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    Amir Asraf
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    Freight Management Holdings reported results for the fourth quarter of 2012 that were within expectations. Revenue for the quarter increased 9.2% year-over-year to RM88.7 million while net profit grew 21.8% to RM7.2 million. The analyst maintains a "Buy" recommendation with a target price of RM1.12, representing a 23.1% upside from the current market price, based on projected 2013 earnings and an estimated P/E ratio of 7.5 times. While global economic growth faces challenges, the company is well positioned to grow steadily with a strong management team and efficient business model focused on the resilient Asia-Pacific trade region.

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    Freight Management Holdings reported results for the fourth quarter of 2012 that were within expectations. Revenue for the quarter increased 9.2% year-over-year to RM88.7 million while net profit grew 21.8% to RM7.2 million. The analyst maintains a "Buy" recommendation with a target price of RM1.12, representing a 23.1% upside from the current market price, based on projected 2013 earnings and an estimated P/E ratio of 7.5 times. While global economic growth faces challenges, the company is well positioned to grow steadily with a strong management team and efficient business model focused on the resilient Asia-Pacific trade region.

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    21 views3 pages

    Freight Management Holdings: Results Report

    Uploaded by

    Amir Asraf
    Freight Management Holdings reported results for the fourth quarter of 2012 that were within expectations. Revenue for the quarter increased 9.2% year-over-year to RM88.7 million while net profit grew 21.8% to RM7.2 million. The analyst maintains a "Buy" recommendation with a target price of RM1.12, representing a 23.1% upside from the current market price, based on projected 2013 earnings and an estimated P/E ratio of 7.5 times. While global economic growth faces challenges, the company is well positioned to grow steadily with a strong management team and efficient business model focused on the resilient Asia-Pacific trade region.

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    of 3

    Mercury Securities Sdn Bhd RESULTS REPORT

    28 Aug 2012 Market Price: Market Capitalisation: Board: Sector: Stock Code/Name: RM0.91 RM147.7m Main Market Trading/Services 7210/FREIGHT

    Freight Management Holdings


    Recommendation: Target Price: Analyst: Edmund Tham BUY RM1.12

    KEY FINANCIALS
    Key Stock Statistics Earnings/Share (sen) P/E Ratio (x) Dividend/Share (sen) NTA/Share (RM) Book Value/Share (RM) Issued Capital (mil shares) 52-weeks share price (RM) Major Shareholders: .Chew Chong Keat .Singapore Enterprises Pte Ltd .Yang Heng Lam 2013F 14.9 6.1 4.0 0.88 0.89 162.3 0.68 1.00 % 26.2 20.0 18.4

    PERFORMANCE 4Q/FY12
    4Q/ 30 Jun Rev (RMm) EBIT (RMm) NPAT^(RMm) EPS (sen) 12M/30 Jun Rev (RMm) EBIT (RMm) NPAT^(RMm) EPS (sen) 4Q12 88.7 10.1 7.2 4.4 FY12 327.1 27.6 20.9 12.9 4Q11 81.3 6.9 5.9 3.6 yoy % 9.2 46.7 21.8 21.8 FY11 295.5 21.9 19.7 12.2 3Q12 76.6 5.3 4.4 2.7 qoq% 15.8 91.2 62.7 62.7 yoy % 10.7 26.3 5.8 5.8

    *Share base adjusted for recent 1 for 3 bonus.


    Ratios Analysis Book Value/Sh. (RM) Earnings/Sh. (sen) Net Dividend/Sh. (sen) Div. Payout Ratio (%) P/E Ratio (x) P/Book Value (x) Dividend Yield (%) ROE (%) Net Gearing (or Cash)(x) 2010 0.59 10.1 3.8 27.8 9.0 1.5 4.1 17.2 0.12 2011 0.69 12.2 3.8 23.1 7.5 1.3 4.1 17.7 0.09 2012 0.79 12.9 4.0 31.1 7.1 1.2 4.4 16.4 0.00 2013F 0.89 14.9 4.0 26.8 6.1 1.0 4.4 16.7 (0.07)

    ^NPATMI

    Q4 results within expectations Freight Management Holdings (FMH) 4Q/FY12 result (for quarter ended 30th June 2012) was within our earlier expectations. During 4Q/FY12, the group recorded solid revenue of RM88.7 million and NPATMI of RM7.2 million. These figures were higher by 9.2% and 21.8% y-o-y, respectively. All of the groups business segments recorded yo-y revenue growth, with the exception of Customs Brokerage (which is a support service to freight services). The groups Freight (sea, rail, air and land) segments recorded 12% y-o-y growth, while other segments (Tug & Barge, 3PL, Haulage) recorded 13% y-o-y growth. Compared with the preceding 3Q/FY12, the groups revenue and NPATMI were higher by 15.8% and 62.7%, respectively. The higher revenue was aided by a strong performance from the groups Seafreight segment, which recorded a 21% q-o-q revenue growth.

