MIRA INFORM REPORT

Report Date :

23.05.2008

IDENTIFICATION DETAILS

Name :	MANITOWOC CRACE GROUP ASIA PTE LTD
Formerly Known As :	^MANITOWOC EQUIPMENT WORKS, PTE. LTD
Registered Office :	4 Kwong Min Road, 628707
Country :	Singapore
Financials (as on) :	31.12.2006
Date of Incorporation :	^14.02.1994
Com. Reg. No.:	^199401055M
Legal Form :	^Pte Ltd
Line of Business :	^Investment Holding Company, Trading in Industrial Cranes and Parts, and Servicing of Industrial Cranes.

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 :	Very Good
Payment Behaviour :	Regular
Litigation :	Exists

Subject Company

MANITOWOC CRACE GROUP ASIA PTE LTD

Line Of Business 

^{INVESTMENT HOLDING COMPANY, TRADING IN INDUSTRIAL CRANES AND PARTS, AND SERVICING OF INDUSTRIAL CRANES.}

Parent Company

^{MANITOWOC HOLDINGS ASIA SAS}

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2006

COMPANY

Sales : US$125,066,549

Networth : US$ 68,831,603

Paid-Up Capital : US$ 47,995,477

Net result : US$ 8,726,561

Net Margin(%) : 6.98

Return on Equity(%) : 12.68

Leverage Ratio : 0.51

COMPANY IDENTIFICATION

^{Subject Company : MANITOWOC CRANE GROUP ASIA PTE. LTD.}

^{Former Name : MANITOWOC EQUIPMENT WORKS, PTE. LTD}

^{Business Address : 4 KWONG MIN ROAD}

^{Town : SINGAPORE}

^{Postcode : 628707}

^{County :}

^{Country : Singapore}

^{Telephone : 6264 1188}

^{Fax : 6862 4040}

^{ROC Number : 199401055M}

^{Reg. Town :}

PREVIOUS IDENTIFICATION

^{MANITOWOC EQUIPMENT WORKS, PTE. LTDDATE OF CHANGE OF NAME: 03/01/2003 MANIT}

SUMMARY

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

^{Legal Form : Pte Ltd}

^{Date Inc. : 14/02/1994}

^{Previous Legal Form : -}

^{Summary year : 31/12/2006}

^{Sales : 125,066,549}

^{Networth : 68,831,603}

^{Capital : -}

^{Paid-Up Capital : 47,995,477}

^{Employees : 55}

^{Net result : 8,726,561}

^{Share value : -}

^{Auditor : PRICEWATERHOUSECOOPERS}

^{BASED ON ACRA'S RECORD}

^{NO OF SHARE CURRENCY AMOUNT}

^{ISSUED ORDINARY 7,373,302 SGD 73,733,020.00}

^{ISSUED PREFERENCE 43,806 SGD 4,380,600.00}

^{PAID-UP ORDINARY - SGD 73,733,020.00}

^{PAID-UP PREFERENCE - SGD 4,380,600.00}

^{BASED ON ACRA'S RECORD}

^{NO OF SHARE CURRENCY AMOUNT}

^{ISSUED ORDINARY 17,031,775 SGD 170,317,750.00}

^{ISSUED PREFERENCE 43,806 SGD 4,380,600.00}

^{PAID-UP ORDINARY - SGD 170,317,750.00}

^{PAID-UP PREFERENCE - SGD 4,380,600.00}

REFERENCES

^{Litigation : YES}

^{Company status : TRADING}

^{Started : 14/02/1994}

PRINCIPAL(S)

^{JOHN WAYNE STEWART F2202200T Director}

DIRECTOR(S)

^{GLEN E. TELLOCK 025051670 Director}

^{Appointed on : 20/12/1999}

^{Street : 8529 ARROW ROAD MANITOWOC}

^{WINSCONSIN USA}

^Town:

^Postcode:

