GWC outlook bright on strong growth in frieght forwarding segment: QNBFS

GWC’s freight forwarding segment grows 39% since 2017

OUTLOOK is bright for Qatar’s leading logistics provider Gulf Warehousing Company (GWC) as the company has withstood the blockade well with its freight forwarding segment showing significant growth of 39 percent from 2017 to 2019, QNB Financial Services (QNBFS) has said in its latest report.

Driven by contract logistics and increasing occupancy in Bu Sulba, the report said, logistics business of GWC also remains robust.

GWC has started generating substantial free cash flow (FCF) and the management remains on the hunt for expansion avenues. The recent Al Wukair Logistics Park contract serves as an example of such a growth opportunity.

Awarding of Al Wukair Logistics Park by Manateq has given GWC another reason to maintain its growth post more than 90 percent occupancy in Bu Sulba.

GWC will build, operate and transfer (BOT) the development of the 1.48 km2 Al Wukair Logistics Park in a public-private-partnership deal for 30-year lease tenure with an investment value of QR1.5 billion.

“We maintain our market perform rating on GWC with a QR5.10 price target.

Longer term, we retain our bullish investment thesis on

GWC,” the report said.

According to the report, GWC posted better-than-expected earnings in the fourth quarter and the company’s decision to distribute dividend of QR0.20 per share was in-line with its estimate.

“GWC posted earnings of QR67.6 million in the fourth quarter, beating our estimate of QR63.2 million. Reversal of credit losses and lower finance costs helped in the net income beat for the quarter,” it said.

As expected, the report said, GWC increased its proposed dividend per share (DPS) by 5.3 percent from QR0.19 in 2018 to QR0.20 in 2019.

“GWC disclosed that its 2020 budgeted net income is QR260.4 million, an yearon-year (YoY) of 4 percent. We had been expecting net income of QR232 million for 2020, which implied around 5 percent earnings decline. We adopt a wait-and-see attitude and will change our model post 2020 first quarter results,” the report said.

We maintain our market perform rating on GWC with a QR5.10 price target. Longer term, we retain our bullish investment thesis on GWC.

QNBFS report