MIRA INFORM REPORT

Report Date :

06.02.2008

IDENTIFICATION DETAILS

Name :	^HITACHI ASIA LTD.
Formerly Known As :	^HITACHI ASIA PTE. LTD.
Registered Office :	^16 Collyer Quay ^#20-00 ^Hitachi Tower
Country :	Singapore
Financials (as on) :	31.03.2007
Date of Incorporation :	^01.02.1989
Com. Reg. No.:	^198900416G
Legal Form :	Public Limited Company
Line of Business :	^Sales of Electronic Parts and Equipment

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 :	Exists

Subject Company

^{HITACHI ASIA LTD.}

Line Of Business

^{SALES OF ELECTRONIC PARTS AND EQUIPMENT}

Parent Company

^{HITACHI, LTD}

^{(PERCENTAGE OF SHAREHOLDING: 100%)}

Financial Elements

FY 2007

CONSOLIDATED

^{Sales : S$1,091,653,000}

^{Networth : S$146,806,000}

^{Paid-Up Capital : S$24,000,000}

^{Net result : S$10,886,000}

^{Net Margin(%) : 1.00}

^{Return on Equity(%) : 7.42}

^{Leverage Ratio : 2.65}

COMPANY IDENTIFICATION

^{Subject Company : HITACHI ASIA LTD.}

^{Former Name : HITACHI ASIA PTE. LTD.}

^{Business Address : 16 COLLYER QUAY}

^{#20-00 HITACHI TOWER}

^{Town : SINGAPORE}

^{Postcode : 049318}

^{Country : Singapore}

^{Telephone : 6535 2100}

^{Fax : 6535 1533/65389011}

^{ROC Number : 198900416G}

^{Reg. Town :}

PREVIOUS IDENTIFICATION

^{HITACHI ASIA PTE. LTD. DATE OF CHANGE OF NAME: 12/03/1998}

SUMMARY

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

^{Legal Form : Pub Ltd Co}

^{Date Inc. : 01/02/1989}

^{Previous Legal Form : Pte Ltd}

^{Summary year : 31/03/2007}

^{Sales : 1,091,653,000}

^{Networth : 146,806,000}

^{Capital :}

^{Paid-Up Capital : 24,000,000}

^{Employees :}

^{Net result : 10,886,000}

^{Share value : 1}

^{AUDITOR: ERNST & YOUNG}

REFERENCES

^{Litigation : Yes}

^{Company status : TRADING}

^{Started : 01/02/1989}

PRINCIPAL(S)

^{TOSHIO TODA G5892118T Managing Director}

DIRECTOR(S)

^{TAN SU MAY S1654320I Company Secretary}

^{Appointed on : 01/10/2002}

^{Street : 56 KHEAM HOCK ROAD}

^{Town: SINGAPORE}

^{Postcode: 298819}

^{Country: Singapore}

^{SHUNSUKE OTSU G5699434W Director}

^{Appointed on : 31/03/2003}

^{Street : 32 ORANGE GROVE ROAD}

^{Town: SINGAPORE}

^{Postcode: 258354}

^{Country: Singapore}

^{OH HSIU-HAU (HU ZHIHUI) S7510762E Company Secretary}

^{Appointed on : 06/11/2003}

^{Street : 25 TAMAN KEMBANGAN}

^{KIMNAN PARK}

^{Town: SINGAPORE}

^{Postcode: 416485}

^{Country: Singapore}

^{SHARON CHUA S7700237E Company Secretary}

^{Appointed on : 01/08/2004}

^{Street : 313C ANCHORVALE ROAD}

^#07-148

^{Town: SINGAPORE}

^{Postcode: 543313}

^{Country: Singapore}

^{KENSUKE OKA G5863465X Director}

^{Appointed on : 01/04/2006}

^{Street : 60 HAVELOCK ROAD}

^#08-28

^{Town: SINGAPORE}

^{Postcode: 169658}

^{Country: Singapore}

^{TOSHIO TODA G5892118T Director}

^{Appointed on : 01/08/2006}

^{Street : 53 GRANGE ROAD}

^#13-03

^{SPRING GROVE}

^{Town: SINGAPORE}

^{Postcode: 249565}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{LEE SIEW JEE JENNIFER S1336064B}