^{Country: United States}

^{TAN SAN-JU S1495769C Company Secretary}

^{Appointed on : 01/01/2003}

^{Street : 37 MCNAIR ROAD}

^TOWNERVILLE

^{Town: SINGAPORE}

^{Postcode: 328532}

^{Country: Singapore}

^{JOHN WAYNE STEWART F2202200T Director}

^{Appointed on : 01/12/2003}

^{Street : 4 CACTUS DRIVE}

^#01-04

^{GRANDE VISTA}

^{Town: SINGAPORE}

^{Postcode: 809684}

^{Country: Singapore}

^{ERIC ETCHART 99AE01767 Director}

^{Appointed on : 06/08/2001}

^{Street : 6945 TALL OAKS ROAD, WI 54220}

^{Town: MANITOWOC}

^Postcode:

^{Country: United States}

^{ERIC ETCHART 99AE01767 Managing Director}

^{Appointed on : 06/08/2001}

^{Street : 6945 TALL OAKS ROAD, WI 54220}

^{Town: MANITOWOC}

^Postcode:

^{Country: United States}

FORMER DIRECTOR(S)

^{TANG CHEE LIN S0112148J}

^{SILVA ROBERT K S02233568}

^{E DEAN FLYNN 022912678}

^{FRED M BUTLER 051815143}

^{ROBERT R FRIEDL 150379115}

^{DANIEL EDWARD DAVIS F2305006N}

^{YEO GUEK CHENG ROSALIE S0244437B}

^{PHILIP LAWRENCE FITZGERALD Z6516585}

^{TERRY DEAN GROWCOCK 150710700}

ACTIVITY(IES)

^{HOLDING COMPANIES Code:11320}

^{CRANES Code:5920}

^{BASED ON ACRA'S RECORD}

^{1) OTHER INVESTMENT HOLDING COMPANIES;}

^{HOLDING COMPANIES}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{MANITOWOC HOLDINGS ASIA SAS 17,075,581 Company}

^{Street : 18 RUE DE CHARBONNIERES}

^{Town: ECULLY}

^{Postcode: 69130}

^{Country: France}

FORMER SHAREHOLDER(S)

^{THE MANITOWOC COMPANY INC 464,100}

^{MANITOWOC EUROPE LTD 43,806}

^{MANITOWOC CRANE COMPANIES INC 43,806}

^{POTAIN S.A.S. 507,906}

HOLDING COMPANY

^{MANITOWOC HOLDINGS ASIA SAS UF47895M % : 100}

SUBSIDIARY(IES)

^{MANITOWOC (HANGZHOU) REFRIGERATION CO LTD}

^{SHANGHAI MANITOWOC INTERNATIONAL TRADING CO LTD}

^{MANITOWOC (CHINA) REFRIGERATION COMPANY., LTD}

^{MANITOWOC CRANE GROUP (CHINA) CO}

^{MANITOWOC CRANE GROUP INC}

^{ZHANGJIAGANG POTAIN CONSTRUCTION MACHINERY CO., LTD}

^{MANITOWOC CREDIT (CHINA) LEASING CO., LTD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity : SUFFICIANT}

^{Payments : REGULAR}

^{Trend : UPWARD}

^{Financial Situation: GOOD}

LITIGATION(S)

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

^{Case Number: MCS12499/2004}

Defendant MANITOWOC CRANE GROUP ASIA PTE. ROC # : 199401055M

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

^{Case Number: MCS15704/1998}

Defendant MANITOWOC CRANE GROUP ASIA PTE. ROC # : 199401055M

FINANCIAL ELEMENTS

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

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN) Date Account Lodged: 29/01/2008}

^{Balance Sheet Date: 31/12/2006 31/12/2005 Number of weeks: 52 52 Consolidation Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Preliminary Exp 1,500,000 1,500,000}

