MIRA INFORM REPORT

Report Date :

14.03.2007

IDENTIFICATION DETAILS

Name :	KCC (SINGAPORE) PTE. LTD.
Registered Office :	^1 Tuas Avenue 2, Singapore - 639441
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^22/05/1992
Com. Reg. No.:	^199202641M
Legal Form :	^Pte Ltd
Line of Business :	Manufacture and Sale of Paints and that of Contractors for Repainting Projects.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

KCC (SINGAPORE) PTE. LTD.

Line Of Business

MANUFACTURE AND SALE OF PAINTS AND THAT OF CONTRACTORS FOR REPAINTING PROJECTS.

Parent Company

KCC CORPORATION (F.K.A.: KUMGANG KOREA CHEMICAL CO., LTD)

(PERCENTAGE OF SHAREHOLDING: 100%)

Financial Elements

FY2005

COMPANY

Sales : US$45,327,732

Networth : US$29,432,430

Paid-Up Capital : US$ 9,681,535

Net result : US$ 2,319,232

Net Margin(%) : 5.12

Return on Equity(%) : 7.88

Leverage Ratio : 0.21 TIMES

Rating

Credit Rating : Sing $ 10000001 to Sing $ 50000000

COMPANY IDENTIFICATION

^{Subject Company : KCC (SINGAPORE) PTE. LTD.}

^{Former Name : -}

^{Business Address : 1 TUAS AVENUE 2}

^{Town : SINGAPORE}

^{Postcode : 639441}

^{County : -}

^{Country : Singapore}

^{Telephone : 6862 0100}

^{Fax : 6863 0678/9}

^{ROC Number : 199202641M}

^{Reg. Town : -}

SUMMARY

^{All amounts in this report are in : USD}

^{Legal Form : Pte Ltd}

^{Date Inc. : 22/05/1992}

^{Previous Legal Form : -}

^{Summary year : 31/12/2005}

^{Sales : 45,327,732}

^{Net Worth : 29,432,430}

^{Capital : 9,681,535}

^{Paid-Up Capital : 9,681,535}

^{Employees : -}

^{Net Result : 2,319,232}

^{Share value : 1}

^{Auditor : ERNST & YOUNG}

REFERENCES

^{Litigation : YES}

^{Company status : TRADING}

^{Started : 22/05/1992}

PRINCIPAL(S)

^{CHUNG MONG JIN 3472930 Director}

DIRECTOR(S)

^{CHUNG MONG JIN 3472930 Director}

^{Appointed on : 01/12/1994}

^{Street : 7 TANJONG RHU ROAD}

^#14-04

^{THE WATERSIDE}

^{Town : SINGAPORE}

^{Postcode : 436887}

^{Country : Singapore}

^{LEE BENG TZEN S6816643H Director}

^{Appointed on : 19/01/2000}

^{Street : 712A UPPER CHANGI ROAD EAST}

^#03-11

^{Town : SINGAPORE}

^{Postcode : 486843}

^{Country : Singapore}

^{CHAN FOOK MENG S2557235A Company Secretary}

^{Appointed on : 10/11/1997}

^{Street : 36C DUNEARN ROAD}

^#01-19

^{CHANCERY COURT}

^{Town : SINGAPORE}

^{Postcode : 309428}

^{Country : Singapore}

^{PARK SUNG WAN JR1036840 Director}

^{Appointed on : 14/10/2003}

^{Street : 7 TANJONG RHU ROAD}

^#14-04

^{THE WATERSIDE}

^{Town : SINGAPORE}

^{Postcode : 436887}

^{Country : Singapore}

FORMER DIRECTOR(S)

^{HUI CHOON HO S1163288B}

^{TAK YOUNG SOO F2075052U}

^{MIN BYUNG SAM 4949197}

^{SHIN DONG IL LA0225732}

ACTIVITY (IES)

^{PAINT - WHSLE And MFRS Code: 15800}

^{PAINT DEALERS Code: 15810}

^{PAINTING CONTRACTORS Code: 15850}

^{BASED ON ACRA'S RECORD AS AT 09/03/2006}

^{1) MANUFACTURE OF PAINTS}

^{2) GENERAL CONTRACTORS (BUILDING CONTRUCTION INCLUDING MAJOR}

CHARGES

^{Date : 17/05/1995}

^{Comments : CHARGE NO: 9502937 (DISCHARGED - 30/04/2001)}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE: BANQUE INDOSUEZ}

^{Date : 17/05/1995}

^{Comments : CHARGE NO: 9502938 (DISCHARGED - 07/05/2003)}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE: BANQUE INDOSUEZ}

^{Date : 08/10/1994}

^{Comments : CHARGE NO: 9405811 (DISCHARGED - 13/09/2000)}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED}

