KUALA LUMPUR: CJ Century Logistics Holdings Bhd
’s (Century Logistics) total logistics services segment (TLS), particularly freight forwarding, is expected to face challenges due to the slowdown in South Korea.
MIDF Research noted that the country’s July exports fell by 16.5% year-on-year, with South Korean clients typically contributing 30% to 35% to Century Logistics’ revenue.
“This impact is further heightened by the global freight rates returning to normal levels.
“However, the procurement logistics services (PLS) segment is set to stay strong with China’s reopening ensuring a steady supply of electronic components.”
Additionally, the research house said growth in exports of electrical and electronics (E&E) products to Vietnam and Indonesia, which are key destinations for Century Logistics, is expected.
Separately, TA Research also said the company’s TLS segment is expected to face challenges amid the gloomy global trade outlook, especially with the slowdown in South Korea’s trade volume.
“The impact would be amplified by normalisation of global freight rates.”
Additionally, TA Research said Century Logistics’ PLS segment is expected to remain robust, underpinned by the resurgent demand for air conditioners worldwide due to the heat wave.
“Besides, China’s full reopening would ensure consistent supply of E&E components, which is important to Century Logistics’ E&E assembling business in Malaysia.”
For the second quarter ended June 30, Century Logistics’s net profit tumbled 47% to RM3.8mil, or earnings per share of 0.66 sen against RM7.2mil, or 1.23 sen posted a year ago. Revenue fell 16.6% to RM210.9mil versus RM252.9mil a year prior.
In the first six months, the company’s net profit more than halved to RM7.5mil from RM16.5mil last year while revenue fell 13.1% to RM430.5mil against RM495.7mil previously.
Commenting on the results, TA Research said the company’s first half (1H23) core profit of RM6.9mil accounted for 40% of the research house’s full-year projections and 31.5% of consensus forecast.
“We consider this as within our expectation as 2H23 earnings are expected to be higher due to upsurge in demand for air conditioners and gradual recovery in container freight rates.”
MIDF Research, meanwhile, said earnings came in below expectations.
“It fell short of projections, representing only 23% and 30% of our and consensus full-year estimates respectively.
“The negative deviation was primarily due to lower-than-expected profit margins,” said the research house.
