FM GLOBAL LOGISTICS HOLDINGS BHD: Initiation Report on Sustainable Growth
FM Global Logistics Holdings Bhd (FM Global) or previously known as Freight Management Holdings Berhad, is a leading multimodal, non-carrier international freight service provider. The Group specialises in ocean freight transport while also offering air freight, land transportation, custom brokerage, third party & warehousing (3PLW), specialised logistics and e-commerce solutions.
We favor FM Global for its (i) steady growth, (ii) superior operational efficiencies, and (iii) attractive dividends and healthy balance sheet. However, global trade growth is currently experiencing a near-term slowdown mainly due to uncertainties from US President Trump’s tariff policy and geopolitical tensions, and hence, risk of margins negatively impacted by global supply chain disruptions is quite high in our view. Nevertheless, long-term prospects remain positive, supported by potential for increased trade in Asia and the ongoing progress of technological advancements that support the demand for FM Global’s services. We initiate coverage on FM Global with a target price of RM0.56, based on a peers’ average P/E multiple of 9.0x pegged to its FY26F EPS, though with a Neutral call, given limited share price upside. The prospective dividend yield is estimated at about 5.5%.
Key Highlights
- Resilient track record. FM Global has registered steady revenue and earnings growth at a CAGR of 10.1% and 9.2% respectively since its listing on Bursa Malaysia in 2004, with PAT of RM5.8m. Although FY24 revenue and earnings declined by 13.8% and 26.4% YoY, respectively, due to the normalisation of freight rates following the pandemic’s exceptional conditions, it still marked a 7.1% increase compared to pre-pandemic levels in FY21.
- Superior operational efficiency. The Group’s FY24 return on equity (ROE) and return on asset (ROA) stood at 7.2% and 3.7% respectively, compared to the peers’ average of 4.0% and 1.6%. The better than average ROE and ROA reflects its integrated operations, established network of international independent agents and experienced management team. These advantages enabled the Group to deliver reliable, high-quality services at competitive rates.
- Attractive 5.5% Yield. The Group has maintained a payout ratio above 40% of profit after tax and minority interest (PATAMI) since FY15, based on 52.1% payout ratio, closely aligned with the three-year average of 48%. This implies an attractive 5.5% yield on our estimates, which we view as sustainable given its strong cash flow generation and healthy net gearing of 32.2%.
- Logistic expansion. FM Global strategically deploys capital and investments to improve and expand its logistic capabilities, strengthening its position as a “one-stop” multimodal international freight service provider. This includes developing or acquiring new warehousing facilities, such as the new 200,000 sqft warehouse in Port Klang, Malaysia, scheduled for completion in 2QFY25 and expected to begin operations in 4QFY25. The Group also focuses on international expansion through acquisitions and investments while simultaneously refining its operational efficiency and reducing its carbon footprint through technology and digitalisation.
Stock & Shareholder Data
Share Price Chart & Data
The share price chart shows fluctuations between approximately RM0.52 and RM0.57 from January to July 2025, with the current price at RM0.56.
52 Week Range (RM): 0.53-0.54
3-Month Average Vol (‘000): 50.7
Share Price Performance
| Period | 1M | 3M | 6M |
|---|---|---|---|
| Absolute Returns | -1.7% | 2.6% | 1.7% |
| Relative Returns | 0.0% | -0.1% | 1.0% |
Key Stock Data
Market Capitalisation (RMm): 315.5
No. of Shares (m): 558.4
Major Shareholders
| Shareholder | % |
|---|---|
| Chew Keat Chong | 24.1 |
| Vibrant Capital Pte Ltd | 20.1 |
| Yang Lam Heng | 18.4 |
Key Financial Summary
| FYE Jun (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 948.4 | 817.5 | 993.5 | 1,023.3 | 1,054.0 | 8.8% |
| Operating Profit | 67.5 | 52.1 | 57.6 | 61.4 | 65.3 | 7.8% |
| Pre-tax Profit | 62.3 | 46.7 | 50.2 | 54.0 | 58.0 | 7.6% |
| PATAMI | 42.0 | 30.9 | 32.2 | 35.0 | 37.5 | 6.6% |
| EPS (Sen) | 7.5 | 5.5 | 5.8 | 6.3 | 6.7 | |
| P/E (x) | 7.3 | 9.9 | 9.6 | 8.8 | 8.2 | |
| DPS (Sen) | 4.0 | 4.0 | 3.0 | 3.0 | 3.0 | |
| Dividend Yield (%) | 7.3 | 7.3 | 5.5 | 5.5 | 5.5 |
Source: Company, PublicInvest Research estimates
Business Overview
FM Global is a leading multimodal, non-carrier operating international freight service provider. It was established in 1988, listed on Bursa Malaysia Second Board on 3rd Feb 2005 and subsequently transferred to Main Board of Bursa Malaysia on 19 Dec 2007. Services offered by FM Global are (i) Sea Freight, (ii) Land Freight, (iii) Air Freight, and (iv) 3PL & Warehousing distributions and other supporting services.
