Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

<ul class=""><li>Consensus EPS estimates for <a href="https://www.smartkarma.com/entities/11557" target="_blank" data-smartkarma-citation="entities:11557:1">CJ Korea Express Corp (000120 KS)</a> in 2018 and 2019 assume a dramatic and sustained improvement in Operating Margin compared to the current 3.8%.</li><li>A portion of this improvement may come from CJL's two Korea-centric segments, Contract Logistics and Parcel, which accounted for 37% and 30% of Sales in Q1 2017, respectively. But the opportunities for these two segments to scale up significantly are limited by Korea's relatively small domestic market size.</li><li>A much larger proportion of the expected earnings improvement will likely come from CJL's Global segment, which focuses on 'asset light' transportation services outside of Korea (primarily in China and elsewhere in developing Asia). CJL over the last two years has grown this segment organically and through M&amp;A.</li><li>In our view, the most likely path to significantly higher earnings in 2018 and 2019 would be a sharp increase in both the scale and profitability of CJL's Global (ie, non-Korean) logistics business. We believe improvements in domestic segments (such as raising automation in Parcel) will probably have a smaller impact on medium-term earnings, if any.</li><li>In this note we evaluate CJL's chances of successfully following one of these paths to EPS of 6,400+ Won by 2018. Given the company's recent track record, we believe consensus earnings estimates for 2018 (over 6,400 Won EPS) and 2019 (over 8,400 Won EPS) are simply too high, and that analysts will pull them down later in 2017 when it becomes apparent that progress towards those milestones is negligible.</li></ul>

Consensus EPS estimates for CJ Korea Express Corp (000120 KS) in 2018 and 2019 assume a dramatic and sustained improvement in Operating Margin compared to the current 3.8%.A portion of this improvement may come from CJL's two Korea-centric segments, Contract Logistics and Parcel, which accounted for 37% and 30% of Sales in Q1 2017, respectively. But the opportunities for these two segments to scale up significantly are limited by Korea's relatively small domestic market size.A much larger proportion of the expected earnings improvement will likely come from CJL's Global segment, which focuses on 'asset light' transportation services outside of Korea (primarily in China and elsewhere in developing Asia). CJL over the last two years has grown this segment organically and through M&amp;A.In our view, the most likely path to significantly higher earnings in 2018 and 2019 would be a sharp increase in both the scale and profitability of CJL's Global (ie, non-Korean) logistics business. We believe improvements in domestic segments (such as raising automation in Parcel) will probably have a smaller impact on medium-term earnings, if any.In this note we evaluate CJL's chances of successfully following one of these paths to EPS of 6,400+ Won by 2018. Given the company's recent track record, we believe consensus earnings estimates for 2018 (over 6,400 Won EPS) and 2019 (over 8,400 Won EPS) are simply too high, and that analysts will pull them down later in 2017 when it becomes apparent that progress towards those milestones is negligible.

Why CJ Logistics Won't Likely Reach Annual EPS of 6,400+ Won Any Time Soon

Co-founder & Managing Director, Marketnomix 

Rajan Govil

Co-founder & Managing Director

Marketnomix 

Macroeconomics

Malaysia’s GDP grew 4% y-o-y in 2Q2016 compared to a 4.2% y-o-y rise in 1Q2016 – slowing for the sixth straight quarter. Final consumption contributed 4.1 percentage point (ppt) to GDP largely driven by private consumption while fixed capital formation contributed 1.7 ppt. Change in inventories and net exports detracted 1.2 ppt and 0.7 ppt respectively from GDP. Net exports detracted from overall GDP as imports grew at a faster pace than exports.On the supply side, growth continued to be driven…

Malaysia’s GDP grew 4% y-o-y in 2Q2016 compared to a 4.2% y-o-y rise in 1Q2016 – slowing for the sixth straight quarter. Final consumption contributed 4.1 percentage point (ppt) to GDP largely driven by private consumption while fixed capital formation contributed 1.7 ppt. Change in inventories and net exports detracted 1.2 ppt and 0.7 ppt respectively from GDP. Net exports detracted from overall GDP as imports grew at a faster pace than exports.On the supply side, growth continued to be driven…

Malaysia: Manufacturing and Services Drive GDP

Malaysia

Century Logistics Holdings Bhd is an investment holding company. The Company, through its subsidiaries, provides freight forwarding, warehousing, container haulage, transportation, and open yard storage services. Century Logistics also provides distribution services, invests in property, and operates as shipping agent.

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CJ Century Logistics Holdings (CLH MK)

Why CJ Logistics Won't Likely Reach Annual EPS of 6,400+ Won Any Time Soon

Consensus EPS estimates for CJ Korea Express Corp (000120 KS) in 2018 and 2019 assume a dramatic and sustained improvement in Operating Margin...

Daniel Hellberg

Malaysia: Manufacturing and Services Drive GDP

Malaysia’s GDP grew 4% y-o-y in 2Q2016 compared to a 4.2% y-o-y rise in 1Q2016 – slowing for the sixth straight quarter. Final consumption...

Rajan Govil

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