CHT holding issued a profit warning

CHT (holdings) has issued a profit warning on last night, expecting 3Q2007 to be adversely affected by the reduction in the rate of value added tax export refund, appreciation of the Renminbi against the United States Dollars in 3Q2007 and rising costs. In our previous note, we had expected 5% lower profit in FY07 than FY06, considering the negative impact like from VAT and appreciation of RMB. The company will announce 3Q2007 results in the second week of November 2007. We are considering downgrading the company and will issue a note on it after the 3Q results for more visability.