Performance of Virtual Fund for January 2008

Holdings as at 31 January 2008

China Fishery 40,000 @ $1.79, Unrealised Loss -$2,800
China Hongxing 100,000 @ $1.27721088, Unrealised Loss = -$66,221.09
Raffles Education 15,000 @ $3.06, Unrealised Loss = -$10,650
Sino Techfibre 90,000 @$1.03222, Unrealised Loss = -$47,000
STX Pan Ocean 80,000 @ $3.354875, Unrealised Loss = $73,190

Sum invested = $606,511.09
Cash holding = $4,830
Realised profit = $111,341.09 = 22.27%
Unrealised Loss = -$199,861.09

My Own Portfolio as at 31 January 2008

Transactions today:

Sold all Man Wah
Bought more Sinotech Fibre

Latest Holdings as at 31 January 2008

Cash
Ausgroup
Cacola Furniture
China Energy
ChinaWheel
ChinaXLX
Noble Group
Jiutian Chemical
Sihuan
Sinotechfibre
STX Pan Ocean

CPF
Asia Enterprise
Midas
Raffles Education

Midas secures RMB1.05 Billion Contract

MIDAS’ JV COMPANY NANJING SR PUZHEN RAIL TRANSPORT AND CONSORTIUM PARTNERS SECURE RMB1.05 BILLION CONTRACT
- To supply 21 train sets (126 train cars) for the Nanjing Metro Line 1 Extension Project
- Nanjing SR Puzhen Rail Transport has an estimated 70% share of contract

Singapore, January 28, 2008 – Main Board-listed Midas Holdings Limited

(“Midas”) (麦达斯控股有限公司) is pleased to announce that it has today been informed by its JV company, Nanjing SR Puzhen Rail Transport Co., Ltd (南京南车浦镇城轨车辆有限公司) (“NPRT”), that a contract to supply metro train cars, valued at RMB1.05 billion has been awarded by Nanjing Metro Co., Ltd ( 南京南车浦镇城轨车辆有限公司) to NPRT and its consortium partners Shanghai ALSTOM Transport Electrical Equipment Co.,Ltd. (上海阿尔斯通交通电气有限责任公司) and ALSTOM Transport S.A (阿尔斯通交通股份有限公司).

Under the terms of the contract, NPRT and its consortium partners will supply 21 metro train sets (1 train set = 6 train cars), an equivalent of 126 train cars for the Nanjing Metro Line 1 Extension Project. NPRT has an estimated 70% share of this contract which is expected to be fulfilled between 2009 and 2011.

As such, the contract is not expected to have a material impact on the Group’s FY2008 financials.

Midas has a 32.5% equity stake in NPRT, a Sino-foreign joint venture, to engage in the development, manufacturing and sale of metro trains, bogies and their related parts. “We are delighted that our JV company NPRT has won this contract. This deal is a testament of NPRT’s growing customer base and marks the beginning of a strong start to 2008 for NPRT,” said Mr Patrick Chew (周华光), CEO of Midas.

AusGroup

Added Ausgroup at 1.04 to my own portfolio today. I see value in the stock after it has fallen more than 30% from 2 weeks ago. The Company has just assured investors of its fundamentals.

AUSGROUP: "No impact from subprime mortgage problem"
Written by Leong Chan Teik
Thursday, 24 January 2008

AUSGROUP is not experiencing any impact from the US subprime mortgage woes. No, AusGroup does not have any problem with credit lines. Instead, AusGroup is riding high on the booming oil & gas and resources industries in Western Australia, which are insulated from those issues.AusGroup’s Kenny Stuart was in town yesterday (Jan 23) to assure analysts that the industry fundamentals remain as robust as last year, if not more so - even if AusGroup's stock price has fallen along with the rest of the market.”AusGroup is on track for growth,” he said. He also introduced John Sheridan, his successor as the MD, who took office on Jan 7. Mr Stuart, 55, has assumed the post of executive director.

Insiders trades

Despite the volatility of the share markets, certain key shareholders/directors have been buying shares of their respective companies. From my portfolio:

ChinaWheel
Man Wah
Sihuan
Jiutian

This to me sends a very optimistic signal to the market that their shares have been undervalued at the moment.

My reply on Advance SCT

Coincidentally I received 2 queries over last few days on Advance SCT. I will write what I know and feel about this company even though I don't hold this counter currently.

