MIRA INFORM REPORT

Report Date :

22.11.2007

IDENTIFICATION DETAILS

Name :	EASTCOMPEACE SMART CARD (SINGAPORE) PTE LTD

Registered Office :	^{371 Beach Road, #03-31/36, Keypoint, Singapore - 199597}

Country :	^Singapore

Financials (as on) :	31.12.2006

Date of Incorporation :	^13/11/2003

Com. Reg. No.:	^200311583K

Legal Form :	^{Pte Ltd}

Line of Business :	Trading of Smart Cards and Consultancy for Smart Card Solutions

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate

Payment Behaviour :	Regular

Litigation :	Clear

Subject Company

EASTCOMPEACE SMART CARD (SINGAPORE) PTE LTD

Line Of Business

TRADING OF SMART CARDS AND CONSULTANCY FOR SMART CARD SOLUTIONS

Parent Company

EASTCOMPEACE SMART CARD CO., LTD.

(PERCENTAGE OF SHAREHOLDINGS: 80.00%)

Financial Elements

FY 2006

COMPANY

Sales : US$5,456,341

Networth : US$ -334,362

Paid-Up Capital : US$ 459,730

Net result : US$ 10,091

Net Margin(%) : 0.18

Return on Equity(%) : -3.02

Leverage Ratio : -8.16

COMPANY IDENTIFICATION

^{Subject Company : EASTCOMPEACE SMART CARD
(SINGAPORE) PTE. LTD.}

^{Former Name :
ZEP SMART CARDS PTE. LTD.}

^{Business Address : 371 BEACH ROAD}

^#03-31/36

^KEYPOINT

^{Town :
SINGAPORE}

^{Postcode : 199597}

^{Country :
Singapore}

^{Telephone : 6392 3909}

^{Fax :
6392 3989}

^{ROC Number :
200311583K}

^{Reg. Town : -}

PREVIOUS IDENTIFICATION

^{ZEP SMART CARDS
PTE. LTD. DATE OF CHANGE : 23/03/2005}

SUMMARY

^{Legal Form : Pte Ltd}

^{Date Inc. : 13/11/2003}

^{Previous Legal
Form : -}

^{Summary year :
31/12/2006}

^{Sales :
5,456,341}

^{Networth : -334,362}

^{Capital :
-}

^{Paid-Up Capital : 459,730}

^{Employees : 18}

^{Net result : 10,091}

^{Share value : 1}

^{Auditor :
ROHAN MAH & PARTNERS}

REFERENCES

^{Litigation : No}

^{Company status : TRADING}

^{Started :
13/11/2003}

PRINCIPAL(S)

^{CHEW TEE KIONG
ANDY S7031782F Director}

DIRECTOR(S)

