Courts Asia to open one new store in Singapore annually for the next 3 years

And it targets 6 new stores in Malaysia.

According to UOB, CAL’s earnings will continue to grow strongly on the back of new store openings, increasing average sales/sf, and better economies of scale. Management targets to open at least one new store in Singapore and six new stores in Malaysia annually for the next 2-3 years, adding an average of 140,000sf of retail space every year.

Refurbishments and relocations aim to improve existing store performance with better store layouts, customised product mixes, and more “consumer experience” areas. 

Here's more from UOB:

Repeat patronage and added income stream from credit business. The revamped “Courts Flexi Schemes” business is expected to provide a stable income stream for CAL. Purchasing on credit encourages repeat buying and typically, credit customers are more inclined to avail of extra services.

Out of the over 273,000 customers under the Courts Flexi Schemes as of end-FY12, approximately 84% of those in Singapore and 68% of those in Malaysia are repeat customers. In FY10-12, service charges earned through the provision of these facilities contributed a substantial 15.4-18.3% of total revenue.

Recapturing Indonesia. CAL has signed a lease for a site in East Jakarta, where it targets to open its first megastore by 2014. Talks are currently ongoing with the preferred developer.

CAL intends to capitalise on the recent trend of retail “big box” formats in this growth market, with store areas of at least 60,000sf and up to 120,000sf, through greenfield projects or acquisitions. Management has recently recruited an executive with experience in this market to join the team.

Expect above-industry average growth, maintain BUY. CAL’s impressive turnaround story and market leadership in Singapore and Malaysia makes it an attractive proxy for the growing Asia-consumer market.

We view a potential  for significant upside ahead as CAL focuses on improving the profitability and productivity of existing stores and further gaining market share and scale with new store openings.