Stock Name: CENTURY
Company Name: CENTURY LOGISTICS HOLDINGS BHD
Research House: OSK
Century Logistics Holdings Bhd
(Aug 13, RM1.72)
Maintain buy at RM1.62 with higher target price of RM2.24 (from RM2): Century recorded its highest semi-annual revenue and earnings (in 1HFY2010) of RM75 million and RM7.6 million respectively, which were higher year-on-year (due to the low base in 1HFY09) as well as year-to-date and quarter-on-quarter (revenue q-o-q: 26%; earnings q-o-q: 14%). With 1HFY10 top and bottom line numbers already representing 51% to 53% of our and consensus' full-year forecast, we deem the numbers in line. On a q-o-q basis, margins contracted slightly owing to higher costs of goods from the assembly segment.
For 2Q, revenue from all three segments (OEM, third party logistics and oil & gas) was predominantly driven by higher sales from the OEM assembly division (which manufactures TV sets) ahead of the FIFA World Cup in South Africa (q-o-q: 152%, y-o-y: 132%, YTD: 78%).
On the logistics side, demand for trade activities continued to be driven by the larger number of shipments handled for its new and current customer base, while O&G logistics continued to see healthy turnover for ship-to-ship transfer, thanks to spillover demand from Singapore, Asia's largest bunker market.
For 2H, management is taking a prudent stance to its upcoming expansion plans in anticipation of slowing growth, notably at its logistics and assembly division. Management's immediate focus is centred on cost cutting, optimisation of its own warehouses and setting up a new production line (from which capacity will increase to 50% by end-2010).
With the results in line with our numbers, we continue to maintain our earnings estimates. We have rolled over our valuation base to reflect FY2011 earnings, as we continue to peg the counter at six times PER, which is a slight discount on the sector PER of seven times, after taking into consideration the dilution effect from the exercise of its warrants. This gives a fair value of RM2.24 (from RM2), which provides an attractive net dividend yield of 5% (FY2010F) and 6.2% (FY2011F). Maintain 'buy'. ' OSK Research, Aug 13
This article appeared in The Edge Financial Daily, August 16, 2010.
Company Name: CENTURY LOGISTICS HOLDINGS BHD
Research House: OSK
Century Logistics Holdings Bhd
(Aug 13, RM1.72)
Maintain buy at RM1.62 with higher target price of RM2.24 (from RM2): Century recorded its highest semi-annual revenue and earnings (in 1HFY2010) of RM75 million and RM7.6 million respectively, which were higher year-on-year (due to the low base in 1HFY09) as well as year-to-date and quarter-on-quarter (revenue q-o-q: 26%; earnings q-o-q: 14%). With 1HFY10 top and bottom line numbers already representing 51% to 53% of our and consensus' full-year forecast, we deem the numbers in line. On a q-o-q basis, margins contracted slightly owing to higher costs of goods from the assembly segment.
For 2Q, revenue from all three segments (OEM, third party logistics and oil & gas) was predominantly driven by higher sales from the OEM assembly division (which manufactures TV sets) ahead of the FIFA World Cup in South Africa (q-o-q: 152%, y-o-y: 132%, YTD: 78%).
On the logistics side, demand for trade activities continued to be driven by the larger number of shipments handled for its new and current customer base, while O&G logistics continued to see healthy turnover for ship-to-ship transfer, thanks to spillover demand from Singapore, Asia's largest bunker market.
For 2H, management is taking a prudent stance to its upcoming expansion plans in anticipation of slowing growth, notably at its logistics and assembly division. Management's immediate focus is centred on cost cutting, optimisation of its own warehouses and setting up a new production line (from which capacity will increase to 50% by end-2010).
With the results in line with our numbers, we continue to maintain our earnings estimates. We have rolled over our valuation base to reflect FY2011 earnings, as we continue to peg the counter at six times PER, which is a slight discount on the sector PER of seven times, after taking into consideration the dilution effect from the exercise of its warrants. This gives a fair value of RM2.24 (from RM2), which provides an attractive net dividend yield of 5% (FY2010F) and 6.2% (FY2011F). Maintain 'buy'. ' OSK Research, Aug 13
This article appeared in The Edge Financial Daily, August 16, 2010.
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