa at the Raffles Arcade.
Fax: (65) 6545 3333

We welcome your
comments and criticism.
Send your letters to
The Edge, Raffles City Post Office
PO Box 218
Singapore 911708
Tel: (65) 6232 8622
Fax: (65) 6232 8620
e-mail: feedbackspore@bizedge.com

Pseudonyms are allowed but please

state your full name, address and contact
number for us to verify.
 THEEDGE SINGAPORE | MARCH 3, 2008 • OP3

YourWeekOut
ENJOY a casual afternoon of classical music with the Sin-
gapore Symphony Orchestra in its concert Fantasy and Ro-
mance. The orchestra plays Saint-Saens’ Fantaisie for Violin
and Harp, Glinka’s Romance and Debussy’s Les Chansons de
Bilitis, among others. March 9, 5pm, Victoria Concert Hall.
Tickets at $10 (show your ticket at Victoria Café from 4pm to
5pm to enjoy a free cup of coffee or tea and a slice of cake).
endary jazz musician comes to town for the Mosaic
Music Festival. Known as Captain Fingers, Ritenour has
established himself as one of the world’s leading jazz
guitarists, playing with The Mamas and the Papas, Tony
Bennett, Lena Horne, Sergio Mendes, Herbie Hancock,
Dizzy Gillespie and a host of other luminaries. March
8, 7.30pm, Esplanade Concert Hall. Tickets at $58 to
$118 from Sistic*.

DON’T miss Lee Ritenour in concert when the leg- *Sistic hotline: 6348 5555

WATCH 10,000 BC (opens March 6), an

epic action adventure from Independence
Day director Roland Emmerich and set in
prehistoric times. D’Leh (Steven Strait) is a
warrior who mellows after falling in love
with Evolet (Camilla Belle). But when she
is kidnapped, his fighting instincts return.

SEE Harry Connick Jr in action when he

brings his My New Orleans Tour to town and
opens the Mosaic Music Festival. The multiple
Grammy awardwinner takes his band on the
road to promote his new album, Oh, My
NOLA, which is filled with big-band sounds
and piano workouts. March 7, 8pm, Esplanade
Theatre. Tickets at $88 to $248 from Sistic*.

CHECK out The Stage Club’s staging of

three classic works in Black Comedy and
Light Tragedies. They are Peter Shaffer’s
Black Comedy about a poor sculptor and his
fiancée’s unexpected confrontation when a
bulb blows; Alan Ayckbourn’s Countdown,
a snapshot of a marriage; and Michael
Green’s Present Slaughter, where a Noel
Coward play descends into a bloodbath
after its leading man meets with an ac-
cident. Directed by Nick Perry. March
5 to 8, 8pm, DBS Arts Centre, Home of
SRT. Tickets at $30 and $35 from Sistic*.

TAKE the kids to Paper Shaper, a physi-

cal theatre piece that promises to be funny,
quirky and colourful. Capital E National Thea-
tre for Children from New Zealand puts on
this performance about a mysterious gar-
bage man living underground and a deter-
mined passer-by trying to throw his lunch
away. Part of ACT 3 International’s Prudential
Children First! Singapore International Festi-
val for Children 2008. March 5 to 9, 10am
and 2pm (Wednesday to Friday), 11am and
5pm (Saturday and Sunday), Drama Cen-
tre Black Box. Tickets at $20 from Sistic*.

CATCH Incubus in concert as the alterna-

tive metal band, made up of vocalist Bran-
don Boyd, guitarist Mike Einziger, bassist
Ben Kenney, drummer Jose Pasillas and
turntablist Chris Kilmore, play their past
hits and songs from its latest album, Light
Grenades. March 7, 8pm, Fort Canning
Park. Tickets at $125 and $400 (with ac-
cess to VIP hospitality suite) from Sistic*.
OP4 • THEEDGE SINGAPORE | MARCH 3, 2008

SPECIAL EVENT Annalyn Celebrating her 9th Birthday by Hartmut Schwarzbach.

Nine-year old Annalyn, who wants to be a neighbourhood
teacher, lives in a charcoal camp located in a trash dump in
Manila. Schwarzbach’s shot won him third prize at Unicef’s
Photo of the Year contest last year.

Captivating
compelling
&
The World Photography Awards celebrate excellence
in the field. Grace Chin reports.

P
hotography as a commu-
nicative art has become
accessible to the masses
with the affordability of
technology and prolifer-
ation of digital cameras. Ruth Ei-
chorn, director of photography for
GEO magazine, says: “Photogra-
phy is the international language
of the future. The more people
are getting educated about good
photography, the better.”
The ubiquitous photo-sharing
experience online has exposed and
heightened the public’s awareness
of what a “good” picture looks
like. “But what makes a photo-
graph, or a series of photographs,
stand out from the familiar and
generic?” asks Simon Bainbridge,
editor of the British Journal of
Photography.
Bainbridge says it takes more
than good technique, or being in
the right place at the right time,
to capture something compelling.
“You need commitment, engage-
ment, investigation and, above
all, a unique way of seeing and
interpreting what is in front of
you. Otherwise, it is just visual
karaoke,” he says. “The paradox
is that a ‘just good enough’ at-
titude pervades in this age of
cheap and instant image down-
loads, which devalues the status
of professional photography, and
yet the medium’s standing as an
art form has never been higher.
The World Photography Awards
provide an excellent opportunity
to celebrate excellence, and to
show the world that great pho-
tographs can’t be bought for a
dollar,” Bainbridge adds.
Eichhorn and Bainbridge are
among two of the World Photo-
graphic Academy (WPA) members
who are judges for the inaugural
Sony World Photography Awards,
an international showcase of the
best images taken from both re-
nowned and undiscovered pho-
tographers alike. The awards are
supported by hundreds of the in-
dustry’s top photographers, crit-
ics, gallery owners and directors,
among others.
Of the 25,9354 amateur and
44,641 professional photograph
entries, 17 short-listed candidates
for both professional and ama-
teur participants were announced
recently for the 11 categories:
abstract, advertising, architecture,
fashion, music, nature, nude,
portraiture, photojournalism, sci-
ence, and sport.
The winners will be announced
at a black-tie award ceremony at
the Palais des Festivals in Cannes
on April 24. The annual awards
and the follow-up exhibition aim
to become to photography art
America’s Cup by Miguel Riopa Alende
what the Oscars are to the film
industry. Its judges are drawn
from from the WPA, set up to
promote excellence in the field
and to provide inspiration for
the new generation of photogra-
phers. Members include 100 of the
world's most respected photogra-
phers, critics, picture editors, gal-
lerists and other industry leaders,
including Phil Stern (US), Terry
O’ Neil (UK), Chien-Chi (China),
Sylvia Plachy (Hungary), Carl de
Keyzer (Belgium) and Esko Man-
nikko (Finland). Members form
the judging panel for the awards,
and winners will automatically
gain membership to the acade-
my. The academy is governed
by the Honorary Board, which
comprises 11 members, including
Tom Stoddart, Mary Ellen Mark,
Bruce Davidson, Martin Parr, El-
liott Erwitt, Susan Meiselas and
Stephen Cohen.
Exceptional photographs will
be selected — ranging from artis-
tic expressions to personal docu-
mentation and interpretations
of subjects — that represent the
diverse and colourful psyche of
humanity and our environment.
Says UK-based artist and academy
member Idris Khan, “Photography
is a medium in which we celebrate
the vision of an artist who most
of the time quite literally points
his camera to the world and says,
‘Look at this’, and then we read it
as ‘Look at what was there’ and
even more now ‘Was that really
there?’ Its development is fast and
challenging; it has no boundaries
[and it] should live longer than
you or me.”
The overall winner of the title
Sony World Photography Awards
Photographer of the Year will re-
ceive US$25,000 ($35,162). The
winner of the amateur category
gets US$5,000, donated by Sony,
and will be named Sony World
Photography Awards Amateur Pho-
tographer of the Year. The indi-
vidual will also be flown to attend
the awards ceremony in Cannes.
In addition to that, Saatchi Online,
one of the biggest names in the arts
and photography world, has signed
up to partner the awards and sup-
port the amateur entries.
A selection of 100 images from
highly commended amateur entries
will be displayed on the Saatchhi
Online Gallery wall in Cannes dur-
ing the awards, followed by the
launch of the WPA Image Bank on
Saatchi Online that will feature up
to 1,000 top commended amateur
images for commercial sale.
Grace Chin is a writer with the Op-
tions desk at The Edge Malaysia.
Browse the short-listed entries at
worldphotographyawards.org.
OP6 • THEEDGE SINGAPORE | MARCH 3, 2008

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

THE ASCOTT INTERVIEW

W
hen Vincent Perriard was invited to Mova- ket

SPARKING a
do Group International (MGI)’s headquar- age
ters in New York to meet MGI boss Greg Co
Grinberg, he was visibly disappointed after wa
being told that, of all the brands under its thi
stable, Perriard was to be entrusted with Concord. At
Recalling the exchange, Perriard says, “He asked, ‘Why we
do you react that way? It’s a cool brand.’ And I said, ‘No, scr

REVOLUTION
it’s not a cool brand at all!’ mo
“I think I did that on purpose. I wanted to test him nol
and see whether we were on the same page because, for as
me to take on the challenge of Concord, it could only be the
a great success if we could completely rethink the brand we
from inside out.” nol
His second mandate was that the brand shift its head- to r
quarters back to Switzerland after being in New York for des
Concord has gone from classic to edgy in a 35 years. “In the US, they don’t really know how to speak
luxury. Concord became almost like an American brand So,
flash. Its president Vincent Perriard speaks and that was one of the biggest issues,” he says. the
Perriard was promptly granted both wishes and giv- rig
to Jamie Nonis about being given carte en free rein to mould Concord. In addition, a brand-new We
team was put together to create a revolutionary mile- tio
blanche in reinventing the brand. stone for the brand. hav
The only directive from Grinberg was that he wanted ine
“to be proud of Concord again”, shares Perriard. This thi
goal was achieved in a single day at the annual Basel con
watch fair in Switzerland last year, when Concord sold
all 1,100 pieces of its new C1 chronograph. Wh
Any detractors who had laughed at the brand’s bold lik
declaration of reinventing itself as “modern and edgy” We
had to swallow their words as the industry enthusiasti- sol
cally lapped up the C1. me
Indeed, the watch makes a strong statement, with its thi
striking and highly recognisable design. It is a monster 200
on the wrist at 44mm, distinguishable by three unique Bas
features. First, the case alone comprises 53 components, cra
versus the usual maximum of seven. Second is the ab- we
sence of lugs that usually affix the strap to the case, uct
making the watch adaptable to even those with small- and
er wrists. Finally, the deal-sealer is the three-layer dial Co
that creates an extraordinary 3D effect.
Never in your wildest imaginations would you have Ha
envisaged that a watch stamped with the Concord brand Al
could look this cool. Indeed, Grinberg’s words have come ate
to pass under Perriard’s deft hands and inspired vision. stru
All the brand’s previous collections, such as the Deliri- wo
um and Saratoga, have been done away with, as has the the
old logo. So, really, it is a brand-new Concord in every up
sense of the word.
This year, Concord will rock aficionados’ worlds further qu
with the first-ever tourbillon located outside the watch du
and positioned vertically instead of the usual horizontal thi
mode. The watch will be called the Tourbillon Gravity. sig
Perriard says, when the tourbillon was invented by Ab- nic
raham-Louis Breguet in the 1700s, it was intended for We
pocket watches. When kept in the pocket, the tourbil- sto
lon was maintained in a vertical position and this was ryt
“the best way for quality and accuracy”. Thus, he says
the Tourbillon Gravity will boast a heightened accuracy we
compared with traditional tourbillons. is
Perriard, who has worked at Audemars Piguet and str
Hamilton, was the perfect candidate to spearhead this not
“risky and daring” project of refashioning a classical con
brand. First, the 38-year-old looks nothing like the ster-
eotypical, sometimes stuffy, image of a CEO of a luxury
watch brand. Dressed in an impeccably cut suit and de-
signer prescription glasses stylishly stealing some atten-
tion from his bald pate, Perriard looks like he heads a
fashion house instead. He gamely models, not just pos-
es, for our series of photographs; his towering physique
seamlessly contouring into position.
He speaks with Options about being given carte
blanche to completely reinvent a long-time classic, tak-
ing Concord from mass to niche and a 200% jump in
its price point.

In terms of brand DNA, how would you describe the

transformation Concord has undergone?
It’s completely radical. That was one of the biggest chal-
lenges because, when the team started in June 2006, we
asked people in many countries like Singapore, Hong
Kong, Japan and the US to describe the DNA of Concord
and it was always a different answer.
The reason is that, in the past, Concord was doing dif-
ferent advertising campaigns, and [had] almost different
logos and different collections [to appeal to different mar-
 THEEDGE SINGAPORE | MARCH 3, 2008 • OP7

va- kets]. So, you end up with a situation in which the im- So, you’re not planning to retain the old clientele? we have no pressure from the group to deliver numbers.
ar- age is not very clear. So we said, ‘Let’s go back to when No. But if people love what we have done with the We have pressure to do the best qualitative job ever be-
reg Concord was a strong brand.’ In the late 1970s, Concord C1, then great. We’re doing the concept that we think cause the revenues are really coming from the other
fter was hot in the industry because in 1979, we launched the is [best] for Concord but we never try to appeal to the brands like Ebel, Movado and the fashion brands as we
its thinnest watch in the industry, which was the Delirium. old clientele of Concord. We know that we are los- own [watch] licences for brands like Hugo Boss, Tom-
At that time, the brand had a very strong reputation. So ing some [of the old clientele] but the new clientele my Hilfiger, Lacoste, Coach and so on. Concord has a
Why we said, ‘Let’s imagine that we are in 1979 and try to de- is much more energetic and we’ve already seen some mission now to be really small and beautiful, so it’s all
No, scribe Concord at that time’. Then, the brand was daring, great discussions in the [Internet] forums. So, it’s not about limited quantities.
modern, and it was using a tremendous amount of tech- a problem at all.
im nological know-how and engineering. The brand was edgy What kind of impact on revenue are you expecting
for as it was really unexpected to create such a thin watch [at Who are your competitors in the market now? with this new strategy?
be the time]. Those elements were the DNA of Concord, so I can honestly say we have no competitors. [The C1 is] What I can tell you is 2007 [was about] stabilising the
nd we decided to keep that DNA — daring, modern, [tech- going to be purchased by a consumer who has [an Au- numbers because we shut down the old Concord and we
nological] know-how, unexpected — and use those values demars Piguet] Royal Oak Offshore. He might have a launched the new C1. The balance makes a flat number
ad- to redesign the new Concord. We gave these values to the Hublot Big Bang, a Panerai and, tomorrow, he will have and, as of next year, we are going to start to grow [but]
for designers and they came up with this design. a C1. We believe the C1 will not be for someone’s first a very limited growth of around 5%. We feel we could
eak purchase. You need to be ‘educated’, understand and have a huge boom with the C1 but we’re going to keep
nd So, you’ve gone from having the thinnest watch to be in love with the industry. Maybe you will start with it very limited; we want to keep the numbers down. We
the thickest. Is it really the thickest in the industry an Omega, then you will go to a Panerai, then maybe don’t want to burn [out].
iv- right now? Corum, then suddenly you see the C1 — it’s bigger,
ew We believe so. We might find a special grand complica- there are no lugs, it’s different and you love the story Do you plan to keep production figures at 3,000 or
ile- tion that’s a bit thicker but, for chronographs, I think we of the dial. We are in this universe of big, visible, con- will you increase this in the years to come?
have the thickest in the industry. We said, ‘Let’s imag- structed watches and so those names I mentioned are It’s a very difficult question because we also have to
ted ine the ultimate in construction’ and we came up with the brands in this game. adapt, depending on the speed of success. If I had to
his this idea of having a very complex watch in terms of give you a number, I would say that five to 10 years from
sel construction. Can you share revenue figures? now, the vision will be to achieve a maximum of 10,000
old It’s a listed company so the numbers are open but we units. But it’s only when the brand has proven that it’s
What has the consumer and industry feedback been don’t break down the numbers for the specific brand. working well and we are everywhere. Compared with
old like since you relaunched? We are moving from a brand that used to produce 40,000 others, 10,000 units [is still] really small, which is fine
gy” We presented [the C1] to the industry at Basel 2007 and we pieces a year to being a brand that produces 3,000 pieces because we want to be niche.
sti- sold the whole quantity in a day. So, we knew at that mo- a year — that’s going to be our target. In other words,
ment [that] we had something hot on our hands. The other Have you kept the same market strategy?
its thing is the number of press interviews at Basel. [At] Basel No, there is a big shift. We used to be very strong in the
ter 2006, I was not there, we had three or four interviews. [In] US [50%], then the Middle East, then Southeast Asia.
que Basel 2007, we had 137 press interviews in a day. It was The new Concord, and the way we have sold the pieces
nts, crazy, so the attention from the press was big. We knew we in Basel so far, I would say 25% each in North Ameri-
ab- were definitely going in the right direction with this prod- ca, Europe/Russia, Asia and the Middle East. It’s a very
se, uct. And then the second step of reaction was the trade good balanced business so far but, obviously, it may
all- and the public in the forums. If you go to Google and type evolve along the way.
dial Concord C1, you’ll see the number of hits is crazy.
What are your plans for China, India and the Mid-
ave Has Concord’s price point increased? dle East?
and A lot. It was not driven by marketing. We wanted to cre- The Middle East is still a very strong market [and],
me ate something special, something ultimate with the con- with the C1, it’s even stronger. We see huge poten-
on. struction [and] we wanted something very edgy. So, we tial. We launched in Dubai in January with the most
iri- worked with the best suppliers in the industry and, at powerful group in the region. There is no special
the the end of the process of building the watch, you end plan as Concord is a very famous brand in the Mid-
ery up with the price. dle East because of the past, so we have a very good
It’s about [a] 200% [increase]. That’s why we were future there.
her quite nervous about the whole idea. But the design, pro- In India, we don’t have any plans today because we
tch duct and the story seemed to work so well in Basel. So, have so many things to do first in Europe. We started
ntal this is proof that if you have the right product, great de- in January but only with three points of sale, which are
ity. sign, some innovation in the product and you are very really at the top [of the luxury market].
Ab- niche — we had only 1,100 units last year — it works. We have a subsidiary in Hong Kong. We reorganised
for We changed the logo, the colours, we removed the old The C1 is a monster on the the subsidiary and decided that this year, we will give
bil- stock, [so] it’s a new display, new merchandising, eve- wrist at 44mm, distinguish- full attention to Hong Kong and Macau and that’s it for
was rything is new, even the people are new. able by three unique features: the beginning. The objective is to grow to only 10 points
ays When you bring so much freshness and new ideas, a case that comprises 53 com- of sale and maintain that number by year-end. Next year,
acy we have a new clientele. The person who buys the C1 ponents (the norm is only up we will enter the Chinese market with a subsidiary in
is an extrovert [with an] open personality and a very to seven); the absence of lugs Shanghai and partnerships in China. E

nd strong character. He loves big, statement watches. He’s that usually affix the strap to
his not shy. The clientele we had before was much more the case; and a three-layer Jamie Nonis is a freelance writer with a passion for qual-
cal conservative, classical and understated. dial that creates a 3D effect ity timepieces
er-
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OP8 • THEEDGE SINGAPORE | MARCH 3, 2008