^{Date : 04/01/2000}

^{Comments : CHARGE NO: 200000030 (DISCHARGED - 07/05/2003)}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE: CREDIT AGRICOLE INDOSUEZ}

^{Date : 23/05/2003}

^{Comments : CHARGE NO: C200302374}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED}

^{Date : 30/01/2003}

^{Comments : CHARGE NO: C200300298 (DISCHARGED - 13/12/2005)}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED}

PREMISES/PROPERTY INFORMATIONS

^{Date : 14/03/2007}

^{Tax rate : 10%}

^{Site Address : 1 TUAS AVENUE 2}

^{Town : SINGAPORE}

^{Postcode : 639441}

^{Country : Singapore}

^{Annual Value : SGD 1,195,000}

* TAX RATE OF 4% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS OWNER OCCUPIED.

* TAX RATE OF 10% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS PARTIALLY OR FULLY RENTED OUT BY THE OWNER/OWNED BY COMPANY.

* FOR PROPERTIES OTHER THAN RESIDENTIAL PROPERTIES REGARDLESS RENTED OUT OR NOT, THE TAX RATE IS 10% (I.E INDUSTRIAL AND COMMERCIAL PROPERTY).

* ANNUAL VALUE IS THE ESTIMATED ANNUAL RENT THE PROPERTY CAN FETCH IF IT WERE RENTED OUT. THE ANNUAL VALUE IS DETERMINED IN THE SAME MANNER REGARDLESS OF WHETHER THE PROPERTY IS LET-OUT, OWNER-OCCUPIED OR VACANT.

BANKERS

^{CREDIT AGRICOLE INDOSUEZ}

^{THE HONGKONG & SHANGHAI BANKING CORPORATION LTD}

^{KOREAN EXCHANGE BANK}

^{DBS BANK LTD.}

ASSOCIATED COMPANY(IES)

^{LOTH-X AUDIO PTE LTD}

^{37 TANNERY LANE}

^#03-09

^{TANNERY HOUSE}

^SINGAPORE

SHAREHOLDERS(S)

^{KCC CORPORATION (F.K.A.KUMGANG 14,660,000 Company}

^{Street : 1301-4 SEOCHO-DONG}

^SEOCHO-KU

^{Town : SEOUL}

^{Postcode : -}

^{Country : Korea, Republic of}

HOLDING COMPANY

^{KCC CORPORATION UF09068K % : 100}

SUBSIDIARY (IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation : AVERAGE}

LITIGATION(S)