^{CHEUNG SIU KUI S2586794G}

^{KIYOSHI URAKAMI MP6636658}

^{YOSHIRO KUWATA MN8108562}

^{TAKASHI MURAKI F0400740U}

^{HIDEAKI ITO TZ0042838}

^{YOSHITAKA HIROSE MR1685983}

^{KATSUMI YAMAMOTO TE2325308}

^{FOONG YUEN PING S7426541C}

^{MASAKAZU NAITO G5662549L}

^{TAKAO MATSUI TE6976120}

^{TAKUYA TAJIMA TF2955667}

^{TADAHIKO ISHIGAKI TF5141245}

ACTIVITY(IES)

^{COMMUNICATION EQUIPMENT Code:5020}

^{MACHINERY Code:13260}

^{SEMICONDUCTOR DEVICES Code:19130}

^{ELEVATORS Code:7705}

^{COMPUTERS Code:5100}

^{BASED ON ACRA'S RECORD}

^{1) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT;}

^{SALE OF INDUSTRIAL PARTS, COMPONENTS AND EQUIPMENTS, PROVIDE}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{MIZUHO BANK}

ASSOCIATED COMPANY(IES)

^{ASIA PLANT MAINTENANCE SERVICE PTE Singapore}

^{HITACHI SEMICONDUCTOR SINGAPORE}

^{1 TAMPINES INDUSTRIAL AVENUE 5}

^{SINGAPORE Singapore}

SHAREHOLDERS(S)

^{HITACHI, LTD. 24,000,000 Company}

^{Street : 6-6 MARUNOUCHI 1-CHOME}

^CHIYODA-KU

^{Town: TOKYO}

^{Postcode: 100-8280}

^{Country: Japan}

HOLDING COMPANY

^{HITACHI, LTD. UF33164W % : 100}

SUBSIDIARY(IES)

^{HITACHI HOME ELECTRONICS ASIA (S) PTE LTD}

^{HITACHI INDIA PRIVATE LIMITED}

^{HITACHI ASIA (MALAYSIA) SDN BHD}

^{HITACHI ASIA (THAILAND) CO. LTD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation: GOOD}

LITIGATION(S)

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

^{Case Number: MCS18680/1996}

Defendant HITACHI ASIA LTD.

