CWT

CWT: 3Q14 net profit and revenue both grew 7% to $32.5m and $3.8b respectively. on the back of a broad based revenue increase for all business segments. The largest increase came from Commodity Marketing (+75%) and Financial Services (+220% y/y, but -26% q/q, which could be due to tighter credit environment in China post Qingdao Port Scandal in June). Gross margins fell 0.4ppt to 2.36%. 4Q is expected to be another good quarter, with Logistics sector’s contribution stemming from increased capacity. CWT Cold Hub 2 (a.k.a. Singapore Wine Hub) received TOP in 3Q14 and is currently almost taken up. Meanwhile, CWT Pandan Logistics Centre TOP is slated for 4Q, with 80% committed occupancy, and advanced negotiations with for remaining capacity is ongoing. With bigger naphtha contributions kicking in, commodity trading business also looks to be buoyed in 4Q. Financial Services may deliver weaker results given current tight credit environment for commodity trade financing in China. CWT is trading at 7.5x FY14e P/E Maybank-KE maintains Buy with lower TP of $1.87 (from $1.90) as it anticipates weakened Financial Services contribution on China’s credit tightening.