KUALA LUMPUR (June 10): Hong Leong Investment Bank (HLIB) sees integrated logistics service provider Sin-Kung Logistics Bhd (KL:SINKUNG) being an indirect beneficiary of the rising demand for air freight.
In a technical tracker on Monday, the research house said recent disruptions in two major sea routes have created an opportunity for increased air cargo charter business as shippers and forwarders seek alternative transport.
HLIB said that after recording a 47.9% decline in FY2023 earnings, it projects Sin-Kung’s earnings to recover in FY2024F and achieve a compounded annual growth rate of 39.9% from FY2023 to FY2025.
“Our optimism is supported by (i) the increase in air cargo traffic in Malaysia and Singapore due to disruptions in major sea routes; (ii) the commencement of operations for 100 commercial vehicles in FY25; and (iii) stronger air cargo traffic resulting from the recovery of E&E output in Malaysia in FY25-FY26F.
Building a base
“After correcting 12% from its IPO high of 16.5 sen to 14.5 sen on the last trading day, Sin-Kung is now building a base in the 13.5 sen-14.5 sen region.
“A successful breakout above RM0.15 will spur the price toward 15.5 sen-16.5 sen-17.5 sen. Cut loss at 12.5 sen,” it said.
At the time of writing, Sin-Kung shares rose 3.45% or 0.5 sen to 30.5 sen, with 10.2 million shares traded.