Chasen Holdings Ltd - CGS-CIMB Research 2018-09-28: Record-High Revenue In FY18


Chasen Holdings Ltd - Record-High Revenue In FY18

  • Chasen achieved record-high revenue of S$127.8m in FY3/18. Management is guiding for higher revenue in FY19.
  • The company expects to benefit from the relocation of factories outside of China and on-shoring of manufacturing in the US.
  • Chasen trades at a historical FY18 P/BV of 0.40x with dividend yield of 4.1%.

Emerged from a reverse takeover

  • Chasen was incorporated on 2 Nov 1999. It was listed on SESDAQ on 8 Aug 2000 and was transferred from the SGX Catalist to Mainboard on 26 Feb 2013. 
  • The company changed its name from China Entertainment Sports Ltd to Chasen Holdings Limited (Chasen) on 17 May 2007 following the completion of the reverse takeover (RTO) exercise in Feb 2007 whereby the company acquired the entire issued and paid up capital of Chasen Logistics Services Limited.

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FY18 revenue breakdown

  • In FY18, Specialist Relocation Solutions accounted for 58.7% of Chasen’s revenue, the Technical & Engineering (T&E) segment accounted for 23.4%, while the Third-Party Logistics segment accounted for the remaining 17.9%.
  • By geography, Chasen’s major markets are Vietnam and Thailand.

FY18 financial performance

  • Revenue grew 20% y-o-y to S$5.5m in FY18 (the highest in the past 6 years).
  • The improvement in FY18 earnings performance was due to strong demand for its Specialist Relocation Solutions and for cross-border land freight services in Southeast Asia, according to the company. Chasen commented that it is seeing a trend of factories moving out of China due to rising labour costs and the economic policies of US President, Donald Trump.

Strategic initiatives

  • In a Jul 2018 public update, Chasen highlighted that it had three years from 5 Jun 2017 to meet the SGX’s minimum trading price requirement and the group is actively exploring opportunities to do so.
  • In FY19, Chasen expects to deliver higher revenue y-o-y and positive net profit, driven by:
    1. growing momentum of relocation activities,
    2. growth of cross-border trucking activities, and
    3. cost savings from restructuring its T&E segment.

Historical valuations

  • Chasen trades at a historical FY18 P/E of 5.7x, and P/BV of 0.40x versus ROE of 7.1%.https://sginvestors.io
  • FY18 dividend yield was 4.1% and the company has been paying dividends in the past five years.
  • Its net gearing at end-Mar 2018 was 0.35x.

William TNG CFA CGS-CIMB Research | https://research.itradecimb.com/ 2018-09-28
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* This Eyes On the Ground report represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.