Century Logistic Holdings Berhad (Century - 7117) is principally involved in logistic solution ranging from supply chain solution, international freight forwarding, transportation management & distribution, warehouse management services, oil & gas logistic, procurement logistic and the latest being document management services.
With the ever challenging environment in the logistic industry, it is important for industry player to stay competitive with more value added services, implementation of breaking through technology services, as well as diversifying of services from the crowded arena.
The logistic industry is always considered as high capex industry, especially on warehouse storage space with escalating land prices in strategic location. While the industry is on tight competition, growth still persist in Malaysia as one of the major trade partner for China and US.
Century had been juggling well between growth and a good dividend policy for the shareholder in the past 5 years, paying out more than 50% of the net profit. However, what would it take for Century to capitalize on the coming growth in the logistic industry in Malaysia?
Putting up Century chart will see a good consolidation effort in the past 5 months after a slump in price when Nestle issue a writ of summon to Century for a claim amounting RM 21.6 million. Nonetheless, Century had saw solid foothold consolidating at the range of RM 0.80. The latest event had saw Century broken up on long term resistant line of RM 0.82, which will suggest further upside on the share price towards the range of RM 1.00 with better participation of volume in the coming days.
The successful break out in Century will also mark a new uptrend for the share price, which is highly linked to some corporate dealing in Century.
On Going Business
It is known that Century will be having their multi-tier warehouse storage facility ready in the end of 2017 at the strategic location of Setia Alam, which will boost an additional 600,000 sq ft of warehouse storage space.
The company had also ventured into data management solution that will involves physical and electronic storage for data management.
Currently, Century's revenue is broken down to 60% from total logistic business, 20% from ship to ship transfer services for fuel and oil while 20% from procurement services for various electronic and electrical items. Century is expecting it's procurement logistic services to take up a larger portion of the revenue with the booming industry in the electronic and electrical sector.
Emergence of New Shareholder
It had been known that Century had been seeking for new and ambitious major shareholder to bring Century to another level. Datuk Richard Phua who control 26.4% of shares in Century had earlier courted by Felda, however, the deal did not materialized.
According to familiar sources, Century had been approached by established logistic player from China, Korea and Japan who are looking to see a working tie up with Century in order to see better synergy in logistic operation. Century involvement in 3rd party logistic, where the company handles everything from the procurement of raw materials to port and customs clearance, international freight forwarding, inventory management and distribution is the key interest for the foreign logistic company to forge a better working efficiency.
Rumor are looking at biggest Korean logistic company - Pantos Logistic, having great interest in Century. Currently, Pantos Logistic (M) Sdn Bhd is situated in Klang, which had good proximity to Century warehouses. Pantos Logistic had been expanding fast over the year, and it's committed to reach 200 offices (currently approx 180) by 2020.
With the strong underlying fundamental in Century along with strong dividend history, it will be believe that Datuk Richard will not be looking at anything lower than RM 1.00 for his founding stake in Century.
According to close sources, Century will be seeing a steadier dividend ranging from 6 to 7 cents a year when all it's current investment start to reap the fruits (Assuming Century will keep it's 50% net profit as dividend policy). This will be a huge re-rating for the company, and will invite more long term solid investor to the play field. Currently, Century is trading at single digit PE, which explains the price of the share being unattractive. In a full run scenario (operation of multi-tier warehouse and data management services), Century can look to perform towards an EPS of RM 0.12, trading at PER x14 which can translate to RM 1.68.
Sources informed that Century could be seeing a emergence of new shareholder paying a possible RM 1.20 per share.
Century will be an interesting company to be invested in based on
- Emergence of new shareholder with possible entry price of RM 1.20
- Strong management team in driving the company direction in changing landscape of business
- Century strong dividend policy for the past 5 years
- Investment of Multi-tier warehouse in 2017 to provide steadier recurring revenue
- Growing procurement logistic driven by high input from electronic and electrical industry
- Legal counsel positive on striking out legal suit from Nestle
Bone's mid term TP : RM 1.20
Cheers and have a nice day
Regards,
Bone
CENTURY (7117) - Century - A Ripe Century
http://bonescythe.blogspot.my
