KGI Securities (KGI) estimated Leo Global Logistics Public Company Limited (LEO) to report a 1Q21 net profit of 21.40 million baht, increasing 53% QoQ and 30% YoY driven by expected 30% growth in logistics specially from sea freight service.
Gross margin is expected to decline to 25.5% from 25.8% in 4Q20 due to a strong jump in freight rate which resulted in charging more for the service, but at a low rate compared to rising freight rate. However, since logistics have risen dramatically, it is still positive to LEO’s earnings.
Moreover, LEO will recognize additional 2 million baht revenue, which was supposed to be booked in the financial statement since 4Q20, in this quarter.
As the BDI index continues to rise, KGI foresaw a bright outlook for LEO. Rising BDI indicates global demand for logistics at a fast pace.
KGI further stated that Thai exports will surge in a positive direction in 1Q21 and will continue its momentum in 2Q21 driven by global re-stock. Hence, LEO is likely to grow outstandingly this year.
Self storage unit is another key driver for LEO’s profit in 2021 thanks to the rise of E-commerce.
With all positive factors, KGI has maintained a “BUY” recommendation on LEO with a target price of ฿7.80/share.