CWT

CWT: UOBKH maintains Buy Call and raises TP to $1.72 from $1.61. Note that current share price weakness provides opportunity as fundamentals remain intact. In house view, a potential new area for CWT’s future growth is commodity trading, which provides grp with natural advantages such as trade information flow and strong existing relationships with upstream and downstream companies.

With completion of acquisition of MRI in Jul11, CWT will consolidate contributions from MRI from 3Q11. Group will manage risk conservatively and plans to fully hedge MRI’s commodity position. Expect total warehousing capacity to grow to over 8.5m sq ft in 2011. As for CWT Hub3’s take-up, approximately 85% of the space has been occupied and tenants have been progressively moving in since May 11, bring total warehouse space to more than 2m sqft.

With strong balance sheet (net cash of $104.4m/$0.18/share) as at Jun 11, think CWT will not be in a hurry to securitize these assets and may wait for higher valuations when these assets mature. Assuming no major M&A, house estimate CWT’s capex at S$30m-50m each in 2011F and 2012F.