Courts Asia

Courts Asia: HSBC initiates at Overweight with TP $1.29, implying 73% potential upside. Notes the stock is attractively priced at 8x FYMar14e P/E, vs the wt sector avg FY13e P/E of 14.7x. Courts Asia is a leading electrical products, IT products and furniture retailer in Singapore and Malaysia. It is 68.2% owned by the Asia Retail Group, which in turn is owned by four key investors. The co has experienced strong earnings growth over the past three years, with earnings up 22% to $39m for FY12. The co operated 70 stores at end-Mar 2012, with 57 in Malaysia and 13 in Singapore. Nomura forecasts its store portfolio to grow to 94 by end- 2015, with 18 new stores in Malaysia, 3 in Singapore and 3 in Indonesia. Pencils revenue growth of 12-15% in FY13-14e, with earnings increasing 13-19% over the same period.