Creative Technology - Patent

CREATIVE AWARDED U.S. PATENT ON ITS INVENTION OF USER INTERFACE FOR PORTABLE MEDIA PLAYERS

“Zen Patent” Granted for Invention of its User Interface for Portable Media Players Including Many of Creative’s Zen and NOMAD Jukebox MP3 Players and Found in Some Competing Players Such as the Apple iPod and iPod mini

Singapore – August 30, 2005 – Creative Technology Ltd. (NASDAQ: CREAF), a worldwide leader in digital entertainment products, today announced that it has been awarded U.S. Patent 6,928,433, which Creative is referring to as the “Zen™ Patent.” The Zen Patent was awarded to Creative for its invention of the user interface for portable media players, including many of the Creative Zen and NOMAD® Jukebox MP3 players, and found in some competing players, such as the Apple iPod and iPod mini. The Zen Patent covers the user interface that enables users of portable media players to efficiently and intuitively navigate among and select tracks on the players. Creative applied for the Zen Patent on January 5, 2001 and it was awarded on August 9, 2005.

Creative’s invention for the user interface for portable media players enables selection of at least one track in a portable media player as a user sequentially navigates through a hierarchy using three or more successive screens on the display of the player. One example would be the sequence of screens that could display artists, then albums, and then tracks. When the user selects an artist, the player displays a list of albums for that artist. Selection of one of the listed albums then displays a list of tracks on the album.

“The user interface covered by the Zen Patent was invented by Creative research and development engineers in our Advanced Technology Center in Scotts Valley, California,” said Sim Wong Hoo, chairman and CEO of Creative. “The first portable media player based upon the user interface covered in our Zen Patent was our NOMAD Jukebox MP3 player. We shipped the NOMAD Jukebox to U.S. retail customers in September of 2000, and by November of 2000, it was already ranked as the top revenue-generating product in the U.S. in the digital audio player category, according to PC Data. By January of 2001, we announced that we had already sold 100,000 NOMAD Jukeboxes. The Apple iPod was only announced in October 2001, 13 months after we had been shipping the NOMAD Jukebox based upon the user interface covered by our Zen Patent.”

“I am very excited that we were awarded the Zen Patent, which helps to protect our invention and recognizes our innovation in portable media players,” said Sim. “After a major investment of time and effort by a group of our research and development engineers, we developed a way for a user to efficiently and intuitively navigate and select tracks from a significant number of tracks stored on a player. Before this invention, there was no intuitive and efficient way to deal with the large number of tracks that could be stored on a highcapacity player.”

“There has been press coverage recently regarding the rejection of Apple’s patent application, published as Pub. No. U.S. 2004/0055446 for a user interface in a multimedia player. This Apple patent application was filed on October 28, 2002. A related provisional application was filed by Apple on July 30, 2002, eighteen months after our filing date for the Zen Patent and over twenty months after our NOMAD Jukebox based upon our user interface was on the market,” added Sim.

“We continue to innovate in digital media players with the introduction of the Zen Vision, which adds high-quality video playback to its MP3 music and digital photo viewing features. The Zen Vision, as well as the upcoming Zen Micro Photo with a color OLED screen and many more new products, will be based upon the user interface covered by the Zen Patent,” noted Sim.

The full text and images of the Zen Patent, U.S. 6,928,433 are available at www.uspto.gov by doing a patent number search under issued patents.

Comments - Wow! Creative going to sue Apple for royalties soon ? :D

Previous Post

Asia Enterprises Holding Limited - IPO

Asia Enterprises Holding Limited

Issue statistics
Offer size: 68m new shares Public Tranche - 5m shares Placement Tranche - 63m shares
Price: S$0.27
NTA per share (post-IPO): 21.43 cents
Historical PE: 4.52x (FY04)
Market Cap (post-IPO): S$72.36m
Open: 23 August 2005
Close: 30 August 2005, 12.00noon
Trading: 1 September 2005 (on "when issued" basis)
Lead Manager: DBS

The company is a major Singapore-based steel distributor. Besides supplying a wide array of steel products, it also provides value-added steel processing services to industrial end-users in Singapore and the Asia Pacific. Most of its customers are from the shipbuilding & marine, engineering/fabrication, oil & gas, construction, precision metal stamping and manufacturing industries/businesses. The company expects its business to be driven by an increase in shipbuilding- & marine-related activities. Revenue jumped 44.3% from $56.5m in FY03 to $81.5m in FY04. The improvement in earnings, which rose more than threefold from $3.5m in FY03 to $11.9m in FY04, could be attributed to higher sales.

