Stock Name: ILB
Company Name: INTEGRATED LOGISTICS BHD
Research House: RHB
Integrated Logistics Bhd
(March 9, RM1.01)
Maintain outperform at RM1 with fair value RM1.40: The construction of the 67 million yuan (RM34 million) Phase 2 of ILB's warehouse complex in Wujiang, with a total area of 390,000 sq ft, is scheduled to start during the month with completion expected by August. We understand that ILB has already identified potential tenants, including a world-renowned France-based cosmetics and beauty company and a prominent US-based global online retailer.
The full completion of the greenfield 170 million yuan warehouse complex for Frestech/Xinfei is expected by June. At present, three of the five warehouses within the 810,000 sq ft complex have been completed.
We understand from independent sources that ILB may also embark on a fairly sizeable greenfield warehouse project within the auto industry belt in northeastern China, to be leased to a Sino-American auto company for the storage of auto parts on a 15-year lease.
Currently 75% completed, ILB's 50%-owned new RM260 million warehouse in Dubai is scheduled to open for business by early-2012. Substantially equipped with cold room facilities, the warehouse will tap into Dubai's fast-growing regional fast moving consumer goods (FMGC) distribution business, covering the Middle East and North Africa. While the unrest in the region may put a dent in the growth in its FMGC sector, we are more inclined to believe that this is temporary.
We are raising FY12/13 net profit forecasts by 1% to 3%, having changed our assumptions on the commencement and area of Phase 2 of the warehouse project in Wujiang to FY12 and 390,000 sq ft, from FY13 and 240,000 sq ft as guided previously.
Risks include: (i) A major slowdown in the global economy, hence China's export sector; (ii) Prolonged downturn in Dubai; and (iii) Rising costs in China, particularly, labour.
With the disposal of its business in Malaysia, ILB has become very much a high-growth China-based company listed in Malaysia. Indicative fair value is RM1.40 based on 13 times FY11 earnings per share, at a 30% premium to our benchmark one-year forward target price-earnings ratio for the transport and logistics sector of 10 times to reflect ILB's superior earnings growth visibility with the good execution of its second wave of investment/expansion in China. ' RHB Research, March 9
This article appeared in The Edge Financial Daily, March 10, 2011.
Company Name: INTEGRATED LOGISTICS BHD
Research House: RHB
Integrated Logistics Bhd
(March 9, RM1.01)
Maintain outperform at RM1 with fair value RM1.40: The construction of the 67 million yuan (RM34 million) Phase 2 of ILB's warehouse complex in Wujiang, with a total area of 390,000 sq ft, is scheduled to start during the month with completion expected by August. We understand that ILB has already identified potential tenants, including a world-renowned France-based cosmetics and beauty company and a prominent US-based global online retailer.
The full completion of the greenfield 170 million yuan warehouse complex for Frestech/Xinfei is expected by June. At present, three of the five warehouses within the 810,000 sq ft complex have been completed.
We understand from independent sources that ILB may also embark on a fairly sizeable greenfield warehouse project within the auto industry belt in northeastern China, to be leased to a Sino-American auto company for the storage of auto parts on a 15-year lease.
Currently 75% completed, ILB's 50%-owned new RM260 million warehouse in Dubai is scheduled to open for business by early-2012. Substantially equipped with cold room facilities, the warehouse will tap into Dubai's fast-growing regional fast moving consumer goods (FMGC) distribution business, covering the Middle East and North Africa. While the unrest in the region may put a dent in the growth in its FMGC sector, we are more inclined to believe that this is temporary.
We are raising FY12/13 net profit forecasts by 1% to 3%, having changed our assumptions on the commencement and area of Phase 2 of the warehouse project in Wujiang to FY12 and 390,000 sq ft, from FY13 and 240,000 sq ft as guided previously.
Risks include: (i) A major slowdown in the global economy, hence China's export sector; (ii) Prolonged downturn in Dubai; and (iii) Rising costs in China, particularly, labour.
With the disposal of its business in Malaysia, ILB has become very much a high-growth China-based company listed in Malaysia. Indicative fair value is RM1.40 based on 13 times FY11 earnings per share, at a 30% premium to our benchmark one-year forward target price-earnings ratio for the transport and logistics sector of 10 times to reflect ILB's superior earnings growth visibility with the good execution of its second wave of investment/expansion in China. ' RHB Research, March 9
This article appeared in The Edge Financial Daily, March 10, 2011.
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