^{ZHOU ZHONGGUO P.4401968 Director}

^{Appointed on : 31/01/2005}

^{Street : ROOM
1203, BLDG 3,HUAJING GARDEN-}

^{QUNYUAN RESIDENTIAL
QUARTER, EAST}

^{SHIHUA RD, JIDA DISTRICT,
ZHUHAI}

^{Town : GUANGDONG}

^{Postcode : -}

^{Country : China}

^{HUANG
NINGZHAI P.6204305 Director}

^{Appointed on : 31/01/2005}

^{Street : ROOM 801,
BLDG 1, HUAJING GARDEN-}

^{QUNYUAN RESIDENTIAL
QUARTER, EAST}

^{SHIHUA RD, JIDA DISTRICT,
ZHUHAI}

^{Town :
GUANGDONG}

^{Postcode : -}

^{Country : China}

^{LI HAIJIANG P.6204306 Director}

^{Appointed on : 31/01/2005}

^{Street : ROOM 504,
DORMITORY OF EASTCOMPEAC}

^{ESMART CARD CO LTD, NO. 8
PINGGONG}

^{ZHONG RD, NANPING S&T
IND COMM}

^{Town : ZHUHAI,
GUANGDONG}

^{Postcode : -}

^{Country : China}

^{CHEW TEE KIONG
ANDY S7031782F Director}

^{Appointed on : 13/11/2003}

^{Street : 196C
PUNGGOL FIELD}

^#10-493

^{Town :
SINGAPORE}

^{Postcode : 823196}

^{Country : Singapore}

^{HUANG
NINGZHAI P.6204305 Managing Director}

^{Appointed on : 15/03/2006}

^{Street : ROOM 801,
BLDG 1, HUAJING GARDEN-}

^{QUNYUAN RESIDENTIAL
QUARTER, EAST}

^{SHIHUA RD, JIDA DISTRICT,
ZHUHAI}

^{Town :
GUANGDONG}

^{Postcode : -}

^{Country : China}

^{HU DAN P.6204304 Director}

^{Appointed on : 15/03/2006}

^{Street : ROOM
1303, BLDG 1, HUAJING GARDEN-}

^{QUNYUAN RESIDENTIAL
QUARTER}

^{EAST SHIHUA ROAD, JIDA
DISTRICT}

^{Town : ZHUHAI,
GUANGDONG}

^{Postcode : -}

^{Country : China}

^{KONG YUH LING
DOREEN S1123500Z Company Secretary}

^{Appointed on : 01/07/2007}

^{Street : 27 DOVER
CRESCENT}

^#16-25

^{Town :
SINGAPORE}

^{Postcode : 130027}

^{Country : Singapore}

FORMER DIRECTOR(S)

^{ONG SWEE LEONG
ANTHONY S1825709B}

^{LING BOON HUI S7236364G}

ACTIVITY(IES)

^{CREDIT CARD And
PLASTIC CARD SUPPLIERS Code: 5985}

^{BASED ON ACRA'S
RECORD AS AT 16/11/2007}

^{1. ACTIVITIES NOT
ADEQUATELY DEFINED; CONSULTANCY FOR SMART CARD SOLUTIONS}

CHARGES

^{Date: 02/11/2007}

^{Comments : CHARGE
NO: C200709456}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): CITIBANK N.A.}

^{Date: 10/11/2005}

^{Comments : CHARGE
NO: C200506987}

^{AMOUNT SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): DBS BANK LTD}

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{CITIBANK N.A.}

^{DBS BANK LTD.}

SHAREHOLDERS(S)

^{CHEW TEE KIONG
ANDY
100,000 Private Person}

^{Street : 196C
PUNGGOL FIELD}

^#10-493

^{Town :
SINGAPORE}

^{Postcode : 823196}

^{Country : Singapore}

^{EASTCOMPEACE SMART
CARD CO., LTD.
400,000 Company}

^{Street : NUMBER 8
PINGGONG ZHONG ROAD}

^{NANPING S&T, INDUSTRY COMMUNITY}

^{ZHUHAI, GUANGDONG}

^{Town : -}

^{Postcode : 519060}

^{Country : China}

FORMER SHAREHOLDER(S)

^{ONG SWEE LEONG
ANTHONY
50,000}

HOLDING COMPANY

^{EASTCOMPEACE SMART
CARD CO., LTD. UF39013G %: 80.00}

SUBSIDIARY(IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality :
AVERAGE}

^{Liquidity : LACKING}

^{Payments : REGULAR}

^{Trend :
UNKNOWN}

^{Financial
Situation : BAD}

FINANCIAL ELEMENTS

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

^{Audit
Qualification: "MILD"
UNCERTAINTIES "MILD"
UNCERTAINTIES}

^{Date
Account Lodged:
30/03/2007}

^{Balance
Sheet Date:
31/12/2006 31/12/2005}

^{Number
of weeks:
52 52}

^{Consolidation
Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Tangible
Fixed Assets: 67,175 51,784}

