Century Logistics Holdings Bhd (Nov 11, RM1.70)
Maintain market perform with fair value RM1.60: Century Logistics’ 9MFY12 net profit of RM24.1 million accounted for 75% of our and consensus full-year estimates. The Port Authority of Johor has ordered several floating storage units (FSU) operating in Pasir Gudang to depart. This is mainly to improve the access route to the area for two major projects, including the new Petroliam Nasional Bhd refinery and petrochemical integrated development project in Pengerang.
This brought Century’s total FSU operations down to six from nine (two remain in Pasir Gudang, three are in Port of Tanjong Pelepas and one is in Batu Pahat). Although we understand Century is poised to obtain a licence to place another FSU in PTP, the setback will likely affect the ship-to-ship segment in 4Q11. It is unlikely the other two FSUs will be placed in PTP as it is at capacity.
The third party logistics (3PL) segment continues to garner strength for Century, as we understand it has just recently secured a new contract for a leading steel company. This follows its recent contract from Celcom Axiata Bhd for storage and distribution which started in September.
Furthermore, we believe it could benefit from Fraser & Neave Holdings Bhd’s (F&N) plans to increase operations in Malaysia following the Thai floods. Century currently handles the logistics and distribution for F&N’s dairy products (including raw materials) within Malaysia. Note that 3PL is the main revenue contributor (55% to 60% of total revenue).
Our fair value estimate is lowered to RM1.60 per share (from RM1.68) based on six times FY12 earnings per share (EPS) of 26.7 sen, in line with our benchmark one-year forward price-earnings ratio (PER) for the transport and logistics sector.
We remain cautious on transport and logistics companies but we believe the risk of a slowing global economy is partly mitigated by Century’s focus on the fast-moving consumer goods market both in Malaysia and countries in Asia where demand is expected to remain resilient. We maintain our “market perform” call on the stock. — RHB Research, Nov 11
This article appeared in The Edge Financial Daily, November 14, 2011.
Maintain market perform with fair value RM1.60: Century Logistics’ 9MFY12 net profit of RM24.1 million accounted for 75% of our and consensus full-year estimates. The Port Authority of Johor has ordered several floating storage units (FSU) operating in Pasir Gudang to depart. This is mainly to improve the access route to the area for two major projects, including the new Petroliam Nasional Bhd refinery and petrochemical integrated development project in Pengerang.
This brought Century’s total FSU operations down to six from nine (two remain in Pasir Gudang, three are in Port of Tanjong Pelepas and one is in Batu Pahat). Although we understand Century is poised to obtain a licence to place another FSU in PTP, the setback will likely affect the ship-to-ship segment in 4Q11. It is unlikely the other two FSUs will be placed in PTP as it is at capacity.
The third party logistics (3PL) segment continues to garner strength for Century, as we understand it has just recently secured a new contract for a leading steel company. This follows its recent contract from Celcom Axiata Bhd for storage and distribution which started in September.
Furthermore, we believe it could benefit from Fraser & Neave Holdings Bhd’s (F&N) plans to increase operations in Malaysia following the Thai floods. Century currently handles the logistics and distribution for F&N’s dairy products (including raw materials) within Malaysia. Note that 3PL is the main revenue contributor (55% to 60% of total revenue).
Our fair value estimate is lowered to RM1.60 per share (from RM1.68) based on six times FY12 earnings per share (EPS) of 26.7 sen, in line with our benchmark one-year forward price-earnings ratio (PER) for the transport and logistics sector.
We remain cautious on transport and logistics companies but we believe the risk of a slowing global economy is partly mitigated by Century’s focus on the fast-moving consumer goods market both in Malaysia and countries in Asia where demand is expected to remain resilient. We maintain our “market perform” call on the stock. — RHB Research, Nov 11
This article appeared in The Edge Financial Daily, November 14, 2011.
