Thursday, 27 March 2014

Courts Asia

UOBKayhian on 27 Mar 2014

FY14F PE (x): 12.8
FY15F PE (x): 9.6

Courts Singapore’s 40th anniversary was celebrated with an appreciation luncheon for business partners on 21 March and a big weekend sale for customers on 22-23 March. Besides great deals and giveaways, it hosted a line-up of events that featured personalities such as former Manchester United football player Paul Scholes. Courts also took this opportunity to introduce its newest product category – World of Wellness – which pioneers Singapore’s most complete one-stop wellness destination. World of Wellness (WOW) was launched with over 2,000 products from wearable technology, gym equipment to appliances for the health conscious and many more. WOW products are categorised under Feel Well, Look Well, Train Well and Rest Well. Besides its bestselling line of air purifiers, WOW also carries sports and outdoors goods, such as bikes and apparel, and training supplements. Management has dedicated an atrium at its megastore for WOW and will eventually roll out the concept at its other stores. The first Indonesian megastore will be handed over to Courts in Jun 14, which aims to have it operational by Sep 14 at the latest. The second megastore will follow in six months’ time. Management plans to open 10 stores in Indonesia in the next five years. Maintain HOLD and target price of S$0.62, based on 1.2x P/B, which is at a 30% discount to the blended peer average of 1.7x. While downside may be limited at current levels, the negative outlook on discretionary spending and regulatory risks on consumer financing may continue to weigh on the stock.

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