KUALA LUMPUR: Listing-bound Sin-Kung Logistics Bhd is expected to record a compounded annual growth rate in core net profit of 39.9 per cent for financial years 2023-2025, said Hong Leong Investment Bank Bhd (HLIB).
This will be underpinned by the increase in air cargo traffic in Malaysia and Singapore due to disruptions in major sea routes, the commencement of 100 commercial vehicles in FY25 and the stronger air cargo traffic resulting from the recovery of E&E output in Malaysia in 2025-2026.
Set to debut on Bursa Malaysia's ACE Market on May 15, Sin-Kung is an integrated logistics service provider, specialising in airport-to-airport road feeder services.
HLIB said with 52 per cent of its earnings stemming from these services, the company is an indirect beneficiary of the uptick in air cargo demand, propelled by recent disruptions in major sea routes.
"Notably, global air cargo volume demand has seen seven consecutive months of YoY growth, as mentioned by DHL.
"We project Sin-Kung's earnings to record a strong FY23-FY25 CAGR of 39.9 per cent. We value Sin-Kung at 17 sen, based on 15x price earnings ratio (P/E) on FY24's earnigs per share of 1.1 sen," it added.
While this P/E multiplier represents a 25 per cent discount compared to regional peers, it is notably higher than the average of 9.2x for local logistics players.
"Sin-Kung's distinction lies in its
specialised airport-to-airport road feeder services, an area where only five logistic
players have been identified by Smith Zander, contrasting sharply with the fragmented landscape of general logistics service providers," HLIB said.
