Singapore Stock Market News

CWT Limited - Not a good sign

StockFanatic
Publish date: Thu, 07 Nov 2013, 11:12 AM
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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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