| # | Services | Involvement | Cargo Type |
|---|---|---|---|
| 1 | Sea Freight Services | Worldwide Import, Worldwide Export, Trans-shipment | LCL/FCL, LCL |
| 2 | Land Freight Services | Import (Thailand), Export (Thailand) | LCL/FCL |
| 3 | Air Freight Service | Worldwide Import, Worldwide Export | Palletise Cargo/ULD |
| 4 | 3PLW | Warehouse and distribution | Bonded/General |
| 5 | Supporting Services | Customs Brokerage, e-commerce fulfillment, last-mile delivery, Project Management | Import/Export |
Notes: (1) LCL stands for Less than Container load and FCL stands for Full Container Load. (2) ULD stands for Unit Load Device, generic term for air cargo containers.
Revenue Breakdown (9MFY25)
Sea Freight Services remain the group’s largest revenue contributor.
- Sea Freight: 59%
- Air Freight: 12%
- 3PL, Warehousing & Dist: 12%
- Land Freight: 4%
- Supporting Services: 13%
Warehouse Portfolio
| Location | Size (sq ft) |
|---|---|
| Main Warehouse, Lot 37A & Lot 37B, Kaw. Perind. Bandar Sultan Sulaiman, P. Klang* | 340,000 |
| Lot 24, Kaw. Perind. Bandar Sultan Sulaiman, P. Klang* | 110,000 |
| Lot 16, Jalan Sultan Alauddin 4/KU 17, P. Klang* | 230,000 |
| Plot 55, Lorong Perusahaan Maju 1, Kaw Perusahaan Prai, Penang* | 40,000 |
| Plot 61, Lorong Perusahaan Maju 1, Kaw Perusahaan Prai, Penang* | 38,000 |
| Lot 14, Kaw. Perind. Bukit | 120,000 |
| Total | 878,000 |
Note: * Owned by FM Global
Industry Outlook
The near-term freight market outlook remains mixed, with demand growth expected in Asia and Latin America but US import demand likely to moderate due to rising trade barriers and policy uncertainty. The temporary pause on US tariffs for Chinese goods has resulted in a surge in US demand as importers rush to replenish inventories before the tariff window closes in August.
Looking beyond near-term fluctuations, we believe the global freight market is poised for sustainable long-term growth, projected at a 5.5% CAGR, fueled by expanding international trade and e-commerce within Asian and the Global South countries. This growth will be further supported by technological advancements including AI, IoT, and blockchain, along with increasing emphasis on sustainability and resilient logistics solutions.
Environment, Social and Governance (ESG)
FM Global infuses ESG standards throughout its business, as sustainability has become a key driver of success. Environmentally, the Group focuses on reducing its carbon footprint through energy efficiency initiatives, including the installation of 1,210 solar panels at The Central Business Hub, which generate over 100MWh annually. Socially, the Group invests in programs that promote equal opportunities, enabling access to a broader talent pool and fostering innovation at all level of the organisation. Additionally, FM Global reinforced its commitment to Ethical governance by conducting Anti-bribery & Anti-Corruption and Whistleblowing training programs throughout 2024, ensuring alignment with sustainability governance frameworks and industry practices.
Investment Risks
- Global trade slowing down. Global trade is currently experiencing a slowdown, particularly sea freight, as the global freight market shows signs of softening. This is due to various factors including weakening economic prospects, trade policy uncertainty, rising trade costs and geopolitical instability.
- Reliance on vendor integration. As a comprehensive multimodal international freight service provider, the Group depends on third-party vendors. Effective coordination and integration among these partners are critical for maintaining seamless multimodal freight services.
- Competition. The industry maintains high barriers to entry due to significant capital requirements and the need to establish international agent networks. Despite these barriers, the Group competes with both established players and potential new entrants in the freight forwarding market.
- Service rate volatility. While service rate fluctuations are typically passed through to customers, FM Global cannot guarantee that such changes would not adversely impact its business operations. Rate volatility may materially affect the Group’s financial performance.
Valuations & Peer Comparison
We like FM Global for its i) consistent growth trajectory, ii) superior operational efficiencies, and iii) attractive dividend yield and robust balance sheet. While revenue growth could continue through logistic capacity expansion, we are wary several potential headwinds, such as rising trade barriers, policy uncertainties and on-going geopolitical tensions may constrain near-term growth and pressure profit margins.
