Freight Management shares on the rise
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Monday, 01 April 2013 09:01
PORT KLANG: Freight Management Holdings Bhd (FMH), an integrated logistics provider, has been attraching investors’ attention lately with its shares on an uptrend since early this year. FMH shares closed at an all-time high of RM1.19 on March 25.
Three out of four analysts covering FMH have given the company “buy” and “outperform” ratings. RHB Research, in its recent note, raised its target price for FMH to RM1.25. FMH shares closed at RM1.15 last Friday.
Perhaps the company’s net profit compound annual growth rate of 16.9% from financial year 2003 (FY03) to FY12 was the reason for investors to flock to the stock.
For FY12 ended June 30, 2012, FMH recorded a net profit of RM20.87 million on revenue of RM327.1 million. The net profit and revenue were 5.88% and 10.7% higher than the previous year.
FMH group MD Chew Chong Keat said in an exclusive interview with The Edge Financial Daily, “As far as I am concerned, the company has to deliver every time and focus on the business to reward our shareholders better.
“I’m glad that our business model is not asset-focused — we do not operate planes and ships carrying cargos. We are simply freight-service providers. In other words, we use the shipping line services and of course in some cases, we value-add to it,” he noted.
FMH, which has offices in Asean countries and Australia, offers multimodal freight services that include sea, land, air, tug and barge and rail.
For the first six months of FY13 ended Dec 31, 2012, its sea freight segment provided the biggest share of the company’s revenue with RM101.4 million or 57.4%.
Customs brokerage, airfreight and third-party logistics (3PL) and warehousing were the next biggest contributors with RM16.4 million, RM16.3 million and RM16.2 million respectively.
Chew said the company’s 3PL and warehousing business is growing steadily and he expects the segment to grow. The 3PL and warehousing segment caters to major clients including Toshiba, Shell, Pharmaniaga and Novozyme.
RHB analyst Jerry Lee said in his note, “The entry of these companies’ products is very encouraging, especially from Toshiba, which was above expectations.”
Lee said the logistics sector might be on the road to recovery this year, although the growth pace might not be too significant.
“Domestically, judging from the export and import data that we have gathered, container throughput among the major ports is still on a long-term uptrend. On the international front, we notice that exports breakdown by country improved substantially in January 2013,” Lee added.
Chew believes FMH could maintain its net profit growth momentum for FY13. “If things do go well in the fourth quarter, hopefully the (full-year) growth will touch a strong single digit, close to a double digit even,” he said.
However, FMH’s third quarter results might be impacted by the Chinese New Year festivities as a number of its customers took extended breaks in the celebration.
Going forward, FMH is going to improve its efficiency, activate more marketing efforts and increase its services coverage.
While FMH has international presence, it still regards Malaysia as its home of opportunities. Last year, Malaysia’s total container volume stood at 20.78 million twenty-foot equivalent units (TEUs).
FMH only carried 85,108 TEUs in FY12. “As you can see, this is only 0.4% of Malaysia’s total. Basically, our organic growth will be the key,” Chew said.
FMH is also looking at taking up a 25% stake in the shipyard business to service vessels with its Thai partner, YKP-FM Global Shipyard Co Ltd.
“That is the additional business that for us to widen our spread,” said Chew.
FMH also plans to open offices in Cambodia, Myanmar and the Philippines soon. These are the three Asean countries that the company has not penetrated.
This article first appeared in The Edge Financial Daily, on April 1, 2013.