OCBC released a research report on CWT Limited after meeting with the company management. I have distilled the main points of the report:
- CWT Limited is significantly undervalued in terms of PER relative to companies in the same sector.
- Prices in its Commodity SCM business are fully hedged and the company deals mainly with state-owned companies and MNCs. The analyst believes the Commodity SCM is less risky than perceived. The FY14 core earnings is also expected to be higher as energy products make a full-year contribution.
- The Logistic business is estimated to deliver 16% CAGR when the three redeveloped/new warehouses receive TOP in FY14. Collectively, the trio will increase the portfolio’s total GFA by 38%.
I mentioned in a previous post 2 weeks ago about the strong performance of the stock. Since then, the price movement has been even more impressive, gaining 15.15% from 5 Mar to 3 Apr! A near-term pullback is very likely, but at 8.5x PER and 1.5x P/BV, I believe there is ample room to go up further if the company meets the earnings expectation.
Click here to view the report by OCBC Research
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