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Significant synergy. The acquisition will enhance Noble’s capacity to source for quality iron ore to satisfy demand from buoyant global steel industry. We believe that through the acquisition, Noble is able to have access to high quality iron ores to satisfy the growing demand, particularly from the steel industry in China. Mhag on the other hand will be able to tap on Noble’s expertise in iron ore, logistics and freight, together with a deep knowledge of emerging markets. Incidentally, Noble has direct contacts with 120 steel enterprises in China. Mhag is already producing and shipping high quality iron ore through the port of Suape in the state of Pernambuco. It has plans to increase, immediately, production of iron ore to 3.6 million tons per year, with output to reach 10 million tons per year by 2009. By 2009 (after expanding production capacity), it is expected that Mhag will be amongst the most competitive producers because of favourable strategic location (Mhag’s mine is near to a port), high quality ore, low cost internal transport and availability of all other necessary resources.

Demand for raw materials like iron ore, steel, and coal to remain strong, driven by strong growth in infrastructural spending as seen in many developing countries. Steel production in Japan, South Korea, China, and the EU combined has increased by 42.4% since 2003. In China alone, steel production has increased by 92.2% from 219.3 million tons in 2003, to 421.5 million tons in 2006 (see Exhibits 1 & 2). The substantial increase in steel production also leads to an increase in demand for iron ores and (coking) coal. With a stake in Mhag, we expect Noble to benefit from being able to provide quality iron ores to the buoyant steel industry, especially in China.

Although the Chinese government has recently imposed export tariffs on a variety of steel products, we retain our optimistic long term view on the demand for steel. Our view is supported by strong demand for steel, not only in the construction sector of emerging Asian countries, but also in their automotive, oil & gas, and marine sectors. Local demand in China also remains strong, with infrastructural spending maintaining at a high level.

Fair value revised up to S$2.15. BUY recommendation maintained. We do not see the steel industry, especially in China, slowing down in the near term. As such, we remain positive on the overall demand level for iron ores. We believe that the Brazilian acquisition will reinforce Noble’s position as a major supplier of quality iron ores to China. According to trade statistics, Brazil exported 22.5 million tons of iron ore in May this year with China being their largest customer. China’s iron ore imports from Brazil for the January to May 2007 period were 40.3 million tons, up 40.5% y-o-y (source: Clarkson).

We increase our estimation for tonnage growth for Noble’s MMO segment (which includes iron ore as part of the product portfolio) to an average of 8.9% for the FY07 to FY09 period. Although we are positive that the acquisition will result in the increase in tonnage volume of Mhag’s iron ore export shipment to be handled by Noble, we remain conservative in our projections. Accordingly, we revise upward our average earnings growth rate to 16.4% CAGR over the FY07 to FY12 (inclusive) period.

Our fair value of S$2.15 is derived at using the three-stage DDM model. Key assumptions are highlighted in the table below (see Exhibit 3). Our fair value translates to FY08 P/E of 22.3x and a FY08 P/B of 2.9x. We maintain our BUY

Exceptional Quarterly Performance: CWT Limited, a leading logistics player,reported earnings growth of 173.0% to S$8.1m in 1Q07 from S$2.9m in 1Q06.The increase was on the back of a 40.3% surge in turnover from S$83.1m toS$116.7m. Net profit nearly tripled to S$7.5m from S$2.7m.

Logistics Business Boost Earnings: The profit surge was contributed largelyby its Logistics business where NVOCC (i.e. Non-vessel operating commoncarriers) services remain as the top contributor. Net profit to shareholdersfrom Logistics business grew by more than 3-fold to S$4.4m in 1Q07. The commodity logistics division recorded net earnings of S$2.87m. Profit from the Engineering Services increased by more than 30% as more jobs were closed forbilling in 1Q07.

Improved Margins: Gross margin gained 2.5%-points from 8.5% 1Q06 to11.0% in 1Q07, and EBITDA margin saw a similar increase of 1.6%-points to 8.3%.The margin was due to a strong revenue growth and a big jump in other operatingincome from S$0.1m to S$2.6m. With strong contributions from joint companies and associates, net margin was up from 3.4% to 6.9%, an increment of3.5%-points.

