FY06 RESULTS

26 February 2007

Meiban Group Ltd S$ 0.29 @23/02/07

Recovery year Target: S$0.42 Mkt.Cap: S$96.3m

Technology (Components & Periphs)

OUTPERFORM Maintained SINGAPORE

MEI SP / MPLS.SI Jonathan Ng +65 6210-8650 ? jonathan.ng@cimb.com MICA (P) 51/03/2006

• Above expectations. Excluding S$0.8m of provisions for the closure of its Germany operations, 2H06 core earnings came in 18% above our expectations with the key variance coming from a stronger-than-expected recovery in plastic injection moulding revenue.

• Sales jumped 39% yoy to S$267m in 2H06, powered by both the plastic component and CM businesses. The plastic component business benefited from HP?s higher inkjet printer shipments (HP earlier reported 17-18% yoy volume growth for 2H06) while the CM business gained from a recovery in orders from Dyson with the completion of inventory adjustments and introduction of new costdown models.

• EBITDA margins slipped 10bp yoy to 5.7% in 2H06, affected by continuous pricing pressure from key customers, higher material costs, and losses at the Zhongshan plant. Net profit, however, improved 44% yoy to S$5.5m, marking the first yoy improvement after three consecutive sets (half-yearly) of yoy declines. Meiban?s performance was also markedly better than that of its direct competitor, Fu Yu (FUYU SP, S$0.32, NR), which earlier reported losses of more than S$35m during the same period.

• Gearing remained comfortable at 0.05x. Cash cycle days increased nine days hoh due to longer debtor days (due to backend-loaded sales) and shorter payable days. Meiban declared final and special dividends of 1.0cts and 0.5cts respectively, translating into a decent yield of 5.2%.

• Outlook set to improve in 2007, underpinned by continuous volume growth for both the plastic injection moulding and CM units. We gather from industry contacts that HP?s volume is projected to grow in the low teens in 2007, while Dyson?s business should be driven by 12-month contributions from new lower-cost models. Also, the recent weakness in oil prices will translate into stable material prices, which is positive for Meiban. Its loss-making Zhongshan plant is also expected to turn around in 2H07 on the back of increased business.

• Forecasts and Outperform rating maintained. We have kept our FY07-08 EPS forecasts unchanged, and introduced our FY09 forecast. We have also rolled over our 8x target P/E from CY07 to CY08, lifting our target price from S$0.33 to S$0.42, in line with its historical average. Maintain Outperform. We see catalysts from further evidence of a turnaround and stabilising material prices.

• 2H06 Topline Revenue of $267.3m was 39% higher than 2H05
• 2H06 Bottomline Profit attributable to shareholders of $8.8m was 45% higher than 2H05.

•  $1.7m exchange loss & write-off ;
•  $1.9m due to higher effective tax rate; &
•  $1.4m FY05 negative goodwill (once off).

• EPS = 2.7 cts
• NTA = 33.2 cts
• PE = 10.74x
• Final Dividend = 1ct per share
• Special Dividend = 0.5ct per share
• Share capital = $36m
• Retained Earnings = $75m
• Total Equity = $110m