^{Tangible Fixed Assets: 393,879 187,136}

^{Investments 57,947,561 32,222,919}

^{Total Fixed Assets: 59,841,440 33,910,055}

^{Inventories: 8,627,317 10,815,167}

^{Receivables: 22,195,912 7,399,531}

^{Cash,Banks, Securitis: 12,472,879 16,149,277}

^{Other current assets: 724,397 1,672,782}

^{Total Current Assets: 44,020,505 36,036,757}

^{TOTAL ASSETS: 103,861,945 69,946,812}

^{--- LIABILITIES ---}

^{Equity capital: 47,995,477 23,593,046}

^{Profit & lost Account: 20,836,126 12,109,565}

^{Total Equity: 68,831,603 35,702,611}

^{Other long term Liab.: 4,283,180}

^{Total L/T Liabilities: 4,283,180}

^{Trade Creditors: 21,013,125 23,040,205}

^{Prepay. & Def. charges: 7,943,376 4,453,491}

^{Provisions: 4,025,008 1,187,991}

^{Other Short term Liab.: 2,048,833 1,279,334}

^{Total short term Liab.: 35,030,342 29,961,021}

^{TOTAL LIABILITIES: 35,030,342 34,244,201}

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

^{Net Sales 125,066,549 86,670,961}

^{Purchases,Sces & Other Goods: 108,638,915 77,058,378 Gross Profit: 16,427,634 9,612,583 NET RESULT BEFORE TAX: 10,968,036 5,990,859 Tax : 2,241,475 897,489 Net income/loss year: 8,726,561 5,093,370 Interest Paid: 141,041 426,367 Depreciation: 112,781 68,137 Directors Emoluments: 951,368 827,130 Wages and Salaries: 3,635,295 2,737,600 Financial Income: 528,513 222,005}

RATIOS

^{31/12/2006 31/12/2005 Turnover per employee: 2273937.25 1575835.65 Net result / Turnover(%): 0.07 0.06 Stock / Turnover(%): 0.07 0.12 Net Margin(%): 6.98 5.88 Return on Equity(%): 12.68 14.27 Return on Assets(%): 8.40 7.28 Net Working capital: 8990163.00 6075736.00 Cash Ratio: 0.36 0.54 Quick Ratio: 0.99 0.79 Current ratio: 1.26 1.20 Receivables Turnover: 63.89 30.73 Leverage Ratio: 0.51 0.96}

^{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}

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

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

FINANCIAL COMMENTS

^{NOTE: THE FINANCIALS FOR FY2004 WERE EXPRESSED IN SINGAPORE DOLLARS WHILE THOSE OF FY2006 AND FY2005 ARE IN UNITED STATES DOLLARS.}

^{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 92.79% FROM US$35,702,611 IN FY 2005 TO US$68,831,603 IN FY 2006.}

^{THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF US$20,836,126 (2005: US$12,109,565); A RISE OF 72.06% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 59.99% (2005: 76.90%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO US$21,013,125 (2005: US$23,040,205). THE BREAKDOWN IS AS FOLLOWS:}

^{* THIRD PARTIES (TRADE) - 2006: US$2,878,994 (2005: US$1,288,862)}

^{* IMMEDIATE HOLDING CORPORATION (TRADE) - 2006: US$2,582,852 (2005:}

^US$387,826)

^{* RELATED CORPORATIONS (TRADE) - 2006: US$15,551,279 (2005:}

^{US$21,363,517)}

^{OVERALL, THE LEVERAGE RATIO HAD IMPROVED TO 0.51 TIMES (2005: 0.96 TIMES), INDICATING THAT THE COMPANY'S TOTAL LIABILITIES WERE LESS SUBSTANTIAL IN RELATION TO ITS TOTAL EQUITY.}

^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 1.26 TIMES, UP FROM 1.20 TIMES AND QUICK RATIO IMPROVED TO 0.99 TIMES FROM 0.79 TIMES IN FY 2005.}

^{SIMILARLY, NET WORKING CAPITAL IMPROVED BY 47.97% FROM US$6,075,736 IN FY 2005 TO US$8,990,163.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 44.30% FROM US$86,670,961 IN FY 2005 TO US$125,066,549 AND NET PROFIT ROSE BY 71.33% TO US$8,723,561 (2005: US$5,093,370). HENCE, NET MARGIN ROSE TO 6.98% (2005: 5.88%).}

^REVENUE:

^{* SALES OF CRANES - 2006: US$114,828,617 (2005: US$79,069,380)}

^{* SALE OF PARTS - 2006: US$ 8,675,746 (2005: US$ 6,885,260)}

^{* SERVICES RENDERED - 2006: US$ 1,562,186 (2005: US$ 716,321)}

^{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 CONSIDERING THAT ITS INTEREST EXPENSES WERE LOW AT US$141,041 (2005: US$426,367).}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{* LOAN TO A SUBSIDIARY - 2006: US$1,500,000 (2005: US$1,500,000)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{* SHARE CAPITAL:}

