2 Important Things Investors Should Know About CWT Ltd

Credit: Axisadman

CWT Ltd (SGX: C14) is a logistics company that was founded in 1970.

It is currently the largest home-grown logistics services provider and had brought in S$9.9 billion in revenue in 2015.

The company’s logistics services include warehousing, transportation, freight forwarding, cargo consolidation, procurement, inventory management, and more. Beyond logistics, CWT also has interests in commodity marketing, engineering services, and financial services.

CWT has been a solid winner in Singapore’s stock market over the past five years – its share price has climbed 92%.

Here are two things investors may want to know about the company:

1. The company has grown consistently over the last 10 years

Here’s a table showing how CWT’s revenue, operating profit, and net asset value has changed in each year from 2005 to 2015:

Source: CWT 2015 Annual Report

All three financial numbers have increased at impressive compound annual growth rates of at least 23.3% for the period under study.

It’s worth noting that CWT’s weighted average share count had essentially doubled from 300.2 million in 2005 to 600.3 million in 2015, according to data from S&P Global Market Intelligence. But even so, the three financial numbers’ compound annual growth rates on a per-share basis would still range from 15% to 34.9%.

2. The company is managed by its major shareholders

When a company is managed by shareholders with a controlling stake, there are pros and cons. If management also owns a significant stake in a company, there is incentive for management to focus on sustainable long-term growth instead of banking on unsustainable short-term gains. But, it will also be difficult for a company’s minority shareholders to remove management if incompetence and/or integrity issues surface.

In the case on CWT, its chairman, Loi Kai Meng, controls 50.1% of its shares as of 16 March 2016. This gives Loi significant power in terms of directing CWT’s future.

It can be difficult to judge whether Loi’s interests are aligned with CWT’s minority shareholders. But we know for sure that CWT has been a good investment for all its shareholders over the past five years – as mentioned earlier, the company’s stock price has gained nearly 100%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.