CWT Limited announced that its financial services subsidiary, Straits Financial Services Pte Ltd (SFSPL), has been granted a Capital Market Service Licence by the MAS. With the licence, SFSPL will be able to provide worldwide commodity futures, options and centrally-cleared OTC contracts. We think this will complement CWT’s capability in logistics management and global warehousing facilities by providing an integrated one-stop service on both physical and hedging needs. We view this development positively as it shows CWT is actively growing its business beyond its traditional warehousing business in recent years. The development of its financial services segment could be an additional earnings growth engine in the coming years and provide re-rating should it become sizable enough. We re-iterate our BUY call with S$1.87 fair value estimate.

Source: OCBC Research - 9 May 2014