Revenue slipped 6.7% to S$7.7m in 1Q09 ? In line with expectations ? mainly due to downward pressure on average selling prices ("ASP") of marine cables and accessories as a result of lower copper prices. Revenue from marine cables and accessories, the largest revenue contributor for the Group, declined 22.9% to S$14.1m which was partially offset by an 11.7% increased in revenue contribution from the marine lighting equipments and accessories of S$4.5m.

Gross profit decreased 18.2% to S$7.7m in 1Q09 due to the lower ASP from marine cables and accessories as a result of lower copper prices and the consolidation of new marine switchboards and services segment which carries a lower gross profit margin. Overall gross profit margin declined 4.7ppt to 33.7% in 1Q09.

Net profit decline 31.3% to S$3.4m in 1Q09, achieving 23.9% of our FY09F estimates ? due to the relatively inelastic operating expense which rose 1.8% and 4.0% to S$3.5m in 4Q08 and 1Q09 respectively. Overall net profit margin declined 5.4ppt to 15.4% in 1Q09, in line with our FY09F forecast of 14.1%.

Downgrade to Sell; target price raise to S$0.18. We believe product pricing is likely to stabilize going forward with crude oil and copper price bouncing off from their respective Feb 09 and Dec 08 low. We increase our target price to S$0.18 after raising our valuation parameter to 1.0x FY09F P/B (previously 0.9x FY09F P/B), still pegged at a premium to its small cap peer's average P/B valuation of 0.7x. While we continue to like BH Global for its superior margins and ROE, we believe BH Global, trading at 6.9x FY09F P/E and 1.5x FY08 P/B, is fully valued at current price given that its peers in mid and big cap stocks category are trading at 4~8x FY09F P/E and 0.8~2.3x FY08 P/B. Stock outperformed STI index in the past 1 month, having surged 38% as compared to 19% respectively. Downgrade to Sell on valuation grounds.