I think the Company has been quite successful in transforming itself from a conventional pcb business to now an integrated cooper refinery. Together with the recycling plants and joint ventures etc, the integrated supply chain looks promising and is likely to spur for explosive growth going forward. The current low profit margin and ROE will only get better when all new businesses put together.

Many would say the main risk for this kind of cyclical business is the price of cooper. The exposure to a single commodity makes it vulnerable to price weakness.

I bid to differ:
1.) I believe the Company is fully aware of this risk and has spread its business by different countries such as China, US, Middle East, Vietnam and Europe. In addition, the Company has also involved in the alternative clean energy and exploring other new technologies.

2.) As they are more a recycling firm, they typically enjoy high margin by turning scraps into saleable cooper which fetch good value. The profit margin will not be as thin as pure commodity
traders.

Lastly, the 2 key personnel, Terence Tea and Mr Seah have good industry experience and they have been buying the Company's shares whenever we see significant price weakness. Many analysts have target price of about S$1.60 (more than double current price!). So the rest is up to you.

Transactions of Own Portfolio

Added the following shares to my portfolio/average down costs today:

Cacola Furniture
China Energy
ChinaWheel
Man Wah
Noble Group
Sihuan
Sinotechfibre

Sihuan acquires company

SHENZHEN SIHUAN PHARMACEUTICAL ACQUIRES HAINAN XINFUCHENG TECHNOLOGY PHARMACEUTICAL CO., LTD. OF YANGPU, HAINAN

The Board of Directors of Sihuan Pharmaceutical Holdings Group Ltd. (the “Group”) wishes to announce that its wholly-owned subsidiary, Shenzhen Sihuan Pharmaceutical Co., Ltd “Shenzhen Sihuan”) has today acquired a 100% equity interest comprising 2,000,000 shares of RMB1.00 each in the capital of Hainan XinFuCheng Technology Pharmaceutical Co., Ltd. (“药业有限公司海南新福程科技" or “Hainan XinFuCheng”). Shenzhen Sihuan will pay the vendors, Zhang Xiao Ming (张小民) and Zhang Ai Lin (张爱玲), a total cash consideration (the “Consideration”) of RMB 1.9 million.

The Consideration, which is paid in full on completion of the acquisition, is arrived at on a willing
buyer, willing seller basis, and is based on the valuation of the net assets of Hainan XinFuCheng as at 23 July 2007. This valuation was determined by an independent valuer, Hainan Haixin Accountant Affairs Office (海南海信会计师事务所).

The abovementioned transaction will be funded by internal resources and is not expected to have any material impact on the earnings per share and net tangible assets per share of the Group for the financial year ending 31 December 2008.

Jiutian further invests in new methanol plant

Jiutian secures a further 24.5% stake in new methanol plant to enhance integration

• Increased equity stake from 51% to 75.5% in new 250,000 ton methanol plant under construction will provide better cost control and earnings stability from 4Q2008

• Completion of new methanol plant targeted for end 3Q2008 on track

• Ramping up of new DMF plant in 4Q2007, affected by high and volatile methanol price, was slower than expected

• Significantly higher efficiency and better unit cost have since been attained with new DMF plant now operating at 80% capacity

Singapore, 14 January 2008 - Jiutian Chemical Group Limited (“Jiutian Chemical”, “九天化工” or “The Group”), one of the largest dimethylformamide1 (“DMF” or “二甲基甲酰胺”) producers in China, is pleased to announce that it has obtained the approval of the relevant authorities in Anyang, Henan Province, People Republic of China to increase its equity stake in Anyang Jiulong Chemical Co Ltd (“Jiulong”), which has been set up to construct a 250,000 ton methanol plant, from 51% (equivalent to Rmb204 million) to 75.5% (equivalent to Rmb 302 million).

The increase in stake in Jiulong will further underpin the Group’s operation and profitability as the methanol plant will provide a stable and cost effective supply of methanol for the Group’s enlarged DMF production. The scheduled completion of the new methanol plant by the end of 3Q2008 is on track.

Performance of the new DMF plant under Anyang Jiuyang Chemical Co Ltd (“Jiuyang”) which started commercial production from October 2007, encountered high and volatile price movements and unstable supply of methanol, a key feedstock in the production of DMF which the Group had to purchase from third parties prior to the completion of its new methanol plant under construction. Average price of methanol (including VAT) has increased from Rmb2,700 in January 2007 to Rmb3,602 in December 2007, an increase of 33%. As a result, ramping up of production capacity of Jiuyang to efficient levels, and the corresponding financial performance, was below expectations.

