CWT

[greengiraffe]

CWT 1Q review-

CIMB:

Investment in MRI bears fruit
CWT had a strong 1Q, contributed by sturdy growth in MRI revenues.
The company also announced the acquisition of a new industrial
facility to cater to its expanding logistics business, especially for the oil
& gas and chemicals sector.
1Q13 core net profit (S$27m)
exceeded expectations, forming 27%
of both our estimates and consensus.
Consistent delivery of MRI earnings
has prompted us to raise our target
P/E for the MRI business from 5.4x
to 7x, based on 20% discount to peers.
Our SOP-based target price increases
to S$1.96.
MRI revenue growth
MRI revenues (S$1,256m) showed
healthy yoy growth (+150%) although
it declined qoq. This increase was due
to higher base metal trading volumes
and new product lines introduced in
3Q12. Assuming logistics GP margins
was constant, MRI gross profit was
20% higher yoy and 35% higher qoq.
Bottom line contributions of MRI,
however, looked muted due to higher
administrative expenses, dragging
down overall operating margins and
bringing profits down closer to our
expectations.
New facility acquisition
On April 30, 2013, CWT completed
the purchase of an old industrial
facility at Pandan Avenue for
S$20.5m (according to REALIS), a
prime location for logistics
warehouses. CWT plans to redevelop
the 23,800 square metres of
industrial space into a multi-storey
ramp-up logistics facility to cater to
its expanding logistics operations in
the oil & gas and chemicals segments.
We adjusted FY13-14 numbers to
account for the acquisition and
development cost, and factored in
incremental logistics revenues in
FY15 numbers.
Rosy outlook
Management remained optimistic on
growth in both the MRI and logistics
businesses, especially since there are
significant synergies to be realized -
growth in the MRI business can
generate more logistics business for
CWT since the raw materials will have
to be stored while in transit.

KE:

CWT Ltd
Growth Story Intact
Structural growth story intact. 1Q13 net profit was within expectation
as CWT registered recurring net profit of SGD26.5m for 1Q13. Our
expectation of a 30% profit growth for the full-year remains intact, and
we continue to see a multi-year structural growth story from there.
Reiterate BUY.
Within expectation. 1Q13 recurring net profit was up 7% yoy to
SGD26.5m (reported net profit of SGD27m). Revenue grew 39% yoy on
expansion of commodity trading business, which helped gross profit
grow 12% yoy. The profit growth came despite higher SG&A cost (up
17% yoy), as CWT continues to build out its commodity trading
business. There was also a high base effect in that MRI had strong
profitability in the same quarter last year.
Commodity trading volumes are up. While the company does not
disclose volume in this segment, revenue was up 20% yoy. Given that
commodity prices are lower, the implication is that volume growth was
stronger than that. This is in line with management’s earlier aim to grow
volume significantly in FY13, and we are likely to see operating
leverage kicking in as the year goes on.
Yet another piece of land. CWT Cold Hub 2 which commenced
construction in March 2012 is now 45% complete and likely to achieve
TOP in 1Q14. Toh Guan Road East is now 30% complete and TOP has
been set for end 2013. We expect these two properties to provide good
rental income next year or provide options for divestment gains. The
company also announced that it has purchased an old industrial facility
at Pandan Avenue in April and this will be developed into a ramp-up
warehouse which will be approximately 640,000 sq feet.
Reiterate BUY. Excluding non-recourse debt associated with
commodity trading business, CWT is in a net cash position of
SGD35.9m. We keep our estimates unchanged, and adjust our SOTP
TP to SGD2.20 from SGD2.05 on account of change in financial asset
and cash value. We have not incorporated the possible value of the
Pandan Avenue property, but it will likely add around between
SGD0.15-SGD0.20 to value per share. Reiterate BUY.

[Dividend Warrior]

er... when mother make money off the child - who do you think is better off?

Which is better - originator of REIT or the slow growing but always cash hungry REIT itself that always need to raise funds to fund yield accretive acquisitions?

To each its own - its your money, your choice, your decision depending on your risk/reward profile.

Vested
GG

CWT good means CACHE also good???

Using the same logic, SPH spinning off its retail assets into a REIT will be good for SPH itself.......

[Temperament]

er... when mother make money off the child - who do you think is better off?

Which is better - originator of REIT or the slow growing but always cash hungry REIT itself that always need to raise funds to fund yield accretive acquisitions?

To each its own - its your money, your choice, your decision depending on your risk/reward profile.

Vested
GG

CWT good means CACHE also good???

Using the same logic, SPH spinning off its retail assets into a REIT will be good for SPH itself.......

Is the spin-off company on its own identity or a subsidiary of SPH? Can spin-off operates as an independent company? Can some one enlighten us? Can SPH choose?

[NTL]

er... when mother make money off the child - who do you think is better off?

Which is better - originator of REIT or the slow growing but always cash hungry REIT itself that always need to raise funds to fund yield accretive acquisitions?

To each its own - its your money, your choice, your decision depending on your risk/reward profile.

Vested
GG

CWT good means CACHE also good???