ROC # : 198900416G

FINANCIAL ELEMENTS

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

^{Date Account Lodged: 01/08/2006}

^{Balance Sheet Date: 31/03/2007 31/03/2006}

^{Number of weeks: 52 52}

^{Consolidation Code: CONSOLIDATED CONSOLIDATED}

^{--- ASSETS ---}

^{Preliminary Exp 220,000 1,066,000}

^{Tangible Fixed Assets: 4,336,000 1,084,000}

^{Investments 6,035,000 4,908,000}

^{Total Fixed Assets: 10,591,000 7,058,000}

^{Inventories: 32,259,000 29,142,000}

^{Receivables: 150,719,000 171,002,000}

^{Cash,Banks, Securitis: 128,366,000 116,422,000}

^{Other current assets: 214,218,000 253,033,000}

^{Total Current Assets: 525,562,000 569,599,000}

^{TOTAL ASSETS: 536,153,000 576,657,000}

^{--- LIABILITIES ---}

^{Equity capital: 24,000,000 24,000,000}

^{Reserves: 86,000 5,369,000}

^{Profit & lost Account: 122,223,000 110,016,000}

^{Other: 497,000 -4,072,000}

^{Total Equity: 146,806,000 135,313,000}

^{Other long term Liab.: 30,000}

^{Total L/T Liabilities: 30,000}

^{Trade Creditors: 141,843,000 157,879,000}

^{Short term liabilities: 23,000 22,000}

^{Due to Bank: 141,685,000 32,442,000}

^{Provisions: 7,633,000 7,623,000}

^{Other Short term Liab.: 98,133,000 243,378,000}

^{Total short term Liab.: 389,317,000 441,344,000}

^{TOTAL LIABILITIES: 389,347,000 441,344,000}

^{--- PROFIT & LOSS ACCOUNT ---}

^{Net Sales 1,091,653,000 1,076,577,000}

^{Result of ordinary operations 16,852,000 3,914,000}

^{NET RESULT BEFORE TAX: 13,073,000 -4,849,000}

^{Tax : 2,187,000 3,176,000}

^{Net income/loss year: 10,886,000 -8,025,000}

^{Interest Paid: 3,779,000 3,112,000}

^{Depreciation: 2,434,000 1,254,000}

^{Dividends: 66,000,000}

^{Directors Emoluments: 672,000 512,000}

^{Wages and Salaries: 28,510,000 24,752,000}

RATIOS

^{31/03/2007 31/03/2006}

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

^{Stock / Turnover(%): 0.03 0.03}

^{Net Margin(%): 1.00 -0.75}

^{Return on Equity(%): 7.42 -5.93}

^{Return on Assets(%): 2.03 -1.39}

^{Dividends Coverage: -0.12}

^{Net Working capital: 136245000.00 128255000.00}

^{Cash Ratio: 0.33 0.26}

^{Quick Ratio: 0.72 0.65}

^{Current ratio: 1.35 1.29}

^{Receivables Turnover: 49.70 57.18}

^{Leverage Ratio: 2.65 3.26}

^{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 GROUP WAS SEEN TO BE STABLE IN VIEW OF}

^{THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED SOUND WITH NET WORTH IMPROVED BY 8.49% FROM S$135,313,000 IN 2006 TO S$146,806,000 IN 2007.}

^{THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF S$122,223,000 (2006: S$110,016,000); A RISE OF 11.10% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{TRADE CREDITORS FELL BY 10.16% TO S$141,843,000 (2006: S $157,879,000), AND CONSIST OF THE FOLLOWING:}

^{-HOLDING COMPANY - 2007: S$49,686,000 (2006: S$52,488,000)}

^{-RELATED COMPANIES - 2007: S$67,570,000 (2006: S$66,603,000)}

^{-OUTSIDE PARTIES - 2007: S$24,587,000 (2006: S$38,788,000)}

^{AMOUNTS DUE TO BANKS, WHICH CONSIST OF TERM LOANS, ROSE SHARPLY BY 3.37 TIMES TO S$141,685,000 (2006: S$32,442,000).}

^{SUBJECT INCURRED LONG TERM LIABILITY, WHICH CONSISTS OF OBLIGATION UNDER FINANCE LEASE, AMOUNTED TO S$30,000 (2006: - ). IN ALL, LEVERAGE RATIO FELL FROM 3.26 TIMES TO 2.65 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 BY 6.23% TO S$136,245,000 (2006: S$128,255,000).}

^{CURRENT RATIO ROSE TO 1.35 TIMES, UP FROM 1.29 TIMES AND QUICK RATIO IMPROVED TO 0.72 TIMES FROM 0.65 TIMES IN 2006.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 1.40% FROM S$1,076,577,000 IN 2006 TO S$1,091,653,000 AND SUBJECT ACHIEVED A NET PROFIT OF S$10,886,000 IN 2007 AS COMPARED TO THE NET LOSS OF S$8,025,000 IN 2006.}

^{HENCE, NET MARGIN ROSE INTO POSITIVE REGION OF 1.00% (2006: -0.75%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING. IN ADDITION, ITS INTEREST COVERAGE WAS HEALTHY AS SHOWN BY ITS INTEREST COVERAGE RATIO OF 4.46 TIMES (2006: -0.56 TIMES).}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEM IS CLASSIFIED UNDER PRELIMINARY:}

^{-DEFERRED TAX ASSET - 2007: S$220,000 (2006: S$398,000)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{TERM LOAN PAYABLES}

^{SHORT TERM BANK LOANS ARE UNSECURED AND BEAR INTEREST RANGING FROM}

^{4.5% TO 5.00% (2006: 2.15% TO 4.50%) PER ANNUM.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 01/02/1989 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS NAMESTYLE AS "HITACHI ASIA PTE. LTD.".}

^{SUBSEQUENTLY ON 12/03/1998, THE COMPANY CHANGED TO ITS PRESENT NAMESTYLE AS "HITACHI ASIA LTD." AND IS TRADING AS A PUBLIC COMPANY LIMITED BY SHARES.}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 24,000,000 SHARES OF A VALUE OF S$24,000,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{(1) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT,}

^{SALE OF INDUSTRIAL PARTS, COMPONENTS AND EQUIPMENTS, PROVIDE}

^{BUSINESS SOLUTION}

^{(2) BUILDING CONSTRUCTION}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF THE SALE OF ELECTRON TUBES, ELEVATORS, ESCALATORS, AIR-CONDITIONING AND REFRIGERATION EQUIPMENT, COMPUTERS, TELECOMMUNICATION EQUIPMENT AND OFFICE SYSTEMS, POWER PLANT EQUIPMENT, PLANT AND INDUSTRIAL MACHINERY, RENDERING OF TECHNICAL SERVICES ON THE EQUIPMENT SUPPLIED.}

