FM: Logistics Firm Delivers Expected Earnings Amidst Mixed Market Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
FM Global Logistics Holdings Bhd reported a modest 3.0% year-on-year increase in net profit to RM9.1 million for its second quarter of fiscal year 2026 (2QFY26). The results were largely in line with expectations, accounting for 50.8% of the full-year forecast. PublicInvest Research maintains its “Neutral” call with an unchanged target price of RM0.60, citing continued uncertainty in the sea freight market.
Performance Review
Despite a marginal rise in net profit, 2QFY26 revenue saw a 4.7% year-on-year decline to RM231.6 million. This decrease was primarily attributed to weaker performance in the core sea freight segment, which constitutes approximately 58.4% of the total revenue. The segment experienced a revenue decline, driven by lower freight rates, even as volume increased by 5.5%. Similarly, the Air Freight and Supporting Services segments also faced contractions of 13.6% and 15.1% year-on-year, respectively, due to subdued demand and business activities.
However, these weaknesses were partially mitigated by robust performance in the 3PL (Warehouse and Distribution) and Land Freight segments, which saw revenue increases of 4.6% and 3.3% year-on-year, respectively. The overall net profit improvement was driven by effective cost control and enhanced operational efficiency, leading to a PAT margin expansion to 3.9% from 3.6% in 2QFY25.
Future Outlook
The outlook for the global freight market remains mixed. While global trade growth is projected to slow to 1.5-3.0%, the market faces persistent geopolitical risks, rising trade barriers, and policy uncertainty. The significant orderbook for new vessels and anticipated fleet growth are expected to contribute to existing overcapacity, suggesting that freight rates will likely remain weak throughout 2026.
Looking beyond these immediate challenges, PublicInvest Research anticipates a sustainable long-term growth trajectory for the global freight market, projected at a 5.5% CAGR. This growth is expected to be fueled by expanding international trade and e-commerce, particularly within Asian and Global South countries, and further supported by technological advancements such as AI, IoT, and blockchain, alongside a growing emphasis on sustainability and resilient logistics solutions.
Investment Bank’s View
Given the ongoing uncertainties surrounding the sea freight market, PublicInvest Research has reiterated its “Neutral” recommendation for FM Global, with an unchanged PE-based target price of RM0.60.
