Jasmine International

Underperforming as long as lawsuit continues. SELL

Jasmine International Plc (JAS)

Progress on TT&T lawsuit

Today, the court will rule on TT&T's request for control of TTTBB's property,

restricting JAS from disposing, selling, distributing, pledging, and having

obligation on assets and shares in TTTBB (JAS would recognize this in the

afternoon). TT&T has filed a lawsuit against JAS (holding 100% stake in

Acumen: ACU), demanding ACU to sell shares in TTTBB (ACU holding 99.2%

stake) valued B868m, or 69.4% of TTTBB’s total paid-up shares, to the

shareholders of TT&T as of September 17, 2009. TT&T claims that JAS's

purchase of TTTBB’s paid-up shares was unjust to TT&T. (See page 2)

Small hope for infrastructure fund establishment

The market is probably keeping an eye on the court's decision on its control of

TTTBB's property. No matter what decision the court makes on control of

TTTBB's property, JAS's infrastructure fund is not likely to be established. If

the court decides to control TTTBB's property, JAS will surely have no right to

establish the fund until the case is closed. If the court decides not to control

TTTBB's property, JAS will be able to establish the fund, but the Securities

and Exchange Commission (SEC) is not likely to approve establishment of the

fund involved with lawsuit. Aside from TT&T’s petition for the court’s control of

TTTBB's property, additional petition is still unclear. Under the court's control,

TTTBB can still probably operate as usual, having no effect on JAS's profit.

After this, the lawsuit’s effect on JAS's earnings will depend on the court's

final ruling on JAS's disposal of shareholding on TTTBB. In the worst-case

scenario that JAS has to dispose 69.8% shareholding on TTTBB, JAS's

earnings are expected to contract by over 50% from our forecast because

TTTBB generates 70% of JAS's profit.

B4.0 fair value if JAS loses lawsuit, implying large downside

Fair value (DCF) is revised down from B9.2 to B6.7. Terminal growth is

lowered and WACC is increased to reflect higher risk. The current fair value is

near the current share price. However, in the worst-case scenario, the fair

value will be revised down to B4.0, which implies a large downside from the

current share price. JAS would be underperforming as long as lawsuit

continues. We recommend SELL.