Loan obligations updates ? According to China Essence's announcement, the Group will be required to repay 16.7% of the loan, i.e. RMB70 million (equivalent to US$10 million), on 31 August 2009. The repayment of the remaining full sum of the loan amounting to US$50 million will be extended by one year to 30 June 2010, with an interest rate of LIBOR plus 3.25% per annum.
Downgrade to HOLD; Target price maintained at S$0.25 We reduced our FY10F earnings estimates by 1.9% after adjusting for refinancing cost. We maintain our target price of S$0.25, equivalent 0.5x FY09 P/B. With an upside potential of 16%, we downgrade China Essence to HOLD.
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