^{Total Fixed Assets: 67,175 51,784}

^{Inventories:
5,172}

^{Receivables: 1,685,147 696,628}

^{Cash,Banks,
Securitis: 417,070 284,278}

^{Other
current assets:
223,150
46,889}

^{Total Current Assets: 2,325,367 1,032,967}

^{TOTAL ASSETS: 2,392,542 1,084,751}

^{--- LIABILITIES ---}

^{Equity
capital:
459,730
305,129}

^{Profit
& lost Account: -794,092 -804,183}

^{Surplus
equity: 154,601}

^{Total Equity: -334,362 -344,453}

^{Trade
Creditors:
2,580,980
1,340,877}

^{Prepay.
& Def. charges:
75,854
30,930}

^{Provisions: 16,766 12,479}

^{Other
Short term Liab.:
53,304
44,918}

^{Total short term Liab.: 2,726,904 1,429,204}

^{TOTAL LIABILITIES: 2,726,904 1,429,204}

^{PROFIT
& LOSS ACCOUNT}

^{Net
Sales
5,456,341 4,481,385}

^{Purchases,Sces
& Other Goods:
4,648,461
3,978,378}

^{Gross
Profit:
807,880
503,007}

^{NET
RESULT BEFORE TAX:
10,091
-422,759}

^Tax
:

^{Net
income/loss year:
10,091
-422,759}

^{Depreciation: 39,563 29,615}

^{Directors
Emoluments:
116,619 226,832}

^{Wages
and Salaries:
608,615
468,984}

^{Financial
Income:
7,871
5,838}

RATIOS

^{31/12/2006 31/12/2005}

^{Turnover
per employee: 303130.06 248965.83}

^{Net
result / Turnover(%): 0.00 -0.09}

^{Net
Margin(%): 0.18 -9.43}

^{Return
on Equity(%): -3.02 122.73}

^{Return
on Assets(%): 0.42 -38.97}

^{Net
Working capital: -401537.00 -396237.00}

^{Cash
Ratio: 0.15 0.20}

^{Quick
Ratio: 0.77 0.69}

^{Current
ratio: 0.85 0.72}

^{Receivables
Turnover: 111.18 55.96}

^{Leverage
Ratio: -8.16 -4.15}

^{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}

^{Net
Working capital : (Total current
assets/Total short term liabilities)/1000}

^{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

^{AUDITORS'
REPORT:}

^{WITHOUT QUALIFYING
OUR OPINION, WE DRAW ATTENTION TO NOTE 2.2 TO THE FINANCIAL STATEMENTS. THE
COMPANY SUSTAINED AN ACCUMULATED LOSS OF US$794,092 FOR THE YEAR ENDED 31
DECEMBER 2006 AND AS OF THAT DATE, THE COMPANY'S CURRENT LIABILITIES EXCEEDED
ITS CURRENT ASSETS BY US$401,537 AND ITS TOTAL LIABILITIES EXCEEDED ITS TOTAL
ASSETS BY US$334,362. THE FINANCIAL STATEMENTS HAVE BEEN PREPARED ON A GOING
CONCERN BASIS BASED ON THE ASSUMPTION THAT THE HOLDING COMPANY WILL CONTINUE TO
PROVIDE FINANCIAL SUPPORT TO THE COMPANY.}

^{THE FINANCIAL
CONDITION OF THE COMPANNY WAS SEEN TO BE LIMITED IN VIEW OF THE FOLLOWING:}

^NET
WORTH:

^{THE BALANCE SHEET
WAS CONSIDERED INADEQUATE WITH NET WORTH STILL IN THE NEGATIVE REGION DESPITE
NET WORTH IMPROVED BY 2.93% FROM US$-344,453 IN 2005 TO US$-334,362 IN 2006.
THIS WAS DUE TO LOWER ACCUMULATED LOSSES INCURRED OF US$-794,092 (2005:
US$-804,183); A RISE OF 1.25% FROM THE PRIOR YEAR.}

^LEVERAGE:

^{IN THE SHORT TERM,
SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 94.65% (2005:
93.82% AND AMOUNTED TO US$2,580,980 (2005: US$1,340,877). THE BREAKDOWN IS AS
FOLLOWS:}

^{* TRADE
CREDITORS - 2006:
US$25,720}

^{(2005:
US$9,652)}

^{* AMOUNT DUE TO
HOLDING COMPANY - 2006: US$2,555,260}

^{(2005:
US$1,331,225)}

^{SUBJECT DID NOT
INCUR LONG TERM LIABILITIES FOR BOTH FINANCIAL YEARS.}

^{IN ALL, LEVERAGE
RATIO FELL FROM -4.15 TIMES TO -8.16 TIMES AS A RESULT OF A RISE IN TOTAL LIABILITIES.}

^LIQUIDITY:

