moving day

Something good Adcool?

Investment Merits
Niche transporter in high impact activities
• Xin Hwa position itself into niche segment of transporting for ports, industrial products and equipments. This positioned Xin Hwa close to the high impact economic activities like external trade and construction sector.
• Almost 30% of land transports revenue contributed from transporting precast concrete throughout Peninsular Malaysia and Singapore.
• Under container haulage, Xin Hwa is a major player for PTP and Penang Port.
• Xin Hwa also a specialist in project cargo which involves transportation services for boilers, cement plant structure and machinery, generators, tower cranes and railway equipment.

Expansion driven growth on warehousing
• For warehousing division, XIn Hwa has recently completed the new 180,000 sq. ft. warehouse in Pasir Gudang and operations shall commence soon. Management is confident to reach full utilization within 6 months as the company already has orders in hand for the new warehouse.
• With the new addition, Xin Hwa now has a total warehousing space of 584,000 sq. ft. Xin Hwa plan to double their warehousing space to approximately 1 million sq. ft. by end of 2018 with another 426,000 sq. ft. of space coming from their new E-Fulfillment Centre in Shah Alam. This will put Xin Hwa in a strategic position to capitalize the demand for warehousing following the introduction of the Digital Free Trade Zone (DFTZ).

Tapping into E-commerce
• In March 2017, Xin Hwa launched its China business-to-business (B2B) e-commerce platform, e5buy.com, gives Malaysian businesses and individuals direct access to 75,000 suppliers and 1.8 million products in China's Yiwu Commodity Market in the Zhejiang province, which has been dubbed the world's largest wholesale market.
• Xin Hwa is hoping to gain a slice of the cargo traffic that moves ¬between Yiwu and Malaysia via e-commerce. Based on conservative estimates, there are at least 2,000 containers with total value of RM4 mil being shipped to Malaysia from Yiwu every month.
• Management expects the e-commerce venture to contribute to Xin Hwa’s group earnings within a year.
• The e-commerce growth translates into high demand growth for the logistics industry which provides Xin Hwa with an opportunity to extend the scope of logistic services, which may include courier services and door-to-door delivery services
• Over next three to five years, Xin Hwa is planning to venture to other Asean countries, by replicating the e-commerce model and forming joint ventures with local logistics players in other regional markets.

Key Risks
• Weaker-than-expected demand in land transportation
• Weaker-than-expected demand in warehousing

Financial Highlights
• In FY17, Xin Hwa hit bump when their PAT dropped by 20% due to higher financing cost from warehouse expansion and higher effective tax rates due to absence of capital allowance.
• With the commissioning of new warehouse and upcoming larger-sized logistics contracts from the upcoming major infrastructure projects in the country, management expect Revenue and PBT to grow exponentially in FY18.
• Its in-house expertise in manufacturing, fabrication and maintenance set the Group apart from other logistics players, showcased by its superior profit margin, with land transport PBT margin at 15% in FY17 as compared to 9-11% of peers in the industry.
• XIn Hwa’s balance sheet is healthy with total borrowings stood at RM74.9m as at 1QFY18 and net gearing of 0.5x.

Valuation
• Closest peer in term of business segment and growth potential to Xin Hwa is Century Logistics which is trading at 18.0x FY17 and 15.7x FY18 PE with EPS growth of 30% and 11.6% respectively. With consensus target price of RM1.51, Century Logistics is valued at 19.6x FY18EPS. Xin Hwa should be valued at least at 19.0x FY19 EPS or RM1.30/share.

Logistics play is coming back! Century up 9% yesterday! Soon will be this counter.

if close at 0.09 today, would be a positive sign. buy buy.

Free warrant for shareholder!! Heheh. Based on minimum scenario, Ang Li-Ann from Neata will become the largest shareholder at 17% after the whole exercise is done. And who is this Ang-Li-Ann? Hmmm. Another proxy?

let say the rumor about bad relationship between Anne and Taib is true, which then makes Instacom not favourable to get tower contract in Sarawak, I'm banking of the emergence of new substantial shareholder which has better connection to Taib, and by looking from the off-market transactions recently, I think it is quite possible. If not, Instacom still has Sabah for the tower contract.

I heard MCMC will announce the 400 tower contract soon, 50:50 between East and West Malaysia, before the 2015 budget on 10 Oct. Instacom will get a slice of the contract especially in Sabah since Sarawak already kawtim with Sacofa (CMSB) and Weida. We'll see.

0.56 cents. non-rated report by cimb. hehe.