CWT is a leading provider of logistics solutions for worldwide customers in the commodities, chemical, petrochemical, marine, oil & gas, defense and industrial sectors. A competitive edge is its global logistics network which connects customers to around 200 direct ports and 1,500 inland destinations. The group is currently developing two large warehouses, estimated to add another 50% to its owned warehouse space in Singapore. In total, we estimate its entire warehouse portfolio to be worth about S$800m. Meanwhile, the recently acquired Commodity SCM business is also expected to scale up quickly, taking advantage of the group’s strong global logistics network and reputation as an established commodity collateral manager. Our SOTP fair value estimate for CWT is S$2.08 per share. Given the ample upside, we initiate coverage with BUY.
Global logistics player
CWT is a leading provider of logistics solutions for worldwide customers in the commodities, chemical, petrochemical, marine, oil & gas, defense and industrial sectors. A competitive edge is its global logistics network which connects customers to around 200 direct ports and 1,500 inland destinations. The group controls a number of warehouse facilities in strategic locations in Asia and Europe, serving as key regional distribution hubs and helping facilitate efficient storage, movement and distribution of goods.
Expanding portfolio of warehouse assets
The group is currently developing two warehouses in Singapore – the Cold Hub 2 (TOP: 1Q2014) and Toh Guan Road East (TOP: 4Q2013). Upon completion, its owned warehouse space in Singapore would increase by more than 50%, bringing about higher revenue from warehouse rentals and other logistics services. Including the two warehouses under construction, CWT owns more than 6m sqft of warehouse space, estimated to be worth around S$800m. Given its track record of monetizing its assets into REITs, future disposal gains cannot be ruled out.
Commodity SCM to drive growth
We also expect the recently acquired Commodity SCM business to scale up quickly, taking advantage of the group’s strong global logistics network and reputation as an established commodity collateral manager. Besides purely arranging logistics services for other companies, it now aims to earn a spread by purchasing physical commodities (e.g. copper and zinc) from the producers (e.g. mines) before selling them to the consumers (e.g. smelters).
Initiate with BUY with S$2.08 fair value
We value CWT using sum-of-the-part methodology. For its logistics and Commodity SCM businesses, we assigned PER multiples of 17x and 12x, in-line with their respective peers. The warehouse portfolio is estimated to be about S$800m. Accordingly, our fair value estimate is S$2.08. Given the ample upside, we initiate coverage with BUY.
CWT is a leading provider of logistics solutions for worldwide customers in the commodities, chemical, petrochemical, marine, oil & gas, defense and industrial sectors. A competitive edge is its global logistics network which connects customers to around 200 direct ports and 1,500 inland destinations. The group controls a number of warehouse facilities in strategic locations in Asia and Europe, serving as key regional distribution hubs and helping facilitate efficient storage, movement and distribution of goods.
Expanding portfolio of warehouse assets
The group is currently developing two warehouses in Singapore – the Cold Hub 2 (TOP: 1Q2014) and Toh Guan Road East (TOP: 4Q2013). Upon completion, its owned warehouse space in Singapore would increase by more than 50%, bringing about higher revenue from warehouse rentals and other logistics services. Including the two warehouses under construction, CWT owns more than 6m sqft of warehouse space, estimated to be worth around S$800m. Given its track record of monetizing its assets into REITs, future disposal gains cannot be ruled out.
Commodity SCM to drive growth
We also expect the recently acquired Commodity SCM business to scale up quickly, taking advantage of the group’s strong global logistics network and reputation as an established commodity collateral manager. Besides purely arranging logistics services for other companies, it now aims to earn a spread by purchasing physical commodities (e.g. copper and zinc) from the producers (e.g. mines) before selling them to the consumers (e.g. smelters).
Initiate with BUY with S$2.08 fair value
We value CWT using sum-of-the-part methodology. For its logistics and Commodity SCM businesses, we assigned PER multiples of 17x and 12x, in-line with their respective peers. The warehouse portfolio is estimated to be about S$800m. Accordingly, our fair value estimate is S$2.08. Given the ample upside, we initiate coverage with BUY.
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