MIRA INFORM REPORT

 

 

 

Report Date :

01.12.2008

 

IDENTIFICATION DETAILS

 

Name :

SUN MICROSYSTEMS PTE LTD

 

 

Registered Office :

1 Magazine Road #07-01/13 Central Mall 059567

 

 

Country :

Singapore

 

 

Financials (as on) :

30.06.2007

 

 

Date of Incorporation :

30.061994

 

 

Com. Reg. No.:

199404596R

 

 

Legal Form :

Pte Ltd

 

 

Line of Business :

Leading Provider of Industrial-Strength Hardware, Software, and Services that make the Network

 

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Moderate

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Subject Company   

 

SUN MICROSYSTEMS PTE LTD

 

 

Line Of Business  

 

LEADING PROVIDER OF INDUSTRIAL-STRENGTH HARDWARE, SOFTWARE, AND SERVICES THAT MAKE THE NETWORK

 

 

Parent Company    

 

 -

 

 

Financial Elements

 

                                                FY 2007

                                                COMPANY

Sales                                        : US$457,915,540

Networth                                               : US$10,588,159

Paid-Up Capital                                      : US$13,638,774

Net result                                  : US$-1,574,600

 

Net Margin(%)                           : -0.34

Return on Equity(%)                   : -14.87

Leverage Ratio                           : 13.42

 

COMPANY IDENTIFICATION

 

Subject Company :

SUN MICROSYSTEMS PTE LTD

Business Address:

1 MAGAZINE ROAD #07-01/13 CENTRAL MALL

Town:

SINGAPORE

Postcode:

059567

Country:

Singapore

Telephone:

64381888/63959617

Fax:

67353226/62427166

ROC Number:

199404596R

 

 

SUMMARY

 

Legal Form:

Pte Ltd

Date Inc.:

30/06/1994

Summary year :

30/06/2007

All amounts in this report are in :

USD

Sales:

457,915,540

Networth :

10,588,159

Capital:

 

Paid-Up Capital:

13,638,774

Net result :

-1,574,600

Share value:

 

 
AUDITOR : ERNST & YOUNG LLP                                           
                                                                      
AUTHORISED CAPITAL : 22,000,000.00 V/SHARE : 1.0000 SINGAPORE DOLLAR  
ISSUED ORDINARY    :    500,000.00 V/SHARE : 1.0000 SINGAPORE DOLLAR  
ISSUED ORDINARY    :    500,000.00 V/SHARE : 1.0000 SINGAPORE DOLLAR
                                                                      
BASED ON ACRA'S RECORD
                                 NO OF SHARE     CURRENCY       AMOUNT          
ISSUED ORDINARY         19,281,200       SGD              19,281,200.00      
PAID-UP ORDINARY            -                   SGD               19,281,200.00
                                                                      
BASED ON ACRA'S RECORD 
                                          NO OF SHARE     CURRENCY       AMOUNT          
ISSUED ORDINARY         22,707,580                 SGD           22,707,580.00      
PAID-UP ORDINARY            -                            SGD             22,707,580.00

 

 

REFERENCES

 

 

Litigation:

No

Company status :

TRADING

Started :

30/06/1994

 

 

PRINCIPAL(S)

 

LIM CHIN TECK

S2537508D

Managing Director

 

 

DIRECTOR(S)

 

WONG YOEN HAR

S1771279I

Company Secretary

Appointed on :

31/12/2007

 

Street :

243 BISHAN STREET 22 #21-280

 

Town:

SINGAPORE

 

Postcode:

570243

 

Country:

Singapore

 

LIM CHIN TECK

S2537508D

Director

Appointed on :

30/06/1994

 

Street :

19 CAIRNHILL CIRCLE #12-01 THE LIGHT @ CAIRNHILL

 

Town:

SINGAPORE

 

Postcode:

229768

 

Country:

Singapore

 

SCOTT DOUGLAS LUNDERING

057518217

Director

Appointed on :

12/12/2005

 

Street :

665 WIGGENS STREET SUPERIOR, CO 80027

 

County:

CO

 

Country:

United States

 

VAIDYANATHAN RADHAKRISHNAN

S2696461Z

Director

Appointed on :

01/06/2007

 

Street :

370D ALEXANDRA ROAD #02-09 THE ANCHORAGE CONDOMINIUM

 

Town:

SINGAPORE

 

Postcode:

159957

 

Country:

Singapore

 

LIM CHIN TECK

S2537508D

Managing Director

Appointed on :

01/10/1994

 

Street :

19 CAIRNHILL CIRCLE #12-01 THE LIGHT @ CAIRNHILL

 

Town:

SINGAPORE

 

Postcode:

229768

 

Country:

Singapore

 

 

FORMER DIRECTOR(S)

 

CHIA LUANG CHEW HAZEL

S1407126A

 

MICHAEL H MORRIS

155048664

 

MICHAEL E LEHMAN

055241096

 

JESWANT SINGH S/O DARSHAN SINGH

S2560579I

 

WILLIAM DAVID WILSON

740075474

 

KIMIE KINOSHITA

MR3481806

 

IP SIK MING STANLEY

S2588433G

 

 

 

ACTIVITY(IES)

 

Activity Code:

5100

COMPUTERS

Activity Code:

6200

DATA PROCESSING EQUIPMENT

 
 
BASED ON ACRA'S RECORD 
1. WHOLESALE OF COMPUTER HARDWARE AND PERIPHERALS EQUIPMENT;          
   MANUFACTURE/REPAIR COMPUTERS & DATA PROCESS EQUIPMENT              
2. MANUFACTURE OF COMPUTERS & DATA PROCESSING EQUIPMENT EXCEPT        
   COMPUTER PERIPHERAL EQUIPMENT