^{BEGINNING OF FINANCIAL YEAR (ORDINARY SHARES) - 2006: 3,436,722}

^{(2005: 464,100)}

^{ISSUED SHARES - 2006: 3,936,580 (2005: 2,972,622)}

^{END OF FINANCIAL YEAR - 2006: 7,373,302 (2005: 3,436,722)}

^{AS AT 31/12/2005, THE AUTHORISED SHARE CAPITAL COMPRISED 3,472,622}

^{ORDINARY SHARES OF S$10 EACH AND 55,000 CUMULATIVE REDEEMABLE PREFERENCE SHARES OF S$100 EACH. UNDER THE COMPANIES (AMENDMENT) ACT 2005 THAT CAME INTO EFFECT ON 30/01/2006, THE CONCEPTS OF PAR VALUE AND AUTHORISED SHARE CAPITAL WERE ABOLISED.}

^{ON 28/04/2006, THE COMPANY ISSUED 1,440,000 ORDINARY SHARES TO ITS HOLDING COMPANY FOR A CONSIDERATION OF S$14,,00,000. ON 16/04/2006, THE COMPANY ISSUED AN ADDITIONAL 2,496,580 ORDINARY SHARES TO ITS HOLDING COMPANY FOR A CONSIDERATION OF S$24,965,800. THE PROCEEDS FROM THE TWO ISSUANCES OF ORDINARY SHARES WERE USED TO FINANCE THE}

^{ACQUISITION OF ZHANGJIAGANG POTAIN CONSTRUCTION MACHINERY CO LTD AND MANITOWOC CREDIT (CHINA) LEASING CO., LTD THE PREFERENCE SHAREHOLDER WILL BE DEEMED TO HAVE 10% OF RIGHTS OF ALL SHARES ISSUED.}

^{* EVENT OCCURRING AFTER BALANCE SHEET DATE}

^{IN APRIL 2007, THE IMMEDIATE HOLDING CORPORATION, MANITOWOC CRANE GROUP FRANCE S.A.S. (FORMERLY KNOWN AS POTAIN S.A.S.) TRANSFERRED ALL OF ITS SHARES IN THE COMPANY TO A RELATED CORPORATION, MANITOWOC HOLDING ASIA SAS, INCORPORATED IN FRANCE. ACCORDINGLY, MANITOWOC HOLDING ASIA SAS BECAME THE IMMEDIATE HOLDING CORPORATION OF THE COMPANY FROM THAT DATE.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 14/02/1994 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS NAMESTYLE AS "MANITOWOC-PACIFIC PTE. LTD.".}

^{SUBSEQUENTLY, ON 14/10/1994, THE COMPANY CHANGED TO ITS NAMESTYLE AS "MANITOWOC-EQUIPMENT WORKS, PTE. LTD.".}

^{SUBSEQUENTLY, ON 03/01/2003, THE COMPANY CHANGED TO ITS PRESENT NAMESTYLE AS "MANITOWOC CRANE GROUP ASIA PTE. LTD.".}

^{THE COMPANY HAS ISSUED AND PAID-UP CAPITAL OF 17,031,775 ORDINARY SHARES OF A VALUE OF S$170,317,750 AND 43,806 PREFERENCE SHARES OF A VALUE OF S$4,380,600.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY}

^{AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) HOLDING COMPANIES}

^{2) TRADING IN AND SERVICING OF INDUSTRIAL CRANES AND PARTS}

^{DURING THE FINANCIAL YEAR UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY CONSIST OF AN INVESTMENT HOLDING COMPANY, TRADING IN INDUSTRIAL CRANES AND PARTS, AND SERVICING OF INDUSTRIAL CRANES.}

