Friday, 8 August 2014


Kim Eng on 8 Aug 2014

  • 2Q14 in line. Revenue up 114% YoY and net profit, 67%.
  • Growth fuelled by Logistics and Financial Services.
  • We expect stronger 2H. Maintain BUY and TP of SGD1.90 (SOTP). Catalysts are positive earnings surprises.
Another strong quarter
1H14 net profit formed 48% of our full-year forecast. 2Q14 commodity trading revenue, its key propeller, grew 125.7% YoY. QoQ, it was down 20.5% on seasonally lower naphtha contributions. YoY bottom-line growth of 66.9% was fuelled by Logistics and Financial Services.

Higher logistics capacity, better naphtha seasonality
We expect 2H earnings to be stronger, led by increased logistics capacity and stronger commodity trading. CWT’s Cold Hub 2 received TOP on 4 Jul for its 747k sf facility. This is being fitted out. Customers will be phasing into the warehouse progressively, with utilisation expected to reach 90% by October.
Given the seasonality in naphtha demand, we expect a flat 3Q14 for commodity trading, before a pick-up in 4Q.
We maintain our earnings and SOTP-based TP. Maintain BUY with catalysts expected from positive earnings surprises.

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