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Disclaimer:DMG & Partners Securities Pte Ltd may have received compensation from the companies covered in this reportfor its corporate finance or its dealing activities; this report is therefore classified as a non-independent report.Please refer to important disclosures at the end of this publication.

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Morning Matters

Figure of the Day

Source: google.com

Armstrong: 3Q12 results in line with ourforecasts. See 'Scoop of the Day'.

Market Indices

Value Chg % Chg

Dow Jones 12,542.4 -28.57 -0.23

S&P 500 1,353.3 -2.16 -0.16Nasdaq 2,836.9 -9.87 -0.35

FTSE 100 5,677.8 -44.26 -0.77Nikkei 8,829.7 +164.99 +1.90

Hang Seng 21,108.9 -333.06 -1.55

Shanghai 2,030.3 -25.13 -1.22

KOSPI 1,870.7 -23.32 -1.23

STI 2,945.9 -32.11 -1.08

KLCI 1,631.7 - -

Key Indicators

Value Chg % Chg

Oil Price*(US$/bbl)

85.45 -0.87 -1.01

Gold Price**(US$/oz)

1715.8 -10.55 -0.61

US$/S$ 1.2237 +0.00 +0.04

* WTI Crude Future** Gold Spot

While You Were Sleeping

US markets: NegativeDow futures: -4 (as at 8am Singapore Time)

US Wrap: The major U.S. stock averages continued this week's losingstreak after the latest data on the employment picture and manufacturingactivitiy disappointed investors. The Dow Jones Industrial Average fell morethan 28 points, or 0.23%, to close at 12,542 in a choppy day of action. Theblue-chip index has now fallen in four straight sessions and in six of the pastseven days. The S&P 500 was off more than 2 points, or 0.16%, to close at1353, while the Nasdaq slid nearly 10 points, or 0.35%, to finish at 2837.Gold for December delivery settled down $16.30 at $1,713.80 an ounce atthe Comex division of the New York Mercantile Exchange, while Januarycrude oil contracts lost 97 cents to close at $85.87.

The Day Ahead

Scoop of the Day: Armstrongs 3Q12 results came in largely in line with ourforecasts with PATMI of S$2.8m (+27% YoY) on the back of S$56.8m insales (+1.3% YoY), as business rebounded from the impact of the Thaifloods a year ago. Excluding one-off items such as forex gain and insuranceclaims, 9MFY12 core PATMI came in at approximately S$4.8m, accountingfor only 48% of our forecasts. Therefore, we lowered our FY12 core PATMIestimates by 32% to S$6.9m. Going forward, the possible strong rebound in4Q is not likely to happen with its HDD business expected to remainsubdued over the next two quarters. Nonetheless, the group hastransformed into a diversified foam and rubber component supplier with 1732customers across different industries. We are also positive towardsArmstrongs automotive business in China following the recent Sino-Japantension as the group mainly services the European, US and local auto OEMsthere. Reiterate NEUTRAL with a new TP of S$0.27, based on 11.5xblended FY12/FY13 core earnings (5-yr forward P/E historical average).(Edison Chen)

WHATS INSIDE?

On The Platter

HLA: Incurred 3Q12 losses as volumes decline(SELL, S$1.66, TP: S$1.28)

Silverlake Axis: Approaching our fair value(NEUTRAL, S$0.475, TP: S$0.50)

Insider Trade Highlights 15 Nov 12

DIARY OF EVENTS

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On the Platter

HLA: Incurred 3Q12 losses as volumes decline (SELL, S$1.66, TP: S$1.28)Leng Seng Choon, CFA (+65 6232 3890, sengchoon.leng@sg.oskgroup.com)

HLA reported 3Q12 net loss of S$1m, versus 3Q11s S$27.9m net profit. This came on the backof a 3% YoY decline in revenue and 36% collapse in profit from continuing operations. The

Chinese economy slowdown has led to weaker diesel engine unit sales and lower white goodssales. 9M12 net profit of S$17.9m is only 59% of our previous 2012F net profit. Given the pooroutlook, we cut our 2012 and 2013 net profit forecasts by 35% and 29% respectively. We maintainSELL on HLA with a lower target price of S$1.28.