^{IN GENERAL,
SUBJECT'S LIQUIDITY SITUATION WAS LACKING AS SEEN FROM THE ET WORKING CAPITAL
STILL REMAINING IN THE NEGATIVE REGION AND THE CHANGES IN LIQUIDITY RATIOS.
CURRENT RATIO ROSE TO 0.85 TIMES, UP FROM
0.72 TIMES AND QUICK RATIO IMPROVED FROM 0.69 TIMES IN 2005 TO 0.77
TIMES. NET WORKING CAPITAL, ON THE OTHER HAND, DROPPED BY 1.34% FROM
US$-396,237 IN 2005 TO US$-401,537 IN 2006.}

^{PROFITABILITY:}

^{REVENUE POSTED AN
INCREASE OF 21.76% FROM US$4,481,385 IN 2005 TO US$5,456,341 IN 2006. THIS
RESULTED IN THE RISE OF NET PROFIT OF 1.02 TIMES TO US$10,091 (2005:
US$-422,759). HENCE, NET MARGIN ROSE TO 0.18%, UP FROM -9.43%.}

^{DEBT
SERVICING:}

^{DEBT SERVICING
PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE IMPROVED AND PAYMENT
BY TRADE DEBTORS ARE FORTHCOMING.}

^{NOTES TO FINANCIAL STATEMENTS:}

^{GOING
CONCERN}

^{THE FINANCIAL
STATEMENTS HAVE BEEN PREPARED ON A GOING CONCERN BASIS ON THE ASSUMPTION THAT THE
HOLDING COMPANY WILL PROVIDE CONTINUING FINANCIAL SUPPORT TO THE COMPANY FOR AT
LEAST TWELVE MONTHS FROM THE DATE OF THE DIRECTORS' REPORT TO ENABLE THE
COMPANNY TO OPERATE AS A GOING CONCERN.}

^{CONTINGENT
LIABILITIES}

^{AT 31 DECEMBER
2006, THERE WERE CONTINGENT LIABILITIES IN RESPECT OF THE FOLLOWING:}

^{(I) GUARANTEES GIVEN TO BANKS BY THE COMPANY IN
RESPECT OF TENDER DEPOSITS REQUIRED TO BE PLACED WITH CUSTOMERS IN ACCORDANCE
WITH THE CONDITIONS OF TENDER SPECIFICATIONS FOR THE SUPPLY AND DELIVERY OF SMART
CARDS AMOUNTING TO US$144,391 (2005: US$139,917).}

^{(II) GUARANTEES
GIVEN TO BANKS BY THE COMPANY TO A CUSTOMER AMOUNTED TO US$28,615 (2005:
US$7,065) AS SECURITY DEPOSITS.}

BACKGROUND/OPERATION

^{THE COMPANY WAS
INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 13/11/2003 AS A LIMITED PRIVATE
COMPANY UNDER THE NAMESTYLE OF "ZEP SMART CARDS PTE. LTD.".}

^{SUBSEQUENTLY ON
23/03/2005, SUBJECT CHANGED TO ITS PRESENT NAMESTYLE OF "EASTCOMPEACE
SMART CARD (SINGAPORE) PTE. LTD.".}

^{AS AT 16/11/2007,
THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 500,000 SHARES, OF A VALUE OF
S$752,000.}

^{PRINCIPAL
ACTIVITIES:}

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

^{1) ACTIVITIES NOT
ADEQUATELY DEFINED; CONSULTANCY FOR SMART CARD SOLUTIONS}

^{DURING THE
FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITIES ARE THOSE OF
TRADING OF SMART CARDS AND CONSULTANCY FOR SMART CARDS SOLUTIONS. FROM THE RESEARCH DONE, THE FOLLOWING
INFORMATION WAS GATHERED:}

