Good morning.
Today, we feature a note on Tri-Mode System (M) Berhad in our FundTech Radar – 19th March 2019. TRIMODE was listed in ACE market on 11th May 2018. It is a Malaysian based integrated logistics service provider, where its principal activities include provision of sea freight, container haulage, air freight, freight forwarding, warehousing and marine insurance services. In addition, TRIMODE launched an e-commerce logistics platform (HiClicks) to cater for inbound courier services on 18 Sept 2018. As at 31 Dec 2018, TRIMODE’s sales were made up of 92% local sales.
Fundamental Stance
· A healthy 3-year (FYE16-18) revenue and core PATAMI CAGR of circa 2.8% and 20% respectively.
· Its FY18E core PATAMI margin dropped slightly to 6.6% (vs. 7.0% in FY17).
· TRIMODE is in a net cash position of RM5.7m (3.4 sen per share) as at 31 Dec 2018.
· It adopted a dividend policy of at least 30% of its core PATAMI
· It paid its first interim dividend of 1 sen on 11 Jan 2019, translating into a 2.2% dividend yield.
· Cost hikes (such as sea freight rate, diesel prices, and air freight rate) as well as on-going US-China trade war will be the key factors that may affect performance going forward.
· The new warehouse, which is expected to be completed during 1H2020, may also generate potential income return from: (1) fixed warehouse lease/rental and also (2) ILS under MIDA incentive scheme of 70% tax exemption for 5 years.
· The HiClicks may potentially be a game changer.
· Currently trading at 11.7x 12-month trailing P/E (10.8x if excludes 3.4 sen net cash per share), which is a 35.3% discount to its domestic peers P/E.
Technical Front
Trading volume is illiquid.
The trend for the stock seems to be changing from down to up.
Resistances: 0.475/0.500/0.560
Supports: 0.435/0.400/0.355
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
19th Mar 2019
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