MFT - Mainfreight

[Onemootpoint]

"Also rising, and more sharply than in the prior week, container freight rates were up +7% last week. Rates out of China to both the US and Europe drove the increase. Bulk cargo rates have started rising again."

https://www.interest.co.nz/economy/125168/us-jobless-claims-rise-china-slips-deflation-ping-loses-apple-loses-air-travel

[Shareguy]

Craigs thoughts

MFT is currently trading on a rolling forward PE of 21.6x, which is ahead of key peers (DSV 18.6x / FRW 19.2x) and in line with the NZX50 average of 21x. Our DCF valuation implies good upside (spot DCF $73.77 / forward $79.20), but we think the market will remain cautious around the recovery in the macro environment before assigning materially greater value. The Air & Ocean operation, and in particular the long-term margins that can be achieved, remains the key uncertainty in our view. This is unlikely to be resolved in the near-term and could remain as an overhang until demand/supply in the global forwarding market is more balanced.
Price Target $69.00 (prev $78.20)
Our Price Target remains based on the average of 1) our forward DCF valuation ($79.20, WACC 8.5%) to incorporate a longer-term view of capital intensity, and 2) international peer PE multiples (18.6x, $58.80).

$58.80 .....

[Cod]

Recent week price action is a counter trend move within an existing downtrend, expect price to retest $57.39 measured move line.You cannot view this attachment.

[Shareguy]

Great to see the share price appreciating.  Congrats to those that topped up or added. FB positive report labeled "The cream de la cream" was released today which might of been the catalyst for todays rise.

[Shareguy]

https://www.cnbc.com/2024/01/03/maersk-shares-gain-after-shipping-firm-extends-red-sea-pause.html

[Shareguy]

Craigs this morning.  Has the share price got ahead of itself?

•   MFT – Over the past couple of days DSV, CH Robinson, and Old Dominion (MFT global comps) have reported Q4 earnings. Wade Gardiner has cast his eye over the results and notes that in general they have been fairly weak. CHR and Old Dominion reported softer than expected Q4 Domestic (mainly US) freight volumes, with some commentary around higher opex (esp personnel costs) at the high-end of expectations. In Ocean freight CHR and Old Dominion reported that Q4 demand has remained soft, in line with previous quarters, with revenue reflecting the year-on-year decline in freight rates. In comparison DSV was more bullish around their road and sea freight results and margins, although they weren't immune to lower market activity and year-on-year freight rate declines. A key focus area with MFT at present is Air & Ocean margins, which for DSV remained strong in Q4 and consistent with prior periods....Gardiner notes sea freight rates in January have risen as a result of trade lane disruptions (Red Sea and water depth issues in the Panama Canal), but there is no indication of an upturn in demand. It is hard to know how long the Red Sea disruptions will continue for but there was some commentary from CHR that elevated rates will remain until at least the Chinese New Year, with some relief through 2024 as new vessel capacity continue to enter the market.   

[Sideshow Bob]

I think heard recently that 15% of NZ's imports/exports go via the Red Sea.

[Shareguy]

Gosh MFT thread languishing at the back pages. Is the love lost for such a quality stock.

Fbar latest says Management is due to report its FY24 result on 29 May 2024 and they expect a positive message on the outlook. MFT currently trades at ~21x one year forward PE which is not expensive in my opinion.

FB think lack of a year end trading update/earnings downgrade provides confidence that its commentary at the interim result was accurate and that 2H24 will at the very least meet market expectations, which implies a ~+NZ$40m PBT uplift on 1H24.


Not long to wait. If FB are right should be catalyst for uptrend.

[Mr Cashflow]

Mainfreight share price only high cause they a great company.

They should be extremely proud of their high share price ...... let them take the kudos for it

It possibly gives more credibility where it matters (money markets)

An Aussie paper would not have suggested Mainfreight NZ greatest company if its share price was $7

Let them keep the bragging rights ....no share split ...it'll only cheapen them

Most of the reasons for share splits in that article are unsubstantiated .... Just a good story imo

I like thier balance sheet.

[Cod]

MFT seems to track nicely with inverted NZ 10 Year albeit with 2-4 week delay.

You cannot view this attachment.

[entrep]

MFT seems to track nicely with inverted NZ 10 Year albeit with 2-4 week delay.

You cannot view this attachment.

So numba go up or down?

[Left Field]

Results out......tough times.

https://www.nzx.com/announcements/431909

Result Summary:
Revenue $4.72 billion Down 17%
Profit before tax $395.4 million Down 33%
Net profit before abnormals $277.9 million Down 35%

• Adjusted for foreign exchange impact, group revenue is down 18%, and profit before tax is down 33%.
• An abnormal accounting (non-cash) adjustment of NZ$69 million relating to the tax treatment of depreciation on New Zealand owned property.
• Operating cash flows declined from $757 million to $505 million and reflects the reduction in profitability for the period.
• A final dividend of 87.0 cents per share has been authorised by the Board of Directors, payable on 19 July 2024.

[Waltzing]

be interesting to see if this sector leads the way out of the inflationary  environment when and it the OCR moves down.
 

 

[Basil]

Craigs this morning.  Has the share price got ahead of itself?

•    MFT – Over the past couple of days DSV, CH Robinson, and Old Dominion (MFT global comps) have reported Q4 earnings. Wade Gardiner has cast his eye over the results and notes that in general they have been fairly weak. CHR and Old Dominion reported softer than expected Q4 Domestic (mainly US) freight volumes, with some commentary around higher opex (esp personnel costs) at the high-end of expectations. In Ocean freight CHR and Old Dominion reported that Q4 demand has remained soft, in line with previous quarters, with revenue reflecting the year-on-year decline in freight rates. In comparison DSV was more bullish around their road and sea freight results and margins, although they weren't immune to lower market activity and year-on-year freight rate declines. A key focus area with MFT at present is Air & Ocean margins, which for DSV remained strong in Q4 and consistent with prior periods....Gardiner notes sea freight rates in January have risen as a result of trade lane disruptions (Red Sea and water depth issues in the Panama Canal), but there is no indication of an upturn in demand. It is hard to know how long the Red Sea disruptions will continue for but there was some commentary from CHR that elevated rates will remain until at least the Chinese New Year, with some relief through 2024 as new vessel capacity continue to enter the market. 

I think Craigs who have been all over this in recent months calling it fully priced have been bang on the money. 

Just as an aside, I do wonder a bit about the morality of charging such high commission fees and rates to customers when freight rates went through the roof during Covid, but that's just my opinion and its ancient history now.

Nobody in their right mind would own this for the dividend yield, that's for sure. 

Sure, international trade and with-it freight, will pick up again in the next up cycle, but when's that going to be? 

[Waltzing]

https://www.youtube.com/watch?v=lcfvrXyNSLE