KCF issued a profit warning last Friday that it would be reporting a loss for 4Q08, citing lower revenue and selling prices for copper foil. We have cut our FY08 profit forecast by 25% to reflect the losses in 4Q08, and reduced our FY09-10 forecasts by 21-41% to assume lower sales and gross margins.

Accordingly, we trim our target price from S$0.265 to S$0.255, still based on 0.43x CY09 P/BV. We continue to believe that the group has the financial capability and strong parentage to ride through the difficult times in 2009. The group is also a prime privatisation candidate, in our opinion, given its huge discount to book value. Maintain Outperform.