 

 

SHAREHOLDERS(S)

 

SUN MICROSYSTEMS OF CALIFORNIA, INC

22,707,580

Company

 

Street :

2550 GARCIA AVENUE MOUNTAIN VIEW CALIFORNIA

Town:

USA

Postcode:

94043

Country:

United States

 

HOLDING COMPANY

SUN MICROSYSTEMS OF CALIFORNIA, INC

UF12694R

100%

 

 

 

SUBSIDIARY(IES)

 

STORAGETEK SOUTH ASIA PTE LTD

 

 

 

PAYMENT HISTORY AND EXPERIENCES

 

Trade Morality:

AVERAGE

Liquidity :

SUFFICIANT

Payments :

REGULAR

Trend :

LEVEL

Financial Situation:

AVERAGE

 

 

 

FINANCIAL ELEMENTS

 

All amounts in this report are in :

USD

 

Audit Qualification:

UNQUALIFIED (CLEAN) OPINION

UNQUALIFIED (CLEAN) OPINION

"MILD" UNCERTAINTIES / DISAGREEMENTS

Date Account Lodged:

03/12/2007

 

 

Balance Sheet Date:

30/06/2007

30/06/2006

30/06/2005

Number of weeks:

52

52

52

Consolidation Code:

COMPANY

COMPANY

COMPANY

 

 

 

 

 

--- ASSETS

 

Preliminary Exp

2,328,468

5,731,609

501,513

Tangible Fixed Assets:

5,756,792

6,448,235

4,880,477

Investments

2,195,131

 

 

Total Fixed Assets:

10,280,391

12,179,844

5,381,990

Inventories:

16,806,804

19,034,381

20,282,409

Receivables:

79,944,407

79,493,478

62,374,599

Cash,Banks, Securitis:

11,469,320

9,197,405

3,194,380

Other current assets:

37,179,731

58,009,694

33,035,629

Total Current Assets:

145,400,262

165,734,958

118,887,017

TOTAL ASSETS:

155,680,653

177,914,802

124,269,007

--- LIABILITIES

 

 

 

Equity capital:

13,638,774

11,443,643

343,643

Profit & lost Account:

-3,050,615

-3,840,506

-8,253,079

Total Equity:

10,588,159

7,603,137

-7,909,436

Other long term Liab.:

6,013,167

6,693,971

23,133,113

Total L/T Liabilities:

6,013,167

6,693,971

23,133,113

Trade Creditors:

75,436,658

103,271,105

69,322,012

Provisions:

11,911,456

12,713,584

9,423,817

Other Short term Liab.:

48,731,213

47,633,005

30,299,501

Total short term Liab.:

136,079,327

163,617,694

109,045,330

TOTAL LIABILITIES:

142,092,494

170,311,665

132,178,443

 

 

 

 

 

--- PROFIT & LOSS ACCOUNT

 

 

 

Net Sales

457,915,540

393,179,033

394,208,424

Results of Ord Ops:

1,429,517

-44,252

3,254,471

NET RESULT BEFORE TAX:

1,210,906

-239,275

2,695,030

Tax :

2,785,506

-2,246,243

 

Net income/loss year:

-1,574,600

2,006,968

2,695,030

Interest Paid:

218,611

195,023

559,441

Depreciation:

3,195,204

3,809,920

4,332,187

Directors Emoluments:

1,385,967

1,301,159

683,360

Wages and Salaries:

59,938,410

47,620,545

51,186,059

Financial Income:

743,010

248,445

107,271

RATIOS

Date Account Lodged:

30/06/2007

30/06/2006

30/06/2005

Net result / Turnover(%):

-0

0.01

0.01

Fin. Charges / Turnover(%):

0

0

0

Stock / Turnover(%):

0.04

0.05

0.05

Net Margin(%):

-0.34

0.51

0.68

Return on Equity(%):

-14.87

26.4

-34.07

Return on Assets(%):

-1.01

1.13

2.17

Net Working capital:

9320935

2117264

9841687

Cash Ratio:

0.08

0.06

0.03

Quick Ratio:

0.67

0.54

0.6

Current ratio:

1.07

1.01

1.09

Receivables Turnover:

62.85

72.79

56.96

Leverage Ratio:

 

 

 

 
 
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)/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

 

THE FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:                                                        
                                                                      
NET WORTH:                                                            
THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 39.26% FROM US$7,603,137 IN FY 2006 TO US$10,588,159 IN FY 2007. THIS WAS DUE TO LOWER ACCUMULATED LOSSES OF US$-3,050,615 (2006: US $-3,840,506); AN IMPROVEMENT OF 20.56% FROM THE PRIOR FINANCIAL YEAR AND AN ISSUE OF ORDINARY SHARES OF A VALUE OF US$2,195,131 FOR THE FY 2007.
                                                                      
LEVERAGE:                                                             
IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 55.43% (2006: 63.11%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$75,436,658 (2006: US$103,271,105). THE BREAKDOWN IS AS FOLLOWS:                                                        
-AMOUNT DUE TO ULTIMATE HOLDING COMPANY- 2007: US$41,000,713 (2006: US $61,571,683)                                                          
-AMOUNT DUE TO RELATED COMPANIES- 2007: US$34,435,945 (2006: US $41,699,422)
                                                                      
IN THE LONG-TERM, SUBJECT WAS WHOLLY FINANCED BY LONG TERM DEFERRED REVENUE WHICH AMOUNTED TO US$6,013,167 (2006: US$6,693,971).          
                                                                      
