DBS Group Research, Equity, June 25
CWT'S core logistics business goes from strength to strength. Broad-based revenue growth and higher rate renewals drove top line improvement and better margins in Q1-14, which should continue for the rest of 2014.
Additionally, with CWT Cold Hub's TOP (temporary occupation permit) this quarter and CWT Pandan Logistics Centre's TOP in Q4, this additional 1.4 million sq ft of owned warehouse space will boost the segment's prospects further.
Meanwhile, revenue from financial services has grown exponentially from $8 million in Q1-13 and $9 million in Q2-13 to $34 million in Q4-13 and $48 million in Q1-14.
We now project this segment to contribute $220 million (+237 per cent y-o-y) in revenue in 2014F, with a conservative 15 per cent growth estimate in 2015.
Granted a Capital Markets Service Licence by MAS recently, CWT's financial services segment's growth should be further enhanced in the longer term as well.
CWT is still trading at attractive valuations of 1.3 times FY14 P/B against 16.7 per cent ROE and less than 9 times FY14 PE, versus 17 times PE for Logistics peers and 15 times PE for commodity trading companies. Reiterate BUY.
BUY
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