Courts Asia

Courts Asia: CIMB upgrades to Buy with TP $0.69. The house highlights that Malaysia has recovered from credit woes two quarters ago. With the opening of two Big Box stores, the outlook is turning brighter. As credit sales recover, Malaysia profits are now 49% of group profit. (FY13:31%). Singapore, though, is struggling as retail sales slow in the aftermath of TDSR. Courts’s FY14 net profit ($28.3m) was within expectations ($28.6m) but below consensus ($30.4m). With Malaysia past its trough and Indonesia coming on, see a 9x P/E valuation as good enough to turn positive. Upgrade to Add from Hold, with residual income model target price rolled forward to $0.69. Potential catalysts stem from earnings growth from Malaysia and Indonesia.