Planning ahead and removing bottlenecks
Xpediator has announced the signature of a 20-year lease with AB Ports from Q1 2021 to expand its presence significantly in the Port of Southampton. The new facility will allow the business to improve profit margins on customer stock held at peak times within third-party warehousing and provide the capacity to widen its customer base further.Once the facility is both operating efficiently and at high capacity levels, the expected uplift to profitability will be marked from 2022 onwards. It will increase the business’ presence in and around the Port of Southampton by 46%, and warehousing within the Group by a chunky 34% to 790,000 sq ft in total.
The agreement will ‘future proof’ the ISL business, enabling it to meet peak demand levels and provide expansionary growth. Current peak demand levels are filling the existing Group capacity, and in 2018 and 2019 the excess was fulfilled via external warehousing, thereby reducing the capacity for growth in the future.
Initially, there are cost implications to the new facility, with management of the opinion that it is likely to take several months to fill the site. A factor in that is because ISL is very active in the toy industry and generates peak demand in the August to November period. But we then see an anticipated uplift in revenues from the new facility of c. £12.5m from 2022. One should then expect an improvement in margins, highlighting the reduced need for external warehousing. At a conservative operating margin of 6.4% before central costs, the new facility should add c. £0.8m per annum to EBITA from 2022.
We leave estimates unchanged, as is our fair value per share at 48p. At the end of FY19, we anticipate that net cash amounted to 20% of the Group’s market capitalisation, placing the current rating on a cash adjusted FY20 PER of just 6.8x.
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.
Eddie Stobart is a logistics and supply chain organization in the UK. From its headquarters in Warrington, operating 2,200 vehicles, 3,800 trailers and 24 distribution centres throughout the UK and Europe. Co. operates its business across the following core sectors: E-Commerce - covering online retailers and omni-channel retailers; Manufacturing, Industrial & Bulk - includes movement of raw materials and components used in manufacturing processes; Consumer includes the movement of manufactured products; and Retail covers the retail supply chain, operating from either a retailer's supplier or a retailer's own distribution centers, from where goods are transported to a retailer's outlets.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.