^{Type Of Case : Magistrate Court - W/S}

^{Case Number : MCS21175/2005}

Defendant KCC (SINGAPORE) PTE. LTD. ROC # : 199202641M

^{Type Of Case : High Court - W/S}

^{Case Number : HWS00420/2005}

Defendant KCC (SINGAPORE) PTE. LTD. ROC # : 199202641M

^{Type Of Case : Magistrate Court - W/S}

^{Case Number : MCS017921/2004}

Defendant KCC (SINGAPORE) PTE. LTD. ROC # : 199202641M

^{Type Of Case : Magistrate Court - W/S}

^{Case Number : MCS009100/2001}

Defendant KCC (SINGAPORE) PTE. LTD. ROC # : 199202641M

^{Type Of Case : High Court - W/S}

^{Case Number : HWS000901/2000}

Defendant KCC (SINGAPORE) PTE. LTD. ROC # : 199202641M

FINANCIAL ELEMENTS

^{All amounts in this report are in : USD}

^{Audit Qualification: UNQUALIFIED UNQUALIFIED UNQUALIFIED}

^{(CLEAN) (CLEAN) (CLEAN)}

^{Date Account Lodged: 17/05/2006}

^{Balance Sheet Date: 31/12/2005 31/12/2004 31/12/2003}

^{Number of weeks: 52 52 52}

^{Consolidation Code: COMPANY COMPANY COMPANY}

^{--- ASSETS ---}

^{Tangible Fixed Assets: 7,175,632 7,861,934 8,297,017}

^{Investments 2,503,160 838,160 838,160}

^{Total Fixed Assets: 9,678,792 8,700,094 9,135,177}

^{Inventories: 8,892,648 6,250,165 4,140,846}

^{Receivables: 8,707,974 8,763,420 6,080,697}

^{Cash, Banks, Securities: 8,192,979 8,934,627 11,896,502}

^{Other current assets: 170,718 230,789 79,265}

^{Total Current Assets: 25,964,319 24,179,001 22,197,310}

^{TOTAL ASSETS: 35,643,111 32,879,095 31,332,487}

^{--- LIABILITIES ---}

^{Equity capital: 9,681,535 9,681,535 9,681,535}

^{Profit & loss Account: 19,750,895 17,431,663 16,268,745}

^{Total Equity: 29,432,430 27,113,198 25,950,280}

^{L/T deferred taxes: 271,986 275,777 247,017}

^{Total L/T Liabilities: 271,986 275,777 247,017}

^{Trade Creditors: 4,011,150 3,334,527 2,822,200}

^{Provisions: 678,014 806,939 1,177,155}

^{Other Short term Liab.: 70,877 114,145 155,327}

^{Prepay. & Def. charges: 1,178,654 1,234,509 980,508}

^{Total short term Liab.: 5,938,695 5,490,120 5,135,190}

^{TOTAL LIABILITIES: 6,210,681 5,765,897 5,382,207}

PROFIT & LOSS ACCOUNT

^{Net Sales 45,327,732 40,939,844 38,730,085}

^{Purchases,Sces & Other Goods: 38,732,790 33,969,933 30,989,236}

^{Gross Profit: 6,594,942 6,969,911 7,740,849}

^{Result of ordinary operations 2,554,929 2,715,595 3,910,914}

^{NET RESULT BEFORE TAX: 2,827,586 2,791,678 3,968,242}

^{Tax : 508,354 628,760 1,172,377}

^{Net income/loss year: 2,319,232 2,162,918 2,795,865}

^{Interest Paid: - 33 4,162}

^{Depreciation: 521,764 518,722 551,842}

^{Dividends: - 1,000,000 1,000,000}

^{Directors Emoluments: 707,496 740,348 586,854}

^{Wages and Salaries: 1,700,661 1,569,412 1,596,602}

^{Financial Income: 248,571 123,151 81,061}

RATIOS

^{31/12/2005 31/12/2004 31/12/2003}

^{Net result / Turnover(%): 0.05 0.05 0.07}

^{Stock / Turnover(%): 0.20 0.15 0.11}

^{Net Margin(%): 5.12 5.28 7.22}

^{Return on Equity(%): 7.88 7.98 10.77}

^{Return on Assets(%): 6.51 6.58 8.92}

^{Dividends Coverage: - 2.16 2.80}

^{Net Working capital: 20025624.00 18688881.00 17062120.00}

^{Cash Ratio: 1.38 1.63 2.32}

^{Quick Ratio: 2.85 3.22 3.50}

^{Current ratio: 4.37 4.40 4.32}

^{Receivables Turnover: 69.16 77.06 56.52}

^{Leverage Ratio: 0.21 0.21 0.21}

^{Net Margin : (100*Net income loss year)/Net sales}

^{Return on Equity : (100*Net income loss year)/Total equity}

^{Return on Assets : (100*Net income loss year)/Total fixed assets}

^{Dividends Coverage : Net income loss year/Dividends}

^{Net Working capital : (Total current assets-Total short term liabilities)}

^{Cash Ratio : Cash Bank securities/Total short term liabilities}

^{Quick Ratio : (Cash Bank securities+Receivables)/Total Short term liabilities}

^{Current ratio : Total current assets/Total short term liabilities}

^{Inventory Turnover : (360*Inventories)/Net sales}

^{Receivables Turnover : (Receivable*360)/Net sales}

^{Leverage Ratio : Total liabilities/(Total equity-Intangible assets)}

FINANCIAL COMMENTS

^{THE FINANCIAL CONDITION OF THE COMPANY WAS FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS DEEMED PASSABLE WITH NET WORTH IMPROVED BY 8.55% TO US$29,432,430 (2004: US$27,113,198). THE IMPROVEMENT WAS CONTRIBUTED BY HIGHER ACCUMULATED PROFIT WHICH AMOUNTED TO US$19,750,895 (2004: US$17,431,663); A RISE OF 13.30%.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 67.54% (2004: 60.74%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$4,011,150 (2004: US$3,334,527). THE BREAKDOWN IS AS FOLLOWS:}

^{- TRADE CREDITORS - 2005: US$2,202,060 (2004: US$2,494,663)}

^{- DUE TO HOLDING COMPANY (TRADE) - 2005: US$476,379 (2004: US$839,864)}

^{- DUE TO A RELATED COMPANY (TRADE) - 2005: US$1,331,035 (2004: US$NIL)}

^{- DUE TO A SUBSIDIARY (TRADE) - 2005: US$1,676 (2004: US$NIL)}

^{IN THE LONG-TERM, DEFERRED TAX AMOUNTED TO US$271,986 (2004: US$275,777).}

^{IN ALL, LEVERAGE RATIO WAS CONSERVATIVE AT 0.21 TIMES IN FY 2005 (2004: 0.21 TIMES). THIS INDICATED THAT THE COMPANY'S LIABILITIES WERE MODEST IN RELATION TO ITS TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL BY 7.15% TO US$20,025,624 (2004: US$18,688,881).}

