CWT

CWT: 4Q14 results were below estimates, with net profit at $14.7m (-35.2%) taking FY14 net profit to $112.4m (+6%).

FY14 revenue was up 67% to $15.2b, largely led by a 72.0% rise in commodity marketing revenue to $13.9b, and higher contributions from the logistics services (+14.0% at $920.6m), engineering services (+23.6% at $161.6m) and financial services segment (+213.0% at $204.2m).

Bottom-line was weighed by a 0.3ppt drop in operating PBT margin to 0.9%, largely due to margin squeeze in the commodity marketing segment, which saw PBT margin for the division at 0.1% versus 0.2% the previous year, as a result of weaker demand, liquidity and less favourable trading conditions.

Additionally, finance expenses rose 37% to $61.2m, as a result of significant growth in commodity marketing volume and logistics project financing, while tax expense more than doubled to $17.8m, due to higher operating profits.

Going forward, CWT is guiding for further growth in its logistics division, highlighting that the Singapore Wine Vault (also known as CWT Cold Hub 2) obtained TOP in Jul ‘14 and is about 100% utilised from Jan 2015 after a fitting out period.

Meanwhile, CWT Pandan Logistics Centre obtained TOP from end Jan ’15, and customers’ operations would be phased in progressively after a 2-month fitting out period, with full utilisation expected from Apr ‘15. CWT’s mega integrated logistics hub is presently at planning and design stage, with construction expected to start around mid-2015.

First and final DPS of 4¢ declared. (FY13: 3.5¢), representing a yield of 2.5%.

Balance sheet remains fairly stable with net gearing at 0.38x (FY13: 0.27x) and current ratio at 1.2x.

At the current price, CWT trades at 8.6x FY14 P/E versus Noble’s 9.4x trailing P/E and Olam’s 8.4x trailing P/E.