IN ALL, LEVERAGE RATIO FELL FROM 22.40 TO 13.42 TIMES AS A RESULT OF A RISE IN TOTAL EQUITY AND A FALL IN TOTAL LIABILITIES.                 
                                                                      
LIQUIDITY:                                                            
IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT RATIO ROSE TO 1.07 TIMES, FROM 1.01 TIMES AND QUICK RATIO IMPROVED TO 0.67TIMES FROM 0.54 TIMES IN FY 2006.                                     
                                                                      
SIMILARLY, NET WORKING CAPITAL IMPROVED BY 3.40 TIMES FROM US $2,117,264 IN FY 2006 TO US$9,320,935.
                                                                      

PROFITABILITY:                                                        
REVENUE POSTED AN INCREASE OF 16.46% FROM US$393,179,033 IN FY 2006 TO US$457,915,540 BUT NET PROFIT DROPPED BY 1.78 TIMES TO US$-1,574,600  (2006: US$2,006,968). THIS COULD BE DUE TO A REVERSAL IN TAXES, FROM A TAX BENEFIT OF US$2,246,243 IN THE FY 2006 TO A TAX EXPENSE OF US $2,785,506 FOR THE FY 2007. HENCE, NET MARGIN FELL TO -0.34% (2006: 0.51%).                                                               
                                                                      
DEBT SERVICING:
DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING. HOWEVER IT IS NOTED THAT SUBJECT HAVE NET LOSSES WHICH NEED CAUTION.  
                                                                      
NON-CURRENT ASSETS:
THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:                 
-DEFERRED TAX ASSETS- 2007: US$1,738,330 (2006: US$5,041,082)         
-DEPOSITS- 2007: US$590,138 (2006: US$690,527)

 

 

BACKGROUND/OPERATION

 

THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 30/06/1994 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "SUN MICROSYSTEMS PTE LTD".                      
                                                                      
THE COMPANY HAS ISSUED AND PAID-UP CAPITAL OF 22,707,580 SHARES OF A VALUE OF S$22,707,580.                         
                                                                      
PRINCIPAL ACTIVITIES:                                                 
SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:
1. WHOLESALE OF COMPUTER HARDWARE AND PERIPHERALS EQUIPMENT;          
   MANUFACTURE/REPAIR COMPUTERS & DATA PROCESS EQUIPMENT              
2. MANUFACTURE OF COMPUTERS & DATA PROCESSING EQUIPMENT EXCEPT        
   COMPUTER PERIPHERAL EQUIPMENT
 
DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE SALE OF COMPUTER EQUIPMENT AND THE PROVISION OF RELATED SERVICES.                                        
                                                                      
FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED:
                                                                      
BACKGROUND OF SUN MICROSYSTEMS INC:                                   
SINCE THEIR INCEPTION IN 1982, THE VISION OF "THE NETWORK IS THE COMPUTER" HAS EVOLVED INTO THE PARTICIPATION AGE. THEY SEE EVERYONE AND EVERYTHING PARTICIPATING ON THE NETWORK.
                                                                      
THE GROUP IS AN INNOVATIVE INDUSTRY LEADER IN SERVERS, STORAGE, SOFTWARE, AND SERVICES WITH A 100 PERCENT FOCUS ON NETWORK COMPUTING. 
                                                                      
SUBJECT IS LISTED IN THE SINGAPORE LOCAL DIRECTORY UNDER THE CLASSIFICATION OF: COMPUTERS                                          
                                                                      
SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:                          
* LEADING PROVIDER OF INDUSTRIAL-STRENGTH HARDWARE, SOFTWARE, AND     
  SERVICES THAT MAKE THE NETWORK
                                                                      
PRODUCTS AND SERVICES:                                                
                                                                      
* SYSTEMS                                                             
SUN SYSTEMS - SERVERS, STORAGE, WORKSTATIONS, AND INFORMATION APPLIANCES - SERVE VITAL FUNCTIONS IN VIRTUALLY EVERY INDUSTRY, FROM TELECOMMUNICATIONS TO FINANCIAL SERVICES, MANUFACTURING TO RETAIL, ENTERTAINMENT TO HEALTH CARE.                                         
                                                                      
* SOFTWARE
SUN'S SOFTWARE OFFERINGS EXTEND FROM DEVELOPER TOOLS TO THE INDUSTRIAL-STRENGTH SOLARIS OPERATING ENVIRONMENT AND FROM INNOVATIVE JAVA TECHNOLOGIES TO THE FULL RANGE OF IPLANET E-COMMERCE SOLUTIONS, PLUS THE STAROFFICE PRODUCTIVITY SUITE.
* SERVICE                                                             
OUR SERVICE ORGANIZATION SUPPORTS MORE THAN 1.2 MILLION SYSTEMS WORLDWIDE AND IS THE LEADING PROVIDER OF TRAINING FOR THE JAVA PLATFORM AND UNIX (R) SYSTEM SOFTWARE.
* PROGRAMS                                                            
OUR IFORCE INITIATIVE DELIVERS PRODUCTS, PROGRAMS, AND SERVICES BUILT ON THE EXPERTISE OF SUN AND AN ENTENSIVE COMMUNITY OF LEADING COMPANIES. OUR SUNTONE PROGRAM, FOR EXAMPLE, INCLUDES MORE THAN 750 SERVICE PROVIDERS, SOFTWARE VENDORS, AND EQUIPMENT MAKERS.
                                                                      
TRADE NAMES:                                                          
* SUN      UNIX SERVER (US)                                                
                                                                      
