- 3Q14 in line with market but slightly below our numbers on slower Financial Services growth. Cut FY14E-16E EPS by 3-6%.
- 4Q14 to be another good quarter, led by Logistics and Commodity Trading. Financial Services may be weaker from credit tightening in China.
- Maintain BUY with slightly lower SOTP TP of SGD1.87 from SGD1.90.
3Q14 revenue grew 70% YoY to SGD3,767m and net profit, 70% YoY to SGD32m. Results were in line with market expectations but slightly below ours. 9M14 EPS forms 73% of our FY14E forecast.
Highlights were: 1) broad-based growth, with Commodity Trading revenue up 75% YoY; 2) Financial Services revenue grew 220% YoY but fell 26% QoQ, slightly missing our expectation. We believe the QoQ drop came from a tighter credit environment in China after the Qingdao port scandal in June.
Expect another good quarter
We expect 4Q14 to be another good quarter. Logistics should benefit from increased capacity. CWT Cold Hub 2, also known as Singapore Wine Vault, received TOP in 3Q14 with almost 100% take-up. CWT Pandan Logistics Centre is expecting TOP by end-FY14. Customers have committed to c.80% of its operating capacity. Commodity Trading should also gain from bigger naphtha contributions during the winter season in 4Q. Financial Services could remain flattish, given China’s current tightening of commodity trade financing.
We lower net profits by 6/3/3% for the next three years for lower Financial Services contributions. This reduces our SOTP TP to SGD1.87 from SGD1.90. Continue to BUY for further sets of strong results.
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