We are ceasing coverage on CJ Century Logistics Holdings Bhd (CLH) to reallocate our research resources. The Group posted a 2QFY21 PBT of RM6.6m from its continuing operations against a loss before tax of RM2.4m in 1QFY20 and RM1.9m in previous quarter. While the disposal of its lossmaking courier unit should help arrest further losses to be incurred, it would also remove the potential growth catalyst of the group. To recap, the Group proposed to dispose its loss-making courier unit in Jun 2021 as the courier service segment continued to record higher losses in the past three (3) financial years. Our last call is Neutral with TP of RM0.46. Current forecast should no longer be relied on as basis for recommendation.

• 2QFY21 revenue rose (+93% YoY, +5% QoQ). Revenue increased from RM119.5m in 2QFY20 to RM231.1m in 2QFY21 mainly due higher revenue from Total Logistics Segment as a result of merger with CJ Korea Express Malaysia SB as well as higher activities in the Procurement Logistics Services. The Group reported PBT of RM6.6m (+53% YoY, -8% QoQ) for 2QFY21 from its continuing operations. Discontinued Operations courier services business continued to record higher pre-tax loss of RM11.3m for 2QFY21 compared to RM6.8m in 2QFY20 and RM9.0m in the previous quarter mainly due to poor margins from intense competition.

Source: PublicInvest Research - 26 Aug 2021