Tri-Mode’s new warehouse seen to boost income

Valuation-wise, this ACE Market-listed stock is trading at a price earnings multiple (PE) of 22.2 times for calendar year 2020 (CY20).

PETALING JAYA: Tri-Mode System (M) Bhd’s new headquarters-cum-warehousing and distribution hub should give it a new income source going forward.

The homegrown integrated logistics service provider began operations of this enlarged warehouse at the end of March 2021.

This new hub sits on a 12-acre parcel of land located at the Pulau Indah Distribution Park, Selangor.

The general warehouse has a total size of 85,485 square feet and is able to hold up to 10,500 pallets.

This space has been fully taken up, its management guided according to CGS-CIMB Research.

“Hence, it is currently constructing a second warehouse with a floor space of 28,000 sq ft or 3,200 pallets,” added the brokerage.

According to CGS-CIMB, its management “guided significantly stronger year-on-year results ahead, to be driven by maiden contributions from its first general warehouse, plus from a pick-up in global freight volumes, better cost efficiency and productivity with centralised operations at the new hub.

The company believes that the new warehouse may lead to a demand pick-up in other complementary segments such as haulage and forwarding.

Valuation-wise, this ACE Market-listed stock is trading at a price earnings multiple (PE) of 22.2 times for calendar year 2020 (CY20).

This, said CGS-CIMB, is a 63.4% discount to the CY20 PE of Malaysia’s freight stocks at 61.4 times and a 57.6% discount to the CY20 PE of global freight players at 52.4 times.

As of the first quarter (Q1) of financial year 2021 (FY21), 83% of Tri-Mode’s revenue was derived domestically and the rest from overseas markets.

Sea freight made up the bulk of its revenue for Q1 of FY21.

Besides this, the company is also involved in the provision of various logistics services such as container haulage, air freight and warehousing.