MORNING CALL:21/8/23

MIDF Research cut its target price on CJ Century Logistics Holdings by 42%, though it says the stock is still a ‘buy’.

Transcript

00:00 This Monday morning, it's CJ Century Logistics Holdings.

00:05 MIDF Research cutting its target price on the transportation and freight company from

00:09 95 cent to 55 cent, though it says the stock is still a buy.

00:14 CJ Century last traded at 42.5 cent.

00:18 Let's look at its latest results, Core Patami of RM3.5 million in the second quarter of

00:22 FY23, resulting in a cumulative Core Patami of RM7.3 million for the first half.

00:29 This fell short of projections, representing only 23% of MIDF's full-year estimates and

00:36 30% of consensus forecasts.

00:38 This was no thanks to reduced freight activities due to global trade slowdown, though E&E product

00:44 exports grew amid recovering export markets.

00:47 For the rest of FY23, the total logistics services segment, particularly freight forwarding,

00:54 is expected to face challenges due to the slowdown in South Korea's trade.

00:58 The procurement logistics services segment is set to stay strong with China's reopening

01:04 and growth in exports of E&E products to Vietnam and Indonesia, MIDF lowering its target price

01:10 due to the expectation of a decline in earnings and the challenges posed by the slowdown in

01:15 global trade.

01:16 Despite this, it said CJ Logistics is still aiming for a 10% freight volume growth next

01:21 year by leveraging its parent network, while also planning a 3-5% reduction in non-salary

01:28 operating costs through the installation of solar panels and adoption of tech-based logistics

01:34 solutions.

01:35 So what's the consensus?

01:36 According to Bloomberg data, only one other research house covers CJ Century, and that's

01:42 TA Securities, with a buy call and target price of 76 cent.

01:46 So that's two buys, average target price 86 cent.

01:49 CJ Century ended trading on Friday at 42.5 cent, so we're looking at a potential upside

01:55 of about 100%.

01:56 [MUSIC]