FEATURE

Juli
her

Rolex’s
GIFT TO THE ARTS Dav

ty
Continuing a tradition almost as old as time, the Rolex Mentor and Protégé Arts Initiative is an international gel
cyc
philanthropic programme created to assist extraordinary, rising artists to achieve their full potential. It seeks out him
glin
these artists from around the world and brings them together with great masters for a year of creative collaboration —
Per
in a one-to-one mentoring relationship. Leela Barrock was in New York for the initiative’s gala night. wa
at

I
t was a blustery November night at the
Lincoln Centre in New York. A tad too
early for Christmas but a little detail
like that would not put a damper on
the festivities that evening. There was
a real-life red carpet (like on E! Channel)
and press photographers at the ready to
capture the rich and famous all dressed
to the nines (yes, exactly like on E!) —
gliding, posing, gliding, looking oh-so-
glamorous, mingling, trilling and sipping
champagne.
Martin Scorsese was there in a tux,
smiling, nodding, managing to look every
inch the legend he is even with this awe-
struck reporter enthusiastically pumping
his hand, transfixed into silence by his lack
of height (he looks taller on TV, I swear)
and those eyebrows.
Mira Nair was resplendent in a star-
tling red Punjabi suit. She called Scorcese
a guru and later smiled indulgently as Ju-
lie Taymor (Lion King, remember?) wait-
ed for the same reporter to finish pump-
ing her hand. Owen Wilson was a guest,
standing out with his blonde bangs, tan
corduroy and canvas shoes in the sea of
formal evening wear. And Stephen Frears,
the man possessed of a soul sensitive
enough to have captured The Queen, cut
a dashing figure in formal attire, in stark
contrast to the somewhat rumpled man
some 15 journalists had interviewed just
a few hours earlier. There were other lu-
minaries as well, from the worlds of lit-
erature, dance, music and the visual arts,
from all over the world.
“Only in New York could you put to-
gether such a gathering,” one of the guests
at the gala event remarked as yet another
familiar face squeezed past a nearby table.
Indeed, not only did it seem that every na-
tion on earth was represented there, the
place was overflowing with the famous
and glamorous.
There were numerous don’t-I-know-
her/him-from-somewhere moments, as
a dozen different languages and count-
less accents ebbed and swelled among
the crowd, which gave up all claim to
personal space. But it was not New York
that drew the Frears and Scorceses of the
world to the Lincoln Centre that night. It
was Rolex.
Rolex is better known for its precision
Swiss (what else) watches but it does have
a long history of association with the arts.
But nothing quite like this, though.
It was in 2002 that Rolex launched its
Mentor and Protégé Arts Initiative, giv-
ing a twist to the Medici-style patron of
the great Florentine tradition, but with-
out any fanfare. For that first cycle, Rolex
brought together mentors like William
Forsythe (dance), Toni Morrison (liter-
ature), Sir Collin Davis (music), Robert
Wilson (theatre) and Alvaro Siza (visu-
al arts) with carefully selected protégés
— all, without exception, nominated for
their talent, potential, need, motivation
and suitability.
“Just as it takes a year to construct a
Rolex timepiece to our exacting standards,
it takes a year to set up a relationship be-
tween a mentor and a protégé, who then
spend another year developing a fruitful
collaboration,” Rolex CEO Patrick Hein-
iger said.
Thus, for two years, the protégé gets all
paid to spend time with his/her mentor. a-o
The protégé gets a stipend of US$25,000
($35,162) plus expenses and gets to spend to t
time with an idol he or she may have only the
dreamed of ever meeting. Too good to be iga
true? It gets better. Rolex will offer an ad- lite
ditional US$25,000 to produce an event. Pet
And they do not wash their hands of past for
protégés but keep track of their progress
and even boast about them like any proud bra
benefactor would. son
To prevent the unsavoury aspects of som
patronage from tainting the process, the sea
protégés are selected in secret. There is no pro
application process and no lobbying. In- the
stead, six nominating panels consider 30
to 40 young candidates from around the bes
world and narrow their numbers down to fou
three or four. The mentors, selected by a pla
Rolex advisory panel, will then pick the him
protégé they want to work with. No won- the
der the protégés’ descriptions of that first sou
phone call from Rolex sounded like a Cin- lite
derella moment.
“I cannot describe what an opportuni- for

Julie Taymor (left), 2006/07 mentor in theatre, and
her protégée Selina Cartmell
David Aaron Carpenter and Lady Valerie Solti
ty this was for me,” Antonio Garcia An-
gel, protégé for literature in the second
cycle, said when I shared a bus ride with
him one evening. There he was, a strug-
gling writer in Columbia and — voilà!
— the offer comes to spend a year under
Peruvian author Mario Vargas Llosa. “It
was incredible... I thought it was a joke
at first,” Angel said.
This was the thread that ran through
ets all the protégés — Rolex had given them
tor. a-once-in-a-lifetime opportunity.
000 In the second cycle, theatre was added
nd to the list of disciplines, with Mira Nair as
nly the first mentor. There was Saburo Tesh-
be igawara in dance, Mario Vargas Llosa in
ad- literature, Jessey Norman in music, Sir
nt. Peter Hall in theatre and David Hockney
ast for the visual arts.
ess That night in New York, Rolex was cele-
ud brating the culmination of the third sea-
son of the mentor protégé programme with
of some 650 guests crammed into the 400-
the seater ballroom to fete the mentors and
no protégés of the third season and announce
In- the mentors of the fourth season.
30 Scorsese, the reigning Oscar winner for
the best director is the mentor for film in the
n to fourth cycle, taking over from Frears, who
ya played the role in the third cycle. Joining
the him will be Rebecca Horn as mentor for
on- the visual arts, Jiri Kylian for dance, Yous-
irst sou N’Dour for music, Wole Soyinka for
in- literature and Kate Valk for theatre.
Apart from Frears, the other mentors
ni- for the third season were Taymor (thea-
Stephen Frears (left), 2006/07 mentor in film;
Mira Nair, 2004/05 mentor in film; and Josué
Méndez, 2006/07 protégé in film
Edem Awumey (left), 2006/07 protégé
in literature, and Wole Soyinka,
2008/09 mentor in literature
Renee Flemming
Patrick Heiniger (left), CEO of Rolex SA, and William Forsythe, 2002/03 mentor in dance
tre), Tahar Ben Jelloun (literature), Anne
Teresa De Keersmacker (dance), Pinchas
Zukerman (music) and John Baldessari
(visual arts).
Most of the mentors spoke with enthu-
siasm of the initiative of living up to Rolex’
claim that they had been selected not just
because they are great artists but also be-
cause they are generous, according to Re-
becca Irvine, Rolex’s programme director.
At least two of the three mentor-and-pro-
tégé pairs I spoke with appeared to have
formed lasting bonds with each other.
Director Julie Taymor and protégé Selina
Cartmell said they had become friends and
they looked like friends, talking as much
to each other as of each other during the
interview. Author Tahar Ben Jelloum and
Edem Awumey showed a respect for each
other that was heart-warming to see and
spoke of the continuing relationship the
two enjoy.
It was Frears, the Englishman who is
renowned for such film hits as The Queen,
Dangerous Liaisons and My Beautiful Laun-
derette, who stood out as the only mentor
who said he did not see a reason to con-
tinue his professional relationship with
his protégé. No, really.
Was that Frears playing to the gallery?
Perhaps he was, because Frears and pro-
tégé Josué Méndez appeared to share a
certain camaraderie and dry, self-deprecat-
ing wit. One got the feeling that it would
just go against Frear’s grain to admit that
he had a grand time of things in the two
years and may actually have enjoyed men-
toring Méndez.
Known for being a taciturn interview-
ee, Frears has cultivated a reputation for
his acerbic wit and caustic temperament.
Would it not do to appear like he actual-
ly enjoyed mentoring a young, budding
Peruvian? Or at least that was the glossy-
magazine-quality psychoanalysis a couple
of us journalists came up with between
glasses of wine.
The night ended relatively, early con-
sidering that the following day was a Tues-
day and thus a working day. On the bus
back to the hotel, a tiny Indian lady in a
sari smiled uncertainly at me. “Are you
THEEDGE SINGAPORE | MARCH 3, 2008 • OP9
(From left) Germaine Acogny, dance adviser
for the Rolex Arts Initiative; Pinchas Zuker-
man, 2006/07 mentor in music; and Anani
Dodji Sanouvi, 2006/07 protégé in dance
Martin Scorsese,
2008/09 mentor in film
Diane Von Furstenberg
Indian?” she asked.
“No,” I replied. “I’m Malaysian.” The
irony of the moment was lost to all but
me because nobody else would under-
stand that nowhere else in the world am
I classified as an Indian except in my own
country.
The lady, it turned out, was one of the
panel of judges who select potential pro-
tégés. Her category was dance.
I looked at her with interest. The Rolex
process had found her to become one of
six panellists to scour the world looking
for suitable candidates to become a protégé
in dance. She was evidence of the proc-
ess Rolex is proud of — a transparent, free
and fair process that offers a chance for a
student to learn at the knees of a master,
keeping the age-old tradition of appren-
ticeship alive and within reach. She was
evidence that the Rolex initiative was not
just a sterling effort — it is a commitment
worthy of the brand. E
Leela Barrock is an associate editor at The
Edge Malaysia
OP10 • THEEDGE SINGAPORE | MARCH 3, 2008

BEHIND THE BOTTLE

SUFFERING for SAKE Rocky Swift watches as Japan’s

British master brewer gets to work

T
he first steaming rice batch of the year is prayed
over in a Shinto rite and travels along a conveyor
belt in the frosty morning air at Kinoshita-Shu-
zou’s brewery, to begin a centuries-old transfor-
mation into sake.
At hundreds of similar facilities around Japan, the
same process is taking place, with one key difference:
At 160-year-old Kinoshita-Shuzou near Kyoto, the man
in charge of brewing the beverage isn’t Japanese.
Philip Harper, raised in Cornwall, England and ed-
ucated at Oxford, is Japan’s only foreign-born master
sake brewer.
“I’m obviously a bit of a weird presence,” Harper,
41, says during an afternoon break as a kerosene heat-
er blasted from the corner of the tatami room. “It’s not
particularly well-remunerated work.”
After years of declining domestic sales and shuttered
breweries, Harper has become a link in the industry’s
effort to boost the export market. In Japan, chairmen
break open sake casks to commemorate corporate an-
niversaries and sumo champions guzzle it from trophy
cups. Younger drinkers, however, are switching to wine,
beer and other drinks.
Sake shipments in Japan plummeted 27% in the five
years to 2005, according to the Japan Sake Brewers As-
sociation.
Harper, a soft-spoken man, began his sake career 17
years ago in the western city of Nara after arriving in
Japan as an English teacher in the late 1980s. A passion
for tasting turned into a full-time job and eventually led
to Harper attaining the rank of toji, or master brewer,
three years ago.
Dying tojis
He took the helm of Kinoshita-Shuzo in October follow-
ing the death of the previous toji, who had held the po-
sition for 47 years. The sixth-generation owner of the
brewery considered closing the plant until an acquaint-
ance put him in touch with Harper.
Only about a third of the nation’s 2,000 tradition-
al breweries, or kura, are active because of the retire-
ment or death of master brewers who left behind no
apprentice.
“There’s a real crisis of manpower in the traditional
guilds,” says Harper. “You’ve got a huge changing of the
guard. You probably will see some breweries for whom
BLOOMBERG
Harper has a passion for sake and has written two books on the brew
in an effort to promote the drink globally
this is the final straw.”
Winter is the busiest season for sake brewers, a rem-
nant of a system developed centuries ago to give farmers
something to do when fields were fallow. The labour is
long and physical, and at times requires night-time vig-
ils as the bacteria and yeast work on the brew. On this
January morning, Harper cycles wordlessly through ac-
tivities from cooking rice, mixing in purified water from
the local mountain spring, then transporting huge tubs
of it over space heaters using a forklift.
Long nights
A four-year correspondence course gave him the tech-
nical know-how for the work, with long nights fretting
over hissing, frothy vats of fermenting rice.
“You don’t get much in the way of a social life if
you’re doing traditional brewing,” he says. “My first
five years brewing, the only day I had off was the day
I got married.”
Harper toiled in relative obscurity until he wrote The
Insider’s Guide to Sake, a pocket-sized explanation of the
art that has sold about 20,000 copies. It describes nig-
ori, a sweet brew with a cloudy texture caused by leav-
ing the rice sediment unfiltered. There are the dai-ginjo,
ginjo and hon-jouzu — gradations of brew determined by
the type of rice and how far each grain is milled down
to its starchy core.
His follow-up, The Book of Sake, is a trim, picture-lad-
en volume aimed at enthusiastic overseas novices.
Overseas growth
“The brightest point at the moment is that overseas
sake sales are coming along so well,” Harper says.
“Only about 1% of sake that’s made is going overseas,
so obviously that market needs to continue growing
very strongly for it to make up for the drop in domes-
tic demand.”
Sake exports rose 46% over the five years to 2006,
with more than a third of those sales in North America.
Japan’s surviving breweries are focusing more on high-
grade sakes popular with overseas enthusiasts.
Quantity will decline as kura go out of business, while
overall quality will improve, says Yasutaka Daimon, a
sixth-generation sake brewer from Osaka. Daimon co-
founded eSake.com in 1998 to promote the product over
the Internet and through North American distributors.
The site’s top 720ml bottle, Sato no Homare, from Ja-
pan’s oldest brewery, costs US$200 ($281).
He said the industry needs to win back younger Jap-
anese drinkers and capture a domestic market that has
been almost ignored: women.
“It was common sense that women do not like sake,”
Daimon says. “But it was not right; they just didn’t have
the chance.”
At the Kinoshita-Shuzou brewery, Harper is nervous
about how his first batches of sake will turn out, work-
ing with a new crew and with different machinery and
ingredients. He named his debut brand Fukubukuro, af-
ter the “lucky bags”, loaded with surprises, that retail-
ers sell at New Year.
“At the end of the day,” Harper says, “the whole
thing only works if the stuff is actually being drunk.”
— Bloomberg LP E

BITE

riety of other activities to keep
the munchkins entertained while
you enjoy the afternoon.
Where: The Terrace, Sentosa Re-
sort and Spa
Prices: $158++ for adults;
$79++ for children (four to 12
years old)
Reservations: Call 6371 1414,
full payment is required. Email
info@thesentosa.com for addi-
tional information, or log on to
The Terrace www.thesentosa.com.
breads. The new selection
took a year to research
and test, and was devel-
oped in consultation with
chefs from France, Japan,
Spain and Taiwan, to give
this new range a truly in-
ternational flavour. High-
lights include the Canto
Gusto, the equivalent of
dim sum in a bun, Ap-
ple King (a bun stuffed with a
light apple cream), and Curry
idea as any. Highlights of the
spread by chef Salvatore are
Salmon and Ricotta Filled Shell
Pasta in Cream of Tomato, or
Oven-Roasted Lamb with Peas
and Carrots, and Squid Ink Lasa-
gna with Seafood Ragout, Ricotta
Fresca and Italian Herb Tomato
Salsa. There will be a free-flow of
champagne and feel free to bring
anytime of the day. the kids as there will be an East-
Where: Playground @ Big Splash, er Egg hunt to keep them out of
East Coast Park your hair.