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

^{BACKGROUND OF THE SUBJECT:}

^{HITACHI ASIA IS ONE OF FOUR REGIONAL HEADQUARTERS FOR HITACHI'S WORLDWIDE OPERATIONS, THE OTHER THREE BEING NORTH AMERICA, EUROPE AND CHINA. EMPLOYING APPROXIMATELY 300 PEOPLE IN 10 OFFICES ACROSS 7 ASIAN COUNTRIES, HITACHI ASIA HAS FULL RESPONSIBILITY FOR HITACHI'S SALES AND MARKETING OPERATIONS IN ASIA, EXCLUDING EAST ASIA.}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* SERVES AS A REGIONAL HEADQUARTER FOR ASIA}

^{* MARKETS POWER AND INDUSTRIAL SYSTEMS, INFORMATION}

^{SYSTEMS AND ELECTRONIC COMPONENTS}

^{* PROVIDES PROCUREMENT SERVICES FOR HITACHI FACTORIES WORLD-WIDE}

^{PRODUCTS AND SERVICES:}

^{* AIR CONDITIONING AND REFRIGERATION EQUIPMENT}

^{* INDUSTRIAL COMPONENTS AND EQUIPMENT}

^{* POWER GENERATION SYSTEMS}

^{* SECURITY SYSTEMS}

^{* SYSTEMS MANAGEMENT AND INTEGRATION}

^{* ELEVATORS AND ESCALATORS}

^{* INDUSTRIAL PLANTS}

^{* TRANSMISSION AND DISTRIBUTION EQUIPMENT}

^{SUBJECT HAS FOREIGN BRANCHES IN:}

^{* TAIWAN}

^{* PHILIPPINES}

^{* BRUNEI}

^{* MYANMAR}

^{BUSINESS DIVISIONS:}

^{* POWER & INDUSTRIAL SYSTEMS GROUP}

^{- OFFERS COMPLETE SOLUTIONS FOR NUCLEAR, THERMAL AND COMBINED CYCLE}

^{POWER PLANT SYSTEMS, INCLUDING THE SUPPLY OF EQUIPMENT SUCH AS}

^{BOILERS, GENERATORS, HRSG, TURBINES AND SWITCHGEARS, TO THE}

^REGION

^{* INFORMATION SYSTEMS GROUP}

^{- CONSTANTLY DEVELOPS STATE-OF-THE-ART PRODUCTS WITH CUTTING-EDGE}

^TECHNOLOGIES

^{- OFFERS A WIDE ARRAY OF SERVICES INCLUDING PROJECT CONSULTATION,}

^{SOFTWARE DEVELOPMENT, PROJECT MANAGEMENT AND IMPLEMENTATION}

^{* DISPLAYS DIVISION}

^{- THE DISPLAYS DIVISION IS RESPONSIBLE FOR THE SALES OF LIQUID}

^{CRYSTAL DISPLAY MODULES (LCM) FOR FLAT SCREEN MONITORS,}

^{NOTEBOOKS, HANDHELD COMPUTERS AND MOBILE PHONES}

^{* DIGITAL MEDIA SYSTEMS GROUP}

^{- MARKETS NEW PRODUCT DESIGNS AND RESEARCH ON CURRENT DEMAND TRENDS}

^{FOR DIGITAL MEDIA PRODUCTS}

^{- CONSISTS OF THE PRODUCTS PLANNING DIVISION, BUSINESS CONTROL}

^{DIVISION AND THE RESEACH AND DEVELOPMENT DIVISION}

^{* INTERNATIONAL PROCUREMENT GROUP}

^{- SOURCES AND SUPPLIES HIGH-QUALITY, COST-COMPETITIVE MATERIALS}

^{FROM ASIA TO HITACHI'S MANUFACTURING PLANTS WORLDWIDE.}

^BRAND:

^{* HITACHI}

^MARKETS:

