Courts

Courts: HSBC reiterates Overweight with TP $1.46. Notes, at first glance, Courts seemed to have delivered a tepid set of results with revenue growing 1.6% yoy to $197.1m and net profit growing only 5.1% yoy to $7.0m. However, considering the disruptions from the haze in Spore and Msia, elections, credit concerns in Msia, HSBC believes Courts has delivered a good set of results with margins improving across the board. Gross margin improved to 30.6% in 1QFYMar14 from 30.1% yoy, opex ratio declined to 23.7% from 23.9% and net margin improved to 3.6% from 3.5%. With the Eid festivities having just passed, HSBC expects the next quarter to be significantly stronger. Notes the most impt driver for Courts is its new store expansion in Spore, Indonesia and Msia, which currently appear ahead of target. Within its retail coverage in SE Asia, HSBC believes Courts offers the best value , trading at 10x FYMar14e P/E against a sector avg of 17.3x.