T
o celebrate Easter, be sure
to make your way to The
Terrace at the Sentosa Re-
sort & Spa, where a champagne
brunch awaits, with rock lob-
sters, shucked oysters and crabs
to complement the more terrestri-
al offerings. These include whole
Beef Ribs on the Bone, Pan-Fried
Foie Gras, a barbecue selection
and steamed shrimp. It wouldn’t
be a champagne brunch without
a little bubble, and there will
be a free-flow of Duval Leroy.
The day will be a family affair,
with a do-it-yourself pizza sec-
tion for children, an Easter Egg
hunt, bouncy castles and a va-
BreadTalk
In conjunction with its eight an-
niversary celebrations, BreadTalk
has released 12 new signature
Dozo (Japanese curry with egg
wrapped in bread). Check out
these delectable new flavours
at the refurbished CityLink Mall
outlet and other branches across
the island.
Where: CityLink Mall, B1-42 or
any BreadTalk bakery
Carl’s Jr
A good burger on the go is a rare
find in this part of the world,
but that won’t be a problem for
too long. Carl’s Jr is opening a
24-hour drive-through outlet at
the Playground @ Big Splash in
East Coast Park. American-style
grilled burgers are now available
Where: 80 Bras Basah Road, Fair-
Prego, The Fairmont mont Singapore
Singapore Prices: $88++ per person, with
Easter Sunday brunch at an Ital- free-flow of Soave Brut, soft
ian restaurant seems as good an drinks, coffee and tea; $68++
per person, with free-
flow of soft drinks,
smoothies, coffee and
tea; $35++ per per-
son, with free-flow of
soft drink and smooth-
ies (for children aged
six to 12)
Reservations: Call 6431
6156 or email dining.sin-
gapore@fairmont.com
— Compiled by Des-
mond Wong E
 THEEDGE SINGAPORE | MARCH 3, 2008 • OP11

FOOD
J.Co Donuts recently opened
at the basement of Raffles City

J.Co’s doughnuts have catchy

names such as Al Capone

S
ingaporeans just
can’t seem to get
enough of biting
into doughnuts.
Check out the long
queue snaking its way around
popular outlets like Donut Fac-
tory at Raffles City — even be-
fore they open their doors. Quek have been business part-
Which is why Singapore Ex- ners and friends for many years.
change-listed Breadtalk Group re- “Rather than compete with him

BRINGING
cently brought in J.Co Donuts & and create our own [brand], we
Coffee café. Located at the new- opted to work with him to bring
ly renovated basement one of J.Co to the next level.”
Raffles City, it’s touted as the Although he declines to tell
first lifestyle donut café in town, Options how much the master
boasting 25 yummy varieties of
doughnuts as well as a selection
of top-of-the-line coffee and ice-
blended drinks like the signature
Almonetto Freeze.
franchise is worth or the com-
pany’s projected monthly turno-
ver, he does let on that the Singa-
pore outlet is a joint venture, with
Breadtalk holding 70% and An-
in the dough
Founded by Indonesian entre- drean, 30%. The synergy seems Fad or not, the doughnut craze has hit Singapore and joining in the fray is J.Co
preneur Johnny Andrean in 2005, intuitive, almost inevitable. For,
the chain has expanded aggres- just like Breadtalk’s range of buns Donuts. Felix Cheong is smitten by the little pastry with a hole in the middle.
sively in Asean over the past cou- and breads, J.Co’s donuts also
ple of years, counting 32 outlets come with snazzy and offbeat
in Indonesia and two in Malay- names, such as Al Capone, Heav- doughnuts have been flying off apple crumble? The craze fizzled meet and chill out.”
sia. In Singapore, the Breadtalk en Berry and JCrown Donatel- the counters. But given Singapo- out soon enough. Which is why you can look
Group holds the master franchise la. The donuts are light, easy reans’ taste buds for food fads, “J.Co is not just about dough- forward to another J.Co Donuts
to run J.Co for 10 years. on the tongue and not cloyingly is it a sustainable business? Re- nuts,” asserts Tan, who also wears & Coffee at Bugis Junction in the
“J.Co is Asia’s fastest-growing sweet. They’re handmade and member the coffee-scented bun, another hat as president of the middle of the year and possibly
lifestyle concept,” enthuses Wil- freshly baked, using natural in- Rotiboy, which inspired a spate Breadtalk Group. “It’s a lifestyle more over the next few years. E
liam Tan, CEO of J.Co Donuts & gredients. of copycats? Or how about Portu- café concept that also offers great
Coffee, adding that both Andrean Little wonder, then, that since guese egg tarts, Taiwanese bub- music, ambience and even read- Felix Cheong is a published poet
and Breadtalk founder George the café opened on Feb 9, the ble tea and melt-in-your-mouth ing material. It’s a great place to and author

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OP12 • THEEDGE SINGAPORE | MARCH 3, 2008
DRIVE
W
hat’s in a name? If
you harbour fan-
tasies of having
your name live
forever, there are a
few routes to sure success. The
easy route is the one taken by
Idi Amin, Pol Pot and their ilk,
though chances are you’d prefer
to be fondly remembered.
A better path is to succeed
in motorsport, though gone are
the days when you could enter
a Formula 1 race in a car bear-
ing your own name — there is
just too much money in the sport
these days. Names such as Bra-
bham, Jordan and Surtees are fa-
ding memories, though it has to
be said that McLaren, Williams
and Ferrari still fire the collective
imagination.
When those names appear on
road-going cars, they do have
cachet — Ferrari is an obvious
one, and McLaren is responsi-
ble for one of the fastest road-
going cars ever (top speed was
around 390kph), though only a
small number of buyers managed
to come up with the million-dol-
lar-plus asking price.
When you look at the Mini —
particularly the humble original,
with it’s small wheels and tiny en-
gine — Formula 1 is not the first
thing that comes to mind, though
the most coveted Minis, wearing
the Cooper badge, should.
John Cooper and his father
started the Cooper Car Co after
the war, building single-seat rac-
ing cars, which were mostly sold
to private individuals. The cars
had the engine placed behind the
driver — apparently Cooper said
this was for practical reasons, as
they were powered by motorcy-
cle engines using the chain fi-
nal drive — but the handling ba-
Maximising the Mini
There is more legroom in the front, and there’s a lot of kit as standard, such as auto
climate control, a proximity key, leather and more airbags than you could possibly
know what to do with
lance of these mid-engined cars
showed the way forward.
I should say at this point that
the British racing fraternity was
possibly a little myopic: There
had been examples of successful
mid-engined race cars that pre-
dated the Coopers’. Still, the de-
sign was a success and the com-
pany won back-to-back Formula
1 World Championships in 1959
and 1960, and is often credited
as a pioneer of the mid-engine
concept.
Cooper fame
But the Cooper name will be best
remembered for its association
with Mini. It helps that the Mini
Cooper S won the gruelling Monte
Carlo Rally several times, too.
Little surprise, then, that when
BMW resurrected the Mini, it
would resurrect the Cooper name
with it — the basic line-up here
includes the Mini One, Mini Coop-
er and Mini Cooper S.
Expect to hear the Cooper
The Mini Cooper S gets a lift with the addition of the John Cooper
Works tuning kit. Tony Watts hangs on for the ride.
name even more often with the lo-
cal launch of John Cooper Works
Tuning. On offer are body kits,
double-spoke 18-inch wheels, 16-
inch brake kits, branded Recaro
sports seats and a tuning kit.
It was the latter fitted to the car
on test. Altered engine manage-
ment, a different air filter and
twin exhaust boost the perform-
ance of the Cooper S. Horsepow-
er is up 17hp to 192hp, top speed
is 232kph (up from 225kph) and
the zero-to-100kph dash is dis-
patched in 6.8 seconds (down
from 7.1, though you can pro-
bably add around 0.2 second for
this automatic variant).
The kit does all this without
too much fanfare — there are no
silly wings or bulges added, just
a few discrete badges and dif-
ferent exhaust tips. It’s an ap-
proach I wholeheartedly approve
of — I’d rather have a car that
goes quick, than one that simply
looks quick.
As the base car is a Cooper S,
there are no real changes to ba-
sic functionality. The bootspace,
for instance, is pretty small, and
the rear seats have decent head-
room, but a fairly — uh — mini
amount of legroom.
Things are better in the front
seats, and there’s a lot of kit as
standard, such as auto climate
control, a proximity key, leather,
and more airbags than you could
possibly know what to do with.
There are even audio controls on
the steering wheel, which is diffi-
cult to fathom as the audio system
is a very short reach away.
The details are pure Mini — the
“floating” roof (which is achieved
largely by blacking-out the pil-
lars), chrome filler cap and door
handles give it that retro touch,
without appearing naff.
Retro
The interior also gets the retro
treatment and, after several years
between drives, I have to admit
to being less enamoured of the
details. The central rocker switch-
es for the electric windows, for
instance, look great, but aren’t
ideal from an operation perspec-
tive; likewise the massive speedo-
meter in the centre of the dash.
I know it harks back to the ori-
MINI COOPER S
WITH JOHN COOPER
WORKS TUNING KIT
$6,248 (kit only)
$134,048 including COE
Engine: 1,598cc, 16-valve,
turbocharged in-line four
Power/torque: 192hp/270Nm
(overboost)
0-100kph: 6.8 seconds*
Top speed: 232kph*
*Figures for manual transmission
Expect to hear the Cooper name even
more often with the local launch of
John Cooper Works Tuning. On offer
are body kits, double-spoke 18-inch
wheels, 16-inch brake kits, branded
Recaro sports seats and a tuning kit.
ginal cars, but it does mean ta-
king your eyes off the road to see
what speed you’re doing. Worse,
if your passengers like to nag, the
speedometer is on display to eve-
rybody in the car.
This is a real shame, because
the Cooper S with the John Coo-
per Works tuning kit does like to
go, so they will probably have
plenty to nag about.
The test car was fitted with the
six-speed automatic transmission
(one retro item I’d really have
liked to see here is the manual
gearbox), which offers steering
wheel-mounted paddles for gear-
shifting. The power does make
itself known through the steer-
ing with a little tug at the wheel
when you floor it — torque-steer
in motoring parlance. Otherwise,
the Mini is a joy to pilot. The
power is strong, the handling
is sharp and the braking perfor-
mance up to scratch. It is a sur-
prise just how rapidly this thing
gets along.
One price you pay for all this
is a firm ride, but if you want a
limousine, maybe you should be
looking elsewhere. Oh, and the
manual gearbox would give it
slightly more speed, and a more
“in control” feel.
Still, the original Mini had an
anti-establishment rebelliousness
about it, and if equipped with the
John Cooper Works tuning kit, so
does this one.
It doesn’t matter if you find
some of the retro details con-
trived; the Cooper S essential-
ly follows the spirit of the origi-
nal car, and that’s nothing but a
good thing. E
Tony Watts is a freelance writer
with a passion for fast cars and
bikes
 THE WEEK OF MARCH 3, 2008

Rolex’s gift
to the arts
Help for rising artists
to reach full potential

Suffering
for sake
Keeping a dying art alive

Maximising
the Mini
Mini Cooper S gets a lift

Sparking a
REVOLUTION
Concord’s president Vincent Perriard on being given
carte blanche in reinventing the brand
 PW2 • THEEDGE SINGAPORE | MARCH 3, 2008

PERSONAL WEALTH

EDITOR/REGIONAL MANAGING
DIRECTOR
Tan Boon Kean
What makes Fidelity tick?

GWYNETH YEO/THE EDGE SINGAPORE

(bktan@bizedge.com)
| BY JOAN NG | and you want to make sure you put them in the right
SECTION EDITOR position. If they’re good at attacking, you put them in

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REGIONAL SENIOR MANAGER |
Suresh Kumar
F
or the second year running, Fidelity Invest-
ments emerged tops at last week’s The Edge-
Lipper Singapore Fund Awards. The glo-
bal fund management giant swept a total
10 awards, sharing the honours with Lion
Capital Management, which also bagged the same
number of awards.
As one of the powerhouses of the global fund-man-
agement industry, with US$1.6 trillion ($2.25 trillion)
in assets under management, Fidelity has attained a
reputation of grooming and retaining top talent, em-
bodied by legendary fund managers like Gerald Tsai
and Peter Lynch. Part of that has come from allowing
its fund managers relatively free rein and more flex-
ibility than is found at other fund houses.
“We give them the freedom to be themselves,”
says global head of institutional investment Michael
Gordon. “To express themselves as an individual
within their funds.”
Gordon, who joined Fidelity in Australia in 2000
and until recently held the position of chief invest-
ment officer, admits that there isn’t total freedom in
certain aspects — such as the number of stocks a fund
holds or the types of stocks that make up a portfolio,
which are elements subject to a fund’s type or man-
date. Since the 1990s, Fidelity has had to reduce some
of the leeway it gives its managers to make big bets
as those that backfired had hurt fund returns.
“But they’re free to build the fund as they see fit,”
he says. Most other fund houses would perhaps clas-
sify a growth manager or a value manager and buy
or reject a stock on the basis of which profile it fits,
but Fidelity doesn’t do that, Gordon explains. “The
fund manager is free to formulate their own invest-
ment view, their own thoughts, their own thesis. So
a lot of entrepreneurialism exists with the individual.
Which I think is one of the reasons people stay with
the firm, one of the reasons people like the firm.”
Gordon: There’s much more demand within Asia. We have
supply shortages.
Right position
Such flexibility does, however, create issues as to the
point at which a manager needs to be reined in. For
Gordon, there is no hard and fast rule. “It’s not like
two years you’re on warning and three years you’re
out,” he says. “I have taken action when a fund man-
ager hasn’t underperformed… Yet there are times when
we’ve got good fund managers who’ve underperformed
for three years and we’ve done nothing.”
Instead of taking just fund performance as a meas-
ure of a manager’s progress, Gordon says it’s impor-
tant to look at specific behaviours that could affect
the team, or are counter to an individual’s strengths.
He recalls an incident where one fund manager began
underperforming around the time he stopped sending
out his thoughts to his team over email. “We told him,
how about you get back and start writing again, and it
worked. So it’s things like that. You look for patterns
of behaviour that correlate with strong performance,”
he says. “It’s a bit like coaching a sporting team. A
good CIO knows his players’ strengths and weaknesses
an attacking position and then you make sure they’re
behaving in accordance with their strengths.”
This year will be a year in which those skills be-
come all the more important. Global equity markets
are sliding and the benchmark MSCI World Index is
down 9.5% since the start of this year (as at Feb 20).
A majority of experts are predicting a US recession
that would spin off into a global bear market.
‘A long while to get through’
“This is not a market correction [where you can say
that] once the S&P gets to a particular level we’ll be
fine. This is going to take a long while to get through,”
says Gordon of the banking and housing crisis that has
hit the US. “But the big difference between Asia and
the US is debt. The US is saddled with it and Asia has
none of it. And Asia knows what it’s like to go through
a debt crisis. They went through one 10 years ago and
that’s how painful it’s going to be for the US.”
Gordon does believe that the Asian markets are in
a much better position to ride out the difficult times.
“When you look at it fundamentally, you think actu-
ally [the idea that Asian markets cannot decouple] is
not right… There’s much more demand within Asia.
We have supply shortages,” he says. With the excep-
tion of a few sectors that are exceptionally depend-
ent on the US, Gordon doubts there will be a signifi-
cant slowdown in Asia. “If the US is in trouble, Asian
economies are in better condition than they’ve ever
been. Since [the Asian financial] crisis, Asia now gets
all the ticks: self-funded, huge saving ratios, massive
foreign reserves. It’s in great shape,” he adds.
Gordon believes that, globally, the investment com-
munity will eventually begin looking less towards the
US for leadership and more towards Asia. “We’ve all
spent most of our working lives thinking that [what’s
in] the US is best practice and I think these are times
for questioning that. Particularly here in Asia.” E

