MIRA INFORM REPORT

Report Date :

31.07.2008

IDENTIFICATION DETAILS

Name :	MHI ENGINE SYSTEM ASIA PTE. LTD.
Formerly Known As :	^MHI SOUTH EAST ASIA PTE LTD
Registered Office :	2 Tuas Avenue 20, Singapore - 638818
Country :	Singapore
Financials (as on) :	31.12.2006
Date of Incorporation :	^20.06.1981
Com. Reg. No.:	^198102850N
Legal Form :	^Pte Ltd
Line of Business :	Trading and Servicing of Machinery and Spare Parts Used By Builders and Contractors, Assembly of Generator Sets

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

MHI ENGINE SYSTEM ASIA PTE. LTD.

Line Of Business 

TRADING AND SERVICING OF MACHINERY AND SPARE PARTS USED BY BUILDERS AND CONTRACTORS, ASSEMBLY OF GENERATOR SETS

Parent Company

MITSUBISHI HEAVY INDUSTRIES LTD

(PERCENTAGE OF SHAREHOLDINGS: 100.00%)

Financial Elements

FY 2007

COMPANY

Sales : S$ 135,474,734

Networth : S$ 14,855,080

Paid-Up Capital : S$ 1,400,000

Net result : S$ 1,262,895

Net Margin(%) : 0.93

Return on Equity(%) : 8.50

Leverage Ratio : 5.64

COMPANY IDENTIFICATION

^{Subject Company : MHI ENGINE SYSTEM ASIA PTE. LTD.}

^{Former Name : MHI SOUTH EAST ASIA PTE LTD}

^{Business Address : 2 TUAS AVENUE 20}

^{Town : SINGAPORE}

^{Postcode : 638818}

^{Country : Singapore}

^{Telephone : 6862 2202}

^{Fax : 6862 5728}

^{ROC Number : 198102850N}

^{Reg. Town : -}

PREVIOUS IDENTIFICATION

^{MHI SOUTH EAST ASIA PTE LTD DATE OF CHANGE OF NAME: 03/04/2007}

SUMMARY

^{All amounts in this report are in : SGD unless otherwise stated}

^{Legal Form : Pte Ltd}

^{Date Inc. : 20/06/1981}

^{Previous Legal Form : -}

^{Summary year : 31/12/2006}

^{Sales : 135,474,734}

^{Networth : 14,855,080}

^{Capital : -}

^{Paid-Up Capital : 1,400,000}

^{Employees : 53}

^{Net result : 1,262,895}

^{Share value : 1}

^{Auditor : PRICEWATERHOUSECOOPERS}

^{BASED ON ACRA'S RECORD}

^{NO OF SHARE CURRENCY AMOUNT}

^{ISSUED ORDINARY 12,235,282 SGD 12,235,282.00}

^{PAID-UP ORDINARY - SGD 12,235,282.00}

REFERENCES

^{Litigation : No}

^{Company status : TRADING}

^{Started : 20/06/1981}

PRINCIPAL(S)

^{KODAI SHIRO G5957724M Managing Director}

DIRECTOR(S)

^{TADASHI TOMIOKA G5743395M Director}

^{Appointed on : 01/04/2004}

^{Street : ROOM NO. 1009, 8A NGUYEN BINH KHIE}

^{M STREET, DISTRICT 1}

^{Town: HO CHI MINH CITY}

^Postcode:

^{Country: Viet Nam}

^{HIRANO SEITARO G5953702X Director}

^{Appointed on : 02/04/2007}

^{Street : 150 BEACH ROAD}

^#28-01

^{GATEWAY West}

^{Town: SINGAPORE}

^{Postcode: 189720}

^{Country: Singapore}

^{KODAI SHIRO G5957724M Director}

^{Appointed on : 02/04/2007}

^{Street : 28 SCOTTS ROAD}

^#06-02

^{Town: SINGAPORE}

^{Postcode: 228223}

^{Country: Singapore}

^{KODAI SHIRO G5957724M Managing Director}

^{Appointed on : 02/04/2007}

^{Street : 28 SCOTTS ROAD}

^#06-02

^{Town: SINGAPORE}

^{Postcode: 228223}

^{Country: Singapore}

^{JOANNA LIM LAN SIM S1572261D Company Secretary}

^{Appointed on : 20/04/2007}

^{Street : 165 TAMPINES STREET 12}

^#09-305

^{Town: SINGAPORE}

^{Postcode: 521165}

^{Country: Singapore}

^{LIM AIK KUN S7161644D Company Secretary}

^{Appointed on : 30/06/2006}

^{Street : 49 HUME AVENUE}

^#07-01

^{PARC PALAIS}

^{Town: SINGAPORE}

^{Postcode: 598749}

^{Country: Singapore}

^{ISHII YOSHIYUKI TF6756499 Director}

^{Appointed on : 25/06/2007}

^{Street : 3-15-7, YAKUSHIDAI, MACHIDA-CITY}

^{Town: TOKYO}

^{Postcode: -}

^{Country: Japan}

^{MASUDA SHUICHI TG4163342 Director}

^{Appointed on : 02/04/2007}

^{Street : 1-19-8 UTSUKUSIGAOKA, AOBA-KU,}

^YOKOHAMA-SHI

^{Town: KANAGAWA}

^{Postcode: 225-0002}

^{Country: Japan}

FORMER DIRECTOR(S)

^{FOO SOON SOO S1310912E}

^{KEIICHI ISHIZUKA TF4162372}

^{AKIZAWA SHIGEHIRO 8080545}

^{SHIBAYANAGI EIJI E8919365}

^{MATSUDA TSUYOSHI E9499228}

^{TAZAWA SHINZO SG1010491}

^{MATSUSHITA MITSUO SG1888681}

^{KITAHARA YASUHISA SH4033780}

^{AKAMI TOSHIKAZU L1554502}

^{WATANABE MINEAKI ML352557}

^{OKAZAKI YOICHIRO MN317021}

^{KUKITA HIROSHI F2335310P}

^{PRISCILLA LOW YIM LENG S1344941D}

^{JUNRO NITTA F2159031L}

^{MITSUO SATOH TZ0011119}

^{MAKOTO SHIMASAKI TE5726287}

^{CHEN WEN WOAN ANGELA S1715798A}

^{NOBUYASU MATSUDAIRA TF0221226}

^{YUKIO SUGAMA TE1684486}

^{TADASHI TOMIOKA G5743395M}

^{AKIRA HISHIKAWA TE5872465}

^{CHOONG MEE FONG S2564466B}

^{LIM KA BEE S2581084H}

ACTIVITY(IES)

^{MACHINERY Code: 13260}

^{GENERATORS - COMMERCIAL And INDUSTRIAL Code: 10240}

^{BASED ON ACRA'S RECORD}

^{1) MANUFACTURE AND REPAIR OF ELECTRIC GENERATORS;}

^{TRADING AND SERVICING OF MACHINERY, SPARE PARTS AND ASSEMBLY OF}

PREMISES/PROPERTY INFORMATIONS

^{Date : 31/07/2008}

^{Tax rate : 10}

^{Site Address : 2 TUAS AVENUE 20}

^{Postcode : 638818}

^{Country : Singapore}

^{Annual Value : 278,000}

* 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

^{THE BANK OF TOKYO-MITSUBISHI UFJ, LTD}

^{(THE BANK OF TOKYO-MITSUBISHI, LTD)}

SHAREHOLDERS(S)

^{MITSUBISHI HEAVY INDUSTRIES LTD 12,235,282 Company}

^{Street : 16-5 KONAN 2-CHOME}

^MINATO-KU

^{Town TOKYO}

^{Postcode 108-8215}

^{Country Japan}

HOLDING COMPANY

^{MITSUBISHI HEAVY INDUSTRIES LTD UF33251G % : 100}

SUBSIDIARY(IES)

^{MHI SERVICE VIETNAM CO. LTD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : DOWNWARD}

