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Will Strong Growth Persist For CWT?
Tradeable, Tradeable Ideas | 14 August 2014
By: Raymond Leung
Articles (142) Profile
  1. CWT announced stellar results as revenue increased 114 percent to $3.7 billion. Net profits grew 46 percent to hit $30.3 million.
  2. CWT’s commodity marketing segment as well as its logistics business and rebound in financial services helped to contribute to the results.
  3. CWT’s Cold Hub 2 is expected to start contributing to its financial performance. Another development, Pandan Logistic Centre is also slated to come online this year.

Analysts' updates on CWT

Last week, CWT Limited (CWT) announced its 2Q14 and 1H14 results which saw huge growth. Revenue increased by 114 percent year-on-year (YoY) for 2Q14 from $1.7 billion to $3.7 billion. Net profit gained 46 percent YoY for the quarter as it went from $18.1 million to $30.3 million.

The strong 2Q14 results contributed heavily to the high 1H14 performance. Revenue for the half grew by 157 percent YoY from $3.2 billion to $8.2 billion. As a result, net profit for 1H14 extended by 45 percent from $45.1 million to $65.2 million.

Once again, the commodity marketing segment of CWT triumphs as the company’s top revenue generator with revenue of $7.6 billion for the first half of the year. Net profit was heavily attributed to the logistics business and the rebound of its financial services segment in 2Q14.

CWT’s engineering segment saw a moderate growth which dwarfed in comparison to CWT’s other businesses. Overall, CWT saw broad based growth across various segments of the company.

Energy products that were introduced this quarter and higher volume of its existing products boosted the performance of the commodity marketing segment. Financial services rebounded back to strong earnings as trade services increased for the quarter.

Logistic sector was driven by higher occupancy rate from CWT Jurong East Logistics Centre that was completed in 1Q14. The sector is expected to continue its strong growth in the next half of this year.

CWT Cold Hub 2 (Singapore Wine Vault) completed its works on 4 July this year. The first batch of tenants will begin moving in this quarter and occupancy is expected to reach 90 percent by the end of this year. Meanwhile, Pandan Logistic Centre will be completed by the fourth quarter this year and has achieved 80 percent pre commitment.

CWT's new Cold Hub 2 is expected to provide a boost to CWT's financial performance this year.

CWT will be redeveloping the Jalan Buroh warehouse into an integrated logistics complex with 6.2 times the built up area of the current warehouse. The project is aimed at upgrading the facilities and unlocking more value in the warehouse.

CWT expects the redevelopment to be completed by the end of 2017. Existing tenants of the property will be moved to other properties so as to not disrupt their current operations.

With near and long term development clearly mapped out, analysts from the street are bullish towards CWT. They unanimously gave the company a “Buy” call and an average potential upside of 16.4 percent.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

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