^{* SINGAPORE}

^{* MALAYSIA}

^{* THAILAND}

^{* INDONESIA}

^{* PHILIPPINES}

^{* VIETNAM}

^{* INDIA}

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

^{* JAPANESE CHAMBER OF COMMERCE & INDUSTRY}

^{* SINGAPORE CHINESE CHAMBERS OF COMMERCE & INDUSTRY}

^{* SINGAPORE INFORMATION TECHNOLOGY FEDERATION}

^{* SINGAPORE MANUFACTURERS' FEDERATION}

^{NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT}

^{GRANTED BY SUBJECT'S PERSONNEL}

^{THE COMPANY'S IMMEDIATE AND ULTIMATE HOLDING COMPANY IS HITACHI LTD,}

^{INCORPORATED IN JAPAN.}

^{REGISTERED AND BUSINESS ADDRESS:}

^{16 COLLYER QUAY}

^#20-00

^{HITACHI TOWER}

^{SINGAPORE 049318}

^{DATE OF CHANGE OF ADDRESS: 29/03/1993}

^{- MAILING ADDRESS}

^{- RENTED PREMISE}

^{- PREMISE OWNED BY: SAVU INVESTMENTS LTD}

^{THE SUBJECT OCCUPIES 3 FLOORS IN THE BUILDING:}

^{18TH FLOOR - INFORMATION TECHNOLOGY DEPARTMENT}

^{19TH FLOOR - SALES DEPARTMENT}

^{20TH FLOOR - MAILING ADDRESS}

^{WEBSITE: http://www.hitachi.com.sg}

^{EMAIL : asp@has.hitachi.com.sg}

MANAGEMENT

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

^{1) SHUNSUKE OTSU, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{2) KENSUKE OKA, A JAPANESE}

^{- BASED IN SINGAPORE.}

^{3) TOSHIO TODA, A JAPANESE}

^{- BASED IN SINGAPORE.}

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 8.9% IN 3Q 2007, FOLLOWING 8.7% GROWTH IN 2Q 2007. GROW MOMENTUM (ON AN ANNUALISED QUARTER-ON-QUARTER BASIS) WAS 4.3%, COMPARED WITH 14.5% IN THE SECOND QUARTER.

THE FINANCIAL SERVICES SECTOR ROSE SIGNIFICANTLY BY 20% IN 3Q 2007, FOLLOWING A 17% GROWTH IN THE PREVIOUS QUARTER. HOWEVER, ON A SEASONALLY-ADJUSTED QUARTER-ON-QUARTER BASIS, THE SECTOR FELL BY 8.6%, IN CONTRAST TO THE 39% GROWTH IN THE SECOND QUARTER. THE DECLINE STEMS FROM THE IMPACT FROM THE TURMOIL IN GLOBAL FINANCIAL MARKETS.

THE CONSTRUCTION SECTOR REGISTERED A STRONG GROWTH. THE SECTOR GREW BY 18%, FOLLOWING 19% GAIN IN 2Q 2007. GROWTH MOMENTUM MODERATED FROM 15% IN 2Q 2007 TO 6% IN 3Q 2007.

MANUFACTURING SECTOR ROSE BY 10% IN 3Q 2007, UP FROM 8.3% IN 2Q 2007. THE HIGHEST GROWTH WAS REGISTERED IN THE BIOMEDICAL MANUFACTURING CLUSTER, FOLLOWED BY TRANSPORT ENGINEERING, ELECTRONICS AND CHEMICALS

CLUSTERS. PRECISION ENGINEERING SECTOR CONTINUED TO SEE LOWER PRODUCTION.

THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.6% IN 3Q 2007, SLOWER THAN THE 8.4% GROWTH IN 2Q 2007. ALTHOUGH NON-OIL RE-EXPORTS STRENGTHENED IN THE QUARTER, RETAIL SALES SAW WEAKER GROWTH.

THE TRANSPORT AND STORAGE SECTOR MOEDERATED TO 4.8% IN 3Q 2007, FROM 5.3% IN 2Q 2007. HIGHER GROWTH IN THE AIR TRANSPORT SEGMENT WAS OFFSET BY SLOWER GROWTH IN THE WATER TRANSPORT SEGEMENT AFTER LAST QUARTER’S STRONG GROWTH.

THE HOTELS AND RESTAURANTS SECTOR GREW BY 4.5% FROM 5.3% IN 2Q 2007.

THE AVERAGE OCCUPANCY RATE OF HOTELS CLIMBED TO 89%, A 2.1% RISE OVER 3Q 2006. THE AVERAGE ROOM RATE ALSO GREW BY 22% TO S$204. CONSEQUENTLY, TOTAL HOTEL ROOM REVENUE OF GAZETTED HOTELS ROSE BY 20% IN 3Q 2007 TO AN ESTIMATED S$478 MILLION.

