In the red. Chartered saw 4Q08 topline (excluding Silicon Manufacturing Partners) come in flat at US$351.7m as higher ASPs were mitigated by lower utilisation rates. Also, the company announced a US$114m net loss for the quarter as compared to a US$5.9m gain in 4Q07 while it sank into the red for the full year at US$92.6m after recording net profit of US$101.7m in FY07.

4Q08 performance below expectations. Chartered had guided for losses to be no more than US$84m for the 4Q which was roughly inline with the analysts' forecast of a ~US$81m loss. Excluding the negatives in the form of a bearish macroeconomic environment (that the company is currently facing) which we believe had already been foreseen by most, an unexpected tax credit reversal of US$33m had actually pushed the company further into the red.

We estimate Chartered to breakeven if ASPs reach US$1,196. We have assumed the ASPs of wafers to hit US$920 for FY09, slightly higher than the US$909 seen in 4Q08 while close to management's guidance of c. US$932 for 1Q09. According to our sensitivity analysis of wafer prices based on an average 51% utilisation rate for the full year, Chartered would only be able to breakeven in FY09 if ASPs were 30% higher than our base case scenario of US$920.

Valuation & Recommendation. In accordance with our previous report, we have excluded market leader TSMC from our peer comparison table as it has historically traded at a loftier P/B value. Currently priced at 0.48x FY09F P/B and assuming Chartered trades down to the industry average of 0.45x FY09 P/B, we maintain our recommendation at NEUTRAL with a new price target of S$0.285 (from S$0.25 previously).