Estimated net IPO proceeds of S$16.2m will be used for the following:

1. S$10.0m to support business expansion, in particular, to grow its market share in shipbuilding- and marine-related activities and to expand its customer base in Southeast Asia.
2. S$5.0m for possible investments to expand its product range, capabilities and businesses through acquisitions, JVs or strategic alliances.
3. S$1.2m as working capital.

PROSPECTUS EXTRACTS

Page 63 - Ownership Structure
Comments - Wow! So many different families! They ought to provide us with the family tree!

Page 65 - Lock up period
Our Shareholders, namely the Koh family, the Lor family, the Ong family, the Yeo family and the Teo family, who will in aggregate hold 26,924,306 Shares, representing 10.05% of our Company’s enlarged issued and paid-up capital after the Invitation, have each undertaken not to sell, transfer or otherwise dispose of any part of their respective interests in our Company for a period of three months commencing from the date of our Company’s admission to the Official List of the SGX-ST.
Comments - How come all these families so special? The rest 6mths lock-up period. All waiting to take profit asap, huh?

Page 78 - Inventory turnover days 258(FY02), 210(FY03), 299(FY04)
Comments - Wow! almost 300days! Money sitting in the warehouse, not in the bank earning interest! Looks scary to me, poor inventory mgmt?

Inventory data for all 3 listed Steel Distribution cos. using latest results,

1. AEH : Inventory $46.502Mil (Dec-04) vs Revenue $81.395Mil (1 yr)
   
   • AEH has the highest inventory, slightly more than 50% of revenue (1yr)
     
2. HSH : Inventory $67.466Mil (30-Jun-05) vs Revenue $197.819Mil (11mths) ; Inventory $34.133 (31-Jul-04)
   
   • HSH is next highest , 31.3% (annualised using 11mth revenue data)
     
3. HG Metal : Inventory $80.002Mil (31-Mar-05) vs Revenue $154.4Mil (6mths) ; Inventory $62.004Mil (30-Sep-04)
   
   • HG Metal is lowest, aro' 26% (annualised using 6mth revenue data)

It does appear that AEH has the highest inventory figure and in an increasing steel price environment, they'll enjoy higher margins. The converse will be true in a declining steel price environment.

Note : Above figure is a simple estimation. It does not take into consideration the different make-up of the biz. A more accurate figure would be to use only data for the distribution biz (as that forms the bulk of AEH biz).

Page 82 - Customers with 5% or more of total revenue in any of last 3 years are,

1. Keppel Offshore & Marine group : 4.8% in FY04
2. Metal Component Engineering Limited : 2.0% in FY04
3. Piasau Slipways Sdn Bhd : 7.4% in FY04

Comments - So, the other "branded" name customers often mentioned for this IPO do not contribute 5% or more in revenue in any of the past 3 years.

• FY04 Revenue $81.495Mil : 5% = $4.1Mil
• FY03 Revenue $56.474Mil : 5% = $2.82Mil

Page 87 - Some of our competitors in the steel distribution business include, Chuan Leong Metalimpex Company (Private) Limited, HG Metal Manufacturing Limited, Hup Seng Huat Co. Ltd. and Regency Steel Asia Pte. Ltd.
Comments - Those who are free can compare with the 2 other listed competitors, HG Metal and Hup Seng Huat. Some comparison data,

1. Share Price $0.27 at 27% premium to NAV. Premium higher compared to HSH but lower than HG.
2. Debts : After IPO, can be debt free. Both HG & HSH have large debts of $100Mil & $46Mil respectively.
3. Market Capitalisation : HSH is biggest at $134Mil. AEH & HG about the same at $70Mil+

Page 99 - Had the Service Agreements been effective since 1 January 2004, the aggregate remuneration (including CPF contributions and other benefits) payable to our Executive Directors for FY2004 would have been approximately $2.3 million instead of $2.9 million and profit before tax for our Group would have been approximately $16.0 million instead of $15.4 million.
Comments - Yes, the salaries are huge but would be lower after the listing compared to what they'd been getting prior to the listing. Of course, the more profitable, the higher the salaries would be. I don't think I've seen many small cos. paying their MD so many $Mil in salaries!