^{Financial Situation : AVERAGE}

FINANCIAL ELEMENTS

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN)}

^{Date Account Lodged: 29/06/2007}

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

^{Number of weeks: 52 52}

^{Consolidation Code: CONSOLIDATED CONSOLIDATED}

^ASSETS

^{Preliminary Exp 31,283 -}

^{Tangible Fixed Assets: 3,670,595 3,968,779}

^{Total Fixed Assets: 3,701,878 3,968,779}

^{Inventories: 34,042,538 33,054,213}

^{Receivables: 42,430,659 34,347,562}

^{Cash,Banks, Securitis: 14,708,453 17,866,075}

^{Other current assets: 3,723,583 4,583,879}

^{Total Current Assets: 94,905,233 89,851,729}

^{TOTAL ASSETS: 98,607,111 93,820,508}

^LIABILITIES

^{Equity capital: 1,400,000 1,400,000}

^{Reserves: -430,093 -249,275}

^{Profit & lost Account: 13,885,173 13,922,278}

^{Total Equity: 14,855,080 15,073,003}

^{Trade Creditors: 76,784,164 71,942,260}

^{Provisions: 859,298 1,112,302}

^{Other Short term Liab.: 1,618,566 568,152}

^{Prepay. & Def. charges: 4,490,003 5,124,791}

^{Total short term Liab.: 83,752,031 78,747,505}

^{TOTAL LIABILITIES: 83,752,031 78,747,505}

PROFIT & LOSS ACCOUNT

^{Net Sales 135,474,734 137,373,848}

^{Purchases,Sces & Other Goods: 127,826,820 127,702,501}

^{Gross Profit: 7,647,914 9,671,347}

^{NET RESULT BEFORE TAX: 1,771,213 4,092,738}

^{Tax : 508,318 893,340}

^{Net income/loss year: 1,262,895 3,199,398}

^{Interest Paid: 4,811 10}

^{Depreciation: 536,579 533,836}

^{Dividends: 1,300,000 448,000}

^{Wages and Salaries: 3,362,680 3,079,174}

^{Financial Income: 233,084 186,346}

RATIOS

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

^{Turnover per employee: 2556127.06 2591959.40}

^{Net result / Turnover(%): 0.01 0.02}

^{Stock / Turnover(%): 0.25 0.24}

^{Net Margin(%): 0.93 2.33}

^{Return on Equity(%): 8.50 21.23}

^{Return on Assets(%): 1.28 3.41}

^{Dividends Coverage: 0.97 7.14}

^{Net Working capital: 11153202.00 11104224.00}

^{Cash Ratio: 0.18 0.23}

^{Quick Ratio: 0.68 0.66}

^{Current ratio: 1.13 1.14}

^{Receivables Turnover: 112.75 90.01}

^{Leverage Ratio: 5.64 5.22}

^{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 SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE EVEN THOUGH NET WORTH DROPPED BY 1.45% FROM S$15,073,003 IN FY 2005 TO S$14,855,080 IN FY 2006. THIS WAS DUE TO LOWER RETAINED EARNINGS OF S$13,885,173 (2005: S$13,922,278); A DROP OF 0.27% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 91.68% (2005: 91.36%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$76,784,164 (2005: S$71,942,260). THE BREAKDOWN WAS AS FOLLOWS:}

^{*NON-RELATED PARTIES - 2006: S$2,353,408 (2005: S$2,401,280)}

^{*ULTIMATE HOLDING CORPORATION - 2006: S$74,190,677 (2005: S}

^$69,540,980)

^{*RELATED CORPORATIONS - 2006: S$240,079 (2005: NIL)}

^{IN ALL, LEVERAGE RATIO ROSE FROM 5.22 TIMES TO 5.64 TIMES AS A RESULT OF A RISE IN TOTAL LIABILITIES AND A DROP IN TOTAL EQUITY. A LOWER RATIO WOULD BE MORE DESIRABLE AS THE LOWER THE RATIO, THE GREATER THE FINANCIAL SAFETY AND OPERATING FREEDOM FOR THE COMPANY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL BY 0.44% TO S$11,153,202 (2005: S $11,104,224).}

^{CURRENT RATIO DROPPED SLIGHTLY TO 1.13 TIMES (2005: 1.14 TIMES) WHILE QUICK RATIO ROSE SLIGHTLY TO 0.68 TIMES (2005: 0.66 TIMES).}

^{CASH AND CASH EQUIVALENTS FELL BY 17.67% TO S$14,708,453 (2005: S $17,866,075) AND CONSISTED OF:}

^{*CASH AT BANK AND ON HAND - 2006: S$12,229,853 (2005: S$10,744,492)}

^{*SHORT TERM BANK DEPOSITS - 2006: S$2,478,600 (2005: S$7,121,583)}

^{PROFITABILITY:}

^{REVENUE FELL BY 1.38% FROM S$137,373,848 IN FY 2005 TO S$135,474,734 AND NET PROFIT DROPPED BY 60.53% TO S$1,262,895}

^{(2005: S$3,199,398). HENCE, NET MARGIN FELL TO 0.93% (2005: 2.33%).}

^{REVENUE COMPRISED OF:}

^{*SALE OF GOODS - 2006: S$129,921,646 (2005: S$129,747,915)}

^{*RENDERING OF SERVICES - 2006: S$5,553,088 (2005: S$7,625,933)}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENTS BY TRADE DEBTORS ARE FORTHCOMING. THE AVERAGE COLLECTION PERIOD WAS LENGTHENED TO 113 DAYS (2005: 90 DAYS).}

