We think the growing demand for last-mile delivery services from e-commerce players should bode well for GDEX’s long-term prospects, supported by the ever-growing regional e-commerce market. Also, its newly-cemented collaboration with Yamato (9064 JP, NR) should significantly boost its long-term aspirations to grow its operations across ASEAN. Maintain NEUTRAL, with an unchanged DCF-derived TP of MYR1.70 (2% upside) premised on 47x FY17 P/E.

Long-term collaboration. The newly-signed collaboration in network-sharing between GD Express (GDEX) and Yamato could lead to better operational efficiency. GDEX would be able to leverage on Yamato’s expertise in the business-to-consumer and consumer-to-consumer segments, and superior technology in improving and expanding its business. Yamato is a prominent name in Asia, being the top courier service provider in Japan. Rosy outlook. We expect the company’s robust earnings trajectory to remain intact, underpinned by the ever-growing demand from e-commerce. We understand from management that the online shopping transaction volume from sites like Lazada continues to maintain GDEX’s growth momentum, coupled with strong volume growth from Astro’s GoShop. Forecasts and risks. We maintain our forecasted numbers. Key risks to its prospects would be a volume decline due to heightened competition from GDEX’s rivals, as well as potential changes in the e-commerce players’ business strategies, eg opting to utilise their respective in-house delivery services.

Financial Exhibits

SWOT Analysis

Source: RHB Research - 25 Feb 2016