BRANDS CARRIED:
* SUN MICROSYSTEMS                                                    
* SOLARIS                                                             
* THE NETWORK IS THE COMPUTER                                         
* JAVA                                                                
* NETRA
* N1                                                                  
* SUN FIRE                                                            
* SUN RAY                                                             
* SUNSPECTRUM                                                         
* SUN STOREDGE
* SUNTONE                                                             
* ULTRASPARC PROCESSORS                                               
                                                                      
REGIONAL SUN PARTNERS:                                                
* ECS HOLDINGS LTD (SINGAPORE)
* CSC COMPUTER SCIENCES PTE LTD (SINGAPORE)                           
* FRONTLINE TECHNOLOGIES PTE LTD (SINGAPORE)                          
* INGRAM MICRO ASIA LTD (SINGAPORE)                                   
* ORACLE CORPORATION (S) PTE LTD (SINGAPORE)                          
* AMD FAR EAST LTD (SINGAPORE)
* WIPRO INFOTECH (INDIA)                                              
* PT SUN MICROSYSTEMS (INDONESIA)                                     
* APPLIED BUSINESS SYSTEMS SDN BHD (MALAYSIA)                         
* AC CORPORATION (PHILIPPINES)                                        
* FIRST LOGIC COMPANY LTD (THAILAND)
* MFEC PUBLIC COMPANY LTD (THAILAND)                                  
                                                                      
TERMS OF PAYMENT:                                                     
* TRADE AND OTHER PAYABLES: 30-90 DAYS TERM
SUBJECT IS ALSO A MEMBER OF FOLLOWING ENTITIES:                       
* AMERICAN CHAMBER OF COMMERCE                                        
* SINGAPORE INFORMATION TECHNOLOGY FEDERATION                         
* SINGAPORE BUSINESS FEDERATION
NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL 
                                                                      
THE COMPANY IS A WHOLLY-OWNED SUBSIDIARY COMPANY OF SUN MICROSYSTEMS  
OF CALIFORNIA, INC., A COMPANY INCORPORATED IN CALIFORNIA, THE UNITED
STATES OF AMERICA.THE ULTIMATE HOLDING COMPANY IS SUN MICROSYSTEMS.   
INC., INCORPORATED IN THE STATE OF DELAWARE, THE UNITED STATES        
OF AMERICA.                                                           
                                                                      
REGISTERED AND BUSINESS ADDRESS:
1 MAGAZINE ROAD                                                       
#07-01/13 CENTRAL MALL                                                
SINGAPORE 059567                                                      
- RENTED PREMISE                                                      
- OWNED BY CITY DEVELOPMENTS LIMITED
- DATE OF CHANGE OF ADDRESS: 30/04/2004                               
                                                                      
OTHER BUSINESS ADDRESSES:                                             
                                                                      
1 MAGAZINE ROAD
#06-01 CENTRAL MALL                                                   
SINGAPORE 059567                                                      
                                                                      
750 CHAI CHEE ROAD                                                    
#04-00 TECHNOPARK @ CHAI CHEE
SINGAPORE 469000                                                      
                                                                      
750 CHAI CHEE ROAD                                                    
#04-04 TECHNOPARK @ CHAI CHEE                                         
SINGAPORE 469000
                                                                      
WEBSITE:                                                              
http://www.sun.com                                                    
                                                                      
EMAIL:
as_suncenter@sun.com                                                  
sales@sun.com

 

 

MANAGEMENT

 

THE DIRECTORS AT THE TIME OF THE REPORT ARE:                          
                                                                      
1) SCOTT DOUGLAS LUNDERING, AN AMERICAN                               
   - BASED IN THE UNITED STATES OF AMERICA.
 
2) LIM CHIN TECK,  A SINGAPORE PERMANENT RESIDENT                     
   - HOLDS NO OTHER DIRECTORSHIP AS RECORDED IN OUR DATABASE.         
                                                                      
3) VAIDYANATHAN RADHAKRISHNAN, A SINGAPOREAN PERMANENT RESIDENT       
   - HOLDS NO OTHER DIRECTORSHIP AS RECORDED IN OUR DATABASE.
 

GENERAL COMMENTS

 

SINGAPORE'S COUNTRY RATING 2008                                                 
                                                                                                                                                                
INVESTMENT GRADE
                                                                                
IN SINGAPORE, THE POLITICAL AND ECONOMIC SITUATION IS VERY GOOD. A QUALITY      
BUSINESS ENVIRONMENT HAS A POSITIVE INFLUENCE ON CORPORATE PAYMENT BEHAVIOUR.   
CORPORATE DEFAULT PROBABILITY IS VERY LOW ON AVERAGE.                           
ECONOMIC GROWTH REMAINED STRONG IN 2007 AND IN Q1 2008 (6.7%) THANKS TO A SHARP
INCREASE IN CONSUMPTION SPURRED BY A BRIGHT EMPLOYMENT PICTURE, RISING REAL     
WAGES, AND A POSITIVE WEALTH EFFECT PRODUCED BY RISING PROPERTY PRICES. IN THIS 
CONTEXT, BANKRUPTCIES CONTINUE TO DECLINE, AS REFLECTED BY THE FAVOURABLE COFACE
PAYMENT INCIDENT INDEX TREND. SINGAPORE MOREOVER BOASTS THE BEST GOVERNANCE IN  
ASIA THANKS TO AN EFFECTIVE LEGAL SYSTEM AND A GOOD LEVEL OF FINANCIAL
TRANSPARENCY.         
                                                          
HOWEVER, A GROWTH SLOWDOWN IS EXPECTED FOR 2008 (4.5%) AMID WEAKER DEMAND GROWTH
IN THE UNITED STATES, SINGAPORE'S NUMBER TWO TRADING PARTNER. THE FOREIGN TRADE 
CONTRIBUTION TO GROWTH WILL THUS DECLINE ESPECIALLY WITH EXPORTS REPRESENTING   
210 PER CENT OF GDP.
 
