3Q08 results review: Results within expectation

Sales: PCS sales declined by 5% yoy in 3Q08 due to lower local sales while Telecom sales dropped by 13% yoy to S$5.2 million due to lower iDD usage arising from intense competition and lower mobile data usage. Sales in
engineering segment slid 23% to S$8.1 million due to lower revenue recoded for projects in Indonesia and Singapore.

Cash level dropped by a whopping S$9 million to S$16 million in 3Q08 due to S$4.5 million repayment of bank loans and S$13.7 million of negative change in working capital: Increased inventories and receivables and decline in trade payables were the cause of the negative operating cash flow. Despite that, WestComb rule out the possibility of Telechoice facing financing difficulties because of its sound financial position. WestComb view the negative cash flow in operation to be short-lived and customer credit risk is insignificant by having Starhub as its key customer.

China JV achieved sequential growth of 14% to S$0.428 million: The joint venture with China Fortune to provide logistics and fulfillment services for Nokia branded handsets in China has made a remarkable progress.

Target Price S$0.300