Freight  Management  (FMH)  delivered  a  8.1%  y-o-y  growth  in  net earnings  for  FY13  despite  a  challenging  operating  environment.  Its main  core  businesses  chartered  commendable  growth  while  its expansion  plans  are  right  on  track.  The  company  declared  a  final dividend  of  3.0 sen.  As we continue  to  like FMH, we  maintain  our  BUY call and MYR1.71 FV.  
 
- FY13 results spot on! FMH’s net earnings of MYR22.3m (+8.1% y-o-y) were  spot  on  with  our  and  consensus’  estimates.  We  deem  the  results satisfactory  as  the  Group  still  managed  to  chalk  up  respectable  growth against the backdrop of a tough operating environment.  

- Core  businesses  show  commendable  growth.  In FY13, FMH’s core businesses,  namely,  sea  freight,  land  freight,  tug  &  barge  and 3PL/warehousing  charted  promising  gross  profit  growth  of  +7.8%  y-o-y, +44.3% y-o-y, +18.9% y-o-y and +51.6% y-o-y respectively.

- Expansion in line. The company’s recent moves included: i) a 50:50 JV with Scomi Energy Services (SES), ii) a JV in India and iii) construction of  a  new  warehouse  on  the  land  adjacent  to  its  present  warehouse  in Klang.  Management  has  guided  that  all  its  plans  are  progressing  well and would contribute positively in the future.

- Risks.  These  are:  i)  a  slowdown  in  the  global  and  local  economy,  ii) intensifying  competition  in  the  sector  as  well  as  iii)  investment  risks  in new markets.  

- Maintain  BUY,  FV  unchanged.  We  continue  to  like  FMH’s  solid business  model  and  strong  balance  sheet,  which  as  a  backbone  to support  its  expansion  plans.  On  top  of  that,  Management’s asset-light strategy has proved to be viable amid the market challenges. We make no  changes  to  our  earnings  forecasts.  Maintain  BUY  on  FMH,  with  our MYR1.71 FV based on unchanged 11x FY14F P/E (peer average) 

Source: RHB