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Driving returns with an aggressive and concentrated approach
| BY KELVIN TAN |
One of the first things Mario Frontini did when he took
over as portfolio manager of the Fidelity European
Aggressive Fund last June was to cut the fund’s stock
holdings by a third to approximately 60 names by selling
the potential underperformers while increasing exposure to
stocks that he has high convictions on.
At end-2007, Frontini’s concentrated strategy seemed
to have paid off after this fund turned in stellar returns of
13% (in euro terms), outpacing his fund sector average of
6.55%. Generating above-average gains, however, isn’t
new to the 39-year-old Italian fund manager, who used to
beat his benchmark every year when he ran the Fidelity’s
Italian Fund from 2004 to mid-2007.
The following are excerpts from an interview with Personal
Wealth last week, in which Frontini talks about his investment
style, strategies and stocks that he likes. His Fidelity European
Aggressive Fund won two awards at last week’s The Edge-
Lipper Singapore Fund Awards 2008 for best fund in the
European equity category over three- and five-years.
Personal Wealth: You seem to have adopted a more
focused and concentrated approach to the running
of the European Aggressive Fund. Tell us your
rationale of doing that. And is that move primarily
to boost performance?
Mario Frontini: I have always run more concentrated portfolios
in all previous mandates and I still do so. I tend to invest quite
a lot of time with company management and analyse the
industry dynamics and whenever I find a good investment
idea, I would try to make the most of the benefits for the fund.
That said, I am very focused on controlling risk and limiting the
downside, should my investment case prove to be incorrect.
In what other ways is your management style
different from that of your predecessor?
As with my predecessor, I am a bottom-up stock picker and I
look for opportunities. I believe it is essential movements of macroeconomic indicators.
to be constantly ahead of the market and be During this recent period of volatility
willing to take, at times, a contrarian view. I have uncovered several interesting
I do not have a specific investment style as new ideas and purchased some stocks
such, though I prefer companies that are that have suffered as a result of the
trading below intrinsic asset value, where indiscriminate market sell-off rather
there is a valuation anomaly or market than from any deterioration in their
inefficiency, or they are undergoing change. fundamentals.
Have you added more exposure to Name us some stock names which
small or mid caps since taking charge you are bullish on and have the
or are most of your holdings still in highest conviction over a 12-month
the big-cap arena? period.
The weighting in stocks with a market cap I have conviction in [German steel
of under €5 billion [$10.56 billion] has Frontini: I remain cautious producer] Thyssen Krupp, as I believe
risen over the past six months, while the on financials, given the that the fundamentals for the European
weighting in stocks above a €20 billion uncertainty surrounding the steel sector are very good. The low
market cap has been reduced somewhat, sector, and I do not currently current inventories and re-stocking should
but this is primarily due to stock picking find valuations compelling translate into higher prices. The company
rather than an overt bias towards small caps. is also benefiting from a large investment
plan in the US and Brazil and investors are not recognising
Let’s talk about the European stock markets, which the strong growth in its technology and elevator divisions.
like most other markets, have been affected of I also think that the recent correction in luxury goods
late. What is your current strategy in this difficult companies, like Richemont, is unjustified and I have been
condition? buying this stock recently. I also like the deepwater drilling
Over recent months, volatility has remained very high, and sector and I would recommend Seadrill, a Norwegian
this has created substantial uncertainty among professional company, which has a very modern fleet.
investors and the general public. I see the current market
environment as offering interesting opportunities, and I Are you staying away from European banks and
remain convinced that adherence to a clear and consistent financials at the moment?
investment process should benefit the fund’s performance I remain cautious on financials, given the uncertainty
in the medium term. surrounding the sector, and I do not currently find
The overall outlook for the European economy is rather valuations compelling, due to the heightened level of
complex and difficult to assess. Therefore, it is not easy risk. I believe that the issues currently affecting the
to forecast how things will balance out over the coming credit markets and beyond are having a significant
months. As a result, I believe that I can add more value impact on the financial sector. Of course, the health of
by focusing on company fundamentals and spotting the financial sector has an impact on the rest of the
undervalued stocks, instead of slavishly following the economy and I am wary of this.
PW4 • THEEDGE SINGAPORE | MARCH 3, 2008

PERSONAL WEALTH

Lion Capital builds a reputation

by sticking to processes

PICTURES: GWYNETH YEO/THE EDGE SINGAPORE

| STORIES BY JOAN NG | more from the company’s investment profes-
sionals to maintain its track record.

I
t is among the newest players in the fund
management game. Yet Lion Capital Man-
agement has succeeded, for the third year
running, at coming out among the front
runners in this year’s The Edge-Lipper Sin-
gapore Fund Awards 2008. Formed in 2005 from
a merger of OCBC Asset Management, the fund
management arm of OCBC Bank, and Straits
Lion Asset Management, the investment sub-
sidiary of local insurer Great Eastern Life, the
fund house won 10 awards, including a group
award in the mixed asset category.
Daniel Chan, the CEO and chief investment
officer of Lion Capital, says he is “delighted”
and “maybe a little surprised” with the results.
After all, the firm has not been around for a long
time. “And to be winning the same number of
awards as Fidelity, which has many funds in
Singapore, is a rare honour,” he adds. Fidelity
also bagged 10 awards last week.
Putting faith in processes
Chan believes that the wins are a testimonial
of sorts to the stock-picking processes he has
put in place at the firm. “I think this time we
can say that we’re a little bit more confident
that the wins reflect more of the Lion Capital
resource, process and structure than the previ-
ous year,” he says. “We have always said that
we try to institutionalise the process so that
it’s not so people-dependent. [It’s about] hav-
ing the right structure, the right process and
the right approach to make it work.”
Last year, Lion Capital lost two key fund man-
agers: Hou Wey Fook, head of global equities,
left the firm in May to take up the role of chief
investment officer at ING Asia Pacific Bank; and
in December, senior fund manager Kam Yoke
Meng, who had been managing the award-win-
ning Lion Capital Singapore/Malaysia Fund, de-
parted for DBS Asset Management.
Chan: We have always said that we try to institutionalise the process so that it’s not so people-dependent
But Janet Liem, head of Asian equities at
Lion Capital, says the departures had very lit-
tle impact on the performance of the funds
they were managing. “There is no star man-
ager in Lion Capital. So when a fund does well
or does badly, it is joint ownership for the en-
tire team. The portfolio manager basically is
the face for the fund, but the credit doesn’t go
entirely to the portfolio manager,” Liem says.
“With the departure of any one of us in the
team, there should not be any change if our
process is adhered to.”
However, that’s not to say that the firm
disregards the importance of retaining talent.
“Our compensation policy factors are geared
Chan is well aware of this, but believes that
some opportunities can be found if you look
hard enough. “I think the outlook is still a lit-
tle bit cloudy simply because of the scale of
the credit problems that we are seeing; not just
subprime but various other commercial mort-
gages, credit cards, auto loan receivables and
so on. Mainly problems originating out of the
US,” says Chan. “So, it looks like it’s still too
early to say that we have seen everything and
I think we haven’t really seen the full damage
on the [US] economy.”
Nevertheless, Chan also adds that funda-
mentals in Asia still look very strong. Corporate
balance sheets, for instance, are still healthy.
“The Asian markets have also had quite a cor-
rection, even in China and India. We are starting
to see a lot of value emerging here and there,”
he says. “So, although I think it’s hard to say
where the bottom [of this banking and hous-
ing crisis is], if you invest on a bottom-up ba-
sis, and taking a long-term view, I would say
this represents a buying opportunity.”
In terms of specific geographical markets,
Chan is most positive on China H-shares,
which he says are looking particularly attrac-
towards retention of talent: paying a compet- tive at the moment, especially with the recent
itive salary and rewarding good performance. sell-down. Year-to-date, the Hang Seng Index
We have also introduced battle chest schemes is down 16.3%. Markets that Chan isn’t too
to give them an incentive; sort of a stake in keen on are South Korea and India. Although
the firm,” Chan says. the South Korean market has a price-to-earn-
ings multiple of about 12 times, making it ap-
Cloudy outlook but stick with Asia pear cheap, he believes that its dependence on
The trade secrets put in place at Lion Capital will the rather cyclical heavy sectors is a weakness.
be tested a fair bit this year. Since 2005, when Meanwhile in India, earnings expectations are
Lion Capital was formed, global equity mar- a little too high for his liking.
kets have been fairly strong. The MSCI World Chan assures investors that even with the
Index rose by about 40% between the start of market turmoil Lion Capital will keep hunt-
2005 and end-2007, and most equity funds have ing for investment opportunities. “With all
been performing well in general. But with the this selldown, it can only represent fair value
global freefall in markets of late, it will require opportunities for us.” E

New manager rebalances Singapore/

Wong: Sectors that we prefer right now are telcos and transport for
their defensive nature
Malaysia fund
With the departure of its portfolio
manager Kam Yoke Meng, the Lion Capital
Singapore/Malaysia Fund now has a new
fund manager. But Kelvin Wong, who joined
Lion Capital in January, has a tough act to
follow. After all, the fund, which is among
the oldest of Singapore’s unit trusts, has
been consistently winning awards year after
year. This year, it secured an award in each
of the individual fund categories for best
performance: over three, five and 10 years.
Wong, who has seven years of
experience in equities and two years in
corporate banking, says that there has not
been any basic change in his approach to
the fund. “I’ve looked at the portfolio and
it’s a well run fund,” he says. “In terms of
the number of stocks, right now we have
slightly under 40, so it’s a relatively well
diversified but also in a way concentrated
portfolio.”
According to Wong, the only tweak
he has made in the short time since
he joined was to increase the country
weightage of Malaysia in the portfolio.
Previously, Malaysia made up less than
40% of the total fund portfolio. “I think
the short-term catalysts in Malaysia are Wong believe that the Singapore market
there, what with the election year and the should outperform the Malaysian one.
government pumping in money,” he says. “Singapore is clearly showing a lot more
Wong increased the weightage so that value and it also offers a lot more choices,”
both Malaysia and Singapore weighed Goh says.
about evenly. Wong also adds that the fund will
“We’re also taking a look at our small- have a slight tilt towards the defensive
cap exposure. What with the uncertainty in this year because of market uncertainties.
the US, and being unsure of how long this “Sectors that we prefer right now are
is actually going to last, I’ve been looking at telcos and transport for their defensive
our small-cap exposure and just trimming it, nature.” Wong’s top picks are SMRT
especially those stocks that we’re a bit less Corp and StarHub, which he says are
comfortable with,” Wong adds. rising- population plays. “StarHub should
Brigette Goh, a portfolio manager get the benefit in terms of a bigger
at Lion Capital who specialises in addressable market, as well as a number
Malaysian equities and has worked portability issue in the second half, which
with the Singapore/Malaysia fund team may allow it to steal some market share
for the last two years, says last year’s from SingTel,” he says. And for SMRT,
performance was helped significantly by the growing population as well as the
the strong performance of the property recently-announced government initiatives
and construction sector in Malaysia, which should lead to more people taking public
saw a lot of good news flow in 1H2007. transportation.
“Another theme that was also structurally Apart from these two stocks, Wong
steady and took off very strongly last year also likes DBS Group Holdings, which
was plantation and soft commodities,” she he says is currently undervalued in relation
adds. to its peers United Overseas Bank and
Looking forward though, both Goh and Oversea-Chinese Banking Corp.
PW6 • THEEDGE SINGAPORE | MARCH 3, 2008

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

PERSONAL WEALTH

Shift to mixed assets Tan Boon Kean (back row, second from left), editor and
regional managing director of The Edge Singapore, with the
As equities drop, investors search for safety winners of The Edge-Lipper Singapore Fund Awards 2008

| BY JOAN NG | presented for each category, and one award for sistent above-average performance in relation a driver and I’m still trying to find out whether
overall performance across categories. to their peer groups.” this trend is sustainable,” says Koh.

G
lobal fund giant Fidelity and local
asset management powerhouse Lion
Capital Management emerged tops
at last week’s annual The Edge-Lip-
per Singapore Fund Awards 2008,
scooping up 10 awards each. Runners-up Al-
lianceBernstein and UOB Asset Management
picked up seven awards and six awards re-
spectively.
Lion Capital, AllianceBernstein and UOB
also bagged a group award each: Lion Capi-
tal for best performance in the mixed assets
category, AllianceBernstein for the bond as-
set class and UOB for overall best perform-
ance among the locally registered fund houses.
Deutsche Asset Management won the fourth
group award for best performance in the eq-
uities asset class category, while also picking
up two individual fund awards.
The winners were presented their plaques at
Reuters’ spanking-new office at One Raffle Quay
last Thursday. The awards are jointly organised
by The Edge Singapore and Lipper, a company
wholly owned by Reuters. A total of 67 awards
was given out to individual funds for perform-
ance across three broad categories: bonds, equi-
ties and mixed assets. One group award was also
Top and bottom 10 Lipper global classifications
for FY2007 by net fund flows ($ mil)
INFLOWS
LIPPER GLOBAL CLASSIFICATION NET FLOW
Mixed asset SGD balanced 1,432.37
Equity Asia Pacific ex Japan 1,270.57
Money market SGD 638.22
Bond SGD 591.00
Equity China 520.58
Equity Singapore 469.12
Equity Greater China 439.07
Equity sector natural resource 364.10
Equity Malaysia/Singapore 318.13
Equity global 317.42
Winning funds are selected based on the
Lipper Leader format, which uses four major Healthy fund inflows 2008 to be challenging
categories: consistent returns, total return, Koh, who also spoke briefly about the trends Koh sees the emerging markets in Asia as some-
preservation and expenses. Kenneth Koh, head in the fund management industry last year and what of a safe haven against market volatilities
of research for Lipper’s Asia ex-Japan team, the outlook for 2008, said 2007 saw a healthy this year. Last year’s fund flows increasingly
spoke briefly on the importance of using dif- amount of fund flows. In fact, fund flows reflected that, with Equity Asia Pacific ex-Ja-
ferent categories to judge the performance of rose to $5.6 billion last year, more than dou- pan offerings recording an overall increase of
funds. “Not everyone would have the same re- ble the $2.1 billion in fund flows for 2006. In- $1.3 billion, ranked second among the fund
quirements from a fund,” Koh explains, and the flows were larger than outflows, amounting to classifications.
categories allow buyers to make choices based $31.9 billion, versus $26.3 billion for outflows. With the volatility in the equities market
on their individual investment goals. The bulk of the money flowed through equi- likely to continue, however, there is no doubt
While the individual fund awards help inves- ty funds, which accounted for $3.8 billion, or that 2008 will be a tough year. Because of that,
tors select particular funds, the group awards about two-thirds of total fund flows. he believes, investor appetite for riskier invest-
system is also helpful in boosting the position of However, Koh also noted that while aggregate ments is also shrinking. In 4Q2007, net flows
a fund house. To qualify for the group awards, fund flows into equity funds were high, a lot of into equity unit trusts slowed to $720 million
fund houses must have three distinct portfolios it also consisted of fund outflows. Total fund from $1.7 billion in 3Q. Meanwhile, net flows
in each of the three asset classes. The winner subscriptions amounted to $20.6 billion while in the mixed-asset class grew in 4Q2007 to
is calculated based on the best average con- redemptions stood at $16.7 billion. “It means $543.6 million, closing the gap with equities.
sistent returns over the last three years, which a lot of people are actually using the market to In the short term, Koh believes it is unlikely
means that while a fund house may not win trade and taking a more short-term view,” Koh that mixed asset funds will overtake equity funds
as many individual awards, a fairly consistent says. “Of course, some of the fund houses may in popularity. “Most Asians tend to be still, funda-
performance across portfolios and asset class- not be too happy, because they want long-term mentally, equity investors,” he says. However, he
es would allow it to stand out. “A fund house money; but there could be some investors, in fact believes that this year will be a challenging one
represents itself to investors not through just there are investors, who take a short-term view for most fund managers and fund houses, owing
one fund, or one asset class, but across all its and use equity funds for that purpose.” to market volatility. There will certainly be a great
products,” Koh says. “What is important is for Another trend that Koh also pointed out deal of cautiousness among investors.
all the funds to be able to demonstrate con- was the continued weak fund flows coming “That is why we will need to stay vigilant
in under the CPF Investment Scheme (CPFIS), to maintain viability in the marketplace,” Koh
which allows Singaporeans to invest portions says. “When markets are bad, there are always
of their CPF savings in approved unit trusts. products that you can buy — a more conserv-
CPFIS-approved funds recorded an aggregate ative product, for instance. So, in that perspec-
outflow of $34.8 billion in 2007. However, this tive, the industry still has room to move. What
OUTFLOWS outflow is still less than the recorded outflow is important, then, is for the fund promoters to
LIPPER GLOBAL CLASSIFICATION NET FLOW of $52.9 billion in 2006. come up with innovative products to deliver
Protected -1,121.75 The improvement was due to a sharp spike returns and yet not compromise on risk. That’s
Equity Japan -278.14 in inflows in 2H2007, which Koh says could be where product innovation comes in.”
Equity emerging markets Europe -212.70 due to government policies introduced last year, Koh believes that since the local fund man-
Equity sector information technology -172.85 such as investment restrictions on the CPF Ordi- agement industry experienced its boom at least
Equity sector pharmaceuticals & health -116.79 nary Account (OA) monies. Indeed, come April, a decade ago, there has been some stagnation
Guaranteed -90.35 CPF members would no longer be able to invest in the market in terms of innovation and bet-
Equity sector real estate global -82.21 the first $20,000 of their OA balances under the ter products. He says this will have to change.
Equity Europe small & mid cap -60.36 CPFIS. To beat the April deadline, when the re- “Obviously, it’s not always easy. Product de-
Mixed asset SGD aggressive -55.86 striction comes into effect, some members have velopment and innovation will take time,” he
Equity sector real estate Europe -53.07 already started scrambling to invest their OA says. But when well executed, such innova-
monies in CPFIS products. “I’m not saying it’s tion is almost always rewarded. E
LIPPER/IMAS FUND FLOW REPORTS

Singapore fund flows (1Q to 4Q2007) CPF versus non-CPF net flows (1Q to 4Q2007)
$ mil $ mil
2000 1800
1600
1500
1Q2007 1400
2Q2007 CPF net flows
1200 Non-CPF net flows
1000 3Q2007
4Q2007 1000 Total net flows

