The company is currently trading at a very high valuation of which those invested would normally expect very high growth. Even if they managed to deliver a PAT of RM30mil for FY19 (meaning from 2nd to 4th quarter PAT would be around RM7.8mil per quarter), at the current price valuation is still 54x fwd PE.
Not sure where the growth will come from. Agree that ecommerce has very high growth potential but there are a lot of logistics companies out there. The most worrying part is the fact that some ecommerce platform (like Lazada which is backed by Alibaba) has started to provide their own logistic services. How can companies like Gdex compete with Lazada Express for example?
Those invested, what are the positive catalysts for this company? Because looking at the financials, it seems that growth in revenue can only be achieved via margin cutting (as competition are intensifying).
I can only find MIDF analyst report and they are only projecting a PAT of RM26mil in FY19 and RM31mil in FY20 which is still lower than the record PAT recorded back in FY17 of RM36.8mil.
Lazada Ceo, Christophe Lejeune, was interviewed by BFM today.
He mentioned that Alibaba is committed to invest a further USD2bil into Lazada of which a portion of the investment will be used to expend the Logistic division.
I am not sure how much Gdex revenue comes from Lazada (or ecommerce) but if the ecommerce platform themselves are expected to go down the value chain since they believe that they will have the volume to reduce their unit cost, 3rd party service providers like Gdex might be negatively effected (hence why most logistic players have seen negative profit margin growth).
If profit are not expected to grow substantially, then the current valuation 75x PE is really overvalue for investors.
Those that want to invest in this company need to ask themselves where will the growth comes from? The current market landscape is really tough at the moment with other logistic companies such as Lazada eLogistic, Century Logistic, Pos Malaysia, Ninja Van, GrabExpress (yes even they are doing this) etc all expending their networks and fleet size. Revenue might increase but i think it will be at the expense of profit. I think companies like Gdex is more appropriate for long term investors (those with investment horizon longer than 5 years).
Given the current market condition, i think it would be safer for investors to focus on company's that are currently trading at low valuation but still can offer profit growth in the short and mid term.
With this in mind i would recommend those that are looking to diversify their portfolio to consider MBMR.
The company is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 5.3x PE (based on target FY18 PATAMI of RM145mil. 9m PATAMI is already RM106mil). PB is low at only 0.5x BV. 4Q18 results is expected to be higher than 3Q18 and last year 4Q17. And FY19 growth will be driven by the still high demand of new Myvi and the launch of the new SUV in 1Q19.
Hope Gdex can proof me wrong and deliver profit growth to its investors. Management need to deliver on their promise of high growth for profit as well and not just revenue. It also help if they can improve on their customer relation services.
Going by the sales and profitability trend, the reasonable market value should be below 1 billion. Current PE of 74 times is too high. No point to consider this counter for the time being.
Can find many companies with this profitability even higher than Gdex trading at market value ranging from 600 to 800 million. Gdex should be rightly valued at 700 to 800 million nothing more. It means Gdex share price could dive half to 13 to 15 sen. Seat tight everyone!
Why put money in a company with negligible yield. Good in what sense? Yes in a supposed strong growth industry. But Gdex is not capitalising it will in turn losing its market share. Need a person that can run the business better than the remisier.
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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....
hipster
211 posts
Posted by hipster > 2018-11-26 15:30 | Report Abuse
PE 70+. this company issued too much shares, price hard to go up ...