^{THE COMPANY IS
LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE CLASSIFICATION OF: IT
CONSULTANCY.}

^{SUBJECT ENGAGES IN
THE FOLLOWING ACTIVITIES:}

^{* LEADING SMART
CARD PRODUCTS AND SYSTEM SOLUTIONS PROVIDER}

^{* SALES OFFICE FOR
SMART CARDS PRODUCTS EG.CONTACT-LESS CARD, MOBILE SIM CARD, TELEPHONE CARD,
ANIMATED CARD, PREPAIR CARD AND ETC.}

^{PRODUCTS DEALINGS:}

^{* CARD PRODUCTS
FOR TELCOM INDUSTRY}

^{* SCRATCH CARD}

^{* SIM CARD
APPLICATIONS}

^{SUBJECT IS A
MEMBER OF THE FOLLOWING ENTITY:}

^{* SINGAPORE
BUSINESS FEDERATION}

^{NUMBER OF
EMPLOYEES:}

^{* 18 (AS OF 2006)}

^{FROM THE
TELE-INTERVIEW CONDUCTED ON 21/11/2007, SUBJECT CONFIRMED ITS ADDRESS AND
CONTACTS. NO OTHER TRADE INFORMATION WAS AVAILABLE AS SUBJECT PERSONNEL
DECLINED TO REVEAL.}

^{NUMBER OF
EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2006:
- (2005: -)}

^{REGISTERED AND
BUSINESS ADDRESS:}

^{371 BEACH ROAD}

^#03-31/36

^KEYPOINT

^{SINGAPORE 199597}

^{DATE OF CHANGE OF
ADDRESS: 13/07/2006}

^{- RENTED PREMISE}

^{- PREMISE OWNED
BY: SABLE RESOURCES PTE LTD}

^{WEBSITE : http://www.eastcompeace.com}

^{EMAIL :
info@eastcompeace.com.sg}

MANAGEMENT

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

^{1) ZHOU ZHONGGUO,
A CHINESE}

^{- BASED IN CHINA.}

^{2) HUI DAN, A
CHINESE}

^{- BASED IN CHINA.}

^{3) HUANG NINGZHAI,
A CHINESE}

^{- BASED IN CHINA.}

^{4) LI HAIJIANG, A
CHINESE}

^{- BASED IN CHINA.}

^{5) CHEW TEE KIONG
ANDY, A SINGAPOREAN}

^{- HOLDS NO OTHER
DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

SINGAPORE’S COUNTRY RATING 2007

^{INVESTMENT GRADE}

^{IN SINGAPORE, THE POLITICAL SITUATION REMAINS
STABLE.}

^{SINGAPORE BOASTS THE BEST GOVERNANCE IN ASIA,
WITH AN EFFECTIVE LEGAL SYSTEM} ^{FACILITATING DEBT COLLECTION AND TO A HIGH DEGREE OF FINANCIAL
TRANSPARENCY.}

^{EXTERNAL ACCOUNTS HAVE REMAINED SUBSTANTIALLY
IN SURPLUS, CONTRIBUTED TO THE} ^{DYNAMISM OF THE ELECTRONICS AND PHARMACEUTICALS SECTORS AND TO
REPATRIATION OF} ^{PROFITS FROM SINGAPORE INVESTMENTS. THE FINANCIAL
AND TOURISM SECTORS HAVE ALSO} ^{CONTRIBUTED TO THE LARGE CURRENT
ACCOUNT SURPLUS.}

^{SINGAPORE CONTINUES TO KEENLY WELCOME FOREIGN
INVESTMENT AND OFFERS A VERY OPEN} ^{AND WELL-PLANNED ECONOMIC AND POLITICAL ENVIRONMENT. IT HAS BEEN
IMPLEMENTING} ^{AMBITIOUS DIVERSIFICATION STRATEGY, FOCUSED
PARTICULARLY ON THE CHEMICALS AND} ^{PHARMACEUTICAL SECTORS.}

