Investor's Checklist: Business Services

Understand the business model.  Knowing if a company leverages technology, people, or hard assets will provide insight as to the kind of financial results the company may produce.

Look for scale and operating leverage.  These characteristics can provide significant barriers to entry and lead to impressive financial performance.

Look for recurring revenue.  Long-term customer contracts can guarantee certain levels of revenue for years into the future.  This can provide a degree of stability in financial results.


Focus on cash flow.  Investors ultimately earn returns based on a company's cash-generating ability.  Avoid investments that aren't expected to generate adequate cash flow.

Size the market opportunity.  Industries with big, untapped market opportunities provide an attractive environment for high growth.  In addition, companies chasing markets perceived to be big enough to accommodate growth for all industry participants are less likely to compete on price alone.

Examine growth expectations.  Understand what kind of growth rates are incorporated into the share price.  If the rates of growth are unrealistic, avoid the stock.  



Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey



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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.

A quick look at Freight Management (28.4.2010)

Freight Management Holdings Bhd

Business Description:
Freight Management Holdings Bhd. The Group's principal activity is operating in the freight and forwarding industry. It offers complete multimodal international freight services covering sea, rail, air freight and tuge barge services, customs brokerage and distribution container haulage and conventional trucking services. It also operates as an investment holding company. Operations are carried out in Malaysia, Singapore, Australia and Indonesia

Wright Quality Rating: LCB1 Rating Explanations






A quick look at Freight Management (28.4.2010)
http://spreadsheets.google.com/pub?key=tCRbHcnPniv_YU0cQTJLvgw&output=html

Current year prospects
The logistics sector of the Malaysian economy has seen a decline in activity due to the global economic crisis in the first half of the year 2009. Amidst early indications that the industry is moving towards recovery, the management remains cautiously optimistic in view of the prevailing uncertainties. The Group will continue its ongoing aggressive marketing efforts to boost sales and the management is actively working towards sustaining the Group’s lead position in its core business segments. Barring unforeseen circumstances, the Group is confident of some growth in the coming quarters of the financial year ended 30 June 2010.