With total production of just above 9,000 tonnes in 4Q2007, Jiuyang is expected to generate operating loss of around Rmb 7 million for the Group for FY2007. The marginal loss however is expected to be well absorbed by the profits generated by the other part of the Group.

Jiutian Chemical’s Executive Chairman, Mr. Wang Xianjin (王先进) commented, "Notwithstanding the challenging operating environment faced by the new DMF plant of Jiuyang during its ramping up of capacity in 4Q2007 arising from the high price and unstable supply of methanol, we remain confident of its overall profitability in 2008, barring further unexpected adverse price movements of DMF and methanol, as significantly higher efficiencies and better unit cost have since been attained with the plant operating at around 80% capacity from middle of December 2007.

The performance of the first 30,000 DMF plant under Anyang Jiutian Chemical Co Ltd (“Jiutian”), which has its own methanol production, remained attractively profitable in 2007. The successful acquisition of a further 24.5% stake in Jiulong is therefore strategic as it will provide the Group with a stable and cost effective supply of methanol, a key feedstock for its production of DMF.

When the new methanol plant is operational in 4Q2008, it will not only be able to cushion any volatility in methanol price movements, but also allow the Group to take full advantage of opportunities arising from the excess methanol of around 100,000 tonnes per year over and above the feedstock requirement of its total 150,000 tonne DMF production.

Whilst the marginal loss of Jiuyang for 2007 was inevitable given the unexpected market conditions of methanol, we are pleased to inform that the two tax-free years for Jiuyang will now be for 2008 and 2009, followed by 15% concessionary tax rate for 2010, 2011 and 2012. This will generate significant tax savings for the Group as Jiuyang reaches full capacity operation by end of 1Q2008 and become fully integrated with Jiulong’s methanol plant by 4Q2008.”

Kit's Top Picks for 2008

Many brokers and analysts have come out with their stock picks for 2008. My top 10 picks:

BH Global 0.72
Cacola Furniture 0.405
China Fish 1.85
EZRA 3.32
Foreland 0.585
Noble Group 2.43
Pan United 0.78
Raffles Education 3.04
Sihuan 0.775
Tat Hong 3.42

The prices quoted are opening prices for 2008.

Transactions of Own Portfolio

Bought back STX at $2.86 sold previously at $3.71.

I am optimistic about the future expansion plan of the Company. KRX is still trading at about S$4.20. So there is still room for arbitrage.

Transactions of Own Portfolio

Bought back Jiutian Chemical sold last week at $0.37.

Legg Mason and maybe other fund managers have been selling down furiously last few days. Same old story, their backyard caught fire so need to liquidate some funds to rescue their portfolio.

Sihuan

Hi Kids (Kit),

Visited your homepage and like your ideal on picking value stocks. Can you share with us your view on Sihuan? Have been holding this one since IPO and recent price is side way, Please share your view on what is the potential up side of this company and how soon.

Regards
Kah

Kit's response:

Thank you for following my share investment blog. Sihuan has been one of my favourite holdings to-date:

Reasons:

1. Key growth driver product has very strong position in the market.

Kelinao has been a star performer. Sales nearly doubled YoY. There is very strong barrier of entry and there is no readily available substitute for such drug in the market.

2. Strong R&D capability

The Company has a very strong R&D team and has collobaration with research centres and universities. Currently, they are developing 6 Class One which have not been marketed in the world. Due to its pioneer position, its not hard to obtain government grant to fund the R&D. The Company has also reinvested 15% to 20% of its revenue in this area vs 1% for most other drug companies.

3. Highly cash generative

The Company has no borrowings. Its strong cash position allows M&A activities which is likely to complement and strenghten its current market position. Over the past few months, the Company has been buying some rights of drugs for future developments. The Company has also committed to be paying not less than 30% of its profit after tax and MI as dividend for FY2007.

4. High profit margin and ROE

CV drugs alone accounted for 72% of its revenue and this group of products command profit margin of 86%! Overall profit margin is very high at 66% and ROE > 60%.

5. Expanding distribution network

It is aggresively growing its hospital and medical centre network from the current 3,550 to 6,000 over the next 2 years. This will provide strong platform for future revenue growth.