^{NON-CURRENT ASSETS}

^{THE FOLLOWING ITEM WAS CLASSIFIED UNDER PRELIMINARY:}

^{*DEFERRED INCOME TAX ASSETS - 2006: S$31,283 (2005: NIL)}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 20/06/1981 AS A LIMITED PRIVATE COMPANY UNDER THE NAMESTYLE OF "MHI SOUTH EAST ASIA PTE LTD".}

^{SUBSEQUENTLY ON 03/04/2007, SUBJECT CHANGED TO ITS PRESENT NAMESTYLE OF "MHI ENGINE SYSTEM ASIA PTE. LTD.".}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 12,235,282 SHARES, OF A VALUE OF S$12,235,282.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) MANUFACTURE AND REPAIR OF ELECTRIC GENERATORS TRADDING AND SERVICING OF MACHINERY, SPARE PARTS AND ASSEMBLY OF GENERATORS SETS}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE TRADING AND SERVICING OF MACHINERY AND SPARE PARTS USED BY BUILDERS AND CONTRACTORS, ASSEMBLY OF GENERATOR SETS. THE PRINCIPAL ACTIVITIES OF THE SUBSIDIARIES ARE THE TRADING AND SERVICING OF MACHINERY AND SPARE PARTS USED BY BUILDERS AND CONTRACTORS.}

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

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* TO ASSEMBLE MITSUBISHI DIESEL GENERATORS UP TO 4500 KVA}

^{(4000 KW) /11 KV.}

^{* PROVIDE MITSUBISHI GENUINE SPARE PARTS AND AFTER-SALES TECHNICAL SUPPORT FOR ENGINE, CONSTRUCTION MACHINES, PRINTING MACHINES}

^{* AND ELECTRONIC ROAD PRICING (ERP) / ELECTRONIC PARKING SYSTEM}

^{(EPS) (*PARTS SUPPLY ONLY)}

^{* A BASE FOR MOTHER COMPANY'S BUSINESS ACTIVITIES IN THE ASIAN REGION.}

^{1) PURCHASING OF GOODS}

^{2) SUPPORT SALES ACTIVITIES FOR GENERAL MACHINERY, POWER PLANT, SHIPBUILDING AND MACHINE TOOLS}

^PRODUCTS:

^{* MITSUBISHI GENERATOR MODELS}

^{1) MGS (MITSUBISHI GENERATOR SERIES)}

^{2) MGP (MITSUBISHI PORTABLE GENERATOR)}

^{IMPORT COUNTRIES:}

^{* JAPAN}

^{EXPORT COUNTRIES:}

^{* ASIAN REGION}

^{TERMS OF PAYMENT:}

^{* TRADE AND OTHER RECEIVABLES: 30-90 DAYS TERM}

^{* TRADE AND OTHER PAYABLES : 30-90 DAYS TERM}

^{SUBJECT IS A MEMBER OF FOLLOWING ENTITIES:}

^{* JAPANESE CHAMBER OF COMMERCE & INDUSTRY (JCCI)}

^{NO OTHER TRADE INFORMATION WAS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL.}

^{THE COMPANY'S IMMEDIATE HOLDING CORPORATION, WHICH IS ALSO THE ULTIMATE HOLDING CORPORATION, IS MITSUBISHI HEAVY INDUSTRIES LTD, INCORPORATED IN JAPAN.}

^{REGISTERED AND BUSINESS ADDRESS:}

^{2 TUAS AVENUE 20}

^{SINGAPORE 638818}

^{DATE OF CHANGE OF ADDRESS: 20/07/1992}

^{- OWNED PREMISE}

^WEBSITE:

^{http://www.mhis.com.sg}

^EMAIL:

^{mhisgen@singnet.com.sg}

^{teng_mhis@intr.mhi.co.jp}

MANAGEMENT

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

^{1) TADASHI TOMIOKA, A JAPANESE}

^{- BASED IN VIETNAM.}

^{2) HIRANO SEITARO, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{3) KODAI SHIRO, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{4) YOSHIYUKI ISHII , A JAPANESE}

^{- BASED IN JAPAN.}

^{5) MASUDA SHUICHI, A JAPANESE}

^{- BASED IN JAPAN.}

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.

