As per half yr 07 P&L the gross profit for proceeds of Neo-Neon Holdings Limited (HK) was S$86.48mln.

If the balance of 31mln shares sold by this year @ HK$12.00 = HK$372mln (S$72.8mln), the gross profit shd be S$71.5mln (less cost @ S$1.3mln).

This portfolio may generate gross profit of S$157mln~S$180mln

Transpac Industrial Holdings

Harvest in full swing

�� Neo-Neon ? a 50 bagger!

Transpac announced yesterday that it has placed out part of its holdings in Neo-Neon to

Deutsche Bank. The 36m share sale was priced at HK$12.50/share, implying a disposal

gain of S$86m before tax and expenses. Following the disposal, Transpac will still retain

31m shares in Neo-Neon, which is carried at book cost of S$1.3m versus a market value

of S$78m. Neo-Neon is Transpac?s most successful investment to date, netting realised

and unrealised gross profits in excess of S$200m versus a S$4m investment cost.

�� Next on the block: Hsu Fu Chi?

We believe Transpac will continue to capitalise on strong market sentiment to divest other

investment holdings. With the moratorium for Hsu Fu Chi expiring in end May 2007, we

view this as the next likely divestment candidate. While we do not expect the realisable

gains from Hsu Fu Chi to exceed that of Neo-Neon, a sale at current market prices will still

reap a sizable return of S$40m over original cost of $3.5m.

■ Intrinsic portfolio value exceeds headline NAV

Following a rights issue in 2005, Transpac has deployed the proceeds into new

investments in Semen Gresik and OUE; collectively, these investments are sitting on

paper gains of 50%. In addition, Transpac also acquired additonal interests in trusts

managed by Transpac Capital ? an investment management entity that is associated with

Transpac?s investment advisory panel. As Transpac Capital also hold common

investments with Transpac, the net result is an increased stake in many profitable

investments such as Neo-Neon, Hsu Fu Chi and Foodstar. To reflect its enhanced

portfolio value, Transpac has revised its NAV to $4.35 per share as of end 2006 (excapital

distribution of 19.5 cents). We believe the headline NAV is conservative

considering the intrinsic value of its portfolio holdings.

�� Raising target price; Buy maintained

We are raising out our target price for Transpac to S$5.90 per share, based on 15%

discount to RNAV. Following the successful sale of Neo-Neon shares, we expect another

special dividend round, which the company has committed to distributing. Meanwhile,

positive performance trends in investments such as Nanhai Zhonghai Aluminium and

Foodstar will serve to underpin our RNAV assumptions. Key investment risk would be a

rescinding of Transpac?s dividend policy.