OVERVIEW:
The subsidiary of Keppel Corp, is a leading service provider in Southeast Asia and Europe with businesses in logistics and data center. In logistics, it offer one-stop, integrated solutions to help clients manage their entire supply chain. It owns and operates data centers across Asia Pacific and Europe, providing dedicated co-location suits with technical support.
HIGHLIGHTS:
[1] Latest quarter saw revenue down 5.5% year on year. Operating profit down > 90% because of lower fair value gain on investment properties and higher overheads. Full year operating profit was higher by $26m, mainly due to gain on disposal of subsidiary.
[2] For FY2016, logistics division reported net loss $17m due to impairment loss on fixed assets. It shall be $9.6m excluding the impairment loss. Lower earning was due to lower contribution from China operation. Data Centre division saw operating profit up $56m, attributed to higher revenue as well as disposal gain.
[3] Gearing ~ 60%. 25% of borrowing to be settled in following year.
INVESTMENT THEMES:
[1] FY2016 earning per shares - 0.189 || Dividend per shares ~ 0.045
Last trading price, 1.705 translates to undemanding PE ~ 9 and dividend 2.6%. FY2015 dividend was 0.03.
[2] New acquisition of Courex allows the group to establish foothold in e-commerce logistics sector. Newly acquired Tier III data centre in Frankfurt, where is home to one of the world's largest internet exchanges shall contribute earning on FY2017.
[3] Impairment loss and lower valuation gain mainly incurred on last quarter due to startup cost and property assets transition losses. Investor could look forward some turnaround on following quarters.
[4] The group just announced sales of 10% interest in Asia Airfreight Terminal Company for $45.2m. At the same time, it is considering sales of its shares from M1. Such divestment from non-core business allow the group to re-invest into its core businesses. Shall it come true, it will be loading heavy war chest for future growth opportunities, such as buying more high quality data centres.
PRICE TREND:
The counter saw significant buying volume on last trading day. Price nicely rebounded from support 1.61. Immediate resistance is 1.77. Shall buying momentum continue, one year high 1.9 could be targeted.
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