Venture is committed to further enhance its design capability and provide more enterprise solutions in the future. It has sent out product samples to targeted new clients in aerospace, industrial instrument, medical, and communication industries in Q2 and these could become important growth drivers in 2010.

The industry is not completely out of the woods yet Looking into the different sales growth rates among different product lines, the implication is for products that are more consumer related, they are closer to demand recovery. On the contrary, products that are more industrial or capex related, are more distant from demand recovery. While we have seen stabilization in market demand, a full recovery may not take place immediately.

Q209 results largely in line Venture reported Q209 net income of S$60.9m (+120% q/q) vs. UBSe S$42.1m due to higher fair value market adjustment on its derivative financial instrument. EBIT of S$38m was in line with UBSe S$38.8m. The company managed to improve its cash conversion cycle to 64 days, 7 days shorter than a year ago.

Valuation: Maintain Buy rating; fine tune price target to S$9.3 We adjust our 2009/10//11 EPS estimate from S$0.57/S$0.79/S$0.89 to S$0.61/S$0.74/S$0.84 as we adjust the sales mix to account for a higher percentage of lower-margin businesses such as the full configuration service. We believe the long-term industry recovery trend is intact and Venture is wellpositioned to capitalise on the potential recovery in industrial IT spending.