CWT

CWT: Maybank KE maintains that upside is still substantial on its multi-fold structural growth story. House has a BUY and increases TP to $2.05. House see substantial value, with REIT units and warehouse portfolio alone worth SGD1.20/ share. CWT's core net profit increased 70% y/y, and Maybank thinks the major profit driver in commodity trading will continue to drive bottom line in FY13, given the scalability of the business. FY12's bottomline in commodity trading was hampered by expansion start-up cost such as overheads and new hires. Maybank KE understand that insufficient scale in new offices (China and Singapore), as well as new products such as coal and naptha means they are not bottom line-positive yet, which should change in FY13 as volume ramps up. As one of the largest operators of ramp-up warehouses in Singapore, CWT will benefit from the rise in rental rates on the back of increasing capital values. House estimate rates have surged around 12% over the past twelve months, which should feed into profit. CWT is currently developing two warehouses, Cold Hub 2 and Distripark @Toh Guan East, which will be completed by end-2013 and will add around 18% to total Singapore warehouse space under management.