CWT Limited – CIMB Research

CWT’s 4Q core net profit of S$31.4m excluding one-time gains rose 64% QoQ and 43% YoY, because of strong contributions from naphtha which experiences seasonally stronger demand in winter. Overall revenue was up 65% QoQ and 101% YoY, driven by strong Commodity SCM revenue growth (+71% QoQ, +122% YoY). Core logistics revenue had a mixed showing (+12.4% QoQ, -12.8% YoY) as freight forwarding revenues fell, but contract logistics, commodity logistics and engineering services held up well.

CWT Limited (C14.SI)is one of the few growth stocks that I own. I bought the shares in 2012 because the company was attractively priced and I was impressed by the management’s ability to grow the company to its current scale. However, I was somewhat disappointed that the foray into the commodities market did not go as well as expected. The strong revenue growth did not translate into earnings growth. The 4QFY13 results are more encouraging. I will continue to monitor the company performance in FY14 and add more shares if it manages to improve its margins and earnings. If the situation does not improve over the next few quarters, I will most likely liquidate my holdings and look for other alternatives.

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