1Q09 results -- Reported profit of S$27.7m was affected by S$12.6m CDO losses but S$40m recurring profit (-41% qoq, -48% yoy) was in line with our estimates. Revenue reached S$726m (-20% qoq, -23% yoy) boosted largely by Printing (+6% yoy) while others (Networking, Test Measurement, PC) were largely down ~30% yoy.

Margin trend -- Gross margins reached 17.7% (vs our 18.2%; down -347 bps yoy) due to a lower revenue run rate and a shift towards turnkey activities for a Printing customer. Venture also recorded FX gains of S$9m (vs. S$4m in 1Q08).

Key highlights -- 1) FCF generation continued to improve (S$97m vs negative S$2.6m in 1Q08); net cash reached S$304m vs S$192m in 4Q08; 2) Valuations are below historical trough (P/E and P/B) with potential M&A angle as a buyout candidate; 3) Impact from CDO/investments exposure already priced in while any potential write-back would be a positive surprise.

Maintain estimates but raise div payout -- We maintain our above consensus estimates but raise i) our dividend forecast by ~10% to S$0.50; and ii) target price to S$6.70 on higher target price multiple of 8.5x 09E P/E. At the current level, Venture trades at 09E 7.8x P/E, 0.8x P/B and offers 8.4% net div yield.

Risk rating – We lower our risk rating to Medium, from the High Risk rating derived from our Quant rating system, in view of Venture's consistent strong FCF generation ability and improved net cash of about ~S$300mn.