Courts Asia

Courts Asia: Credit Suisse has an unrated report on the recent IPO debutante. Courts retails electrical products (35% of FYMar12 sales), IT products (26%) and furniture (16%) with an operating history spanning >35 years in Singapore and 25 in Malaysia. Courts operates 70 stores across more than 1 m sf of retail space — 13 in Singapore where it leads with 9.8% market share, ahead of Best Denki (7.2%), and Pertama (Harvey Norman) (6.7%), and 57 in Malaysia, with 7.0% market share (2nd largest player). Its credit operations, which offer in-house facilities to customers, with the flexibility of installment payments over a period of up to 60 months, are critical to the growth of its retail operations. Mgt plans to expand the store network by an average of 1 store/yr in Singapore and 6 stores/yr in Msia over the next 2- 3 years, with an average 140k sf YoY increase in retail space. Euromonitor estimates total retail value sales in Singapore and Malaysia could grow at 4.9% and 4.3% CAGR to S$6.2 b and RM 9.9 b, respectively. The co raised $43.8 m from its 15 Oct ‘12 IPO, the bulk (>90%) used to fund its expansion into the Indonesian market, with plans to roll out Megastore formats in urban centres to target the rising middle class, with the first in 2014. Credit Suisse notes other SEA retailers (eg. Parkson Bhd in Msia, and CP All in Thailand) are trading at 12-27x/10-23x FY13/14 P/E. This compares with Courts’ 11x FY12 P/E.