GDEX’s partnership with RedCargo an incentive to expand network
KUCHING: GD Express Carrier Bhd’s (GDEX) partnership with RedCargo Logistics (RedCargo), the cargo and logistics platform of AirAsia, is expected by analysts to incentivise GDEX to expand the group’s services to a wider network.
In a filing by GDEX on Bursa Malaysia last week, it was revealed that RedCargo, the cargo and logistics platform of AirAsia, had announced a strategic partnership with GDEX.
“The new partnership provides GDEX customers with access to AirAsia’s extensive network, meaning goods are able to be transported and delivered efficiently on more than 5,000 weekly flights across Asia Pacific,” the press release read.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recapped that GDEX is not the first to form a partnership with RedCargo as Tasco Bhd was appointed as the first direct logistics partner of RedCargo in January this year.
“With already two logistics companies including GDEX forming a partnership with RedCargo, we view that there is ample network capacity available to be booked by logistics partners.
“This bodes well for the growth in international parcel traffic which has been growing for the past three years,” MIDF Research said.
Apart from that, the research arm did not discount the possibility of special rates being offered by AirAsia Group Bhd (AirAsia Group) to GDEX in order to attract more volume being channelled to the belly space of AirAsia Group’s aircrafts.
“This in turn would incentivise GDEX to expand its services to a wider network.”
However, as RedCargo is deemed as a relatively new entity, analysts do not expect much impact towards GDEX’s earnings at this juncture.
“RedCargo was incorporated in March last year as the exclusive provider of cargo capacity for AirAsia Group.
“Therefore, we opine that that the impact towards GDEX earnings to be minimal at this juncture as it has yet to undergo its gestation period.
As such, MIDF Research maintained its earnings estimates for financial year 2019 ( FY19) and FY20, with core profit after tax (PAT) at RM29.1 million and RM33.9 million respectively.