    *Per share data adjusted for recent 1 for 3 bonus. *We now use Net Div/share instead of Gross Div/share
    P&L Analysis (RM mil) Year end: Jun 30 Revenue Operating Profit Depreciation Interest Expenses Profit before Tax (PBT) Effective Tax Rate (%) NPATMI Operating Margin (%) PBT Margin (%) NPATMI Margin (%) 2010 265.5 23.2 (6.4) (1.5) 21.8 21.7 16.4 8.8 8.2 6.2 2011 295.5 25.9 (7.7) (1.9) 24.0 17.7 19.7 8.8 8.1 6.7 2012 327.1 29.7 (8.9) (1.7) 28.0 21.7 20.9 9.1 8.6 6.4 2013F 350.7 33.9 (9.9) (1.8) 32.1 20.6 24.2 9.7 9.2 6.9

    *50 sen par value *NPATMI=net profit after tax & minority interest

    All information, views and advice are given in good faith but without legal responsibility. Mercury Securities Sdn. Bhd. or companies or individuals connected with it may have used research material before publication and may have positions in or may be materially interested in any stocks in the markets mentioned.
    This report has been prepared by Mercury Securities Sdn Bhd for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and has been compensated to undertake the scheme. Mercury Securities Sdn Bhd has produced this report independent of any influence from CBRS or the subject company. For more information about CBRS and other research reports, please visit Bursa Malaysias website at: http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/

    Mercury Securities Sdn Bhd

    (Page 2/3) 28 Aug 2012 Thailand. FMHs management is still keen on exploring new business opportunities in China, India and various ASEAN countries presumably Cambodia and Myanmar. We are particularly pleased with the growing contributions from Indonesia while its relatively new Vietnam operations have started to be profitable. IMF: further Policy Action needed According to the IMFs latest World Economic Outlook (WEO-July 2012), overall global economic growth is projected at about 3.5% in 2012, and 3.9% in 2013. IMF expects economic growth rates in the US, China and India to be slower than their earlier projections. Nevertheless, trade numbers had benefited from strong industrial production levels in Asia. Overall, IMF is dissatisfied with the pace of economic growth and feels that further policy actions need to be undertaken particularly in Europe, Asia and the US. IMF: GDP data Area U.S. Euro Area Japan China India ASEAN-5 2010 3.0 1.9 4.4 10.4 10.8 7.0 2011 1.7 1.5 -0.7 9.2 7.1 4.5 2012E 2.0 -0.3 2.4 8.0 6.1 5.4 2013E 2.3 0.7 1.5 8.5 6.5 6.1

    OUTLOOK/CORP. UPDATES
    Cautious but Positive outlook We expect that FMH would continue to report a positive performance during its FY13. The groups growth would be underpinned by its core Sea Freight business, supported by solid numbers from its 3PL & Warehousing, Air Freight and Land Freight business segments. Nevertheless, we are mindful of the challenging operating environment given the slow global economic growth and stiff competition within the logistics industry. The groups Tug & Barge segment has shown a promising turnaround in results, after earlier reporting negative growth for the past two years. For the 3PL segment, FMH has built quite a reputation, particularly for segments such as lubricants, apparels and consumer electrical products. This segment is also set to expand further in the upcoming FY13 with new warehouse facilities (in Port Klang and Penang state) and transport equipment acquired in the second half of FY12 and also in FY13. Focus Asia-Australia Region We note that FMHs freight business is mostly focused on trade within the Asia-Australia region, as such the group would not be affected that much by the weak business sentiment in the US and Europe. The groups core Sea Freight segment continues to enjoy growing TEU volumes and margins. This is partly due to its pricing flexibility arising from its niche in providing one-stop and packaged services to customers. The groups FCL (Full Container Load) TEU volumes continued to grow steadily, aided by solid volumes to East Asian ports (which also commanded higher GP margins). Steady regional contributions During FY12, about 23.1% of FMHs revenues were derived from its overseas operations in Singapore, Australia, Indonesia, Vietnam and
    Results Report