INFLATION ACCELERATED IN 2007 AND REACHED 7.5% IN MAY 2008 BECAUSE OF RISING RAW
MATERIAL PRICES. INDEED, SINGAPORE IMPORTS ALMOST ALL ITS ENERGY AND FOOD.      
HOWEVER, FOR THE ENTIRE YEAR, INFLATION SHOULD MODERATE AND REACH 2.8%.         
THE FINANCIAL SITUATION HAS REMAINED ROBUST AS THE EQUILIBRIUM OF PUBLIC SECTOR 
FINANCES AND THE SOLIDITY OF A BANKING SYSTEM POISED TO ADOPT BASEL II
PRUDENTIAL STANDARDS ATTEST. EXTERNAL ACCOUNTS CONTINUE MOREOVER TO SHOW LARGE  
SURPLUSES THANKS TO GOOD PERFORMANCE IN A RANGE OF SECTORS INCLUDING            
ELECTRONICS, TRANSPORT, CONSTRUCTION, TOURISM, AND FINANCIAL SERVICES. THE      
DECLINE EXPECTED IN THE CURRENT ACCOUNT SURPLUS IN 2008 SHOULD NOT JEOPARDISE   
SINGAPORE'S EXCEPTIONAL FINANCIAL SOLIDITY.
 
UNDERPINNED BY SUBSTANTIAL FISCAL RESERVES AND A LARGE MAJORITY IN PARLIAMENT,  
THE PEOPLE'S ACTION PARTY OF PRIME MINISTER LEE HSIEN LOONG HAS SOUGHT AT ONCE  
TO MAKE THE CITY-STATE MORE ATTRACTIVE TO FOREIGN INVESTORS AND TO BOLSTER THE  
SPECIALISATION IN HIGH-VALUE ADDED SECTORS TO MEET THE GROWING COMPETITION FROM 
LOW-COST ASIAN ECONOMIES. BESIDES REDUCTIONS IN CORPORATE INCOME TAX AND TAX
INCENTIVES FOR COMPANIES SETTING UP OPERATIONS IN SINGAPORE, THE GOVERNMENT     
CONTINUES TO PURSUE ITS INFRASTRUCTURE AND R&D INVESTMENT POLICY.               
                                                                                
ASSETS                                                                          
"              THE COUNTRY HAS BEEN PURSUING AMBITIOUS DIVERSIFICATION STRATEGY,
ESPECIALLY TO HIGH VALUE-ADDED SECTORS LIKE CHEMICALS, PHARMACEUTICALS, AND     
FINANCE.                                                                        
"              IT IS AMONG THE MOST ADVANCED COUNTRIES OF ASIA IN QUALITY                    
COMPETITIVENESS TERMS.                                                          
"              SINGAPORE HAS BECOME A MAJOR EXPORTER OF CAPITAL IN ASIA IN MANY ECONOMIC
SECTORS -SUCH AS FINANCE, TELECOMMUNICATIONS, TRANSPORT - NOTABLY VIA THE STATE-
OWNED TEMASEK HOLDING COMPANY                                                   
"              THE ECONOMY HAS BENEFITED FROM THE COUNTRY'S POLITICAL STABILITY AND          
EXCELLENT BUSINESS CLIMATE.
WEAKNESSES                                                                      
"              SKILLED LABOUR IS IN SHORT SUPPLY IN THE SECTORS THE COUNTRY WISHES TO        
DEVELOP.                                                                        
"              THE AGEING POPULATION COULD ULTIMATELY UNDERMINE ECONOMIC PERFORMANCE.        
"              GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE
LEAST SKILLED COULD GENERATE SOCIAL TENSIONS.                                   
"              THE VERY OPEN ECONOMY IS VULNERABLE TO A WORLD ECONOMIC DOWNTURN.               
  
OVERVIEW OF SINGAPORE                                                           
                                                                                
PAST PERFORMANCE
                                                                                
THE SINGAPORE ECONOMY GREW AT A MODERATE PACE OF 2.1% IN 2Q 2008. ON AN         
ANNUALISED QUARTER-ON-QUARTER BASIS, GROWTH FELL BY 6.0%, IN CONTRAST TO THE    
15.7% GROWTH IN THE PREVIOUS QUARTER.
THE MANUFACTURING SECTOR FELL BY 5.2% IN 2Q 2008, COMPARED TO 2Q 2007. THE      
DECLINE WAS MAINLY DRIVEN BY THE BIOMEDICAL MANUFACTURING CLUSTER WHICH FELL BY 
28.0%.                                                                          
                                                                                
THE FINANCIAL SERVICES SECTOR ROSE BY A SMALLER 10.2% IN 1Q 2008, FOLLOWING A
13% GAIN IN 1Q 2008. GROWTH WAS ACROSS THE BOARD, SUPPORTED BY ROBUST EXPANSIONS
IN BOTH THE DOMESTIC AND OFFSHORE BANKING SEGMENTS.                             
                                                                                
THE CONSTRUCTION SECTOR RECORDED HIGH GROWTH, RISING BY 17.4%, FOLLOWING THE    
ROBUST 15% GROWTH IN 1Q 2008.
                                                                                
THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.0% IN 2Q 2008, FASTER THAN THE  
5.5% GROWTH IN 1Q 2008. NON-OIL RE-EXPORTS GREW BY 14.0% IN 1Q 2008, HIGHER THAN
THE 11.0% GROWTH IN 1Q 2008. EXCLUDING MOTOR VEHICLES, RETAIL SALES FELL BY 1.4%
IN 2Q 2008, COMPARED TO 1Q 2008.
                                                                                
THE TRANSPORT AND STORAGE SECTOR ROSE BY 5.7% IN 2Q 2008, MARGINALLY HIGHER THAN
5.4% IN 1Q 2008. THIS WAS ATTRIBUTED TO THE DOUBLE-DIGIT GROWTH FOR CONTAINER   
THROUGHPUT.
THE HOTELS AND RESTAURANTS SECTOR GREW BY A SLIGHTLY SMALLER 2.1% IN 2Q 2008,   
FOLLOWING THE 2.4% GROWTH IN 1Q 2008.                                           
                                                                                
THE INFORMATION AND COMMUNICATIONS SECTOR ROSE 7.6% IN 2Q 2008, HIGHER THAN THE 
6.8% IN 1Q 2008.
                                                                                
THE BUSINESS SERVICES SECTOR EXPANDED BY 7.5%, SLOWER THAN THE 8.3% GAIN IN 1Q  
2008.                                                                           
                                                                                
NEWS
                                                                                
IT'S RECESSION WATCH 2009                                                       
                                                                                
THE GLOOM WAS NOT JUST IN THE OFFICIAL NEWS - THAT SINGAPORE HAS SLIPPED INTO   
TECHNICAL RECESSION, THE FIRST TIME SINCE 2002, AND THAT THIS YEAR'S ECONOMIC
GROWTH MIGHT ONLY HIT 3.0%.                                                     
                                                                                
IT WAS EVEN MORE VISIBLE IN THE OPINION OF SEVERAL ECONOMISTS: NEXT YEAR COULD  
BE WORSE.
CITIGROUP ECONOMIST KIT WEI ZHENG EXPECTS 2009 GROWTH TO BE "SLOWER, OR EVEN    
NEGATIVE". THE LAST TIME SINGAPORE EXPERIENCED A FULL-SCALE RECESSION WAS IN    
2001, WHEN THE ECONOMY CONTRACTED BY 2.4% DURING THE YEAR.                      
                                                                                
 
IN FACT, SOME ECONOMISTS FELT THE CURRRENT CRISIS COULD SURPASS THE 1997 ASIAN
FINANCIAL CRISIS, ECLIPSING THE POST-911 AND SARS SLUMPS IN RECENT YEARS. OR    
EVEN THE RECESSIONS TRIGGERED BY THE 1985 PAN ELECTRIC COLLAPSE AND 1973 OIL    
SHOCK.                                                                          
                                                                                
AND HOW QUICKLY SINGAPORE - THE FIRST ASIAN ECONOMY TO SLIP INTO RECESSION -
RECOVERS HINGES ON WHETHER WESTERN GOVERNMENTS AND CENTRAL BANKS CAN RESOLVE THE
CREDIT CRISIS IN THE COMING MONTHS.                                             
                                                                                
"IN THE WORST-CASE SCENARIOS, IT WILL BE FAR WORSE THAN ANYTHING WE'VE SEEN     
BEFORE BECAUSE WE ARE TALKING ABOUT JOB LOSSES WHICH WILL CUT ACROSS ALL
INDUSTRIES," SAID CIMB-GK REGIONAL ECONOMIST SONG SENG WUN.                     
                                                                                
AND WHILE THE GOVERNMENT IS EXPECTED TO DIP INTO ITS COFFERS, THE ABILITY TO    
STIMULATE THE ECONOMY COULD BE HINDERED BY THE RESOURCE CRUNCH IN THE           
CONSTRUCTION SECTOR.
                                                                                
SAID SINGAPORE MANAGEMENT UNIVERSITY ECONOMICS PROFESSOR DAVIN CHOR:"THE        
CONSTRUCTION SECTOR HAS RELATIVELY LIMITED CAPACITY TO EXPAND IN THE SHORT      
TERM."
BUT MR SONG ARGUED THAT THE CONSTRUCTION CRUNCH COULD BE A BLESSING IN DISGUISE,
GIVEN THAT BUILDING COSTS WOULD "TUMBLE QUICKLY" BY THE FIRST QUARTER OF NEXT   
YEAR. SAID MR SONG: "PROJECTS, WHICH HAVE BEEN PUT ON THE BACKBURNER, CAN BE    
BROUGHT FORWARD."
AND WHILE MUCH HOPES ARE PINNED ON THE UPCOMING MARINA BAY SANDS INTEGRATED     
RESORT - SLATED TO OPEN ITS DOORS NEXT YEAR - EXPERTS ARE CAUTIOUS ABOUT ITS    
IMPACT, ESPECIALLY LAS VEGAS SANDS - WHICH CLINCHED THE LICENCE TO BUILD THE IR 
- HAS SEEN GAMING EARNINGS FALL IN ITS CHIEF MARKETS IN THE US AND MACAU.
SAID FORECAST ECONOMIST VISHNU VARATHAN: "FROM THE OPERATORS' POINT OF VIEW,    
THEY MAY BE FACING THEIR OWN FINANCIAL DIFFICULTIES. AND A SLOWING ECONOMY MEANS
FEWER VISITORS, LESS SPENDING POWER."                                           
                                                                                
WHEN CONTACTED, MARINA BAY SANDS GENERAL MANAGER GEORGE TANASIJEVICH SAID THE
GROUP "REMAINS 100% COMMITTED TO SINGAPORE AND TO HELPING SINGAPORE ACHIEVE ITS 
TOURISM GOALS".                                                                 
                                                                                