^{HOWEVER, LIQUIDITY RATIOS HAD WEAKENED. QUICK RATIO FELL TO 2.85 TIMES FROM 3.22 TIMES AND CURRENT RATIO DECLINED FROM 4.40 TIMES TO 4.37 TIMES IN FY 2005.}

^{CASH AND CASH EQUIVALENTS WAS DEPLETED BY 8.30% TO US$8,192,979 (2004: US$8,934,627). THE BREAKDOWN IS AS FOLLOWS:}

^{- FIXED DEPOSITS - 2005: US$6,000,000 (2004: US$6,600,000)}

^{- CASH & BANK BALANCES OF US$2,192,979 (2004: US$2,334,627)}

^{PROFITABILITY:}

^{REVENUE IMPROVED BY 10.72% TO US$45,327,732 (2004: US$40,939,844) AND NET PROFIT ROSE BY 7.23% TO US$2,319,232 (2004: US$2,162,918.).}

^{GROSS MARGIN WAS LOWER AT 14.55% IN FY 2005 (2004: 17.02%). DESPITE THE RISE IN REVENUE AND NET PROFIT, NET MARGIN DROPPED TO 5.12% (2004: 5.28%).}

^REVENUE:

^{- SALES OF GOODS - 2005: US$41,469,745 (2004: US$39,252,953)}

^{- PROJECT INCOME- 2005: US$3,857,987 (2004: US$1,686,891)}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE ANTICIPATED IF PAYMENTS FROM TRADE RECEIVABLES WERE FORTHCOMING AND EARNINGS CAN BE IMPROVED OR MAINTAINED. THIS WAS ALSO IN VIEW THAT THERE WAS NO INTEREST-BEARING DEBT TO FINANCE.}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{SHARE CAPITAL:}

^{AUTHORISED, ISSUED AND FULLY PAID:}

^{- 14,660,000 ORDINARY SHARES OF S$1 EACH, AT BEGINNING AND END OF YEAR}

^{- 2005: US$9,681,535 (2004: US$9,681,535)}

^{CAPITAL COMMITMENTS:}

^{CAPITAL EXPENDITURE CONTRACTED FOR AS AT BALANCE SHEET DATE BUT NOT RECOGNISED IN THE FINANCIAL STATEMENTS IS AS FOLLOWS:}

^{- CAPITAL COMMITMENTS IN RESPECT OF INVESTMENT IN AN ASSOCIATE}

^{- 2005: US$8,325,000 (2004: US$NIL)}

BACKGROUND/OPERATION

^{THE SUBJECT WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 22/05/1992 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE OF "KCC (SINGAPORE) PTE. LTD.".}

^{AS AT 09/03/2007, SUBJECT HAS AN ISSUED AND PAID-UP CAPITAL OF 14,660,000 SHARES OF A VALUE OF S$14,660,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) MANUFACTURE OF PAINTS}

^{2) GENERAL CONTRACTORS (BUILDING CONTRUCTION INCLUDING MAJOR UPGRADING WORKS)}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THE MANUFACTURE AND SALE OF PAINTS AND THAT OF CONTRACTORS FOR REPAINTING PROJECTS.}

^{THE COMPANY IS A WHOLLY-OWNED SUBSIDIARY OF KCC CORPORATION (PREVIOUSLY KNOWN AS KUMGANG KOREA CHEMICAL CO LTD), INCORPORATED IN THE REPUBLIC OF SOUTH KOREA, WHICH IS ALSO ITS ULTIMATE HOLDING COMPANY.}

^{FROM THE RESEARCH CONDUCTED, THE FOLLOWING INFORMATION WAS GATHERED:}

^{SUBJECT IS LISTED IN THE SINGAPORE LOCAL DIRECTORY UNDER THE CLASSIFICATION OF: PAINT - WHOLESALERS & MANUFACTURERS.}

^{SUBJECT IS A MANUFACTURER AND SALES OF MARINE, CONTAINER PAINTS, HEAVY DUTY PROTECTIVE PAINTS, AUTOMOTIVE PAINTS, BUILDING MATERIALS AND RESINS.}

^PRODUCTS:

