CWT

CWT: Registered a lackluster set of 2Q13 results which was broadly in-line with recent street reduction in earnings estimates for the counter. Despite revenue coming in at a record $1.7b (+66% y/y, +17% q/q) net profit fell to $18.1m (-6% y/y, -33% q/q) largely weighed by a 70% rise in cost of sales to $1.7b. This brings 1H13 net profit to $45.1m (-1%) The strong top-line revenue was led by contributions from the group’s new product line of the Commodity Supply Chain Management (SCM) business, however, the SCM business experienced margin squeeze and fall in certain sales volume, resulting in gross margins slumping to 3.6% versus 6.2% in the corresponding period. CWT also incurred higher admin expenses of $43.7m (+17%) due to higher management cost and the restructuring cost relating to the Commodity SCM business. In addition, finance costs rose by 8% to S$8.5m due to higher borrowings and trade finance volume. Going forward, the group note that it remains on track with its warehouse construction developments that will add new capacity to its logistics activities and has reorganised the management of its SCM business group to streamline operations and trim overheads to enable a greater efficiency and effectiveness in control and management of the business. At current price, CWT trades at an annualized 9.2x annualized P/E.