PRIME MINISTER LEE HSIEN LOONG REITERATED ON FRIDAY THAT SINGAPORE IS WELL-     
PLACED TO RIDE THROUGH THE "FINANCIAL STORM", BUOYED BY THE MOMENTUM FROM
PROJECTS SUCH AS THE RECENT SINGAPORE GRAND PRIX. SAID MR LEE:"OUR FINANCIAL    
SYSTEM IS SOUND, AND OUR ECONOMY REMAINS COMPETITIVE.                           
                                                                                
"OVER THE LAST FEW YEARS, WHEN CONDITIONS WERE GOOD, WE HAD CONSCIOUSLY DECIDED 
TO MAKE THE BEST OF THE GOOD TIMES AND PRESSED ON WITH UPGRADING AND
DIVERSIFYING OUR ECONOMY. THIS WILL MEAN NEW AND BETTER JOBS,                   
EVEN IF SOME OLD ONES ARE LOST."                                                
                                                                                
MR VARATHAN EXPECTS THE ECONOMY TO GROW 3.0% NEXT YEAR - MATCHING THE OFFICIAL  
FORECAST FOR GROWTH THIS YEAR.
                                                                                
UOB ECONOMIST HO WOEI CHEN FEELS THAT THE WORST IS YET TO COME.                 
                                                                                
SAID MD HO: "THE BANKS ARE THE ONES WHO HAVE BEEN HURT… WE WILL SEE THE CRISIS  
TRANSLATING INTO THE REAL SECTORS OF THE ECONOMY."
                                                                                
 
MANUFACTURING WILL CONTINUE TO BE A DRAG ON THE ECONOMY, WITH THE RETAIL AND    
SERVICES INDUSTRY POISED FOR A HIT. BUT SINGAPORE, WHERE THE BANKING SCENE IS   
DOMINATED BY PRIVATE BANKING, WOULD LIKELY BE HURT LESS THAN ITS RIVAL HONG     
KONG, ASIA'S CENTRE FOR INVESTMENT BANKING, SAID MS HO.
                                                                                
MR VARATHAN EXPECTS INDUSTRIES DEALING IN ENERGY, FOOD AND WATER - WHICH ARE NOT
KEY DRIVERS OF SINGAPORE'S ECONOMY - TO BE SHIELDED FROM THE DOWNTURN.          
                                                                                
OUTLOOK
                                                                                
THE COMPOSITE LEADING INDEX (CLI) ROSE MARGINALLY BY 0.5% IN 2Q 2008, FOLLOWING 
THE 2.8% DECLINE IN 1Q 2008. OF THE NINE COMPONENTS WITHIN THE INDEX, THREE     
COMPONENTS RECORDED DECLINES WHILE THE REMAINING SIX COMPONENTS ROSE MARGINALLY.
THE SIX INDICATORS THAT REGISTERED IMPROVEMENTS ARE THE MONEY SUPPLY, NON-OIL
SEA CARGO HANDLED, STOCK PRICE, US PURCHASING MANAGER'S INDEX, STOCK OF FINISHED
GOODS AND DOMESTIC LIQUIDITY.                                                   
                                                                                
OVERALL, THE SINGAPORE ECONOMY REMAINED RESILENT IN 1ST HALF OF 2008, DESPITE   
THE SLOWDOWNS IN MAJOR EXTERNAL ECONOMIES AND GLOBAL INFLATION CONCERNS. THE
ECONOMY GREW BY 4.5% IN 1ST HALF OF 2008.                                       
                                                                                
LOOKING AHEAD, THE GLOBAL ECONOMIC ENVIRONMENT WILL REMAIN WEAK FOR THE REST OF 
THE YEAR AND WELL INTO 2009. THE DEVELOPED ECONOMIES ARE EXPERIENCING A BROAD   
SLOWDOWN IN ECONOMIC ACTIVITY. SLUGGISH GROWTH IS EXPECTED OVER THE NEXT SIX TO
TWELVE MONTHS, AS THE EFFECTS OF THE US FINANCIAL AND HOUSING SLUMPS RIPPLE ITS 
EFFECT THROUGHOUT THE WORLD. THESE WILL HAVE AN ADVERSE IMPACT ON EMPLOYMENT,   
BUSINESS CONFIDENCE, CONSUMER SPENDING AND OVERALL DEMAND. EMERGING ECONOMIES   
PARTICULARY THOSE IN ASIA, HAVE CONTINUED TO GROW,                              
PROVIDING SOME SUPPORT TO GLOBAL DEMAND AND GROWTH. HOWEVER, THE US AND EUROPE
SLOWDOWN WILL HAVE A DOWNSIDE IMPACT ON THE ASIAN ECONOMIES. AT THE SAME TIME,  
INFLATION CONTINUES TO PERSIST AND POSES A CHALLENGES FOR POLICY MAKERS IN      
COUNTRIES SUCH AS CHINA, INDIA, INDONESIA AND VIETNAM.                          
                                                                                
THE PACE OF GROWTH OF SINGAPORE'S ECONOMY HAS SLOWED DOWN, ATTRIBUTED MAINLY TO
WEAKNESSES IN DOMESTIC AND EXTERNAL DEMAND. WHILE THE COMPOSITE LEADING         
INDICATOR POINTS TOWARDS A SLIGHT PICKUP, BUSINESS PERFORMANCE OF PERFORMANCE   
ACROSS THE SECTORS ARE MIXED.                                                   
                                                                                
