PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 21 Jan 2021, 11:57 AM


CJ Century Logistics Holdings - Higher Taxation

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CJ Century Logistics (CLH) reported a narrower net loss of RM0.5m in 3QFY20 due to better margin from its Total Logistics segment. YTD 9MFY20 core net loss was at RM4.4m, worse than our expectations of full-year net loss of RM2.7m. The weaker-than-expected results were mainly due to ongoing costs from the expansion of the courier operation and higher taxation due to under provision in previous years. No dividend was declared for the quarter. We adjust our forecast downward by an average of 8% for FY20- 22F, as we anticipate longer turnaround time for its Courier segment. We maintain our Trading Buy call on CLH with unchanged TP of RM0.56 pegged to 0.8x FY20F BVPS. We expect the Group’s earnings to improve moving forward from recent merger with CJ Korea Express Malaysia (CJKX).

  • Higher revenue from Total Logistics segment. Revenue for the quarter jump 80% YoY to RM209m, mainly due to higher contribution from Total Logistics segment (+133%) as a result from recent merger with CJ Korea Express Malaysia Sdn Bhd as well as overall higher activities from the segment. Courier and Procurement Logistics services also reported stronger sales by 40% and 20% respectively, on the back of higher parcels volume handled and export sales from the assembly of electrical products. (Figure 2).
  • Narrower net losses despite higher taxation costs. The Group’s reported a net loss of RM0.5m in 3Q20, compared to a net loss of RM1.3m in 3Q19. This was partially help by improved margin for its Total Logistics segment which saw an EBIT of RM8.5m, compared to RM2.6m in 3Q19. Meanwhile, its Courier services continued reporting a loss of RM8.5m due to continuous expansion of its delivery capacity. Besides, higher taxation cost was recorded during the quarter due to under provision of taxation in the previous years.

Source: PublicInvest Research - 24 Nov 2020

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