FM: Logistics Firm Posts Mixed FY25 Results Amid Global Headwinds
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | MYR0.59 (+3%) |
| Last Traded | MYR0.58 |
| Recommendation | NEUTRAL |
A leading logistics provider reported its full-year 2025 core earnings at MYR31.5 million, a 2.9% year-on-year increase, though falling slightly below both internal and consensus estimates (95.8% and 97.8%, respectively). Despite the slight miss, the company’s fourth-quarter core profit surged by 6.8% quarter-on-quarter and 54.7% year-on-year to MYR7.9 million, primarily driven by a more favorable pricing environment and an improved product mix across its operations.
Performance Review
The company’s performance in FY25 was characterized by a mixed bag across its various segments. The sea freight division demonstrated robust growth, with revenue climbing 24.3% year-on-year and profit rising 9.4% year-on-year, supported by a 4.7% increase in throughput to 120,000 TEUs. Similarly, the air freight segment saw revenue grow 20.4% year-on-year to MYR108.7 million, and profit increased 12.1% year-on-year to MYR26.9 million, boosted by ongoing recurring aircraft projects. The land freight segment also contributed positively, with revenue up 10.3% year-on-year to MYR41.6 million, attributed to fleet expansion and new customer acquisitions.
However, the 3PL and warehousing segment faced significant headwinds, experiencing a 10.1% contraction in revenue and an 11.3% decline in profit year-on-year. This downturn was largely due to elevated operating costs associated with the newly commissioned warehouse. Management anticipates this new facility will begin contributing positively to earnings from FY26 onwards.
Future Outlook and Challenges
Looking ahead, the investment bank maintains a cautiously optimistic stance on the company’s earnings trajectory. While the logistics provider is expected to benefit from sustained sea freight volumes and continuous air freight project work, significant external headwinds are anticipated. Global uncertainty, fueled by unpredictable US tariff policies and a subdued global trade growth outlook, poses challenges. The World Trade Organisation’s projection of 1.8% global trade growth for 2026 suggests these factors could suppress volume recovery and exert pressure on freight rates in the near term.
Investment Recommendation
The investment bank has maintained a NEUTRAL rating on the stock, with an unchanged target price of MYR0.59, representing a 3% upside from its last traded price of MYR0.58. The valuation is considered fair at 8x FY27F P/E, which aligns with its five-year mean, and includes a 6% ESG premium given its 3.3 score against the country median of 3.0. The “Neutral” rating reflects the absence of strong catalysts for significant upside.
Key Risks
Potential downside risks include slower-than-expected volumes, higher-than-anticipated operating expenses, and a further slowdown in global trade activities. Conversely, an acceleration in these factors would present upside opportunities.