IN VIEW OF THE OUTLOOK FOR THE MAJOR SECTORS AND A SLOWDOWN IN THE GLOBAL
ECONOMIC ENVIRONMENT, THE MINISTRY OF TRADE AND INDUSTRY LOWERED THE 2008 GDP   
GROWTH FORECAST FROM 4.0-6.0% IN THE LAST QUARTER, TO 4.0-5.0%.                 
                                                                                
IN THE FINANCIAL SERVICES INDUSTRY, MAJORITY OF THE BANKS AND FINANCE COMPANIES 
FORECAST BUSINESS OUTLOOK TO REMAIN THE SAME FOR THE 2ND HALF OF 2008 OVER THE
1ST HALF OF 2008. BANKS AND FINANCE COMPANIES ARE MORE OPTIMISTIC WHILE STOCK,  
SHARE AND BOND BROKERS, FUND MANAGERS AND INSURANCE COMPANIES FORECAST SLOWER   
BUSINESS ACTIVITY IN THE COMING MONTHS, MAINLY DUE TO UNCERTAINTY IN THE        
INVESTMENT CLIMATE AND GLOBAL ECONOMY.
IN THE REAL ESTATE INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS PREDICTS A  
SLOWER BUSINESS CLIMATE FOR THE COMING MONTHS.                                  
                                                                                
IN THE SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 24% OF FIRMS, EXPECT        
BUSINESS TO BE BRISK FOR THE COMING MONTHS WHILE A WEIGHTED 22% OF FIRMS
PROJECTS LESS FAVOURABLE BUSINESS CONDITIONS. MAJORITY OF THE FIRMS (A WEIGHTED 
54%) EXPECT BUSINESS ACTIVITIES TO REMAIN STABLE FOR THE COMING MONTHS. THIS    
RESULTS IN A NET WEIGHTED BALANCE OF 2% OF FIRMS EXPECTING A POSITIVE BUSINESS  
OUTLOOK. THIS MAGNITUDE IS SMALLER THAN THE NET WEIGHTED BALANCE OF 28%         
REGISTERED IN THE SAME PERIOD FOR 2007 (IE JUL - DEC 2007) AND COMPARABLE TO THE
NET WEIGHTED BALANCE OF 3% RECORDED FOR APR-SEP 2008 IN THE PREVIOUS QUARTER.   
                                                                                
GENERALLY, THE MAJORITY OF WHOLESALERS, WITH A NET WEIGHTED BALANCE OF 55% OF   
FIRMS, FORECASTS BUSINESS ACTIVITIES IN THE COMING MONTHS, TO REMAIN AT SIMILAR 
LEVELS. FOR THE REMAINING WHOLESALE FIRMS, A WEIGHTED 22% OF THEM EXPECTS BETTER
BUSINESS CONDITIONS TO IMPROVE. THESE FIRMS ARE MAINLY IN THE BUSINESS OF       
WHOLESALE TRADE OF INDUSTRIAL MACHINERY AND EQUIPMENT, ELECTRONIC COMPONENTS,   
AND COMPUTER AND ACCESSORIES. ON THE OTHER HAND, A WEIGHTED 23% OF WHOLESALERS, 
MAINLY FROM FOOD AND BEVERAGES, AND PETROLEUM AND PETROLEUM PRODUCTS, FORECAST  
BUSINESS CONDITIONS TO DETERIORATE IN THE COMING MONTHS. ON THE WHOLE, A NET
WEIGHTED BALANCE OF 1% OF FIRMS EXPECTS GENERAL BUSINESS OUTLOOK TO REMAIN LESS 
FAVOURABLE.                                                                     
                                                                                
A NET WEIGHTED BALANCE OF 20% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS    
CONDITIONS FOR THE PERIOD ENDING DECEMBER 2008. MOTOR VEHICLES RETAILERS, AND
JEWWELLERY AND WATCHES CONTINUE TO PREDICT SLOWER SALES IN THE MONTHS AHEAD.    
                                                                                
IN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 8% OF FIRMS    
FORECASTS BETTER FAVOURABLE BUSINESS CONDITIONS FOR THE COMING MONTHS. THE      
SEGMENTS EXPECTING HIGHER BUSINESS ACTIVITIES ARE LAND TRANSPORT AND
SHIPPING LINES.                                                                 
                                                                                
                                                                                
HOTELIERS REMAIN CONFIDENT ABOUT THE BUSINESS CLIMATE IN THE MONTHS AHEAD, WITH 
A NET WEIGHTED BALANCE OF 37% OF HOTELIERS EXPECTING THEIR BUSINESSES TO
IMPROVE. IN THE CATERING TRADE INDUSTRY, BUSINESS CONDITIONS ARE EXPECTED TO BE 
LESS OPTIMISTIC. IN PARTICULAR, CONVENTIONAL RESTAURANTS AND FOOD CATERERS      
MENTIONED HIGH OPERATING COSTS AS THE REASON FOR THE LESS POSITIVE OUTLOOK.     
                                                                                
IN THE INFORMATION AND COMMUNICATIONS INDUSTRY, A NET WEIGHTED BALANCE OF 12% OF
FIRMS PREDICTS BETTER BUSINESS.                                                 
                                                                                
IN THE BUSINESS SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS       
PREDICTS POSITIVE SENTIMENTS. THESE INCLUDE THOSE ENGAGED IN ENGINEERING,       
INDUSTRIAL DESIGN, TECHNICAL TESTING AND ANALYSIS, AND INVESTIGATION AND
SECURITY ACTIVITIES.                                                            
                                                                                
EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE                       
                SINGAPORE DEPARTMENT OF STATISTICS                              
                TODAY
                                                                               

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.50.09

UK Pound

1

Rs.76.68

Euro

1

Rs.63.48

 

 

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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