We initiate coverage on FM Global with a target price of RM0.56 based on P/E multiple of 9.0x pegged to its FY26F EPS, though with a Neutral call given limited share price upsides. Prospective dividend yield is at 5.5%.
| PE Ratio | Dividend Yield (%) | Net Gearing (%) | Return On Asset (ROA) (%) | Return on Equity (ROE) (%) | Pre-tax Margin (%) | |
|---|---|---|---|---|---|---|
| Tasco | 6.8 | 4.1 | 18.6 | 1.5 | 4.1 | 4.2 |
| Swift Haulage | 8.8 | — | 160.0 | 1.3 | 4.1 | 3.7 |
| Tiong Nam Logistics | 9.8 | 3.5 | 92.0 | 1.5 | 3.6 | 6.8 |
| Weighted average | 8.4 | 2.6 | 24.1 | 1.6 | 4.0 | 4.9 |
| FM Global | 8.9 | 5.5 | 32.2 | 3.7 | 7.2 | 5.7 |
Source: Bloomberg, PublicInvest Research
Key Financial Data
Income Statement Data
| FYE Jun (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 948.4 | 817.5 | 993.5 | 1,023.3 | 1,054.0 |
| Operating Profit | 67.5 | 52.1 | 57.6 | 61.4 | 65.3 |
| Finance costs | -7.8 | -8.0 | -9.5 | -9.5 | -9.5 |
| Share of JV | 2.6 | 2.2 | 2.1 | 2.2 | 2.3 |
| Pre-tax Profit | 62.3 | 46.7 | 50.2 | 54.0 | 58.0 |
| Income Tax | -15.1 | -12.9 | -13.1 | -14.1 | -15.1 |
| Effective Tax Rate (%) | 24.3% | 27.7% | 26.0% | 26.0% | 26.0% |
| Net Profit | 47.2 | 33.7 | 37.2 | 40.0 | 43.0 |
| Minorities | -5.1 | -2.8 | -5.0 | -5.0 | -5.5 |
| PATAMI | 42.0 | 30.9 | 32.2 | 35.0 | 37.5 |
Balance Sheet Data
| FYE Jun (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 192.2 | 258.7 | 284.6 | 298.8 | 313.8 |
| Trade and Other Receivables | 196.2 | 229.9 | 272.7 | 281.6 | 290.9 |
| Cash and Cash Equivalents | 105.7 | 90.4 | 87.3 | 89.5 | 93.4 |
| Other Assets | 194.9 | 245.9 | 231.3 | 221.8 | 201.9 |
| Total Assets | 689.0 | 824.8 | 875.9 | 891.7 | 899.8 |
| Trade and Other Payables | 89.3 | 97.6 | 126.9 | 130.7 | 124.1 |
| Borrowings | 95.3 | 229.7 | 194.2 | 193.9 | 193.6 |
| Other Liabilities | 99.9 | 45.1 | 92.6 | 92.3 | 92.1 |
| Total Liabilities | 284.5 | 372.4 | 413.7 | 416.8 | 409.8 |
| Shareholders’ Equity & Minority | 404.5 | 452.4 | 462.2 | 474.9 | 490.0 |
| Total Equity and Liabilities | 689.0 | 824.8 | 875.9 | 891.7 | 899.8 |
Per Share Data & Ratios
| FYE Jun | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share (RM) | 0.72 | 0.81 | 0.83 | 0.85 | 0.88 |
| NTA Per Share (RM) | 0.72 | 0.81 | 0.83 | 0.85 | 0.88 |
| EPS (Sen) | 7.52 | 5.54 | 5.76 | 6.27 | 6.71 |
| DPS (Sen) | 4.00 | 4.00 | 3.00 | 3.00 | 3.00 |
| Payout Ratio (%) | 53.2 | 72.2 | 52.1 | 47.9 | 44.7 |
| ROA (%) | 6.1 | 3.7 | 3.7 | 4.0 | 4.1 |
| ROE (%) | 10.9 | 7.2 | 7.3 | 7.7 | 8.0 |
Source: Company Prospectus, PublicInvest Research estimates
Denny Oh
T 603 2268 3000
F 603 2268 3014
E oh.boonyeow@publicinvestbank.com.my
RATING CLASSIFICATION
STOCKS
OUTPERFORM: The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12 months.
NEUTRAL: The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.
UNDERPERFORM: The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.
TRADING BUY: The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.
TRADING SELL: The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.
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