9MFY2008 financial results. Sinwa Limited reported a 12.13% growth (year-on-year) in revenue from SGD 89.77 million in 9MFY2007 to SGD 100.66 million in9MFY2008. In addition, net profit grew by 10.82% (year-on-year) from SGD 7.18million in 9MFY2007 to SGD 7.95 million in 9MFY2008. On a quarterly basis,revenue grew approximately by 13.84% (year-on-year) from SGD 30.33 million in3QFY2007 to SGD 34.53 million in 3QFY2008. However, net profit fell by 12.38%(year-on-year) from SGD 2.15 million in 3QFY2007 to SGD 1.91 million in 3QFY2008.The decline in the quarterly net profit was mainly attributed by the increase in theGroup’s financial expenses.

Profit margins. The Group’s gross margin continued to improve by 3.59ppts (year-on-year) from 23.10% in 9MFY2007 to 26.69% in 9MFY2008, attributed by their jointventure with Nordic International Limited. From 3QFY2007 to 3QFY2008, gross profitmargin also improved, by 4.93ppts (year-on-year), from 22.50% to 27.43%respectively. However, net profit margins were eroded due to the increase in financeexpenses. In 9MFY2008, net profit margin fell by 0.05ppts (year-on-year) from 7.95%in 9MFY2007 to 7.90%. The Group’s net profit margin also fell by 1.56ppts (year-on-year), from 7.08% in 3QFY2007 to 5.52% in 3QFY2008.

DPII 300 Men Accommodation Barge. The vessel is scheduled to be delivered bythe second half of 2009. However, in view of the current global economic sentimentsand the slowdown in the shipping industry, we are bearish on the charter possibility ofthe vessel which has yet to be confirmed and announced.

Estimates. We have further trimmed our estimates by forecasting revenue growth of12.32% for FY2008 and 10.90% for FY2009, encompassing revenue contributionsfrom the joint ventures with KS Energy Limited and Nordic International Limited. Wehave maintained our forecast for gross margins of 26.27% and 28.89%. However, inview of the Group’s financial expenses, we have adjusted our forecast for theGroup’s net profits to SGD 9.77 million and SGD 11.68 million for FY2008 andFY2009 respectively. The contracts with Nordic International Limited and KS Energyshould potentially improve the Group’s gross profit margins. Despite decrease in netprofit margins, the Group should still be experiencing net profit growth of 22.57% and19.50% in FY2008 and FY2009 respectively.

Maintain BUY. We have revised our estimates and revalued our fair value estimateto S$0.25 per share. This is derived from a 1x pegged to the Group’s FY2008 nettangible asset per share, translating to 150.00% upside. In view of the globaleconomic sentiments and the slowdown in the shipping industry, we remain cautiousand conservative of the Group’s growth and earnings from their main core business,supply and logistics in the year ahead. However, we believe that the Group’searnings would be bolstered by the contribution from their joint venture projects.