Stock Picks Red Star Express Plc may find it difficult to beat its FY 2018 performance if the decline seen in first quarter results continues. Red Star Express Plc is our stock pick for the week. About the company
Red Star Express Plc commenced operations on the 12th of October, 1992 and became a public company on the 9th of July, 2007. It was listed on the Nigerian Stock Exchange in November 2007.
Red Star Express Group includes three subsidiaries – Red Star Freight Limited, Red Star Logistics Limited, and Red Star Support Services Limited. The group engages in courier services, mail management services, freight services, logistics, warehousing, and haulage. Recent Results
Results for the first quarter ended June 2018 show that turnover increased from N2 billion in 2017 to N2.3 billion in 2018. Profit before tax dropped from N176 million in 2017 to N164 million in 2018. Profit after tax dropped from N120 million in 2017 to N111 million in 2018. Pricing
Current Share Price: N5.40
Year High: N6.50
Year Low: N5.12
Year to date: 6.45% Price Outlook
Possibilities of the stock witnessing significant upside from its current price are quite low. The stock market is currently on a downward trend and is down 12.54% year to date.
Red Star is currently trading at 5.4% away from its year low and could break below that if bearish sentiments persist. The possibility of a sharp decline in price is, however, limited due to the largely illiquid nature of the stock. Valuation
The stock is currently trading at 9.24 times earnings, much lower than the other company operating in the same sector, Trans-Nationwide Express Plc, which is trading at 97 times earnings. Outlook
FY 2018 has recorded the best performance in half a decade, in terms of top line and bottom line. The group made N4.4 billion as revenue and N334 million as profit before tax.
Last year, the company obtained shareholders’ approval to raise capital and held a fact behind the offer presentation.Proceeds of the capital raise were to be used to expand the company’s operations to other countries, such as the Republic of Niger.In addition, the company planned to invest in new ventures such as agro chain services, pharmaceutical logistics, technological services, prints, and packaging.With the current market sentiments, possibilities of a capital raise are quite low. Second quarter results (ending in September), will give […]