500 800

600
0 400

200
-500
0

-1000 -200
Bond Equity Mixed assets Money market Others 1Q2007 2Q2007 3Q2007 4Q2007
PW8 • THEEDGE SINGAPORE | MARCH 3, 2008
PERSONAL WEALTH
Templeton bond fund outperforms by
betting against the greenback
| BY KELVIN TAN |
G
iven the extensive travel-
ling time Franklin Temple-
ton’s Michael Hasenstab
spends visiting countries,
especially those in the
developing world, you would have
thought that he was part of the fund
house’s globetrotting emerging mar-
kets equity team rather than fixed-
income bond chief.
Hasenstab, who co-directs all
investment strategies within the
International Fixed Income Group
at Franklin Templeton, spends one
third of his time on the road. Indeed,
he is unlike many of the archetypal
bond fund managers who prefer to
do their fixed-income investing be-
hind the desk, with the aid of com-
plex quantitative models to evaluate
the yield curves, direction of inter-
est rates and currencies.
Managing the Templeton Global
Bond (A [Mdis] USD) Fund, which
invests heavily in the government
bonds of Asia, Latin America and East-
ern Europe, Hasenstab believes that
it is imperative to be on the ground
when evaluating the economic, polit-
ical and social aspects of these ever-
changing emerging countries. “Coun-
try visits are as important for us as
company visits are for equity fund
managers,” he points out.
In recent years, Hasenstab’s in-
vestment approach seems to have
paid off. Over the past five years,
his fund — a winner of two awards
at last week’s The Edge-Lipper Sin-
gapore Fund Awards 2008 for best
fund in the global bonds category
over a five- and 10-year period —
has significantly outperformed all
other global bond funds available for
sale in Singapore after turning red-
hot returns of 32.28% versus aver-
age group gains of 11.6%.
To know more about his win-
ning ways and the outlook for glo-
bal bonds, Personal Wealth recent-
ly spoke to Hasenstab, who holds a
PhD in economics from the Austral-
ian National University and current-
ly oversees bond assets in excess of
US$22 billion ($30.83 billion). Here
are excerpts from the interview.
Personal Wealth: How do you man-
age to outpace most of your rivals
and turn in such high double-digit
returns for your bond fund in re-
cent years?
Michael Hasenstab: Our approach
is to combine qualitative analysis of
macroeconomic factors with sophis-
ticated quantitative tools. We begin
with an in-depth analysis of a coun-
try in order to understand its fun-
damentals and then complement a
bottom-up analysis, with a top-down
global perspective, that helps reveal
potential catalysts that may drive a
revaluation. We seek to identify op-
portunities within those countries,
ultimately searching for value.
Our unconstrained [non-bench-
mark] approach provides the flexibil-
ity to hold only the most attractive
Our approach is to combine
qualitative analysis of macroeconomic
factors with sophisticated
quantitative tools — Hasenstab
sources of alpha. Currency, interest
rate, and credit exposure are eval-
uated and exploited independent-
ly in order to maximise risk-adjust-
ed returns.
The past two years have present-
ed the fund with the opportunity to
capitalise on several very impor-
tant secular trends in the context
of a largely benign global environ-
ment. The fund has taken advantage
of the rebalancing of global growth
towards developing economies by
adding currency exposure to those
rapidly growing economies.
Asian currencies have largely
benefited the fund performance over
this period as have peripheral Euro-
pean currencies, which have bene-
fited from euro-area convergence.
To add to that, the fund benefited
from having almost no exposure to
the US dollar over the period. Fur-
ther, the fund has only recently start-
ed adding duration exposure after
only holding interest rate exposure
in select economies during the pe-
riod of strong growth and rising in-
terest rates.
As returns and risks go hand in
hand, does it mean that your fund
is riskier compared with other glo-
bal bond funds?
The fund’s high returns are much
more a product of its fundamentals
driven research and selective port-
folio construction than they are due
to holding risky assets.
Our returns typically come from
currency and interest rate changes
FRANKLIN TEMPLETON
as well as security selection. Curren-
cy and interest rate returns are gen-
erally larger than the returns from
credit exposure, and this has been
true recently with currency expo-
sure having been particularly ben-
eficial. While it is true that individ-
ual assets generally compensate for
higher risk with higher returns, the
broad opportunity set available to
the fund allows it to achieve high
returns while maintaining broad di-
versification and high credit quality.
In fact, the fund’s average credit rat-
ing has remained quite high, histori-
cally ranging from A to AA.
What was your best strategy? How
much return was gained by your
fund with that single strategy and
how long was your holding pe-
riod?
For the past several years, the fund
has held almost no exposure to the
US dollar. This allocation has been
a central part of the fund’s strong
performance as the US dollar has
been weak, and it has allowed the
fund to maintain exposure to a va-
riety of appreciating currencies, par-
ticularly in Asia.
Our view on the dollar has been
based on the historically large and
unsustainable, current account defi-
cit of the US. We anticipated a shift
in global growth and consump-
tion away from the US and towards
these developing economies, which
have become the world’s produc-
ers. Declining interest rates in the
US recently have benefited this
positioning even further.
For example, the Malaysian ring-
git appreciated 12.5% in 2006 and
2007 against the US dollar, the South
Korean won rose 22% from the be-
ginning of 2004 through 2006, and
the Indian rupee appreciated 12.3%
against the dollar in 2007 alone.
Most strategists are still calling
for an underweight position in the
fixed-income asset class this year,
saying that bonds in general will
produce very low real returns in
2008. Do you agree that the cur-
rent environment is difficult for
global bonds to generate respect-
able returns?
Overall, we remain positive on the
global fixed-income asset class given
attractive valuations in various seg-
ments of our investment opportunity
set. Often, increased market volatil-
ity leads to the mispricing of assets,
and creates opportunities for the
fund. Our flexible strategy allows us
to take advantage of changing macro
themes, and allows the fund to pro-
vide alpha and diversification in any
stage of the business cycle.
The fund is currently positioned
for a likely US-led global slowdown.
In addition to extending duration to
benefit from changes in growth and
inflation in countries that are likely
to be strongly impacted by the US
downturn such as South Korea and
Mexico, we can also position the
fund in defensive currency positions
and where fund restrictions permit,
through instruments such as credit
default swaps, which provide cred-
it protection.
One example of our defensive cur-
rency positioning is increasing expo-
sure to currencies that were used to
fund carry trades, such as the Japa-
nese yen or Swiss franc, which ben-
efit from rising volatility in global
markets. The yen and franc offer
strong fundamental value as both
countries run large current account
surpluses and interest rate differen-
tials with other countries that are
likely to decline as concerns over
growth persist into 2008.
Additionally, we can take relative
currency positions to benefit from
currency exposure even in an envi-
ronment of a strong base currency.
Going long on one currency against
another is a way to benefit from dete-
riorating fundamentals in one coun-
try against strong fundamentals in
another that is relatively insulated
from external influences.
What other strategies are you adopt-
ing and what type of bonds are you
betting on at the moment?
While US Treasuries performed well
over the past few months, we remain
attentive to valuations. We see val-
ue outside of the US and in markets
where yields have lagged the rally
in the US.
We also see value in peripher-
al bond markets, particularly those
that backed up from risk aversion
in 2H2007 and where the macroeco-
nomic backdrop favours lower yields
through potential interest rate eas-
ing. Additionally, we are interested
in European markets, where recou-
pling could have a larger impact on
aggregate growth, given the limited
room for a quick fiscal policy response
and limited capacity for households
to pick up the slack. We aim to take
advantage of market weakness to add
to existing positions and will contin-
ue to look for attractive valuations
as opportunities arise amid shifts in
the global economy.
We continue to be negative on
the US dollar due to the large bal-
ance-of-payment imbalances. Histor-
ical examples suggest this requires a
multiyear weak dollar cycle to cor-
rect. This dollar-weakening cycle be-
gan in 2002 and by end-2007, saw
only marginal improvement in the
US current account deficit. As the
growth momentum in the US slows,
we would expect some cyclical im-
provement in the current account
via low import growth.
However, the larger issue in our
view is the magnitude of the current
account deficit, which must still be
financed to prevent dollar weakness
by foreign capital at a time when cor-
porate profits are under pressure and
the US Federal Reserve is easing in-
terest rates. Additionally, the inter-
est rate advantage over other devel-
oped economies is narrowing and will
likely turn negative this year. As a
result, the US dollar is still vulnera-
ble, and its ability to attract capital
flows to match the size of the cur-
rent account is deteriorating. Long-
er-term trends also work against the
US dollar, including foreign exchange
reserve diversification.
While we are now bearish on the
US dollar, the cycle will eventually
turn. The Templeton Global Bond
Fund has the ability to hedge fully
back into the US dollar and we an-
ticipate a time in the short to medi-
um term when US dollar exposure
will be increased.
Among non-dollar currencies,
the rebalancing of the global econ-
omy favours Asia. While low import
growth in the US and double-digit ex-
port growth has marginally improved
the US current account deficit over
the last several quarters, bilateral
balances show that underlying im-
balances persist. This likely reflects
the strong competitive positioning
of Asian economies along with the
managed-currency approach of many
Asian countries.
We also view peripheral Euro-
pean currencies as having more at-
tractive valuations than the euro as
many of those economies are expe-
riencing higher growth and are more
competitive.
Finally, we paired the yen and
Swiss franc against higher-yielding
currencies that are likely to suffer
in periods of volatility. These expo-
sures have helped minimise risk and
have benefited performance through
the difficult period of the last sev-
eral months. E
 THEEDGE SINGAPORE | MARCH 3, 2008 • PW9

BLOOMBERG
PERSONAL WEALTH

Betting on a turnaround
in Chinese equities
| BY KELVIN TAN |
Investors monitor stock quotes at a

A
fter delivering impressive annu- securities trading firm in Shanghai,
al gains of 73.74% and 64.88% in China, on Jan 22, when stocks tumbled,
2006 and 2007, respectively, Jiang with the benchmark index posting its
Yiqian and Craig Chen — co-portfo- biggest two-day decline on record
lio managers of the DWS China Eq-
uity Fund — now face the challenge of steer-
ing their fund into positive territory in 2008,
after being hit by the severe global stock mar-
ket rout in January.
Although their fund is currently 18.8% in
the red for the year as at Feb 26, the manag-
ers from DWS, which is the retail fund man-
agement arm of Deutsche Asset Management,
remain confident of turning their performance
around over the next 10 months.
“We expect positive gains in 2008, for Chi-
nese equities,” asserts Jiang. She points out that
earnings growth for Chinese stocks is expect-
ed to exceed 20% this year. And with ongoing
mergers and acquisitions/restructuring activi-
ties, the strengthening of the remimbi coupled
with strong economic growth in China, there is
no reason why Chinese stocks would continue
to stay in negative territory, says Jiang, who
has 11 years of investment experience.
Sharing that optimism, Chen points out that
valuations of China-related stocks — especially
Hong Kong-listed H-shares and red chips, which
were “oversold” recently — have now come
down to reasonable levels and are looking to be
good value. “Valuations of China stocks have
become very attractive after the recent correc-
tion, trading at around 14 times 2008 price-to-
earnings ratio with expected earnings growth
of over 20% this year,” beams the fund man-
ager, who has 12 years of investment experi-
ence. “We expect Chinese companies to deliver
strong earnings growth during the annual re-
sults season, which should help ease some of
the current market concerns,” he adds.
The DWS China Equity Fund, which won
an award for the best fund in the China equi-
ty fund category at last week’s The Edge-Lip-
per Singapore Fund Awards 2008, currently
has assets of 86.8% invested in H-shares and
red chips, 3.5% in mainland China B shares,
4.8% in Singapore-listed Chinese companies
and 2.5% in Hong Kong-listed firms.
In recent weeks, the DWS fund managers
reveal that they have been taking advantage
of the market correction to buy into Chinese
companies in the railway construction, agri-
culture, and alternative energy sectors. “These
sectors are less affected by the government’s
austerity measures or global economic slow-
down,” says Jiang. In addition, she points out
that her team has revised the weightings in
banks from “underweight” to “neutral”, add-
ing that the sector was oversold on concerns
over credit tightening.
At the moment, the DWS fund managers
like China stocks such as the attractively val-
ued banking counter ICBC, telecom firm China
Telecom (a key beneficiary of telecom indus-
try restructuring and 3G licensing), and ferti-
liser distributor Sinofert (an agriculture play
that is benefiting from increasing demand for
fertilizer in China).
Looking ahead, Chen says a prolonged re-
cession in the US, and high inflation in China,
currently pose the biggest risks for Chinese eq-
uities. “On the domestic front, persistent infla-
tionary pressure would be a negative factor.
The government may impose more price con-
trols or tightening measures if the CPI [con-
sumer price index] continues to rise.” Never-
theless, he believes that China’s CPI would
start to drop in 2Q due to the easing of sup-
ply shortages. E
PW10 • THEEDGE SINGAPORE | MARCH 3, 2008
PERSONAL WEALTH
Fears of US recession could spur interest
in defensive healthcare stocks
| BY KELVIN TAN |
T
he global healthcare equity sector
hasn’t had the best of times over the
past two years. Dragged down by pat-
ent expirations of blockbuster drugs,
a more stringent US Food and Drug
Administration (FDA), which has scaled back
and delayed approvals of new drugs, as well
as high-profile billion dollar lawsuits against
big pharmaceutical companies, the MSCI World
Healthcare Index — a barometer of health-
care stocks around the world — has been on
a downtrend since early last year.
Despite the cloudy outlook in the US-cen-
tric global healthcare sector, which could get
darker if the drug safety focused Democratic
Party wins the coming US presidential election,
Mae Leong — fund manager of United Global
Healthcare Fund — is seeing a silver lining
emerging from the anaemic sector. (Globally,
the US is the largest consumer of healthcare
goods and services.)
Like most investment specialists in the health-
care sector, Leong reckons that drug companies
could do well relative to other stocks in 2008 if
the US economy goes into recession. Indeed,
people would still require medicines and health-
care in good or bad times in the economic cycle.
“The healthcare sector, which is often perceived
as defensive, [could outperform] as investors
become more concerned about the possibilities
of a global recession,” says the fund manager
from UOB Asset Management (UOBAM).
The United Global Healthcare Fund won two
awards at last week’s The Edge-Lipper Singa-
pore Fund Awards 2008 for the best fund in the
equity sector pharmaceuticals and health care
category over a three- and five-year period.
A consistent performer
Over the past three and five years, the Unit-
ed Global Healthcare Fund, leveraging on the
expertise of Boston-based institutional fund
management firm Wellington Management,
the sub-adviser to the fund, has consistently
Top 10 Holdings
(As at Dec 31, 2007)
Forest Laboratories
Schering Plough Corp
Eli Lilly
UnitedHealth Group
Mckesson Corp
Shionogi
Eisai Co
Sanofi Aventis
Medtronic
ST Jude Medical
Table 1
Performance of Singapore-registered healthcare unit trusts
NAME
Lion Capital Global Healthcare Investment A
Fidelity Funds – Global Health Care A
United Global Healthcare Fund
AllianceBernstein — International Health Care A USD
ABN AMRO Health Care A EUR
DWS Invest Life Science LC
Equity Sector Pharma & Health Average (6)
BLOOMBERG
agnostics, medical devices, surgical practices
and in the study of the human genome and
its applications.”
Near-term opportunities
At the end of last year, Leong’s fund — relative
to the MSCI Healthcare Index — had taken an
underweight position in pharmaceutical compa-
nies while overweighting biotechnology compa-
nies and those in medical products and healthcare
services. With the broad sell-off in drug compa-
nies last year, Leong is beginning to see “near-
term opportunities” in well-diversified pharma-
ceutical companies with strong drug pipelines,
as well as companies “with favourable earnings
trend driven by significant cost restructuring, pat-
ent victories and emerging pipelines”.
“Selected US, European and Japanese phar-
maceuticals with strong pipelines and good
costs controls would continue to see strong
sales growth and improving operating mar-
gins,” she adds. The rise of mergers and acqui-
Two main trends supporting the long-term investment case for healthcare are demographics and sitions (M&A) in the pharmaceutical industry
technological innovation is also seen as beneficiary for the stock prices
of drug companies. “Pharmaceutical compa-
trounced its rivals by a wide margin in terms powerful secular growth trends such as age- nies are continuing to merge to create cost syn-
of performance. For instance, over the past five ing populations in developed countries and ergies, diversify and enhance their drug pipe-
years (ended Feb 15), the fund delivered gains technological innovation. “The fund focuses line, form alliances to enhance their research
of 78.4%, which are more than twice of that on value investing in a growth industry, giv- and development capabilities and acquire bi-
of the average gains of 36.24% in the health- en its focus on fundamentals and valuation. otech companies to improve their drug pipe-
care fund sector. Lion Capital Global Health- Some may consider this to be a contrarian line,” Leong observes.
care Investment A Fund was a distant second, approach,” Leong quips. One of Leong’s best performing stocks of last
achieving a return of 39.67% over the same pe- “As an example, for the pharmaceutical year that benefited from M&A was US drug com-
riod. (See Table 1 for more information on the stocks, the biggest overhang has been ongo- pany Medimmune, which was delisted after it
performance of retail healthcare-focused unit ing patent lawsuits. We view this as merely a was acquired by UK pharmaceutical giant Astra-
trusts sold to investors in Singapore.) timing issue. As cases are ultimately decided, Zeneca. The share price of Medimmune almost
Leong attributes the strong performance of the market will remove the heavy discount doubled from early 2007 to June last year, after
her bottom-up stock-focused fund to a “val- being placed on the long-term earnings out- it was bought over by AstraZeneca at a signif-
ue style” investment approach within the look,” explains the fund manager, who isn’t icant premium. Leong, whose fund had small
growth sector of healthcare, which rides on afraid to pick up fundamentally solid compa- holdings in Singapore- listed healthcare stocks
nies whose share prices have suffered unduly such as Eu Yan Sang International, LMA In-
SAMUEL ISAAC CHUA/THE EDGE SINGAPORE
over the short-term. ternational and Parkway Holdings last year,
declined to talk about stock names.
Betting on a recovery Besides pharmaceuticals, she also sees op-
Although the United Global Healthcare Fund, portunities in the medical technology sector.
like many other healthcare-focused unit trusts, She points out that companies in the sector
suffered negative performance last year, Leong, tend to hold up well in economic downturns
who is sanguine on the long-term prospects of as they are less exposed to consumer discre-
the global healthcare sector, isn’t worried. “The tionary spending. At the same time, these com-
long-term case for global healthcare investing is panies — unlike pharmaceuticals — are not
strong,” she says, adding that her fund general- subjected to the threats of generic companies
ly “focuses on longer-term trends and drivers”. taking market share over their products and
“Currently, there are two main trends support- pipeline problems, she adds.
ing the long-term case for healthcare — demo-
graphics and technological innovation.” Diversifying from the US
Leong says the positive trend in demograph- To reduce the risk of her fund to “US politics”
ics is largely driven by the growing gray popu- on healthcare, the UOBAM fund manager has
lation around the world, longer life expectan- also recently started diversifying away from US
cy, a rise in chronic diseases and an increase holdings to those in Europe and Japan. “Euro-
in demand from non-US markets. “Technolog- pean and Japanese companies that have rela-
Leong: The long-term case for global healthcare ical innovation is also critical to the growth of tively low valuations and much lesser expo-
investing is strong the sector. It is at work in areas such as di- sure to US political risks also look increasingly
attractive on valuation grounds in 2008.” At
the end of last year, the United Global Health-
LIPPER
care Fund had assets of 66.52% invested in
the US, 11.59% in Japan, and 12.93% in Eu-
rope and the rest of the world.
RETURN % RETURN % RETURN % RETURN % Looking ahead, the global pharmaceutical
YTD 1 YEAR 3 YEARS 5 YEARS
market, which reached US$603 billion in 2006,
12/31/2007 02/ 15/2007 02/15/2005 02/14/2003
will continue to grow with emerging markets
- 02/15/2008 - 02/15/2008 - 02/15/2008 - 02/15/2008
showing the highest average annual growth
VALUE RANK VALUE RANK VALUE RANK VALUE RANK
rate of 10% per annum, says Leong. She is ex-
-7.80 3 -1.25 1 4.15 3 39.67 2
pecting a turnaround in performance for the
-8.27 5 -10.45 2 6.50 2 34.49 3
healthcare sector this year.
-5.31 1 -10.56 3 15.54 1 78.40 1
According to the recent Russell Investment
-7.71 2 -11.87 4 2.92 4 28.26 4
Group’s Investment Manager Outlook report
-7.84 4 -15.60 5 -4.39 5 11.60 6
released at the end of last year, the healthcare
-9.51 6 -15.78 6 -4.80 6 25.01 5
industry remains the second-most favoured sec-
-7.74 6 -10.92 6 3.32 6 36.24 6
tor behind technology with some 73% of fund
managers saying they are bullish on it. E
 THEEDGE SINGAPORE | MARCH 3, 2008 • PW11

