CENTURY (7117) - Century Logistics Holdings Bhd (CENTURY, 7117)

Business Overview

• Century Logistic was founded in 1970s initially as a forwarding agent. To date, it has grown its business into:
  • Integrated logistics – Provides total logistics solutions to its clients, from
    the procurement of raw materials to distribution.
  • Oil logistics – Handles the supply chain management and ship
    husbandry for fuel oil traders.
  • Procurement logistics – Provides procurement logistics services for
    various electronic and electrical companies.

• 62% of revenue come from its total logistic business, 19% from ship to ship transfer services for fuel and oil traders; while the remaining 19% come from procurement services for various electronic and electrical items

• The company also ventured into data management solutions which involves physical and electronic storage and data management as well as consultancy service. We understand that this business is still at infant stage.

Board of Directors

• Datuk Phua Sin Mo
  • Founder of Century Group
  • Executive Chairman
  • Aged 66, Malaysian (2015)
  • Holding 19.18% of shares (FY14)

• Teow Choo Hing
  • Managing Director
  • Aged 55, Malaysian (2015)
  • Holding 11.06% of shares (FY14)

• Yeap Khoo Soon Edwin
  • Chief Financial Officer of the Century Group
  • Executive Director
  • Aged 44, Malaysian (2015)
  • Holding 0.6% of shares (FY14)

Financial Overview

• Bad business in FY12 but regained momentum in FY13
• Bonus issue 1:2 and Share split 1:2 in FY14
• No of shares increased by three times but Dividend, Earnings and Net Assets per share remain healthy in FY14

• Good dividend yield since FY09
• DPS in 9M15 is 4.5 sen which translated to 5.63% dividend yield based on an average stock price of RM0.80

SWOT

• Strengths
  • Explosive earnings growth potential
  • Exciting expansion plan
  • Attractive dividend yield
  • Diversified clientele to mitigate impact on specific industry.

• Weaknesses
  • Long term borrowing is increasing while free cash flow is decreasing

• Opportunities
  • Signing of TPP to induce import

• Threats
  • Unfavourable outcome of LOD
  • Risk of losing existing client following court case with one of its longest serving clients.
  • Slower than expected manufacturing/trade industry

Conclusion

Century Logistics Holdings Bhd was favoured by the market because of its explosive growth potential, exciting expansion plan and attractive dividend yield. However, it was no longer the case when the integrated logistics service provider was slapped with a Letter of Demand amounting to RM21.6m from NESTLE for purported losses and damages which triggered a sell-down of its shares. On the bright side, CENTURY does not have any ongoing contracts with NESTLE, so the risk of revenue loss is nil.
Despite all that, this case will not dent the fundamentals of CENTURY and/or hurt its core net earnings too significantly. The revenue and net profit of the company are increasing in all three quarters (FY15) compare to last year (FY14) thanks to the encouraging performance in procurement logistics. On top of that, CENTURY has paid a total DPS of 4.5 sen in 9M15 as compare to 2.3 sen in 9M14. Also, current book value/share is RM0.77, which is near to the current stock price of RM0.81 (24/1/2016).
In my opinion, the current sell down of its shares is a good chance for investors to collect at low. As quoted by Warren Buffet, “You want to be greedy when others are fearful. You want to be fearful when others are greedy”.

CENTURY (7117) - Century Logistics Holdings Bhd (CENTURY, 7117)
https://stockhuat.wordpress.com/2016/01/25/century-7117/ 
CENTURY, CENTURY (7117), 7117, EN7117, KLSE:CENTURY, Investing,
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