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

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* TRADING AND SERVICING OF GROVE MOBILE CRANES, MANITOWOC CRAWLER}

^{CRANES AND POTAIN TOWER CRANES, SPARES/REPLACEMENT PARTS}

^{TRADE NAMES:}

^{* MANITOWOC CRAWLER CRANES (US)}

^{* GROVE MOBILE CRANES (DE)}

^{* GROVE MOBILE CRANES (US)}

^{* POTAIN TOWER CRANES (FR)}

^{FROM THE TELE-INTERVIEW CONDUCTED, SUBJECT CONFIRMED ITS ADDRESS, CONTACTS AND LINE OF BUSINESS. SUBJECT ALSO REVEALED THAT THEY HAVE ABOUT 55 EMPLOYEES. FURTHER ENQURIES WERE REJECTED. NO OTHER TRADE INFORMATION WAS AVAILABLE}

^{THE IMMEDIATE HOLDING CORPORATION IS MANITOWOC CRANE GROUP FRANCE S.A.S. (FORMERLY KNOWN AS POTAIN S.A.S.), INCORPORATED IN FRANCE. THE ULTIMATE HOLDING CORPORATION IS THE MANITOWOC COMPANY, INC., INCORPORATED IN THE UNITED STATES OF AMERICA.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{* COMPANY - 2006: 50; (2005: NOT AVAILABLE; 2004: NOT AVAILABLE;}

^{2003: NOT AVAILABLE; 2002: NOT AVAILABLE; 2001: 50;}

^{2000 : 51 )}

^{REGISTERED ADDRESS:}

^{3 CHURCH STREET}

^#08-01

^{SINGAPORE 049483}

^{- DATE OF CHANGE OF ADDRESS: 18/12/2006}

^{BUSINESS ADDRESS:}

^{4 KWONG MIN ROAD}

^{SINGAPORE 629898}

^{- RENTED PREMISE}

^{- OWNED BY STONE INDUSTRIES (FAB) PTE. LTD.}

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

^{EMAIL : enquiry.apac@manitowoc.com}

MANAGEMENT

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

^{1) GLEN E. TELLOCK, AN AMERICAN}

^{- BASED IN UNITED STATES OF AMERICA.}

^{2) ERIC ETCHART, A FRENCH}

^{- BASED IN UNITED STATES OF AMERICA.}

^{3) JOHN WAYNE STEWART, AN AMERICAN}

^{- 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 5.4% IN 4Q 2007, SLOWER THAN THE 9.5% GROWTH IN 3Q 2007. GROW MOMENTUM WAS LED BY CONSTRUCTION AND FINANCIAL SERVICES. FOR THE WHOLE OF 2007, THE ECONOMY GREW BY 7.7%, DOWN FROM 8.2% IN 2006.

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 SECTOR. ON THE OTHER HAND, ELECTRONICS, CHEMICALS, PRECISION ENGINEERING AND TRANSPORT ENGINEERING SECTOR PERFORMED BETTER. OVERALL, THE MANUFACTURING SECTOR POSTED A 5.8% GROWTH IN 2007, DOWN FROM 12.0% IN 2006.

THE FINANCIAL SERVICES SECTOR ROSE SIGNIFICANTLY BY 16% IN 4Q 2007, FOLLOWING A 20% GROWTH IN THE PREVIOUS QUARTER. MOST SECTORS EXPERIENCE STRONG EXPANSION WITH THE EXCEPTION OF STOCK BROKING AND FUND MANAGEMENT ACTIVITIES WHICH HAVE SLOWED DOWN. OVERALL, THE FINANCIAL SERVICES SECTOR POSTED A 17% GROWTH IN 2007, HIGHER THAN 11.0% IN 2006.

THE CONSTRUCTION SECTOR REGISTERED A STRONG GROWTH. THE SECTOR GREW BY 24%, FOLLOWING 20% GAIN IN 3Q 2007. GROWTH MOMENTUM FOR THE WHOLE YEAR GREW 20%, ITS FASTEST GROWTH SINCE 1996.

THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.0% IN 4Q 2007, SLOWER THAN THE 6.8% GROWTH IN 3Q 2007. NON-OIL RE-EXPORTS SAW GROWTH REDUCED FROM 9.0% IN 3Q 2007 TO 7.0% IN 4Q 2007. RETAIL SALES FELL BY 2.5% IN 4Q 2007, FOLLOWING A 1.5% GROWTH IN 3Q 2007. OVERALL, THE WHOLESALE AND RETAIL TRADE SECTOR POSTED A 7.3% GROWTH IN 2007, DOWN FROM 10.0% IN 2006.

