power generation facilities.Jiutian announced that it is investing RMB204m for

a 51% stake in a joint venture with its largest supplier, Anyang

Chemical Industry to set up Anyang Jiulong Chemical, a

methanol manufacturing facility with operational capacity of

250,000 tonnes, together with pressure steam production and

power generation facilities.

�� Point: We view this upstream expansion positively as the

move will 1) ensure a steady and cost effective supply of

feedstock to sustain stability and profitability of the group?s

DMF division; 2) reduce Jiutian?s dependence on Anyang and

3) generate external sales of high pressure steam and power

for methanol. The 5x DMF capacity expansion plan, coupled

with new contribution from Jiulong, will propel Jiutian?s

earnings growth to an impressive 3 year CAGR of 80% up till

FY09.Point: We view this upstream expansion positively as the

move will 1) ensure a steady and cost effective supply of

feedstock to sustain stability and profitability of the group?s

DMF division; 2) reduce Jiutian?s dependence on Anyang and

3) generate external sales of high pressure steam and power

for methanol. The 5x DMF capacity expansion plan, coupled

with new contribution from Jiulong, will propel Jiutian?s

earnings growth to an impressive 3 year CAGR of 80% up till

FY09.

�� Relevance: We have raised FY08 earnings by 13% to

account for Jiulong?s new contributions, which comes

onstream from 2H08. Consequently, our target price is raised

to S$3.00, still peg to 11x FY08 earnings. Maintain Buy.Relevance: We have raised FY08 earnings by 13% to

account for Jiulong?s new contributions, which comes

onstream from 2H08. Consequently, our target price is raised

to S$3.00, still peg to 11x FY08 earnings. Maintain Buy.