Out with the old..
2019 proved successful on several measures, not least organic revenue growth, cash generation, the performance of the Baltic operations and the turnaround of Benfleet. That said, management is likely to be glad that a challenging year is over. It has taken swift action where required, reducing the cost base and upgrading the Board. The Group is trading in-line with revised expectations, with year-end net cash levels some way ahead of our estimates and underpinning dividend expectations.Yesterday's trading update demonstrated strong growth in revenues, with an additional £18m (+10.4%) generated organically, and a further £15m from acquisitions. Overall revenues of £212m was £5m ahead of our estimate, which is encouraging. Standouts amongst the strong performances were the activities in the Baltic region (Freight Forwarding in Lithuania and Estonia), the Pall-Ex Romania franchise (a 21.7% y-o-y increase in pallets handled, to 60.700 per month) and the turnaround of Benfleet Far Eastern.
We anticipated net cash of £3.2m by the end of 2019. The outcome of £6.9m was significantly ahead, reflecting active cash collection and lower deferred consideration paid, which more than offset the increase in capex (particularly on IT). The high cash level not only underpins dividend expectations but provides options for management in terms of M&A opportunities. The short-term focus is on fully integrating past acquisitions and increasing the level of cross-selling throughout the Group.
The positive outlook and management’s swift action on costs/issues appear to underpin our 2020 estimates. Furthermore, net cash amounts to a significant 18% of the current market capitalisation.
XPD shares are trading on a 2020F PER multiple of just 8.8x and markedly below our unchanged fair value of 48p/share.
DSV is engaged in the provision of transport and logistics solutions. As of Dec 31 2014, Co.'s operations comprised of three business areas. The DSV Air and Sea business provides air and sea freight services and designs project solutions. The DSV Road business provides road and rail transport services including full loads, part loads and groupage. The DSV Solutions business area specializes in contract logistics, which include logistic and warehousing solutions, as well as freight management, custom clearance, order management and e-commerce solutions.
FedEx provides transportation, e-commerce and business services through companies under the FedEx brand. These companies are included in the following segments: Federal Express Corporation, including TNT Express B.V., is an express transportation company; FedEx Ground Package System, Inc., which is a provider of small-package ground delivery services; FedEx Freight Corporation, which is a provider of less-than-truckload freight services; and FedEx Corporate Services, Inc., which provides sales, marketing, information technology, communications, customer service, technical support, billing and collections services, and certain back-office functions.
Kuehne & Nagel International is a holding company, engaged in providing logistics solutions. Co.'s business units comprised of: Seafreight, Airfreight, Overland, and Contract logistics. Co. operates on a worldwide basis in the following geographical areas: Europe, Americas, Asia-Pacific and Middle East, Central Asia and Africa. Within its Seafreight, Airfreight and Overland business units, Co. is engaged in purchasing transportation services from direct (asset-based) carriers and selling a combination of those services to its customers. Co. also develops solutions for the construction, renovation and operation of hotel chains and casinos all over the world.
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