Although 3Q's revenue surprised on the upside, margins were squeezed,
which brought profits closer to our expectations. We continue to expect
margin pressure as volatility of commodity prices stays low. We are
also uncomfortable with CWT's divestment of its REIT investments.
3Q net profit met our expectations
but was below consensus. 9M13's
number was largely in line at 75% of
our FY13, but we cut FY13-15 EPS by
4-12% on expectations of lower
margins. Our target price falls to
S$1.49, now based on 9.1x CY15 P/E
(historical average) instead of a SOP
valuation as CWT divested some
investments. We downgrade from
Outperform to Neutral as we turn less
bullish on its medium-term outlook.
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