Fewer diesel engines sold. China Yuchai International (CYI) sold 97k units of diesel engines,down 8.5% YoY. There was weaker demand in the commercial truck market, especially in theheavy-duty truck segment. Whilst CYI recorded a 45% YoY rise in profit, this was largely due toforeign exchange revaluation gains, which are non-quality in nature. Excluding this, CYIs net profitwould have fallen ~10% YoY.

Xinfei recorded losses. Xinfei sales volume contracted due to the slowing Chinese economy,keen competition and overcapacity. Gross margin at Xinfei were affected by lower ASP.

Management indicated that there may be a tax exposure of up to S$8m as a result of Chinese taxauthority disagreeing with Xinfei on the high tech incentive status granted for FY2009.

However, the building materials unit recorded improved gross profit as a result of better salesvolume.

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Silverlake Axis: Approaching our fair value (NEUTRAL, S$0.475, TP: S$0.50)Edison Chen (+65 6232 3892, edison.chen@sg.oskgroup.com)Terence Wong, CFA (+65 6232 3890, terence.wong@sg.oskgroup.com)

Silverlake Axis (SLA)s 1QFY13 results came in largely in line with our estimates. Despite revenuefalling 15% YoY to RM80.1m, PATMI rose 42% YoY to RM39.5m with more revenue contributionfrom the software licensing and maintenance and enhancement services segments which yield

better margins. Most notably, the recurring maintenance revenue stream continues to strengthenwith better margins. Though the current order backlog remains healthy, it has been depleting overtime since the group last won a major contract from CIMB. The stock had a good run, rising 56%since our initiation, and is now approaching our target price. Downgrade to NEUTRAL as we waitfor major contract win in order to ensure profitability growth going forward. Our new TP of S$0.50 isbased on 14.9x FY13 P/E, in line with its peers' average.

Maintenance segment is the highlight. While revenue from software licensing fluctuates fromtime to time depending on project milestone, the 38% YoY jump in maintenance revenue issustainable. As expected, upon installing many new SIBS systems in the past year, the groupautomatically secure many new product-life-long maintenance contracts, generating attractive cashflow for the years to come. Moreover, the gross margin for maintenance business has beenenhanced from about 50% a year ago to 60% now as a result of maintenance fees hike and

economies of scale.

Need for order backlog boost. We noticed that the order backlog has been depleting since SLAwon the major CIMB contract more than two years ago. We estimate that the group currently hasan outstanding project backlog of approximately RM360m, which is about 1.8x of FY12s projectrelated revenue. Though this remains healthy, it is time for the group to secure new contracts if itwere to grow its profits. We believe that SLA is currently in the process of pursuing four new

customers with two of them being financial institutions in Southeast Asia.

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DMG Research

Company Insider No. of SharesShare Price

(S$)

% Stake before

transaction

% Stake after

transaction

JIUTIAN CHEMICAL Anyang Longyu (HK) Development Co Ltd 800,000 na 28.630 28.680

NOBLE GROUP Noble Holdings 7,337,000 na 21.293 21.406

STAMFORD TYRES Wee Kok Wah 440,000 0.325 37.594 37.781

BIOSENSORS Share Buy-Back 1,159,000 1.089 na 0.362

HO BEE INVESTMENT Share Buy-Back 1,417,000 1.510 na 0.910

HOTUNG INVESTMENT Share Buy-Back 1,658,000 0.149 na 2.070

SEE HUP SENG Share Buy-Back 912,000 0.187 na 2.069

SEMBCORP INDUSTRIES Share Buy-Back 100,000 4.849 na 0.076

Company Insider No. of SharesShare Price

(S$)

% Stake before

transaction

% Stake after

transaction

Sale

CHINA MINZHONG FOOD CMIA Capital Partners Pte. Ltd. 4,390,000 na 6.530 5.740

# Exercise of Rights issue / Share Options / Convertibles / Warrants / Share Issuance.

## Married deal.

Purchase

INSIDER TRADES HIGHLIGHT FOR 15 Nov 12

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