THE INFORMATION AND COMMUNICATIONS SECTOR ROSE 6.9% IN 3Q 2007, HIGHER THAN THE 6.5% IN 2Q 2007. THE TELECOMMUNICATIONS SEGMENT CONTINUED TO ACCOUNT FOR MUCH OF THE GROWTH IN THE SECTOR. IT SERVICES MAINTAINED ITS MODERATE GROWTH LEVEL FROM 2Q 2007.

IN THE TELECOMMUNICATIONS SEGMENT, THE GROWTH OF MOBILE SUBSCRIBERS CONTINUED TO RISE, RISING BY 20%, UP FROM 18% IN 2Q 2007. INTERNATIONAL TELEPHONE CALL DURATION GREW TO 27%, UP FROM 24% IN 2Q 2007.

THE BUSINESS SERVICES SECTOR EXPANDED BY 7.1%, SIMILAR TO THE 7.2% GAIN IN 2Q 2007. GROWTH WAS HEALTHY ACROSS ALL SEGMENTS, WITH GOOD PERFORMANCES IN THE BUSINESS REPRESENTATIVE OFFICES, REAL ESTATE AND PROFESSIONAL SERVICES SEGMENTS.

NEWS

SINGAPORE GROWTH SLOWS TO 6% IN 4Q 2007

THE SINGAPORE ECONOMY GREW AT A SLOWER-THAN-EXPECTED 6% GROWTH IN 4Q 2007, WEIGHED DOWN BY DECLINING MANUFACTURING OUTPUT.

ECONOMISTS HAD ANTICIPATED GROWTH OF 7.0-8.5% FOR 4Q 2007.

THE ESTIMATE FOR REAL GROSS DOMESTIC PRODUCT (GDP) GROWTH, COMPARED WITH 4Q 2006, MEANT THE GROWTH HAD MODERATED FROM THE REVISED GROWTH FIGURE OF 9% SEEN IN 3Q 2006, THE MINISTRY OF TRADE AND INDUSTRY SAID.

ON A QUARTER-ON-QUARTER SEASONALLY ADJUSTED ANNUALISED BASIS, REAL GDP FELL BY 3.2% IN 4Q 2007 COMPARED WITH A 4.4% GAIN IN 3Q 2007, CAUSED BY A SLOWDOWN IN MANFACTURING OUTPUT.

THE FIGURE MARKS THE FIRST QUARTER-ON-QUARTER DECLINE SINCE 1Q 2005, ACCORDING TO DATA.

GROWTH IN THE MANUFACTURING SECTOR IS FORECASTED TO HAVE SLOWED FROM 10.3% IN 3Q 2007 TO 0.5% IN 4Q 2007. IT WAS LARGELY ATTRIBUTED TO A DECLINE IN THE BIOMEDICAL MANUFACTURING CLUSTER AS SOME ACTIVE PHARMACEUTICAL INGREDIENTS WERE NOT PRODUCED.

TRANSPORT ENGINEERING, WHICH INCLUDES OIL RIG MANUFACTURING AND SHIP REPAIR, CONTINUED TO SHOW DOUBLE-DIGIT GROWTH, WHILE THE CONSTRUCTION SECTOR IS PREDICTED TO HAVE GROW STRONGLY BY 24.4% IN 4Q 2007, UP FROM 19.2% IN 3Q 2007.

GROWTH IN THE SERVICE SECTOR WAS STEADY AT 8.3%.

SINGAPORE’S ECONOMY GREW BY 7.5% IN 2007, MARKING THE FOURTH STRAIGHT YEARS OF STRONG GROWTH, PRIME MINISTER LEE HSIEN LOONG SAID IN HIS NEW YEAR MESSAGE.

THE FIGURE FOR 2007 ECONOMIC EXPANSION WAS AT THE LOWER END OF THE GOVERNMENT’S UPGRADED FULL-YEAR GROWTH TARGET OF 7.5-8.0%, AND WAS BELOW THE 7.9% GROWTH REGISTERED FOR 2006.

MR LEE FORECAST GROWTH OF 4.5-6.5% FOR SINGAPORE IN 2008.