BLOOMBERG
PERSONAL WEALTH

Betting on a turnaround
in Chinese equities
| BY KELVIN TAN |
Investors monitor stock quotes at a

A
fter delivering impressive annu- securities trading firm in Shanghai,
al gains of 73.74% and 64.88% in China, on Jan 22, when stocks tumbled,
2006 and 2007, respectively, Jiang with the benchmark index posting its
Yiqian and Craig Chen — co-portfo- biggest two-day decline on record
lio managers of the DWS China Eq-
uity Fund — now face the challenge of steer-
ing their fund into positive territory in 2008,
after being hit by the severe global stock mar-
ket rout in January.
Although their fund is currently 18.8% in
the red for the year as at Feb 26, the manag-
ers from DWS, which is the retail fund man-
agement arm of Deutsche Asset Management,
remain confident of turning their performance
around over the next 10 months.
“We expect positive gains in 2008, for Chi-
nese equities,” asserts Jiang. She points out that
earnings growth for Chinese stocks is expect-
ed to exceed 20% this year. And with ongoing
mergers and acquisitions/restructuring activi-
ties, the strengthening of the remimbi coupled
with strong economic growth in China, there is
no reason why Chinese stocks would continue
to stay in negative territory, says Jiang, who
has 11 years of investment experience.
Sharing that optimism, Chen points out that
valuations of China-related stocks — especially
Hong Kong-listed H-shares and red chips, which
were “oversold” recently — have now come
down to reasonable levels and are looking to be
good value. “Valuations of China stocks have
become very attractive after the recent correc-
tion, trading at around 14 times 2008 price-to-
earnings ratio with expected earnings growth
of over 20% this year,” beams the fund man-
ager, who has 12 years of investment experi-
ence. “We expect Chinese companies to deliver
strong earnings growth during the annual re-
sults season, which should help ease some of
the current market concerns,” he adds.
The DWS China Equity Fund, which won
an award for the best fund in the China equi-
ty fund category at last week’s The Edge-Lip-
per Singapore Fund Awards 2008, currently
has assets of 86.8% invested in H-shares and
red chips, 3.5% in mainland China B shares,
4.8% in Singapore-listed Chinese companies
and 2.5% in Hong Kong-listed firms.
In recent weeks, the DWS fund managers
reveal that they have been taking advantage
of the market correction to buy into Chinese
companies in the railway construction, agri-
culture, and alternative energy sectors. “These
sectors are less affected by the government’s
austerity measures or global economic slow-
down,” says Jiang. In addition, she points out
that her team has revised the weightings in
banks from “underweight” to “neutral”, add-
ing that the sector was oversold on concerns
over credit tightening.
At the moment, the DWS fund managers
like China stocks such as the attractively val-
ued banking counter ICBC, telecom firm China
Telecom (a key beneficiary of telecom indus-
try restructuring and 3G licensing), and ferti-
liser distributor Sinofert (an agriculture play
that is benefiting from increasing demand for
fertilizer in China).
Looking ahead, Chen says a prolonged re-
cession in the US, and high inflation in China,
currently pose the biggest risks for Chinese eq-
uities. “On the domestic front, persistent infla-
tionary pressure would be a negative factor.
The government may impose more price con-
trols or tightening measures if the CPI [con-
sumer price index] continues to rise.” Never-
theless, he believes that China’s CPI would
start to drop in 2Q due to the easing of sup-
ply shortages. E
PW12 • THEEDGE SINGAPORE | MARCH 3, 2008

PERSONAL WEALTH

Reuters Support: (1 800) 776 7188

Dealing Code HELP | Customer zone: www.reuters.com/customers | Product info: www.reuters.com/productinfo

HEDGE FUND WATCH Avenue Capital takes hits, but sees

opportunities in distressed debts
Singapore-registered funds

REUTERS
| STORIES BY DANE HAMILTON | fload assets to raise money to
10 best performers over the past three months meet investor redemptions.

NAME
Optimal Global Trading (Ireland) A USD
Halbis India Alpha USD
Permal US Capital Growth Opportunities A
Vega Select Opportunities Investor USD
Man AHL Currency
HSBC Japan AdvantEdge JPY
Aliquot Gold Bullion A USD
UEB Diversity Portfolio (CHF Reference)
Man AHL Diversified Futures Ltd
Man RMF Four Seasons Strategies 2XL CHF
10 worst performers over the past three months
Platinum Dynasty USD
Platinum Turnberry USD
GAM Asia Equity Hedge USD Open
Permal Media & Technology A
La Fayette Leveraged USD
Platinum Global Dividend USD
CAAM Invest VaR 20 C (EUR)
GAM Japan Equity Hedge USD Open
Permal Global Multi-Long Holdings A USD
Vega Relative Value Fund Ltd Investor Class USD
International funds
10 best performers over the past three months
NAME
RAM Fund LLC
RAM Agressive
Clarke Global Basic Program
Legacy Futures LP
N
% VALUE ew York-based Ave- “If we can buy what we think
67.02 nue Capital Group, the are world-class companies at cheap
US$20 billion ($28.13 valuations, we will do that,” Las-
13.13
billion) hedge fund ry points out. “But we will have
10.08 group led by investor some mark-to-market hits,” mean-
9.28 Marc Lasry, took some hits in ing portfolio markdowns as as-
7.21 January amid the market turmoil, sets sink lower. “Over the next
6.51 but Lasry says he sees “phenom- month or two, we’ll probably be
enal opportunities” this year for flat to up a little.”
6.29
Avenue’s distressed-debt invest- Indeed, January was not kind
5.78
ment strategy. to Avenue, although it performed
5.66 In a recent interview, Lasry also better than comparable indices
4.74 says he’s not changing the firm’s for its strategies. The US$500
health-care plan in response to criti- million Avenue Investments LP
cism by his highest profile employ- Chelsea with her mother, Hillary, on the US presidential campaign and US$1.2 billion Avenue Inter-
ee, former first daughter Chelsea trail. Chelsea, who works at Avenue, had criticised the firm’s national Ltd funds, for instance,
-31.93
Clinton. “I think we have a great health-care plan. fell 2% and 2.46% respectively,
-24.16 health-care plan,” he adds. the worst monthly performance
-20.92 The hedge fund group was down 1% as in January, but we will end up doing for both since July 2002, according to the
-19.78 to 2.5% in its major strategies in Europe extremely well.” investor letter. That compares favourably
-16.52 and the US, according to a letter Avenue Lasry isn’t alone in his optimism for with the Altman Combined Index, which
sent to investors last week that was ob- distressed debt investing. Bruce Richards, values bank debt, which fell 2.9% in Jan-
-15.74
tained by Reuters. head of the US$11 billion hedge fund group uary and the Credit Suisse Distressed In-
-13.78
Lasry declined to confirm performance Marathon Asset Management, told an in- dex, which fell 12.23%.
-13.47 numbers, citing regulatory restrictions. But vestor conference last month that dis- Outside the office, Lasry is a big Demo-
-13.14 he acknowledged that the firm suffered tressed investing has become “a trillion cratic Party supporter and is backing Hil-
-12.92 a rare down month in January as global dollar-plus opportunity”, driven by the lary Clinton, whom he predicts will win
debt and equity markets swooned in re- meltdown in global credit markets. the Democratic nomination.
sponse to a broad credit pullback. And the amount of money raised for In 2006, the firm hired Chelsea Clinton
For Lasry, who started his firm in 1995, distressed-investing hedge funds ballooned as an associate, although the move recent-
the prospect of a recession is good news from an estimated US$70 billion in 2006 to ly drew some unwanted attention to the
for Avenue and a growing group of oth- US$105 billion in 2007, according to indus- firm. The younger Clinton, on leave cam-
er hedge funds that buy corporate bank try tracker Hedge Fund Research, a trend paigning for her mother, suggested that
and bond debt that has fallen well below that experts say is likely to continue. she is “not happy” with her employer-
“par”, or its issue price. But Lasry said it won’t always be smooth provided health care at Avenue, accord-
“When the markets are in disloca- sailing generating returns in choppy mar- ing to media reports.
% VALUE
tion and things go bad, that ends up be- kets, even when the firm sees major buy- Lasry appeared to take Chelsea’s words
62.45 ing good for us,” says Lasry, who said he ing opportunities in debt that is trading with humour and says he has no plans to
62.11 continues to raise money from investors at 50% or 60% of its par value. change the firm’s medical plan. He adds
looking to jack up their allocations to the Sometimes, he says, the marks push he wholeheartedly supported Chelsea,
51.79
strategy. “As the economy goes into re- such securities even lower as faltering, calling her “exceptionally talented and
34.71 cession, we’ll take some short-term hits, leveraged hedge funds scramble to of- incredibly smart”. E

Hawksbill Global Diversified Program A1 (Inc Not) 34.69

Atyant Capital India Fund-I (Offshore) 32.71
Cazenove Eu Alpha Eq Absolute Return A EUR 31.66
Aurarian Offshore Ltd
TOMAC 2
31.48
30.65
Another hedge fund blows up Funds sue Yahoo over Microsoft rebuff
Scully Mistral Program 29.53 | BY GINA KEATING |

D
B Zwirn & Co, a US$5 billion ($7 billion) hedge fund

10 worst performers over the past three months
The High Risk Fund Ltd
Absolute Precious Metals
AAM China Fund
Pukula YES Bond Yield Enhancement Program
Platinum Dynasty USD
Endeavor LLC
CITIC Capital China Plus Ltd
Lucerne Mid-Cap Offshore Ltd
Wellchamp Ltd
Pictet Targeted Fund 2-Global Value-P
Source: Reuters/Lipper
Fund performance as at Jan 31, 2008
Note: The hedge funds registered in Singapore are sold
generally to accredited investors who are required to have a
net worth of at least $2 million or an annual net income of
$300,000. Investors should consult their financial advisers
before investing in these alternative investment funds.
group managed by investor Daniel Zwirn, will liqui-
date its two largest hedge funds after investors de-
-58.72 manded some US$2 billion in withdrawals, a person fa-
miliar with the situation said last week.
-56.83
The New York-based firm told investors in a let-
-35.71 ter on Feb 21 that it would sell assets in two funds, its
-34.98 Special Opportunities Fund and a sister offshore fund,
-31.93 which hold about US$4 billion combined, according to
the source.
-29.63
The investors’ redemptions come after the firm disclosed
-28.56 that it faced questions from its auditors about its account-
-27.97 ing for operational expenses, the source adds.
-27.91 The firm said it may take years to liquidate the funds,
because much of the holdings are illiquid assets, such as
-27.62
private loans, derivatives and other thinly traded assets,
the source says.
The liquidation is a blow to Zwirn, who was previous-
ly a senior portfolio manager of the Special Opportunities
Group of Highbridge Capital Management, which is ma-
jority owned by JPMorgan Chase & Co.
Zwirn was also previously a portfolio manager with
MSD Capital LP, the private investment firm of Dell Inc
founder Michael Dell.
“Anytime a fund reportedly is losing 80% of its assets,
it calls into question how sustainable the firm is on a con-
tinuing basis,” said Daniel Farkas, a hedge fund analyst
at Morningstar Inc. “But things are still playing out so it’s
too early to say.” E Google Inc. — Compiled from Reuters
T
wo Detroit pension funds sued Yahoo Inc and its board over
a week ago for rejecting Microsoft Corp’s unsolicited US$41.2
billion ($57.73 billion) offer in a sign of growing shareholder
frustration with the online search and media company.
The proposed class action, filed by veteran shareholder liti-
gation firm Bernstein Litowitz Berger & Grossman, takes Yahoo
directors to task for spurning the Feb 1 offer and “pursuing all
manner of value-destructive third-party deals”.
The two plaintiffs, Detroit’s Police and Fire Retirement System
and General Retirement System, are concerned about news re-
ports of a “potential imminent deal” sought by the Yahoo board
with media conglomerate News Corp or Time Warner Inc’s AOL
that would not require a shareholder vote.
The plaintiffs asked a Delaware Chancery Court to block the
Yahoo board from completing any such transaction with those
companies, to force it to reconsider Microsoft’s offer, and to block
it from implementing defensive measures that would render the
company unattractive to potential buyers.
Lawsuits by Yahoo shareholders have multiplied in the wake
of Yahoo’s Feb 11 refusal to entertain the offer, which represent-
ed a 62% premium over Yahoo’s share price.
Yahoo said at the time the bid substantially undervalues the
company, failing to take into account its 500 million users world-
wide, investments in its advertising platform and lucrative overseas
holdings. Microsoft has yet to show signs it would raise its offer.
Before the offer, Yahoo’s share price had dropped 46% since
October as it struggled to compete with Internet search leader
E
 THEEDGE SINGAPORE | MARCH 3, 2008 • PW13

