A global presence in all major apparel sourcing regions for USA provides a strategic benefit for Expolanka Holdings (EXPO) due to the prevailing trade tensions between USA and China, First Capital Research (FCR) stated the firm in an equity analytical report.
Therefore, as stated in the report, FCR expects EXPO’s top line to grow above the industry average at a Compound Annual Growth Rate (CAGR) of 17 per cent for the next two financial years, driven by volumes in the medium-term with the global presence in all the major apparel sourcing regions for USA, alongside further expansion into USA (North American trade lane; a critical growth driver) and key markets in Asia.
“EXPO earnings are likely to grow at a CAGR of c.17 per cent FY19-21E with earnings growing by 77 per cent in FY19E and 43 per cent in FY20E. Post-restructuring, the group is now beginning to show a turnaround in the overall business, reporting consistent net profit growth and more focus on the core logistic business driving revenue,” it stated.
EXPO has a global presence in all major apparel sourcing regions for USA, which would provide a strategic benefit due to the prevailing trade tensions between USA and China.
The Global Apparel industry is growing at a five-year CAGR of c.6.9 per cent, while the global logistic industry is expected to grow at a five-year CAGR of c.7.2 per cent, further supporting EXPO’s organic volume growth.
EXPO has completed its restructuring process by generating Rs 2.5 billion in benefits through divesting non-core investment sector. The funds have been re-invested in the freight forwarding business and warehousing facilities. Following the divestments, with the heavy focus on logistics, EXPO plans to take on the challenge of diversifying into new verticals within the logistics sphere with a view to maintain volume growth.
EXPO has initiated plans to cater to pharmaceutical and tech companies, as the need for air exports has grown much more significant. Such Investments would focus on moving into an array of fast-growing verticals such as pharmaceuticals, electronics, retail and e-commerce business to drive volume growth.
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