GDEX top active, surges 20% on stronger earnings prospects

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KUALA LUMPUR (May 22): Shares in GD Express Carrier Bhd (GDEX) soared 20.31% or 6.5 sen to 38.5 sen in active trade on its stronger earnings prospects and positive technical outlook. 

It was the top active counter across the exchange, with some 68.11 million shares traded, more than 17 times higher compared with its 200-day average trading volume of 3.82 million shares.

As of its filing for the second quarter ended Dec 31, 2019, GDEX’s first-half net profit was down 38.1% to RM10.63 million, from RM17.16 million for the same period a year ago, whereas cumulative revenue stood at RM170.43 million, higher by 8.3% compared to RM157.32 million previously.

The group said the higher revenue reported was mainly due to the increase in demand for courier services for e-commerce (business-to-consumer) business.

In view of the economic uncertainties arising from the Covid-19 outbreak, GDEX, commenting on its prospects, said it will continue to stand cautious while being proactive towards developing a strong intra-Asean delivery network.

In a research note published last Friday (May 15), RHB Research said it sees stronger earnings prospects for GDEX in FY21F-22F, due to heightened demand from the e-commerce space.

Besides the abrupt surge in e-commerce volume, lower fuel costs and positive regional expansion are some of the key factors for strong earnings according to the research house.

Particularly, it anticipates GDEX's 44.5%-owned Indonesian associate SAP Express to record further rise in margins in tandem with its rapid growth traction in Indonesia, indicating substantial earnings contribution for the group going forward. 

Meanwhile, GDEX's 50%-owned Netco in Vietnam is expected to take longer to contribute meaningful earnings off a lower base, but RHB said it should nonetheless ride on the country’s strong growth potential.

Nevertheless, RHB Research has upgraded its rating on GDEX to “buy” with a target price of 40 sen after raising its forecasted earnings in FY21-22F by 31-42% — imputing higher volume growth and higher associate contributions.

The research outfit said the premium valuation (54 times PE vs 70-80 times historical mean PE) is justified by a scarcity of profitable listed peers, and GDEX’s lifted growth prospects in the Asean last-mile delivery space as well as its cash-rich balance sheet to offer further expansion opportunities.