PERSONAL WEALTH

‘Low-teen gains’ expected

from BRIC markets

PICTURES: BLOOMBERG
| BY KELVIN TAN |

D
espite recent years’ strong run-up in
the stock markets of Brazil, Russia,
India and China (BRIC), which are
the biggest and fastest-growing econ-
omies of the developing world, the
market upswing for these four red-hot nations
is still at an early stage, says Nick Timberlake,
fund manager of the world’s first BRIC mutu-
al fund, the HSBC GIF BRIC Freestyle, which
made its debut in late 2004.
“In the long run, the drivers for growth in
the BRIC economies remain as they were be-
fore, with strong and sustainable GDP growth,
political and fiscal reform and with more and
more companies listing on their stock exchang-
es,” says Timberlake, who is also HSBC Invest-
ments’ head of global emerging markets (GEM),
in a recent interview with Personal Wealth. “It
is true to say that each BRIC country has its
own cycle of development and is at different
points on it but the fact is that all four are at
the earlier points in their ‘emerging growth’
cycles.” The BRIC fund generated high-octane
returns of 40%, 44.5% and 47.6% in 2005, Russia — in the eyes of the HSBC head of global emerging markets — looks to be most attractive after the recent downturn in global equities
2006 and 2007 respectively.
Last week, the HSBC GIF BRIC Freestyle Although a US recession would affect the is accelerating, driven by high levels of pub-
(M1C USD) Fund, which has almost a third of BRIC economies, he believes the negative im- lic and private investment, liberalisation and
its assets invested in Russia stocks in oil-and- pact would be limited because of the robust consumption. Last year, GDP numbers for
gas names Gazprom and Lukoil Oil as well GDP growth exhibited by the BRIC nations. Russia exceeded US$1 trillion after growing
as banks such as Sberbank, won an award for Companies there such as those in the domes- a healthy 8.1% from the previous year. “We
the best fund in the global emerging markets tic consumer-related sectors, which are less de- continue to believe the dramatic slowdown
equity category over a three-year period at The pendent on global growth, would still be able in the US economy will have little direct ef-
Edge-Lipper Singapore Fund Awards 2008. to grow their earnings, even if the US goes into fect on Russian economic and corporate prof-
a recession, he argues. its growth,” he adds.
‘In buying territory’ “The recent volatility has thrown up some Timberlake is also sanguine on the prospects
Although equity prices of all BRIC markets, with interesting opportunities. Markets have start- of Indian equities, which he is “selectively buy-
the exception of Brazil, are currently in the red for ed to price in a mild recession in US and in- ing on weakness”. “The sharp market correction
the year after January’s market rout, the HSBC vestor surveys are unanimously bearish. His- of late has brought the Indian market to more
emerging market fund manager is still confi- tory shows that when everyone agrees on the reasonable valuation levels and our outlook for
dent that equities in the BRIC markets “should outlook, it usually pays to take the opposite the market is positive,” he says, adding that the
make upward progress again” this year, unless view. That’s why we are now in buying terri- key issues to monitor in the Indian market are
there is a sharp US recession. tory again,” Timberlake says. fiscal and monetary policy initiatives of the gov-
“However, the markets are volatile at present Doubtless, gains in 2008 for the BRIC mar- Timberlake: History shows that when everyone ernment to keep inflation under control and the
and sensitive to news. Although we expect GEM kets will moderate compared with previous agrees on the outlook, it usually pays to take the “large new corporate capital-raising pipeline”,
equities to have a positive year and to beat de- years. But with earnings per share (EPS) growth opposite view. That’s why we are now in buying ter- which still remains a concern.
veloped markets, it is not possible to say to in double-digit territory, low double-digit re- ritory again. On the other hand, Timberlake is staying cau-
what extent,” says Timberlake, who oversees turns for this year should still be a possibili- tious on Brazil because of high inflation, which
US$5.3 billion ($7.4 billion) worth of emerg- ty, he points out. “Given that EPS growth [in Halbis is the active management specialist arm could lead to possible interest-rate hikes by its
ing-market assets. BRIC markets] is currently in the low teens of of the HSBC Group. central bank. “The extent of the impact of the
12% to 13%, similar returns would normally To run a successful BRIC fund of such an US slowdown on Brazil is still unclear and we
HSBC INVESTMENTS

be expected from equities,” he adds. approach, “communication is key”, says Tim- believe that volatility will persist in the coming
Country allocation for HSBC berlake, who gets together once a month with weeks. However, inflation will be a major fo-
GIF BRIC Freestyle Fund Tapping expertise of specialist fund the four fund managers and one of the HSBC cus in the coming months and the market will
managers economists to discuss the risks and opportu- be carefully watching the central bank and the
COUNTRY % OF FUND’S ASSETS* As lead manager for the HSBC BRIC fund, Tim- nities in the investment landscape of the BRIC risk of interest-rate increases,” he says.
Russia 29.4 berlake’s main job is to decide how much to al- markets. After the discussion, a target asset al- For China, inflation and monetary tighten-
Brazil 25.7 locate to each of the BRIC markets. The stock- location would be derived from “an appraisal ing are also the main concerns of Timberlake.
China 22.7 picking process, on the other hand, is taken of the relative merits of the markets to each “We believe sentiment [for Chinese equities]
India 20.4 care of by four specialist fund managers: Luiz other”, he explains. “This is the clear differen- will remain cautious over the coming month
*As at Jan 31, 2008
Ribeiro, a Brazilian equity expert based in São tiator of our fund from the rest of its competi- on concern of further government tightening
Paulo; Douglas Helfer, who runs the Russian tors. The process is a marriage of top-down and to curb inflation and the increased likelihood
portfolio from London; Sanjiv Duggal, a Singa- bottom-up stock selection, which has proved of lower global economic growth in 2008,”
pore-based manager spe- itself since the fund was launched.” he explains.
HSBC INVESTMENTS

cialising in Indian equi- He expects inflation in China to remain

Top 10 holdings (as at Dec 31, 2007) ties; and Richard Wong, Most bullish on Russia high in 1Q but it should ease by 2H as food
who manages Chinese At the moment, among the four BRIC markets, prices soften. “The Chinese government will
SECURITIES HOLDING (%) INDUSTRY
equities in Hong Kong. Russia — in the eyes of the HSBC head of glo- likely maintain an overall tight credit poli-
Petroleo Brasileiro ADR 8.08 Oil & gas producers
All four managers have bal emerging markets — looks to be most at- cy over the coming months to bring inflation
Gazprom ELN 6.11 Oil & gas producers
more than 10 years’ in- tractive after the recent downturn in global eq- down ahead of the important National Peo-
China Mobile 4.20 Mobile telecom
vestment experience in uities. Last month, the Russian equity market ples Congress meeting in March,” he says. At
Lukoil ADR 3.16 Oil & gas producers
their respective markets. fell by more than 16%, underperforming the the moment, Timberlake says the Hong Kong
Sherbank of Russia 2.83 Bank
“In addition, each fund broader emerging markets universe. “Russian H-shares, which his team “has been buying
Jindal Steel & Power 2.72 Industrial metals
manager has consider- equities, following the January sell-off, are on weakness”, look to be of better value than
Novatek GDR 2.62 Oil & gas producers
able support from the again some of the cheapest and fastest-grow- mainland A-shares. “The H-share discount to
Yanzhou Coal Mining 2.47 Mining
Halbis network of ana- ing in the emerging world and present an out- A-shares has widened in January to 56%, ow-
Vimpelcom ADR 2.28 Mobile telecom
lysts and from the wid- standing long-term investment opportunity,” ing to market actions, which leaves the Hong
Gazprom ADR 2.25 Oil & gas producers
er HSBC network as a Timberlake says. Kong-traded China shares even more attrac-
whole,” Timberlake says. He believes that Russia’s economic growth tive,” he adds. E
PW14 • THEEDGE SINGAPORE | MARCH 3, 2008
PERSONAL WEALTH
Kenneth Koh (left), head of research for Asia ex-Japan at Lip-
per, presenting Ernesto Bettoni, global product specialist at
ABN AMRO Asset Management, with the award for Best Fund
Over Three Years — Bond Emerging Markets Global
Koh (left) presenting Tan Kheng Lai, managing director of AIG
Global Investment (Singapore), with the award for Best Fund
Over Three Years — Bond Singapore Dollar
Koh (left) presenting Dokyoung Lee, senior portfolio manager
at AllianceBernstein, with the award for Best Fund Over
Three Years — Bond US Dollar
Koh (left) presenting Yunis Lee, head of corporate com-
munications at BNP Paribas (Singapore), with the award for
Best Fund Over Five Years — Equity Sector Banks and Other
Financials
Darren Duffy (left), vice-president and global head of produc-
tion at Lipper, presenting Teo Chon Kiat, vice-president at
DBS Asset Management, with the award for Best Fund Over
Three Years — Equity Global Small and Mid Caps
Duffy (left) presenting Andrew Kwek, CEO Singapore of
Deutsche Asset Management (Asia), with the award for Best
Fund Over Three Years — Bond Global
Duffy (left) presenting Madeline Ho, managing director at
Fidelity Investments (Singapore), with the award for Best
Fund Over Three Years — Equity Asia-Pacific
Duffy (left) presenting Neo Shiang Yi, marketing & communi-
cations manager at First State Investments Singapore, with
the award for Best Fund Over Three Years — Equity Sector
Information Technology
Tan Boon Kean (left), editor and regional managing director
of The Edge Singapore, presenting William Tan, head of sales
at Templeton Asset Management, with the award for Best
Fund Over Five Years — Bond Global
Tan (left) presenting Tan Su Yin, director for marketing &
sales distribution at Henderson Global Investors Singapore,
with the award for Best Fund Over Five Years — Equity Sec-
tor Information Technology
Tan (left) presenting Serene Quek, head of retail business de-
velopment at HSBS Investment Singapore, with the award for
Best Fund Over Three Years — Equity Emerging Markets Global
Tan presenting Bas van Buuren, CEO of ING Investment
Management Asia-Pacific, with the award for Best Fund Over
Three Years — Bond Europe
Tan (left) presenting Rajeev Demello, head of Singapore opera-
tions at Western Asset Management, with the award for Best
Fund Over Three Years — Bond Asia-Pacific
Tan (left) presenting Daniel Chan, CEO and chief investment Dok
officer (CIO) at Lion Capital Management, with the award for Best
Best Fund Over Three Years — Equity Malaysia and Singapore Man
Edward Haddad (left), senior company officer, ASEAN at
Reuters Singapore, presenting Suraj Mishra, CEO of Pruden-
tial Asset Management Singapore, with the award for Best
Fund Over Three Years — Equity Europe Small and Mid Caps
And
for B
Haddad (left) presenting Jeffrey Lee, managing director and
CIO at Phillip Capital Management, with the award for Best
Fund Over Five Years — Mixed Asset SGD Aggressive
Dan
—M
Haddad presenting Albert Tse, head of retail sales at Schro-
der Investment Management Singapore, with the award for
Best Fund Over Three Years — Equity Emerging Markets Latin
Thio
America
awa
 THEEDGE SINGAPORE | MARCH 3, 2008 • PW15

PERSONAL WEALTH

Winners of The Edge-Lipper Singapore Fund Awards 2008

FUND AWARD SECTOR FUND NAME FUND COMPANY

Best Fund Over Three Years
Bond Asia Pacific Legg Mason Asian Bond Trust Legg Mason
Bond Emerging Markets Global ABN AMRO Global Emerging Markets Bond (EUR) A ABN AMRO Asset Management
Bond Europe ING (L) Renta Fund Euromix Bond P Cap ING Investment Management
Bond Global DWS Lion Bond SGD Deutsche Asset Management
Bond Singapore Dollar AIG International Funds — Singapore Bond AIG Global Investment Corp
Haddad (left) presenting Thio
Bond US Dollar AllianceBernstein-American Income A USD AllianceBernstein LP
Boon Kiat, CIO and managing
director of UOB Asset Manage- Equity Asia Pacific Fidelity Funds — Pacific A Fidelity International
ment, with the award for Best Equity Asia Pacific Ex Japan Fidelity Funds — South East Asia A Fidelity International
era- Fund Over Three Years — Mixed
st Equity China DWS China Equity A SGD Deutsche Asset Management
Asset SGD Aggressive.
Equity Emerging Markets Global HSBC GIF BRIC Freestyle M1C USD HSBC Investments
Equity Emerging Markets Latin America Schroder ISF Latin American A Acc Schroder Asset Management
Equity Europe Fidelity Funds — European Aggressive A Fidelity International
Equity Europe Small and Mid Caps M&G European Smaller Companies A Euro Acc M&G Investment Management
Equity Eurozone Fidelity Funds — Euro Blue Chip A Fidelity International
Equity Global UOB Optimix Contrarian Fund UOB Asset Management
Equity Global Small and Mid Caps Shenton Global Advantage DBS Asset Management
Equity Greater China ABN AMRO China Equity A USD ABN AMRO Asset Management
Equity Japan Lion Capital Japan Growth SGD Lion Capital Management
Equity Korea Lion Capital Korea SGD Lion Capital Management
Equity Malaysia and Singapore Lion Capital Singapore/Malaysia SGD Lion Capital Management
Equity North America M&G American A Euro Acc M&G Investment Management
Equity Sector Banks and Other Financials Fidelity Funds — Global Financial Services A Fidelity International
Equity Sector Information Technology First State Asia Innovation and Technology SGD First State Investments
Equity Sector Pharmaceuticals and Health Care United Global Healthcare Fund UOB Asset Management
nt Dokyoung Lee (centre), senior portfolio manager at AllianceBernstein, poses with the award for
Equity Singapore DWS Singapore Equity Deutsche Asset Management
for Best Group — Bond, with (from left) Tan, Haddad, Giri Muudeliar, executive director of Investment
pore Management Association of Singapore, and Duffy Equity Thailand Lion Capital Thailand SGD Lion Capital Management
Mixed Asset SGD Aggressive United Millennium Trusts III UOB Asset Management
Mixed Asset SGD Balanced Schroder Asian Balanced A Schroder Asset Management
Mixed Asset USD Balanced — Global AllianceBernstein-Global Balanced A USD AllianceBernstein LP
Best Fund Over Five Years
Bond Asia Pacific Legg Mason Asian Bond Trust Legg Mason
Bond Emerging Markets Global ING (L) Renta Fund Emerging Mkts Debt (HC) P Cap ING Investment Management
Bond Europe AllianceBernstein-European Income A EUR AllianceBernstein LP
Bond Global Templeton Global Bond A MDis USD Franklin Templeton Investments
Bond Singapore Dollar AIG International Funds — Singapore Bond AIG Global Investment Corp
Bond US Dollar AllianceBernstein-American Income A USD AllianceBernstein LP
Equity Asia Pacific Fidelity Funds — Pacific A Fidelity International
Equity Asia Pacific Ex Japan Templeton Asian Growth A YDis USD Franklin Templeton Investments
Equity Emerging Markets Global Fidelity Funds — Emerging Markets A Fidelity International
Equity Emerging Markets Latin America Schroder ISF Latin American A Acc Schroder Asset Management
Equity Europe Fidelity Funds — European Aggressive A Fidelity International
en-
Equity Europe Small and Mid Caps M&G European Smaller Companies A Euro Acc M&G Investment Management
est
aps Equity Eurozone Schroder ISF EURO Active Value A Acc Schroder Asset Management
Andrew Kwek (centre), CEO Singapore of Deutsche Asset Management Asia, poses with the award
Equity Global M&G Global Basics A Euro Acc M&G Investment Management
for Best Group — Equity, with (from left) Tan, Haddad, Muudeliar and Duffy
Equity Global Small and Mid Caps Shenton Global Advantage DBS Asset Management
Equity Greater China Lion Capital China Growth SGD Lion Capital Management
Equity Japan Lion Capital Japan Growth SGD Lion Capital Management
Equity Malaysia and Singapore Lion Capital Singapore/Malaysia SGD Lion Capital Management
Equity North America Franklin US Opportunities A Acc USD Franklin Templeton Investments
Equity Sector Banks and Other Financials Parvest Europe Financials C BNP Paribas Investment Partners
Equity Sector Information Technology Henderson HF Global Technology A2 USD Henderson Global Investors
Equity Sector Pharmaceuticals and Health Care United Global Healthcare Fund UOB Asset Management
Equity Singapore Shenton Thrift DBS Asset Management
Equity Thailand Lion Capital Thailand SGD Lion Capital Management
Mixed Asset SGD Aggressive Phillip Growth Phillip Capital Management
Mixed Asset SGD Balanced AIG International Funds — Acorns of Asia Balanced AIG Global Investment Corp
Best Fund Over Ten Years
nd Bond Global Templeton Global Bond A MDis USD Franklin Templeton Investments
st Bond US Dollar AllianceBernstein-American Income A USD AllianceBernstein LP
Daniel Chan (centre), CEO and CIO at Lion Capital Management, poses with the award for Best Group Equity Asia Pacific Ex Japan United Asia Fund UOB Asset Management
— Mixed Asset, with (from left) Tan, Haddad, Muudeliar and Duffy
Equity Emerging Markets Global ABN AMRO Global Emerging Markets Equity A USD ABN AMRO Asset Management
Equity Europe HSBC GIF European Equity PD EUR HSBC Investments
Equity Global AllianceBernstein-Global Growth Trends A USD AllianceBernstein LP
Equity Greater China AllianceBernstein-Greater China Portfolio A USD AllianceBernstein LP
Equity Japan Fidelity Funds — Japan Fund A Fidelity International
Equity Malaysia and Singapore Lion Capital Singapore/Malaysia SGD Lion Capital Management
Equity North America Fidelity Funds — America A Fidelity International
Equity Sector Information Technology Henderson HF Global Technology A2 USD Henderson Global Investors
Equity Singapore Schroder Singapore Trust Class A Schroder Asset Management
Best Fund Group
ASSET CLASS FUND COMPANY
Bond AllianceBernstein LP
Equity Deutsche Asset Management
o-
Mixed Assets Lion Capital Management
or Overall UOB Asset Management
atin
Thio Boon Kiat (centre), CIO and managing director of UOB Asset Management, poses with the
award for Best Group — Overall, with (from left) Tan, Haddad, Muudeliar and Duffy
PW16 • THEEDGE SINGAPORE | MARCH 3, 2008

