Blue-chip transport company Mainfreight trades at record highs

Summary

  • Mainfreight shares have risen by more than 112.89% to $53.50 on 4 November from $25.13 on 23 March and reached a 52-week high of $54.5 on 19 October.
  • The logistics and freight company expects an underlying first-half profit to increase by more than 23% to $102.2 million in 6 months ended in September over the year earlier.
  • Mainfreight is optimistic about its outlook, with increasing domestic transport volumes, improving revenue and demand, and the mounting pressure around the sea and air freight as well as demand for warehousing.

After an indiscriminate selling in March this year, MFT shares have been on an unscathed upside run and are up by about 113% from $25 on 23 March to close at $54.50 on 4 November 2020.

The stock recorded a fresh 52-week high of $54.5 on 19 October 2020.

For the first time in history, Mainfreight exceeded the $50 threshold after the Company posted a trading update showing an expectation of pre-tax profit to be up by about a quarter from 1 April-30 September.

First-half profit to rise

The largest transport company of NZ expects its first-half pre-tax profit to increase by more than 23% to $102.2 million in 6 months ended September compared to last year.

The Company stated that the global customer and sales demand was improving with growing strain on air and sea freight and demand for warehousing.

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Some of the expectations of Mainfreight's metrics across its global network for April-September 2020 included the following:

  • The revenue growth is anticipated to increase by 7.2% to $1.6 billion in the past 26 weeks, with the growth expected to be robust especially in Australia and Asia.
  • Domestic volumes are expected to rise by almost 9% to $37.3 million in New Zealand, by 99% to $30.5 million in Australia and by 61% to $4 million in Asia.
  • Europe's revenue would increase by a meagre 0.2%, with underlying profit expected to be down by nearly 11.2% in the 26 weeks.

Mainfreight is expected to witness a rise in pre-Christmas trading with the second wave of coronavirus infections affecting countries. The Group expects to increase its capital spending and is seeking land opportunities in Auckland and Nelson.

The Company is due to release its results for the first half of 2020 on 11 November.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)  

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