Morningstar | Narrow-Moat DSV Ships Solid Fiscal-Year Results
Narrow-moat DSV delivered a very decent set of full-year results, in line with both our and the Street's expectations. Strong growth in gross profit and EBIT year over year of 8% and 15% respectively will undoubtedly be overshadowed by the outcome of the company’s bid for rival Panalpina, which was recently rebuffed by Panalpina’s largest shareholder but ultimately remains in play. We retain our DKK 440 fair value estimate and believe the current share price is speculatively pricing in future M&A deals.Air and sea, the most profitable business in the DSV group, continued to increase volumes ahead of the market, all while improving operating margins through a combination of increased scale, ruthless cost efficiency and the expansion of premium services. Air in particular saw the most impressive volume growth, rising 8% over the period, twice the purported market rate. Road transport, DSV’s largest business representing around 40% of sales, saw volume growth of 3%, in-line or slightly ahead of the market. Adjusted for one-time gains in 2017, EBIT margins also rose slightly over the period. Lastly, the solutions business, read contract logistics, saw continued improvement in 2018. Although just 15% of the group on a revenue basis, the business continues to benefit from increasing demand for warehouse space and solutions as the e-commerce monster grows, while operating margins continue to see incremental improvement.
We believe the increasingly sophisticated requirements of customers and the increasing demand for inter-modal transport will be a boon to large 3PLs such as DSV in the medium to long term; however, we believe investors’ expectations for the company are currently quite high, hence our lack of enthusiasm for the shares at current price levels.
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.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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.