Monday, September 23, 2013

Courts Asia :Softening Consumer Sentiment Priced In (MKE)

Courts Asia
Buy (unchanged)
Share price: SGD0.75
Target price: SGD1.15 (from SGD1.49)
Softening Consumer Sentiment Priced In

Cut TP to SGD1.15. Courts Asia has seen its share price slump 24% in the past three months, vs 15% for its regional peers. Its share price is now 3% below the IPO price. In our view, Courts has been made a punching bag due to weakening consumer sentiment and rising concerns over household debt in ASEAN, particularly among the lower-income earners, as investors have ignored its proactive approach to tighten credit approvals since 4QFY3/13. Mindful that retail spending may be softening and the temporary closure of GEM store; we lower our FY3/14F-16F earnings estimates by 8- 15% and cut our TP to SGD1.15, pegged at a lower multiple of 14x (previously 16x).


Sell down overdone, still a BUY on sound fundamentals. We think the sell down on Courts has been overdone. Despite the cut in TP, we reiterate our BUY call on Courts, based on attractive valuations at 9x FY3/14F PER, proactive measures to tighten credit approvals and positive growth engines in the pipeline.

Quick to act to tighten credit approvals. Recent reports showed that household debt as a percentage of GDP has reached 75% in Singapore and 81% in Malaysia. Unsurprisingly, banks have tightened their consumer credit policies. Though Courts’ credit accounts make up just a small proportion of individual household debts, the group has been quick to act, slowing credit approvals since 4QFY3/13. This has helped mitigate the risk of loan collection, particularly in Malaysia. Margins may thus be affected but the move is better than a spike in default rates.

Weaker consumer sentiment. Management concurred that consumer sentiment in Malaysia is softening, as evidenced by poorer retail sales data reported for the second quarter, as well as the incoming subsidy rollbacks directly impacting consumer discretionary counters. We also expect the closure of GEM which accounts for 5% of Singapore store GFA to have an adverse effect on sales in the 2nd half of FY3/14

Long-term investment conviction. While the macroeconomic conditions paint a grim picture, we remain optimistic that Courts will still be able to deliver stable earnings growth with new stores opening according to schedule. The group’s first store in Sabah opened two weeks ago. Management is standing by its store growth target of 19% YoY for this year, vs. 5% last year, with the bulk of the expansion occurring in Malaysia.



Source/Extract/Excerpts/来源/转贴/摘录: MKE-Research,
Publish date: 20/09/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock