THE BUZZ
Century Logistics (CLH) entered into a Sale & Purchase
Agreement (S&P) with Nakamichi SB yesterday to buy a
piece of leasehold land in Klang, consisting
of a double-storey factory and
office buildings for a total sum of RM19m.
OUR TAKE
Hungry for more
warehouses. We are not surprised with this acquisition since CLH has been
looking for warehouses in strategic locations in its efforts to expand its warehousing and contract
logistics business. As the group’s present 7 warehouses with total capacity of
840k sq ft space is 96% full, we think the price of this newly-purchased piece
of 26.93 sq ft leasehold land (expiring in 30 June
2105) – which comes with a double-storey factory and office
buildings - is fair and reasonable as it
will enable the group to take its contract logistics business a step further.
With a strong clientele base comprising names like Celcom and F&N, we think
the group’s contract logistics business should continue to see robust growth,
which we expect would chalk up a healthy
y-o-y 8% growth in FY12.
No change in
forecast; CAPEX well within projections.
As the acquisition is well within our CAPEX projection, we are maintaining our
forecast at this juncture. While we believe that CLH’s contract logistics
business will cruise through without a hitch, we are still only
cautiously optimistic on the group’s core Oil & Gas logistics’ segment,
which experienced an interruption in bunker fuel services in 4QFY11.
During that quarter, CLH was asked by the Ministry of Transport’s Marine
Department to suspend the services of four out of eight of its floating and
storage units (FSUs) in Pasir Gudang from Sept-Nov 2011 due to works on
the RM5bn deepwater terminal by Dialog Group (BUY, FV RM3.07) in
Pengerang, Johor. As a result, the group’s 4Q earnings slid 29% during the quarter. Meanwhile, management has
guided that two of its FSUs have resumed operation in new locations,
and that
it is also finalizing the strategic areas for the remaining 2 FSUs. As such, we believe the
group’s 1QFY12 results would still bear the impact of weaker performance in this division. That said, we maintain our NUETRAL stance for
now, with an unchanged FV of RM1.94, based on 6x FY12 EPS.
Source: OSK188
No comments:
Post a Comment