KGT – Lim and Tan

• While net profit of $8.726 mln for period from June 29th to Dec 31st ’10 was 22% above management’s guidance at the time of the IPO last June, distribution is only 10% above at 4.31 cents (8.44 cents annualized), suggesting management is conserving cash ($ mln at end Dec ’10)

• The main contributing factor for the 22% lower than-expected decline in Revenue is the “shift in schedule” of the upgrading works at the Senoko plant. Management said the upgrade is on schedule for completion by June 2012.

• The annualized yield of 7.7% continues to merit a BUY, although pressure is on management to make acquisitions soon, to arrest the slide in the unit price from debut high of $1.16 to recent low of $1.04. Fact remains KGT has zero debt.