Better than expected 3Q07 results

Datapulse?s headline 3Q07 NPAT of $4.7m, +257% YoY growth included higher revenue,

improved cost management on raw materials usage, forex gain of $0.2m and gain on

disposal of financial assets of $0.6m. Revenue grew 12.2% YoY to $16.1m underpinned

by follow through demand for new product launches by customers whilst operating profit

surged 221% YoY to $5.1m due to better operating leverage. 9M07 NPAT grew two folds

to $10.6m and has surpassed FY06 full year results of $6.0m on the back of Microsoft?s

Vista and new Xbox game titles. Full year FY07 results will be the highest in six years. In

light of a better than expected third quarter result, we are raising our FY07 bottomline

estimates by 41% to $13.7m.

�� New product launches to boost sales momentum

Microsoft will be releasing several highly anticipated titles during the fall months such as

Halo 3 (September release), Grand Auto Theft 4 (October release), Super Mario Galaxy,

and Call of Duty 4 which are expected to positively contribute to Datapulse?s 1H08

bottomline. Furthermore, Datapulse should also get a lift from a major customer due to

their relocation efforts to Singapore from Thailand and the release of a new product

launch in September.

�� Upgrading to a Buy, target price at $0.37

We are upgrading our recommendation to a Buy from Hold based on upcoming new

product launches and possible new orders in FY08. Datapulse?s lower trading band has

been 14x-18x PE over the past five years. Taking the mean of this band, we see fair value

at 16x FY07 PE and target price of $0.37 Management also guided 50% dividend payout