Freight Management’s (FMH) FY12 revenue and earnings were within our and consensus estimates, representing 100% and 105% of both our and consensus forecasts respectively. Revenue and PBT jumped 11% and 17% respectively, mainly attributed to prudent cost control, better efficiency and strong volume growth at its core sea freight and contract logistics segments despite the difficult global economic conditions. The group has proposed a final single-tier dividend of 2.5 sen, bringing FY12 dividend to 4.0 sen. This translates into a dividend payout of 31% and a healthy yield of 4.4%. We continue to like FMH‘s niche Less than a Container Load (LCL) business, which commands lucrative margins. We are lifting our FY13 earnings forecast by 9%, with FV raised to RM1.14, based on a 6x FY13 PER. As its warrants only expire in 2017 (exercise price of RM0.97), we have not diluted our share base and thus raise our EPS forecast for FY13 to 19 sen from 13 sen previously.
Well within expectations. FMH’s FY12 revenue and core earnings of RM327m and RM21m were spot on, representing 100% and 105% of both our and consensus’ FY12 forecasts. Earnings ticked up by only 6% due to a one-off tax rebate of RM1.5m booked in FY11. Stripping off the tax rebate, the company’s core earnings grew a healthy 14%. All in, we are happy with the group’s results, which saw strong revenue and PBT growth of 11% and 17% respectively despite the weak global economic sentiment.
In the pink of health. Save for its loss-making rail freight segment, which contributed only 1% of the group’s total gross profit, FMH’s other segments were in the pink of health. Management has also hinted that it may terminate the rail freight business in the event MMC Corp (TRADING BUY, FV RM3.70) privatizes KTMB. Revenue in Its core sea freight business grew 6% y-o-y and 15% q-o-q, mainly attributed to its strong Full Container Load (FCL) operations, which saw a 20% y-o-y jump in Total Equivalent Units to 55k. Meanwhile, its gross margins from the sea freight segment improved 200bps, thanks to low freight rates. The second biggest gross profit contributor was the contract logistics segment, whose revenue and profit climbed 47% and 43% y-o-y, buoyed by the contracts secured in early FY12 from Shell.
We continue to like the group’s contract logistics business as it has just secured a contract from a pharmaceutical giant to provide in-bound logistics services. While earnings contribution from this new contract secured is still minimal at this stage, we believe it will provide FMH with a good reference and marketing advantage in capturing even more contract logistic deals going forward. In the meantime, the group’s land freight segment also performed immensely well, with revenue soaring 70% y-o-y and 18% q-o-q due to a strong pick-up in freight activities in Thailand after the flood situation improved. Volume (TEU) from this segment ballooned by a stellar 70% y-o-y to 4.2k TEUs.
Positive Outlook. BUY. We are positive on FMH’s prospects going forward and are revising higher our FY13 earnings forecast by 9% for an earnings growth of 11% as we like management’s prudent cost control efforts and better operating efficiency, judging from its success in turning around its previously loss-making tug & barge segment via successful fleet rationalization. As a result, the segment’s profit margin expanded 15ppts y-o-y. FMH has also proposed a final single-tier dividend of 2.5 sen, bringing the total dividend to 4.0 sen for FY12. This translates into a dividend payout ratio of 31% and a healthy yield of 4.4%. Following our earnings upgrade, our FV rises to RM1.14 (previously RM1.03), based on and unchanged PER of 6x, pegged to FY13 EPS. Maintain BUY.
Source: OSK
No comments:
Post a Comment