CWT

CWT: Following a 28% drop the past six months on back of disappointing earnings, Maybank-KE believe that value has emerged, and reiterate its Buy call with a reduced $1.47 TP. CWT’s logistics business continues to be the gem year-to-date, posting steady growth, on back of an 8.4% rise in warehouse rental rate. Over the next two years, growth will primarily be driven by capacity increase (2m sf), which should help to offset any compression in rental rates. The three new warehouses will add around 20% to the group’s total warehouse area. Despite some short-term volatility in CWT’s commodity unit, the house expect some improvement in copper trading next year, while synergies and margin enhancements could eventuate should CWT successfully integrate its commodity trading with its existing logistics capability. Valuations are undemanding based on Maybank-KE’s sum-of-the-parts valuation, where CWT’s warehouse portfolio has been valued at $758m, representing 99% of current market cap and 55% of enterprise value. At the current price, CWT’s remaining business is valued at 6x FY14 EV/EBITDA, which is at a discount to that of its closest peer Noble (8x EV/EBITDA). Separately another local broker upgrade the counter to O/p this morning, citing similar grounds of attractive valuations, addition of new warehouses and a recovery in soft commodities logistics.