Page 91
TRENDS

• (a) Our Order Book Our revenue in FY2004 increased by $25.0 million from $56.5 million in FY2003 to $81.5 million in FY2004. This was an increase of approximately 44% as compared to the previous corresponding period, which was due mainly to an increase in the selling price of the steel products we distribute. Barring unforeseen circumstances, we expect to register continued growth in our sales in FY2005 due to the growth in shipbuilding and marine related activities in Singapore and Southeast Asia. Typically in our industry, our customers do not commit to a definite and long-term purchase requisite of their requirement for the various steel products. Notwithstanding this, over the last 32 years, we have established a diverse pool of more than 600 customers in Singapore and the region. Our repeat customers who collectively account for approximately 80% of our revenue for each of the last three financial years ended 31 December 2004. We were therefore able to establish ourselves as a regional centre for steel products.
  
• (b) Steel Prices In FY2004, we achieved a gross profit margin of 30% due to a steep increase in the selling prices of the steel products and lower inventory holding cost. Our inventories were accumulated over the last few years when steel prices were lower. However, our Directors believe that the steel price increase in FY2004 was largely a result of strong global demand for steel. In Asia, the demand was primarily driven by the PRC due to their rapid growth of investments and industrial outputs. In 2004, the PRC government has taken steps to cool the economy, by using a combination of fiscal and monetary policies. Notwithstanding the recent increases in the price of iron ore and coking coal, we believe that the steep increase in steel prices in FY2004 is unlikely to be repeated in the near future. As a result, we believe that moving forward, our gross profit margin could be lower than in FY2004. The average selling prices for our steel products in June 2005 remained relatively stable as compared to the average selling prices in December 2004, supported mainly by the strong demand from our customers engaged in shipbuilding and marine related activities. Barring any unforeseen circumstances, we believe that demand for steel will continue to experience growth and our Group will continue to benefit from the increase in demand for the current financial year.

Comments - Fm the above highlighted points, Revenue may be higher than 2004 but Gross Margin will likely be lower. In a steel price increasing environment, the co. benefited fm having a high Inventory Turnover of aro' 300days (pg78, also above), resulting in a high Gross Margin in FY04. However, going forward, should the price of steel drop, the reverse will be true, ie. Gross Margin will drop (as they will then have expensive 300 days old stocks but selling price is lower). So, for those who plan to be vested, watch out for steel price trend.

Page 58 - We intend to recommend dividends of not less than 40% of our net profits attributable to Shareholders in FY2005.
Comments - From pg91 above, revenue may be slightly better and gross margin may be lower than FY04. I simply use net profits for FY03 and FY04 and average them to get an indication,

1. Net Profit : FY03 = $3.475Mil ; FY04 = $11.932Mil ==> Average = $7.7Mil
2. EPS : FY03 = 1.74cts ; FY04 = 5.94cts ==> Average = 3.84cts
3. Shares : Pre-IPO = 200Mil ; Post-IPO = 268Mil

Using the average EPS and the enlarged nos. of shares,

• EPS = 3.84cts * 200/268 = 2.87cts
• Thus Dividend = 40% * 2.87cts = 1.15cts
• Net Dividend Yield = 1.15/27 = 4.245%

Note : The above is just an estimate. No figures were given in the prospectus.

OTHER COMMENTS

1. Only new shares are being issued, ie. no vendor shares. So, meaning, they are not cashing out some of their current hldgs immediately.
   
2. The usual practice of all IPOs would be to distribute out most of the existing cash prior to IPO as dividends. The same is done here, but the controlling Lee family (and some others) chose to get preference shares (which were converted to shares for IPO) instead of cash.

The above 2 points does indicate that the controlling Lee family is planning to remain for the long term, which is good. But then again, they are very well paid, in terms of salary, so no reason for them to quit if co. is profitable.

Very likely, the other families were 'forced' to follow this direction of no vendor share being issued, but in return, their lock-up period is shorter, 3mths (pg65, also above). I think quite of few of them will likely cash out after the 3mth lock-up period.

Disclaimer : The above is only my opinion. Do not use the above as a basis for your decision.

STI : BT

BT, Published August 24, 2005

Range-bound trading ahead for STI

SHORT-TERM stability has returned to the market in the past week as the Straits Times Index steadied itself near the 60-day moving average. Considering that the corporate earnings season is drawing to a close, we believe the index is likely to remain range-bound in the weeks ahead

Interest will likely gravitate towards companies that have delivered on the earnings front with strong growth prospects. Another factor to watch is oil prices, whose rising trend in recent weeks has been a debilitating factor to the equities market. While market watchers expect companies to perform better in 2H05, this scenario could be derailed if oil prices continue to trend up.

Observation of past trends suggests the market will slip into consolidation soon after oil prices break out into new highs. Thus, a good indicator to watch for the resumption of market momentum is a pullback in Brent crude prices.

