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Kenanga initiates coverage on Century with Outperform call

October 10, 2017 3:55 AM
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KUALA LUMPUR: Century Logistics Holdings stands to benefit from backing by shareholder CJ KOrea and a healthy balance sheet for long-term scalability, said Kenanga Research.

CJ KOrea emerged as Century's largest shareholder after acquiring a 31.44% stake from Datuk RIchard Phua and family for a RM1.45 a share.

shareholder. CJ Korea is currently the largest logistics provider, as well as the number-one parcel delivery company in Korea with a 40% market share.

"Century is expected to benefit from utilising CJ Korea’s 76 global networks worldwide to expand its existing customer base and services, coupled with transfer of industrial expertise and technologies to achieve better operational efficiency," said the research firm.

Kenanga Research is also set to venture into last-mile delivery to ride on the longer term growth of e-commerce. The research firm like Century for CJ KOrea's backing, its low net gearing and the company's ability to leverage on its existing branding and networks nationwide.

"Timeline-wise, we expect Century to commence its last-mile operations in early FY18, with earnings impact to be largely neutral during its initial few years of infancy."

On expansion plans, a new multi-storey warehouse in the Eastern Gateway Industrial Hub in Klang, which is expected to provide an additional 450,000 sq ft or 20% of warehousing space, is scheduled to to be completed by mid-FY18.

The company has also earmarked RM150mil capex for FY17-18 for the construction of the new warehouse and office, purchase of 500 delivery trucks and warehousing equipment and IT-related expenses.


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