NCB

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NCB remains attractive despite big fall in share price By: SHARIDAN M. ALI

While Northport in the past was quite comfortable with an average of about 5% in container volume growth, the expanding port now is just looking at maintaining its volume this year .

PETALING JAYA: Port and logistics operator NCB Holdings Bhd’s share price which has tumbled over the past year to a near four-year low at RM2.55 last Friday may pique investors’ interest.

As its earnings and profitability were still intact albeit being affected by its loss-making logistics arm last year, its current share price which has fallen by more than 47% from the peak of RM4.85 last October could be “attractive”.

NCB’s share price four years ago was affected by the global economic crisis that has adversely impacted shipping lines.

NCB recorded a big net profit drop to RM53.6mil last year from RM143.6mil in 2012, partly pulled down by its loss-making logistics arm.


But the huge fall in share price was not the only factor to accumulate NCB’s shares now as with price-to-earnings (PE) ratio of 37.8 times, the counter was still considered “expensive” to its peers, Westports Holdings Bhd and Bintulu Port Holdings Bhd with PE ratios of 21.21 times and 18.98 times respectively.

The counter also has liquidity issue, with only less than 10% of free float out of its 470.3 millions outstanding shares.

In terms of dividend, NCB has a yield of 2.53% while Westports and Bintulu Port recorded yields of 1.72% and 3.87% respectively.

Nevertheless, as one of the largest national maritime gateways, NCB’s growth outlook, although not so exciting, is quite satisfactory and stable.

In terms of operations, NCB has two main subsidiaries, Northport Malaysia Bhd and Kontena Nasional Bhd.

While Northport is the cash cow of NCB, Kontena Nasional despite being one of the biggest homegrown logistics companies in the country, recorded a loss of RM74.1mil in last financial year due to several loss-making contracts.

Northport’s annual capacity now is 5.6 million twenty-foot equivalent units (TEUs). It handled 2.88 million TEUs in 2013, down by 3% from 3.09 million TEUs in 2012.

While Northport in the past was quite comfortable with an average of about 5% in container volume’s growth, the expanding port now is just looking at maintaining its volume this year as the the volume achieved for the first half of this year was not that encouraging despite reports on the country’s economic growth.

Kenanga Research previously reported that driven by its port infrastructure upgrade plans and rationalisation of its logistics arm, the core net profit of the group was expected to grow at a two-year cumulative average growth rate (CAGR ) of 12.4% from 2013 to 2015.

But it said the profits were expected to be marginally offset by higher depreciation and amortisation costs from incremental capex on Wharf 8A, 16 and 8 upgrading works.

Northport is one of two major ports alongside Westports in Port Klang.

Port Klang is currently ranked 12th on the world’s busiest ports list based on last year’s volume of 10.3 million TEUs, which was a 3.5% increase over 2012.

Out of this total, Westports handled 7.5 million TEUs while Northport’s volume stood at almost 2.9 million TEUs.

When contacted, NCB’s officials told StarBiz that they would be ready to talk on efforts to boost the group’s profitability, that would mainly revolve around managing its cost, this week.

Source: The Star

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