AIO Finance Analysis

ASIAN MARKETS

Asian markets, with the exception of Taiwan, will likely have a rough start following Wall Street’s sharp fall last Friday as a result of warning by American Express of rising credit card defaults, confirming fears of the spread of the credit market contagion. Dow was down nearly 250 points or 1.9%. (KMT, the opposition party in Taiwan, scored a landslide victory at the legislative elections on Saturday, representing a repudiation of incumbent President Chen’s call for a referendum on Taiwan’s UN application. Taiwan’s presidential election will be held on Mar 22nd.

ELLIPSIZ

Ellipsiz warned that profit for H1 ended Dec ’07 will be “significantly lower” than a year ago, when the profit was a robust $10.89 mln. (Profit in H2 ended Jun ’07 had already slipped to $4.14 mln.) Ellipsiz has also appointed Melvin Chan as the new CEO, as Xavier Chong gives up the role to remain as Executive Chairman. Ellipsiz’s share price has dropped 70% since the prospective buyer terminated talks with the company in June; at 30.5 cents, Ellipsiz is at its lowest since 2003.

STATS

Even though the Temasek name would help STATS borrow cheaply, investors were certainly not impressed with its plan to distribute US$813 mln to shareholders, which works out to 37 US cents / Singapore cents per share by taking on more borrowings: the stock rose by “only” 4 cents on Friday before closing 2 cents higher at $1.52.

Assuming the plan goes ahead, STATS’ borrowings will rise to US$1.41 bln from US$683 mln and gross gearing to 2.2x from 0.5x. (As at end Sept ’07, STATS had cash of US$260 mln.) Those hoping to see Temasek take STATS private will just have to wait till the scheme is completed, a process that is likely to take months. (Temasek owns, at the close of its S$1.75 cash offer on May 18 ’07, 1,693,700,099

shares or 83.1% of STATS’ issued capital.)

CHEMOIL ENERGY

Chemoil has appointed Clyde Michael Bandy as Chairman / CEO with immediate effect. Bandy, Lead Independent Director of Chemoil since Aug ’06, has >35 years of experience in the energy industry, mainly with the Texaco / Chevron group. This is positive for Chemoil after the tragic demise of founder Chairman / CEO R Chandran last week, except that investors are likely more interested in the possibility of Chemoil becoming a takeover candidate. As we had commented last week, it may be premature to speculate on this, given the legal

implications arising from Mr Chandran’s demise - bulk of Chemoil Chandran owned are held in a trust.

SIA

Reflecting the first official response to the SIA / Temasek / China Eastern saga, the Xinhua News Agency said on Saturday that China “needs to urgently unify its civil aviation market and create a national network of aviation routes that can act as runway for the country to soar globally”. This is taken to signal the central government’s change of mind, now wanting to consolidate the key domestic players (Air China, China Eastern and China Southern) to create a super-carrier”. An official was also quoted as saying the lack of competition resulting from such a consolidation would not be an issue. This is obviously negative news for SIA as far as its China aspirations go.

Source: Lim & Tan Securities