The decrease in revenue was mainly due to the reduction in the engineering, procurement and construction ("EPC") segment from $42.9m in FY08 to $32.1m in FY09. However, the decrease was offset by the increase in the treatment business from $8.3m in FY08 to $10.8m in FY09.

The operating income for treatment business was $5.0m, surpassing that of EPC segment which recorded a mere $1.4m profit.

The other operating expenses decreased 19.5% to $6.1m in FY09 as one-off various fees incurred to obtain the financing for the two TOT projects in Liaoyang and Xintai.

Finance cost pertained mainly to the bank loans interest expenses for the two TOT projects in Liaoyang and Xintai. The reduction was consistent with the decline in the borrowing rate.

No dividend was declared for FY09, as compared to 0.3 Sg cts in FY08.

The business risk for EPC segment is very high as we can see from the high variance of segmental sales over the years. The revenue for EPC is less predictable and is highly dependent on the company's ability to secure new contracts in the increasingly competitive industry. Nevertheless, the volatility in EPC segment is well buffered by its stable and improving treatment business. We like its treatment business for several reasons: (1) steady cash flow, (2) increasing treatment capacity, and (3) high return-on-invested capital.

Although the FY09 results were below our expectation, we are still upbeat about the company's prospect. Therefore, there is no major revision on our estimates for FY10 and FY11.

The share price was battered badly as a key substantial shareholder ? China Growth Opportunities Ltd - is unloading its stake and we are unsure when it will end. On top of that, in near term, the share price might be overhung as Oei Hong Leong, holding more than 15% stack in the company, was reported in the press that he lost $1 billion due to trades in forex and US Treasury bonds. Nevertheless, we view all these serve as a good entry for investors.

We continue to apply 0.7x FY10 NTA per share, we derive a target price of S$0.15, representing 76% upside potential. Maintain BUY.