Strong earnings growth registered. 3QFY08 and 9MFY08 earnings
grew 34.7% to RMB 0.1m and 2,103.1% to RMB 5.7m y-o-y respectively. This was achieved under a modest revenue growth of 5.8% and 9.7% for 3QFY08 and 9MFY08 respectively.

Fall in gross margin. Gross margin fell y-o-y from 86.4% to 85.1%
(3QFY08) and from 85.1% to 84.2% (9MFY08) due partially to change in product mix to a lower margin product – Cordyceps Sinesis. NRA would remain watchful of this trend going forward.

Outlook. The slowing global economy arising from the housing and
credit crisis is likely to affect demand for its health tonic products such
as Cordyceps which is positioned as a high-end product. Pharmesis would continue to concentrate on marketing its key products of ATT and Gansu and to improve operational efficiency.

Fair value of S$0.100. HOLD