^{THE GOVERNMENT USES FOREIGN DIRECT INVESTMENT
TO DEVELOP PRIORITY SECTORS} ^{(ELECTRONICS, CHEMICALS, BIOTECHNOLOGY). THE AIM IS TO ENCOURAGE
THE GROWTH OF} ^{HIGH ADDED-VALUE ACTIVITIES AND TURN SINGAPORE INTO A
REGIONAL HUB FOR FOREIGN} ^{INVESTORS INTERESTED IN ASIA.}

^{CERTAIN SECTORS (MEDIA, LEGAL AND FINANCIAL
SERVICES) ARE HOWEVER ONLY PARTIALLY} ^{OPEN TO FOREIGN INVESTMENT. THESE SECTORS ARE SLOWLY OPENING UP,
BUT THE} ^{PROGRESS IS SLOW.} ^{AFTER HIGH GROWTH IN 2006,
BUOYED BY THE DYNAMISM OF BOTH EXPORTS AND HOUSEHOLD} ^{CONSUMPTION, A
SLOWDOWN IS EXPECTED IN 2007.}

^ASSETS

^{" MAJOR EXPORTER OF CAPITAL IN ASIA,
NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING}

^COMPANY.

^{" HIGH QUALITY COMPETITIVENESS IN ASIA}

^{" EXCELLENT BUSINESS CLIMATE}

^{" POLITICAL STABILITY.}

^WEAKNESSES

^{" SKILLED MANPOWER HAS BEEN LACKING IN
THE SECTORS TARGETED FOR DEVELOPMENT.}

^{" AN AGEING POPULATION COULD,
ULTIMATELY, AFFECT ECONOMIC PERFORMANCE.}

^{" GROWING INEQUALITY AND THE EMERGENCE
OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST}

^{SKILLED COULD GENERATE
SOCIAL TENSIONS.}

^{" BEING THE WORLD'S MOST OPEN ECONOMY,
IT HAS BEEN VULNERABLE TO WORLD ECONOMIC}

^DOWNTURNS.

OVERVIEW OF SINGAPORE

PAST PERFORMANCE

SINGAPORE’S ECONOMY GREW BY 6.1% IN QUARTER 1 OF 2007 AFTER A 6.6% GROWTH IN QUARTER 4 OF 2006. THE GROWTH MOMENTUM EASED SLIGHTLY TO 7.6% IN 1Q 2007, COMPARED WITH 7.9% A QUARTER EARLIER. GROWTH IN QUARTER 1 WAS LED BY THE FINANCIAL SERVICES AND CONSTRUCTION SECTORS. THE MANUFACTURING SECTOR CONTINUED TO EXPERIENCE A MODERATION IN GROWTH.

THE FINANCIAL SERVICES SECTOR SIGNIFICANTLY INCREASED BY 13% IN 1Q 2007 ON THE HEELS OF THE 11% GROWTH A QUARTER AGO. THE STRONG PERFORMANCE WAS ACROSS ALL MAJOR FINANCIAL SEGMENTS, PARTICULARLY IN THE CAPITAL AND MONEY MARKETS. FUND MANAGEMENT ACTIVITIES REMAINED BOUYANT, IN LINE WITH THE CONTINUED STRENGTH IN ECONOMIC CLIMATE. SIMILARLY, BANKS SAW STRONG GROWTH, BOUYED BY SUSTAINED RESILIENCE IN THE ASIA DOLLAR MARKET AS WELL AS A STEADY INCREASE IN DOMESTIC LENDING ACTIVITY.

THE CONSTRUCTION SECTOR GREW BY 9.7% IN 1Q 2007, ITS STRONGEST GROWTH IN 9 YEARS. CERTIFIED PAYMENTS INCREASE BY 9.5% IN 1Q 2007, SUPPORTED BY STRONG GROWTH IN THE PRIVATE RESIDENTIAL, COMMERCIAL AND INDUSTRIAL SEGMENTS AS WELL AS PUBLIC RESIDENTIAL SEGMENT. HOWEVER, CONTRACTS AWARDED FELL BY 11% IN 1Q 2007, DUE MAINLY TO THE DROP IN THE PRIVATE COMMERCIAL AND PUBLIC INSTITUTIONAL SEGMENTS.