    *Indonesia, Malaysia, Philippines, Thailand, and Vietnam

    Looking at local economic data Malaysia had reported a reasonable Inflation figure (CPI) of +1.4% (July 2012) and Unemployment figure of 3.0% (June 2012). Bank Negara Malaysia (BNM) had still maintained its Overnight Policy Rate (OPR) at an accommodative 3.0%. Meanwhile, Malaysia recorded a solid 2Q/2012 GDP growth of 5.4%, amidst weak economic growth in the developed regions (the US, Eurozone and Japan). The latest available data, June 2012 y-o-y figures appear promising Exports +5.4%, Imports +3.6%, IPI +3.7% and Manufacturing Sales +6.3%.

    This report has been prepared by Mercury Securities Sdn Bhd for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and has been compensated to undertake the scheme. Mercury Securities Sdn Bhd has produced this report independent of any influence from CBRS or the subject company. For more information about CBRS and other research reports, please visit Bursa Malaysias website at: http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/

    Mercury Securities Sdn Bhd

    (Page 3/3) 28 Aug 2012 With a strong management team and a multimodal, asset-light, tight cost-control, operationally efficient and low-gearing business model, FMH seems well-set to grow steadily. FMH also has ample capabilities, financial reserves and operational flexibility to expand organically and also to explore new JV and M&A opportunities. Further earnings upside would be dependent on factors such as freight volumes, freight rates, FMHs regional business expansion, global economic growth, 3PL client additions and also any future JVs and M&As. As usual, there are possible risk factors to the global economy - such as the EU sovereign debt turbulence, volatile financial markets, higher crude oil prices, sustained high unemployment levels in the US and political upheavals in the Middle East/North Africa. FMHs profit margins could also be impacted during times of sudden or extreme foreign exchange (FX) and freight rate fluctuations. Freight: Share Price

    VALUATION/CONCLUSION
    Proposed Final Dividend for FY12 Earlier in July 2012, FMHs Board of Directors (BOD) had paid out an interim single tier 1.5 sen dividend per share (DPS) for its FY12 ending 30th June 2012. Group BOD has now proposed for shareholders approval a final single tier 2.5 sen DPS for its FY12. Given FMHs steadfastly resilient earnings performance and its dividend payout track record of 20% to 30%, we opine that FMH would maintain its dividend payout at this range for its FY13 as well. Thus far, FMH (+0.0% YTD) has slightly underperformed the KLCI (+7.6% YTD) this year. Market conditions have also been volatile during the past year, impacted by the Arab Spring uprisings, the Tohoku natural disaster in Japan, debt-ceiling issue in the US and sovereign debt issue in Europe. As FMH is not an especially large market-cap stock, this may put a dampener on its market visibility and trading volume. Maintain Buy Call Based on our forecast of FMHs FY13 EPS and an estimated P/E of 7.5 times, we set a FY13end Target Price (TP) of RM1.12. This TP represents a reasonable 23.1% upside from its current market price. Our TP for FMH reflects a P/BV of 1.25 times over its FY13F BV/share. Proven Resilience Even during the times of economic weakness, FMHs business model had proven to be solid and resilient. We like FMH due to its one-stop business model, calculated growth strategy, attractive value (undemanding P/E and P/BV valuations), reasonable dividend yield and ROE. We also note that FMH has low net gearing levels and may turn into Net Cash position in its FY13. Set for steady growth

    Source: NextView

    All information, views and advice are given in good faith but without legal responsibility. Mercury Securities Sdn. Bhd. or companies or individuals connected with it may have used research material before publication and may have positions in or may be materially interested in any stocks in the markets mentioned.
    This report has been prepared by Mercury Securities Sdn Bhd for purposes of CMDF-Bursa Research Scheme ("CBRS") administered by Bursa Malaysia Berhad and has been compensated to undertake the scheme. Mercury Securities Sdn Bhd has produced this report independent of any influence from CBRS or the subject company. For more information about CBRS and other research reports, please visit Bursa Malaysias website at: http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/

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