^{* ANTI-CORROSIVE PAINTS}

^{* ARCHITECTURAL PAINTS}

^{* MARINE PAINTS}

^{* HEAVY DUTY PROTECTIVE PAINTS}

^{* AUTOMOTIVE PAINTS}

^{* DECORATIVE PAINTS}

^{* CARGO CONTAINER PAINTS}

^{* GENERAL INDUSTRIAL PAINTS}

^{* POWDER COATINGS PAINTS}

^{* SYNTHETIC RESINS}

^{* PRE-COATED METAL PAINTS}

^{* AVIATION PAINTS}

^{* BUILDING PAINTS}

^{* BUILDING MATERIALS}

^{- INSULATION/FIREPROOF MATERIALS}

^{(EG: SILICA, CERAK WOOL, GLASS WOOL, MINERAL WOOL)}

^{- INTERIOR AND EXTERIOR MATERIALS}

^{(GYPSUM BOARD)}

^{- CEILING MATERIALS}

^(MITONE)

^BRANDS:

^{* KCC}

^PURCHASES:

^{* IMPORTS: NOT PROVIDED}

^{* TERMS OF IMPORT: 30 TO 90 DAY TERMS}

^{* IMPORT COUNTRIES: KOREA, ETC.}

^MARKETS:

^{* LOCAL (%): NOT PROVIDED}

^{* TERMS SALES: 30-180 DAY TERMS}

^{* EXPORT(%): NOT PROVIDED}

^{* TERMS OF EXPORT: 30-180 DAY TERMS}

^{* EXPORT COUNTRIES: SOUTHEAST ASIA REGION; CHINA, SOUTH AFRICE, ETC}

^{BCA, BUILDING & CONSTRUCTION AUTHORITY (SINGAPORE) REGISTERED WORK HEADS /}

^{DESCRIPTION / TENDERING LIMIT:}

^{* CR09/REPAIRS & REDECORATIONS/L4 $5 MILLION}

^{* SY02/CHEMICALS/L3 $3 MILLION}

^{OVERSEAS OFFICES:}

^{* HONG KONG, CHINA, MALAYSIA, TAIWAN, JAPAN, U.A.E., KOREA, CANADA, U.S.A., BRAZIL, GERMANY, CROATIA, NETHERLANDS, GREECE, RUSSIA & SOUTH AFRICA.}

^{QUALITY ASSESSMENT:}

^{* ISO 9002}

^{* ISO 9001}

^{* ISO 14001}

^{FROM THE TELE-INTERVIEW CONDUCTED ON 14/03/2007, IT WAS REVEALED THAT THERE ARE 60 PERSONS EMPLOYED IN THE BUSINESS. NO OTHER TRADE INFORMATION WAS MADE AVAILABLE.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2005: NOT AVAILABLE (2004: 63; 2003: 61; 2002: 62)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{1 TUAS AVENUE 2}

^{SINGAPORE 639441}

^{DATE OF CHANGE OF ADDRESS: 04/04/1994}

^{-- OWNED PREMISE}

^{-- OFFICE CUM FACTORY}

^WEBSITE:

^{* www.kccpaint.com.sg}

^EMAIL:

^{* sales@kccpaint.com.sg}

^{* cblim@kccpaint.com.sg}

MANAGEMENT

^{THE DIRECTORS AT THE TIME OF THIS REPORT ARE:}

^{1) CHUNG MONG JIN, A SOUTH KOREAN}

^{- BASED IN SINGAPORE.}

^{2) PARK SUNG WAN, A SOUTH KOREAN}

^{- BASED IN SINGAPORE.}

^{3) LEE BENG TZEN, A SINGAPOREAN}

^{- HOLDS OTHER DIRECTORSHIP AS RECORDED IN OUR DATABASE.}

^{KCC PAINTS SDN BHD}

SINGAPORE'S COUNTRY RATING 2006

INVESTMENT GRADE

IN SINGAPORE, THE POLITICAL SITUATION APPEARS TO BE VERY STABLE.

ECONOMIC GROWTH IS BECOMING MORE MODERATE AS INVESTMENT HAS BEEN FLAT DUE TO INCREASING OIL PRICES AND LESS BUOYANT DEMAND FOR ELECTRONIC PRODUCTS.

ECONOMIC PERFORMANCE HAS REMAINED STRONG, UNDERPINNED BY PHARMACEUTICALS AND SERVICES. EXPORTS HAS BENEFITED FROM THE STEADINESS OF DEMAND FROM ITS MAIN TRADING PARTNERS, MALAYSIA, THE UNITED STATES, CHINA AND HONG KONG. OTHER THAN ITS BALANCED PUBLIC SECTOR ACCOUNTS, LIMITED FOREIGN DEBT AND COMFORTABLE FOREIGN CURRENCY RESERVES HAVE CONTRIBUTED TO SINGAPORE'S STRONG FINANCIAL CONDITION.