6. Many strong and consistent new drugs in the pipeline

Most recently, sodium ozagrel drug has been approved for manufacturing and commercial launch. There are many more to come. You may refer to their website for more technical information.

7. Strong instituitional support

Dubai Ventures and Lehman Brothers have been supporting it since IPO.

8. Favourable industry

Sales continue to be on the uptrend for its CV drugs. The new regulation that came into effect should benefit the Company as it would improve the drug industry image after many fake drug scandals in the last 2 years. The approval by China State Food & Drug Admin also further endorses its quality and make the drug procurement procedure more transparent in general.

In my personal opinion, I think Sihuan is undervalued at the moment as most analysts have target price > $1.30. Should current market sentiments improve, the share price can easily double from the current levels. I believe it has all the ingredients to be a multi bagger in time to come. When? Only heaven knows. If I had the answer, I would not be writing this.

I will continue to collect when the price drops lower. Lets see what will happen by end of the year.

Transactions of Own Portfolio

Took the opportunity to clear some of my profitable holdings over the past week as the stock market was weakening. US market continues to bleed as the rate cut and SWF cannot seem to stop the downfall.

Sold:
Changtian Plastic: Avg cost $0.397, sold $0.44 (sold all)
China Fishery: Avg cost $1.65, sold $1.87 (sold all)
Jiutian Chemical: Avg cost $0.445, sold $0.46 (sold half)
STX Pan Ocean: Avg cost $3.17, sold $3.71 (sold all)

Sino Techfibre Business Update

SINO TECHFIBRE LIMITED

BUSINESS UPDATE

The Directors refer to the Group’s press release dated 14 November 2007, and would like to provide an update on the progress of the installation of our new Pattern Moulding Paper (PMP) production lines.

In the said press release, it was stated that the US-made machinery would be installed “toward the end of November”, and that the Group was “definitely on track to commence trial production with two PMP production lines by end December 2007”.

Whilst the renovation of the factory has been completed, and part of the ancillary equipment have been installed, we have been informed by the US manufacturer that the critical machinery would take longer than expected to fine-tune. We are pleased to inform that our PMP engineer, who is in the US, has inspected the said machinery and has confirmed that the machinery has been completed and meets all of our performance specifications.

He has advised that the machinery is already on its way to China and is now expected to arrive in China by mid February 2008 and that trial production could only commence in 2Q2008. We hope that our investors and shareholders appreciate the complexity of the PMP technology and that it is absolutely critical that we ensure that the machinery runs according to our stringent specifications before leaving the United States. As a gesture of goodwill, the manufacturer of the machinery has agreed to compensate by offering us free spares for one year.

We are confident that the PMP production will roll-out successfully. However because of the complexity of the technology, a longer gestation period is required for fine tuning and trial production. We envisage that we will be able to achieve a utilization rate of between 40% to 50% in the second half of FY2008, and as such, the annualized utilization rate for full year 2008 is expected to be between 20% to 25%.

Potential of the PMP Business

PMP is primarily used for transferring patterns and textures on to synthetics leathers such as PU and microfibre as well as PVC and even genuine leather. Currently, China is totally reliant on foreign imports of PMP, importing approximately 100,000 tonnes of PMP from six producers in the United States, United Kingdom, Italy and Japan. Sino Techfibre will be the first and only in China, and the fifth country in the world, to have this capability of producing this paper which is essential in transferring patterns on to synthetic leathers, PVC and even genuine leather. From our industry knowledge, China has been importing about 100,000 tonnes (or 400 million metres) of PMP, and our initial total production capacity of 40 million metres is only about 10% of total demand.

Currently, all Chinese manufacturers source PMP from overseas, our strategy is to sell around 10% - 20% discount to the imported price, which we project, will allow us to derive a good gross margin. Already, many distributors have contacted us about the possibility of distributing our PMP products, however, we want to focus on successfully installing our production lines first. We are confident that being users of PMP ourselves, we will be able to achieve the best possible quality standards, particularly since our PMP machinery is predominantly based on the US technology, which is deemed to be the best in the world. Currently the demand for certain patterns have been phenomenal, and the whole of China has run out of stock of some of these patterns. Because of the long lead time required to import these PMP products, we expect the tight supply situation to continue for some time.

