HLG Research: Buy Freight Management on weakness

HLG Research: Buy Freight Management on weakness
Tags: Freight Management | HLG Research

Written by HLG Research
Wednesday, 23 June 2010 08:36


KUALA LUMPUR: HLG Research says Freight Management’s share price, which surged to a 52-week high of 89.5 sen in November 2009, the share price tumbled to as low as 66 sen in February this year.

In its trading idea note issued on Tuesday, June 23 it said that Freight Management shares, instead of succumbing to the bears, prices bounced back after hitting the support trend line and consolidating within the 76 sen to 82 sen region.

“Currently, it is holding above the 100-day (77 sen) and 200-day (75 sen) SMAs. The next target to beat is 84 sen (76.4% FR from 89.5 sen to 66 sen), followed by 89.5 sen and our 3-month technical target of 96 sen, implying a 7x FY11 P/E (a 22% discount to its 5-year average of 9x),” it said.

MACD has swung back to the positive territory while its RSI is also above the 60 mark, accompanied by rising Money Flow Index.

“Traders may BUY on weakness. Major supports are 78 sen (40% FR) and 75 sen. Cut losses if prices fall below 75 sen as a violation of the 200-day SMA would indicate that the trend has turned negative,” it said.

Listed on the Second Board in February 2005, Freight Management was transferred to the Main Board in December 2007. It is a logistics player providing sea, rail and air freight services, tug and barge services, as well as warehouse/distribution and custom brokerage services.

It focuses on a “multimodal” concept, providing the full range of freight services, with consolidation of both LCL (less than a container load) and FCL (full container load). ??Listed logistic sector rivals include Century Logistics, ILB, Nationwide, Haisan, Tasco and Yinson.

FY09’s revenue breakdown - 58% from sea freight, followed by customs brokerage (12%), tug & barge (11%), airfreight (8%), warehouse & distribution (5%) and others (6%).

9MFY10 geographical revenue breakdown - 77.6% from Malaysia, followed by Singapore (9.6%), Australia (6.5%), Indonesia (4.5%) and others (1.8%).

“At 81 sen, it is trading at 5.9x P/E and 0.91x P/B for FY11, supported by a decent yield of 7.4% and strong EPS CAGR of 14% from FY09-11,” it said.