Venture Corporation: CDO losses remain a dragV

Hit by CDOs. 3Q08 revenue inched up 3.2% to S$965.6m although the increase would have
been greater at 13.8% should turnover had been measured in US$. Net profit, however, fell
47.8% to S$40.1m as Venture was hit by a S$29.8m non-cash charge on its CDOs in 3Q08.
Management also noted that EBITDA would have stood at S$84.6m and S$263.1m for 3Q08 and
9M08 respectively should the CDO charges were to be excluded.
Lacklustre results even if CDO charges were excluded. We note that bottomline in 3Q08 and
9M08 excluding the mark-to-market adjustments came up to S$69.9m and S$219m respectively
– still lower than the year ago period at S$76.3m and S$225.7m. With several of the major CMs
reporting lower earnings for their latest quarterly results due to the global economic slowdown,
we believe that Venture may not be spared from this trend either.
Full recovery of the CDOs? While we had previously expected Venture to fully recover the
S$167.8m host value on its CDO when it matures in Dec 09, we had not foreseen such a drastic
downturn in the global credit market. According to Venture, the spread for its CDOs had widened
from 138 basis points in end-Jun 08 to 168 during end-Sep 08.





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