Money Talk: City Developments, CWT, Thai Beverage

SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.

1. City Developments

Broker: CIMB

CityDev has announced a mixed set of results with Q1 core net profit largely in line at 23 per cent of our FY14 forecast. During the quarter, due to the series of property cooling measures and the Total Debt Servicing Ratio (TDSR), sales of existing projects launched last year have slowed.

For the rest of the year, further contributions from other pre-sold projects, including D'Nest (94 per cent sold), Jewel @ Buangkok (83 per cent sold) and Blossom Residences, are expected to support its earnings. The sale of the development project Coco Palms - the last parcel of land within Pasir Ris Grove - will commence on May 17.

Although the sales of mass-mid segments remain stable, we believe that the unsold units in its high-end projects remain a concern.

On the back of a slowdown in the sales of existing projects, coupled with the recent outperformance in its share price, we downgrade CityDev to Reduce from Hold. Our target price is slightly higher at $9.66 as we fine-tune our earnings per share estimates to account for a slightly stronger performance by (hotel arm) Millennium & Copthorne and (hotel trust) CDL Hospitality Trusts.

2. CWT

Broker: OSK-DMG

CWT's Q1 profit made up 31 per cent, and revenue 48 per cent, of our previous 2014 estimate, implying lower-than-estimated margins.

Strong revenue growth from higher naphtha trading volumes and a rise in profits for its logistics and financial service business aided the 32 per cent year-on-year profit rise.

CWT raised $100 million in Q1 through the issuance of notes and has extended the maturity of $152 million worth of term loans, which were due this year. While it is well-funded to complete the construction of two warehouses by end-2014, CWT could raise debt or monetise its warehouse assets, if it wins a tender to construct a new warehouse during 2015-16.

We still believe that improving earnings outlook and a large valuation discount to its peers should re-rate the stock. Maintain Buy with a $1.90 target price.

3. Thai Beverage

Broker: OCBC

Despite Thailand's political unrest scaling up in Q1, Thai Beverage has shown earnings resilience. Its Q1 revenue increased 4.8 per cent year-on-year to 41 billion baht, in-line with expectations as it forms 25.1 per cent of our FY2014 forecast.

Due to better-than-expected gross profit margins, net profit increased 72.9 per cent to 6 billion baht, making up 30.2 per cent of our expectations.

Alcoholic segments retain market shares while competition caused a drop in sales volumes in the non-alcoholic beverage segment. We revise the gross profit margins for its beer and spirits segments upwards to take into account the higher selling prices post-excise tax increase.

We maintain Buy with a slightly higher target price of $0.74.