Leo Global Logistics Public Company Limited (mai: LEO) is among one of the securities that benefit from the positive sentiment of a higher freight rate that peaked last October while remaining at a level of more than one year high in January 2022.
The company announced one of its biggest moves in May last year by joining forces with China Post Yunnan, an affiliated company under China Post Group, one of China’s biggest state enterprises. The alliance aims to augment cargo and parcel deliveries, especially e-Commerce cargo, between Thailand and China.
Under this alliance, LEO, as an end–to–end global logistics service provider, was promoted to the General Sales Agent (GSA) for China Postal Airlines. Currently, China Postal Airlines offers air freight services between Bangkok and Kunming, China with Boeing 757 aircraft capable of supporting 30 to 35 tons of cargo per flight. China Postal Airlines is planning to offer the service at least three times per week.
The company reported a significant increase in net profit for its 3Q21 results at 52.23 million baht, an increase of 253% from a net profit of 14.80 million baht in 3Q20. The record of net profit in this quarter was almost equal to the whole year of 2020, which was 56.9 million baht. The increase was mainly due to its strong performance in all aspects such as revenue amount, shipment volume in terms of TEUs for sea freight and tons for air freight and net profit.
“Uniting with China Post and becoming its GSA will enable LEO to enhance its cross-border transportation, air freight, and international transportation services for e-Commerce cargo. Under this partnership, we also plan to offer new services and products with China Post, which will become alternatives for SME and e-Commerce businesses in Thailand for exporting to China and other destinations around the globe. China Post offers low service rates as well as an efficient transportation service throughout China and around the world,” Mr. Kettivit Sittisoontornwong, Chief Executive Officer of LEO, revealed.
Meanwhile, China’s postal and courier industry is expected to maintain stable growth in 2022, according to the State Post Bureau, estimating total revenue of the sector to grow by 11% YoY to 1.4 trillion yuan (approx. $219.6 billion) in 2022. More importantly, the courier industry’s business revenue is expected to grow 12% YoY to 1.16 trillion yuan in 2022.
KGI Securities noted that LEO will benefit from the China and Laos railway through its partnership with China post. The new railway could help increase transportation volume between China and Thailand through Laos. KGI Securities expects the opening of China-Laos Railway will be an essential catalyst to LEO, which will acquire its share in transportation management through its partnership with China Post.
The opening of China-Laos Railway will enormously facilitate Yunnan’s container transportation,” said Li Ting, a Yunnan Academy of Commerce researcher
Under the background that the China-Laos railway has been opened and the Regional Comprehensive Economic Partnership Agreement (RCEP) will take effect on January 1, 2022, container transportation will become one of the important means for efficient customs clearance.
Brokers estimated LEO to report net income in 2021 at 181 million baht, representing more than a 100% growth when compared to 56.88 million baht in 2020 and 45.88 million baht in 2019. The consensus target price is THB17 per share with KGI Securities giving the highest price at THB19 per share.
