AGX: Logistics Specialist Delivers Strong Half-Year Performance Amidst Cautious Outlook






Financial News Report


AGX: Logistics Specialist Delivers Strong Half-Year Performance Amidst Cautious Outlook

Investment Bank TA SECURITIES
TP (Target Price) RM0.25 (+25.0%)
Last Traded RM0.20
Recommendation BUY

Performance Review

An integrated third-party logistics provider reported a robust performance for the first half of fiscal year 2025 (1HFY25), with its results largely in line with expectations. The company’s core net profit more than doubled year-on-year, driven by a substantial 25% increase in revenue. This strong top-line growth was underpinned by broad-based demand across all its service lines, coupled with disciplined operational cost management and lower forex losses. The 1HFY25 core net profit of RM8.39 million accounted for 49% of the full-year forecast, successfully meeting analysts’ projections.

Key drivers for the revenue surge included an 83% year-on-year increase in road freight transportation, particularly on Thailand-Myanmar routes, a 58% rise in air freight forwarding from Malaysia and Vietnam, and a 21% growth in sea freight forwarding from Malaysia and Vietnam. The company also benefited from its expanded logistics hubs in Penang and Johor Bahru, with Vietnam contributing RM7.6 million as a new market. Improved EBITDA margin, up 2.5 percentage points year-on-year to 13%, alongside a lower effective tax rate of 20%, further bolstered profitability.

However, the second quarter of FY25 (2QFY25) saw a sequential dip in core net profit, falling 9% quarter-on-quarter to RM4.0 million. This decline was attributed to higher net forex losses and a weaker contribution from associates. Gross margin also contracted by 90 basis points to 28% due to pricing pressures from market share expansion in Vietnam, while weaker demand from the petrochemical industry and increased Chinese competition impacted contributions from Korea.

Future Outlook and Strategy

Looking ahead, the logistics firm maintains a cautious yet vigilant stance. While Trump’s tariff-related pressures have eased and the IMF’s July 2025 World Economic Outlook Update projects stronger global GDP growth, which should sustain trade diversification and inter-regional trade flows, the company remains focused on strategic initiatives. These include strengthening revenue streams through customer and market diversification, optimising operational efficiencies via advanced logistics technologies and process enhancements, and exploring partnerships to broaden service offerings and reinforce market position.

The investment bank maintains its forecasts for the company, noting the results were in line with expectations. Following a switch in valuation methodology from PER to EV/EBITDA, the target price has been slightly lowered to RM0.53 from RM0.54, with a “Hold” recommendation maintained on the stock. The current traded price is RM0.51.


Leave a Reply

Your email address will not be published. Required fields are marked *