OUTLOOK

FOR 2008, EXTERNAL ECONOMIC CONDITIONS ARE EXPECTED TO WEAKEN SLIGHTLY COMPARED TO 2007. THE LINGERING EFFECTS OF THE SUB-PRIME PROBLEMS AND AN OVERALL WEAKENING OF THE HOUSING MARKET WILL DAMPEN US CONSUMPTION. EU GROWTH IS ALSO EXPECTED TO BE LOWER AS A STRONG CURRENCY ERODES EXPORT COMPETITIVENESS. HOWEVER, THE FORECAST FOR ASIAN ECONOMIES REMAIN POSITIVE, WITH CHINA EXPECTED TO SUBSTAIN DOUBLE-DIGIT GROWTH.

WITH THESE FACTORS IN MIND, THE MINISTRY OF TRADE AND INDUSTRY PREDICTS THS SINGAPORE ECONOMY TO GROW BY 4.5-6.5% IN 2008. THIS REPRESENTS A MODERATION IN GROWTH TOWARDS THE ECONOMY’S POTENTIAL RATE OF GROWTH, AFTER FOUR YEARS OF ABOVE-TREND GROWTH.

THERE ARE SOME DOWNSIDE RISKS. IF THE SUB-PRIME PROBLEMS WORSEN THAN EXPECTED, OR OIL PRICES RISE FURTHER IN 2008, THIS COULD BRING A GREATER-THAN-EXPECTED SLOWDOWN IN US, WHICH WOULD AFFECT THE SINGAPORE ECONOMY.

IN THE FINANCIAL SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS, ESPECIALLY INSURANCE COMPANIES, REMAINS POSITIVE ABOUT THE BUSINESS OUTLOOK IN THE MONTHS AHEAD.

FIRMS IN THE REAL ESTATE INDUSTRY EXPECT BUSINESS TO BE BRISK FOR THE

COMING MONTHS, IN PARTICULAR THE REAL ESTATE DEVELOPERS.

MANUFACTURING FIRMS REMAIN OPTIMISTIC FOR THE PERIOD ENDING MARCH 2008. A NET WEIGHTED BALANCE OF 25% OF MANUFACTURERS FORECAST BETTER BUSINESS, SLIGHTLY HIGHER THAN THE 22% REGISTERED BOTH IN THE PREVIOUS QUARTER AND THE SAME PERIOD IN THE PREVIOUS YEAR.

WHOLESALERS GENERALLY REMAIN POSITIVE ABOUT THEIR BUSINESS CONDITIONS, WITH A NET WEIGHTED BALANCE OF 24% OF FIRMS BEING OPTIMISTIC FOR THE COMING MONTHS. SEGMENTS THAT ARE EXPECTED TO PERFORM BETTER INCLUDE WHOLESALING OF FOOD AND BEVERAGES, WEARING APPAREL AND FOOTWEAR, COSMETICS AND TOILETRIES, AND HOUSEHOLD ELECTRICAL APPLIANCES.

RETAILERS ANTICIPATES BETTER BUSINESS IN THE COMING MONTHS DUE TO YEAR-END FESTIVE SHOPPING, WITH A NET WEIGHTED BALANCE OF 31% BEING POSITIVE. THE SEGMENTS THAT ARE FORECASTING BRISK BUSINESS IN THE COMING MONTHS INCLUDE DEPARTMENT STORE AND SUPERMARKET OWNERS, WEARING APPAREL AND FOOTWEAR, FURNITURE AND FURNISHINGS, AND JEWELLERY AND WATCHES.

IN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 18% OF FIRMS FORECASTS FAVOURABLE BUSINESS CONDITIONS FOR THE COMING MONTHS.

HOTELIERS FORESEES A FAVOURABLE BUSINESS OUTLOOK, WITH A NET WEIGHTED BALANCE OF 79% OF FIRMS EXPECTING THEIR BUSINESSES TO RISE IN ANTICIPATION OF HIGHER BANQUET SALES AND INCREASE IN ROOM REVENUE IN VIEW OF THE POSITIVE DEVELOPMENT IN THE TOURISM INDUSTRY. FIRMS IN THE CATERING TRADE INDUSTRY ALSO FORESEES BETTER BUSINESS CONDITIONS.

FIRMS IN THE INFORMATION AND COMMUNICATIONS INDUSTRY PREDICTS A HIGHER DEMAND FOR THEIR SERVICES, WITH A NET WEIGHTED BALANCE OF 5%.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 33% OF FIRMS EXPECTS POSITIVE SENTIMENTS. THESE INCLUDE ACCOUNTING, BOOK-KEEPING AND AUDITING, ENGINEERING AND SPECIALISED DESIGN SERVICES AS WELL AS TRAVEL AGENCIES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

CHANNEL NEWS 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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