MANUFACTURING SECTOR

PAST PERFORMANCE

THE MANUFACTURING SECTOR ROSE BY 0.2% IN 4Q 2007, SLOWER THAN THE 11.0% IN 3Q 2007. THE SMALL GROWTH WAS ATTRIBUTED TO A 28.0% CONTRACTION IN THE BIOMEDICAL MANUFACTURING CLUSTER. ON THE OTHER HAND, ELECTRONICS, CHEMICALS, PRECISION ENGINEERING AND TRANSPORT ENGINEERING CLUSTER PERFORMED BETTER. THE GENERAL MANUFACTURING INDUSTRIES CLUSTER SAW A MORE MODERATE PERFORMANCE.

OVERALL, THE MANUFACTURING SECTOR POSTED A 5.8% GROWTH IN 2007, DOWN FROM 12.0% IN 2006. THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO GROW AT A ROBUST PACE WHILE THE ELECTRONICS, CHEMICALS AND GENERAL MANUFACTURING INDUSTRIES CLUSTERS REGISTERED MORE MODEST INCREASES. HOWEVER, THE BIOMEDICAL MANUFACTURING CLUSTER RECORDED A MARGINAL DECLINE.

THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO RECORD STRONG GROWTH OF 24.0% IN 2007 COMPARED TO 32.0% IN 2006. WITHIN THE SECTOR, THE MARINE AND OFFSHORE ENGINEERING SEGMENT GREW SUBSTANTIALLY BY 32.0% AS CONTRACTS INCREASED FOR SHIP BUILDING, SHIP CONVERSION, SHIP REPAIRING AND OIL RIG FABRICATION. THE AEROSPACE SEGMENT GREW BY 9.6% WHICH IS ATTRIBUTED TO A HIGHER VOLUME IN REPAIRS OF COMMERCIAL AIRCRAFT FUELLED BY THE BOOM IN LOW COST AIR TRAVEL. THE LAND TRANSPORT SEGMENT GREW 19.0% ON THE BACK OF HIGHER EXPORT ORDERS.

THE ELECTRONICS CLUSTER ROSE BY 4.0%, DOWN FROM 4.5% IN 2006. THE PRODUCTION OF

SEMICONDUCTORS GREW 16.0% WITH INCREASED PRODUCTION OF AND FLASH AND DRAMS WHILE THE PRODUCTION OF ELECTRONIC MODULES AND COMPONENTS GREW 7.0% AS COMPARED TO 2006.

ON THE OTHER HAND, LOWER OUTPUT WERE SEEN IN THE COMPUTER PERIPHERALS (-20.0%), INFOCOMMS AND CONSUMER ELECTRONICS (-7.7%) AND DATA STORAGE SEGMENTS (-1.6%). THE DECLINE IN THE DATA STORAGE SEGMENT MODERATED AS THE HIGHER OUTPUT OF DISK MEDIA OFFSET THE FALL IN DISK DRIVES PRODUCTION.

THE CHEMICALS CLUSTER EXPANDED BY 3.3% IN 2007, HIGHER THAN THE 1.7% IN 2006. THE PETROCHEMICALS AND SPECIALTY CHEMICALS SEGMENT ROSE BY 5.4% AND 6.5% RESPECTIVELY.

HOWEVER, THESE EXPANSIONS WERE MODERATED BY A 0.2% DIP IN OUTPUT OF REFINED PETROLEUM PRODUCTS, DUE TO SOME REFINERY PLANT MAINTENANCE SHUTDOWNS DURING THE YEAR.

THE PRECISION ENGINEERING CLUSTER REGISTERED FLAT OUTPUT GROWTH IN 2007. THE 6.5% GROWTH IN THE MACHINERY AND SYSTEMS SEGMENT WAS OFFSET BY A 4.3% DECLINE IN THE PRECISION MODULES AND COMPONENTS SEGMENT. PRODUCTION OF PRECISION COMPONENTS, SPRINGS, METAL STAMPINGS, DIES AND MOULDS FELL WHILE OUTPUT OF MACHINERY – SUCH AS HOISTS, LIFTING MACHINERY, REFRIGERATING MACHINERY, INDUSTRIAL PROCESS CONTROL EQUIPMENT, SWITCHGEAR AND SWITCHBOARDS ROSE.