MANUFACTURING SECTOR INCREASED BY 4.3% IN 1Q 2007, DOWN FROM 7.7% IN THE PREVIOUS QUARTER. BOTH BIOMEDICAL MANUFACTURING (-5.0%) AND PRECISION ENGINEERING (-0.7%) CLUSTERS SAW LOWER PRODUCTION DURING THE QUARTER. THE ELECTRONICS CLUSTER, HOWEVER, RECOVERED FROM A 4.1% CONTRACTION IN 4Q 2006 TO REGISTER AN INCREASE OF 2.6% IN 1Q 2007. THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO EXPAND STRONGLY AT 23%, FOLLOWING A 25% INCREASE IN 4Q 2006.

THE WHOLESALE AND RETAIL TRADE SECTOR EXPANDED 6.7% IN 1Q 2007 AFTER A 6.9 GROWTH IN 4Q 2006. RETAIL SALES GROWTH EASED FROM 7.9% IN THE PREVIOUS QUARTER TO 6.1% IN 1Q 2007, MAINLY DUE TO A DECELERATION IN MOTOR VEHICLES SALES. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.9%, UP FROM 4.2% IN 4Q 2006. IN THE WHOLESALE SEGMENT, GROWTH OF NON-OIL RE-EXPORTS REMAINED FIRM AT 5.9%, SLOWER THAN 6.3% IN 4Q 2006.

THE TRANSPORT AND STORAGE SECTOR GREW 4.4% IN 1Q 2007, UP FROM 4.0% A QUARTER EARLIER. THE AIR SEGMENT SAW A SLOWDOWN DUE TO A MODERATION IN AIR PASSENGER TRAFFIC GROWTH AND A DECLINE IN AIR CARGO. STRONGER ACTIVITY WAS RECORDED IN THE SEA SEGMENT ON THE BACK OF BETTER PERFORMANCE IN SEA CARGO HANDLED AND CONTAINER THROUGHPUT.

THE HOTELS AND RESTAURANTS SECTOR REGISTERED A SLOWER GROWTH OF 4.7% IN 1Q 2007, DOWN FROM 6.1% 4Q 2006. VISITOR ARRIVALS GREW AT A MORE MODEST PACE OF 4.1% COMPARED TO 8.4% IN THE PREVIOUS QUARTER. THE INCREASE IN HOTEL ROOM REVENUE MODERATED FROM THE 21% GAIN IN 4Q 2006 TO 14% IN 1Q 2007. HOWEVER, THE AVERAGE OCCUPANCY RATE OF HOTELS REMAINED HIGH AT 87%, A 4.3% POINTS INCREASE OVER THE CORRESPONDING PERIOD LAST YEAR.

THE INFORMATION AND COMMUNICATIONS SECTOR GREW 6.6% IN 1Q 2007, UP FROM 6.0% IN THE PREVIOUS QUARTER. WHILE THE IT SEGMENT SAW SOME MODERATION IN ACTIVITIES, THE TELECOMMUNICATIONS SEGMENT PERFORMED BETTER. INTERNATIONAL TELEPHONE CALL DURATION WENT UP SHARPLY BY 19%, UP FROM 11% IN 4Q 2006. GROWTH IN THE NUMBER OF MOBILE SUBSCRIBERS AND BROADBAND SUBSCRIBERS ALSO REMAINED STRONG DURING THE QUARTER.

BUSINESS SERVICES SECTOR EXPANDED BY 6.6% IN 1Q 2007, BETTER THAN THE 5.4% POSTED IN 4Q 2006. ROBUST PERFORMANCE WAS SEEN IN THE REAL ESTATE SEGMENT ON THE BACK OF CONTINUED STRENGTH IN THE LUXURY PROPERTY MARKET. THE SECTOR WAS ALSO WELL SUPPORTED BY THE OTHER SEGMENTS, PARTICULARLY BUSINESS REPRESENTATIVE OFFICES, AND BUSINESS & MANAGEMENT CONSULTANCY ACTIVITIES.