Additional PMP production lines ordered

The Group had placed a deposit of RMB125 million for its third and fourth PMP production lines which is expected to be installed by the end of 2008. These additional lines will double our PMP production capacity to 80 million metres which will be used not only for our capacity expansion, but for the development of new products as well.

Furthermore, using our current PMP prototype machine, our R&D team has discovered that by using acrylic as raw material, the PMP prototype machine is able to produce a type of reflective material, which could possibly be used for on roads and expressways.

However, further research and development on this potential product would need the use of the full-scale PMP machine. From what we understand, China currently imports reflective products used on its roads and expressways which we believe to be from 3M. Should we be successful with the R&D of this product, we may have another new product with big potential.

New Production Capability - TPU

In line with the Group’s continual efforts in developing new, cutting-edge products, Sino Techfibre has successfully installed new equipment for the launch of a new product – TPU – a new-generation PU variant with enhanced breathability, wind-proof and waterproof properties because of its ultra-thinness -- that is ideal for the lining of outerwear and raincoats, sports shoes, gloves, medical equipment, and packaging materials.

TPU is expected to replace the current generation of protective lining materials, which is PU-based, and used by the uniformed groups such as PLA and Ministry of Public Security. Currently, Sino Techfibre imports a thicker type of TPU from Taiwan which is used as a lining for rainwear and wintercoats.

This new, ultra-thin TPU is jointly developed with the PLA’s Technology Research and Development Centre for Military Product Supplies of Synthetic Leather and it is an environmentally- friendly product. With the increasing demand from the market, the market potential of this product is huge.

Having in-house capability to produce TPU film will enable the Group to derive higher margins and command higher average selling prices as we have a wide range of valueadding production processes that can churn out various properties and effects according to customer preferences. We envisage that our new TPU film, when fused with cloth materials, will be able to fetch a higher selling price than those using imported TPU from Taiwan.

Our main TPU machine, which has the capability to produce multi-layer TPU (up to seven layers) with various properties such as anti-bacterial, microbial, is currently the one of its kind in Asia.

As the machines are currently at testing stage, it is difficult for us to determine the exact production capacity. However, assuming that the machines only use for TPU, we expect the production capacity to be approximately 10 million metres. We expect TPU to contribute to our revenue from 3Q2008.

Outlook

Whilst the PMP and TPU businesses are exciting for the Group, we wish to reiterate that our existing PU and microfibre business continues to enjoy strong demand and solid growth, not only from the Government sector, but from domestic and overseas customers as well. Coupled with its continual effort to enhance its product mix, the Group expects average selling prices and gross profit margins for the two product segments to remain strong.

Barring unforeseen circumstances, Sino Techfibre’s directors are optimistic of the Group’s growth prospects particularly with strong demand for PU and microfibre synthetic leathers in China and overseas, and the Group’s continual effort to expand production capacity and introduce new sources of revenue such as PMP and TPU.

BY ORDER OF THE BOARD
Li Wenheng
Chief Executive Officer
Date: 3 January 2008

Raffles Edu proposes to split 1 share into 2

PROPOSED SUB-DIVISION OF EACH ORDINARY SHARE IN THE CAPITAL OF RAFFLES EDUCATION CORPORATION LIMITED INTO TWO ORDINARY SHARES
________________________________________________________
The Board of Directors (the "Directors") of Raffles Education Corporation Limited (the "Company") wishes to announce a proposed sub-division (the "Sub-Division") of every existing ordinary share ("Share") in the capital of the Company into two ordinary Shares.

As at 2 January 2008, the Company has 1,139,850,148 Shares in issue. The proposed Sub- Division, if approved, would increase the number of Shares to 2,279,700,296.

The Directors believe that the Sub-Division will increase the affordability, accessibility and liquidity of the Shares of the Company available for trading on the Mainboard of the Singapore Exchange Securities Trading Limited (the “SGX-ST”)

The Sub-Division is subject to, inter alia:
(a) the approval of the shareholders by way of an ordinary resolution at an extraordinary general meeting ("EGM"), to be convened; and

(b) the approval from SGX-ST.

The Company will be making an application to the SGX-ST in due course for its approval for the listing and quotation of all the Shares arising from the Sub-Division. A circular containing further details of the Sub-Division and the EGM will be despatched to shareholders in due course.

BY ORDER OF THE BOARD
Mr Chew Hua Seng
Chairman and Chief Executive Officer
2 January 2008