THE BIOMEDICAL MANUFACTURING CLUSTER FELL BY 0.6%. ALTHOUGH THE MEDICAL TECHNOLOGY SEGMENT ROSE 15.0%, THE CLUSTER WAS DRAGGED DOWN BY A 2.5% DECLINE IN THE PHARMACEUTICALS SEGMENT. PLANT MAINTENANCE SHUTDOWNS AND CHANGES IN PRODUCT MIX RESULTED IN A SIGNIFICANT DECLINE IN ACTIVE PHARMACEUTICAL INGREDIENTS PRODUCTION IN 4Q 2007.

THE GENERAL MANUFACTURING INDUSTRIES GREW BY 6.3%, SIMILAR TO 2006. THE FOOD, BEVERAGES AND TOBACCO SEGMENT REGISTERED A STRONG 11% INCREASE IN OUTPUT, WHILE THE PRINTING SEGMENT GREW BY A MORE MODEST 2.4% OVER THE YEAR.

NEWS

SINGAPORE DRAWS S$3 BILLION OF MANUFACTURING INVESTMENTS

DESPITE CURRENT GLOBAL ECONOMIC JITTERS, INVESTMENT INFLOWS HERE REMAIN STRONG. IN THE FIRST FEW MONTHS OF 2008, SINGAPORE HAS ALREADY ATTRACTED MORE THAN S$3 BILLION OF MANUFACTURING INVESTMENTS.

ADDING A WHIFF OF FRESH AIR TO THE LIFESTYLE PRODUCTS AND SERVICES AREA – ANOTHER NEW CLUSTER SINGAPORE IS TRYING TO GROW – US CONSUMER GOODS GIANT PROCTER & GAMBLE HAS JUST OPENED ITS FIRST PERFUME PLANT IN ASIA AT TUAS, WHERE IT IS CAPITALISING ON THE HEIGHTENED “NOSES” OF ITS SINGAPORE TALENT TO HELP TAILOR-MAKE “ASIANISED” PRODUCTS.

EDB MANAGING DIRECTOR KO KHENG HWA SAID THAT SOME OF THE PROJECTS INJECT NEW CAPABILITIES AND STRENGTHEN THEIR EXISTING CLUSTERS – SUCH AS ROLLS-ROYCE’S AIRCRAFT ENGINE MANUFACTURING FACILITY, P&G’S SPECIALTY PERFUME PLANT AND LANXESS’S ADVANCED RUBBER FACILITY. OTHERS BUILD NEW GROWTH ENGINES FOR THE FUTURE – SUCH AS NORSUN’S HIGH-END SOLAR WAFER PLANT, UBISOFT’S 300-STRONG GAMES DEVELOPMENT STUDIO AND NESTE OIL’S NEXT-GENERATION BIODIESEL PLANT. THE NEW GROWTH SECTORS WILL ALSO DIVERSIFY SINGAPORE’S INDUSTRIAL BASE AND INCREASE SINGAPORE’S RESILIENCY TO WEATHER BUSINESS CYCLES.

LOOKING AHEAD, MR KO SAID THAT EDB IS ALSO MOUNTING A NEW INITIATIVE CALLED “FUTURE.SINGAPORE” TO BUILD ACTIVITY WITHIN SELECTED BUSINESS THEMES WHERE SINGAPORE WANTS GOOD SOLUTIONS. THESE THEMES INCLUDE URBAN SOLUTIONS,

WELLNESS, AGEING, AND HEALTHCARE AND LIFESTYLE PRODUCTS.

OUTLOOK

THE MANUFACTURING SECTOR IS CAUTIOUS ABOUT BUSINESS CONDITIONS FOR THE PERIOD ENDING JUNE 2008. A NET WEIGHTED BALANCE OF 2% OF MANUFACTURERS FORECAST BETTER BUSINESS, LOWER THAN THE 7% REGISTERED IN THE SAME PERIOD LAST YEAR AND THE 25% RECORDED IN THE PREVIOUS QUARTER.

