I saw their advertising at highway. 2M products and 75K seller. But in their website just 100K products. I don't think got 75K sellers. Not very genuine info. Disappointed. Got few lots in hand think of sell it.
Johor Bahru, 31 May 2017 – Integrated logistics services provider, Xin Hwa Holdings Berhad (“Xin Hwa” or “the Group”), announced its Fifth Quarter FY17 (“5QFY17”) results today for its financial period ended 31 March 2017. To recap, Xin Hwa changed its financial year end to 31 March 2017 and hence, this is a cumulative 15-month results. Due to the change, there are no comparative figures disclosed for the preceding year corresponding period. For the quarter under review, Xin Hwa posted a revenue and net profit of RM26.6 million and RM2.0 million respectively. Xin Hwa’s land transport operations remain its main revenue generator, contributing RM24.3 million or 91.4% to total revenue in 5QFY17. The Group’s land transport operations comprise cargo transportation services and container haulage services which accounted for approximately 58.0% and 33.4% of turnover respectively.
On the other hand, Xin Hwa’s warehousing and distribution operations accounted for RM2.2 million or 8.2% of its total revenue for the current quarter under review. Meanwhile, the Group’s other services that consist of freight forwarding and customers brokerage services, as well as manufacturing and fabrication of trailers, contributed RM0.1 million or 0.4% to total revenue for the 3-month period ended 31 March 2017.
For the cumulative 5 quarters, the Group achieved a revenue and net profit of RM128.7 million and RM12.8 million respectively. Land transport operations accounted for RM119.7 million or 93.1% to the Group’s FY17 revenue while warehousing and distribution operations and other services contributed the balance of RM8.7 million and RM0.3 million respectively. The gross profit and pre-tax profit (“PBT”) margin for FY17 are 37.5% and 12.7% respectively.
Managing Director of Xin Hwa, Mr. Ng Aik Chuan said, “2016 had been a challenging for us. This is in-line with the broader weak market conditions stemming from the rising cost of living, fluctuations of Ringgit, increase in oil prices, and uncertainties in the global markets. These factors affected overall consumer sentiments as well as the demand for transport services and warehousing which, in turn, affected our profitability. Furthermore, absence of contribution from several larger-sized logistics contracts for Klang Valley MRT Line 1 which we completed in 2015 also resulted in the softer results in FY17. Nevertheless, based on our track record, we are positive to secure some land transport works stemming from the upcoming major infrastructure projects in the country.”
“We have been busy expanding in 2016 while remaining cost prudent at the same time. Our new warehouse in Pasir Gudang measuring approximately 180,000 sq. ft. that is adjacent to our current warehouse, is on track to be completed in June 2017. We are confident this new warehouse will swiftly reach full capacity by September 2017 as we already have customers on hand. Meanwhile, we are also building another new warehouse in Shah Alam, Selangor which is slated for completion by end of 2018. It has 4-storeys with a combined built-up size of 400,000 sq. ft. Upon completion, Xin Hwa will double our space from 404,000 sq. ft. currently to approximately 1 million sq. ft.” “In addition to our warehouse expansion, we also continue to expand our fleet size in tandem with the expected growth in our business. Currently, we have a fleet size of approximately 1,500 vehicles consisting of prime movers, trailers, and trucks. Our economy is growing with GDP increased healthily by 5.6% year-on-year 1Q2017, which exceeded the 4.6% forecast by economists. This bodes well for our prospects as we do see correlation between GDP growth and demand for our services.”
“As for our recently launched e-commerce platform, www.e5buy.com, the response has been encouraging with orders coming in from various parts of Malaysia. There are also a lot of enquiries to find out our offerings and services. The platform is still new and therefore, we are channeling our efforts to promote it. We are positive on the future of our e-commerce venture as we will ride on our country’s effort to double the nation's e-commerce growth by 2020.
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.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Yeowc Yeowc
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Posted by Yeowc Yeowc > 2016-09-13 10:42 | Report Abuse
Near target should be 1.50