By Chan Quan Min
Delivery and courier service GD Express (GDEx) is a company in rapid growth with net profit expected to expand by about 18% in the current year, according to an RHB Research report.
“GDEx has more room to grow, as it believes that e-commerce has changed the way business is done and that it is in the sweet spot to ride on this bandwagon.
“The street thinks improvements in regional Internet infrastructure will facilitate transaction volumes and allow the company to grow its business.
“Note that GDEx not only focuses on Malaysia’s 30 million population, but the Asean region’s 600 million inhabitants as well. We believe this gives it huge growth potential,” an analyst at RHB Research said.
GDEx transferred to the Main Market of Bursa Malaysia in July last year after posting several consecutive years of double-digit growth and securing investment from Singapore Post.
Over the past 12 months the company’s stock has doubled in value to now trade in the region of RM2 per share.
RHB thinks the rally may not be over yet. In a report to initiate coverage on GDEx, the bank’s research arm estimated a potential upside of 20% to a target price of RM2.42.
The target price was derived from a discounted cash flow analysis. “The stock may be trading at very high price-to-earnings valuations but we believe its high potential growth could justify the high valuations,” the research house said.
Profit growth this financial year ending June 2015 is expected to be subdued at 18% because GDEx has earmarked this year as an investment year.
The following two financial years ending June 2016 and June 2017 are expected to see higher profit growth rates of about 26% and 28% respectively.
GDEx shares were trading on the stock exchange at RM2.08 as of 11:30am, up 7 sen for the morning.
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