Using the same logic, SPH spinning off its retail assets into a REIT will be good for SPH itself.......

Is the spin-off company on its own identity or a subsidiary of SPH? Can spin-off operates as an independent company? Can some one enlighten us? Can SPH choose?

Looking at Capitaland's structure, I think it is possible to choose. Before CapitaAsiaMall, it is operated under Capitaland, managing all the REITS.

[greengiraffe]

Sounds the same story to me, can analysts tell us something that we really dunno?

CWT, OCBC Sec maintain BUY:

GROWING THE TRADING WING
· 1Q13 net profit flat at S$27m
· Undervalued warehouse assets
· Three warehouses under redevelopment
1Q results within expectations
CWT Ltd’s 1Q13 revenue jumped 39% YoY to S$1.5b, while net profit
was flat at S$27m. 1Q results were in-line with ours and the street’s
expectations. The surge in 1Q revenue was mainly driven by its newly
established trading business (Commodity SCM) which resulted in
higher volume, and the inception of a new product line. At the same
time, the group incurred higher administrative expenses relating to
the costs of establishing new operations. The group’s logistics
operations were largely business-as-usual.
Growing the Commodity SCM
Commodity SCM revenue expanded by 49% to S$1,256m in 1Q13
(1Q12: S$841m). However, we believe most of the incremental
earnings were offset by higher start-up costs. The Commodity SCM
business is still in a very early stage. As the trading volume scales up,
operating leverage should kick in and we should see sustainable
earnings growth in the coming years.
Expanding the warehouse space
Meanwhile, the group’s construction of CWT Cold Hub 2 (TOP:
1Q2014) and Toh Guan Road East (TOP: end-2013) are at 45% and
30% completion respectively. On completion, we expect the two
properties to contribute to rental income. There may also be
opportunities for divestment gains. In addition, CWT recently acquired
an old industrial property at Pandan Avenue of about 23,800 sqm and
plans to redevelop it into a multi-storey ramp-up logistics facility (max
GFA of 640,000 sqft) for its expanding logistics operations.
Balance sheet supportive of growth
Excluding the self-liquidating short-term trade financing (non-recourse
to CWT), the group has net cash reserve of S$35.9m as of end 1Q13.
Overall balance sheet looks sound and is supportive of long-term
growth. Maintain BUY with unchanged FV of S$2.08.

[greengiraffe]

Loi family upped stake:

http://infopub.sgx.com/Apps?A=COW_Corpor...010713.pdf

http://infopub.sgx.com/Apps?A=COW_Corpor...030713.pdf

[touzi]

I was reading the AR and a few thoughts came to mind:

- For a company with $5B revenue and global operation, CWT has a very small board consisting of 6 directors.

- Commodity SCM made up 82% of FY12 revenue and China account for about half of revenue (52%). With the slow down in China which is affecting commodity trade, CWT may be hit very hard in FY13.

- The defence logistics business probably has just one customer. Question is how many competitor.

Not vested.

[greengiraffe]

From Cache REIT latest results presentations... waiting for $ from potential sale to come:

•Granted by Sponsor (CWT) and C&P on properties in Asia Pacific
•13 properties with approximately 4.5 million sq ft GFA
• Located in Singapore, China and Malaysia
No.
Name
Description
Year of Completion
Location
GFA (sq ft)
1
CWT Logistics Hub 3
5-storey ramp-up warehouse
2011
Singapore
846,303
2
CWT Cold Hub 2
Multi-Storey Warehouse
2013
Singapore
725,000
3
CWT Toh Guan Development
6-storey ramp-up warehouse
2014
Singapore
601,339
4
Tampines Distrihub
4-storey ramp-up warehouse
2013
Singapore
454,475
5
CWT Logistics Hub 1
2-storey ramp-up warehouse
2007
Singapore
375,233
6
PKFZ Warehouse
Single storey warehouse
2012
Malaysia
112,768
7
CWT Tianjin Logistics Hub (Ph 1)
Single storey warehouse
2010
Tianjin
84,372
Selected properties covered by the ROFR
ROFR Properties
KNOWING. BELIEVING. DELIVERING

[propertyinvestor]

I was reading the AR and a few thoughts came to mind:

- For a company with $5B revenue and global operation, CWT has a very small board consisting of 6 directors.

- Commodity SCM made up 82% of FY12 revenue and China account for about half of revenue (52%). With the slow down in China which is affecting commodity trade, CWT may be hit very hard in FY13.

- The defence logistics business probably has just one customer. Question is how many competitor.

Not vested.

China is now looking at allowing their banks to trade commodities while the US is now looking at banning their banks from such operations.

CWT's focus seems centered on metal commodities...

[CY09]

Decided to see CWT's financials after seeing it at yesterday's NDP contingent.

A few observations: 1) It is indeed growing as shown by revenue growth; 2) The company has been expanding and using up a lot of cash resulting in increased borrowings. 3) the company is highly geared with a debt to asset ratio of 76%.

Hence is CWT that good as an investment? It might be if its commodities business pick up.Seeing the way it has been growing, it is similar to Noble or Olam to me in terms of gearing. Any other views?