AS THE ELECTRONICS SECTOR FACES COMPETITION FROM THE ASIAN ECONOMIES, SINGAPORE HAS BEEN PURSUING DIVERSIFICATION STRATEGY THAT HAS BEEN CONSOLIDATING ITS POSITION. PHARMACEUTICALS ALREADY REPRESENT 10% OF EXPORTS IN COMPARATIVE TO ITS INSIGNIFICANT CONTRIBUTION IN YEAR 1995. ELECTRONICS SECTOR SECTOR'S SHARE HAS DECLINED FROM 80% TO 60% DURING THE SAME PERIOD. THERE IS HIGH RELIANCE ON DEVELOPMENT OF PETROCHEMICAL PRODUCTS, HIGH VALUE-ADDED SERVICES AND BIOTECHNOLOGIES.

ASSETS

- ONE OF THE MOST OPEN ECONOMIES IN THE WORLD WITH EXPORTS PLAYING A MAJOR

ROLE IN ITS PERFORMANCE.

- ONE OF ASIA'S MOST ADVANCED COUNTRIES IN QUALITY COMPETITIVENESS TERMS.

- WORKFORCE'S EDUCATION AND SKILL LEVEL IS VERY HIGH.

- A MAJOR EXPORT OF CAPITAL IN ASIA, PARTICULARLY THE STATE-OWNED HOLDING

COMPANY, TEMASEK.

- THE BUSINESS ENVIRONMENT HAS BEEN VERY FAVOURABLE.

- GREAT POLITICAL STABILITY.

WEAKNESSES

- ECONOMY REMAINED OVERSPECIALISED IN THE ELECTRONICS SECTOR.

- MUST ACCELERATE DIVERSIFICATION IN SERVICES TO MAINTAIN ITS LEAD OVER

OTHER ASIAN ECONOMIES

- REFORMS ARE STILL NEEDED TO FOSTER INNOVATION AND EDUCATION-SYSTEM

MODERNIZATION.

- AGING POPULATION COULD ULTIMATELY AFFECT ECONOMIC PERFORMANCE.

OVERVIEW OF SINGAPORE

PAST PERFORMANCE

SINGAPORE’S ECONOMY GREW BY 6.6% IN 4Q 23006, AFTER A 7.0% GROWTH IN 3Q 2006. THE GROWTH MOMENTUM, ON AN ANNUALISED QUARTER-TO-QUARTER BASIS, DOUBLED TO 7.9% IN 4Q 2006, FROM 3.9% IN THE PREVIOUS QUARTER. THIS BROUGHT FULL-YEAR REAL GDP GROTH TO 7.9%, HIGHER THAN THE 6.6% GROWTH IN 2005.

THE MANUFACTURING SECTOR GREW AT A MORE MODEST PACE OF 7.7% IN 4Q 2006, AFTER A 9.5% EXPANSION IN 3Q 2006. THIS WAS DUE MAINLY TO A FALL IN THE OUTPUT OF THE ELECTRONICS AND CHEMICALS CLUSTERS, AND SLOWER GROWTH IN THE PRECISION ENGINEERING CLUSTER. GROWTH IN THE TRANSPORT ENGINEERING CLUSTER EASED BUT REMAINED STRONG. MEANWHILE, THE BIOMEDICAL MANUFACTURING CLUSTER ACCELERATED FROM A GROWTH OF 4.7% IN 3Q 2006 TO 27% IN 4Q 2006. FOR THE WHOLE YEAR, THE MANUFACTURING SECTOR GREW BY 12%, UP FROM 9.5% IN 2005, SUPPORTED BY STRONGER PERFORMANCES IN THE TRANSPORT ENGINEERING, BIOMEDICAL

MANUFACTURING AND PRECISION ENGINEERING CLUSTERS.

THE WHOLESALE AND RETAIL TRADE SECTOR EXPANDED 6.9% IN 4Q 2006, BUT ITS GROWTH MOMENTUM WAS DOWN BY 3.5%. THE WHOLESALE SEGMENT MODERATED, WITH GROWTH OF NON-OIL RE-EXPORTS HALVED FROM 13% IN 3Q 2006 TO 6.3% IN 4Q 2006. PERFORMANCE OF THE RETAIL SEGMENT IMPROVED FURTHER AS RETAIL SALES WENT UP 7.9% IN 4Q 2006, COMPARED TO 5.2% IN THE PREVIOUS QUARTER. OVER 2006, THE WHOLESALE AND RETAIL SECTOR EXPANDED STRONGLY BY 10%, UP FROM 9.6% IN 2005.

