FM: Logistics Firm Posts Expected Profit Growth Amidst Mixed Market Signals
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
FM Global Holdings Bhd (FM Global) reported a 21.0% year-on-year increase in net profit for the fourth quarter of fiscal year 2025 (4QFY25), reaching RM8.1 million. This robust quarterly performance contributed to a full-year FY25 net profit of RM31.1 million, which was in line with analyst expectations, representing 96.6% of the full-year estimates. The company also announced a third interim dividend of 2.0 sen, bringing the total FY25 dividend to 4.5 sen, an increase from 4.0 sen in FY24.
Performance Review
The improved profitability was primarily attributed to a more favorable pricing environment and a better product mix. Overall revenue for 4QFY25 grew marginally by 4.0% year-on-year to RM230.5 million. This growth spanned most business segments, with the exception of 3PL, warehousing, and distribution services. Notably, sea freight revenue saw a 5.6% increase to RM131.0 million, despite a slight 0.3% year-on-year drop in volume, recorded at 30,206 TEU. Furthermore, the company benefited from an expanded profit margin and a lower effective tax rate, which together contributed to an increase in the profit after tax (PAT) margin to 3.5% from 3.0% in 4QFY24. However, the growth rate experienced a slight moderation during the quarter due to prevailing trade and economic headwinds.
Future Outlook
The near-term outlook for the global freight market remains mixed. While global trade has demonstrated resilience, underpinned by stronger-than-expected front-loading activities and lower average US tariff rates, a potential moderation in US import demand is anticipated. This is primarily linked to geopolitical tensions, rising trade barriers, and policy uncertainty. Despite these short-term fluctuations, the global freight market is viewed as poised for sustainable long-term growth, projected at a 5.5% Compound Annual Growth Rate (CAGR). This anticipated growth is expected to be fueled by expanding international trade and e-commerce, particularly within Asian and Global South countries. Additionally, technological advancements in areas like AI, IoT, and blockchain, coupled with a growing emphasis on sustainability and resilient logistics solutions, are set to provide further support.
