CJ Century misses expectations with FY23 earnings of RM10.7 mln

KUCHING: Logistics player CJ Century Logistics Bhd (CJ Century) has missed the mark with its newly released financial year 2023 (FY23) core profit after tax and minority interest (PATAMI) of RM10.7 million as it met only 83 per cent of consensus full-year estimates.

According to the research arm of Midf Amanah Investment Bank Bhd (Midf Research), the negative deviation was mainly due to lower-than-expected contributions from its contract logistics segment and production volume for the procurement logistics segment.

For the latest quarter under review (4QFY23), the group’s core PATAMI fell dramatically by 82.2 per cent year on year (y-o-y) and 77.6 per cent quarter on quarter (q-o-q) to RM0.6 million due to market freight rate corrections and decreased business volume across most segments, with the exception of transportation services.

“Previously, management highlighted a significant decline in freight forwarding volume from its affiliate, CJ Bio, attributed to direct competition from suppliers in China, with possible ongoing impact into 4QFY23,” the research arm explained.

Cumulatively, CJ Logistics’ FY23 revenue dropped by 20.8 per cent y-o-y to RM736.5 million while its core PATAMI fell by a wider 61 per cent to RM10.7 million as its margins also deteriorated during the year.

To reflect the missed expectations, Midf Research have revised down their forward projections for CH Logistics’ FY24F and FY25F core PATAMI by 10 per cent to RM21.5 million and RM24 million, respectively.

Consequently, the research arm has also revised their target price downwards from RM0.50 to RM0.45 that is based on 12-fold FY24F earnings per share (EPS).

Despite the downward revisions, the research arm is still optimistic on CJ Logistic as they view that the stock is trading at an attractive 21 per cent discount to its 5-year historical mean.

Furthermore, they also opine that the group’s outlook in the coming year is looking more optimistic as they believe its total logistic services (TLS) division could witness a rebound in FY24, supported by improvement of South Korea’s trade from a year-long slump in late FY23.

“It is worth noting that South Korea-based customers contributed 30 to 35 per cent of the Group’s revenue,” the research arm highlighted.