THE TRANSPORT AND STORAGE SECTOR ROSE BY 5.4% IN 4Q 2007, FROM 5.0% IN 3Q 2007. HIGHER GROWTH IN THE SEA TRANSPORT SEGMENT WAS OFFSET BY SLOWER GROWTH IN THE AIR TRANSPORT SEGEMENT. OVERALL, THE TRANSPORT AND STORAGE SECTOR POSTED A 5.1% GROWTH IN 2007, UP FROM 4.7% IN 2006.

THE HOTELS AND RESTAURANTS SECTOR GREW BY A SMALLER 2.5% FROM 4.9% IN 3Q 2007. VISITOR ARRIVALS ROSE 5.5% IN 4Q 2007, SIMILAR TO 5.4% RISE IN 3Q 2007. HOWEVER, THE AVERAGE OCCUPANCY RATE OF HOTELS DIPPED TO 86.0% IN 4Q 2007 FROM 88.0% IN 4Q 2006. VISITOR ARRIVALS ROSE 5.4% TO REACH A RECORD OF 10.3 MILLION IN 2007. OVERALL, THE HOTELS AND RESTAURANTS SECTOR POSTED A 4.4% GROWTH IN 2007, DOWN FROM 4.8% IN 2006.

THE INFORMATION AND COMMUNICATIONS SECTOR ROSE 6.1% IN 4Q 2007, SLIGHTLY SLOWER THAN THE 6.6% IN 3Q 2007. BOTH THE TELECOMMUNICATIONS AND IT SERVICES SEGMENTS REMAINED HEALTHY DURING THE QUARTER. FOR THE TELECOMMUNICATIONS SEGMENT, THE GROWTH OF INTERNATIONAL TELEPHONE CALLS DURATION AND NUMBER OF SUBSCRIBERS FOR BOTH MOBILE PHONE SERVICE AND BROADBAND INTERNET REMAINED STRONG. OVERALL, THE INFORMATION AND COMMUNICATIONS SECTOR POSTED A 6.3% GROWTH IN 2007, UP FROM 4.6% IN 2006.

THE BUSINESS SERVICES SECTOR EXPANDED BY 8.7%, HIGHER THAN THE 7.5% GAIN IN 3Q 2007. GROWTH WAS HEALTHY ACROSS ALL SEGMENTS, WITH GOOD PERFORMANCES IN THE BUSINESS REPRESENTATIVE OFFICES AND REAL ESTATE SEGMENTS. OVERALL, THE BUSINESS SERVICES SECTOR POSTED A 7.8% GROWTH IN 2007, UP FROM 6.9% IN 2006.

NEWS

SINGAPORE ECONOMY GROWS 7.2% ON STRONG SHOWING IN MANUFACTURING

SINGAPORE’S ECONOMY TURNED OUT TO BE SURPRISINGLY RESLIENT IN THE FIRST QUARTER, EASILY BEATING MARKET EXPECTATIONS WITH STRONG GROWTH OF 7.2%.

THE ADVANCE ESTIMATES ISSUED BY THE MINISTRY OF TRADE AND INDUSTRY (MTI) REPORTED YESTERDAY WERE A MARKED IMPROVEMENT OVER THE 5.4% POSTED IN THE FINAL QUARTER OF LAST YEAR. EARLIER REPORTS HAD SUGGESTED MARKET EXPECTATIONS OF 5.9% GROWTH. ON A SEASONALLY ADJUSTED ANNUALISED BASIS, THE ECONOMY GREW AT A BREAKNECK RATE OF 16.9% QUARTER-ON-QUARTER. IT SHRANK 4.8% IN 4Q 2007.

HOWEVER, ECONOMISTS DO NOT BELIEVE THE STRONG PERFORMANCE SIGNIFIES AN UPTREND FOR THE REST OF THE YEAR. THEY POINT TO A POTENTIAL RECESSION IN THE UNITED STATES AND RISING GLOBAL INFLATION.

MANUFACTURING AND SERVICES WERE CONTRIBUTORS TO THE BETTER-THAN-EXPECTED FIRST QUARTER GROWTH.