Meanwhile, a range-bound environment is to be expected.

Support levels are:

1. 2245 - start point of the long white candle formation on July 19.
2. 2269 - the recent low touched on Aug 15.
   

Resistance levels are:

1. 2319 - 38.2 per cent retracement level of the correction from 2400 to 2269.
2. 2334 - 50 per cent retracement level of the correction from 2400 to 2269.

Prime REIT

Extracted from UOB Kay Hian Research Talking Point

Prime REIT: REIT of prime assets

The REIT fever will jump up another notch when IPO of Prime REIT takes place. The REIT will comprise of two prime Orchard Road properties in its portfolio. It's 74% stake in Wisma Atria and 27% stake in Ngee Ann City are worth S$1.3b.

The majority of its valuation from retail (85%) is positive, with the government's initiative to re-juvenate Orchard Road as well as the development of Integrated Resorts. Also, the possibilities of enhancing distribution per unit (DPU) is greater for retail space, given that the manager can re-mix tenants, re-size stores etc.

Prime REIT is offering a yield of about 5.1-5.4%. This is higher than CMT's forecast yield of about 4.1% and Suntec REIT's 5.3%. While CMT has had a growth track record, growth for Suntec REIT has been insignificant to-date. Given the excellent asset location, growth prospects and good DPU yields, Prime REIT is an attractive alternative to both Suntec REIT as well as CMT.

Watch out for REIT's IPO in mid-September.

Properties:	74% of Wisma Atria and 27% of Ngee Ann City
Lease Remaining:	56 yrs for Wisma Atria and 67 yrs for Ngee Ann City
Total Asset Value:	S$1.3b
Equity Raising:	S$915m
Commercial MBS:	S$420m
Debt to Asset:	31%
Initial yield:	5.12 - 5.40%
Indicative range:	S$0.93 - 0.98
Number of units:	581.9 - 629.1m
Financial sponsor:	Macquarie Group (Will hold a stake of 20-25%)
Cornerstone other than Macquarie:	AIA, DBS & Great Eastern (Together upto 13.3% stake)
Growth plans:	Rent increases, acquisitions (Singapore & overseas)
IPO Date:	Slated for mid-September

Previous Post

Introduction of REIT Investing

If you happen to come across this blogsite and decide to read through some of our blog topics, you will found out that there is a huge posting or interest on REIT counters. One of the reason is that the contributors for this blog site has vested interest (including me) in the REIT counters currently trading in SGX market. So I decided to post some basic introduction of REIT.

Actually, REITs are considered quite new in the Singapore equity market, with the first two REIT floated in Singapore Exchange (SGX) in July 2002. Currently, there are about six REIT counters trading in SGX at this point of posting. You may want to visit StockPick created by KK (one of the BullRun contributor) for more detailed analysis of REIT counters.

A REIT is an investment vehicle that holds a portfolio of real estate assets primarily with the aim of generating income from the properties. It is set up as a closed-end investment trust, which means that no new shares or units are issued after the IPO. REIT will only issue new shares or units when the REIT manager decide to acquire additional properties. The sale of new shares or units will fund the acquisition. Once, the REIT start the debut trading, supply and demand will determine the market price.

Singapore REITs are required by law to hold at least 70% of their total assets in real estate assets and they are not allowed to engage in property development activities, whether on their own, through joint venture with other property developers or investing in unlisted property development companies. This mean that REITs are not exposed to the risks of property development.

Benefit of Investing in REITs

• Exposure to the Property Market - By buying REIT, you can own a stakes in the properties held by REIT.
  
• Portfolio Diversification - You reduce your risk as REIT normally hold multiple properties under it portfolio.
  
• Regular Income - You can expect to receive rental income generate by the properties held by the REIT.
  
• Potential Capital Gains - You can expect to reap capital gains if you sell your REIT shares at a higher price than you purchase.
  

Risks of Investing in REITs

• Deterioration in business conditions
  
• Increased supply of similar properties
• Early termination of lease by tenants
• Increase in Interest Rate
• Fall in Property prices

Factor to Consider when Buying REIT

• Type of Property Held by REIT - Industrial, Retail, Office
• Quality of Property
  
• Quality of Management
• Occupancy Rate
  
• Expenses
• Share Price Vs NAV of REIT
• Deferred Payment Scheme - For new acquisition or New IPO launch
  

Credit: Some of the information for this post is extracted from Benedict Koh and Fong Wai Mum book, Personnel Financial Planning