But despite the Sell call by RHB Research Institute Sdn Bhd, GDex’s stock continued its steady climb to inch up by over 4% to hit RM2.75 in early morning trade.
GDex whose market cap has grown to RM3.8bil presently, trades at 99.6 times trailing 12-month earnings per share and 68 times FY 2018 forecast earnings.
The stock has risen 37% in the past month and close to 60% year-to-date.
The company is seen as a key beneficiary of the e-commerce growth in Malaysia with RHB Research revising up its forecasts net profit for FY17 to FY18 by 2-5% to account for higher volume growth. It expects the company to generate a two-year net profit CAGR of 21%.
“While we believe it is well managed and expect its foray into Indonesia to be longer-term positive, we are of the view that its current valuations have run ahead of earnings expectations. The stock is currently trading at 68x FY18 forecast price to earnings (PE), more than +1sd above its forward PE.”
“We downgrade GDex to Sell as we roll forward our discounted cash flow-derived target price to MYR1.90 from MYR1.63 - a 23% downside,” the research house adds.
It says there is cost pressures and heightened competition risks as more players enter the courier business to ride on the e-commerce boom, cutting prices to gain market share in the process.
Gdex is the second largest courier service provider in Malaysia with around 19% market share. With online retail sales accounting for less than 1% of total retail sales locally, growth potential for the sector extends beyond last-mile delivery to value-added services, including warehousing and inventory management.
According to Bloomberg data, out of the four analysts covering the stock, there were two buy calls and one hold and sell calls, respectively.
At half day market close, GDex added 8 sen to RM2.71. A total of three million shares changed hands.
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