Strengthened Balance Sheet: Total assets increased by 22.9% to S$379.0mbetween 1Q-FY07 and 1Q-FY06, reflecting improvements in cash, and increase inproperty, plant and equipments’ value. Shareholders’ equity increased fromS$137.5m to S$146.0m, a rise of 6.2%.

Optimistic outlook backed by government: In the 2006 SingaporeBudget, Prime Minister Lee announced that his Cabinet aimed to strengthenSingapore’s existing traditional sectors, with one of them, being logistics. Fourfinancing and tax incentive schemes were introduced to attract more internationalship-owning and ship-operating companies to set up operations inSingapore. Strategic location, efficient 24/7 operations, reliable physical and ITinfrastructure and excellent connectivity have made Singapore a compelling globallogistics hub. With total value added in the logisticssector standing at S$350m in 2006, up from S$285m in 2005, companies suchas CWT that are able to provide valueadded service would stand to gain fromthis backdrop.

Connecting to Ukraine and Russia: Ukraine currently enjoys most favourednationstatus with the European Union for export operations, and is not required tobind its own tariffs. This is an excellent attraction that could lead to theestablishment of more vertical Foreign Direct Investment in Ukraine. To relocateto developing countries such as Ukraine,logistics and supply activities are the topthree most important functions.

CWT has formed a 72-28 JV with Economic Development Group, areputable Ukrainian investment group, to develop logistics facilities and establish a comprehensive distribution network in major cities across Ukraine and Russia.The facilities will be strategically located in Kiev, the capital of Ukraine, andOdessa, the main seaport of Ukraine. Thus, the company is well-positioned toseize the growing demand for quality logistics facilities and services in Ukraine.

Additional warehouse space: CWT has existing warehouse space of more than4m sqft globally, and is expected to increase to more than 7m sqft by end2008. Currently, only two of their warehouses are under the sale and leaseback (S&L) arrangement with Cambridge Industrial Trust in July 2006. There are possibilitiesof more S&L arrangement which may further boost their earnings.

High dependence on NVOCC: NVOCC business segment softened in 1Q07consequent to festive seasons in China and generally keener competition forcertain trade lanes. Being the major contributor to revenue and earnings,should NVOCC not be able to fight off its competitors, the company’s top- andbottom-line would be adversely affected.

Severe economic downturn: An economic downturn would lead to declinein world trade and this in turn causes a decline in demand for warehouse space.The NVOCC business segment would be affected as well since it is a freightconsolidation operation. Margins may dip and growth would come to a standstill.

Price performance: Since our last report in Feb 07, the price of CWT has increased about 47% from S$0.69 (adjusted for rights issues and shares placement) toS$1.02.

Revised forecast: We have upped our revenue forecast for FY07 by 8.4% fromS$415.8 to S$437.8m due to the higher turnover and earnings contribution shownin 1Q07, as well as the higher rental rate. We have also raised net profit forecast for FY07 from S$23.0m to S$25.2m, and FY08 earnings forecast to S$30.0m.However, we have lowered the EPS for FY07 from 6.6cts to 4.4cts and FY08 from7.8cts to 5.2cts due to the right issues and the placement of 55m new shares.

Recommendations: Based on the average historical PE of 28x, we valuedCWT using a 20% discount of 22x and the average EPS of FY07 and FY08, and arriveat a fair value of S$1.06. Our new target price represents a 3%upside from the current share price of S$1.03. We downgrade to a ‘HOLD’ recommendation.

Poised to benefit from construction and property upswing. SIF’s $1b loan portfolio comprises mainly of property development (~43%) and mortgage (~25%, largely private properties) loans. Other lending includes vehicle hire purchase (~20%), factoring and SME loans. Loan growth from 2003-06 was mainly property-driven, with a 3-year CAGR of 28%. Overall quality of loans is good, with an aggregate NPL ratio of <2%>