THE FINANCIAL SERVICES SECTOR EXPANDED BY 11% IN 4Q 2006, AFTER GROWING BY 7.4% FROM THE PREVIOUS QUARTER. THE EXPANSION WAS BROAD-BASED ACROSS MOST SEGMENTS. IN PARTICULAR, THE STOCK TRADING SEGMENT ENJOYED A SHARP INCREASE IN ACTIVITY DURING THE QUARTER. FUND MANAGEMENT, ASIAN CURRENCY UNITS, AND FOREX SEGMENTS ALSO REGISTERED STRONG GROWTH IN 4Q 2006. THE STRONG PERFORMANCE IN THE FINAL QUARTER BROUGHT THE SECTOR’S FULL-YEAR GROWTH TO 9.2%, HIGHER THAN THE 7.6% GAIN IN 2005.

THE CONSTRUCTION SECTOR CONTINUED TO EXPAND BY 4.7%, FOLLOWING 5.8% IN 3Q 2006. GROWTH MOMENTUM ON A SEASONALLY ADJUSTED QUARTER-ON-QUARTER BASIS REMAINED STRONG AT 12%. CERTIFIED PAYMENTS GREW SLIGHTLY BY 0.7%, DOWN FROM 9.8% IN 3Q 2006. CONTRACTS AWARDED DIPPED 8.0% IN 4Q 2006 AFTER A RISE IN GROWTH IN THE PREVIOUS QUARTER. FOR THE YEAR, THE SECTOR GREW BY 2.7%, UP FROM 0.7% IN 2005.

THE HOTELS AND RESTAURANTS SECTOR CONTINUED TO STRENGTHEN IN 4Q 2006 WITH A 6.1% INCREASE FOLLOWING A 4.4% GROWTH IN 3Q 2006. VISITOR ARRIVALS ROSE 8.4% COMPARED WITH 4.5% IN THE PREVIOUS QUARTER. THIS HELPED TO RAISE THE AVERAGE OCCUPANCY RATE OF HOTELS TO 88% IN 4Q 2006, COMPARED TO 85% A YEAR EARLIER. HOTEL ROOM REVENUES WENT UP 12% AFTER A 28% INCREASE IN 3Q 2006. FOR THE YEAR AS A WHOLE, THE SECTOR GREW BY 5.1%, UP FROM 4.3% IN 2005, ON THE BACK OF A RECORD 9.7 MILLION VISITOR ARRIVALS.

THE FINANCIAL SERVICES SECTOR EXPANDED BY 11% IN 4Q 2006, AFTER GROWING BY 7.4% A QUARTER EARLIER. THE EXPANSION WAS BROAD-BASED ACROSS MOST SEGMENTS. IN PARTICULAR, THE STOCK TRADING SEGMENT ENJOYED AN INCREASE IN ACTIVITY DURING THE QUARTER. FUND MANAGEMENT, ASIAN CURRENCY UNITS, AND FOREX SEGMENTS ALSO REGISTERED STRONG GROWTH IN 4Q 2006. THE STRONG PERFORMANCE IN THE FINAL QUARTER BROUGHT THE SECTOR’S FULL-YEAR GROWTH TO 9.2%, HIGHER THAN THE 7.6% GAIN IN 2005.

THE TRANSPORT AND STORAGE SECTOR INCREASE BY 4.0% IN 4Q 2006, SAME AS THE PREVIOUS QUARTER. WITHIN THE SECTOR, THE AIR TRANSPORT SEGMENT TURNED IN BETTER PERFORMANCE WHILE THE WATER TRANSPORT SEGMENT MODERATED. SLOWER GROWTH WAS SEEN IN BOTH SEA CARGO AND AIR CARGO HANDLED. MEANWHILE, GROWTH IN AIR PASSENGERSHANDLED AND CONTAINER THROUGHPUT IMPROVED COMPARED TO 3Q 2006. OVERALL, THE TRANSPORT AND STORAGE SECTOR EXPANDED 4.3% IN 2006, SIMILAR TO THE 4.2% IN 2005.

THE INFORMATION AND COMMUNICATIONS SECTOR POSTED A BETTER PERFORMANCE IN 4Q 2006 WITH A GROWTH OF 6.0%, FOLLOWING A 3.6% GAIN IN 3Q 2006. THE NUMBER OF BROADBAND SUBSCRIBERS CONTINUED TO REGISTER DOUBLE-DIGIT GROWTH IN THE QUARTER. INTERNATIONAL TELEPHONE CALL DURATION AND THE NUMBER OF MOBILE PHONE SUBSCRIBERS GREW AT A FASTER PACE COMPARED TO THE PREVIOUS QUARTER. THE SECTOR EXPANDED BY 4.6% DURING THE YEAR, COMPARED TO 5.5% IN 2005.

