Why Courts Asia is predicted to have a 'muted' 2Q14

Furniture sales in Singapore to slow down.

DBS expects results to be muted, on lower fuel subsidies in Malaysia and slower furniture and household equipment sales in Singapore.

Here's more:

We have therefore reduced sales psf expectations in Singapore and Malaysia; and hence lowered our FY14F/FY15F earnings forecast by 5%/2%.

Longer term, we expect demand in Malaysia to normalise when the market adapts to lower fuel subsidies. With higher housing completion in Singapore going forward, we remain positive on demand picking up.

Since Apr/May 2013, Courts’ share price has fallen 33% from a high of S$1.145 to S$0.77 currently. Courts now trades attractively at 10.0x FY14F PE, below average valuations of 11x and peer’s average of 14x.

Long-term trends continue to be in favour for Courts as a beneficiary of increasing population and housing trend in Singapore. It will also continue to benefit from the growing middle class and rising income trend of ASEAN consumers in Malaysia, and Indonesia from 2014.

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