MANUFACTURING IS ESTIMATED TO HAVE EXPANDED BY 13.2% IN THE FIRST QUARTER, COMPARED TO A SMAL 0.2% RISE IN THE PREVIOUS THREE MONTHS. IT WAS ALSO CONSIDERABLY HIGHER THAN THE 3.9% REGISTERED IN 1Q 2007.

THIS WAS LARGELY DUE TO A SURGE IN BIOMEDICAL MANUFACTURING OUTPUT. THE REST OF THE MANUFACTURING CLUSTERS ALSO ENJOYED BETTER PERFORMANCES

WITH THE EXCEPTION OF TRANSPORT ENGINEERING AND PRECISION ENGINEERING CLUSTER WHO ENJOY MODERATE GROWTH.

SERVICES INDUSTRIES GROW 7.6%, SIMILAR TO THE 7.7% IN 4Q 2007 AS WELL AS IN 1Q 2007. FINANCIAL SERVICES CONTINUED TO BE THE FASTEST-GROWING AMONG THE SERVICES SECTORS.

HOWEVER, THE FIGURE FOR THE SLOWING CONSTRUCTION SECTOR WAS LESS ROSY WITH GROWTH SLIPPING TO 14.6% FROM 24.3% IN 4Q 2007.

UNITED OVERSEAS BANK ECONOMIST HO WOEI CHEN SAID THIS WAS DISAPPOINTING,

AFTER THREE QUARTERS OF GROWTH ABOVE 20.0%. BUT SHE STILL EXPECTED THE SECTOR TO CONTRIBUTE TO GROWTH THIS YEAR, ON THE BACK OF INFRASTRCTURE PROJECTS SUCH AS THE INTEGRATED RESORTS AND THE PROPOSED SPORTS HUB IN KALLANG.

ECONOMISTS WERE SURPRISED BY WHAT THEY SAID AMOUNTED TO A CONTRACTION IN THE INDUSTRY BUT THEY REMAINED CONFIDENT THAT GROWTH WAS STILL HEALTHY AND IN LINE WITH THEIR FORECASTS FOR THE YEAR, WHICH RANGED FROM 10.0%

TO 25.0%.

CIMG-GK ECONOMIST SOGN SENG WUN SAID THAT RISING INFLATION, ESPECIALLY FOR FOOD PRICES, WILL BE A MAJOR CONCERN. “PEOPLE ARE FOCUSING ON ISSUES SUCH AS THE RISING PRICE OF RICE AND THIS IS SOMETHING THAT COULD PERSIST FOR THE REST OF THE YEAR”.

NONE OF THE ECONOMISTS INTERVIEWED REVISE FULL-YEAR GROWTH FORECASTS WHICH RANGE FROM 4.7% TO 5.5%. MTI HAS FORECAST A RANGE OF 4.0% TO 6.0% FOR THE YEAR.

OUTLOOK

AFTER THE LAST REVIEW IN NOVEMBER 2007, THE OUTLOOK FOR EXTERNAL DEMAND IN 2008 HAS WORSENED AND THERE ARE INCREASED DOWNSIDE RISKS.

COMPARED TO THE FORECAST THREE MONTHS AGO, THERE IS BROAD CONSENSUS NOW THAT THE US ECONOMY IS ENTERING A SLOWDOWN. THE LENGTH AND SEVERITY OF THE SLOWDOWN REMAINS TO BE SEEN, AND IT WILL AFFECT COUNTRIES WORLDWIDE AND KEY INDUSTRIES.

TAKING INTO ACCOUNT THE RISE IN DOWNSIDE RISKS, THE MINISTRY OF TRADE AND INDUSTRY LOWERED THE ECONOMIC FORECAST FOR THE SINGAPORE ECONOMY TO GROW BY 4.0-6.0% IN 2008, DOWN FROM THE GROWTH FORECAST OF 4.5-6.5% EARLIER.

CURRENT CONDITIONS INDICATE THAT THE US ECONOMY WILL LIKELY ENTER A MILD RECESSION IN THE FIRST HALF BUT ITS STRONG FUNDAMENTALS, COUPLED WITH FISCAL AND MONETARY STIMULUS, WILL ASSIST TO SUPPORT RECOVERY IN THE SECOND HALF. REGIONAL ECONOMIES WILL HAVE MODERATE BUT HEALTHY GROWTH. SINGAPORE’S GDP GROWTH WILL THEN BE IN THE UPPER HALF OF THE FORECAST RANGE. HOWEVER, IF THE US FALLS INTO A MORE SEVERE RECESSION, THE REGION WILL BE MORE SIGNIFICANTLY AFFECTED. THE IMPACT ON THE SINGAPORE ECONOMY WILL ALSO BE STRONGER, PARTICULARLY IN THE SENTIMENT-SENSITIVE AND EXPORT-ORIENTED SECTORS LIKE FINANCIAL SERVICES, WHOLESALE TRADE AND ELECTRONICS. IN THIS ENVIRONMENT, THE SINGAPORE ECONOMY WILL GROW AT A SLOWER PACE, NEARER THE LOWER END OF THE FORECAST RANGE.

IN THE FINANCIAL SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 19% OF FIRMS, ESPECIALLY INSURANCE COMPANIES AND FIRMS PROVIDING CREDIT CARD SERVICES, REMAINS POSITIVE ABOUT THE BUSINESS OUTLOOK IN THE MONTHS AHEAD.

IN THE REAL ESTATE INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS,

EXPECT BUSINESS TO BE BRISK FOR THE COMING MONTHS.

MANUFACTURING FIRMS ARE 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.

GENERALLY, WHOLESALERS ARE POSITIVE ABOUT THEIR BUSINESS PROSPECTS IN THE COMING MONTHS, WITH A NET WEIGHTED BALANCE OF 4% OF FIRMS EXPRESSING POSITIVE BUSINESS SENTIMENTS. THE MAJORITY OF WHOLESALERS OF PETROLEUM AND PETROLEUM PRODUCTS, CHEMICALS AND CHEMICAL PRODUCTS, INDUSTRIAL MACHINERY AND EQUIPMENT AND COMPUTERS AND ACCESSORIES FORECAST BUSINESS OUTLOOK TO REMAIN THE SAME IN THE FIRST SIX MONTHS OF 2008 COMPARED WITH THE LAST SIX MONTHS IN 2007.

A NET WEIGHTED BALANCE OF 12% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE PERIOD ENDING JUNE 2008. AS A RESULT OF THE REDUCED CERTIFICATE OF ENTITLEMENT (COE) QUOTA, MOTOR VEHICLES RETAILERS ARE ESPECIALLY CONCERNED WITH THE SALES.

IN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 5% OF FIRMS FORECASTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE COMING MONTHS.

IN THE SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 8% OF FIRMS,

EXPECT BUSINESS TO BE BRISK FOR THE COMING MONTHS. THIS IS SMALLER THAN THE 18% REGISTERED IN THE SAME PERIOD LAST YEAR AND THE 23% RECORDED IN THE PREVIOUS QUARTER. HOTELIERS REMAIN BULLISH ON BUSINESS CONDITIONS FOR THE COMING MONTHS, WITH A NET WEIGHTED BALANCE OF 35% OF HOTELIERS EXPECTING THEIR BUSINESSES TO RISE IN ANTICIPATION OF EXPECTED INCREASES IN ROOM RATES AND HIGHER OCCUPANCY RATES. IN THE CATERING TRADE INDUSTRY, A NET WEIGHTED BALANCE OF 27% OF CATERERS ANTICIPATES MORE FAVOURABLE BUSINESS CONDITIONS.

IN THE INFORMATION AND COMMUNICATIONS INDUSTRY, A NET WEIGHTED BALANCE OF 9% OF FIRMS PREDICTS A HIGHER DEMAND FOR THEIR SERVICES, IN PARTICULAR THE NETWORK OPERATORS.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 19% OF FIRMS EXPECTS POSITIVE SENTIMENTS. THESE INCLUDE ACCOUNTING, BOOK-KEEPING AND AUDITING, RENTING OF CONSTRUCTION AND INDUSTRIAL MACHINERY AND RENTING OF TRANSPORT EQUIPMENT.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

THE STRAITS TIMES

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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