CWT's 1H15 core net profit of S$52.7m was below expectations at 44% of our and consensus full-year forecasts due to lower commodity logistics volumes and higher start-up costs associated with the new integrated logistics hub. We cut our FY15-17 EPS by 2-8% and our SOP-based target price falls slightly to S$1.76. The only bright spot was the surprise interim DPS of 3 Scts. While CWT has confirmed that its controlling shareholders are potentially exploring the sale of their stake in the company, we believe this may take time to unfold, especially amid poorer underlying business momentum in the logistics segment. As CWT's share price has seen a good run on expectations of a potential buyout, we believe there may be near-term downward pressure on the share price if such an event is delayed, hence our downgrade from Hold to Reduce.
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