Courts Asia

[mkmk]

From UOBKH Research Report (8th Oct 13)

Courts Asia (BUY/Target: S$1.14) – Retailer on discount. Courts’ expansion is on track with the group completing its nationwide retail coverage in Malaysia after securing four new sites ytd in FY14 (two bigbox, two small-format stores). It targets an additional four small-format stores for the rest of FY14 to maximise supply chain efficiency. In Indonesia, Courts’ strategic partnership with Sinar Mas Land will drive its immediate presence in the new market. Already confirmed are two bigbox stores in Jakarta to open within six months of each other. The first store will have its groundbreaking ceremony in Sep 13 and will operate next year. Maintain BUY and target price of S$1.14, based on peers’ average PE of 13.5x on our FY14F EPS of 8.5 S cents.

Not vested

[mulyc]

that being said he has been very gung-ho in his expansion plans and if the southeast asia emerging markets growth story really pans out, the stock should soar wouldn't it?

vested.

[safetyfirst]

expanding is one thing, expanding and making money is another issue

[Clement]

Courts Asia looks promising. At current valuations, it seems like an attractive way to gain exposure to the rising economies of our neighboring countries. I have little knowledge on the retail sector and would like help in understanding certain factors.

1)Does credit extended by courts taken into consideration in the TDSR framework for credit implemented by MAS?
2)Does the bank have any recourse to Courts in the event that of a significant default rate in it's securitization pool.

Any insight would be appreciated.

[mulyc]

CEO has been accumulating recently. Hopefully the worst is over.

Vested.

[Freenasi]

The crowd seems good at Courts. Althought i dont think their prices are guinely cheap (most times their discount is back to a reasonable price only, imho), but their share price is reasonable now.
Vested.

[felixleong]

I kinda like Courts too however if I am not wrong its gearing is over 50%, seems pretty heavy and that worries me.

[felixleong]

Courts results out

Q3 EPS remained the same at 1.12 cents

YTD EPS fell from 5.56 cents to 3.66 cents

this kinda worries me

However I think they may be able to make around 4 cents for FY 2014

Borrowings when up from 224mil a year ago to 308mil,
with an equity of only 291mil it is a very risky stock especially if you think interest rates will go up

Value investors should avoid this stock... I wonder if it will become another epicenter... gg

[CY09]

Courts results out

Q3 EPS remained the same at 1.12 cents

YTD EPS fell from 5.56 cents to 3.66 cents

this kinda worries me

However I think they may be able to make around 4 cents for FY 2014

Borrowings when up from 224mil a year ago to 308mil,
with an equity of only 291mil it is a very risky stock especially if you think interest rates will go up

Value investors should avoid this stock... I wonder if it will become another epicenter... gg

Hi Felix, it is ok if Courts is heavily levered. What is important is its ability to ensure low delinquency rates (good credit control system). This is because Courts is more like a financing company. But this does not mean it can be leveraged 100 to 1. It must have adequate buffer like the capital tier ratios banks have.

If such company is capable of borrowing from banks or from bonds at a rate of 5%, and subsequently lend to consumers at 10% interest with an avg 2% delinquency rate, I will buy the company when it is at the right valuation.

[felixleong]

Dun you think the 300+ mil in long term
Borrowings is a lot?