GKE Corporation Limited - OCBC Investment 2016-07-13: An Integrated Logistics Solutions Provider

GKE Corp Ltd - OCBC Investment 2016-07-13: An Integrated Logistics Solutions Provider GKE CORPORATION LIMITED 595.SI 


  • Established in 1995
  • Core business in warehousing & logistics
  • Made strategic investments into cement mixing plant and LPG carrier

Constructed automated cement mixing plant in China

  • As GKE Corporation Ltd (GKE) also makes strategic investments, it currently has two of them: 
    1. a 50% stake in a JV that constructed a LPG carrier, which is currently in a six-month chartering contract since Apr 16, with a six-month charter extension option, and 
    2. through its wholly-owned subsidiary, Wuzhou Xing Jian, invested RMB50m to construct automated cement mixing plant in Wuzhou, China. 
  • Just last week, we visited GKE’s cement mixing plant and office facilities in Wuzhou, China. The cement plant has a total annual production capacity of 800,000m3, which is the largest relative to its other nine competitors in Wuzhou city. 
  • With the expected urbanization and development plans of Wuzhou, GKE expects the demands for cement products to increase ahead and contribute positively to GKE’s bottom-line. 
  • All said, we think there is still execution risk until there is a consistent flow of contract wins of going forward.

Expanding its core business in warehousing and logistics

  • GKE’s core business is in 3rd-party warehousing and logistics, where it not only includes leasing out space at its warehouses, but also provides full suite of integrated logistics supply chain management solutions and services such as freight forwarding and material handling. 
  • GKE is currently expanding is core business with the redevelopment of one of its warehouses, 39 Benoi Road, which will increase total NLA by an additional 200,000 sqft to 400,000 sqft and 130,000 sqft of open year storage space. The redevelopment, expected to complete by Aug 17, will also allocate one level for chemical storage facilities (higher margins) and see the construction of 40-foot container ramps for every level linked with another GKE’s warehouse at 30 Pioneer Road.

9MFY16 saw losses narrowed from a year ago

  • In its latest 9MFY16 results, core net loss attributable to shareholders narrowed by 10.2% YoY to S$1.6m even as revenue declined 5.4% to S$26.2m. 
  • According to Bloomberg, GKE is currently trading at 0.81x P/B based on 3QFY16 financial results. 
  • We have NO RATING on this stock.

Eugene Chua OCBC Securities | http://www.ocbcresearch.com/ 2016-07-13
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