CWT Limited’s (CWT) FY15 results came in largely in-line with our expectations even as FY15 revenue plunged 30.0% YoY to S$9.93b. The revenue drop was mainly attributable to a 36.9% YoY decline in revenue from its Commodity Marketing (CM) business due to lower trading volume of naphtha and a general drop in commodity prices amidst a downturn in commodity sector.

However, the impact of the steep revenue decline on its bottom-line was limited as FY15 gross profit margins (GPM) improved across its CM (+0.2 ppt), Engineering (+0.7 ppt) and Financial Services (+21.5 ppt) segments, which increased the group’s over GPM by 0.9 ppt to 3.1%.

FY15 also saw a provision of S$8.8m recorded as a result of the Tianjin blasts on 12 Aug 15. Consequently, PATMI only declined 3.1% YoY to S$108.9m, which formed 98.7% of our FY15 forecast. Pending further clarity from management, maintain HOLD but put our FV of S$2.05 under review for now.

Source: OCBC Research - 18 Feb 2016