OUTLOOK

THE ECONOMIC OUTLOOK IS GENERALLY POSITIVE BUT SOME DOWNSIDE RISKS REMAIN. THESE INCLUDE A SLOWDOWN IN THE US ECONOMY, VULNERABILITY OF OIL PRICES TO SUPPLY SHOCKS AND A DISORDERLY UNWINDING OF GLOBAL UNBALANCES. BARRING THESE UNCERTAINTIES, ECONOMIC GROWTH IS EXPECTED TO REMAIN HEALTHY IN 2007.

BUSINESS SENTIMENTS ARE GENERALLY POSITIVE IN THE FINANCIAL SERVICES INDUSTRY. BANKS AND FINANCE COMPANIES, FUND MANAGEMENT FIRMS AND INSURANCE COMPANIES EXPECT AN IMPROVEMENT IN THE BUSINESS CLIMATE IN THE COMING MONTHS.

AN OVERALL NET WEIGHTED BALANCE OF 61% OF FIRMS IN THE REAL ESTATE INDUSTRY EXPECTS BETTER BUSINESS CONDITIONS FOR THE NEXT 6 MONTHS. WITHIN THE INDUSTRY, REAL ESTATE DEVELOPERS AND AGENTS FORESEE BRISK BUSINESS ACTIVITY AHEAD.

MANUFACTURING SECTORS ARE MORE OPTIMISTIC IN THE NEXT 6 MONTHS COMPARED TO THE FIRST QUARTER OF THE YEAR. OVERALL, A WEIGHTED 30% OF MANUFACTURERS FORESEE AN IMPROVED OUTLOOK, WHILE 4% PREDICT DETERIORATION. THIS RESULTS IN A NET WEIGHTED BALANCE OF 26% OF MANUFACTURERS EXPECTING BUSINESS CONDITIONS TO IMPROVE, WHICH IS HIGHER THAN 7% RECORDED A QUARTER AGO.

WHOLESALERS EXPECT TO DO WELL FOR THE NEXT 6 MONTHS, WITH A POSITIVE NET WEIGHTED BALANCE OF 17%. DEALERS OF FOOD AND BEVERAGES, TROPICAL PRODUCE, TEXTILES & LEATHER GOODS AND HOUSEHOLD ELECTRICAL APPLIANCE & EQUIPMENT ARE AMONG THOSE WHO ARE OPTIMISTIC ABOUT THE BUSINESS OUTLOOK AHEAD.

FIRMS IN THE RETAIL TRADE FORESEE BUSINESS TO BE LESS BRISK. IN PARTICULAR, DEPARTMENT STORES, SUPERMARKETS AND RETAILERS OF MOTOR VEHICLES EXPECT SLOWER BUSINESS IN THE COMING MONTHS.

WITHIN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 18% OF FIRMS FORECASTS IMPROVED BUSINESS PROSPECTS FOR THE NEXT 6 MONTHS. IN PARTICULAR, FIRMS IN THE WATER TRANSPORT AND SUPPORTING SERVICES EXPECT HIGHER LEVEL OF BUSINESS ACTIVITY.

HOTELIERS PROJECT A FAVOURABLE BUSINESS OUTLOOK, WHICH IS IN TANDEM WITH THE POSITIVE SENTIMENTS IN THE TOURISM MARKET. FOR THE CATERING TRADE INDUSTRY, BUSINESS OUTLOOK IN THE COMING MONTHS REMAINS THE SAME.

FIRMS IN THE INFORMATION AND COMMUNICATION INDUSTRY ANTICIPATES A HIGHER LEVEL OF BUSINESS ACTIVITY, WITH A POSITIVE NET WEIGHTED BALANCE OF 12%.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 24% OF FIRMS EXPRESSES POSITIVE SENTIMENTS. THESE INCLUDE FIRM ENGAGED IN RENTING OF CONSTRUCTION & INDUSTRIAL MACHINERY, ARCHITECTURAL & ENGINEERING, SPECIALISED DESIGN AND LABOUR RECRUITMENT SERVICES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

CHANNELNEWS ASIA

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.	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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