IN THE TRANSPORT ENGINEERING CLUSTER, A NET WEIGHTED BALANCE OF 11.0% OF FIRMS EXPECTS THE BUSINESS CLIMATE TO IMPROVE IN THE MONTHS ENDING JUNE 2008, LOWER THAN THE 33.0% OBSERVED IN THE PRECEDING QUARTER. THE MARINE AND OFFSHORE ENGINEERING SEGMENT FORESEES SUBSTAINED DEMAND FOR SHIPYARD AND CONVERSION SERVICES, AND A STRONG BACKLOG OF ORDERS. THE AEROSPACE SEGMENT FORECASTS MORE REPAIR AND SERVICING JOBS IN 1Q 2007 AS AIRLINES SEND IN THEIR PLANES FOR MAINTENANCE FOLLOWING THE PEAK TRAVELLING PERIOD IN DECEMBER.

IN THE CHEMICALS CLUSTER, MAJORITY OF FIRMS IN THE CHEMICALS CLUSTER EXPECT BUSINESS CONDITIONS TO REMAIN THE SAME FOR THE FIRST HALF OF 2008, COMPARED WITH THE PREVIOUS QUARTER. A NET WEIGHTED BALANCE OF 6.0% OF FIRMS EXPECTS THE BUSINESS CLIMATE TO IMPROVE, COMPARED WITH 22% RECORDED IN THE PRECEDING QUARTER. THE SPECIALTIES AND OTHER CHEMICALS SEGMENTS EXPECT OUTPUT TO RISE IN 1Q 2008 OVER THE PREVIOUS QUARTER, DUE TO AN EXPECTED RISE IN EXPORTS AND ORDERS. REFINERIES AND PETROCHEMICAL MANUFACTURERS EXPECT THROUGHPUT IN 1Q 2008 TO STAY AT LEVELS SIMILAR TO THOSE IN 4Q 2007.

THE ELECTRONICS CLUSTER IS MUTED WITH A NET WEIGHTED BALANCE OF 1.0% OF FIRMS EXPECTING BETTER BUSINESS AHEAD, SIGNIFICANTLY LOWER THAN THE 33.0% RECORDED IN THE PRECEDING QUARTER. SEASONAL DEMAND FOR ELECTRONIC GOODS IS EXPECTED TO SOFTEN AFTER THE YEAR END FESTIVE PEAK, AND A GENERAL DECELERATION IS NOT EXPECTED ALTHOUGH FIRMS FORECAST GLOBAL DYNAMICS TO CONTINUE EXERTING COMPETITIVE PRESSURES ON THE CLUSTER. NEVERTHELESS, A NET WEIGHTED BALANCE OF 5.0% OF FIRMS EXPECT PRODUCTION TO RISE IN 1Q 2008, OVER THE PREVIOUS QUARTER, IN TANDEM WITH THEIR FORECASTS FOR DIRECT EXPORTS AND ORDERS.

THE BIOMEDICAL MANUFACTURING CLUSTER IS EXPECTING BUSINESS OUTLOOK TO REMAIN THE SAME. A NET WEIGHTED BALANCE OF 0.0% OF FIRMS EXPECT BUSINESS TO IMPROVE IN THE COMING MONTHS, COMPARED TO 22.0% A QUARTER AGO. IN THE PHARMACEUTICALS SEGMENT,

OUTPUT IS FORECASTED TO RISE IN 1Q 2008, AFTER A LULL IN THE PREVIOUS QUARTER.

ACCORDINGLY, FINISHED GOODS STOCKS ARE EXPECTED TO RISE IN THE SAME PERIOD, FOR EXPORT LATER IN THE YEAR.

IN THE PRECISION ENGINEERING CLUSTER, A NET WEIGHTED BALANCE OF 8.0% OF FIRMS FORECASTS BUSINESS CONDITIONS TO DETERIORATE IN THE FIRST HALF OF 2008, COMPARED TO THE 11.0% PREDICTING BETTER BUSINESS CONDITIONS IN THE PRECEDING QUARTER.

THIS IS ATTRIBUTED TO A SEASONAL SLOWDOWN, AS WELL AS RISING PRODUCTION AND RAW MATERIAL COSTS AND FLUCTUATIONS IN THE US DOLLAR. WHILE THE OUTPUT OF THE CLUSTER IS EXPECTED TO DECLINE ON A QUARTER-TO-QUARTER BASIS, A NET WEIGHTED BALANCE OF 5.0% OF FIRMS IN THE MACHINERY AND SYSTEMS SEGMENT EXPECTS HIGHER PRODUCTION ON THE BACK OF A FORECASTED RISE IN EXPORT ORDERS AND SHIPMENTS.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

THE BUSINESS TIMES

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs. 42.90
UK Pound	1	Rs. 84.21
Euro	1	Rs. 66.33

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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