PERSONAL WEALTH

Latin America will continue to shine

BLOOMBERG
| BY KELVIN TAN | with equity exposure to this region ly heavily weighted in stocks such this year. Boosted by interest rate
shouldn’t be too concerned over the as Brazilian petroleum powerhouse cuts in recent years, Brazilian stocks

S
urging more than six folds
over the past five years, Latin
American equities — meas-
ured by the MSCI Latin Amer-
ica index, which is heavily
weighted in resource and commod-
ities stocks — have turned in some
spectacular returns in recent times,
boosted by high commodity prices
and an overall improvement in the
region’s economic fundamentals.
Although the recent global stock
market downturn, triggered by fears
of a looming US recession and tur-
bulence in the global credit markets,
have halted the uptrend of many Latin
American markets this year, investors
Table 1
short-term market rout, says Nicholas
Morse, head of Latin American equi-
ties at global fund house Schroders. He
points out that the outlook for Latin
American stocks remains bright over
the next 24 months. (See table 1 for
how Latin American stock markets
have performed this year.)
“Compared with the past, Latin
American and indeed all emerging
markets are extremely well placed to
weather a downturn in the US,” as-
serts Morse, whose Schroder ISF Latin
American Fund won two awards at
last week’s The Edge-Lipper Singa-
pore Fund Awards 2008 for the best
fund in the Equity Emerging Markets
Latin America category over a
three- and five-year period. “Not
BLOOMBERG
Petrobas, Mexican telecommunica-
tions company America Movil and
Brazilian commodities firm Cia Vale
do Rio Doce (CVRD), is confident that
the emerging economies will “decou-
ple” from the developed region.
Indeed, the impact of a US reces-
sion will vary from country to country
in Latin America. For instance, Mexi-
co, whose economy is heavily tied to
the US, is likely to be more vulnerable
than other Latin American economies
but the potential negative impact has
already been factored into share pric-
es, insists the bullish Morse.
The Schroders fund manager tells
Personal Wealth that Latin America
has massive reserves of natural hard
commodities such as oil, copper, iron
Morse: Emerging markets are extremely
well placed to weather a downturn in
the US
data provided by Lipper. Morse at-
tributes the good performance of his
fund to an investment process that
have been one of the best- perform-
ing groups of stocks in Latin Ameri-
ca over the past three years, surging
some 240%. Morse, however, cautions
that the interest rate easing cycle in
Brazil has probably come to an end
in the short term.
Morse is less sanguine on the pros-
pects of the Chilean stock market.
Over the short term, he sees head-
winds such as GDP downgrades and
interest rate hikes in Chile, where
inflation is currently “well ahead of
expectations”.
Main risk for Latin America
Going forward, Morse says the pri-
mary long-term risk for Latin Ameri-
can stock markets is a drastic decel-

YTD returns of Latin
American bourses
Mexico Bolsa Index
Argentina Merval Index
Brazil Bovespa Index
Chile Stock Market Select
Venezuela Stock Market Index
Peru Lima General Index
Columbia IGBC General Index
Costa Rica BCT Index
Jamaica JSE Market Index
Table 2
only have the economic funda- ore and gold as well as soft resourc- involves a mix of top-down analysis eration in global economic growth,
mentals improved significant- es in coffee, wheat and soya beans. and bottom-up stock selection. “We which could cause commodity prices
ly, but growth [of Latin Ameri- “This puts Latin American econo- aim to derive 20% of our value add- to weaken significantly. That would
can economies] is increasingly mies in a strong position to supply ed from country allocation and 80% negatively impact the region’s fiscal
+1.44% being driven by domestic de- the developed world, where many from our choice of stocks.” and trade accounts. The fund man-
-1.74% mand and the share of exports of these resources are becoming in- Using a quantitative country al- ager, however, points out that such
+1.75% going to the US is declining,” creasingly scarce, as well as supply- location model, Morse and his team a risk is fairly remote at this point in
-3.75% adds the portfolio manager, ing strongly growing emerging econ- start the investment process by se- time, adding that the current growth
-7.95% who oversees equity assets of omies such as China.” lecting the right countries to invest engines of the world such as China
-2.83% US$6.5 billion ($9.13 billion) Adding to his optimism, Morse in within the Latin American region. and India as well as many other econ-
-2.83% in dedicated Latin American says most Latin American govern- After the country selection process omies in the developed world are still
+3.45% portfolios. ments “are in a strong financial posi- is done, “we then invest in the most enjoying robust GDP growth.
+4.43% tion” with high levels foreign curren- attractive stocks in those countries, Over the short term, he is more
Limited impact cy reserves compared with the past ranked by our team of analysts, who concerned about the further dete-
Morse, whose fund is current- when there was a global economic conduct fundamental research on the rioration in investors’ appetite for
slowdown. Indeed, Brazil, which was ground”, he explains. (See table 2 for risk assets should the upheavals in
SCHRODERS

the emerging markets’ biggest debtor the top 10 holdings of the Schroder the global credit markets persist. In-
Top 10 holdings in % over the past decade, is now a net ISF Latin American Fund.) deed, a surge in risk aversion among
foreign creditor after its international Among the Latin American mar- global investors could lead to more
HOLDING SECTOR % NAV
reserves, boosted by investment in- kets, Morse says he is most bullish fund flows out of emerging markets
Petrobras Energy 14.0
flows and record-high export income on the prospects of Brazil going for- including Latin America, despite the
America Movil Telecommunication servies 10.0
from agricultural commodities and ward. “There have been some GDP region’s positive valuations and earn-
Cia Vale do Rio Dooe Materials 7.9
oil, surpassed gross foreign liabilities upgrades recently while fiscal ac- ings growth outlook, he adds.
Bradespar Financials 6.4
by US$4 billion last month. counts remain strong. Earnings growth “In the near term, [Latin Ameri-
Uniao de Barcos Brasileiros Financials 4.8
is also robust and valuations remain can] stock markets are likely to remain
Banco Bradesoo Financials 4.7
Investimentosltau Financials 2.8
Top-down, bottom-up process attractive,” says Morse. volatile, but as the year progresses,
Over the past three and five years, The Brazilian Bovespa stock index the weaker global outlook should be
Eletropaulo Metropol Ultilies 2.0
the Schroder ISF Latin American currently trades at a forward-look- discounted and investors will begin
Empresabras De Aeronautica Industrials 1.7
Fund has generated red-hot returns ing price-to-earnings ratio of 12.52 to look forward to 2009. Emerging
All America Latina Logistica Industrialas 1.6
of 144.56% and 512.91% respective- while earnings per share growth is markets will then look increasingly
Total number of holdings = 67
ly (as at Feb 15), according to fund expected to surge an average of 22% attractive,” he argues. E

DBSAM to double UOBAM plans overseas growth

assets in five years | BY SAEED AZHAR AND KEVIN LIM | South Korea and China.”
Thio says his firm may also take advantage

S
ingapore fund manager UOB Asset Manage- of opportunities that have sprung up in the
| BY KEVIN LIM | September after a stint as a consultant and lec- ment (UOBAM) believes its assets under wake of the credit crisis. “We think there is an
turer at Temasek Holdings’ Wealth Manage- management and profitability are poised opportunity there and we believe we have suf-

D
BS Asset Management (DBSAM), the
funds arm of Southeast Asia’s largest
lender DBS Group, has plans to double
assets under management by attracting inves-
tors from outside Singapore.
DBSAM currently manages $27.6 billion
and hopes to raise the amount to around $50
billion in five years, says CEO Deborah Ho.
This would be done by tapping the parent’s
overseas branch network as well as the asset
manager’s joint ventures in Malaysia and Chi-
na for new customers, she adds. “In the past
25 years, we’ve been very domestic in nature.
Our business was very Singapore-centric. Post
Asian crisis, the Asian story has become a lot
more compelling.”
Ho, who previously worked at Citigroup,
Credit Suisse, JPMorgan and UBS in fixed-in-
come sales, joined DBS Asset Management in
ment Institute.
She says foreign institutional investors have
become more interested in Asia as the region
developed, helping Asia-focused asset man-
agers like DBSAM. “Asian currency markets
and bond markets have opened up and there
are more avenues for investments.”
DBSAM has operations in Singapore and
Hong Kong as well as joint ventures in China
and Malaysia. Its China venture, Changsheng
Fund Management, obtained in October the
country’s qualified domestic institutional in-
vestor (QDII) licence.
DBSAM is considering setting up a research
unit in Vietnam to cater to growing investor
interest in that country, says Ho adding that
DBSAM would prefer working with local part-
ners to distribute its funds rather than setting up
its own sales outlets overseas. — Reuters
for double-digit growth over the next five years
as it targets expansion in North Asia.
Thio Boon Kiat, managing director of the
fund management arm of Singapore’s second-
biggest bank United Overseas Bank, says his
firm would try to grow in new markets such
as China, Japan and South Korea.
The firm, which manages $24.3 billion in
assets, saw single-digit growth in total assets
in each of the last two years, but contribu-
tions from overseas markets doubled during
the same period.
“On asset growth, over the next five years,
we hope to achieve double-digit growth and
one thing that we want to stress is profitabil-
ity,” says Thio. “Last year we opened an of-
fice in Brunei, we want to make inroads into
North Asia, we already have a presence in
E Taiwan — so we would like to be in Japan,
ficient capability to look into that area. Most
of the distressed assets we are seeing are in
the developed world.”
Thio adds that the firm is looking for joint-
venture opportunities in China as well as explor-
ing how it could tap Chinese investors through
the Qualified Domestic Institutional Investor
(QDII) scheme, which lets Chinese investors
put money to work in foreign markets.
Currently UOB Asset Management’s assets
from clients outside Singapore, in markets such
as Malaysia, Thailand and Indonesia, account
for a quarter of total assets.
UOB Asset Management clinched the “Best
Overall Fund Group” in The Edge-Lipper Sin-
gapore Fund Awards 2008 last Thursday, for
delivering consistently strong performance
in bond assets, equity assets and mixed as-
sets. — Reuters E
 THE WEEK OF MARCH 3, 2008

PersonalWealth M A N AG I N G YO U R M O N E Y

BRIC outlook
Russia looks to be
the most attractive,
says HSBC

Bond fund
with equity-
type returns
Templeton fund
manager bets
against greenback

Fidelity, Lion Capital, AllianceBerstein,

TOUGH going The best fund managers last year are finding this year the most
UOB Asset Management and Deutsche
Asset Management were the biggest challenging. Read about what’s in store for the fund industry,
winners at last week’s The Edge-Lip-
per Singapore Fund Awards 2008. markets and trends.
Seen here are Madeline Ho (front
left), managing director of Fidelity
Investments Singapore; next to Ho
is Daniel Chan, CEO and CIO of Lion
Capital Management; (back row from
left) Dokyoung Lee, senior portfolio
manager of AllianceBernstein; Andrew
Kwek, CEO Singapore of Deutsche
Asset Management (Asia); and Thio
Boon Kiat, managing director and CIO
of UOB Asset Management.
 pg 42 (279mm) Cover (276mm) GF1 (273mm)

42 • THEEDGE SINGAPORE | MARCH 3, 2008

SINGAPORE (INCLUSIVE OF GST) S$3.00
OTHER HIGHLIGHTS
THE ASCOTT INTERVIEW
Millionaires’ row Petrodollar Concord CEO
in Singapore tsunami warning sparks revolution
CITY&COUNTRY ECONOMY WATCH OPTIONS

MICA (P) No. 075/08/2007 PPS 1519/09/2008 (000599) BUSINESS & INVESTMENT WEEKLY THE WEEK OF MARCH 3 — MARCH 9, 2008 308

3
SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

NOTEWORTHY

The best of the best:

THE EDGE-LIPPER

SURVIVING
SINGAPORE FUND
AWARD WINNERS
2008

the crunch
ASSIF SHAMEEN:
Money in
looming global
water crisis

SUNITA SUE LENG:

Appetite for
food stocks
shrinks

ST Engineering plans
ARA Asset Management has emerged
diversification to sidestep unscathed from the funding squeeze in the REIT
possible US slowdown
Golden Agri plants up,
market. Now, CEO John Lim wants to double its
seeks to close valuation gap assets under management within three years to
Del Monte emphasises
brand strength, $20 billion, a level that would rival CapitaLand’s
moves up value chain real estate asset management business. Turn to
Celestial NutriFoods
continues expanding, our Cover Story for why institutional investors
squeezed by high
soybean prices
are excited about the stock.
Federal International makes
rash of energy investments
Small-cap financier DB
Zwirn winds down funds
Synear Food, China Milk,
Celestial NutriFoods,
People’s Food, China Dairy,
China Essence
Hot stocks

8 885002 090004 PLUS: Managers of MMP REIT contemplate M&A deal

563/
%"3,
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• Low entry cost of CFDs on 15 major stock indices

Get your free demo account; visit www.saxomarkets.com.sg,

email ps@saxomarkets.com.sg or call +65 6303 7788.

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$PNQBOZ
/P
.

Published by The Edge Publishing Pte Ltd 150 Cecil Street #13-00 Singapore 069543 • Printed by KHL Printing Co Pte Ltd 57 Loyang Drive Singapore 508968
 pg 42 (279mm) Cover (276mm) GF1 (273mm)

42 • THEEDGE SINGAPORE | MARCH 3, 2008

SINGAPORE (INCLUSIVE OF GST) S$3.00
OTHER HIGHLIGHTS
THE ASCOTT INTERVIEW
Millionaires’ row Petrodollar Concord CEO
in Singapore tsunami warning sparks revolution
CITY&COUNTRY ECONOMY WATCH OPTIONS

MICA (P) No. 075/08/2007 PPS 1519/09/2008 (000599) BUSINESS & INVESTMENT WEEKLY THE WEEK OF MARCH 3 — MARCH 9, 2008 308

3
SAMUEL ISAAC CHUA/THE EDGE SINGAPORE

NOTEWORTHY

The best of the best:

THE EDGE-LIPPER

SURVIVING
SINGAPORE FUND
AWARD WINNERS
2008

the crunch
ASSIF SHAMEEN:
Money in
looming global
water crisis

SUNITA SUE LENG:

Appetite for
food stocks
shrinks

ST Engineering plans
ARA Asset Management has emerged
diversification to sidestep unscathed from the funding squeeze in the REIT
possible US slowdown
Golden Agri plants up,
market. Now, CEO John Lim wants to double its
seeks to close valuation gap assets under management within three years to
Del Monte emphasises
brand strength, $20 billion, a level that would rival CapitaLand’s
moves up value chain real estate asset management business. Turn to
Celestial NutriFoods
continues expanding, our Cover Story for why institutional investors
squeezed by high
soybean prices
are excited about the stock.
Federal International makes
rash of energy investments
Small-cap financier DB
Zwirn winds down funds
Synear Food, China Milk,
Celestial NutriFoods,
People’s Food, China Dairy,
China Essence
Hot stocks

8 885002 090004 PLUS: Managers of MMP REIT contemplate M&A deal

563/
%"3,
Turmoil in financial markets doesn’t necessarily have to spell trouble

for your investments. Hedge with stock and index-tracking CFDs on
SaxoTrader to preserve the value of your portfolio.
C A P I T A L
M A R K E T S

4,*&4
50
So trade up to SaxoTrader and enjoy access to over 5,000 CFDs – many of which allow
you to short-sell. Some other benefits include:

#-6&
• More efficient intra-day stock trading with live prices
• Leverage investments up to 10 times
• Diversify with CFDs from 23 major exchanges globally
• Low entry cost of CFDs on 15 major stock indices

Get your free demo account; visit www.saxomarkets.com.sg,

email ps@saxomarkets.com.sg or call +65 6303 7788.

3JTL
XBSOJOH
-FWFSBHFE
JOWFTUNFOUT
JO
GPSFJHO
FYDIBOHF
PS
EFSJWBUJWFT
DBSSZ
B
IJHI
EFHSFF
PG
SJTL
BOE
NBZ
SFTVMU
JO
TJHOJ¾DBOU
HBJOT
PS
MPTTFT
:PV
TIPVME
DBSFGVMMZ
DPOTJEFS
ZPVS
¾OBODJBM
TJUVBUJPO
BOE
DPOTVMU
ZPVS
JOEFQFOEBOU
¾OBODJBM
BEWJTPST
BT
UP

UIF
TVJUBCJMJUZ
PG
ZPVS
TJUVBUJPO
QSJPS
UP
NBLJOH
BOZ
JOWFTUNFOUT
































































$PNQBOZ
/P
.

Published by The Edge Publishing Pte Ltd 150 Cecil Street #13-00 Singapore 069543 • Printed by KHL Printing Co Pte Ltd 57 Loyang Drive Singapore 508968