CWT

CWT: Established a $500m Multicurrency Medium Term Note (MTN) Programme to raise funds for the general corporate funding purposes of the company. Under the MTN programme the notes may be issued in series or tranches in SGD or any other currency, in various amounts and tenors, and may bear interest at a fixed, floating, variable or hybrid rate or may not bear interest. DBS and SCB have been appointed to act as the arrangers and dealers. We note that if successful, MTN would raise grp’s cash hoard to approx. $750m, which bodes well for grp, in light of grp’s recent acquisition of MRI trading, and its evolvement into a fully integrated commodities/logistics supply chain player. Recall last week UOB Kay Hian had an update on the Co. with a Buy Call and $2.09 TP. Key pts noted were: 1) New growth driver from commodity trading. 2) Grp does physical hedging rather than pure hedging with a net exposure Leverage for its commodity trading arm is “ring-fenced” at the subsidiary as it uses non-recourse financing, with no ultimate liability to CWT. 3) Consolidation phase. After its M&A phase over the past two years, mgt’s current focus would be to integrate its new investments and focus on organic growth for its existing businesses in freight and logistics.