THE BUSINESS SERVICES SECTOR ROSE BY 5.4% IN 4Q 2006, FOLLOWING A 5.1% GAIN IN THE PREVIOUS QUARTER. THE EXPANSION IN THE SECTOR WAS DRIVEN BY ACTIVITIES IN THE CONSULTANCY, ARCHITECTURAL & ENGINEERING AND BUSINESS REPRESENTATIVE OFFICES AS WELL AS REAL ESTATE SEGMENT. FOR THE YEAR AS A WHOLE, THE BUSINESS SERVICES SECTOR INCREASED BY 5.8%, SIMILAR TO THE 5.9% GROWTH ACHIEVED IN 2005.

APART FROM WHOLESALE AND RETAIL TRADE, ALL SECTORS EXPERIENCED POSITIVE GROWTH MOMENTUM IN 4Q 2006. FOR 2006 AS A WHOLE, ALL SECTORS REGISTERED GROWTH, LED BY MANUFACTURING, WHOLESALE & RETAIL TRADE AND FINANCIAL SERVICES.

OUTLOOK

THE OUTLOOK FOR THE ECONOMY IS GENERALLY POSITIVE ALTHOUGH THERE ARE SOME DOWNSIDE RISKS. THE AVIAN FLU PANDEMIC TREAT HAS RESURFACED AS A GROWING NUMBER OF COUNTRIES REPORTED CASES OF INFECTION IN BIRDS IN RECENT WEEKS. OTHER UNCERTAINTIES INCLUDE THE DISORDERLY UNWINDING OF GLOBAL IMBALANCES, TERRORISM AND THE VULNERABILITY OF OIL PRICES TO SUPPLY SHOCKS. AS A RESULT, THE ECONOMIC GROWTH FORECAST FOR 2007 IS BEING RAISE FROM 4.0% TO 6.0% TO 4.5% TO 6.5%.

REAL ESTATE DEVELOPERS AND AGENTS AND 73% OF THE REAL ESTATE FIRMS ARE THE MOST OPTIMISTIC. THIS SECTOR IS EXPECTING TO DO WELL IN THE FIRST HALF OF 2007.

THE MANUFACTURING SECTOR IS CAUTIOUSLY OPTIMISTIC ABOUT BUSINESS SITUATIONS IN THE NEXT SIX MONTHS OF 2007.

WITHIN THE FINANCIAL SERVICES INDUSTRY, 46% OF THE FIRMS, INCLUDING COMPANIES ENGAGED IN BANKING AND FINANCE, STOCK, SHARE AND BOND BROKERAGE, FUND MANAGEMENT AND INSURANCE ACTIVITIES, ANTICIPATED HIGHER LEVELS OF BUSINESS ACTIVITIES IN THE FIRST 6 MONTHS.

IN THE BUSINESS SERVICES INDUSTRY, 27% OF THE FIRMS EXPECTS BUSINESS TO PICK UP DURING THE FIRST HALF OF THE YEAR. IN PARTICULAR, FIRMS ENGAGED IN ACCOUNTING, ARCHITECTURAL AND ENGINEERING, ADVERTISING AND SECURITY SERVICES AND THE RENTING OF CONSTRUCTION AND INDUSTRIAL MACHINERY FORESEE HIGHER DEMAND FOR THEIR SERVICES.

WITHIN THE CATERING TRADE INDUSTRY, 31% OF THE FIRM EXPRESSES POSITIVE BUSINESS SENTIMENTS. MOST HOTELIERS EXPECTS TO DO WELL IN THE FIRST HALF, IN ANTICIPATION OF HIGHER TOURIST ARRIVALS AND OCCUPANCY RATE.

RETAILERS, PARTICULARLY DEPARTMENT STORES OWNERS AND RETAILER OF FURNITURE AND FURNISHINGS, PREDICTS BUSINESS CONDITIONS TO IMPROVE IN THE NEXT SIX MONTHS.

WHOLESALERS ARE GENERALLY LESS OPTIMISTIC ABOUT THE BUSINESS ENVIRONMENT. IN PARTICULAR, DEALERS OF JEWELLERY AND WATCHES, INDUSTRIES MACHINERY AND EQUIPMENT, TELECOMMUNICATIONS EQUIPMENT AND ELECTRONIC COMPONENTS ARE THOSE WHO FORESEE SLOWER BUSINESS IN THE COMING MONTHS.

ALSO, TRANSPORT AND COMMUNICATIONS INDUSTRY IS LESS POSITIVE ABOUT THE BUSINESS OUTLOOK. SHIPPING LINES EXPECT SLOWER BUSINESS IN THE FIRST HALF DUE TO SEASONAL FACTORS. IN CONTRAST, FIRMS PROVIDING POST AND COURIER SERVICES FORESEE MORE FAVOURABLE CONDITIONS.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

TODAY

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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